Outgoing Charter Communications CEO Jerry Kent has a special "put" for his interests in the company that forced controlling shareholder Paul Allen to pay Kent even if the MSO's stock price dropped.
The hedge with multi-billionaire Allen, who is chairman of Charter, was undisclosed to shareholders even though both men are officers of Charter. Charter co-founders Howard Wood, who is also a director, and Barry Babcock had a similar arrangement. The company would not disclose terms of the arrangement, but acknowledged it is not detailed in any public securities filings because disclosure was not required.
Much of Kent's Charter stock options are under water, meaning the recent market prices have been less than the options' exercise price. But Kent also had an interest in Charter Investments, which had been the holding company that controlled Charter before Allen arrived in 1998. Allen bought out most of the other investors, but Kent rolled over much of his old Charter stake and let it ride with Allen.
Charter Investment now owns holds 67% the Microsoft co-founder's interests in the publicly-traded Charter Communications, but Allen only owns 97% of that. Kent was the presdient and CEO and held an undisclosed portion of the remainder.
A Wall Street executive, however, said that the deal guaranteed that Kent could essentially sell his Charter interests to Allen for the equivalent of $19 per share price plus 4% compounded annually, or about $21 per share today. The executive estimated that Kent could have collected $70 million from the arrangement, but added that details of the deal are sketchy. - John M. Higgins