AT&T Comcast proxy protects executives

Feb 18, 2002  •  Post A Comment

Comcast Corp. and AT&T Corp. appear to be making sure it won’t be easy for an unwanted suitor to foil their proposed $72 billion deal before it closes later this year-and for years afterward.
In a 332-page shareholder proxy filed with the Securities and Exchange Commission last week, the companies outline provisions making it impossible to replace any of the combined companies’ board members and difficult to replace any of the new entity’s top management before 2005.
The requirements virtually ensure Michael Armstrong (current AT&T chairman) will remain chairman of AT&T Comcast and that Brian Roberts (current Comcast president) will become CEO of AT&T Comcast, with both holding those posts through 2005.
Mr. Roberts and his family, who have a 33 percent voting interest in the combined company, compared with an 87.5 percent voting stake in Comcast, would agree to refrain from selling the new company’s stock for 10 years, unless they received board approval to do so.
The proxy states that removal of either Mr. Armstrong or Mr. Roberts would require a vote by 75 percent of the full board, or nine out of the 12 board members. Mr. Roberts is ensured to succeed Mr. Armstrong as chairman. Also, none of the board members can be replaced before the 2005 annual meeting, and no individual or group can amass more than 10 percent of the new company’s stock without permission.
Although the companies conceded in the filing that such governance issues are atypical, the terms appear not to have been made in reaction to any particular threat.
The provisions, which are being criticized by corporate governance and shareholder rights watchdog groups, would make it more difficult for any company to take over the combined entity, since the composition of the new AT&T Comcast board could not be altered until 2005. Five members of the 12-member board will be appointed by Comcast from its existing board, five will be appointed by AT&T from its existing board, and two independent members will be jointly appointed. After 2005, the board will be elected annually.
Comcast and AT&T officials declined comment on the proxy. They will know later this month whether the Department of Justice intends to conduct a full-blown investigation into the proposed merger. A date for the shareholder vote has not yet been set.