Better late than never?
While it’s fairly common for companies pondering mergers to protect their top executives by offering them lucrative severance packages before the deal is announced, two 8-Ks filed yesterday offered up a different twist by providing benefits after the news was already out. One was filed by Diagnostic Products (DP), which announced last week that it was being acquired by Siemens AG (SIEGn.DE) in a $1.86 billion deal. The other was filed by Michael’s Stores (MIK), which doesn’t have a buyer yet, but which announced last month that it was exploring strategic alternatives.
The 8-K filed by DP provides various benefits, including a lump-sum payment of salary, bonus and retirement for an unspecified period and various other perks, such as outplacement services and the company car for 18 months. There’s also the requisite tax gross-up. Michael’s 8-K offers similar benefits to six top executives, but throws in accelerated vesting of options, continued employment for two years post-merger and throws in a 50-mile clause that allows the benefits to kick-in if the executive has to move more than 50 miles. Executives also qualify for an additional $125K "change in control bonus".
Both companies show that when it comes to post-merger payouts for top executives, it’s better late than never.