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In mid February Comcast Corporation, which is led by Brian Roberts, and Time Warner Cable Inc. agreed to merge to create one enormous cable and media giant, in a deal valued then at around US$45 billion.
The legal form of the combination of the two companies is intended to be a share exchange for 100% of TWC, with Comcast being the surviving entity.
The deal is now subject to approval, by the shareholders of both companies, at special shareholders meetings preparations for which are now underway and the dates of which will doubtless be released shortly.
Accordingly, to further the process, today Comcast and TWC filed a joint proxy statement with the Securities and Exchange Commission, which is combined with Comcast’s S-4 Registration Statement to qualify the issue of its common shares that will take place once shareholders, and regulators, have approved the transaction.
Whilst these are important documents, of themselves they reveal little new about the deal, with one exception – namely details of the very large severance packages arranged to be paid by TWC, to its Chairman & CEO Rob Marcus and other TWC senior officers once the merger takes place.
Since post-merger, there will be no real need for two sets of top public company level executives, it is normal in an agreed merger of this kind for the senior executives of the losing side, i.e. in this case TWC, to be generously paid off.
To make sure shareholders are aware of it however, the SEC has adopted rules that require a company, in this case TWC, to seek an advisory, completely non-binding, vote by its shareholders on such “golden parachute” compensation, as it is called for obvious reasons. Of course the payments are only made if a deal actually goes through.
As part of the merger approval process therefore, TWC shareholders will now be asked to approve the golden parachute compensation payments that Comcast has agreed should be paid by TWC to its named executive officers in connection with the merger if it proceeds. The vote is not binding, and even if TWC shareholders voted strongly against such compensation, but still voted for the merger itself, then TWC will be able to make the payments anyway. The SEC’s position is that at least they will know about it.
These compensation payments are now laid out in detail, for the first time, in the S-4 Registration Statement filed today. TWC Chairman and Chief Executive Officer Rob Marcus, who earlier pushed hard for the merger to ward off advances from Charter Communications, is himself scheduled to receive a severance payment totaling almost US$80 million made up of cash, equity in restricted stock units of Comcast and company benefits, all payable once TWC is indeed merged into Comcast.
Marcus will get US$56.5 million in restricted stock units in Comcast shares and unvested options, almost US$20.5 million in actual cash and US$0.4 million in company benefits according to the new filing. He may also receive an additional performance bonus of US$2.5 million if TWC’s business stays on budget until completion of the merger.
Other officers cashing in include the TWC Chief Financial Officer Artie Minson, who is eligible for a payout totaling over US$27 million after the sale. Michael LaJoie the Chief Technology and Network Operations Officer will be eligible to receive US$16.3 million and, finally, Philip Meeks the Chief Operating Officer is eligible for US$11.7 million.
Altogether these payments to the four senior officers total some US$125 million, according to the Registration Statement.
Of course obtaining shareholder approval is only half the story, and there are many regulatory hoops still to go through as well. Accordingly the merger is only expected to finally close, once approved, much later in the year.
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