By PETER HUSSMANN
Iowa Telecom CEO Alan Wells stands to receive more than $6.7 million upon completion of the merger of the Newton, Iowa-based telecommunications firm with Little Rock, Ark.-based Windstream.
The financial impact of the proposed merger on Wells' pocketbook was spelled out in a Securities and Exchange Commisssion filing by Windstream last week.
About half of the payout to Iowa Telecom's CEO ($3.2 million) will come from the sale of his 195,750 shares of restricted Iowa Telecom stock.
The price is based on Windsteam's plan to offer $7.90 cash plus 0.804 of Windstream shares for each Iowa Telecom share held. The payout estimate was based on Windstream's Dec. 31 closing price of $10.99 per share, though the actual amount received may be higher or lower depending on the price of Windstream stock at the time the merger is completed. The stock was selling for $10 today.
In addition, the SEC filing notes, it is anticipated that "certain of the executive officers" may receive grants of additional shares of Iowa Telecom restricted stock prior to the closing. The filing notes that subject to the approval of Iowa Telecom's compensation committee, a total of 260,000 shares, valued at more than $4.3 million, may be issued prior to the merger closing.
The remaining half of Wells' payout comes from change of control agreements included in his contract (nearly $2.6 million including title to his company car and continued health insurance), 2010 bonus plan payments ($172,000) and installment payments on his deferred compensation benefits ($716,000).
Under the terms of the merger, Wells will be appointed to the board of directors of Windstream upon completion of the merger. The SEC filing notes that he will receive $60,000 annually for his service on the board, a cash fee of $1,750 for each board and committee meeting attended, a one-time grant of $60,000 in restricted Windstream stock and an annual grant (prorated the first year) of $60,000 in restricted company stock.
Iowa Telecom executives may also enter into consulting agreements with Windstream for a period of one year and continue to receive their current annual salaries "in exchange for services totaling approximately 40 hours per month." The aggregate value of the consulting agreements is not to exceed $1.4 million.
Each of the nine other Iowa Telecom executives listed in the SEC filing will receive payouts ranging from approximately $500,000 to more than $1.7 million.
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