A kiss-off to over-the-top greed?

June 15, 2007

images-14.jpegSome critics of footnoted like to accuse us of being against making money just because we often poke at overpaid (and over-perked) executives. But nothing could be further from the truth. Indeed, there’s lots of highly paid executives that footnoted ignores — or, perhaps even better, awards a rare gold star to — because they’re also delivering for their investors.

Take the top executives at aQuantive (AQNT). Last month, Microsoft (MSFT) announced that it planned to spend $6 billion to buy the company, sending the stock up nearly 80%. Earlier this week, when aQuantive filed its merger proxy, it became clear that the company’s top executives will make a lot of money on the deal: CEO Brian McAndrews will walk away with $137 million and COO and co-founder Michael Galgon will get $44.6 million. But unlike a lot of other executives whose companies are purchased, generating huge windfalls for top executives (North Fork Bank and Gillette are two that come to mind), Mssrs. McAndrews and Galgon are not counting on someone else to pay what’s likely to be a hefty tax bill.

That’s right: there’s no gross-up clause in their contracts. Unfortunately, the no gross-up is still pretty rare, as we footnoted last week. But it’s definitely a step in the right direction. Making a lot of money when the company you’ve poured your soul into is sold isn’t the problem. Expecting someone else to cover the tax bill is.

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