Two top EnergySolutions’ executives, who during their seven months leading the nuclear services company have laid off hundreds of employees and in recent weeks enraged shareholders over a deal to take the company private, will get bonuses totaling $4.5 million.
President and CEO David Lockwood will receive a "retention award" of $3.3 million under a compensation plan approved by the Salt Lake City-based company’s board of directors on Jan. 9., two days after announcing a $3.75-a-share takeover offer by Energy Capital Partners II LLC. In addition, CFO Greg Wood will receive $1.2 million, while group presidents John Christian, Mark Morant and Alan Parker pocket $100,000 apiece once the merger is final, according to U.S. Securities and Exchange Commission documents.
Meanwhile, three law firms have filed suit on behalf of shareholders who accuse the company’s leaders of breaching their duty to look out for investors. In addition, at least eight law firms say they are investigating the deal with the same goal as the lawsuits: to leverage a better price for shareholders.
Suits such as these are not uncommon when a publicly traded company is taken private.
Company spokesman Mark Walker had no comment on the lawsuits. But he did confirm that the executive bonuses will supplement the salaries of the executives, who are expected to continue running EnergySolutions under its new arrangement as an ECP subsidiary.
Attempts to get shareholder reaction Thursday to the bonuses was unsuccessful, but investor Angela Luck says in papers filed Jan. 11 the $1.1 billion deal with New Jersey-based ECP should be stopped and that Utah’s 3rd District Court should OK a class-action lawsuit.
"The [named executives and board] disloyally placed their own interests first and tailored the terms and conditions of the proposed acquisition to meet their own personal needs," says the suit.
"The proposed acquisition is wrongful, unfair and harmful to EnergySolutions’ public stockholders and represents an effort by the individual defendants to aggrandize their own financial position and interests at the expense of and to the detriment of" investors.
The suit claims the deal’s structure — which includes a termination fee of up to $13.9 million for ECP if EnergySolutions accepts a competing bid — means there will be few, if any, additional offers before a Feb. 6 deadline. One provision also gives ECP the right to match a superior offer.
The biggest gripe of investors is that the company is worth much more than the $3.75-per-share price ECP has promised. Shareholders must approve the deal in a vote sometime after Feb. 6 for it to be final, and they could withhold their support in hopes of a sweeter offer.
When Lockwood and Wood took over EnergySolutions’ leadership in June, the stock price tumbled from $3.74 per share to $1.62 in a day. Last fall, as a move to help save the company $35 million, they announced layoffs of 265 employees worldwide, with up to 75 of those in Utah.
Also in November, they resolved claims the company intentionally misled investors in connection with its 2007 initial public offering of stock at around $21 in a $26 million settlement.
On another front, the company’s name will continue to be on the home of the Utah Jazz basketball team in downtown Salt Lake City. Nor are there any changes announced for the mile-square disposal site for low-level radioactive waste in Tooele County.
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