BlackRock exit gave exec plenty of time to think…

May 11, 2011

It’s fairly common for an executive of a company that’s merging to come along for the ride, spend a year or so to help work out the transition-related kinks, and then move on to something else. What we see less often is an executive leaving with several million dollars, having spent just a year at the newly merged company.

Then again, we’re talking about BlackRock, Inc. (BLK), the giant asset management company that – as of March 31, 2011 – claimed to have $3.65 trillion (yes, with a “t”) worth of assets under its care. Given that number, perhaps the amount of money and equity rights that Blake Grossman left with shouldn’t surprise us, but it did – at least a little.

You may recall that, prior to coming to BlackRock, Grossman was the CEO of Barclay’s Global Investors (“BGI”), which BlackRock acquired in December, 2009 for a whopping $15.2 billion. At BlackRock, Grossman stepped into the role of vice chairman (which – as Michelle once observed – might just be the best job there is), and he also headed up the scientific investing unit. At the time, according to this June 12, 2009 8-K, Grossman said, —BlackRock Global Investors will create significant new opportunities for the talented employees of both companies, as we help our institutional and retail clients manage their toughest investment challenges. The two firms mesh well — and I have every confidence we will smoothly integrate into one organization.

But by the end of 2010, Grossman apparently felt that his work at BlackRock was done. When his departure was announced, it was widely reported; however, the details of what BlackRock agreed to pay him weren’t known until BlackRock filed this confidential letter as an attachment to the 10-Q it filed on May 9.

The letter, dated December 23, 2010, shows an agreement between the parties that Grossman’s employment would end just 8 days later. In exchange for Grossman signing an agreement and complying with its terms, BlackRock agreed to pay him more than $11.88 million in bonus money. The first chunk of that – a lump-sum cash payment of $6,357,500 – was to be paid “by the date BlackRock pays employees bonuses for 2010 or the eighth day following BlackRock’s receipt of [his] executed Agreement, whichever is later.” The second part will be paid in a lump-sum cash payment of $5.525 million, to be paid “in the first payroll period in February 2012.”

The other major provision in the letter concerns how Grossman’s equity awards will be treated. On that point, BlackRock said it would provide:

“(b) ongoing vesting of any Restricted Stock Unit award agreements previously granted to you until the Termination Date and treatment of your termination of employment as an involuntary termination ‘other than for Cause’ for purposes of, and resulting in, the respective treatment provided in Paragraph 4 of the applicable Restricted Stock Unit award agreements (the ‘Equity-Based Award Agreements’), subject to the terms and conditions of such agreements….”

To get a better understanding of how much that meant, we went back to the proxy that BlackRock filed April 26. It disclosed that when Grossman left, he forfeited 50,241 shares with a 2010 grant date value of $10,742,530. However, the remaining 18,335 shares (which were granted at the same time and have a value of more than $3.920 million) will vest on December 31, 2011. But there are also two other grants: The proxy adds that “the remaining 4,968 unvested shares from his year-end equity award will vest 100% on December 31, 2011.” [Part of a Jan. 29, 2010 grant of 7,451 shares, these had a value of more than $1.062 million.] Finally, his “Partner Plan” award (22,858 shares worth more than $4.887 million) “will vest 100% on December 31, 2011.” All told, continued vesting will give Grossman shares worth about $9.869 million.

When Grossman’s departure was announced, a Bloomberg article said that Grossman planned to “take time off before resuming a career in the financial industry.” Later in the article, Grossman reportedly said, —I’m not in a great hurry to figure out what’s next…. I would like to step back and take a little time to determine what to do over the next few years.

Luckily for him, he’s got the wherewithal to take all the time he wants.

Image source: gfpeck via flickr

_____

Over at FootnotedPro, we’re batting .300 with the news that Lawson Software (LWSN) is being acquired in a $2 billion deal. Two other companies from our January 14 report on top M&A targets for 2011 have also announced deals: Smurfit-Stone Container (SSCC) and Pride International (PDE). FootnotedPro: Interesting. Actionable. Profitable.


 

Leave a Reply