Human Capital & Careers

Massachusetts Probing Gillette Payouts

Chairman and CEO James Kilts will earn more than $153 million if the deal goes through; state regulators have requested all documentation ''evidenc...
Stephen TaubFebruary 3, 2005

Two things are almost certain to follow a blockbuster merger or acquisition: Thousands of employees will lose their jobs, and top executives at the target company will receive hefty change-in-control payments.

Case in point: Proctor & Gamble Co.’s recently announced $57 billion acquisition of Gillette Co. According to The Wall Street Journal, Gillette chairman and chief executive officer James Kilts will earn more than $153 million if the deal goes through, including gains on his stock options and stock rights, an estimated $23.9 million payment from P&G, and a change-in control payment of $12.6 million.

The folks at the Massachusetts Securities Division are not amused, given that about 4,000 of the Boston-based company’s 29,000 workers are employed in that state. Commonwealth Secretary William Galvin’s office has fired off a letter to Gillette, asking for “copies of any records, minutes, reports or other documentation evidencing the approval of the Gillette board of directors” of the proposed merger agreement, according to MarketWatch.

Galvin’s office has requested the totals of direct and indirect compensation that would be paid to Kilts — as well as to vice chairman Edward DeGraan and chief financial officer Charles Cramb — if the deal is consummated, according to Reuters. The wire service added that Galvin wants a list of all Gillette officers, directors, and affiliated parties who were granted options as well as exercised options in the past six months. In addition, Galvin’s office has requested information on merger-related fees paid to the company’s financial adviser, Goldman Sachs/UBS, according to MarketWatch.

The Massachusetts official is also insisting on detailed information regarding the number of jobs that could be cut when the merger is completed. According to published reports, P&G expects to cut 6,000 jobs, or 4 percent of the combined company’s workforce of about 140,000.

Brian McNiff, a spokesman for Galvin’s office noted that Massachusetts law requires company officers to put shareholders’ fiduciary interest ahead of personal monetary gain, according to MarketWatch. The news service added that a written response, as well as the documents and information, is requested by February 11.