AOL’s Armstrong to Leave $213 Million Richer After Verizon Deal

Tim Armstrong’s payout after agreeing to sell AOL Inc. to Verizon Communications Inc. could be more than $200 million, cashing out six years of compensation after never selling a share.

The biggest component of the chief executive officer’s package is about $120 million worth of unexercised options, some of which were granted as early as 2009, according to data compiled by Bloomberg from the company’s filings.

Armstrong, also controls 1.68 million shares of the Internet company, according to a U.S. Securities and Exchange Commission filing. Based on the agreed deal price of $50 a share and accounting for $25 million that the CEO himself invested in AOL, Armstrong will receive, on a net basis, an additional $59 million from the merger.

Including $33.9 million in salary, bonus, perks and equity that Armstrong received in compensation since 2009, Armstrong’s tenure at AOL will amount a grand total of almost $213 million.

Armstrong’s payout reflects, in part, his track record of building up AOL’s video services and the company’s online ads business, which have helped to more than double AOL’s share price over the past five years. Armstrong, who will continue to lead AOL’s operations after the deal is completed, also bought sites such as the Huffington Post and TechCrunch, and expanded AOL’s mobile content.

He’ll receive his stock-based awards within 12 months of the deal’s completion. He can also get them if he’s terminated without cause before then or leaves for good reason, according to AOL’s proxy. Good reasons for leaving include if Armstrong no longer reports to the board, his office is moved more than 50 miles, his responsibilities or titles are diminished or if his salary is cut, the proxy shows.

The company declined to comment beyond the filings.

Armstrong’s acquisition pay pales in comparison to that of David Pyott, the former chairman and CEO of Allergan Inc. He also held on to years of option awards until Actavis Plc acquired the Botox drugmaker in March for $66 billion. Pyott converted $534 million of equity into cash that month.

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