Adelphia Shareholder Committee Seeks Ouster of Board
Board's $41 Million Deal with Company's New Top Execs Called Excessive
Adelphia Communications’ embattled Board of Directors agreed to revised employment contracts for its designated choices to be the company’s next top executives – former AT&T Broadband CEO William Schleyer, and former AT&T Broadband COO Ronald Cooper – as a committee representing the company’s shareholders took action to oust the current Board.
The equity committee, representing Adelphia shareholders in the bankruptcy proceedings, filed a lawsuit on Jan. 16 that urges the bankruptcy court to require the Board to call a shareholder meeting in order to hold a new election for the Board of Directors.
The equity committee said it filed the suit in order to ensure that Adelphia’s Board is not continuing to be influenced by the Rigas family. In its filing, the committee notes that four of the Board’s six members were selected by the Rigas family and the remaining two members were chosen by the Board members picked by Rigas.
The lawsuit also asks that the Rigas family, which has a controlling interest of Adelphia’s voting shares, be barred from voting in an new Board election. “They have lost their rights to vote their shares,” the suit charged.
The committee is also angry over the employment contracts the Board negotiated with Schleyer and Cooper, Adelphia’s new chief executive and chief operating officer. The agreements would grant the two compensation packages totaling a maximum of $41 million.
The compensation deals are bound to also anger hundreds of CWA-represented Adelphia workers who have been waiting on the company to begin serious bargaining discussions on contract demands for employees at 9 separate locations.
The compensation deals are bound to also anger hundreds of CWA-represented Adelphia workers who have been waiting on the company to begin serious bargaining discussions on contract demands for employees at 9 separate locations.
Under the deal he negotiated, Schleyer would receive $1.3 million in salary, $1.7 million in signing bonus, and $10.2 million in stock when the company gets out of bankruptcy. Schleyer also qualifies for yearly “success” bonuses totalling $6.4 million in cash and stock (If fired before the end of his contract, he gets $7.2 million in severance).
As COO, Cooper is set to get $850,000 in salary, $1.1 million in signing bonus, $6.8 million in stock after Adelphia gets out of bankruptcy, plus yearly success awards of up to $4.3 million in cash and stock.
“We believe that few of the top 200 companies, ranked by sales, reward their CEOs as richly, and none the size of [Adelphia] do,” charged a letter from the equity committee’s lawyer The committee has urged that the deals be rejected.
Ironically, the Board earlier had been set to approve a larger deal with Schleyer and Cooper before details leaked out, provoking an outcry. In the earlier deal, worth more a maximum of $56 million, the executives would receive awards depending on how much Adelphia exceeded it current value after bankruptcy. In the deal, Adelphia’s current value was set at $10.3 billion, based on $1,800 for each of Adelphia’s 5.7 million subscribers.
A number of critics suggested that the $1,800 per subscriber figure was set low so that success would be more attainable. Most put the value of Adelphia to at least $2,000 per subscriber.
