Agere Fat Cat Boards MegaSense
The news is interesting on several fronts. MegaSense has clearly scored a coup. A distinguished technologist, Dan DiLeo retired March 31 at age 55 after 32 years at Agere, Lucent Technologies Inc. (NYSE: LU), and AT&T Microelectronics.
DiLeo says that MegaSense was the only startup that caught his attention among dozens of small companies that courted him before he left Agere.
”This company really gets it,” he says. He plans to spend "several days a month" meeting with MegaSense execs to help them define their agenda.
There's also this: DiLeo enjoys a plush severance package with Agere, and he signed a non-compete agreement in order to collect the dough. He was one of several top Agere executives who were offered rich remuneration to stay on at Agere through the ups and downs of its separation from Lucent. Agere's board agreed that if he stayed through March 2002 (instead of retiring in 2001), he would be entitled to receive two years at full salary, plus ongoing participation and vesting in the company's stock plan. Then his retirement package kicks in.
Is DiLeo's involvement a problem for Agere? "No, he is in full compliance with his severance package," an Agere spokesperson says. Maybe Agere doesn't plan to make any MEMS-based VOAs.
Indeeed, maybe DiLeo is just doing something to keep himself occupied -- it's not like he needs the money. In 2001, his annual salary was $440,000 and he owned options on 1,178,284 shares of Agere stock, which have the potential to turn into Agere common shares when the company separates from Lucent in June (see Lucent Sets Agere IPO Date and Lucent Reports Q2, Spins Agere). Now that he's retired, DiLeo's special severance also gets him "an additional $16,042 per month until April 1, 2004, and up to $10,000 to furnish and equip a home office," according to Agere's proxy statement.
While that home office should benefit MegaSense, DiLeo's Agere contacts won't. Agere has a commitment from DiLeo that "until April 1, 2004, he will not compete with the company and will not solicit or employ any person who was an Agere employee in November 2001."
MegaSense captured industry attention earlier this year by claiming to have a component with a potentially disruptive pricing model. It says its variable optical attenuator (VOA), based on MEMS (micro-electro-mechanical system) technology, achieves a record low price of “$100 in volume,” because it’s designed for mass manufacturing processes.
DiLeo says he likes MegaSense's approaching to integrating components. “MegaSense has a systems approach,” he says. Some startups have tackled component design without considering all the elements involved, he asserts. In the end, they've wound up with parts that are difficult to test or expensive in the final assembly phase.
DiLeo isn't the only big name on MegaSense's board, which also boasts Gordon Stitt, founder and CEO of Extreme Networks Inc. (Nasdaq: EXTR).
MegaSense says samples of its VOA are in the hands of about 25 customers now, and production shipment is set for June, following certification by Telcordia Technologies Inc.
DiLeo wasn't the only executive richly repaid for sticking it out at Agere. Other execs have gotten sizeable deals as well, even in a year when Agere cut 38 percent of its staff (see Agere Announces More Layoffs and Agere's Musical Chairs). Mark T. Greenquist, executive VP and CFO of Agere, hired in 2001, was promised a $680,000 payout if Agere didn't separate from Lucent by March 1, 2002. Agere's proxy says the payout was meant "To address Mr. Greenquist's concern that his responsibilities could be significantly reduced if the spinoff from Lucent were not completed as planned." Today, company spokespeople say Greenquist has put off the payout until April 2003.
— Mary Jander, Senior Editor, Light Reading