Talk about creative…

January 27, 2005

Rural telecommunications company Valor Communications (VCG) isn’t even public yet — last week, the company set the price for its IPO at $16 to $18 a share– but that hasn’t stopped the company from coming up with all sorts of creative ways to pay its former CEO. Last April, the company gave Kenneth Cole a $5 million transition payment — nearly 10 times his annual salary — to step down as CEO and into his new role as vice chairman. As vice chairman, he’ll receive $45K a year plus 9,705 shares of stock, once the company goes public. But that’s really just the tip. According to the company’s SEC filings, Cole will also collect $300,000 a year in exchange for devoting 25% of his time to the newly public company. On an annualized basis, that’s a more than 100% raise for a job that carries a lot less responsibility. Cole will also collect another $1.5 million if Valor goes public before early April, which seems almost certain. The filing also talks about an additional $1.5 million Cole is set to receive under an amended employment agreement signed back in November, though it’s not clear from the filing if the $1.5 replaces the $300K yearly salary or is in addition to it. My bet is on the latter, though I’d love to be wrong. Here’s another prediction: about a month after Valor goes public analysts at any one of the 10 firms who are underwriting the deal, will issue glowing ratings encouraging suckers, er, investors, to buy.

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