Equity investors in Adelphia Communications, the bankrupt and allegedly fraud-ridden US cable TV giant, have all but taken to the streets to vent their anger at the $41 million (€38.26m; £25.37m) largesse showered by the company’s board on its new chief executive and chief operating officer.
The issue first reared its head earlier this month when angry stockholders launched a lawsuit to compel the election of new directors [WAMN: 13-Jan-03].
They complained that four of the company’s present board of six were elected by Adelphia’s former ruling Rigas family (three of whom have been charged with fraud), and that the two recently recruited newcomers – ceo William Schleyer and coo Ron Cooper – were in turn hired by the Rigas appointees.
Now the equity committee has written to each member of the board expressing its opposition to the astronomic pay packages handed to the new executive directors, both of whom held identical positions with AT&T Broadband before its acquisition in November by Comcast.
The contested remuneration package bestows on Schleyer a $1.7m golden handshake, an annual base salary of almost $1.3 million and a one-time award of $10.2 million in stock when the company emerges from Chapter 11. He could also net yearly bonuses of $1.3m in cash and $5.1m in stock if the company performs well – and if it doesn’t he’ll benefit from $7.2m in severance pay.
Cooper, on the other hand, has been treated in relatively miserly mode: a signing fee of only $1.1m, a salary pittance of $850,000 annually, and additional performance bonuses of up to $850,000 in cash and $3.4m in stock.
In an interview last Friday, Schleyer described his pay package as fair and in line with those taken home by executives at similarly sized companies.
The stockholders’ committee disagrees - vehemently: “We believe that few of the top two hundred companies, ranked by sales, reward their ceos as richly, and none the size of [Adelphia] do,” opined the committee in its letter to the board. It intends to fight the proposed deal which guarantees the pair $23.9m, and over three years will probably exceed $41m.
Shareholders have lost hundreds of millions of dollars since Adelphia's stock value hit bottom and the committee will urge the bankruptcy court to reject the Schleyer/Cooper pay deal as inappropriately generous.
Data sourced from: The Wall Street Journal Online; additional content by WARC staff