September 10, 2018

Acquisition payday looms for Farmington Bank execs

Photo | Steve Laschever
Photo | Steve Laschever
Farmington Bank CEO John Patrick Jr., who is departing his role after his bank is acquired by People's United. The $544 million deal is expected to close later this year.

The CEO of Farmington Bank's parent and his top lieutenants will collect an estimated $14.8 million in cash severance and other payments once People's United Financial Inc.'s purchase of the community lender is complete, proxy documents show.

Shareholders in First Connecticut Bancorp Inc., Farmington Bank's parent, will vote Sept. 25 at The Farmington Club on the proposed $544 million deal with Bridgeport thrift People's United Financial Inc., according to papers First Connecticut filed with the U.S. Securities and Exchange Commission.

The Aug. 22 severance-pay disclosures, which are estimates based on multiple assumptions, come as First Connecticut recently notified Connecticut state labor authorities of its plans to lay off about one in four of its Farmington Bank staff, or about 95 workers, once the deal is consummated, now targeted for completion on or about Oct. 1.

First Connecticut says in SEC documents that its board of directors will urge support for the deal at the 10 a.m. special meeting taking place ahead of the buyout, filings show. Certain state and federal bank regulators also must review and approve the deal.

Farmington Bank, with $3.2 billion in assets and 25 branches in Connecticut and western Massachusetts, and People's United Financial, with $44 billion in assets and parent of People's United Bank, announced the deal in June.

According to SEC filings, John Patrick Jr., chairman, CEO and president of Farmington Bank and its parent, will draw a severance package worth $6.1 million, including a cash severance payment and prorated annual bonus totaling $2.2 million.

Four other top Farmington Bank executives also are eligible for cash severance, retirement, equity and other benefits tied to "change of control'' and related provisions under their employment contracts, SEC documents show. The payouts are estimates that may or may not change at the time the deal is completed, the SEC documents said.

Executive Vice President, Chief Financial Officer and Treasurer Gregory A. White is eligible for a combined separation package worth $3.7 million, including $715,287 in cash severance and bonus, SEC filings show; Executive Vice President and Chief Lending Officer Michael T. Schweighoffer is due $3.4 million, including cash severance and bonus totaling $780,316; Executive Vice President and Director of Retail Banking and Marketing Kenneth F. Burns will collect $821,000, including $602,802 in related cash payments; and Executive Vice President and Chief Risk Officer Catherine M. Burns is due $793,886, about $589,000 of that in cash.

According to SEC filings, First Connecticut will owe People's United Financial a $22.5 million "breakup fee'' if the deal does not close on or before June 18, 2019.

Based on First Connecticut's closing stock price of $18.73 a share as of Aug. 20, its shareholders will receive about $32.31 a share, based a merger conversion ratio of 1.725 shares of People's United common stock for each First Connecticut common share, documents show.

Farmington Bank referred questions to People's United Bank, which did not immediately respond to a request for comment.

Read more

Farmington Bank to shed 27% of workforce after $544M People's United deal

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