CenturyLink’s execs are paid to stay…

CenturyLink (CTL) got some attention last week for an 8-K it filed, reporting that shareholders of CenturyLink and Qwest Communications International, Inc. (Q) overwhelmingly approved a merger proposal. But the company also filed a second 8-K, which received no real attention, even though it involves more than $10.2 million of shareholders— money.

That filing disclosed that CenturyLink (formerly known as CenturyTel, Inc. until May, 2010) gave equity and deferred cash grants to its CEO, CFO, and other executive officers in order to:

——provide the Named Executive Officers with adequate incentives to remain employed with us through the completion of the merger contemplated under the Merger Agreement— and for the critical period thereafter during which we will begin to integrate Qwest into our operations.

The big winner is CEO Glen F. Post, III, whose retention award of 127,317 RSUs is worth nearly $4.6 million.

But other NEOs got awards, too; 25 percent of their grants are structured as deferred cash awards, and the other 75 percent as RSUs. Looking at the total awards:

  • Karen Puckett, EVP/COO, received an award worth more than $1.84 million;
  • R. Stewart Ewing, Jr., CFO, got over $1.66 million for his award;
  • David D. Cole, SVP — Operations Support, received an award of nearly $1.08 million; and
  • Stacey W. Goff, EVP/General Counsel and Secretary, received more than $1.05 million.

Half of the cash awards will be paid on the merger closing date, and the other half will be paid a year later (assuming the executive still works for the company). Unless the closing date is extended for a permitted reason, the merger must occur on or before April 21, 2011, or the cash portion of the award will be forfeited. The RSUs, meanwhile, will vest in three equal shares on the first three anniversaries of the merger closing date. (And don’t forget that millions more will go to Qwest’s departing executives.)

At this point, the Justice Department and seven state regulatory utility commissions have signed off on the merger, and the companies expect that the deal will be completed in the first half of 2011.

Mergers are — no doubt — a lot of work, and we’re predicting that the executives will get raises and bonuses next year which are justified (on paper, at least) with the stated reason that they should be compensated for all that extra work. But in a case like this – where we know that all of the top managers are coming from CenturyLink (see this post from April and slide #14 from this merger-announcement presentation) – it’s an open question whether these retention awards are really necessary.

Image source: Manchester-Monkey via flickr


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