Cincinnati Bell Inc. says it has approved a proposed settlement in a shareholders’ lawsuit over pay increases given in 2010 to top officers of the telecommunications company.
The lawsuit, filed in the Hamilton County Court of Common Pleas, challenged the pay increases for chief executive officer Jack Cassidy and other top officers in light of a shareholders’ “say on pay” advisory vote in May that opposed board approval for the higher compensation.
Terms of the settlement, subject to a court hearing and final approval, weren’t disclosed.
The lawsuit came after Bell’s net income fell 68 percent last year to $28.3 million, or 9 cents a share, from $89.6 million, or 37 cents a share, in the prior year as the company completed a $525 million acquisition of Texas-based data center CyrusOne.
The acquisition was strategically important to Bell, which is remaking itself into a leading provider of corporate data centers to serve the growing appetite for computer servers, storage gear and network connections for the online world. The CyrusOne purchase has since fueled both higher earnings and revenue, the company has reported.
In its 10K filing with the Securities and Exchange Commission, the company said the drop in net income was “a result of increased interest expense associated with the CyrusOne acquisition and debt refinancings, losses on extinguishment of debt and acquisition-related expenses.”
Bell’s board of directors last year awarded pay increases to top executives —raises that were influenced in part by the successful CyrusOne acquisition.
Cassidy’s compensation increased 71 percent to $8.5 million. Gary J. Wojtaszek, then Bell’s chief financial officer and now president of CyrusOne, saw his compensation increase 80 percent to $2.07 million; and Christopher J. Wilson, vice president and general counsel, saw his compensation increase 54 percent to $1.4 million.
Cassidy’s salary included a $4 million bonus, which according to the proxy was “to recognize (his) contributions to the company over the years, particularly his leadership as chief executive officer, and to ensure his retention during the next few years of transformative growth in the technology solutions/data center segment.”
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