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Hutton Officers May Get Big Bonuses in Merger

December 22, 1987|Associated Press

NEW YORK — Five top officers from E. F. Hutton Group are entitled to hefty bonuses and other "golden parachute" benefits after the company merges with Shearson Lehman Bros. Holdings, documents filed with the Securities and Exchange Commission show.

The disclosed arrangements, filed Dec. 7 with the SEC, come amid announcements that more than 5,000 Hutton employees are expected to lose their jobs as a result of the planned Shearson acquisition.

Hutton agreed earlier this month to merge with Shearson in a $960-million deal that will lift the surviving company to the forefront of the securities industry. Hutton had sought a buyer because of worries about its inability to remain competitive in the uncertain financial and economic environment after the Oct. 19 stock market crash.

Salaries and bonuses for the five executives range from $500,000 to $1.7 million a year, in addition to other guarantees such as payment of resulting excise taxes, retirement benefits and guaranteed third-party loans, according to the filing. Shearson has also agreed in principle to buy 180,000 shares of Hutton stock, much of which is held by the five officers and two unnamed individuals, for $29.25 per share, or $5.26 million, the filing said.

The compensation package to the five officers, all executive vice presidents, expires in two years and would be granted regardless of whether they are kept on by Shearson, according to the filing.

"If there were contracts that were signed, I'm sure they'll be honored," Michael O'Neill, a spokesman for Shearson Lehman Bros., said Monday.

In a golden parachute pact, top executives are provided with lucrative severance benefits in the event that control of the firm changes hands and shifts in management occur.

Covered by the contract, according to the SEC filing, are Kendrick R. Wilson III, Jerry C. Welsh, Melvin B. Taub, Steven J. Friedman and Edward J. Lill, chief financial officer.

Robert P. Rittereiser, Hutton's chief executive and president, is also negotiating for a compensation package that would provide "substantial benefits" should he be terminated, the filing said.

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