In the four months since announcing the sale of Black & Decker Corp. to Connecticut-based rival The Stanley Works, executives have sought to prepare and reassure employees about the merger, sending out "Integration Updates" and hosting forums where questions could be posed to corporate leaders.
In the merger-speak they developed, the integration teams have been referring to Monday as "Day 1."
Monday will be first day of the combined company - to be called Stanley Black & Decker - and also the end of Towson-based Black & Decker as a stand-alone company after a 100-year history in toolmaking. It's a pivotal moment, put into motion by shareholder votes and the closing of the $4.5 billion deal on Friday.
Black & Decker, known for brands sold in 100 countries, will now be folded into the new company as a wholly owned subsidiary. In the place of the Maryland manufacturer that gave consumers the first portable electric drill will be a company that has headquarters in New Britain, Conn., with a new name and new management.
Moving forward, that means huge changes to the company's inner workings, including basic operations such as billing and shipping, as well as far-reaching restructuring that's expected to result in nearly 4,000 layoffs from a global work force of 38,000 and the shuttering of redundant operations. Many of the 250 corporate workers at Black & Decker's Towson headquarters are expected to be let go, though a time frame hasn't been set.
The merger should pay off handsomely for shareholders and for some executives, including Black & Decker's chief executive Nolan D. Archibald, who has been one of the longest-serving CEOs of a Fortune 500 company, with 24 years at the helm. His compensation over the next three years, including bonuses tied to achieving cost-cutting targets, could total $89 million. Other top executives stand to receive millions of dollars in severance and benefits.
Archibald, who declined to be interviewed for this article, recently spoke about the deal to employees gathered at Goucher College.
"I don't believe there is another company in the world who fits quite together like Stanley and Black & Decker," he said, according to a transcript provided in regulatory filings.
"There is no way to put a good face on what will happen to corporate. There can only be one corporate headquarters," he added. "However, for the vast majority of Black & Decker employees who will continue with the combined company, this will be very good for you. You will have the professional opportunities that result from being part of a much larger company."
So far, the merger of the tool titans has been well-received on Wall Street. The deal offered shareholders 1.275 shares of Stanley stock for each share of Black & Decker stock, representing a 22 percent premium. And since the deal was announced, Stanley stock has jumped 30 percent, while the value of Black & Decker has shot up nearly 60 percent.
But the deal also has come under regulatory scrutiny in the past week. The flap stemmed from Archibald's real estate partnership with board member M. Anthony Burns; they are co-owners of a luxury golf community in Utah. But that fact wasn't disclosed by Black & Decker until it fielded inquiries in recent days.
Some analysts questioned Burns' role in reviewing the Stanley deal and Archibald's pay package as an "independent" director on a three-person committee. And the New York Stock Exchange chided Black & Decker, saying it should have considered their partnership when deeming Burns independent.
The episode was part of a "pattern of sloppy corporate governance that translates ... into the answer to the question: 'Why is Black & Decker the selling and not the surviving company?' " said Douglas M. Schmidt, chief executive of financial services company Chessiecap Inc., who first reported the partnership on the Web site Citybizlist.
Archibald's compensation also has come under fire. As part of the merger, he negotiated for himself a hefty "cost synergy bonus" worth up to $45 million and tied to his role in cutting costs, which has drawn criticism from corporate governance and compensation experts. In addition, with salary and other pay, Archibald's total compensation over the next three years would total $89 million, according to Mark Reilly, a compensation expert based in Chicago.
"It's really high," Reilly said of Archibald's merger-related compensation. "It's sort of like being paid a $45 million bonus for meeting your expectations. You're getting paid for just doing your job, not even exceeding expectations. He's getting paid $45 million to lay off people. ... Forty-five million is really out there."
