Millions await Loral brass Schwartz and others due big bonuses if Lockheed takes over

January 16, 1996|By Ted Shelsby | Ted Shelsby,SUN STAFF

Bernard L. Schwartz stands to make a fortune if Bethesda-based Lockheed Martin Corp.'s proposed acquisition of Loral Corp. goes through. And Lockheed Martin will be paid handsomely if the deal is terminated.

Mr. Schwartz is the 70-year-old chairman and chief executive of Loral. Under terms of his employment contract, he is scheduled to receive an $18 million bonus if the company is sold, according to documents filed with the Securities and Exchange Commission.

James Fingeroth, an official of Kekst & Co., which represents Loral, said yesterday that bonus payments totaling $40 million to Loral executives and managers are part of a "change-of-control" agreement in their contact with the company.

Mr. Schwartz also stands to receive $140 million for the approximately 3.7 million shares of Loral stock that he owns.

Loral officials could not be reached for comment yesterday, but Mr. Schwartz told the Wall Street Journal that he had invested heavily in Loral over a long period.

"With this sales agreement, I was rewarded very handsomely for that," he said.

Lockheed Martin announced last week that it intends to acquire most of Loral for $9.1 billion.

If for some reason that agreement is terminated, Loral is obligated to pay a $175 million break-up fee to Lockheed Martin. It may also have to pay about $45 million in expenses related to the acquisition.

In 1994, Grumman Corp. paid Martin Marietta Corp. a $50 million break-up fee and $10 million in expenses after its agreement to be acquired by Martin fell through. That was before Martin Marietta's merger with Lockheed Corp.

Martin Marietta had reached an agreement to acquire Grumman for $1.9 billion. Several weeks later, Grumman reached agreement with Northrop Corp. to be purchased for $2.17 billion.

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