BCE Inc. could spend at least $21-million on severance pay for five Astral Media executives if the company's deal for the broadcaster closes as expected in April.
The two companies announced details of the $3.2-billion deal last week. BCE gets dozens of radio and television stations as part of the agreement, and strengthens its hand considerably in Quebec.
Astral's management circular outlines who gets paid what in the event of a takeover, and it indicates five of the company's executives are in line for $21-million in payouts. The total dollar amount is a combination of severance pay, stock options and other share plans.
Founder Ian Greenberg, for example, would receive $5.8-million in severance on top of $5.1-million in stock-related compensation for a total of $10.9-million. The final amount is likely to be higher, because the vesting options section of the circular assumes a takeover price $34.35 for the company's Class A shares. BCE has offered $50 for these shares.
Mr. Greenberg won’t vanish quietly into retirement, however. He’ll be joining BCE’s board.
“I don't want people to miss this, one of the absolute critical parts of this acquisition is we now have access to the leading media content team in the province of Quebec ... and their CEO is joining our board,” BCE chief executive officer George Cope said in a conference call about the deal. “ It doesn't get any better than that in terms of an acquisition going forward.”
Other employees receiving payouts include chief operating officer Jacques Parisien ($3.7-million), Chaînes Télé Astral president Pierre Roy ($3-million), Astral Television Network president John Riley ($2.8-million) and vice-president of finance Robert Fortier ($737,389).
Other employees eligible for payouts include Astral’s chief operating officer Jacques Parisien ($3.7-million), Chaînes Télé Astral president Pierre Roy ($3-million), Astral Television Network president John Riley ($2.8-million), and vice-president of finance Robert Fortier ($737,389).
Mr. Greenberg's payment is triggered the minute the deal is done, other executives would receive the payment if replaced within 18 months.
BCE may need to consider severance for employees as well. UBS analyst Phillip Huang said head office jobs are likely to be eliminated when the companies merge, due to overlap. He didn’t quantify how many positions could be cut.
“We believe there is significant function overlap between Bell Media and Astral's head offices, and expect substantial synergies,” Mr. Huang wrote in a note to clients.
The deal has been criticized by some because it doesn’t treat all shareholders equally. While it is common for media and communications companies in Canada to have two classes of shares, Astral has three.
BCE is paying $50 a share for the class A non-voting shares and $54.83 for the class B voting shares, the majority of which are controlled by the Greenberg family holding company. But they also control a third class of shares, which have extra votes and are called “special shares” and of which there are only 65,000. BCE is paying $50-million for those – or $769.23 each.