LARGO — This week more than 99.9 percent of participating Tech Data stockholders voted yes to Apollo Global Management’s offer to buy the company for $145 per share.
But when the same shareholders, who represented nearly 81 percent of all investors holding Tech Data stock, were asked for their opinion of paying “golden parachute” compensation if certain executives get ousted after the $6 billion merger, nearly three out of four voted no.
Six Tech Data executives stand to get golden parachute payments of $5.8 million to $17.3 million in cash and stock if they are terminated after Apollo closes on its acquisition of the Pinellas-based global technology distributor.
Tech Data chief executive officer Rich Hume is expected to remain in place, but would be eligible for nearly $15.4 million if he is terminated. Former chief executive officer Bob Dutkowsky, the executive chairman of Tech Data’s board of directors, would receive $17.3 million if Apollo lets him go.
The compensation plan that includes the golden parachute amounts was written before Apollo approached Tech Data about a purchase, and the shareholder vote was advisory, so the outcome doesn’t change the plan even though most stockholders were leery of the idea.
“This was a non-binding proposal related to a pre-existing agreement that was put in place prior to the transaction,” Tech Data spokesman Bobby Eagle said Thursday in an email responding to a Tampa Bay Times inquiry. “Accordingly the comp plan will remain.”
While $15 million might sound like a lot, a termination payout of that amount would be toward the lower end of a survey done by the professional services firm Alvarez & Marsal.
In 2015, the company found, 200 top CEOs stood to be paid an average of $30.2 million if they were ousted after the company they led changed hands. By comparison, Tech Data, with annual revenues of $37 billion, is No. 88 on the Fortune 500 list of the largest public U.S. companies.
The Tampa Bay area also has seen bigger cash-outs. In 2015, when Emera bought TECO Energy, the golden parachutes in place for five TECO executives ranged from $5 million to $35 million. In 2016, a golden parachute for C1 Bank CEO and co-founder Trevor Burgess was expected to pay out more than $40 million after the St. Petersburg bank was acquired by Bank of the Ozarks. And WellCare Health Plans, recently purchased by Centene Corp. in a $17 billion deal, has agreed to pay CEO Ken Burdick a total of $51 million if he’s terminated without cause or for good reason within 24 months of a change in control of the company.
Eagle said Tech Data executives would not be doing any interviews related to the compensation plan. In addition to Hume and Dutkowsky, who was Tech Data’s principal point of contact for Apollo for more than a year and a half leading up to the sale, the plan includes golden parachute compensation for:
• Executive vice president and chief financial officer Charles V. Dannewitz ($7.7 million).
• President for the Americas Joseph H. Quaglia ($7.5 million).
• Executive vice president and chief legal officer David R. Vetter ($5.8 million).
• President for Europe Patrick Zammit ($8.4 million).
The golden parachutes, according to Tech Data’s proxy statement, are based on an assumption that the merger is closed on March 1 and that the executives are terminated without cause or for good reason. The estimated termination compensation would be paid in addition to other amounts the executives were already entitled to receive.
Last week, the company told shareholders in a proxy statement that it expected Hume “will continue to serve as the chief executive officer of Tech Data following the merger.”
The company also said the merger agreement “provides that the officers of Tech Data will continue to serve in their current capacities until duly removed or until successors are duly elected or appointed and qualified,” though at the time no new employment agreements had been put in place.
On the morning the sale was announced last November, Hume told Tech Data employees, “the management team you know today will continue to be the management team that will be on the ground moving forward.”