Calling in a bonanza for Brightpoint executives…

August 21, 2012

On July 2, Brightpoint (CELL) announced it would be bought by Ingram Micro (IM). As far as we can tell, the acquisition makes sense on its face: Brightpoint provides procurement, logistics and other services to the wireless industry, and Ingram is a wholesale hardware distributor, and also offers marketing and logistics services.

There’s another group it makes good sense for, of course: Brightpoint’s executives. The company isn’t huge, in terms of market-cap, at about $618 million (and that’s after a nice bump from the deal news), but executives are getting a significant payout, at least according to the merger proxy Brightpoint filed yesterday.

All told, the executive officers of the company — there are eight, from Chief Executive Robert Laikin to R. Bruce Thomlinson, president of its Asia Pacific division — stand to collect $16.5 million from accelerated vesting of the 1.8 million restricted shares they own. Laikin alone stands to get $6.5 million of that.

Add to this the fact that the company plans to cash out the special executive pensions that several of them get, and Laikin gets another $3.5 million. Plus, Laikin is also getting a special “single trigger” payment — meaning he gets it if the deal goes through, whether or not he keeps his job — under special arrangement with Ingram. That amounts to another $4.1 million. (And he is indeed slated to keep his job once the deal closes, at a salary of $900,000 a year.) Several other top executives are getting similar payments.

The total? For Laikin, $14.1 million. For the top six executives all together (a smaller group than the one cited above) it works out to north of $30 million.

We’ve heard time and again the argument that executives need to know that they won’t suffer in the event that they conclude the company should go on the block. After all, that would provide a disincentive to doing a deal that may be the best thing for shareholders — and even if they did a deal, worrying about where they’ll find their next paycheck would be a distraction, and might lead them to miss a step along the way, or spend their day searching for a new job instead.

In this case, as in so many others, the result is a windfall, rather than insurance. Laikin, of course, is getting both a guaranteed job and a nice payout for shepherding the deal to a close — on top of the same reward every shareholder gets, namely the acquisition price.

After all, the company’s last proxy reported Laikin controlling 560,941 shares. At the $9-a-share purchase price, that’s $5 million gross, and given the 66% premium the companies are claiming, it should be at least $3.3 million in upside.

Besides, think about how much daydreaming goes on when the PowerBall pot gets big, as everyone imagines what they could do with the cash. If you really want to get the most out of your CEO’s attention-span as a deal is coming together, promising him enough to buy a small yacht might not be the way to keep him focused.

Image source: Yacht under way via Shutterstock.com

Leave a Reply

You must be logged in to post a comment.