We’ll leave it to the pundits to determine whether or not Intel Corporation’s (NASDAQ: INTC) proposed $7.7 billion acquisition of McAfee, Inc. (MFE) is a wise move. But regardless of the answer, the deal offers some nice rewards to some of McAfee’s top executives.  The details are in an 8-K and an updated proxy that McAfee filed August 25.

Assuming the deal goes through, McAfee’s current CEO/president, David DeWalt, will become the President of McAfee, which will then be a subsidiary of Intel. In an Executive Employment Agreement dated August 18, 2010, Intel and McAfee promise DeWalt an annual base salary of $950,000 and a target annual bonus of up to $1,050,000. His equity awards will vest on an accelerated basis, and – if he stays with the company – he’ll get a $2 million retention payment after the merger’s first anniversary, and another $2 million after the second anniversary. DeWalt is also “potentially eligible” to receive a third $2 million payment if the company meets its performance metrics for the 2011 calendar year, and $2 million more if McAfee meets the 2012 metrics.

Jonathan Chadwick (who joined McAfee on June 14, 2010, following a move from Cisco Systems, Inc.) will remain as CFO and report to DeWalt, according to his Executive Employment Agreement. His base salary is $600,000, and his target annual bonus is also $600,000. In addition to accelerated equity awards, Chadwick will get another $600,000 in retention payments if he stays with the company through July 31, 2013 (he gets $300,000 of that in 2012). His incentive payments for achieving the company’s performance metrics will be $450,000 for calendar year 2011 and another $450,000 for 2012.

Three other named executive officers got letter agreements which provide ongoing payments to them as part of the “McAfee, Inc. Special Bonus Program.” In each case, the company assures the letter’s recipient that “…you are critical to the success of McAfee’s future business operations and you have the potential to make a significant impact on McAfee’s future growth.”

If the criteria are met (staying with the company through July 31, 2013 and meeting the performance metrics for a given calendar year):

Michael P. DeCesare (EVP – worldwide sales operations) could receive a total of $600,000 in retention bonus payments and $900,000 in performance incentive bonuses;

Mark D. Cochran (EVP – chief legal officer, general counsel) could receive a total of $390,000 in retention bonus payments and $585,000 in performance incentive bonuses; and

Gerhard Watzinger (EVP – worldwide strategy, business development and general manager, data protection) could receive a total of $400,000 in retention bonus payments and $600,000 in performance incentive bonuses.

Perhaps it’s fitting that a company which sells external security to customers also provides a little security for some of its own.

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We don’t hesitate to call companies out for giving former directors and executives lush consulting contracts. Look no further than Northrop Grumman, Acxiom and Boeing, among others.

Now we come across a consulting contract we might even like: One filed with an 8-K on Tuesday by International Rectifier (IRF), a maker of power-management semiconductors in El Segundo, California.

Board member Jack O. Vance is stepping down with the expiration of his term, but the company wants to ensure he’s available  ”to advise, consult with, and assist the Company on an as-needed basis,” as it puts it in the consulting agreement, effective Aug. 18.

Vance isn’t working for a song, but this is no million-dollar deal with vague duties and an open-ended commitment by the company.

Vance will be paid $2,400 a day, for the days he consults with the company. That’s $300 an hour for an eight-hour day, and he could bring in as much as $800 an hour, since just three hours of work can trigger a full day’s payment. But he’s also agreeing to waive the fee “for time spent up to three days per quarter during the first year” of the deal (a $7,200-a-month value!).

Much of the agreement centers on consulting over legal matters, and, in particular, advice

“related to any current or future actions, lawsuits, or other proceedings that have been or may be filed based on events that occurred while Consultant served as a Director of the Company…”

Vance, who was 84 last September, started on the board in 1988. And sure enough, the company has previously disclosed a variety of lawsuits, including a class-action securities lawsuit settled in California for $90 million (split 50-50 with its insurer). Another suit — a derivative case titled Mayers v. Lidow, filed August 13 last year in Los Angeles Superior Court — revolves around “certain of the Company’s directors and former officers…” Derivative lawsuits, of course, take the stance that the plaintiff is suing a company’s managers or directors on behalf of the company itself, in effect. The company says in its May 3 10-Q that a special committee of directors not named in the suit is investigating with the help of separate counsel.

The company is also suing a former chief executive who now works at Efficient Power Conversion Corp. (also a defendant), “alleging improper and unauthorized use and/or misappropriation of certain Company confidential information, trade secrets and technology related to the [International Rectifier's] Gallium Nitride development program.” The defendants have filed a countersuit, and the legal wrangling has commenced.

All in all, this could prove to be a pretty busy retirement for Vance.

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Just over a month ago, Energy XXI (Bermuda) Limited (Nasdaq: EXXI) announced a management realignment.  Headquartered in Bermuda with an office in Houston, the company’s stated goal is to “acquire and exploit producing oil and gas reserves,” primarily in the Gulf of Mexico.

Characterized as a “streamlining of the organization,” the management realignment included the departure of Steve Weyel, a company co-founder who served as its president, Chief Operating Officer, and director.  At the time, Chairman/CEO John Schiller said Weyel was “leaving to pursue personal interests.”  Simultaneously, the reorg shuffled four other executives into roles with increased responsibilities.

But although the reorg happened in July, a month passed before the company and Weyel agreed to the terms of a Separation Agreement on August 20.

The agreement provides that Energy XXI will place a lump sum payment of $2.94 million (less taxes) into a rabbi trust for Weyel’s benefit. He’ll also get his full bonus for FY 2010, the remaining balance of which is $245,000, as well as another $56,538 for unused vacation.

The company also agreed to pay for continued medical and dental insurance for Weyel and his dependants for up to 36 months.

Energy XXI agreed that Weyel’s outstanding awards under its Long-Term Incentive Plan “shall become immediately exercisable and payable in full,” and it gave Weyel a 180-day extension (starting July 23, 2010) in which to exercise his stock options. All told, (based on Attachment A to the Separation Agreement), the gross value of Weyel’s equity interests is more than $4.28 million.

Weyel further gets to keep his company car (a 2010 Range Rover), his company-installed home security system, and his company-issued laptop, iPad, and BlackBerry. Last, but not least, the company will continue to pay the premiums on Weyel’s $3 million life insurance policy for the next 36 months.

In exchange, Weyel agreed to waive any claims he might have against the company, avoid disparaging it, disclose confidential information, and not solicit employees or business contacts for a year. He also has to help the company occasionally with litigation, investigations, and other proceedings.

Whatever Weyel’s personal interests may be, it’s likely that he’s now got the wherewithal to pursue them.

Image source: CD-Traveller.com

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It’s a bizarre fact of American business that directors can stay on corporate boards for years after shareholders have resoundingly rejected them in an annual vote. (As we footnoted here, just look at Cablevision)

So we were at first happy to see that Costco (COST), the giant warehouse-store chain, had modified its bylaws to require directors to tender their resignation if they lose a vote. Here’s how Costco put it in the 8-K it filed yesterday:

The bylaws as amended provide that if in an uncontested election for directors a nominee receives a greater number of “withhold” votes than votes “for” the nominee shall offer his or her resignation. A committee of independent directors whose election is not at issue will determine and publicly report the action to be taken with respect to the resignation offer.

(Costco in many ways is just playing catch-up — a study in 2007 found that a majority of S&P 500 companies already had similar provisions in place.)

But then we took another look at that second sentence. Sure enough, in the revised text of the bylaws themselves (and section 3.6 in particular), we found the escape clause: Should a director have to tender his or her resignation, a special committee of independent directors gets to pick from a number of options that

“can include: (i) accepting the offer of resignation; (ii) maintaining the director but addressing what the Qualified Independent Directors believe to be the underlying cause of the withhold votes; (iii) resolving that the director will not be re-nominated in the future for election; or (iv) rejecting the offer of resignation.”

In other words, that rejected director could still stick around, a la Cablevision, if his buddies on the board want him to.

We could be persuaded that boards need a little flexibility in handing the timing of a resignation, to give them time to recruit a replacement, for example. But can you imagine the ruckus if Congress were able to re-seat incumbents who are voted out, simply by “addressing what [they] believe to be the underlying cause” of the loss? The Whigs would still be running things up on Capitol Hill.

So kudos to Costco for taking a step in the right direction. But shareholders are still a long way from being able to give board members the boot, should they so desire.

Image source: Keith Bacongco via Flickr

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There were times when passages in the merger proxy that Dollar Thrifty Automotive Group, Inc. (DTG) filed August 17 read more like a libretto than an SEC filing. The classic operatic themes are there: money, multiple suitors, commitment issues, and surprising plot twists.

In this particular drama, at least two suitors wooed Dollar Thrifty, including Hertz Global Holdings, Inc. (HTZ) and the Avis Budget Group, Inc. (CAR). The courtship unfolded over a few years, as the proxy’s “Background of the merger” section explains on pages 59 – 76.

Hertz and Dollar Thrifty announced on April 25, 2010 that they had agreed to combine their fates in a deal worth approximately $1.3 billion.  If the merger goes through, Dollar Thrifty will be a wholly-owned subsidiary of Hertz.

Thank goodness there were no duels or bloodshed, but the suitor that lost – Avis – expressed its disappointment publicly. The proxy includes a letter from Ronald Nelson, the Chairman/CEO of Avis, which states:

“…I was very surprised by your April 26 announcement that you had signed a definitive agreement to be acquired by Hertz…. This is particularly true given that, on April 19, a mere week before the Hertz announcement, Scott [Thompson, Thrifty’s CEO/President] and I agreed to meet for dinner on April 28 to discuss a transaction between our companies, which you cancelled after the Hertz announcement….

“…This failure is all the more surprising given that, at the time you signed a definitive agreement to be acquired at virtually no premium, you clearly had knowledge that published earnings estimates for Dollar Thrifty were well below the updated guidance…

“Now that we and our advisors have had access to the terms of the merger agreement, we are astonished that you have compounded these shortcomings by agreeing to aggressive lock-up provisions,…”

A subsequent reply from Dollar Thrifty’s Thompson to Avis’s Nelson began:

“Our Board of Directors has received and reviewed your letter of May 3, 2010. Needless to say, I was surprised to learn of its existence on CNBC before even receiving it. I was also disappointed to read its numerous factual inaccuracies.”

When Thompson made the late-April merger announcement, he lauded the “greater resources and the technology” that a merger with Hertz would bring, adding: “We see the combination of our brands with Hertz’s brands as very compelling.”

Also compelling, perhaps, is the post-merger money that will flow to Dollar Thrifty’s top executives and directors.

If the merger concludes on December 31, 2010, Thompson will receive more than $22.5 million from his severance, equity interests, benefits and accrued vacation. Thompson’s Employment Continuation Agreement also requires the company to pay a gross-up payment of $2,928,678. Although less, the other four NEOs will each get merger-related payments that range from more than $5.32 million to $9.3 million.

Severance in various circumstances could bring Thompson three times his salary, plus bonus and annual incentive (2-1/2 times for other executives), as well as benefits and other perks.

Dollar Thrifty’s directors aren’t left empty-handed, either. When the merger closes, their equity interests (including the grant of 3,560 RSUs that each of them received on January 27, 2010) will immediately vest. While the precise amount each director will get depends partly on the closing price for Hertz’s common stock on the date of the merger, it’s safe to say that they will receive hefty checks for their stakes in the company.

And then there’s this handy perk:

“Upon the completion of the merger, each director (including Mr. Thompson) will also be entitled to lifetime use of rental cars for product and service evaluations while traveling.”

Shareholders will decide whether to accept or reject the merger at a special meeting on September 16, 2010.

Image source: fancycwabs via flickr

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