Longs Drugs CEO Set for Fat Merger Payday

OKLAHOMA CITY -- No wonder Warren Bryant jumped at the chance to run Longs Drug Stores (LDG Quote - Cramer on LDG - Stock Picks).

Bryant could have held out for the top spot at Kroger (KR Quote - Cramer on KR - Stock Picks), the giant grocery chain where he started out as a part-time bagger and rose through the ranks to become senior vice president. After all, Kroger wound up hiring a new CEO the year after Bryant departed.

But Kroger offers no special change-of-control benefits for its executives.

Longs, however, promises its CEOs generous payouts -- exceeding those offered by some of its largest rivals -- if the company sells itself.

Bryant could snag up to $23.6 million if a deal to be bought by CVS(CVS Quote - Cramer on CVS - Stock Picks) goes through. In contrast, critics estimate, CEOs at much-larger Walgreen (WAG Quote - Cramer on WAG - Stock Picks) and Rite Aid (RAD Quote - Cramer on RAD - Stock Picks) would secure $12 million to $15 million in a similar situation.

All told, regulatory filings show, Longs' top five executives could score more than $45 million once the company changes hands. They simply need to leave for a "good reason" -- and relocation now counts -- in order to secure their maximum payouts.

Last month, industry giant CVS offered $2.9 billion for the regional drugstore chain. That all-cash tender offer, which translates into $71.50 a share, represents a 32% premium over Longs' pre-announcement stock price.

Since then, rival Walgreen has offered Longs an even higher $75 a share. Longs' board -- which is chaired by Bryant -- has pledged to review that competing offer. Meanwhile, however, the board continues to formally support the lower CVS bid -- and the big executive payouts that come with it.

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