RCA Says Chief Initially Voted No on GE Deal : Agrees to $2.3-Million ‘Golden Parachute’

RCA Chief Executive Robert R. Frederick, who will lose his top post in the planned merger of the company with General Electric, initially voted against negotiations with GE and has signed a severance contract with RCA that is worth about $2.3 million, an RCA proxy statement disclosed Monday.

The document shows that, at a board meeting Dec. 8--three days before tentative approval of the $6.28-billion deal--Frederick alone voted against the nine other directors who wanted to pursue negotiations.

Although Frederick later voted for the merger, his future role with General Electric remains uncertain. A 34-year General Electric veteran, Frederick was hired as RCA president by RCA Chairman Thornton F. Bradshaw in 1982 after Frederick lost out to John F. Welch in a struggle for GE’s top post.

Frederick has previously said that he viewed the RCA-GE combination, which will create the seventh-largest industrial corporation in the United States, with “mixed emotions.”

Frederick was unavailable for comment Monday, but Thomas B. Ross, an RCA vice president, said Frederick has put aside his initial doubts about the merger and always recognized that RCA’s continued independence “carried considerable risk.”

The proxy notes that the only other dissenting view in the early stages of negotiations was voiced by director Robert Cizik, who is chairman and chief executive of Cooper Industries. But Cizik did not attend the hurriedly convened Dec. 8 meeting to cast his vote with Frederick.

Millions in Stock Options

Frederick will be well-compensated whether or not he leaves the entertainment and communications company. He is entitled to about $4.45 million in stock options, the proxy statement says. If he remains, he will be paid according to a four-year, $2-million salary contract; if he leaves, he receives the $2.3-million “golden parachute.”

RCA would pay about $33 million in golden parachutes if all 62 executives left, although Ross said some top officials are expected to stay. He noted, too, that federal taxes might reduce those figures, as well as the value of the stock options.

The severance contracts give $1.53 million to Richard W. Miller, executive vice president for consumer products and entertainment, and $1.58 million to Roy H. Pollack, executive vice president for electronic products and technology.

The proxy statement notes that Miller is entitled to stock options worth $1.7 million, while Pollack’s are worth $438,000 and those of Grant Tinker, chairman of NBC, another $1.03 million.

RCA Chairman Bradshaw has options for $6.8 million, and he will be paid $500,000 a year for three years after the merger to act as a consultant to the company.

The proxy statement notes that Lazard Freres & Co., the investment banking concern that first proposed the corporate union, has so far received $1 million in fees and is to receive more when the deal is completed.

The document provides some new details on the RCA board’s deliberations as it considered the merger. It shows that board members were concerned that a changing “competitive and technological environment” would increase the company’s capital needs and and make its business riskier. They were concerned, too, the document notes, that by “shopping around” for a buyer they would drive down the price of the company.

Persuasive Arguments

According to the proxy statement, RCA’s Lazard Freres advisers estimated that the company could raise between $64 and $72 a share if various components were sold. But such a sell-off would be “time-consuming, unpredictable and risky” and would not necessarily yield such a per-share price, Lazard Freres said.

The analysis helped persuade RCA to take GE’s offer of $66.50 a share.

The proxy statement says that, when the merger is completed, General Electric will add three RCA directors to its board, which currently has 17 members. The members have not been chosen, a GE spokesman said.