Good chemistry between Argon’s execs and Boeing…

At the end of June, aviation giant Boeing Co. (BA) announced that it planned to buy Argon ST (STST) for a reported $775 million in cash. A few details weren’t known at the time, though, such as how the acquisition would impact Argon’s top executives.

Argon ST, which is based in Fairfax, VA, sells sensors, systems, networks, and services in order to —make sense of the technology threatening our forces and provide the capability to thwart it. It’s a strategic acquisition for Boeing that will enable it to expand its electronic communications capabilities.

At the time the deal was announced, Boeing said it would pay $34.50 cash per share; that’s a 41 percent premium over Argon’s June 29 closing price of $24.43. The acquisition is expected to close by the end of September, 2010.

On July 8, Argon filed an SC TO-T to state that, although no arrangements were in place yet, as part of the merger it would use its —reasonable best efforts to obtain retention and non-compete agreements with its top executives, Terry L. Collins, Kerry M. Rowe, W. Joseph Carlin and Michael J. Hettmann.

By July 12, those agreements were in place, and Argon reported their terms in an amended SC TO-T. In exchange for accepting a position with Boeing (and agreeing to other terms), the executives will get the following:

Terry L. Collins will be the Vice President/General Manager of “Argon ST, A Boeing Company.” He—ll start with a base salary of $502,258 and is eligible to get an —Incentive Bonus payment of $2,009,032.

Kerry M. Rowe will be the Vice President, Division Operations for Boeing. His base salary will start at $414,856 per year, and he’s eligible to receive an incentive bonus of $1,659,424.

W. Joseph Carlin will be a Vice President, Information Dominance with Boeing. He—ll start with a base salary of $288,184 and is eligible to receive an incentive bonus of $576,368.

Michael J. Hettmann will be the Director, Reconnaissance Systems for Boeing. He—ll start with an annual base salary of $230,360 and is eligible to receive another $230,360 as an incentive bonus.

With respect to all four executives, their incentive bonuses will be paid in chunks over a period of about two years, and they require that certain performance goals be met.

This article noted that Argon ST will be a —a stand-alone unit within Boeing. That bodes well for Argon’s 1,000 or so employees, especially since a slide presentation (filed as an exhibit to an SC14D9C) on June 30 stated there would be “No headcount reductions or relocation anticipated due to [the] transaction.”

Granted, they’re not walking into Boeing with lucrative retention agreements, like the top executives are. But at least they get to keep their jobs, and that’s not something to take for granted in an M&A context.


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