Print
More News

If PPD Sale Falls Through, Breakup Would Be Costly

By Jenny Callison, posted Oct 19, 2011

They say that breaking up is hard to do, and that may be the case should PPD’s current agreement to be purchased by two private equity firms founders.

The preliminary notice and proxy statement filed by PPD on October 14 with the Securities and Exchange Commission outlines the penalties each party would pay.

If a superior offer were to emerge for the acquisition of the Wilmington-based contract research organization, or should the shareholders not approve the $3.8 billion deal PPD reached to sell the company to private equity firms The Carlyle Group and Hellman & Friedman, PPD would likely have to pay a termination fee to the buyers of either 1.5 percent or 3 percent of the purchase price, depending on the conditions of the termination.

A change of heart on the part of the prospective buyers would be even pricier. Should Carlyle and H&F decide to back out of the agreement, the specified “reverse termination fee” would be roughly $252 million, or about 6.5 percent of the purchase price.

The statement also specifies the terms of a severance or “golden parachute” settlement payable to PPD’s six executive officers should they lose their jobs as a result of the merger. That list includes the company’s new CEO Raymond Hill and former CEO David Grange, who has a consulting contract with the company through the remainder of 2011.

The other four executives listed in the golden parachute provision are Fred Eshelman, PPD’s founder and executive chairman; William J. Sharbaugh, chief operations officer; Daniel G. Darazsdi, chief financial officer; and Christine A. Dingivan, executive vice president and chief medical officer.

If the owners of the newly-private PPD should decide to break up with any of the executives within a year after consummation of the merger, the individual would be entitled to a parachute settlement that combines cash (two or three times the person’s annual salary), equity (stock and stock options), and two years’ worth of health care and insurance coverage. The terms of the merger exempt Hill from stock equity, and limit Grange’s parachute to the value of his stock and stock options plus the entire amount owed him for his consulting services this year.

The total values of these six packages range from $6,718,345 for Eshelman to $2,379,290 for Dingivan.

All six would be paid the value of their stock holdings when the merger is complete, regardless. If Grange serves out his consulting contract, he will be paid everything in his severance package. But the cash and benefit portions of the other severance packages would be paid only upon termination of the executive.

Because of the Dodd-Frank Act of 2011, company shareholders must vote on proposed golden parachutes, although the PPD filing indicates that their shareholders’ vote is “advisory and non-binding.”

Ico insights

INSIGHTS

SPONSORS' CONTENT
Burrus rob headshot 300x300

Spreading Wings for Flight: 2nd Annual Trade Show Highlights the Ingenuity of UNCW Business Students

Robert Burrus - Cameron School of Business - UNC-Wilmington
Tommytaylor ceo unitedway

How Philanthropy Fits Into Your Financial Plan

Tommy Taylor - United Way
Chris 16239425

‘Creative,’ An Adjective To Describe Your Accountant?!

Chris Capone - Capone & Associates

Trending News

Conservation Group Signs $8M Deal To Buy The Point On Topsail Island

Audrey Elsberry - Mar 26, 2024

Rezoning Could Bring 123 Townhomes To Growing Leland Corridor

Emma Dill - Mar 25, 2024

N.C. Ports Officials React To Baltimore Bridge Collapse

Audrey Elsberry - Mar 26, 2024

Engineering Firm Hires Four Employees

Staff Reports - Mar 26, 2024

National Organization Bestows Top Award On Cape Fear Professional Women In Building

Staff Reports - Mar 26, 2024

In The Current Issue

Q&A: Andrews Reflects On Leadership

Pender County Manager David Andrews is slated to retire this summer after 33 years in local government....


INFO JUNKIE: Jack Fleming

Jack Fleming, owner of Socialry Marketing & Scourz and emcee for 1 Million Cups Wilmington, shares his media and tech picks....


Berries, A Battlefield And More In Pender

The N.C. Blueberry Festival, founded in 2003, is one of several events in Pender County that have drawn more attention over the years....

Book On Business

The 2024 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2023 Power Breakfast: Major Developments