Earlier this month, VeriFone of San Jose rewarded Chairman and Chief Executive Douglas G. Bergeron with a lucrative, three-year contract extension that could be worth up to $63.4 million if the company meets a series of financial targets.
The pay package would be on top of $94.2 million that Bergeron has received in salary, bonus, dividends and stock sales since he and some partners paid $50 million back in 2001 to purchase a division of Hewlett-Packard that became VeriFone.
On Jan. 4, the board of VeriFone, which sells electronic payment systems, agreed to a deal to keep Bergeron running the company at least until October 2009. Under the terms, Bergeron will get an annual salary of $700,000 for the fiscal year ending October 2007. In addition, he is eligible for an annual target bonus of $900,000. However, the board can elect to pay him up to double that bonus if it chooses.
In addition, Bergeron could receive 900,000 restricted stock units over three years that vest if he meets certain targets to increase profits and the share price. The stock – which closed at $36.26 on Friday – must trade over $62.20 in October 2009 for all the shares to vest. If that happens, the stock alone would be worth $55.98 million.
But it could get even better.
Bergeron remains the largest individual shareholder in the company. Based on a filing he made on Jan. 4, Bergeron still owns about 3.4 million shares – or 4.2 percent of VeriFone’s stock. On paper, that was worth $123.3 million as of Friday but could climb to $211.5 million if VeriFone hits its target stock price in 2009.
So far, the company, valued at $50 million when Bergeron bought it, has done well for shareholders. The stock has climbed 229 percent since the company went public in April 2005, giving it a value of almost $3 billion.
Not a bad return for a man who was part of an early wave of private equity buyouts that is sweeping through Silicon Valley.
VeriFone was created in 1981 and sold a check verification device to store owners. HP bought the company in 1997 for $1.2 billion in stock. But in 2001, HP sold the division for $50 million to Gores Technology Group, where Bergeron was a group president. In July 2002, another private equity firm, Chicago-based GTCR, joined Bergeron to invest another $164.6 million in the company.
Bergeron personally invested a total of $5 million in these two transactions, according to a VeriFone spokesman.
Since then, Bergeron has seen returns on his investments in several ways:
In June 2004, while still private, the company paid a special dividend of $97.4 million, worth $1.72 a share. At the time, Bergeron owned about 6.6 million shares, which means he would have received about $11.4 million in cash.
Between 2003 and 2006, Bergeron was paid about $2.1 million in salary; he received annual bonuses totaling $1.7 million, plus $175,000 to relocate him and $171,878 to pay the taxes on the relocation money. Those figures don’t include his 2006 bonus, which the company has not disclosed yet.
Finally, since the company went public in April 2005, Bergeron has sold $79.8 million worth of VeriFone stock. His most recent sale came Dec. 13, when he sold 199,940 shares to collect $7.3 million.
Contact Chris O’Brien at cobrien@mercurynews.com or (415) 298-0207.
