Departing Vonage CEO May Get $1.2M

According to his employment agreement, disclosed in Vonage Holdings Corp. (NYSE: VG)'s original S-1 filing last year, Michael Snyder could get a severance package worth up to $1.2 million for walking away from his CEO post at the company. (See Vonage CEO Leaves; Job Cuts Begin.)

Vonage's S-1 outlines that Snyder receives an annual salary of $500,000 and was granted the option to acquire 2,500,000 shares of common stock at the time of his appointment to CEO on February 27, 2006. He also is eligible for an annual discretionary performance-based bonus. Snyder's base salary has since been raised to $550,000, and he received a cash bonus of $302,000 in 2006, Vonage's financial filings reveal.

According to Vonage's filings, Snyder was due for a payday of "two times his base salary" plus a prorated bonus if he were terminated "without cause" or he resigned "with good reason". However he leaves, Snyder's payday is contingent upon his releasing Vonage of all claims -- meaning, roughly, he agrees not to sue the company for any reason.

Add it all up and Snyder appears to be in line for at least the $1.1 million (two times base salary) plus approximately one third of his last bonus, which would come to around $100,000. This assumes Snyder was not fired with cause, in which case he would get nothing. Vonage spokeswoman Brooke Schulz would only say the parting was "an amicable, mutual decision between he [sic] and the board."

Snyder isn't the first executive to step away from Vonage since its legal troubles began. Betsy Atkins, a member of the board of directors, resigned two weeks ago as well. Vonage has a few high-profile figures on its board, including former Director of Homeland Security Tom Ridge.

Vonage now has the task of finding a new CEO while going through the appeals process of its patent dispute with Verizon Communications Inc. (NYSE: VZ). According to the current Light Reading poll, 68 percent of readers believe Vonage will eventually lose this appeal, and about half say it won't be in business a year from now. (See Vonage Injunction.)

— Raymond McConville, Reporter, Light Reading