As a result of the marriage of Qwest Communications International and US West, the heads of both companies will gain millions of new stock options in the combined company, as well as some cash awards.
But the relatively small amount of cash that each CEO is slated to get will effectively keep them on board for several years so they can see the bulk of their return. This plan is apparently geared at locking each CEO into the planned co-chairman status--an arrangement many analysts have said is likely to be tense.
Under the terms of the agreement, released today in information for US West stockholders, Qwest chief executive Joe Nacchio will be granted 9 million new stock options priced at $28.50 as a reward for finishing the deal, and for staying as head of the company.
Nacchio will also get a hefty pay boost--up to $1 million a year from $680,000--and an annual bonus of up to $1.5 million. The deal itself will bring him an added cash bonus of $750,000.
Additionally, the documents showed that Nacchio is in line for $25.48 million in 2001. The payment comes from grants made previous to Qwest's initial public offering in 1997.
US West chief Sol Trujillo will also make out handsomely from the deal if it is approved. He will gain the chance to buy more than 3 million stock options, which will vest over a four-year period at a price of $54.31 per share.
To have access to the shares, Trujillo also agreed he would not join any firm that competed with Qwest or US West for at least 18 months if he chose to leave his co-chairman post with the company.
Also as a result of the merger, Trujillo will gain immediate access to about $17.5 million in unvested stock options that predated the merger.
Qwest and US West agreed to merge in July, in a deal worth about $36.5 billion. The agreement closed a bidding war between Qwest and Global Crossing, which had already signed an earlier agreement to merge with the Baby Bell.
A meeting for US West stockholders to vote on the merger will be held on November 2.