Change of Control Payments

I'm not an expert on the subject, but I'm fairly sure that the change of control option only will kick in
if TH gets let go after Blackberry is purchased, and then possibly only under certain circumstances.

Change of control clauses in contracts are pretty common, and don't just apply to CEO pay. In the case of a CEO, though, such a contract can serve two purposes.

1. It creates a disincentive to selling the company. ... If the board is going to allow it, they have to understand that there's going to
be a significant cost. Similarly, especially if there is a hostile takeover taking place, the purchasing company knows not only that they likely are going to have to foot the bill for the CEO's change of control clause, but probably also for the entire senior management team, and some of the less senior managers. ... It makes them more inclined to be nice after the purchase. (At least in theory.)

2. The CEO and senior managers probably have stock options that they lose if they leave the company before the shares are vested. In the case of TH, those shares might actually be worth considerably more than $55 million. (I haven't looked at any public records regarding his compensation, so I don't know.) So, when leaders accept positions that include stock options, or are with companies that considered somewhat risky, a change of control clause is like an insurance policy.

In this case, there's a chance that Prem Watsa likes Heins. If that's the case, and he keeps him as CEO for a certain length of time after the acquisition, then there's likely no cash payment.

Again, to be clear, I don't specialize in exec compensation, and I don't know anything about the specifics of this deal. ... Just saying that people are making quite a fuss about it and, taken in context, it may not be as big of a deal as it seems to us mere mortals who may struggle to pay our rent or mortgages each month.

CrackBerry Kevin Michaluk for CEO!!!!!!!!!

Originally Posted by Tim Heard

I'm not an expert on the subject, but I'm fairly sure that the change of control option only will kick in
if TH gets let go after Blackberry is purchased, and then possibly only under certain circumstances.

Change of control clauses in contracts are pretty common, and don't just apply to CEO pay. In the case of a CEO, though, such a contract can serve two purposes.

1. It creates a disincentive to selling the company. ... If the board is going to allow it, they have to understand that there's going to
be a significant cost. Similarly, especially if there is a hostile takeover taking place, the purchasing company knows not only that they likely are going to have to foot the bill for the CEO's change of control clause, but probably also for the entire senior management team, and some of the less senior managers. ... It makes them more inclined to be nice after the purchase. (At least in theory.)

2. The CEO and senior managers probably have stock options that they lose if they leave the company before the shares are vested. In the case of TH, those shares might actually be worth considerably more than $55 million. (I haven't looked at any public records regarding his compensation, so I don't know.) So, when leaders accept positions that include stock options, or are with companies that considered somewhat risky, a change of control clause is like an insurance policy.

In this case, there's a chance that Prem Watsa likes Heins. If that's the case, and he keeps him as CEO for a certain length of time after the acquisition, then there's likely no cash payment.

Again, to be clear, I don't specialize in exec compensation, and I don't know anything about the specifics of this deal. ... Just saying that people are making quite a fuss about it and, taken in context, it may not be as big of a deal as it seems to us mere mortals who may struggle to pay our rent or mortgages each month.

I bet that a buyout triggers a payout for Heins and the rest of the executive team automatically. It depends upon his contract, but that is what I've seen in the past. While it is a lot of money for us mere mortals, for whoever buys BB it will be a small amount to pay to get rid of some dead weight. When a train crashes you look at the guy driving the train.... he must have been BBMing when someone asked if he wanted to stop for Apps.

I'm almost positive I have read that it only kicks in if he gets fired by the new owners.
That makes sense, because if he doesn't get fired, he still has a chance to make a fortune from his unvested stock options.

Originally Posted by scalemaster34

I bet that a buyout triggers a payout for Heins and the rest of the executive team automatically. It depends upon his contract, but that is what I've seen in the past. While it is a lot of money for us mere mortals, for whoever buys BB it will be a small amount to pay to get rid of some dead weight. When a train crashes you look at the guy driving the train.... he must have been BBMing when someone asked if he wanted to stop for Apps.