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Charter on TWC: Never Say ‘Die’

Charter Communications is refusing to give up the fight for Time Warner Cable, continuing to put forward its alternative slate of directors and proposing changes to the cable operator’s bylaws that could be put to a shareholder vote as soon as next month.

Comcast agreed to acquire TWC on Feb. 13, two days after Charter had put forth an alternate slate of directors for the New York-based cable operator, in the hopes that the new board would be open to a Charter acquisition. One month earlier, Charter had made an unsolicited bid for TWC that valued the No. 2 U.S. MSO at about $132.50 per share. Comcast valued TWC at $158.82 per share.

But in the days since TWC accepted the Comcast all-stock proposal, the acquirer’s shares have declined about 12%.

TIn its own proxy statement filed March 28, Charter urged TWC shareholders to reject the deal. On April 9, Time Warner Cable filed the proxy statement for its annual meeting of shareholders, which includes several proposals from Charter. Although the actual date for the meeting was not disclosed, it is expected to take place sometime in May.

Charter spokesman Justin Venech said the company has not withdrawn its slate of directors, but declined further comment.

In the filing, TWC said that Charter has not yet begun soliciting proxies for the new board slate or for its proposals, and urged shareholders to vote no for those proposals. One such proposal would fix the total number of board members at 13, rather than allowing TWC to change the number whenever it wants.

TWC has countered that it needs that flexibility to either add to the board when a highly-qualified candidate becomes available, or to decrease its size if a director decides not to seek re-election.

But that point may be moot. According to the proxy, if Charter’s slate is nominated the election would be considered to be “contested,” meaning there are more nominees than slates available. In that instance, the 13 directors receiving the most votes would get a board seat. That could mean that some of Charter’s nominees would receive seats along with long-time TWC directors and possibly diluting their influence on a deal.

The proxy statement also shed some light on former executives who won’t participate in the “golden parachute” tied to the Comcast merger.

Former chairman Britt, who retired before the Comcast offer was made, was left out of that windfall, but according to the proxy, he received a retirement package worth $67.9 million, with most of that ($62.2 million) coming in the form of stock-option awards.

The proxy also said that former chief financial officer Irene Esteves, who was involuntarily terminated without cause last April, received a severance package worth about $13.8 million, $9.3 million of which was in the form of stock options.