• by Steve McClellan  @mp_mcclellan, May 8, 2015

MDC Partners CEO Miles Nadal and two consulting companies owned solely by him that are paid millions in retainer fees by MDC have agreed to waive rights they previously held to so-called “gross-up payments” that would cover excise taxes in the event of a change of control in the company.

The waiver was agreed to just days after MDC disclosed an ongoing SEC investigation into the company’s accounting practices and trading activity that began last October and was revealed in an SEC document filed by the company earlier this week. Nadal has agreed to repay the company $8.6 million in expensed items red-flagged as a result of the investigation.

Still, Nadal stands to do quite well in the event of a change of control of the company or even if he departs for some other “good reason” — his total severance package is about $27 million, according to his current employment contract as reported in the company’s 2015 proxy statement.

The gross-up payments were part of an “Amended and Restated Management Services Agreement” between Nadal, his two consulting companies, Nadal Management Limited (formerly Stallion Investments Limited), Nadal Financial Corp. and MDC Partners that took effect in May 2013. The provisions granting the gross-up fees were simply terminated by the amendment filed this week.

Nadal’s total compensation last year was $16.8 million, according to the 2015 proxy statement. The consulting companies were paid $1.75 million in 2013 and were scheduled to be paid at least that in 2014 and possibly more depending on certain company performance benchmarks. According to the management services agreement, Nadal Management and Nadal Financial earn their fees by providing “the company with the services of the executive,” Nadal says.

MDC’s stock closed on the NASDAQ exchange Friday at $20.76, down about 26% from its close April 27, just prior to the firm’s disclosure about the ongoing SEC investigation, which company executives said was in its early stages.