Wishing we had GLG Partners’ lucky stars…

September 20, 2010

Lucky stars aren’t all equally lucky. Some bestow small doses of luck – a train pulls into the station just as you reach the platform, or a restaurant draws your business card and caters lunch for the office. But then there are really lucky stars… like the kind that the executives at GLG Partners, Inc. (GLG) seem to have.

In mid-May, 2010, GLG agreed to be acquired by hedge fund Man Group PLC (LSE: EMG), so long as the shareholders approve. Man Group’s shareholders approved the deal earlier this month; GLG’s shareholders will consider the proposal at a special meeting scheduled for October 12. Man has offered to pay $1.6 billion in cash and shares to acquire GLG.

There’s a good WSJ article already available that looks at the millions of dollars that GLG’s top executives will get if the deal closes, so there’s no need to rehash that information. But when we looked at the merger proxy that GLG filed on September 13, we noticed other interesting sections, such as this passage on p. 79:

“On May 16, 2010, the Compensation Committee approved certain amendments to the employment agreements for Jeffrey M. Rojek, Alejandro R. San Miguel, Simon White and Leslie J. Schreyer. These amendments further amended the employment agreements of Messrs. Rojek, San Miguel and White which had been amended in March 2010 in order to better align with each other the terms and conditions of such employment agreements. The March 2010 amendments were authorized by the GLG Board in December 2009, prior to significant and substantive discussions with Man regarding a potential transaction which began in February 2010.”

Reading between the lines here, we see that GLG amended its employment agreements with its senior execs once “substantive discussions” had already taken place, but didn’t choose to disclose them to investors until after that. The agreements were amended again once the deal was announced.

But the relationship between GLG and Man is actually even older than that. In the 16-page “Background of the Merger” section that starts on page 15, we learned that before GLG went public in November, 2007, it “…explored various alternative transactions and engaged in substantive discussions with Man, among others, concerning a potential transaction involving the two companies.”

Although no deal transpired at the time, executives from both companies continued to see one another at industry conferences and events, and GLG’s co-Chief CEO, Emmanuel Roman, and Man Group’s Chief Executive, Peter Clarke, serve together as two of the 14 trustees of the London-based Hedge Fund Standards Board.

The filing details five additional meetings between Roman and Clarke in 2009 on “whether there may be potential for a business fit, including an assessment of strategic rationale and a range of possible transaction structures without focusing on any specific structure.” In 2010, executives from the companies met twice in January, followed by eight meetings in February (which is the month in which GLG says the “substantive discussions with Man” began). Of course, we’re not exactly sure how the 7 meetings that took place in 2009 and 2010 are less substantive than those that took place in February. But we’re assuming a lawyer (or two) understands the difference.

Keep in mind that GLG’s board authorized amendments to the NEOs’ employment agreements in December, 2009, but the amendments simply weren’t put into effect until March, 2010.

The referenced 8-K, filed March 23, 2010, memorializes the addition of employment protection provisions to the agreements with CFO Jeffrey Rojek, COO Simon White, and General Counsel and Corporate Secretary Alejandro San Miguel so that they would receive separation payments if their jobs were suddenly terminated without cause. The filing also notes that the board had agreed to accelerate the vesting schedule for some of the executives’ equity interests. Still other employment agreement terms were amended on May 16, 2010, according to this amended proxy filed May 19, 2010.

While the rest of us hope that our lucky stars will keep showering us with an occasional free lunch, we certainly hope that GLG’s NEOs will remember to thank their lucky stars for what appears to be very good luck indeed.

Image source: NASA Goddard Space Flight Center via flickr

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