Nov 27 Time Warner Cable Inc, being
circled by potential buyers, could pay out more than $50 million
to incoming Chief Executive Robert Marcus as part of his
contract, if the company is bought while he is CEO and he gets
Marcus, 48, is set to take over the top job at the No. 2
U.S. cable company from Glenn Britt on Jan. 1 as takeover
For Marcus to receive the money upon his departure, Time
Warner Cable would have to see a change in control from "an
applicable merger, acquisition, sale or other agreement," once
he is CEO, according to an employment agreement outlined in a
If he makes way for a new chief, Marcus would receive three
times his base salary of $1.5 million and three times his $5
million annual bonus, which equals $19.5 million.
Marcus would also be entitled to stock options accrued over
his time at the company. Based on Time Warner Cable's closing
price of $136.56 on Tuesday, Marcus would be able to cash out of
roughly $37 million in stock, according to a proxy filing. That
would bring Marcus' total payout to about $56.5 million.
A change-in-control agreement is common in employment
contracts for CEOs, according to Daniel Laddin, a partner at
Compensation Advisory Partners, which consults on executive
compensation. The provision is designed to provide financial
security to executives so they would be open to a deal without
being worried about being out of a job, he said.
"This change-in-control provision is fairly typical. What's
the unusual circumstance is to have an incoming CEO announced
already, while a company is in a play," Laddin said.
The "golden parachute" for H.J. Heinz CEO William Johnson,
for example, was set at about $56 million in March after the
ketchup maker's acquisition by Berkshire Hathaway and 3G
In another instance, Nokia CEO Stephen Elop received an 18.8
million euro ($25.5 million) termination payment after he
negotiated the sale of its handset business to Microsoft Corp
Charter Communications Inc and top cable provider
Comcast Corp are examining a joint bid for Time Warner
Cable, according to reports. Time Warner Cable has been an
acquisition target for John Malone, chairman of Liberty Media
Corp, Charter's biggest shareholder, since the summer.
Earlier this year, Liberty's offer for the company was
rejected because it was not viewed as beneficial to Time Warner
Cable shareholders, Reuters has reported.
A Time Warner Cable spokesman declined to comment.
Time Warner Cable shares have increased 41 percent year to
date, outpacing the S&P 500 index, largely due to the
recent speculation of a takeover. This has been a major boost to
Marcus' equity and the value of his pay package.
"The big numbers are really a function of the stock price
having done so well, and at the end of the day the shareholders
are benefiting as well," Compensation Advisory Partners' Laddin
If the company is sold this year before Marcus becomes CEO
and he leaves, he would pocket $10.5 million in severance, and
the same $37 million in stock options, which totals $47.5
Marcus was named the incoming chief in July. He was promoted
to chief operating officer and president in 2010, five years
after he joined the company. Marcus started his career as an
attorney focused on mergers and acquisitions.