BY ANDREA FIGLER AND MAVIS SCANLON Despite repeated objections from its largest shareholders, the Adelphia Communications board of directors late last week OK’d revised employment contracts to hire former AT&T execs Bill Schleyer as the company’s new CEO and chairman and Ron Cooper as the cable operator’s COO and president. It will ask the U.S. Bankruptcy Court of the Southern District of New York as early as Tuesday, Jan. 21., to approve those contracts. Now, the wrangling begins, although at press time, Schleyer and Cooper were expected to begin work on a per diem basis on Tuesday, according to people with knowledge of the contracts. Adelphia needs approval of the contracts by the court, which is overseeing Adelphia’s restructuring. As soon as the company files a motion seeking court approval, the equity committee, representing the shareholders, intends to file an objection, meaning the approval process could drag on for weeks. Cooper told Cable World that the board “modeled [the proposed contracts] after contracts that are in similar situations, in other words, Chapter 11.” He would not comment on whether his or Schleyer’s compensation was reduced from an earlier draft agreement. However, the person with knowledge of the contracts says Schleyer’s salary would amount to $1.27 million per year, and Cooper’s would be approximately $846,000. During the first year of the contract, both men would be guaranteed a bonus of one year’s salary. In subsequent years, bonuses would be based on performance targets set by the board. Additionally, Schleyer would get a $1.7 million signing bonus paid over three years and Cooper $1.13 million over the same period. When and if the company emerges from bankruptcy, Schleyer would be eligible for $10.2 million in stock; Cooper $6.8 million. Both would be required to hold the stock for at least six months after leaving the company. Schleyer could become eligible for another $5.1 million in stock, and Cooper $3.4 million, should they meet further performance targets set by the board. According to a letter to the Adelphia board dated Jan. 16 and obtained by Cable World, attorneys for the committee representing large shareholders laid out 12 specific objections to the latest proposed contract. They ranged from the way the search process was conducted, to the newly proposed compensation and incentives for the two, to the fact that the board has essentially approved this contract without waiting for a decision from the bankruptcy court on a motion the committee filed Jan. 9 (to force a shareholder meeting and elect a new board). A hearing on that motion is set for March 5 and 6. “The proposed bonus structure evinces the same governance abuses that have fostered the current negative business environment,” states Norman Kinel, an attorney with Sidley Austin Brown & Wood, the firm representing the equity committee in the letter. The letter also claims that the contracts allow Cooper to take over as CEO when Schleyer exits the company within two to three years. The equity committee strongly objects to having both Schleyer and Cooper on the board of directors. If they become directors, they will be in charge of determining performance bonuses, which is against good corporate governance, Kinel says. Cooper, however, said there are no provisions for him to replace Schleyer nor to appoint him to the board. Even if approved by the court, there is the possibility for upheaval within months if the judge grants the equity committee’s motion to call the shareholder meeting. Adelphia’s largest shareholders want to elect a new board with no ties to the Rigas family; four of the current six members were appointed by the Rigases. The fate of the stock held by the Rigas family would then likely be called into question. The family controls 63% of the voting stock, which was to have been placed into a voting trust as part of the agreement under which the family members left the board and relinquished control of the company. That trust was never established, however, and now both sides are calling into question the validity of the agreement.