If LoopNet’s shareholders say “We do”…

June 9, 2011

June has always been a popular time for weddings. It’s probably a stretch, but it almost seems like an undercurrent of hope and optimism about the future is also present in the numerous “corporate engagements” that exist between publicly-traded companies.

Whatever the reason, we found a noteworthy example in the DEFM 14A that LoopNet, Inc. (LOOP) filed on Tuesday, except no traditional bride and groom are likely to get the multi-million-dollar gifts that LoopNet’s top executives are about to receive.

LoopNet is a company with a market cap just shy of $600 million that offers online commercial real estate listings. The regulatory document it just filed discloses information about its intended union with a subsidiary owned by CoStar Group, Inc. (CSGP) — a much bigger company with a $1.5 billion market cap that also markets commercial real estate. If LoopNet’s shareholders approve the deal at the upcoming meeting scheduled for July 11, they will get a combination of cash and stock for their shares in the $860 million acquisition, which is expected to close by the end of this year. CoStar recently announced that it would sell 3.75 million shares to help raise money for the deal.

While executives’ tendencies to enthuse about all the synergies that will occur if their two companies are joined as one (a little like listening to one member of a starry-eyed couple talk about his or her partner), and merger proxies like this one always contain a statement that the interests of the executive officers and directors “may be different from, or in addition to” the interests of the regular stockholders, in this deal, that line is hardly just boilerplate.

If the acquisition occurs, Richard J. Boyle, Jr., LoopNet’s Chairman and CEO, will get to swap his equity interests for cash and stock in CoStar; and, as a result, he may end up with more than $32.066 million. From the handy chart on page 58, it appears that about $24 million of Boyle’s stock options and “other shares” are already vested. But Boyle will also benefit from the accelerated vesting of his unvested stock options and RSUs to the tune of more than $8.058 million.

Other top executives at LoopNet will also benefit from the accelerated vesting clause that the deal triggers, although the amount of their interests varies. The numbers for their equity interests range from Thomas P. Byrne’s, the second-highest after Boyle, who may collect an estimated $18.034 million for his options and RSUs, down to a comparatively “low” number of $4.424 million for Frederick G. Saint.

And if a “double trigger” occurs — meaning that one of the named executive officers loses his job without cause, or he resigns for good reason during the period beginning two months prior to the closing of the merger and ending twelve months following the closing of the merger — he will also get a change in control severance payment.

If that happens — if the union doesn’t work out and Boyle ends up on his own — he will get another $569,263 as a change in control severance payment. With that, on top of his $32+ million, he will very likely have more than enough money to buy whatever his heart desires (for weddings or any other occasion)… including a lifetime’s supply of fancy toasters.

Image source: labormikro via flickr

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