Though we often read filings several times just to make sure we’re reading (and interpreting them) correctly, we honestly did a double-take when we read the 8-K that Black and Decker (BDK) filed late yesterday. The filing was a follow-up to the $4.5 billion deal that was announced on Monday. The part that caught our attention was the agreement with Chairman and CEO Nolan D. Archibald. Here’s a snip:
Though we often read filings several times just to make sure we’re reading (and interpreting them) correctly, we honestly did a double-take when we read the Under the terms of his amended and restated employment agreement with Black & Decker, Mr. Archibald would be entitled to certain benefits upon the termination of this employment by Black & Decker without cause or by Mr. Archibald with good reason. Mr. Archibald has the right to terminate his employment for good reason if, upon the occurrence of a change in control, Mr. Archibald is not the chairman, president, and chief executive officer of the successor entity. Upon the termination of his employment without cause by Black & Decker or by Mr. Archibald with good reason, Mr. Archibald would be entitled to a severance payment in the amount of $20,475,000. In connection with a change in control, Mr. Archibald would also be entitled to a gross-up payment if he is subject to the excise tax imposed by Section 4999 of the Internal Revenue Code. However, under the terms of the executive chairman agreement with Stanley, Mr. Archibald has waived his entitlement to the severance payment and the gross-up payment otherwise payable under his amended and restated employment agreement with Black & Decker upon consummation of the Merger.
Say what? A CEO who will essentially be out of a job post-merger — after all there’s only room for one CEO post-deal — is passing up an opportunity to get a pile of cash and a gross-up that he would otherwise be entitled to?
Of course, Archibald isn’t exactly out of a job. Post-merger he’ll be given the new title of Executive Chairman and draw a salary of $1.5 million plus a target bonus of $1.8 million and some other goodies thrown in.
Still, CEOs giving up money that they’d otherwise be entitled to under carefully crafted employment agreements — Archibald’s was just revised on Tuesday — is about as rare as it gets. Next thing you know, we’ll start seeing unicorns in the filings!
