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SYRACUSE, N.Y. -- The board of the Penn Traffic Co. here has voted to protect compensation for key executives if the company is sold. The vote was detailed in documents filed last month with the Securities and Exchange Commission, according to a published report, which noted that such so-called "golden parachute" provisions occasionally mean that a company is about to be acquired.
Analyst speculation has centered on either A&P or Weis Markets as a possible purchaser of the financially embattled company. The executives covered by the vote include Penn Traffic president and c.e.o. Robert J. Chapman. According to the vote, the salaries, bonuses, and benefits -- as well as any severance payments -- for Chapman and the other covered executives would be protected in case Penn Traffic is acquired by another company in the next two years. Such agreements don't require shareholder approval.
"It certainly appears that a merger is imminent, that the board of directors and executives are aware of a potential transaction," Paul Hodgson, an executive compensation expert with Corporate Library, an Oregon-based independent research company focusing on corporate governance, told the Syracuse Post-Standard. "Typically, they are put in place when a company is concerned it is a takeover target and they want to make sure executives stick around during an uncertain period because this guarantees their income."
Penn Traffic, which hasn't released quarterly financial statements since emerging from Chapter 11 bankruptcy 13 months ago, has declined to comment on the provision or its timing.
Employing about 8,000 associates, Penn Traffic currently operates 111 supermarkets in upstate New York, New England, and Pennsylvania.