Toner News Mobile › Forums › Latest Industry News › *NEWS*TOP LEXMARK EXECUTIVES STAND TO GAIN FROM A TAKEOVER
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AnonymousInactiveTop executives stand to gain from a takeover
Over
the past couple of years, industry analysts have pointed to Lexmark
International as a potential takeover target because of its ability to
produce steady cash from sales of ink and toner, as well as its
depressed stock price. But any such takeover could trigger lucrative
payouts to the company’s top executives, and a recently released proxy
statement shows that some of those payments have gone up compared to a
year ago.Such agreements are common in top companies. And in
Lexmark’s case, its top executives would have been eligible to receive
between $1.25 million and $6.59 million, as of Dec. 31, if one of a
number of scenarios occurred. Those include if the company was sold or
if one person or group acquired more than 30 percent of Lexmark’s
stock.By the company’s calculation, CEO Paul Curlander would have
received $6.59 million; Chief Financial Officer John Gamble Jr., $2.98
million; Paul Rooke, head of the inkjet printer division, $4.04
million; Marty Canning, head of the laser printer division, $2.6
million; and General Counsel Vincent Cole, $1.25 million.Those payouts
include long-term and stock-based incentive compensation. They’re far
less than the payouts would have been on Dec. 31, 2006, when the
executives would have received anywhere from $2.55 million to $17.26
million. The lower payouts reflect the past few years’ depressed
performance, which has dramatically lowered incentive compensation.However,
if the top executives were terminated after a change of control, the
cash payments they would receive have increased.Had such an action
occurred as of Dec. 31, the amounts paid would have totaled $7.8
million for Curlander, $2.97 million for Gamble, $3.99 million for
Rooke, $1.75 million for Canning and $1.72 million for Cole.Those are
increases of anywhere from 7 percent for Cole to more than 25 percent
for Rooke.A company spokesman declined to comment specifically on the agreements.
The
compensation in Lexmark’s change-of-control agreements is far from
extraordinary compared to notable cases like that of James Kilts of
Gillette Co.Kilts’ contract called for a payout of more than $160
million when Gillette was absorbed into Procter & Gamble in
2005.Commonly called golden parachutes, these contract provisions are
billed by corporations as a way to retain top-level executives, who
would otherwise have difficulty finding similar employment should they
be forced out of a job. They also can be seen as ways to reduce the
likelihood of unfriendly takeovers.Shareholder proposal
Lexmark
also disclosed in its proxy that its board intends to fight a
shareholder proposal looking to give stockholders a say, albeit a weak
one, about executive pay.An investment fund associated with Amalgamated
Bank, which bills itself as “America’s Labor Bank,” has proposed that
stockholders be able to vote on whether they approve of the company’s
executive compensation plans. The vote would be non-binding and not
affect any actual compensation.The company said it opposes the plan for
a variety of reasons, including that it would place it at a
“competitive disadvantage” since other firms wouldn’t be subject to
such a non-binding vote. Plus, shareholders can already write to the
board members with their opinions.The results of the vote will be
released after the company’s annual meeting of shareholders on April 24.Market share numbers
Market
research firm Gartner Inc. has released its 2007 year-in-review report,
and it contained some good news for Lexmark, amid mixed news for the
industry as a whole.Total inkjet printer shipments in the United States
declined 1 percent, dragged down by a decline of 26 percent in
single-function inkjets. Gartner said 71 percent of all inkjet printer
shipments now are multi-function products that include features such as
scanning or copying. Sales of those products grew 16 percent
domestically.In the U.S. inkjet market, Lexmark posted a growth rate of
10 percent in 2007. The main driver of that growth was a 22 percent
increase coming from sales of its line of wireless inkjet all-in-one
printers, Gartner said.Overall, Lexmark remained second in U.S. inkjet
market share, edging out Canon and Epson. All three distantly trail
market leader HP. New inkjet player Kodak ended the year with a 1
percent market share. -
AuthorApril 1, 2008 at 11:57 AM
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