Cablevision Details Severance in Event of Sale
Five Top Officers Would Receive Restricted Stock, Performance Awards
By Mike Farrell -- Multichannel News, 5/1/2007 6:35:00 PM
Cablevision Systems’ amended annual report issued April 30 had an interesting tidbit -- charts that mapped out just how much in severance payments five of its top officers would receive if they were terminated after a change in control at the Bethpage, N.Y.-based cable operator.
Topping the list was CEO James Dolan, who would pocket more than $64 million in severance, unvested restricted-stock awards and performance awards.
He was followed by vice chairman Hank Ratner ($50.7 million), chief operating officer Tom Rutledge ($44.2 million), chairman Charles Dolan ($28.5 million) and chief financial officer Michael Huseby ($8.2 million).
Cablevision noted in the filing that these payments are heavily weighted with accelerated long-term incentive-stock awards, which have accumulated value over several years. They also assume that the executives would be terminated in the event of a change of ownership.
For example, in the event James Dolan was terminated after a change of control, he would be entitled to receive $12 million in severance, $30.8 million in unrestricted-stock awards, $8.4 million in performance awards and $3.6 million in consulting arrangements (as part of his employment package, James Dolan is entitled to a four-year consulting agreement with the company for at least $600,000 per year if he is terminated without cause).
In the same scenario, Charles Dolan would receive about $28.5 million, including $16.7 million in unvested restricted stock and $5.4 million in performance awards.
Even if the Dolans were retained in a change of control, James Dolan would still be eligible to receive $12.25 million in performance-incentive awards and deferred compensation and Charles Dolan would pocket $6.25 million in performance incentives and deferred compensation, according to the 10-K.
The numbers are interesting if for the simple fact that speculation about a possible sale of Cablevision has been a Wall Street parlor game for more than a decade. And although this information has been disclosed before -- usually buried in employment agreements deep within annual proxy statements -- new Securities and Exchange Commission rules that took effect this year required companies to make executive compensation more transparent for investors; hence the charts.
Cablevision has had a heady run in the past several years, and in 2006, it broke several internal performance records, including an 18.1% gain in cable revenue, its best annual revenue growth ever. Adjusted operating cash flow rose 19.4% for the year and its stock -- including a one-time cash dividend of $10 per share issued last year -- rose 66% in 2006. Cablevision also leads the industry in digital penetration (78%), high-speed-data penetration (44.7%) and telephony penetration (26.5%).
“Cablevision’s performance in 2006 was extraordinary,” company spokesman Charles Schueler said. “The core cable business had its most successful year in history with record operating results and industry leading performance. Cablevision’s executive compensation reflects excellence in both operating performance and shareholder returns.”
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