Broadcom’s Golden Parachute For Top 5 VMware Execs May Total $169.4M
Broadcom says no decisions have yet been made about VMware’s future leadership, ‘It is too early for anyone to be speaking about post-closing arrangements between Broadcom and any VMware personnel, and speculation about those future plans would be without any basis in fact.’
Editor’s note: CRN previously published a version of this story that miscalculated the total amount of payouts to VMware executives. The total payouts could amount to $169.4 million.
Broadcom is promising the top five VMware executives each a share of a possible $169.4 million should they depart between now and when the the semi-conductor giant completes its pending deal with the virtualization all-star.
Broadcom’s filing — which was recorded in July, then amended on Aug. 26, and Sept. 16. — also disclosed that none of VMware’s top five executives have yet negotiated to remain with Broadcom post-close.
“As of the date of this proxy statement/prospectus, no new individualized compensation arrangements between VMware’s executive officers and Broadcom or Broadcom Merger Subs have been established,” states under the section Interests of VMware’s Directors and Executive Officers in the Transactions.
When CRN asked Broadcom about this, the company provided a statement saying its “too early” to discuss leadership should the merger happen.
“We remain focused on completing the acquisition of VMware, which we still expect to occur in Broadcom’s fiscal year 2023. We continue to make progress with our various regulatory filings around the world, with that work moving ahead as expected,” the company said. “At this time, it is too early for anyone to be speaking about post-closing arrangements between Broadcom and any VMware personnel, and speculation about those future plans would be without any basis in fact.”
VMware President Sumit Dwahan told CRN in August that he and VMware CEO Raghu Raghuram could not say whether they would remain at VMware post-close.
“It’d be wrong for me or Raghu, to say, ‘We will be the ones running, running the business.’ Really we serve the shareholders, stockholders and, in this case, it will be the decision that to some extent, during this post-close planning on the leadership structure for and that that will emerge through the discussion,” he told CRN. “Everything that is being built is built in a way so that this continues regardless of how and who is leading it. Hopefully, that doesn’t become a deterrent for not pursuing the vision. Having said that, this is not to say we aren’t going to be there, I’m just saying that’s where we are in terms of post-close discussions with Hock at this point.”
Several hurdles remain to completing the $61 billion merger, including reviews with regulatory officials in both the U.S. and the EU. Broadcom’s checkered past with regards to competitive conduct in those geographies has been well documented, however neither regulatory body has so far said it will carry out a more stringent “Phase 2” look at the acquisition, which could extend the timeframe by months.
Regarding the massive compensation package Broadcom is offering to departing VMware executives, Broadcom says the numbers in the filing “are estimates based on multiple assumptions that may or may not actually occur.”
Cash, severance packages tied to their top salaries as well as multiple forms of securities compensation are on the table, as outlined in a section of the S-4 titled “Golden Parachute Compensation.”
“As a result, the amount, if any, that a named executive officer actually receives in the transactions may materially differ from the amounts set forth in the table,” the company states in its filing.
Here is how much Broadcom estimates it could pay VMware’s top executives if they leave the company: