Comcast’s TWC Acquisition: Shareholders Asked to Vote on ‘Golden Parachutes’ for Execs

Comcast has submitted a filing with the SEC that asks its shareholders to approve the acquisition of Time Warner Cable and alerts them that some executives are in line for hefty payments because of the deal.

The agreement to acquire TWC for about $45.2 billion in stock was announced last month and will require regulatory approval. But first, shareholders of both companies need to sign off on the deal, and while Comcast hasn’t picked a date to conduct a vote, it detailed some of its merger plans on Thursday.

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Among the most notable elements are that TWC stockholders will be asked to approve “golden parachute” compensation payments for the company’s top executive officers. The vote is described as nonbinding and only advisory, and even if stockholders say no (while still approving the overall merger), TWC may still make those payments.

TWC chief executive Robert Marcus is set to receive almost $80 million in golden parachute compensation, including over $20 million in cash. Retired chairman and CEO Glenn Britt is scheduled to take home $27 million in such compensation, the same amount as CFO Arthur Minson Jr., while chief technology officer Michael LaJoie will receive $16 million.

The new securities filing also reveals that under the terms of the merger agreement, Comcast is required to provide all nonunion TWC employees, including the executive officers, with base pay, commission opportunities and cash bonus opportunities that are no less favorable than those provided premerger.

The proposed merger is expected to undergo intensive regulatory scrutiny in the coming months. Many analysts expect that the deal will be approved by federal regulators but that there might be conditions attached. In recent days, some state attorneys general have signaled their own inclination to examine the proposed merger closely.

Comcast is optimistically targeting the end of the year for the close of the merger, but the documents reveal that if the merger is not completed on or before Feb. 12, 2015, either side is empowered to terminate the merger agreement.

Thursday’s filing also revealed some behind-the-scenes negotiations that led to the merger agreement, beginning last May when Charter Communications CEO Thomas Rutledge and Gregory Maffei, CEO of Liberty Media, Charter’s largest shareholder, pursued a Charter-TWC merger. After some discussions, TWC decided it wasn’t interested in combining with Charter for several reasons, including that TWC considered the value of Charter’s stock to be “uncertain.”

The notion of Comcast acquiring TWC first emerged when legal representatives from each company met on June 27. Charter, though, made an unsolicited bid of $114 a share for TWC on July 9, but a day later the offer was rejected. 

In October, Comcast acknowledged that it had discussed with Charter the idea of them jointly bidding on TWC, though on Oct. 24 Charter again submitted an unsolicited bid, this time upping its price to $127 per share.

Negotiations between Comcast and TWC heated up in November and December, even as Charter and Comcast were still considering some sort of joint effort to acquire TWC. 

On Jan. 13, Charter told TWC it would pay in “the low $130s” per share, but TWC countered with $160 per share. The back-and-forth continued, with Comcast and Charter still considering a team bid until Feb. 10 when Comcast agreed to negotiate exclusively with TWC, even though both sides acknowledged there would be regulatory concerns with a Comcast-TWC merger.

Comcast said in its filing that the two parties agreed in principle on a merger on Feb. 12 and at that time the deal had “an implied nominal value of $158.82 per share of TWC common stock.”

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner

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