Clearwire Execs and Directors to Cash In On Merger

With minutes to spare before the filing deadline Tuesday evening, Clearwire (UNKNOWN: CLWR.DL  ) filed a rash of Statement of Changes in Beneficial Ownership documents with the Securities and Exchange Commission.

All told, 18 Form 4s were filed, each indicating a Clearwire award of restricted stock units, or RSUs, to 12 of the 13 members of the company's board of directors, and to seven of its executives, including its CEO, Erik Prusch (also a board member), and its CFO, Hope Cochran.

The RSUs were granted on March 1. For the executives, they will begin vesting on March 1, 2014 over a period of four years. For the directors, except for CEO Prusch, the RSUs will become vested on March 1, 2014.

Of particular interest in the filings for the executives is footnote No. 2, which states: "In the event that the Company's pending merger with Sprint closes, at the effective time of the merger, these RSUs will be converted into a right to receive a cash payment upon vesting equal to the product of the merger consideration."

That footnote refers to the proposed merger with Sprint Nextel (NYSE: S  ) and the $2.97 a share that Clearwire's board voted to accept for giving full control of the company to Sprint.

Given the number of RSUs awarded, for which the recipients paid $0.00, the paydays could range from "quite a bit" for the executives, to "not too bad" for the directors.

Here's the breakdown:

Recipient

Title

RSU Award

Erik Prusch

CEO/Director

2,332,630 

Hope Cochran

CFO

598,271 

John Saw

SVP/CTO

683,464 

Don Stroberg

SVP Wholesale and Strategic Partnerships

416,022 

Broady Hodder

SVP/General Counsel

399,774 

Steve Ednie

Chief Accounting Officer

241,094 

Dow Draper

SVP/GM of Retail

466,527 

John Stanton

Executive Chairman of the Board of Directors

63,974 

Jennifer Vogel

Director

53,873 

Theodore Schell

Director

53,873 

Kathleen Rae

Director

53,873 

Brian McAndrews

Director

53,873 

Dennis Hersch

Director

53,873 

Hossein Eslambolchi

Director

53,873 

Jose Collazo

Director

53,873 

Mufit Cinali

Director

53,873 

Bruce Chatterley

Director

53,873 

William Blessing

Director

53,873 

The only director not included in the Tuesday filings is Slade Gorton, the former U.S. senator from Washington state.

Whether or not the Sprint deal does close, the above-named will still get their RSUs. They just won't be able to convert them to a lump sum cash payout for the directors, or have them converted into what Clearwire calls a "Restricted Cash Account" for the executives.

However, there is always the possibility of the merger not consummating. DISH Network (NASDAQ: DISH  ) put up one hurdle in the form of a counteroffer to Sprint's, one that would pay $3.30 a share for the company.

Another obstacle is dissatisfaction with the merger deal from some major Clearwire stockholders. Mount Kellett Capital Management, holder of a 7.3% share of Clearwire shares, and Crest Financial, with 8.3%, have already complained to the Federal Communications Commission about the proposal.

Crest also filed a lawsuit (link opens PDF) against Clearwire, Clearwire's board of directors, and Sprint, to stop the deal. It accused Sprint, which already had a controlling interest in Clearwire, of not allowing Clearwire to engage in a fair process of selling "either Clearwire or its assets for the benefit of all Clearwire stockholders."  Instead, Sprint "launched a scheme to deliver unilateral control of Clearwire and its spectrum assets" to Sprint's buyer SoftBank "on the cheap, while extracting maximum benefit for itself."

But whether or not Clearwire's stockholders manage to thwart the takeover, even DISH's notoriously tenacious chairman, Charlie Ergen, admitted that his company taking control of Clearwire was not likely to happen. "The deck is stacked against us," he told a group gathered at an AllThingsD conference last month.

That could mean some big payouts are coming up for Clearwire's executives and directors, something they could not have envisioned a year ago when the company threatened to default on a $237 million interest payment on its $4 billion in debt.

But that was another Clearwire era.

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Read/Post Comments (4) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 06, 2013, at 7:40 PM, ddeleo wrote:

    I feel sick!

  • Report this Comment On March 07, 2013, at 1:44 PM, nivegulu wrote:

    This simply proves "breach of fiduciary duty" towards the minority retail / institutionals beyond a reasonable doubt. A relevant judge and/or the FCC need to step in and fix a "fair" reserve price on the spectrum value (~$8 pps - based upon tons of recent technical articles alluded to by experts on the Yahoo MB, and other net based reports). This mega fraud needs to be stopped in it's tracks before it becomes the next "taking of spectrum 1..2..$3" daylight robbery.

  • Report this Comment On March 07, 2013, at 4:40 PM, spokanimal wrote:

    Clearwire's board has now violated it's fiduciary duty to it's shareholders in 2 substantial ways over the past 10 days.

    This report on restricted stock is obviously one of them. Any such issuance that does not result in financial indifference on the part of major company officers and insiders toward the future of this company is clearly grounds for them to all be recused from any further consideration or recommendations regarding buyout offers for this company.

    Furthermore, Clearwire's decision to accept the roughly $80 million in financing from sprint likewise violates their fiduciary duty to Clearwire shareholders. The reason is because the notes issued to Sprint enables sprint to convert those notes to clearwire shares at less than half the current market price of clearwire and less than half the value of dish's bid for the company.

    Because that financing was struck with sprint at the same time that clearwire was considering the dish bid... and because the financing directly impairs the feasibility of the dish bid... the company has obviously undermined the dish bid even before it has rendered an opinion as to the degree to which the dish bid is superior to the sprint bid.

    I've seen a lot of mergers and buyouts over the decades, but precious few that illustrated such a blatant disregard for a board's fiduciary duty to it's shareholders to act in behalf of their best interests.

    Spokanimal

  • Report this Comment On March 10, 2013, at 12:56 PM, nivegulu wrote:

    The whole world needs to read Indano's comments / technical analysis if they want to know / realize the true value of Clear's spectrum. Indano is an absolute genius who has exposed S/clwr-BOD/son's fraud in logical and scientific terms. http://finance.yahoo.com/mb/CLWR/?desktop_view_default=true#...

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