NEWS FLASH - THE PIG IS BACK AT THE TROUGH
Data General Corp. Chief Executive Ronald L. Skates would receive $32.3 million in severance payments if he loses his job.
To rephrase my earlier post "Once again, it is corporate policy Soviet Union-style, how about another 5 year plan? Zero personal accountability. In free market capitalism you are not supposed to get paid for augering in. This guy hits the iceberg, puts it into reverse and cuts up the passengers in the prop wash. Now he is pushing old ladies off the fantail in an attempt to get on the last lifeboat. Funny, funny stuff. All of Wall St must be laughing along (where is Don Young and his 30 dollar break up value?)
Data General Corp. Chief Executive Ronald L. Skates would receive $32.3 million in severance payments if he loses his job in his company's proposed buyout by data-storage leader EMC Corp.
The severance package, detailed in a proxy statement filed last week with the Securities and Exchange Commission, amounts to three times his highest annual salary and bonus over the last three years.
That multiple is common in such deals, but the total sum was enlarged in this case as a result of a controversial $10 million bonus Mr. Skates received in 1997, now tripled in the buyout. Data General, Westboro, Mass., awarded the big bonus two years ago because of a formula pegged to a brief upturn in the company's stock price.
The value of Data General stock during the 30 trading days ended Sept. 27, 1997, more than doubled from the same period a year earlier, triggering the bonus. The stock price hit a 1997 high of $37.25 in late August. But the price fell soon after, reaching a low of $16.31 that December. In composite trading on the New York Stock Exchange, Data General shares fell 18.75 cents to $20.4375.
A spokesman said Mr. Skates wouldn't be available for comment. But he said the bonus and severance package was needed to keep a talented top executive from being distracted by other offers. The spokesman said it hadn't been determined whether Mr. Skates would take a job at EMC, Hopkinton, Mass. If he does, the spokesman said, he won't get the severance package.
As part of the deal, Mr. Skates will also be able to collect another $7 million in restricted stock he was awarded at Data General as a retention bonus two years ago. In all, the top 16 executives at the company are to receive $54 million in severance payments.
In August, EMC agreed to buy Data General in a stock deal valued at about $952 million. Data General, which achieved fame in the 1980s after it was showcased in Tracy Kidder's Pulitzer Prize-winning book "The Soul of a New Machine," has been struggling in recent years. The company's two main product lines, computer storage and computer servers, have been plagued by marketing and distribution problems.
Also yesterday, the companies said they have received a request for additional information from the U.S. Justice Department in connection with the department's requisite antitrust review of the proposed acquisition. An EMC spokesman said he didn't expect the request would delay the deal, which is expected to close by the end of the year. |
