One CFO’s revolving door

Back on July 1, Ralph Lauren filed this 8-K providing separation details for its CFO, Robert Madore. While the company had previously announced Madore’s plans to step down, it waited until after the markets closed on the eve of a three-day holiday weekend (the Fourth of July) to provide Madore’s compensation details. We’ll go out on a limb here and say it probably had something to do with the $2.5 M in severance spelled out in Madore’s severance agreement. In exchange, Madore had to stick around until Sept. 30, which is today. In our experience, people who get that type of severance aren’t usually in a rush to land their next gig. Indeed, most agreements that we’ve seen spell out that an executive is prohibited from working for a similar type of business. That’s what the severance payment is for – to tide someone over so that he doesn’t Continue reading "One CFO’s revolving door"

New title, old salary at Ralph Lauren

Last week, Ralph Lauren Corp. announced that it had hired a new CEO, Stefan Larsson, to take over the reins from the company’s namesake, Ralph Lauren. As expected, the passing of this type of baton got lots of coverage in the media. But far more interesting to us was the 8-K that Ralph Lauren (the company) filed two days after the big media announcement. That’s because the filing included both an employment agreement with Larsson and an amended agreement with Ralph Lauren (the man). First, the agreement with Larsson: his base salary was set at “not less than” $1.25 million with a target bonus of 3x that amount and a maximum of 4.5 times. He will also get a one-time equity award valued at $9.125 million, with the shares split more or less evenly between time-based and performance-based options. If Larsson is terminated without cause or voluntarily Continue reading "New title, old salary at Ralph Lauren"

Lithia Motors’ Emperor for Life

It’s been awhile since we’ve come across the type of 8-K we saw from Lithia Motors yesterday. More specifically, the type of language we saw in the filing which proffers up lifetime benefits to its soon-to-be former Executive Chairman, Sidney DeBoer. DeBoer, who to be fair, built Lithia Motors into a company that has clearly performed well for investors, including DeBoer over the years. But judging by yesterday’s 8-K, that’s still not enough. That’s because the filing spells out a $1.05 million payment to DeBoer for the rest of his life. That’s in addition to a $42,000 a year car payment. Again, for the rest of his life. There’s also a $210K a year payment for serving on the board of directors. Yesterday, in his hometown paper, the Ashland Daily Tidings, DeBoer actually talked about the pay cut. “It’s a huge pay cut for me'” said DeBoer, who is Continue reading "Lithia Motors’ Emperor for Life"

PVH Corp.

Over 10 years ago, I wrote this piece for Slate about how being named Vice Chairman of a company just might be the greatest job in business. Here’s a brief snip:
There are no magazines about vice chairmen and no suck-up profiles in Fortune about them. They don’t write advice books, because no one cares what they have to say. No one even cares if they show up in the office. In short—except for one slight drawback—they have the greatest job in business
I was reminded of that piece when I came across this exhibit in the 10-Q that PVH filed a short time ago. Under the agreement, Fred Gehring, the former Executive Chairman (and before that the former CEO) of Tommy Hilfiger, was demoted to Vice Chairman on Aug. 1. That’s not quite how the company put it in the July 31 press release, but that’s how most Continue reading "PVH Corp."

A very expensive year for Hertz

How much is a year of, presumably, hard work worth? At Hertz Global Holdings, the answer is north of $8 million. Last week, Hertz filed this 8-K disclosing severance details for Hertz Equipment Rental Corp. (HERC) CEO Brian MacDonald. As both this press release and the filing noted, MacDonald stepped down on May 20. Unlike similar announcements and 8-Ks, the “personal reasons” or “more time with the family” language wasn’t trotted out. Ditto for the language about “no disagreements” that is standard fare in most 8Ks announcing a sudden departure. Indeed the press release, didn’t even have the perfunctory quote from the company’s CEO praising MacDonald. Instead, CEO John Tague was quoted as saying that newly appointed HERC CEO Larry Silber “will reenergize HERC’s performance on the topline and importantly in dollar value utilization, which is a key performance driver for this industry.” Ouch! But MacDonald shouldn’t be too Continue reading "A very expensive year for Hertz"

Pier 1’s Not-So Confidential Agreement

Hardly a day goes by when we don’t notice a “Confidential Agreement” attached as an Exhibit to an SEC filing. The irony, of course, is that once it hits the EDGAR database, it’s not exactly confidential any longer. Take this “Confidential Retirement Agreement” that was attached to the 10-K that Pier One filed on Tuesday. The agreement was with former CFO Charles “Cary H.” Turner, who suddenly “retired” on Feb. 10, the very same day that the company “revised” its financial guidance for fiscal 2014. Just to be clear, by revised, we mean sharply lowered. The stock dropped 30% on the news. And much of the news coverage pinned the blame on Turner for not getting those all-important projections correct. The headline on the Bloomberg story even used the word botched to describe his performance. Turner may have been the fall guy in the media, Continue reading "Pier 1’s Not-So Confidential Agreement"

A very good deal at Ross Dress for Less

Anyone who’s ever shopped at a Ross Dress for Less knows what to expect: fluorescent lights highlighting piles of off-price clothes and shoes. Shopping there is more about the hunt for a good deal than anything else. Judging by this 8-K filed earlier today, a former Ross executive has found an unusually good deal — one most Ross shoppers could only fantasize about. For the next two years, Doug Baker, the former chief merchandising officer at Ross’ dd’s DISCOUNTS, will collect his regular base salary of $960,000. He’ll also get bonuses — up to 75% of his base salary — and accelerated vesting in stock. All told, it works out to just over $7 million. In a curt, one-sentence filing back on Jan. 28, the company disclosed that Baker’s employment had “terminated” that day. The filing didn’t provide further details but a three-paragraph press release seemed to downplay the departure by noting that he was “leaving” the company, with Ross Executive Chairman Michael Balmuth praising Baker for “numerous contributions over the years as a merchandising executive at both Ross Dress for Less and dd’s DISCOUNTS.” In this Women’s Wear Daily story (which is behind a pay wall), Baker’s departure was described as a firing, which makes sense to us. After all, you rarely find 20-year executives departing the very same day the announcement is made. What is clear is what he could get over the next two years — for doing nothing. Usually, companies require the executive to remain with the company under the euphemistically titled “consulting” agreements. But in this case Ross appears to have dispensed with that pretense. The only thing that Baker is actually required to do under the agreement is not compete and not try to hire any Ross executives or employees. Continue reading "A very good deal at Ross Dress for Less"

Straight talk in filings?

SEC filings are not exactly known for their straight talk. Executives resign to spend more time with their families. And there’s never (ever!) any disagreements when the executives or directors or the accounting firms that audit the companies step down suddenly. In other words, it’s not exactly the “Straight Talk Express” So you can imagine our surprise when we came across this 8-K that The Fresh Market filed late in the day a few weeks ago. In it, the company said it “had terminated” the employment of CEO Craig Carlock. I think that most people would read that to mean he was fired. Trust us on this: that kind of language is very rare. It’s also much more direct that what the company used in the press release that announced Carlock’s sudden departure on Jan. 12. In that release, the company said that Carlock “has left” and then included some nice statements about what he had accomplished since becoming CEO in 2009. In other words, pretty typical fare. But then we were surprised all over again when we came across this 8-K that the company filed last week. In that filing, the company spelled out Carlock’s severance terms and let’s just say that they don’t really seem like the type offered to the typical person who has, um, “left”. Under the agreement, Carlock gets two years of salary, a pro-rated portion of his bonus, two years of healthcare coverage, continued vesting on several different equity awards. The cherry on top? Continue reading "Straight talk in filings?"

A big sendoff for Abercrombie’s CEO

By now, you’ve undoubtedly heard the news about the sudden retirement yesterday of Mike Jeffries, who had been Chairman and CEO of Abercrombie & Fitch after more than 20 years of running the company. You may have even seen the news that Jeffries would be getting $5.5m in “cash and benefits continuation” according to the 8-K that the company filed late yesterday. We wanted to take a closer look because Abercrombie and Jeffries has been something of a frequent flyer here at footnoted over the years. Indeed, we counted 37 separate items that we’ve written about Abercrombie over the years, including this pearl from 2010 that had the company paying Jeffries $4m not to use the corporate jet as frequently as he did in 2008. What we found is that if you read yesterday’s 8-K carefully, you realize that the $5.5m is really just the beginning. The company says that much in the 8-K with the words “in addition” before disclosing the $5.5m. But you have to go back to Jeffries’ employment agreement from last December and the proxy statement to get additional details. We wrote about the amended agreement last December (subscribers only), noting that the new agreement provided $6m in long-term incentives. But there’s another wrinkle here. The 2013 agreement is valid through Feb. 1, 2015. Since Jeffries stepped down on Dec. 8, 2014 that leaves some questions, as outlined in the 2013 agreement:
The 2013 Agreement provides that if Mr. Jeffries’ employment is terminated following expiration of the term (as a result of delivery of notice to terminate the term by either party as described above), by the Company for Cause, by Mr. Jeffries other than for Good Reason, or due to his Retirement, Mr. Jeffries will only be entitled to: his then current accrued and unpaid base salary through the date of termination, any earned or accrued and unpaid bonus or other incentive compensation for any completed fiscal years preceding the year of termination, any previously deferred compensation, reimbursement of reasonable expenses; and any other benefits and payments to which he is then entitled under the Company’s employee benefit plans (collectively, the “Accrued Compensation”).

Yesterday’s announcement isn’t really clear on whether this provision kicks in. But in  this Bloomberg story on Jeffries’ resignation, his exit package was valued at $27.6 m. Looking closely at the proxy and at yesterday’s 8-K, we think the number is actually $32.7m plus the additional $5.5m promised in yesterday’s filing. Granted, he did run the company for 20 years and presided over some amazing growth. But as we’ve documented over the years, he’s also been unusually well compensated in many different ways, including the frequent private jet usage.

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What was Visa waiting for?

Disclosure practices of some companies don’t make sense, especially when it comes to their executive compensation. Take credit card giant Visa Inc., for instance. Over a year ago, on May 23, 2013 to be exact, the company announced via a press release the appointment of Ryan McInerney as the company’s president. On the same day, the company filed this 8-K, with his compensation details, including his $2 million signing bonus, which we covered here. So far, so good. Or so we thought, until we clicked open one of the exhibits filed with the company’s latest annual report on Nov. 21. In that exhibit and another related one, the company disclosed payouts running into millions of dollars to its executive vice president of Technology, Rajat Taneja. The exhibits were dated Nov. 6, 2013. The problem? This is the first time that the company disclosed the compensation details of Taneja, although his appointment was disclosed more than year ago, on Nov. 18, 2013. (The company also filed its proxy the same day as its latest 10-K on Nov. 21, 2014, detailing his compensation.) Visa’s disclosure was no less earth shattering as far as payouts to Taneja are concerned. In those exhibits, the company said Taneja, the former technology chief of Electronic Arts Inc. — the producer of the Madden and FIFA video games — will get a whopping make-whole equity award valued at $11 million; a one-time cash sign-on bonus of $2 million in lieu of incentives from his prior employer; a long-term performance bonus target of $4.56 million a year; a salary of $750,000 a year; with bonus target of 125% of base salary, with the maximum at 250%. To find out how much he actually made during the company’s fiscal 2014, which ended Sept. 30, we turned to its latest proxy. Not surprisingly, the company valued his total compensation at $14.4 million, including prorated salary of about $640,000; bonus of $2 million; $11 million in equity awards, consisting of stock awards of $8.25 million and option awards of $2.75 million. We wonder why the company took so long to disclose the compensation details of a named executive officer, considering that it had the chance to disclose the details in its previous compensation proxy, filed on Dec. 13, 2013. Or in any of the other filings it has made over the past year. Happy Thanksgiving!  

A downgrade to first class for ex-Ford CEO

Yesterday, Google announced that former Ford Motor Co. CEO Alan Mulally was joining its board and was appointed to the company’s audit committee. That news was widely covered, with much of the coverage focusing on Google’s quest for a driver-less car. Not included in much of the coverage, but part of the 8-K that Google filed yesterday was the additional disclosure that director K. Ram Shriram would be stepping down from the audit committee to make room for Mulally. But the thing that really caught our eye was the letter agreement attached to the 8-K spelling out the terms upon which Mulally joined Google’s board. It’s been over two years since a new director joined Google’s board. The last one, which we footnoted at the time, was Diane Greene in January 2012. When we compared Mulally’s agreement with Greene’s, two things jumped out at us. First, the company disclosed in the letter a new requirement that directors need to hold $750K of fully vested shares. The agreement goes on to note that new directors — like Mulally — have five years to hit that benchmark. Since directors get an initial grant of Google stock units valued at $1m, 25% of which vest on the 1-year anniversary, getting to $750K doesn’t seem like a tall order. The second new thing in the letter is that directors are reimbursed for first-class air travel in connection to the director’s service to Google. While the company had spelled out that it covered travel expenses before, the first-class requirement was never spelled out. Of course, during his long tenure at Ford, Mulally was used to flying one of the company’s private jets for both business and personal use. As this WSJ piece from 2007 points out, it was even a perk extended to his family. And the most recent proxy, which we flagged here, noted that the company spent over $230K to provide Mulally with personal use of the corporate jet last year. Which means that being relegated to just first-class, even if it’s just for Google-related activities, is actually a downgrade.  

Actavis’ pre-holiday dump

It’s pretty rare for a holiday to fall on a Friday. But when it does, it makes the usually juicy “Friday Night Dump” seem like an over-cooked hot-dog. Once the markets closed on Thursday at 1 p.m., the filing floodgates opened wide: we counted 174 8-Ks filed after the markets closed on Thursday.  We’ve flagged a dozen of those for our footnotedPro subscribers. Still, one of the most surprising filings on Thursday was filed before the markets closed. This 8-K, which was filed by Actavis late Wednesday, became available first-thing Thursday morning and it nearly took our breath away. Earlier in the week, Actavis received approval from the FTC for its acquisition of Forest Laboratories, a $25 billion deal that had been announced back in February. But nothing in the many things that have been written about the deal since then disclosed what the company did on page 6 of Thursday’s 8-K. Buried below a bunch of other merger-related disclosures was the news that Actavis was handing out “merger success awards” to several of its top executives, including newly named CEO Brenton L. Saunders and Executive Chairman Paul Bisaro, who had been CEO of Actavis up until the deal closed. We checked the many pages of filings that have been made since the February merger announcement — several of which were over 300 pages — and couldn’t find a single other reference to merger success awards. Saunders, who only joined Forest Labs last September, is set to receive a “merger success” award target of $15 million, with a potential to earn a maximum of $30 million. Bisaro’s merger success award target amount is $10.5 million, with the maximum at $21 million. But as we began to delve deeper into Thursday’s filing, we realized that was really just the beginning. Saunders could get more than $68.5 million in compensation and Bisaro could take home more than $49.6 million, taking into account the maximum amounts they could earn. While hefty payouts are not uncommon when it comes to M&A, the scale of it just boggles the mind. So does the limited disclosure up until this point. We would like to clarify that much of that amount that they potentially could get is tied up in equity related to performance goals spread out over three- to five-year periods. But still. Here’s a snip from the filing that caught our attention:

“Under the Employment Agreements, Mr. Saunders and Mr. Bisaro each will (i) receive an annual base salary of $1,000,000 and $750,000, respectively, subject to periodic review by the Compensation Committee of the board beginning in fiscal year 2015; (ii) be eligible to receive annual cash incentive compensation payments with a target award opportunity of 150% and 140%, respectively, of each Executive’s respective base salary, a threshold award opportunity of 0% of the target award opportunity, and a maximum award opportunity of 225% of the target award opportunity, which in each case will be payable based upon the attainment of corporate financial targets and broad strategic initiatives established by the Compensation Committee; (iii) receive an equity grant consisting of (A) performance-based restricted stock units, which will have an aggregate grant date fair value of $25,650,000 and $19,125,000, respectively, and (B) options to purchase ordinary shares of Actavis, par value $0.0001 per share, having an aggregate grant date fair value of $8,550,000 and $6,375,000, respectively; and (iv) receive merger success awards with target values of $15,000,000 and $10,500,000, respectively, and the opportunity to earn up to a maximum of 200% of the target award.”

One would think that with that kind of haul, the executives wouldn’t sweat the small stuff. But that’s not the case here. In addition to those hefty payouts, both Saunders and Bisaro will get benefits that includes $110,000 in “private air transportation allowance for personal use” each year; up to five weeks of vacation every year; and an automobile and a driver — whose financial details weren’t made available. The company’s largesse didn’t just extend to its top two executives. Other executives stand to reap in millions of dollars too.  Robert Stewart, chief operating officer; William Meury, EVP of Commercial, North American Brands; David Buchen, EVP of Commercial, North American Generics and International; and Todd Joyce, CFO, has each been set a merger success award target of $5 million, with a maximum opportunity of 200% of the respective officer’s target award — amounting to $10 million for each. The company said that “in recognition of certain executives’ contributions to ensuring the success of the Merger and as a retention and performance incentive,” they would also get performance-based awards. Stewart’s performance-based award will be $6.3 million; Buchen, $5.4 million; Meury, $4.73 million; Joyce, $4.16 million. In connection with the closing of the merger, the company granted option awards amounting to $2.1 million for Stewart, $1.8 million for Buchen, $1.58 million for Meury, and $1.39 million for Joyce. Given the hefty awards, we’re actually surprised the company didn’t wait until late on Thursday to dump this.    

No time like the present at Aeropostale

There’s been a lot of speculation about Aeropostale lately, with institutional investors swooping in to try to right the troubled teen retailer. Last week, hedge fund Hirzel Capital Management disclosed that it now owned 5.7% of the teen retailer’s outstanding shares when it filed this 13G. Earlier this week, it followed up with this 13D, upping its stake to 6% and signalling that a passive investment had very quickly turned to an active one.

Though the language in the 13D was pretty boilerplate, some news outlets quickly ratcheted up the speculation by highlighting the fact that the filing noted that Hirzel “may engage in communications with one or more shareholders of the Issuer, one or more officers of the Issuer and/or one or more members of the board of directors of the Issuer.” Just to put that into perspective, we counted over 350 13Ds that had similar language to that in the past year.

And then, yesterday, came this news release from another institutional investor, Crescendo Partners. While the letter didn’t disclose Crescendo’s stake, it described it as “significant” and said that it believed the shares were worth $14 to $16 a share, compared with the just over $10 that Aeropostale is currently trading at. We’ve yet to see a 13D or 13G from Crescendo and it’s not clear from their letter if their “significant stake” will require them to file one.

Both of these, of course, follow this 13D filed in mid-September by Hummingbird LLC, which disclosed a nearly 8% stake in Aeropostale. A month later, Hummingbird filed this amended 13D, which showed their holdings steady at 7.96%.

Any journalist will tell you that three of anything makes a trend. Which is probably what prompted the attorneys at Aeropostale to spring into action and file this change in control severance plan for it executives. While the filing notes that the company’s Compensation Committee adopted the plan on Nov. 12, it’s hard to see it as anything but a response to recent events.

Under the new plan, which covers all of the company’s named executives with the exception of CEO Tom Johnson plus an unknown number of other executives, those executives would get 24 months of pay, plus any earned, but unpaid bonus.

We looked through Aeropostale’s prior filings and couldn’t find a similar plan in the past, which makes it hard to chalk up this week’s filing to a mere coincidence.

One of our rules here at footnoted is that there are no accidents in SEC filings. Everything is there for a reason.

 

 

No time like the present at Aeropostale

There’s been a lot of speculation about Aeropostale lately, with institutional investors swooping in to try to right the troubled teen retailer. Last week, hedge fund Hirzel Capital Management disclosed that it now owned 5.7% of the teen retailer’s outstanding shares when it filed this 13G. Earlier this week, it followed up with this 13D, upping its stake to 6% and signalling that a passive investment had very quickly turned to an active one.

Though the language in the 13D was pretty boilerplate, some news outlets quickly ratcheted up the speculation by highlighting the fact that the filing noted that Hirzel “may engage in communications with one or more shareholders of the Issuer, one or more officers of the Issuer and/or one or more members of the board of directors of the Issuer.” Just to put that into perspective, we counted over 350 13Ds that had similar language to that in the past year.

And then, yesterday, came this news release from another institutional investor, Crescendo Partners. While the letter didn’t disclose Crescendo’s stake, it described it as “significant” and said that it believed the shares were worth $14 to $16 a share, compared with the just over $10 that Aeropostale is currently trading at. We’ve yet to see a 13D or 13G from Crescendo and it’s not clear from their letter if their “significant stake” will require them to file one.

Both of these, of course, follow this 13D filed in mid-September by Hummingbird LLC, which disclosed a nearly 8% stake in Aeropostale. A month later, Hummingbird filed this amended 13D, which showed their holdings steady at 7.96%.

Any journalist will tell you that three of anything makes a trend. Which is probably what prompted the attorneys at Aeropostale to spring into action and file this change in control severance plan for it executives. While the filing notes that the company’s Compensation Committee adopted the plan on Nov. 12, it’s hard to see it as anything but a response to recent events.

Under the new plan, which covers all of the company’s named executives with the exception of CEO Tom Johnson plus an unknown number of other executives, those executives would get 24 months of pay, plus any earned, but unpaid bonus.

We looked through Aeropostale’s prior filings and couldn’t find a similar plan in the past, which makes it hard to chalk up this week’s filing to a mere coincidence.

One of our rules here at footnoted is that there are no accidents in SEC filings. Everything is there for a reason.

 

 

Easy come, easy go for veteran bank exec

Earlier this year, on pg. 202 of the 10-K that Flagstar Bancorp filed on March 5, there was an interesting little disclosure about a retention agreement with executive Steven Issa. Didn’t catch it at the time? No sweat. We didn’t either. As much as we try to read every page of every filing, we don’t. There’s simply not enough hours in the day, especially during peak filing periods when it is often common to see more than 100 10-Ks filed in one day.

At the time, Issa was managing director for commercial banking at Flagstar and, as the filing implied, was likely to be out of a job soon due to the fact that CIT Corp. had agreed to purchase Flagstar’s commercial portfolio. But as the item on pg. 202 noted, Issa was getting a pretty nifty consolation prize: he would be paid approximately $900K and all he had to do was stay at the bank through April 30, once the sale to CIT was expected to be completed. Considering that Issa’s base salary in 2012 was a mere $475K for a whole year or work, making nearly twice as much for around 1/3 as much work seemed like a sweet deal indeed.

But as Flagstar disclosed in this agreement attached to an 8-K which it filed on Wednesday, this didn’t turn into such a happy ending for Issa. Here’s a snip from yesterday’s filing:

“By letter dated September 6, 2013, the Office of the Comptroller of the Currency (the “OCC”) informed the Bank that the OCC, after consultation with the Federal Deposit Insurance Corporation (the “FDIC”), had determined that (a) the Transition Agreement is an agreement to make a “golden parachute payment”…and the 2013 increases in your cash and share salary and the retention payments described in the Transition Agreement were golden parachute payments that would be in violation of Part 359 unless approved under 12 C.F.R. § 359.4(a)(1).”

As it turns out, banking regulators didn’t take kindly to the fact that Flagstar inexplicably decided to more than double Issa’s base salary to $1 million as part of the retention agreement that it disclosed back in March. So instead of $900K for four months of work, Issa will have to forgo $384.5K that he was set to receive, meaning he only made a mere $525K for those four months of hard labor! Of course, as the letter agreement helpfully points out, Issa still made $266.7K more in 2013 than he did in all of 2012, which means it’s not a total loss.

As the filing noted, Flagstar now has to seek approval for the big increase in Issa’s salary (read: attorney fees). If banking regulators don’t approve that, Issa may have to hand back even more money.

Meanwhile, Issa has already moved on to another bank: tiny Customers Bancorp based in Wyomissing, Pa. It’s not clear when Issa started there, but this slideshow that was attached to an 8-K that Customers filed last month listed Issa as an executive vice president.

 

 

Polycom gives cash and electronics to ex-CEO

With earnings season in full swing, we’re paying close attention to companies that use their routine earnings releases to dump other bad news. Take Polycom’s earnings release filed after the market closed yesterday. The company said that CEO Andrew Miller had resigned last Friday “after the Audit Committee of the Board of Directors found certain irregularities in Mr. Miller’s expense submissions.”

While the company said the amounts involved did not have a material impact on the company, falsifying expense reports is often viewed as a gateway drug. If a CEO (or really any employee) does that, who knows what else they may be exaggerating about? Exhibit A, of course, is former HP executive Mark Hurd, who was fired nearly three years ago over something similar.

Polycom’s stock is down sharply today on the news and two law firms have already announced that they’re investigating (see here and here).

Miller isn’t exactly walking away empty-handed, according to the separation agreement attached to the 8-K that was filed yesterday. He’s getting a $500K lump-sum payment, a pro-rated bonus, and three months to exercise any options that are already vested. But the real cherry-on-top comes from the cache of electronics he’s taking with him. As the filing notes, Miller will be able to keep his two Lenovo Thinkpads, an Ipad and his Samsung Galaxy 4 phone. Granted, that’s not the reported $35 million that Hurd reportedly walked away with for a similar offense, but it’s not nothing either.

Needless to say, none of these details were included in the press release that Polycom released yesterday.

We’d also like to point out that we flagged Polycom several times in late 2011 and early 2012 for footnotedPro subscribers. Several changes to their risk factors in the 10-K that they filed in Feb. 2012 particularly caught our eye. At the time, the stock was trading at $22 a share.

 

3 million reasons to hope for quick sale

Over the years, we’ve written a bit about Coach, mostly because many of their employment agreements have been unusually generous. Back in 2008, for example, the company came up with multiple ways to pay Creative Director Reed Krakoff, as we footnoted here.

So when we saw the latest agreement with Krakoff (filed late Wednesday), we couldn’t help but dive in, even though Bloomberg got the key details in this story: Krakoff’s bonus will be $3 million less if Coach isn’t able to reach a binding agreement to sell the Reed Krakoff label by July 29.

What the story doesn’t say is that up until yesterday’s filing, the sale of the label was mostly speculation. Last month, the WSJ ran this story, which said Weinstein Perella had been retained by Coach to sell the brand, which the article said was losing money. How much it is losing is unclear since the company hasn’t provided any numbers in its filings. Coach owns the brand. Back in April, the New York Times quoted Krakoff as looking at “different scenarios” for the brand, but he declined to say if he would buy it from Coach.

But back to the agreement, which has writing that only a corporate attorney (or the folks who write the math questions for the SAT) could love. Here’s a snip:

The Committee has determined, and you expressly accept and agree (notwithstanding anything to the contrary in your Employment Agreement or otherwise), that if the Company has, notwithstanding its good faith efforts, not entered into a binding written agreement for the sale of the Reed Krakoff brand by July 29, 2013, then your Annual Bonus with respect to fiscal year 2013 will be $3,000,000 less than the amount otherwise determined under the Annual Incentive Plan based on the performance goals previously disclosed to you (but shall not be reduced to an amount less than zero; if your Annual Bonus with respect to fiscal year 2013 would otherwise have been less than $3,000,000, you shall receive no Annual Bonus with respect to 2013).

Reading between the lines here, it looks like Krakoff needs to get his investors to make a firm commitment over the next 2 1/2 weeks, or he stands to lose $3 million. That’s a lot of money to lose, even for someone like Krakoff, whose NYC townhouse got the full CNN-gush here. But getting bankers to move quickly — in 90 degree heat and 100% humidity — may even be beyond Krakoff’s considerable talents.

The good news — for Krakoff at least — is that even if there is no signed agreement by July 29 — the bonus can’t be less than zero!

Devil’s in the details in Best Buy agreement

By now, you’ve probably heard that the long-running saga between Best Buy (BBY) and its founder and former Chairman Richard Schulze has been resolved. It was all over the news yesterday and there’s some good background in this Star-Tribune story. In a nutshell, Schulze, who owns about 20% of Best Buy’s stock, will return to the company as Chairman Emeritus. Two former Best Buy executives — Brad Anderson and Al Lenzmeier — were picked by Schulze to join the company’s board and Schulze will continue to “share your wisdom, insight and passion” about Best Buy in his new role. He’ll also collect up to $2.125 million as a consultant over the next year and get an additional $150,000 in salary, neither of which seem particularly necessary. Like a lot of former executives, Schulze will also get office space at the company and administrative support.

But after taking a closer look at the agreement that was attached to the 8-K that Best Buy filed yesterday, we were fascinated with some of the details that we haven’t seen reported. For example, the agreement spells out that Schulze will receive monthly financials “as soon as practicable after they become available following month’s end” and that CEO Hubert Joly and CFO Sharon McCollam will meet with Schulze on a quarterly basis. Schulze will also have an opportunity to provide his input on any new directors that the company might appoint. That’s the more serious stuff.

Then there’s the more picayune stuff that was clearly important to Schulze. The agreement spells out that as Chairman Emeritus he’ll have “use of your office (or a replacement office provided at the Company’s cost and reasonably acceptable to you)”. The wording makes it sound like Best Buy might have left Schulze’s old office intact — much like a parent leaves a child’s bedroom in place after they head off to college — when he stepped down last June. While Schulze is free to use that office, he needs to give Joly a heads-up when he’s planning to be there. Here’s how the agreement describes it: “As a courtesy, you will notify me in advance when you intend to visit the corporate headquarters.”

There’s also an interesting sentence in the agreement about Best Buy’s corporate history. Here’s how the agreement puts it: “the Company will depict in the corporate headquarters important milestones throughout the Company’s history, substantially as has been displayed in the past, which will be updated from time to time for recent events as appropriate.” The way this is worded makes it sound like the company either removed or was planning to remove some sort of display that traced Schulze’s path from owning a single store in St. Paul to creating an international electronics chain. In any event, it was clearly important enough for the display to be spelled out by lawyers in an agreement.