Prem Watsa, owner of Fairfax Financial Holdings Inc played a role in securing a golden parachute around $55 million for the BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO Thorsten Heins, according to company filings.
Watsa was in compensation review panel
Watsa stepped on BlackBerry’s board in January 2012 and was one among the three directors who were given the responsibility to review the compensation of the Canadian company’s chief Thorsten Heins, says a report from Reuters.
In the review, Watsa with two other Board members, Chairwoman Barbara Stymiest and long-time board member John Wetmore, agreed upon increasing Heins’ basic salary and incentive bonus along with enhancing the equity awards that he was to receive in case of losing his job, if the company faces a takeover.
According to the new contract signed in May, the compensation that Heins will get if there is a change of control at BlackBerry was increased by three times to $55.6 million from $18.9 million previously, as per the securities filing on May 21.
The compensation amount $55.6 million is partly based upon BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) share prices in early March, and since then the stock has depleted in its value, which implies that the compensation amount of Heins will be less.
Experts question the role if Watsa
Many market watchers question the role of Watsa in deciding over the compensation package of Heinz after his company Fairfax financials led consortium is up for buying BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB).
Joe Sorrentino, managing director at executive pay advisors Steven Hall & Partners in New York said "(Watsa) was part of the committee that was negotiating this agreement. Did he anticipate that he would make some sort of offer to buy the company? I feel like that's unlikely, but it's impossible to know."
One of the spokesmen at Fairfax said that compensation of Heinz was examined by the whole board of BlackBerry. In August, Watsa stepped down from the board, fearing any possible conflicts of interest when BlackBerry decided to look into different strategic alternatives.
BlackBerry Spokeswoman did not comment on Prem Watsa’s involvement in compensation, and neither Heins himself commented on the issue. There was no comment From Tower Watson, a human resource consultancy firm, which assisted BlackBerry’s board on the compensation package.
Prior to BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB), companies like Nokia have decided upon 18.8 million euros compensation for Stephen Elop if shareholders agree to sell Nokia's handset business to Microsoft Corporation (NASDAQ:MSFT).