BlackBerry CEO Thorsten Heins speaks during the company’s annual general meeting in Waterloo, Ont., Tuesday, July 9, 2013.Geoff Robins/The Canadian Press
BlackBerry Ltd.'s desire to boost CEO Thorsten Heins' compensation earlier this year with a $33.75 (U.S.) million stock award has another effect: It greatly increases his severance if the company is sold, a possible outcome of the strategic review BlackBerry announced last week.
Mr. Heins' severance, were the company to be sold at current market prices below $11 per share, would be roughly $53-million, the Globe and Mail calculates based on the company's securities filings.
Each additional dollar BlackBerry stock gains, however, adds about $5-million to Mr. Heins' package. A sale at $15 (Canadian) per share, nearly 50 per cent above current levels but below the company's high set in January, would bring Mr. Heins nearly $75-million in severance.
The numbers would be much smaller were it not for the BlackBerry board's decision this spring to give Mr. Heins a new contract with a major stock award. (BlackBerry spokesman Adam Emery declined to comment on the company's pay arrangements.)
In its annual proxy circular, BlackBerry says the little-noticed arrangement, disclosed in its annual management information circular, was driven by Mr. Heins' "outstanding leadership" in the fiscal year that concluded in March, including cost savings, maintaining the company's cash balance, and a profitable fourth quarter.
At the same time, the company's board believed Mr. Heins' total direct compensation was below the 25th percentile among tech-company peers, according to the circular.
Blackberry's solution was a significant boost to Mr. Heins' pay, including a 50 per cent increase in salary, to $1.5-million (Canadian), and an increased bonus opportunity. The key part of the package, however, was a bundle of restricted stock valued at $33.75-million (U.S.).
The stock is called "restricted" because Mr. Heins only takes full ownership, and the ability to sell it, over time. Two-thirds of the shares "vest," or are given to Mr. Heins, in July, 2016. The other one-third vest if BlackBerry hits a certain, undisclosed earnings-per-share target in 2016.
That changes, however, if the company is sold. If Mr. Heins' employment is terminated by a BlackBerry buyer within two years of a deal, all Mr. Heins' stock options and restricted shares vest immediately, and Mr. Heins can sell the shares.
In the absence of the recent stock award, Mr. Heins' severance would be about $17-million at today's prices, about two-thirds smaller, the Globe estimates.
BlackBerry's circular shows the board thinks Mr. Heins has excelled in his time in the CEO position, particularly fiscal 2013, during which the company's shares more than doubled.
Prior to his new employment agreement, the company granted Mr. Heins a $6-million stock award for his "outstanding" 2013 performance, as well as a $1.7-million cash bonus.
The company also awarded Mr. Heins an additional $3-million (Canadian) "special achievement bonus" for the criteria of maintaining the company's cash balances and "BlackBerry 10 launch success."
The company didn't include the bonus as part of the year's compensation total because, it says, the decision to award it was made after the close of the fiscal year. Including that in Mr. Heins' total, however, would bring his total compensation to just over $12-million (U.S.), up from $10.3-million in the prior year.
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David Milstead