After months of negotiations and a fair share of controversy, it's now a waiting game for new Adelphia Communications Corp. chairman and CEO William Schleyer and president and chief operating officer Ron Cooper.
Adelphia, which announced the hiring of the two former AT&T Broadband executives Jan. 17, submitted their respective employment contracts to the U.S. Bankruptcy Court for the Southern District of New York for approval on Jan. 21. Judge Robert Gerber set a Feb. 10 hearing date on the matter.
Schleyer and Cooper came under fire earlier this month for what some in the industry said was an excessive employment agreement. While Adelphia ultimately reduced that compensation package — once valued at $64 million over three years for the two executives — the amended agreement is quite lucrative.
According to documents filed with the bankruptcy court, Schleyer and Cooper stand to make as much as $40 million over three years, confirming previous reporting. (See chart.)
All in all, the package guarantees Schleyer at least $4.25 million in his first year. If Schleyer meets all of those targets over the three years of the contract, he stands to make $23.5 million.
Cooper is guaranteed $2.83 million in salary, bonuses and signing bonuses. If he meets all expectations, he could reap about $16.4 million.
Schleyer also would receive a severance package of three times his annual salary and bonus — or about $7.65 million — if he is wrongfully terminated or resigns for good reason.
Cooper's severance also would equal three times his base salary and bonus, or $5.1 million.
In the meantime, Schleyer and Cooper are basically consultants to Adelphia, and as a result will receive $9,600 and $6,400 per day, respectively. If the court approves the package on Feb. 10, the company would have paid Schleyer $144,000 and Cooper $96,000. That amount is not included in their annual salary.
But the approval process is likely to drag out further.
Adelphia's official committee of equity securities holders — led by one of Adelphia's largest shareholders, Citizens Communications Corp. chairman Leonard Tow — has objected to the size of the compensation packages. The group also has objected to what it said was Adelphia's refusal to expand its CEO search beyond Schleyer and Cooper.
In the bankruptcy documents, Adelphia said the search process began in July, with at least 19 potential candidates listed.
The company said it interviewed two candidates in addition to Schleyer and Cooper, but declined to name them. Sources familiar with the situation said one of the candidates was Adelphia board member and former Renaissance Communications vice chairman Rod Cornelius.
Duo approached MSO
According to the court filings, lists of potential candidates also were submitted to the equity committee to keep them abreast of the search progress.
Interestingly, Schleyer and Cooper were not included in the first round of candidates, because Adelphia's board believed their deep involvement with AT&T Broadband — acquired by Comcast Corp. in November — made them unlikely to want the job.
But in September, Schleyer and Cooper contacted Adelphia to express their interest.
According to Adelphia spokesman Eric Andrus, Schleyer traveled to the MSO's Coudersport, Pa., headquarters last Tuesday to speak to the troops. He declined to reveal what Schleyer said. Cooper spoke to Adelphia employees the next day.
Officials with other MSOs reacted favorably to Schleyer and Cooper's appointments, although none would comment on their salary packages.
"I think it's terrific," Insight Communications Co. CEO Michael Willner said. "Cable companies should have cable guys at the helm. They're going to have to navigate through a very difficult situation and if you mind the store and keep the business running, you'll probably be able to do it."