First Fidelity chiefs in for big payday

September 09, 1995|By Timothy J. Mullaney | Timothy J. Mullaney,First Fidelity BancorpSun Staff Writer

Executives of First Fidelity Bancorp. stand to make up to $55 million on stock options if stockholders approve the Newark, N.J., bank's agreement to be acquired by First Union Corp., according to a proxy statement mailed to First Fidelity holders this week.

The money comes from $31.5 million in deferred compensation that 15 top executives have accrued since 1990, which can be paid only if the executives buy First Fidelity stock with the money, and an estimated $23.7 million the executives will make if they buy all the shares they are eligible to buy at below-market prices and sell them to First Union at the share swap terms the companies announced June 19.

The options are in addition to First Fidelity shares that bank executives already own.

The $55 million works out to about 1 percent of the price First Union will pay for First Fidelity, in a deal that will create a bank with about $125 billion in loans and other assets. The June 19 merger announcement followed First Fidelity's buyout of Baltimore Bancorp, parent of the old Bank of Baltimore, by less than a year.

"These are parts of their option incentive deals that go back a number of years, since they started being employed here," said First Fidelity spokesman Paul Levine, saying most of the bank's top executives arrived after chief executive Anthony Terracciano arrived in 1990 and cleaned house. "This is not stuff they simply got yesterday."

Mr. Levine said the executives were supposed to get the $31.5 million over several years, but the deals were all accelerated because after the merger there will not be any First Fidelity shares to buy.

The options are also more valuable than was expected when they negotiated their deals because, as in most mergers, First Union agreed to pay a premium price for First Fidelity.

Mr. Terracciano is set to receive the biggest share, more than $10 million, while two others will get $5.5 million each. Top executives other than Mr. Terracciano, who will become president of First Union and be paid at least $2 million annually, also stand to collect lucrative severance deals if First Union does not keep them after the merger.

"These agreements are in line with what is paid to executives in successful situations in this industry and other industries," Mr. Levine said.

A local analyst who follows First Fidelity was unruffled by the disclosure.

"It's a lot of money and shareholders never like to see these amounts of money leaving," said Alex. Brown Inc. bank analyst George A. Bicher. "But after you gnash your teeth you realize it's a few cents a share, and you look at the franchise."

Mr. Bicher said the bank could have "easily gone out of business" had Mr. Terracciano and others not turned the company around in the early 1990s. "They deserve a lot," he said. "I can't quantify it, but it's more than their salaries."

Shareholders at both First Union and First Fidelity are to vote on the plan Oct. 3.

If approved, it is expected to close by year-end.

WHO GETS WHAT

How much the top executives of First Fidelity Bancorp. stand to make on stock options when the bank is acquired by First Union Corp.

A.P. Terracciano ... $10,134,834

( Chairman, president, CEO

W. Schoellkopf ... 5,472,625

` Vice chairman, CFO

Peter C. Palmieri ... 5,472,625

.` Vice ch., chief credit officer

Leslie E. Goodman ... 5,154,000

# Senior executive VP

Roland K. Bullard II ... 5,091,927

# Senior executive VP

Donald C. Parcells ... 3,783,625

# Senior executive VP

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