Kirk Kerkorian isn’t the only one profiting from the sale of MGM. Top execs at the Lion will pocket multimillion-dollar severance packages, the company revealed in its annual report Monday.
CEO and chairman Alex Yemenidjian is being offered a lump sum payment of $6.25 million, while chief operating officer Chris McGurk will get $5.75 million.
They are expected to leave MGM once its $4.8 billion acquisition by Sony and its consortium of investors closes. But the execs each have contracts that end April 30, 2007, meaning they’ll have around two years remaining in their deals, assuming the purchase closes this spring as expected.
Buyouts are a little less than double the amount execs earned in 2004. Yemenidjian made a total of $3.63 million in 2004, while McGurk took home $3.34 million.
Both execs’ salaries stayed roughly flat from 2004 at $2.5 million for Yemenidjian and $2.3 million for McGurk.
However, the CEO’s $1.25 million bonus and COO’s $1.04 million bonus were down by several hundred thousand dollars each.
Bonus structure is based on MGM’s financial performance, particularly its internally defined targets for free cash flow. Lion generated $192 million in free cash flow in 2003, exceeding its goal, while the $141 million it generated in 2004 was about on-target.
Other top execs at MGM are getting healthy packages as part of the acquisition as well. Senior exec VP William Jones will get $1.79 million and general counsel Jay Rakow is skedded to receive $1.93 million.
Chief financial officer Daniel Taylor will be offered a buyout of $2.5 million for his contract, which ends in June of 2006. But Taylor was recently tapped to become the new prexy of MGM once the acquisition closes, meaning he is likely working out a new contract with Sony, Comcast and the private equity funds who will be his new bosses.
All MGM employees who will lose their jobs as part of the acquisition and have employment contracts — expected to be more than 1,000 of the Lion’s 1,400 employees — will receive a buyout for remaining time in their deals.