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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (13633)	7/11/2000 12:57:24 PM
From: donjuan_demarco	Read Replies (1) \| Respond to of 18998

Herb Hammers Conseco: Hotline heroics: How about that Gary Wendt? By now everybody knows that instead of getting a salary he gets a $45 million signing bonus. (For more details see Peter Eavis' story at TheStreet.com.) But did you know ... he also gets a $1.5 million annuity from a Conseco (CNC:NYSE - news - boards) sub (which, one of my short-selling sources cracks, may be the only new biz that sub writes for the quarter!) and did you know ... that if Wendt dies before June 30, 2005, his current wife will get $1 million a year through 2006. (She's not to be confused with his former wife who has tried to get a big piece of Wendt's assets in a well-publicized divorce battle. ... ) And did you know that in return, Wendt gets protection against the dilution of his interest in Conseco if the company raises new cash through a recapitalization or a reorganization? (GE (GE:NYSE - news - boards) gets a similar deal in return for letting Wendt, who formerly ran GE Capital, out of his GE contract.) That's extremely important, says one Conseco short-seller, because Conseco needs lots of money to shore up its insurance reserves and recapitalize its Green Tree sub. "Wendt and GE have covered themselves in this event by including the recap and reorg language in the option agreement," the short-seller gripes. "In short, I don't think this is really all that positive for common shareholders. He gets $45 million upfront (net of taxes) a lot of other perks and options, which are not affected when they pull in a lot of new capital or restructure the bonds (at, like, 50 cents) and give a bunch of the common to the bond holders." ... Note to Conseco shareholders: Don't say you weren't warned! (And to think some people thought ex-CEO Stephen Hilbert was overpaid!) And note to Jamie Dimon: Next time, cut yourself a better deal. How is it that Wendt got so much and you got so little? (To take over Bank One (ONE:NYSE - news - boards) he was given a puny 35,000 shares and bought 2 million shares with his own money at 28; it's now 30. Who has the bigger incentive? Go, Jamie!) --------------------------------------------------------------------------------