D&E sale to open CEO's 'parachute' worth nearly $1M

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May 13, 2009 (Lancaster New Era - McClatchy-Tribune Information Services via COMTEX) -- DECC | Quote | Chart | News | PowerRating -- With new ownership coming to D&E Communications later this year, D&E's top executive anticipates leaving.

But James W. Morozzi will land on his feet, due to a "golden parachute" that will pay him an estimated $956,000.

Morozzi, D&E's president and chief executive officer, unveiled his likely departure Monday.

"It's not expected that I will be involved in the organization going forward," he said during a press conference to discuss D&E's purchase by Windstream Corp.

Morozzi figures he'll be terminated once the sale is consummated simply because a merged company only needs a single CEO -- and Windstream already has one, of course.

"That's the reality of a merger," said D&E spokesman David J. Moore.

"Golden parachutes" are common practice among companies. The big, extra payments go to executives who are let go after a takeover, also known as "a change of control."

The rationale, as described by D&E in its proxy statement, is "to eliminate, or at least reduce, any reluctance of senior management to pursue potential change of control transactions that may be in the best interests of shareholders" in order to save their own jobs.

Five D&E executives, including Morozzi, are eligible for "change of control" payments if they're terminated after a takeover, the proxy statement shows.

The others are chief financial officer Thomas E. Morell, senior vice president of operations Albert H. Kramer, vice president of engineering operations Stuart L. Kirkwood and vice president of regulatory Leonard J. Beurer.

Morozzi could receive one of six kinds of "change of control" payments, depending on a host of circumstances, the D&E proxy states.

The biggest of the possible payouts, $956,000, will come if he's terminated without cause (meaning he didn't do anything wrong to deserve being dismissed) within 12 months of the sale taking effect.

The biggest possible payouts for the others, should they be terminated without cause after the Windstream deal taking effect, are Morell, $540,000; Kramer, $345,000; Kirkwood, $182,000; and Beurer, $166,000.

(All amounts are estimates, based on D&E's stock price and the executive's compensation as of Dec. 31.)

Morozzi, 46, has led D&E since joining the Ephrata-based telecom in 2005 from Exelon Communications, which he had served as president for three years.

Morozzi earned $514,000 in salary, stock, stock options and other compensation in 2008, according to D&E's proxy statement.

Windstream, a telecom giant based in Little Rock, Ark., anticipates completing its purchase of D&E in the second half of 2009. The deal is subject to the approval of D&E shareholders.

In his press conference,

Morozzi acknowledged that the deal "most likely" would lead to cuts in the D&E work force to eliminate positions already filled by Windstream, such as his.

He also said the D&E name might be scuttled, noting that Windstream operates under its name in its other markets, making for more efficient marketing efforts.

Details about staffing, facilities and the D&E name will be resolved by a transition team, comprising Windstream and D&E officials, who will devise a plan to integrate D&E into Windstream.

That plan should be ready by mid to late summer, said Morozzi.

Morozzi foresaw the acquisition having no impact on D&E's customer-service levels. He said Windstream does "a very nice job of servicing their customers. They understand its importance."

Likewise, Morozzi said he "would not expect any changes" to D&E rates, noting that some rates are regulated by the state or federal government, while others are constrained by competition.

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