H.J. Heinz Co. shareholders still have time to voice their disapproval of golden parachutes that will bestow millions of dollars on company executives, even if those executives keep their jobs past the $28 billion sale of the Pittsburgh food giant.
One shareholder advisory firm is suggesting investors do just that in the votes scheduled to be tallied at a special shareholder meeting in New York on Tuesday, although two other shareholder firms are siding with the company.
If investors accept the offer of $72.50 per share from 3G Capital and Berkshire Hathaway -- a premium over the $60.48 that shares closed at just before the acquisition was announced in February -- Heinz will only need a few more approvals from international regulatory bodies to execute the deal.
"Given this transaction represents a 19 percent premium to Heinz's all-time high share price, we expect shareholders to overwhelmingly approve the acquisition," said Michael Mullen, senior vice president of corporate and government affairs, in response to a query Friday.
Institutional Shareholder Services Inc., in a report issued earlier this month, recommended Heinz shareholders vote no on a plan that it felt offered "excessive" golden parachute payments.
In particular, the Rockville, Md.-based group questioned the $56 million package awarded to Heinz chairman, president and CEO Bill Johnson, a number that ISS complained was inflated by stock awards meant to vest over a number of years but pushed forward by the planned sale.
ISS said Mr. Johnson's golden parachute was valued at approximately $35 million when Heinz disclosed executive compensation in advance of its regular shareholder meeting in August.
Stock awards included in that estimate were based on Heinz's stock price at the time. The $72.50 per share Berkshire and 3G will pay increases the value of those awards.
Also, Mr. Johnson was awarded nearly $450,000 in additional stock options in August, which ISS said will add $7.5 million.
ISS also had a problem with giving Mr. Johnson and other executives pension credits for years they will not work. Mr. Johnson will get an extra three years of credit, which ISS stated "seems gratuitous" given that the CEO's pension was valued last summer at $43.9 million.
Heinz shareholders received a recommendation from ISS last year to reject the company's executive compensation plan, but they approved that by a big margin.
The shareholder vote on the golden parachute payments is required by Dodd-Frank, the securities reform legislation enacted after the 2008 financial crisis. But results of the vote, like the annual shareholder votes on compensation, are nonbinding.
Glass Lewis & Co., another shareholder advisory firm, expressed concerns about the golden parachute payments, questioning why some of the awards are needed when the executives were already eligible for large payouts.
Still, the San Francisco-based firm is recommending shareholders OK the plan because the payments represent a small percentage of the overall premium being paid to Heinz investors.
Egan-Jones, in Haverford, Pa., also backed the company's proposal. Its assessment said, "We believe that, overall, the company's golden parachute compensation is appropriate and in the interest of shareholders in the context of the proposed merger."