MCI Inc. president and chief executive Michael D. Capellas could stand to make at least $9 million after taxes if yesterday's announced merger between MCI and Verizon Communications Inc. results in his departure, according to company filings at the Securities and Exchange Commission.
In 2002, the high-tech turnaround artist took the top job at what was then WorldCom Inc. and last year brought it out of bankruptcy protection. It marked the second time he had taken over a bad situation and stabilized it enough to make it look tasty. And, in the process, profited nicely.
MCI chief executive Michael D. Capellas arrives at Verizon's New York headquarters.
(Rick Maiman -- Bloomberg News)
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_____Multimedia_____
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Video Verizon Communications Inc. has agreed to acquire MCI Corp. for more than $6.7 billion in a deal represents the third big telephone industry merger in two months.
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_____Telecom Deals_____ The Verizon-MCI deal announced on Feb. 14 is the third major telecom merger unveiled since December.
• On Jan. 31, the Texas-based Baby Bell SBC Communications announced its acquisition of AT&T for $16 billion.
• In December, two leading wireless phone services -- Nextel and Sprint -- announced that they would merge in a $35 billion deal. | | |
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As chief of Compaq Computer Corp., Capellas three years ago helped forge the mega-merger with Hewlett-Packard Co. that briefly created the world's largest PC maker. When he left HP in 2002, his severance agreement paid him $14.4 million, plus a $1.9 million incentive payment and $9.6 million to cover his taxes on the payments. When he took over MCI, he received a $2 million signing bonus, and he was paid $3 million in salary and bonuses there in 2003. Under his employment agreement, his most recent salary and bonus would be tripled if he were to receive a severance package after a merger. He also got stock worth $12 million after MCI emerged from bankruptcy protection.
If he leaves the combined Verizon and MCI, Capellas would be considered a top candidate to replace Carly Fiorina, forced out last week as HP's chief executive. Yesterday, after the proposed Verizon-MCI deal was announced, Capellas refused to say whether he would return to HP, which some analysts call an idling giant.
"I have lived a life of no shortage of speculation" about the future, he said. His focus now, he said, is on combining the companies, but he would not say if he planned to remain through its completion. He added that no MCI executives, including himself, have been offered retention packages, as the two boards have yet to craft them.
It was mid-1999 when he took the reins at Compaq after spending his career in the computer and software industries. Known more for its aggressive sales strategy than technological innovation, Compaq was the world's leading personal-computer seller. At one point, it sold computers for less than $1,000 each.
But the company was coming off troubles: After slumping sales and strategic missteps, chief executive Eckhard Pfeiffer was forced out in April 1999 and several top executives followed. The company was so troubled, Capellas -- then chief operating officer -- was hired only after a three-month outside search failed to turn up any candidates.
The turmoil continued. Like other technology companies, Compaq was hammered by the PC sales slowdown and technology crash of 2000. By then, Compaq's sales had been eclipsed by Dell Computer Corp. By 2001, Compaq was forced to lay off more than 7,000 employees.
In 2000 and 2001, Capellas was paid more than $8.6 million in salary and bonus.
The company was on track to meet its 2001 revenue expectations but was crippled by the Sept. 11 terrorist attacks, which at the time Capellas said cost the company $700 million in sales.
