Telent's Parton Sees $6M Payout

When telent plc (London: TLNT)'s proposed sale to private equity firm Holmar fell through last week, CEO Mike Parton lost out on £9 million worth of bonus payments. But don't feel bad for him -- he walks away from the company with a reported payoff worth more than £3.2 million (US$6.05 million).

According to a company filing with the London Stock Exchange, Parton exercised his stock options on Friday and sold 490,000 shares worth £2.38 million ($4.5 million). He has 1,050,000 unvested options remaining.

Telent is the former telecom services arm of Marconi -- the bit that Ericsson AB (Nasdaq: ERIC) didn't want. (See Ericsson Buys Bulk of Marconi.)

Weekend press reports said Parton still gets more than $800,000 in severance pay for overseeing the sale of the bulk of Marconi to Ericsson, restructuring the company, and securing the pension fund. (See Ericsson/Marconi: The Fallout.)

Parton's total walk-away pay puts the cap on a very profitable executive tenure. After five years at the helms of Marconi and telent, Parton has exercised £10 million worth of stock options.

The sale of Marconi's remains was scuppered last Monday by a shareholder revolt led by hedge fund Polygon, which felt the services and support business was worth more than the £346 million ($660 million) price tag. (See Shareholders Nix Telent Deal.) Parton would have received £3.4 million in bonus stock options had he been able to steer that deal through.

On Friday, Telent announced Parton would step down on October 31. (See Mike Parton to Leave Telent.) He said in the statement: "At the time of the Ericsson announcement, I said that I was committed to ensuring that telent made a strong start as a new company and that the long term future of our UK Pension Fund was secured.

"Now that both these objectives have been achieved and the proposed offer from Holmar has lapsed, I feel this is an opportune time for me to move on."

— Nicole Willing, Reporter, Light Reading

einstein 12/5/2012 | 3:44:43 AM
re: Telent's Parton Sees $6M Payout Fact of life, an executive messing up the company, sold it off and receive huge payment for his work. Best job in the world.
paolo.franzoi 12/5/2012 | 3:44:43 AM
re: Telent's Parton Sees $6M Payout

Actually, Parton became CEO after Marconi was destroyed. He was able to keep the company out of receivership by selling off the business in chunks and paying back the debt.

jcrawshaw 12/5/2012 | 3:44:42 AM
re: Telent's Parton Sees $6M Payout I think it is true that the original collapse of Marconi was not really Parton's fault. Although he was in charge of the comms division the acquisitions were decided by the group CEO and were largely presented as a fait-accompli to Parton.

The original shareholders of Marconi were left with very little when the company "restructured" its debt in 2003. Again this is hardly Parton's fault.

After converting its distressed debt into equity and floating this on the London stock exchange in 2003 the shares enjoyed a strong run as business restructuring and a recovery in sales led to better margins.

The future of the company however, hinged on Marconi's ability to win the softswitching contract with BT as part of 21CN. The big hope was that it would go on to win softswitching business with other carriers on the back of this deal.

Marconi was, of course, very close to BT and passed all the technical hurdles with flying colors. In the bidding process however Marconi's pricing was too high. I understand that Parton was asked if $Xm was his final offer and he said yes. So BT went with Ericsson instead.

I can't help but think Parton missed out by not bidding lower for the softswitch contract in the hope of recouping its losses on future contracts much as Alcatel did with the early DSL contracts in the US in the 1990s. That proved to be a smart move in the long run.

Having lost out on the BT softswitch deal, Parton threw in the towel and put the business up for sale. I think he got a good price out of Ericsson so hat's off to him and his team for that.

It's odd that he didn't stick around to see the Telent sale through though. -ú6m seems like an awful lot of money to leave on the table. Does that suggest he thinks the deal with Fortress cannot be rescued?
^Eagle^ 12/5/2012 | 3:44:23 AM
re: Telent's Parton Sees $6M Payout To my opinion, the loss of the transport layer of the BT contract was as big a failure or perhaps bigger than the loss of the softswitch contract.

Marconi lost the optical transport network to Huawei and Ciena.

softswitches are a some what new product category and application vehicle, and as such is a fairly fluid space with architectures still being worked out or debated for delivery of IP services: TV, Voice, data, etc.

the tranport network had been Marconi's to loose. The transport network is / was well understood and Marconi should have won a large part of that award. I understand how Huawei could have purchased their way into winning some % of the deal, but to loose out to Ciena for the second source? Especially as Marconi knew the existing network extremely well having built and serviced it for many years.

As I recall when the BT deal when down, first Marconi lost the transport layer. Then as a "last hope", everyone waited to see if they would win at least some of the softswitch / IP layer of the new network.

I don't know who to lay the blame on for the loss of the transport net. Not enough of an insider to say Parton was or was not responsible. However it would seem to be a fair question. He did have the carrier part of the business under his wings for the last several years.

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