The publishing world buzzed at Meredith Corporation’s (MDP) August 2 announcement that John H. (Jack) Griffin, Jr., the President of its National Media Group, was leaving four days later “to pursue another opportunity.” News leaked – even before an official announcement was made – that Time Warner, Inc. (TWX) had tapped Griffin to become Time, Inc’s. CEO at the end of September and eventually become its Chairman, too.

On August 30, an Exhibit (“Separation Agreement and Release”) attached to Meredith’s 10-K disclosed that Griffin got about $1.4 million worth of payments and benefits on his way out the door; and it appears that Meredith was not contractually obligated to pay him most of that money.  Of course, there’s always the chance that Griffin’s departure wasn’t voluntary – but from all outward appearances, he left to take a sweet gig at Time, Inc., not because the board was unhappy with him.  And that makes the board’s largesse all the more puzzling.

Griffin’s Employment Agreement (executed March 9, 2008 and re-executed August 24, 2009) states that if Griffin voluntarily left the company before the contract expired on June 30, 2011

“…in such event the Company’s only obligation to Griffin shall be to make Base Salary payments provided for in this Agreement through the date of such voluntary termination…. and (b) the Company shall have no further obligation to pay any bonuses to Griffin under the terms of the MIP or this Agreement.”

Yet – addressing subsection (b) first – Meredith gave Griffin a lump sum payment for $1,256,301.00 on August 6 that is stated to be “in full and final satisfaction of his FY2010 MIP bonus.”

Next, Griffin’s Separation Agreement clearly states that its effective date was August 6, 2010; thus, the company’s stated obligation (per his Employment Agreement) was to pay his base salary through the end of that week. But the Separation Agreement reveals that the company paid him $125,000 “in full and final satisfaction” for any claims he had that related to his FY2011 compensation. Griffin’s base salary was $725,000 a year, which means that Meredith gave him more than two months’ worth of extra pay.

In exchange for releasing “any and all claims under the Age Discrimination in Employment act of 1967,” Meredith agreed to pay

“the equivalent of his existing base pay, and a pro rata share (equal to Nine Thousand Three Hundred Seventy-Five Dollars ($9,375) of the “Stay Bonus” provided for in section 5.3 of the Employment Agreement, through September 17, 2010.”

But Meredith’s September 25, 2009 proxy states on p. 24 that Griffin isn’t entitled to a Stay Bonus or a continuation of health benefits if he left voluntarily.  Thus, the company gave him an extra month and a half’s worth of the stay bonus (which, per the Employment Agreement, was paid at the rate of $6,250 per month so long as Griffin worked for Meredith), and it gave him nearly two months of extra health benefits, through September 30, 2010.

The company doesn’t explain why it paid Griffin so much money following such an abrupt departure; it seems unlikely that Griffin would sue Meredith for any claim when he left voluntarily for an even higher profile job (for which no Employment Agreement has been filed yet).  But perhaps the board harbors hope that someday he will return?

Image source: Aresauburn at flickr

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That’s the cover of the new ethics policy at Sysco (SYY), the big food-service company. The company filed it with the Securities and Exchange Commission on Tuesday afternoon, several hours after filing its 10-K.

In the 8-K that included the document, Sysco describes its ethics-policy overhaul in dry, lawyerly terms, saying it was intended

“to reflect a more principles-based approach.  Bright-line rules and numerical limits and thresholds have generally been eliminated in favor of rules intended to foster more thoughtfulness about the relevant facts and circumstances. … The Associates’ Code has also been revised to enhance overall readability and understanding … and is accompanied with learning aids such as frequently asked questions and examples.  Notwithstanding these changes, the overriding ethical principles underlying each provision of the prior ‘code of ethics’ remain substantively unchanged.”

And while the policy document (PDF or HTML) goes on for another 23 brightly colored pages after that striking plate-and-slogan cover, the catch-phrase is a recurring theme:

“Relationships require a strong foundation of mutual trust and understanding that is nurtured day after day.  That trust is earned, not just by following the letter of the law, but also by striving to ‘do the right thing’. … For situations not specifically included in this Code, or in Sysco’s other policies and rules, we still expect that Sysco and its associates will try to do the right thing. …

The “Overall Standard” on page 2 begins: “Always do the right thing.” In an FAQ about handling a “lumper service” that seems to be refusing its employees overtime, the answer concludes: “Do the right thing — talk with your supervisor.”

As that suggests, of course, this corporate version of the Golden Rule actually boils down to following explicit corporate policies — and checking with supervisors or the human-resources department when in doubt.

From a business perspective, doing the right thing means following our Code, speaking up, getting advice and complying with the law. There is no way to provide rules of conduct that will apply to every possible situation. … Any activity or relationship that presents, or appears to present, a conflict of interest must be reported to your immediate supervisor before you engage in the activity.”

So kudos to Sysco for serving up a bold and eye-catching catchphrase in their ethics policy. But for the shareholders’ sake, we’re glad to see that the nuts and bolts of the policy goes into a little more detail.

Image source: Sysco Corp.

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Hardly a day goes by without hearing somebody’s opinion on whether we’re headed for a double-dip recession. Last week, it was Fed Chief Ben Bernake saying he would do whatever he could to avoid the double dip, which as this NPR story shows is being viewed as an increasing possibility. And this morning, there’s a new survey out by Citibank (C) that shows that an overwhelming majority of small business owners — a whopping 86% — believe the economy is headed for a double-dip.

Given all this, we thought we’d take a look at some recent filings to see if there’s any consensus there on the much-feared double dip. To be sure, we saw a marked increase in the number of companies talking about a double-dip recession in their filings. How much more? We counted nearly 200 filings during August that talked about a double-dip recession in some form or another. That compares to exactly 1 filing during August 2009.

Much of this concern is being noted in the filings made by mutual fund companies, the investments most favored by so-called mom and pop investors. While we don’t tend to pay a lot of attention to these filings here at footnoted, we thought this was worth a short diversion off the usual footnoted path.

For example, yesterday, George C.W. Gatch, president and CEO of JP Morgan Funds noted in his President’s letter that “The U.S. economy has clearly entered a soft patch on its path to economic recovery. These signs of slower growth have ignited concerns that we are headed for a double-dip recession. Although there is uncertainty over the pace of the recovery, investors should note that double dip recessions have historically been rare.”

Jonathan Baum, Chairman and CEO of mutual fund giant The Dreyfus Corp was even more optimistic in his letter filed on Monday, noting that “we still believe that it is unlikely that we’ll encounter a “double-dip” recession.” And US Global Investors Funds (UNWIX) noted in its letter that “the “double-dip” recession debate is escalating…With growing concerns about a slowdown or even a “double-dip” recession in the U.S. and Europe, China may ease up on its policies directed at slowing the economy.”

While I majored in economics at college, that was a long time ago. As a result, I don’t profess to be one of the prognosticators on whether we’re on the verge of a double-dip and will leave that to the so-called experts. But judging by what we’re seeing in the filings — the sheer number alone should tell you all that you need to know — fears of a double dip are clearly a big concern

Image source: The Food Section

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The U.S. has restricted a slew of exports to the Islamic Republic of Iran. So when The Australian published an article (payment required) last spring describing a trade-show booth in Tehran that was showcasing an atomic absorption spectrometer made by Waltham, Massachusetts-based PerkinElmer (PKI), the Securities and Exchange Commission took notice.

In a June 22 letter (PDF) to the company, Cecilia Blye, chief of the SEC’s Office of Global Security Risk, wrote:

“Iran is identified by the  State Department as a state sponsor of terrorism, and is subject to U.S. economic sanctions and export controls. … Please describe to us the  nature and extent of your past, current, and anticipated contacts with Iran, whether through subsidiaries, distributors, or other direct or indirect arrangements.”

After all, Blye wrote, PerkinElmer hadn’t said anything in its 10-K about sales in Iran; the company should “address materiality” of any connections with Iran, taking into account “the potential impact of corporate activities upon a company’s reputation and share value.” Blye also wanted to know whether any PerkinElmer devices that turned up in Iran “have weapons or other military uses…”

PerkinElmer’s general counsel, Joel S. Goldberg, responded speedily, just eight days later: PerkinElmer wasn’t exhibiting anything in Tehran; the former distributor cited in the article, called SamaMicro, hadn’t done any business with PerkinElmer in more than five years (since U.S. sanctions were imposed); and PerkinElmer has repeatedly refused to do business with the distributor despite its periodic inquiries. Goldberg continued:

“If SamaMicro displayed PerkinElmer equipment at the 2010 Iran Oil Show, it did so without the Company’s knowledge, authorization or involvement.”

Goldberg did note that the company had heard of another instance of its equipment surfacing in Iran. The details are partly redacted, leaving many answers tantalizingly vague, but it appears that one of PerkinElmer’s AutoDELFIA instruments was installed at an unnamed location, with its main serial number “removed.” The device had been shipped elsewhere “for medical end-use by a hospital” in a redacted location.

“The  shipment was in compliance with applicable U.S. export control law. Indeed, consistent with our export compliance requirements, the shipping invoice for this order properly declared: ‘These commodities or technical data are licensed by the United States for the ultimate destination of: [**]. Diversion contrary to US law is prohibited.’ “

And PerkinElmer also has learned of “a second PerkinElmer product awaiting customs clearance in Tehran,” though the original recipient and end user’s names were also redacted. The company has suspended shipments to an unnamed customer, and “is actively investigating whether any unlawful diversions occurred,” Goldberg wrote.

He also said the equipment doesn’t generally have any military or weapons uses. The atomic absorption spectrometer that sparked the initial article in The Australian is used to suss out “the concentration of specific metal elements in a sample,” for everything from soil and water testing to measuring lead exposure in human blood. The AutoDELFIA instrument is used mainly for newborn genetic-screening tests and other medical applications.

That may settle the issue: On July 16, the SEC told PerkinElmer it had no more questions. Still, PerkinElmer itself said it had contacted the U.S. Commerce Department’s Office of Export Enforcement about the incident after learning of the Australian article.

And then, of course, there’s a disgruntled competitor in Australia — Melbourne-based GBC Scientific Equipment, which was barred last year from selling two spectrometers to Pakistan. The Australian quoted GBC’s chief executive, Ron Grey, as being “very sceptical” and unhappy about various reports that his “competitors are active in these markets” that are otherwise barred to him.

Image source: One World – Nations Online

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CenturyLink (CTL) got some attention last week for an 8-K it filed, reporting that shareholders of CenturyLink and Qwest Communications International, Inc. (Q) overwhelmingly approved a merger proposal. But the company also filed a second 8-K, which received no real attention, even though it involves more than $10.2 million of shareholders’ money.

That filing disclosed that CenturyLink (formerly known as CenturyTel, Inc. until May, 2010) gave equity and deferred cash grants to its CEO, CFO, and other executive officers in order to:

“…provide the Named Executive Officers with adequate incentives to remain employed with us through the completion of the merger contemplated under the Merger Agreement… and for the critical period thereafter during which we will begin to integrate Qwest into our operations.”

The big winner is CEO Glen F. Post, III, whose retention award of 127,317 RSUs is worth nearly $4.6 million.

But other NEOs got awards, too; 25 percent of their grants are structured as deferred cash awards, and the other 75 percent as RSUs. Looking at the total awards:

• Karen Puckett, EVP/COO, received an award worth more than $1.84 million;
• R. Stewart Ewing, Jr., CFO, got over $1.66 million for his award;
• David D. Cole, SVP – Operations Support, received an award of nearly $1.08 million; and
• Stacey W. Goff, EVP/General Counsel and Secretary, received more than $1.05 million.

Half of the cash awards will be paid on the merger closing date, and the other half will be paid a year later (assuming the executive still works for the company). Unless the closing date is extended for a permitted reason, the merger must occur on or before April 21, 2011, or the cash portion of the award will be forfeited. The RSUs, meanwhile, will vest in three equal shares on the first three anniversaries of the merger closing date.  (And don’t forget that millions more will go to Qwest’s departing executives.)

At this point, the Justice Department and seven state regulatory utility commissions have signed off on the merger, and the companies expect that the deal will be completed in the first half of 2011.

Mergers are – no doubt – a lot of work, and we’re predicting that the executives will get raises and bonuses next year which are justified (on paper, at least) with the stated reason that they should be compensated for all that extra work.  But in a case like this – where we know that all of the top managers are coming from CenturyLink (see this post from April and slide #14 from this merger-announcement presentation) – it’s an open question whether these retention awards are really necessary.

Image source: Manchester-Monkey via flickr

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