Related: When Did Romney Retire From Bain?
"Romney kept reins on Bain, bargained hard on severance during absence" by Beth Healy and Michael Kranish | Globe Staff, July 20, 2012
By remaining CEO and sole shareholder, Mitt Romney held on to his leverage in the talks that resulted in his generous 10-year retirement package, according to former associates.
“The elephant in the room was not whether Mitt was involved in investment decisions but Mitt’s retention of control of the firm and therefore his ability to extract a huge economic benefit by delaying his giving up of that control,” said one former associate, who, like some other Romney associates, spoke only on condition of anonymity because they were not authorized to speak for the company.
Romney had a lot at stake because Bain had become hugely valuable under his leadership. Romney established Bain Capital in 1984, and in the 15 years that followed, the company had invested $260 million in its 10 largest deals (out of more than 100 during that period) and had reaped a nearly $3 billion return.
On one deal alone, involving an Italian phone directory company, Bain had invested $51 million and reaped more than $1 billion, with Romney’s personal profit being as much as $40 million, according to a former partner. Bain’s funds nearly doubled investors’ money annually during Romney’s tenure.
Bain did some bending of its own.
Romney had expected to remain at Bain Capital for years. He initially rejected the idea of running the Olympics, recounting in his memoir, “Turnaround,” that “after fifteen years of effort, Bain Capital had become extraordinarily lucrative. How could I walk away from the golden goose, especially now that it was laying even more golden eggs?” To do so, Romney wrote, meant “I would walk away from my leadership at Bain Capital at the height of its profitability.”
Before he left, tasks were doled out to other partners, including work on an investment committee and a compensation committee. He was not a partner in the new private equity funds launched in 2000 and 2001, meaning he had no role in assessing new investments, his partners said — a departure from his having previously had the final say on every deal. He initially kept his corner office at the firm’s Copley Square headquarters, which was eventually turned into a conference room. His secretary moved into Bain’s human resources department.
But Romney still had a lot of money on the table; much of his personal wealth was tied up in Bain. And he was still technically in charge.
James Cox, a professor of corporate and securities law at Duke University, said Bain’s continued reference to Romney as CEO and sole shareholder indicated that Romney was still the final authority. Moreover, Cox said, Romney would likely have been updated regularly about Bain Capital’s profits while he was negotiating his severance package. As a result, Cox said, Romney’s statement that he had no involvement with “any Bain Capital entity” appears “inconsistent” with his actions.
“If he is 100 percent owner, I just find it incredible that what I would call ‘big decisions’ — acquisitions, restructuring, changes in business policy — that they would not have passed on to him on an informational basis, not asking for formal approval but just keeping him in the loop,” Cox said....
--more--"
