WASHINGTON -(Dow Jones)- Knight Ridder Inc. (KRI) Chairman and Chief Executive P. Anthony Ridder could be entitled to a $9.4-million cash severance payment once the company's planned merger with McClatchy Co. (MNI) closes.
According to a regulatory filing from McClatchy on Wednesday, the payment would be made if, during the three-year period following a change of control of the merged company, Ridder's employment is terminated by Knight Ridder without cause or by him for "good reason."
The severance equals three times the greater of the sum of the salary and cash bonus payable to the CEO for the last year or the sum of his annualized salary and the maximum cash bonus he could have earned for the current year.
For 2005, Ridder received a salary of $980,000, unchanged from 2004, and a bonus of $281,304, down from the $718,105 bonus he got for 2004.
Other Knight Ridder executive officers are also eligible to receive the payment, according to McClatchy's filing with the Securities and Exchange Commission.
Ridder and the other executives will also be entitled to continuation of their medical and life insurance for three years after their employment is terminated, McClatchy said.
The SEC filing also disclosed that, as of Monday, and assuming that the merger will close as anticipated on June 26, Ridder's 235,666 stock options, 20,420 restricted stock units and 8,650 performance units will vest upon the acquisition.
Ridder beneficially owns 1.1 million shares of Knight Ridder stock, including shares subject to options. At current prices, they are valued at about $69 million.
Under the merger agreement between the two newspaper-publishing companies, Knight Ridder shareholders will receive 0.5118 of a Class A share of McClatchy, plus $40, for each share of Knight Ridder.
Shares of McClatchy were trading recently at $45.96, down 75 cents from Tuesday's close, while Knight Ridder shares were trading at $62.60, down 29 cents.
-By Patricia Kowsmann, Dow Jones Newswires; 202-862-1350; patricia.kowsmann@dowjones.com
