AOL: Armstrong and Exec Team’s Rich Compensation Package
In the first SEC document AOL (NYSE: TWX) Inc filed earlier yesterday with SEC, details about the package for the new CEO Tim Armstrong, as well as exec compensation for three senior execs have been disclosed. And it makes for an interesting and rich read, in more ways than one. The filing includes compensation package for three EVPs at AOL: Ira Parker (EVP, biz dev and General Counsel), Tricia Primrose (EVP, communications), and David Harmon (EVP, HR).
On Armstrong, whose package went into effect end of April:
—His current contract runs through April 7, 2012, and then continues on a month-to-month basis until either party provides the other party with 60-days’ written notice of termination.
—A minimum annual base salary of $1 million, a discretionary annual cash bonus with a target amount of $2 million and a maximum amount of $4 million (except that his 2009 bonus is guaranteed to be at least $1.5 million) and participation in the company’s savings and welfare benefit plans and perquisite programs, including $50K of group life insurance.
—Awarded with Time Warner equity-based awards with an aggregate grant-date value equal to $10 million in each of 2009 and 2010.
—It also provides for an annual cash payment to him equal to twice the premium he would have to pay to obtain life insurance under the Group Universal Life insurance program made available by the company to obtain life insurance in an amount equal to $4 million.
—He will be entitled to a grant of AOL stock options with an exercise price equal to the company’s per share fair market value (determined as provided in the employment agreement) and an aggregate exercise price equal to 1.5 percent of the aggregate value of the company’s common stock outstanding at the time of the spin-off, subject to a maximum aggregate exercise price of $50 million.
—Armstrong is entitled to retain investments in certain competing entities that were disclosed by him prior to entering into the employment agreement. That means his Associated Content stake will remain for now.
—One year non-compete with following companies excluded (if he gets terminated before the AOL spinoff): AT&T (NYSE: T), Bertelsmann, CBS (NYSE: CBS) Corporation, Comcast (NSDQ: CMCSA) Corporation, The Walt Disney (NYSE: DIS) Company, General Electric (NYSE: GE) Corporation, Google (NSDQ: GOOG), Microsoft Corporation (NSDQ: MSFT), The News Corporation (NYSE: NWS) Ltd., Sony (NYSE: SNE) Corporation, Viacom Inc. (NYSE: VIA) or Yahoo! Inc. (NSDQ: YHOO), or any of their respective affiliates, internet-service subsidiaries or certain successors. If termination occurs following the spin-off, Google Inc., Microsoft Corporation, Yahoo! Inc., or their respective affiliates, internet-service subsidiaries or certain successors, or any other entity that competes substantially with the company.
As for the other execs, the chart below shows their compensation (click on it to get the full scale), and there’s a lot more minutiae in the filing, embedded below. Parker’s base salary is $550,000, Primrose has a base salary of $425,000, Harmon’s base salary to $400,000. No one will get a salary increase this year to to the economic climate. In 2008, the company also adopted a one-year retention program for these EVPs, and as a result, the company paid Parker, Primrose and Harmon their retention payments in the amount of $550,000, $425,000 and $400,000, respectively, on May 15, 2009. For the 2009 retention program, Parker is eligible for a one-time payment equal to $220,000, and Primrose and Harmon are each eligible for a one-time payment equal to $190,000.
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