The midnight filing as the latest contra-indicator…

July 29, 2008

In addition to handing out a Mercedes, donating to politicians and providing memberships to the Core Club, we can add filing at midnight to the growing list of contra-indicators we’ve uncovered here at footnoted.

How else to explain the news this morning over the departures of Alcatel-Lucents’s (ALU) top two executives, CEO Patricia Russo and Chairman Serge Tchuruk? When we last footnoted the company for filing its 10K at 11:30 at night Parisian time, the stock was trading at just under $13. At the time, we were surprised to see Russo’s salary increase from $1.2 million dollars to $1.2 million Euro, a substantial raise, given the rising Euro. There was also a company-paid apartment in Paris whose costs were never disclosed.

It’s easy enough to chalk this up to another dumb merger. As with most of these types of deals, the cost savings and synergies never really materialized. Yet, despite that, both Russo and Tchuruk are likely to emerge from this relatively unscathed, though it’s not as clear from the filings what Tchuruk will receive. According to the annual report that the company filed back in April, Russo will receive at least $740K a year as a Lucent retiree. Here’s a snippet from the filing on additional payments Russo will receive:

More specifically, the Policy provides for maintaining the fixed remuneration for a two-year period referred to as the —continuation period, and for the payment in December for each of the two years occurring during the continuation period, of a bonus equal to the target amount of her variable remuneration, as well as for the accelerated vesting of her stock options. The continuation period and the corresponding payments are taken into account when determining the age, years of service and remuneration for purposes of pension benefits. The various employment benefits, pension benefits and benefits in kind provided also continue during this period.

Of course, the separation agreement — whenever it’s filed — will spell out all of the details. But once again it looks as if another top executive is being rewarded very richly for another dumb merger.

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