NEW YORK Active Value, the 14.1 percent shareholder in Cordiant Communications Group that is calling for the ouster of the holding company's top management, today outlined details of CCG executives' recently renegotiated contracts.
According to information obtained from CCG by lawyers acting on behalf of Active Value, CCG chief executive David Hearn will receive nearly $2.3 million and finance director Andy Boland will receive over $1 million if there's a change in control. Those amounts represent 18 months salary and guaranteed bonus provisions, a representative for Active Value said.
Hearn, 46, earns a basic salary of $900,000, while Boland, 33, receives about $409,600, the Active Value rep said.
Two days ago, Active Value called for an extraordinary general meeting amid concerns that a sale of the troubled British holding company could leave shareholders empty handed [Adweek Online, June 4]. Active Value is proposing resolutions that include the removal of Hearn, Boland and chairman Nigel Stapleton.
"In circumstances where shareholders have lost hundreds of millions of pounds in value, we think these provisions are unacceptable," Active Value principal Julian Treger said in today's statement. "We believe the company and the executives should withdraw them or make them subject to shareholder approval."
A CCG representative declined comment on the incentives.
Active Value today released excerpts of the letters sent this month from Stapleton to Hearn and Boland that detail the executives' revised bonus structure. In both letters, Stapleton said that the revisions were made to "focus your efforts towards stabilizing the business during a period of significant strategic change and recovering as much value as possible for both lenders and shareholders."
CCG is currently carrying out disposals of its non-core assets, including public relations firm Financial Dynamics and German ad network Scholz & Friends, and evaluating a range of strategic options concerning its remaining assets, including Bates and 141 Worldwide.
According to a letter dated June 4, Hearn will take in 2 percent of his salary for every $16 million in pre-tax proceeds up to $245 million the company makes as a result of any share or business disposals or sale of CCG as a whole. He will receive 6.4 percent for every $16 million over $245 million. If a debt-for-equity swap occurs, CCG will pay Hearn 50 percent of his salary as a bonus. The maximum bonus payable to Hearn will be 100 percent of his base salary.
As for Boland, he will earn 1.5 percent of his salary as a bonus for every $16 million in pre-tax proceeds up to $245 million the company makes as a result of any share or business disposals or sale of CCG as a whole, according to a letter dated June 2. He will receive 4.3 percent for every $16 million over $245 million. If a debt-for-equity swap occurs, CCG will pay Boland 40 percent of his salary as a bonus. The maximum bonus payable to Boland will be 75 percent of his base salary.
"The approach I described to you in this letter can serve to reward you appropriately for the considerable amount of work outside the normal scope of your job you are having to undertake as a result of CCG's business problems," Stapleton also wrote in both letters.