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165 Million in Golden Parachute?
What would you do with 165 Million Dollars *pinkie rises to corner of mouth*
Date: 5/23/2005 1:04:18 PM ( 19 y ) ... viewed 2302 times Gillette Awards Options to Top Execs
No severance for laid-off workers, however; ''It would seem like this is a tide that's lifting only yachts, and not all boats,'' says a Massachusetts regulator.
Stephen Taub, CFO.com
May 23, 2005
Gillette disclosed in a Securities and Exchange Commission filing that it has awarded large numbers of options to top executives in advance of its planned $57 billion acquisition by Procter & Gamble Co.
The Boston-based consumer products company made its filing on the same day it announced that workers who lose their jobs as a result of the merger will not receive buyout packages.
Massachusetts Secretary of State William Galvin, who has been probing certain aspects of the merger agreement, said of the stock options, "It would seem like this is a tide that's lifting only yachts, and not all boats," according to the Associated Press. "The priority is taking care of Mr. Kilts and the people at the top, and not the employees."
The Boston Globe reported that Galvin has subpoenaed Gillette's chairman, president, and chief executive officer, James M. Kilts, to testify under oath about the merger; senior vice president and chief financial officer Charles W. Cramb was questioned Thursday.
The newspaper added, however, that Suffolk Superior Court Judge Allan van Gestel ruled that Galvin must limit his probe to determining whether Gillette's two investment banks, Goldman Sachs Group and UBS AG, withheld information that might have valued the company higher than the $57 billion that P&G has agreed to pay.
''The court again observes that it is UBS and Goldman Sachs which are being investigated for fraud committed on Gillette, and possibly Gillette's shareholders, not the other way around," wrote Judge van Gestel, according to the Globe. The judge also reportedly refused to allow Galvin's staff to search Gillette's computers for deleted e-mails of senior executives.
Though Galvin has been critical of Kilts's compensation — he will receive $165 million if the merger goes through — he will not question the CEO about his pay, the Globe added.
As for those option grants: Kilts has been awarded options to buy 800,000 shares of stock, according to the Associated Press. Vice chairman Edward F. DeGraan will receive options to buy 160,000 shares; Cramb, the finance chief, will receive options on 96,000 shares; and vice presidents Peter Hoffman and Mark M. Leckie will receive options to buy 76,000 shares apiece.
According to Gillette's filing, the options will be granted on June 16 and will have an exercise price equal to the fair-market value on that date. Currently, Kilts's options would be worth about $14 million, observed the AP.
According to the wire service, the company also stated that it will not offer buyout packages to the approximately 6,000 employees who are expected to be laid off after the merger, but will offer "appropriate" severance packages. "Gillette has never offered widespread voluntary severance packages," said company spokesman Eric Kraus. "When you have a merger of this size, P&G and Gillette will decide how to staff and how to run the most effective organization."
9th-I'm surprised this merger was approved, since I believe this reduces the competition between 'like' companies and products-"merger 101" rules, but more to the point-how in the world do exec's deserve 165 Million package and the employees get nothing but laid off- spread the wealth; offer some of those millions (maybe 20M or so-leaving 145 M to the self dealing exec's) to the long time employees that will lose their defined benefit pension by being laid off at year 10 or 15-but before retirement age and years of service kick in. There is a variable no maturation date is divulged on the options, maybe they don't mature until 2040- a little 'future-oriented' for those laid off in 2005. Still it sounds wacky!
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