Boston Scientific Corp. (NYSE:BSX) still wants to make it expensive for a buyer to clean house following an acquisition — although in the future it won’t be quite as costly as it once was.
In mid-December, the Natick, Mass.-based device conglomerate revamped its executive retention agreements, triggered by a change in control of the company. The new contracts eliminate some of tax benefits the company previously paid for its executives if the firm is sold. It also somewhat modified the definition of “good cause” executives can cite prior to leaving Boston Scientific with exit compensation packages intact.
Like most companies of its size, senior managers at Boston Scientific would be well compensated if they are let go, or walk away, following its acquisition by another firm. Under terms of the revised agreements, they are now entitled to three times the sum of their regular salary, plus any performance or yearly cash bonuses they’re entitled to, along with an extra $25,000. All outstanding stock options and restricted stock awards also vest immediately.
Still, because the new terms could be considered less favorable for the affected executives than their previous pacts, the Boston Scientific board decided to offer them an one-time award of $15,000 in stock options as an enticement to sign the new retention agreements. The option grants were disclosed in securities filings this week and will vest in four equal annual installments starting Feb. 26, 2011.
To date, all but one of the company’s c-level officers — including CEO Raymond Elliott and Chief Financial Officer Sam Leno — along with seven of the 11 division heads on the Boston Scientific executive committee have signed the new retention agreements.
