Williams Co. said yesterday its $37 per share offer for Houston-based nat gas pipeline and processing rival Southern Union is a much better offer than the $33 per share offer Energy Transfer Equity made for the firm last week.
But it looks like the top managers at Southern Union may have another reason for wanting to stick with the lower-priced offer.
According to SEC filings, SUG Chairman and CEO George Lindemann and COO Eric Herschmann will get consulting and non-compete agreements with Energy Transfer worth about $10 million per year each for five year.
The agreements (first noted by the most-excellent folks at Footnoted.org) say each man gets $3 million a year for five years, and only has to work at most 40 hours a week the first year, 30 hours the second year, and 20 hours each year after that.
Lindemann and Herschmann will each get a non-compete fee of $7 million per year for each of the five years.
But there’s more.
Other perks of the deal for Lindemann and Herschmann include:
- club memberships
- life-insurance policies
- medical and dental coverage
- use of the company jets
- the right to keep using company offices and parking spaces in New York City, Houston and Palm Beach, Fla.,
- unlimited use, “with full technical support, all at the expense of the Company,” of “personal computers, blackberry, and mobile telephones and electronic communications devices.”
In our story yesterday, Gordon Howald, an analyst with East Shore Partners in Hauppauge, N.Y., noted that the tax-free benefits of the Energy Transfer offer likely appealed to Lindemann because he owns about 6.2 percent of SUG’s shares. (Footnoted.org says Herschmann, his family and Lindemann combined own about 13.4 percent of all SUG shares).
“At first blush, Lindemann’s interests might not be the same as those of other shareholders,” Howald said, based on the tax benefits.
At second blush, it seems like Lindemann and Herschmann’s interests are no where near those of other SUG sharholders.