The forms filed for Initial public offerings (IPOs) are overwhelmingly boring, but they usually hide some fun facts.
Yesterday Vonage filed its Form S-1, aiming for an IPO that brings in up to $250m.
Let's start off with some minor details about the CEO's benefits pacakge, but nonetheless details that make you wonder why those terms aren't in your contract:
The newly appointed chief executive officer Michael Snyder is entitled to two times his annual $500,000 base pay salary a prorated annual bonus for the year of termination. Provided of course that " we terminate Mr. Synder's employment without cause or he resigns with good reason" (bold font added by me).
The chief technology officer meanwhile gets no more than one year base salary and a prorated bonus.
Founder Jeffrey Citron later this month is set to give up the position of CEO to Snyder. He had negotiated a far more plush executive benefit package, entitling him to three years of his $400,000 base salary and three times his bonus ($540,000 over 2005) if he would be fired our quit voluntarily. And he had negotiated that he gets to fly first class whenever he is travelling for business, a provision that is set to continue when he becomes chief strategy officer later this month.
In the first nine months of 2005 the company furthermore spent $200,000 on business travel with New World Aviation, a company that he and his wife own (so far for the concept of the lean and mean start-up company).
There are some additional dark facts in the Form S-1. Citron earlier worked for Datek, a stock broker. In 2002 and 2003 he settled with the SEC, after he and several of his business associates were fined a record $70m for securities fraud and Citron ended up paying $22.5m. Citron as a result is banned from any involvement with stock brokers.
There is also a case where National Association of Securities Dealers fined Citron $20,000 and he received a 20 day suspension from Datek.
"There is a risk that some third parties will not do business with us, that some prospective investors will not purchase our securities or that some customers may be wary of signing up for service with us as a result of allegations against Mr. Citron and his past SEC and NASD settlements," the company notes.
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