Motorola Mobility's Sanjay Jha may get $65.7-mn windfall in Google deal
15 September 2011
Motorola Mobility's CEO Dr Sanjay Jha could get a $65.7-million bonanza as a golden parachute payment if Internet giant Google is able to close its $12.5-billion cash takeover offer of the cell phone and video technology provider.
In the largest acquisition in the technology industry this year, last month Google had offered to buy Motorola Mobility for $12.5 billion in cash and offered to pay a whopping $2.5-billion if it decided to walk away from the deal. (See: Google to buy Motorola Mobility for $12.5 billion)
Under the deal that is expected to close by early next year, Jha would receive $13.2 million in cash and $52.4 million in equity related compensation, while Daniel Moloney, Motorola's president stands to take home $15.7 million, Motorola said in a filing with the US Securities and Exchange Commission.
The cash portion of Dr. Jha's compensation is equal to three times his base salary and bonus.
Dr. Jha, a 14-year Qualcomm veteran, was inducted into Motorola in August 2008 to run its ailing wireless-handset division as a prelude to the planned spin-off of the unit in mid-2009.
As part of the company's restructuring and cost cutting measures, Motorola co-CEOs Greg Brown and Dr Jha had decided to reduce their base salaries by 25 per cent in 2009.
In January 2011, when Motorola split itself into two separate business entities - Motorola Mobility and Motorola Solutions - the Motorola Mobility board gave Jha 1.8 per cent in stock options, which had a long-term holding period, but could be sold immediately if the company were to be acquired.
Billionaire investor Carl Icahn and his affiliates, who hold 33.5 million shares or 11.4 per cent in Motorola Mobility, also will make a neat pile of around $1.34 billion million at Google's offer price of $40 per share.
Icahn has long urged Motorola Mobility to explore alternatives, including selling its patents.
Although Motorola makes cell phones exclusively on Android operating system and is one of the largest manufacturers of set top boxes in the US, the Google deal is more about laying hands on Motorola Mobility's trove of over 14,000 granted patents on phone technology, nearly thrice the number of patents than Nortel Networks', that were recently acquired by a consortium of technology majors (See: Apple, Microsoft, Sony, RIM bag Nortel patents for $4.5 bn).
Motorola Mobility holds approximately 14,600 granted patents and 6,700 pending patent applications, worldwide, as of January 2011