Risk & Compliance

MONY Maneuvers to Preserve Axa Deal

Certain senior managers agree to reduce their merger-related compensation so the firm can pay an additional dividend.
Stephen TaubFebruary 24, 2004

The MONY Group Inc. has taken a number of steps to counter shareholder opposition to its planned $1.5 billion sale to French insurance company Axa SA.

The firm stated that it plans to pay an additional dividend of 10 cents per share — above and beyond the 23 to 25 cents that MONY promised to pay before the deal goes through — in addition to the $31 per share that Axa plans to pay.

To enable MONY to declare the additional dividend, certain members of its senior management team have agreed to reduce the compensation they will receive as a result of the merger. The reductions equal approximately $7.4 million ($4.8 million after tax). Last week, after a Delaware judge concluded that MONY should make additional disclosures regarding $90 million in “golden parachute” agreements, the company delayed a vote on the deal, according to the Associated Press.

The expected date for a special meeting to vote on the merger is now May 18, and MONY has pushed back the record date to determine which shareholders can vote from January 2 to April 8. The delay in the record date will significantly change which shareholders are eligible to vote, according to Bloomberg, since more than a quarter of the company’s shares have changed hands in the last week.

MONY also removed a potential trigger that would have enabled Axa to walk away from the deal.

It raised the threshold for the percentage of shareholders who can require that the shares be appraised to 15 percent, from 10 percent. Currently, 13.7 percent of the shares are held by investors who oppose the deal and are seeking appraisal of the shares.

In addition, if the 15 percent threshold is surpassed, the amended agreement provides that Axa must decide either to exercise its rights under the appraisal condition within five business days after all other merger conditions are satisfied, or to promptly close the transaction. If Axa does not elect to close the transaction, the merger agreement will terminate automatically.