Northwest Airlines Corp. and Delta Airlines Inc., already in an agreement to merger since Monday, would need to pay the other $165 million to stop the process under certain conditions, according to a securities filing.
According to an 8-K filing with the Securities and Exchange Commission on Friday, the agreement may be terminated if the merger isn't completed by the end of twelve months, a regulator blocks the sale, or if shareholders reject the sale in addition to other conditions.
The agreement also discloses a retention package for current Northwest Chief Executive Doug Steenland to keep him on board during the regulatory review of the merger and possibly beyond if it is blocked.
Under the retention agreement Northwest said he waived his right to resign for any reason in June and also to receive certain severance payments and benefits worth 7.8 million.
If he stays through the anti-trust review and after if it is not blocked, he received 375,000 restricted retention units, according to the filing. If the merger is completed, the units would be vested immediately.
At their closing price on Friday of $9.69 per share, the units would be worth $3.64 million. If regulators block the merger, he could stay at the company. In that case he would receive the units over a four year vesting period. If he leaves before that time, he would forfeit the units.