The Swartzes are still running the show today, and it shows in the payout that family members (and executives) are getting in a deal recently announced to sell the company: Between various family members, their trusts, and a foundation, they collectively control approximately 73.5% of the combined voting power of the common stock. And that’s why – after the company announced that it was being acquired by the V. F. Corporation (VFC) for $43 a share – it told its own shareholders in the August 24 DEFM 14C (merger proxy) that

“…no further action by any other of Timberland’s stockholders is required to adopt the Merger Agreement or to authorize the transactions contemplated thereby.”

Or, in other, slightly less polite words, “Thanks for owning our stock, but we’ve already decided to sell and you really can’t stop us.”

The $2 billion deal, which is expected to close in the third quarter of this year, will put the Timberland brand in the hands of the company that makes clothing under well-known brands such as Lee, Wrangler, The North Face, Nautica, and others. According to the press release that V. F. published June 13, “…The acquisition… should add approximately $700 million to VF’s 2011 revenues.” That’s a lot of money, yet it’s just a portion of the $1.6 billion in revenues that Timberland expects for the entire year.

The merger proxy discloses that in exchange for selling their interests in the company, Timberland’s officers and directors will receive some fairly hefty checks. As one might expect, the largest payout will go to President/CEO Jeffrey B. Swartz, who has led the company for the past 13 years. The filing estimates that Swartz will get more than $37.24 million, which includes payment for his equity interests (more than $26.87 million) as well as “Golden Parachute” compensation, perks, and a gross-up to pay taxes (collectively worth more than $10.36 million).

The other named executive officers will also get large checks, according to page 45 of the filing.  Vice President and Chief Financial Officer Carrie W. Teffner is set to get more than $4.88 million; Chief Brand Officer Michael J. Harrison will get more than $10.93 million; Senior Vice President and Chief Administrative Officer Carden N. Welsh will get more than $12.28 million; and Vice President and General Counsel Danette Wineberg will get nearly $4.16 million.

And what about long-time Chairman of the Board Sidney W. Swartz? By selling his millions of shares of Class A and B stock, he will receive more than $214 million, and The Swartz Foundation (of which Sidney is one of two trustees) will receive nearly $110 million. That’s enough to buy a lot of footwear… and just about anything else a guy could want.

Image source: The Timberland Company

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In any case, that’s the tempting conclusion from a series of transactions between Worthington Industries (WOR) — a leading maker of scuba tanks, helium-balloon kits and propane tanks, among other metal stuff — and John P. McConnell, its chairman and chief executive. According to the proxy Worthington filed last week, the transactions work out to payments of something like $473,709 from Worthington to entities affiliated with McConnell, and $73,932 going the other direction.

McConnell inherited at least the outlines of the arrangements from his late father, John H. McConnell, who founded the company (colorfully, by putting his car up as collateral for the loan he used to buy his first batch of the metal that would make him his fortune). The John H. McConnell Trust owns JMAC Inc., which in turn has aircraft lease agreements with Worthington Industries. And, while the proxy is silent on the specifics, presumably the trust is among the “beneficial ownership of certain family-owned businesses and common shares transferred to John P. McConnell” on the death of his father.

Under those agreements, Worthington Industries paid JMAC $214,230 in the 2011 fiscal year, “for airplane rental when Company-owned planes were not available…” JMAC paid Worthington $33,182 for similar services, and another John H. McConnell Trust entity (called McAir Inc.) paid the company $10,050.

If you’re curious, you can use the WSJ’s Jet Tracker to see where the Worthington aircraft has gone over the years (mostly fairly prosaic places, including Chicago, Detroit and Decatur, Alabama, but also West Palm Beach nearly a dozen times), as well as where aircraft owned by McAir flew (including such sunny spots as the Virgin Islands, New Orleans, and at least five locations in Florida). JMAC flights don’t seem to show up in the database.

Finally, at least in terms of flying the corporate skies, the company got another $30,700 from Blue Jackets Air LLC, which

“primarily provides air transportation services for the Columbus Blue Jackets, a professional hockey team of which John P. McConnell is the majority owner.”

It’s worth noting that John H. McConnell founded, owned and ran the Blue Jackets before his death in 2008. But the family’s sporting interests extend beyond the ice rink, to the putting green. In addition to the flight payments, Worthington Industries

“paid approximately $259,479 to Double Eagle Club, a private golf club owned by the McConnell family (the ‘Club’). The Company uses the Club’s facilities for Company functions and meetings, and for meetings, entertainment and overnight lodging for customers, suppliers and other business associates.”

As is customary, the proxy goes on to note that the golf-club payments “are no less favorable to the Company than those that are charged to unrelated members of the Club.” (That could still be pretty favorable, judging from the club’s website, which with glowing Midwestern faux-humility boasts of its”near-perfect surroundings.”)

To us, though, the arm’s-length disclaimer always raises a related question: Could the company really find no better deal elsewhere — and did it actually look? Note to golf clubs in the Columbus, Ohio, area: This may be your chance to win some business with a low bid (and do let us know how the company responds to your approach).

John P. McConnell is well paid by Worthington — his total compensation worked out to about $3.5 million last fiscal year, most of it in cash — and at less than half a million dollars, the aircraft and golf-club payments aren’t about to break Worthington Industries.

Still, the company is no sole proprietorship — McConnell controls something like 25% of the company’s outstanding common shares, which is enough to have a bigger say in the company’s operations than usual for a chairman-CEO, but still a far cry from making it a personal fiefdom.

We can’t help but wonder whether shareholders wouldn’t be better served by air travel and golf-related entertainment bought from truly independent third parties. But of course, then McConnell might miss out on the glamour of it all.

Image source: Worthington Cylinders website

Luckily for us, that’s not quite the case. Estée Lauder didn’t exactly publicize the details, but it did file them with the Securities and Exchange Commission in an 8-K filed late last week — and small wonder: It’s a sweetheart of a deal for Aerin.

Aerin Lauder, of course, has been senior vice-president and creative director at Estée Lauder since mid-2004, and before that headed global advertising and held senior marketing roles; she owns 9.3% of voting power in the company, according to its September proxy. Her new Aerin Ltd. business, the New York Post’s Page Six predicted ahead of the news, would focus on a “fashion and lifestyle brand that will include accessories, housewares, china and jewelry.” Later reports, including one at Forbes, mention “home goods,” as well as a beauty collection in coordination with Estée Lauder itself.

And that’s where the big bucks come in for Aerin Lauder. She gave up her job at Estée Lauder, of course — she made a $335,000 salary and $162,459 bonus last year, and stood to make $375,000 in salary and $175,000 in bonus this fiscal year — but more than makes up for it with a couple of agreements with Estée Lauder.

One is a Creative Consultant Agreement that makes her “a spokesperson for the Estée Lauder brand” and secures “a minimum of 35 full days of personal appearances worldwide per year,” as well as “the exclusive right to use Ms. Lauder’s name and image to market beauty products and related services of the Estée Lauder brand.” For this, she’ll be paid $700,000 a year, rising by 4% each year, through 2016 — plus $20,000 a day for each day she works for Estée Lauder, rising by $1,000 a day each year after 2012. She also gets an office “and access to an assistant in connection with her services.”

All in all, it looks like Aerin Lauder is getting paid more now that she’s quit the company, and that’s just in cash — the real bucks could well come from her licensing arrangement with Estée Lauder.

That would be the License Agreement Between Aerin LLC, Aerin Lauder Zinterhoffer and Estée Lauder Inc. Aerin Lauder can’t do much with her last name without permission from Estée Lauder’s chairman (a cousin of hers) and its chief executive, but she is licensing her first name and an “A” logo to Estée Lauder on an exclusive basis for “cosmetics, fragrances, toiletries, skin care, hair care, value sets and beauty accessories,” and on a non-exclusive basis for “cosmetics bags, tote bags and fragranced candles.”

For this, Aerin will get 5% of net sales for fragrances, and for everything else, 4% of net sales up to $40 million, and 5% after that. Estée Lauder also has to spend 20% of net sales to promote Aerin-branded products, falling to 15% after the first year (though the minimum varies depending how much Aerin LLC spends on marketing). Both sides agreed to “distribute Aerin-branded products only through prestige retailers.” (Tough luck, Wal-Mart.)

Meantime, now that she’s no longer an employee, presumably she’ll get paid as a director of Estée Lauder: $70,000 cash, plus $25,000 in Class A stock that is turned over the year after the director leaves the board, and options on 5,000 Class A shares. (Directors also get up to $1,280 in Estee Lauder products each year.)

One has to wonder whether Estée Lauder could have worked out a deal to keep Aerin’s brand in-house, at less expense to shareholders. Then again, given that family members own some 83% of the voting power of the company, maybe the question is irrelevant.

Image source: Estée Lauder website

Instead, we found ourselves spending quite some time with the proxy’s 500-word related-party transaction section, trying to unravel the tangled skein. Some of the details are familiar from past years: the 99-year lease for a piece of land in Fairfax, Virginia, with $13.9 million in rent due over the next few decades; the non-profit funded by the company’s co-founders, Chairman Paul Klaassen and his wife, Teresa Klaassen, (and run at least in part by their daughter) that operates a day-care and rents space from Sunrise to the tune of $197,000 last year.

But new this year was Teresa Klaassen’s job:

“During 2010, Mrs. Klaassen was employed as our chief cultural officer from January 1, 2010 to April 30, 2010. She was paid a total of $40,770 as an employee of our company during this period, including $33,077 of salary and $7,693 representing payment for unused vacation.”

That payment for unused vacation came about because Teresa Klaassen’s job didn’t last quite to Sunrise’s annual meeting on May 4 last year. But losing the job meant gaining a contract with the company her husband oversees, serving as an independent consultant to

“provide the following consulting services to us: advise our chief executive officer and other officers on matters relating to quality of care, training, morale and product development; and at the request of our chief executive officer, visit regions and communities, and attend and speak at quarterly meetings and other company functions.”

Teresa Klaassen’s contract expires April 30 this year, and brings her $100,000 a year.

Now, Teresa Klaassen co-founded Sunrise along with her husband, and Paul Klaassen is listed as still holding something like 6.2% of the company’s stock. But is Teresa Klaassen really the best person to advise the CEO or speak at company functions? Could the company find no one else to advise on training, morale and product development?

After all, saying no to the chairman’s wife isn’t going to be easy, even for an assertive CEO. As Michelle footnoted about a different company six years ago, whenever a big company puts the boss’s wife on the payroll, it’s time for shareholders to ask questions.

Image source: *clairity* via flickr

But a new filing from commercial property company W.P. Carey & Co. (WPC) on Tuesday reminds us that other founders may not be quite so easy to work for — and that family relationships come in all kinds of shapes and patterns.

Gordon DuGan, who has been CEO of W.P. Carey for about five years and an executive there for 11 years, gave notice on June 30. The 43-year-old observed in a formal resignation letter, dated yesterday, that “[t]his is not how I expected my long tenure with the Company would end.” He continued, citing

“irreconcilable differences of opinion concerning the degree of authority and control that should be exercised by the Chairman over day-to-day operations, as well as a difference of opinion with the Chairman regarding the strategic direction of the Company…”

The Chairman, of course, is 79-year-old Wm. Polk Carey (as his name appears throughout company documents), founder of the company and owner of about 30% of its shares. And the friction may help explain why the company’s total return trailed the property management sector by nearly 13 points in 2009, though it outperformed handily in 2008 and it’s doing better so far this year.

In any case, the W.P. Carey board didn’t miss a beat, to judge from the 8-K filed on Tuesday. It accepted DuGan’s resignation and named one of its own, Trevor P. Bond, as interim CEO — all of which took effect yesterday, just six days after DuGan gave notice. (The company also made Mark J. DeCesaris chief financial officer — after nearly five years as acting CFO.)

Bond is a longtime financial manager and has been on the board for three years — he made $217,482 in the position last year, and served on its audit and compensation committees until being named interim CEO.

And it turns out that Bond also has a somewhat closer relationship to Chairman Carey — a fact not found in the company’s press release, but mentioned in the 8-K. (Another director, Francis J. Carey, is Wm. P.’s brother.)

Specifically, the company’s 8-K tells us,

“Mr. Bond is the son of the second husband of the daughter of the half sister of Wm. Polk Carey, the Company’s Chairman.”

That wasn’t enough to keep Bond from being classified as an independent director in the company’s most recent proxy. For shareholders’ sakes, we hope it’s enough to pave the way for a better working relationship with the Chairman.

Image source: Kristal Kraft ~ DenverDwellings via Flickr

No, not some direct-to-cable snoozer on uncontested proxies. This example came via the Securities and Exchange Commission, by way of the 8-K the company filed at 4:58 p.m. Eastern time on Friday — the one giving the results of the company’s annual meeting earlier in the day.

The filing told us up front that the company’s “Class A shareholders elected all five director nominees on which they voted.” But turning to page 3, it became clear that it wasn’t quite as simple as it sounded. Here’s the table:

We’ll do the math for you: Reifenheiser, Ryan and Tese had more shares withheld than voted in their favor. None got more than 48.2% of the vote, and Tese got just 39.8%. Under the rules for any PTA election we’ve ever heard of, they would be out of a seat (and no longer eligible for the cash and stock that come with their board seats: $382,451 for Reifenheiser, $389,138 for Ryan and $228,331 for Tese).

And yet, as Cablevision indicated in the 8-K, they were indeed elected. Such is the curiosity of corporate-board elections.

The Senate bill isn’t law yet, of course. It first must be passed by the House or reconciled with the bill that chamber adopted in December, and it could face plenty of changes in the process. But what would have happened if the majority-voting provision had been in place in time for Cablevision’s annual meeting?

According to the bill text posted on the Senate Banking Committee site, all three men would have had to tender their resignation. The board would then have a choice: Accept the resignations within a “reasonable” amount of time (to be determined by the Securities and Exchange Commission) or vote unanimously to decline them. Should the board decline the resignations, it would have 30 days to “make public” its decisions, “together with a discussion of the analysis used in reaching the conclusion.”

Given Cablevision’s dual-class system, the Class A shareholders are a distinct second fiddle to their Class B counterparts. They elect separate directors — not a single Class B share went against the dozen directors they chose on Friday — and in matters in which both classes vote together, each Class B share counts as 10 Class A shares. The B shares, of course, are firmly in the hands of the Dolan family; its patriarch, Charles F. Dolan, remains chairman, and his progeny and relations are scattered throughout the upper echelons of the company. All told, our colleagues in Morningstar’s equity-research arm have observed, they have more than two-thirds of the voting power and less than a quarter of the economic interest in the company (which may help explain the nice perks we’ve previously reported).

So in the end, majority rule in the Class A vote might not have made all that much difference in the company’s governance. But at least shareholders wouldn’t find themselves represented by directors they tried to boot off the board.

Image source: public.resources.org via Flickr

The company, which happens to be featured prominently in this WSJ story on so-called “bankruptcy beauties”, filed for bankruptcy in December 2008 and emerged a year later after selling a majority stake to Brazillian meat processing company JBS SA. In the WSJ story, founder Lonnie “Bo” Pilgrim recounts a discussion he had with a banker at Lazard (LAZ) about the company (and his own personal) woes:

“Dan, I was worth $1.1 billion,” said the 82-year-old Mr. Pilgrim, who founded the company by opening a feed store in 1946. “Somewhere along the way, I lost the ‘one.’ Can you help me find it?”

The article goes on to note that Pilgrim has “recover(ed) a chunk of his wealth”, which seems to be a mild understatement judging by the 10-Q that the company filed late last Friday. Then again, a lot of those details were buried deep in the footnotes, specifically these 3 footnotes on pg. 34:

(b) Until the Effective Date, Pilgrim Interests, Ltd., an entity related to Lonnie A. “Bo” Pilgrim, guaranteed a portion of the Company’s debt obligations…At December 27, 2009, the Company had accrued loan guaranty fees totaling $8.9 million. The Company paid these fees after emerging from bankruptcy on the Effective Date.
(c) On February 23, 2010, the Company purchased a commercial egg property from Lonnie A. “Bo” Pilgrim for $12.0 million.
(d) In connection with the Plan, the Company and Lonnie A. “Bo” Pilgrim entered into a consulting agreement, which became effective on the Effective Date…Mr. Pilgrim will be compensated for services rendered to the Company at a rate of $1.5 million a year for a term of 5 years.

Now call us crazy, but that seems like some mighty nice rewards for someone whose stewardship led the company down the road to bankruptcy. After all, one could argue that these were the types of crazy deals that caused some of Pilgrim’s Pride’s problems in the first place. That the sweetheart deals continue under what’s essentially a new owner seem particularly offensive.

Last week we looked at MGM Mirage (MGM) and its lavish pay for lackluster performance. This week, we turn to Las Vegas Sands (LVS), where the company and its board clearly know how to sweat the small stuff — while paying out the big bucks to select high-rollers in the corner office.

Chairman and Chief Executive Sheldon G. Adelson made $5.6 million in 2009, including $1 million in cash and $1.8 million in stock options, according to the proxy the company filed on Friday. But look a little closer, and you’ll see that the biggest single chunk of his pay falls under “other compensation” — the home of perks like tax-prep assistance and personal security.

And sure enough, true to Las Vegas stereotype, security for himself and his family is the biggest chunk of that — a whopping $2.45 million. The proxy doesn’t go into detail, so we can only imagine that he has a phalanx of full-time body-guards in his entourage; at $150,000 a year for the upper end of the scale, he could keep 15 employed full-time with enough left over to buy them all sharp suits and shades.

Adelson also got “the full-time and exclusive use of an automobile and a driver of his choice,” at $163,812, “the annual reimbursement of professional fees of $100,000,” and the use of Sands-casino gyms and even dry-cleaning services — price-tag omitted, but no doubt priceless for the well-groomed gaming chief. We haven’t seen dry-cleaning mentioned as a perk since Jack Welch’s divorce proceeding.

And then there are the home repairs.

“The Company also permits its executive officers to use Company personnel for home repairs during business hours on a limited basis. The Company requires that these executives reimburse it in full for these services. There is no incremental cost to the Company for any of these benefits.”

It’s no doubt heartening to shareholders that the company can spare its workmen during business hours without losing money on the deal. But the best news for Sands executives may be that the company stands by its employees’ work. Robert G. Goldstein, Sands’ executive vice-president, had work done on his house in 2008 by a subsidiary of the company and, sadly, it wasn’t up to snuff.

“Mr. Goldstein believed, and the Company acknowledged, that some of the work was not performed in an appropriate manner. The matter was referred to an independent expert, who concurred about the quality of the work and concluded that Mr. Goldstein should not be obligated to pay the $0.4 million incurred by the Company for costs and overhead on the job. These findings have been accepted by the Company and Mr. Goldstein.”

If all this sounds like a lot of distractions for a company that styles itself the “leading global developer of integrated resorts,” not to worry: the Sands is outsourcing other non-core operations, including part of its corporate plane fleet — to its own CEO.

Sands and Adelson swapped aircraft throughout 2009, with Sands paying Interface Operations LLC — a company controlled by Adelson and his wife — some $1.2 million to rent its Boeing Business Jet, Gulfstream G-III and Gulfstream G-IV; at the same time, Interface paid Sands $652,114 to rent its three Gulfstream G-IVs, a Gulfstream G-V and two Boeing 737s. Meanwhile, Interface Bermuda Ltd., controlled by Sheldon Adelson, collected $6.1 million from Sands for the use of its two Boeing 747 aircraft. Net to Adelson entities: $7.45 million.

The more we think about it, the more it strikes us that all of Vegas’s various reputations may fit the bill: When it comes to customers’ money, what happens in Vegas sure does seem to stay in Vegas. And that new family-friendly atmosphere? It’s there all right — but it sure helps to belong to the right families.

Image source: Nevada Tumbleweed via Flickr.

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But in the preliminary proxy that the company filed late Friday, Aaron’s said that when the sponsorship of the Robert Richardson racing team ended last year, the company chose not to renew despite the fact that “Motor sports promotions and sponsorships are an integral part of the Company’s marketing programs.” Butler’s son, Ken Butler III, drove the No. 23 Aaron’s Chevy for 18 races last year. The filing provides no other details on the end of the relationship though a quick skim of Richardson’s site shows that Aaron’s is no longer a sponsor.

But according to this article Aaron’s may not have given up on NASCAR after all. It’s just giving up on sponsoring the Butler boys. In honor of the company’s 55th anniversary, the company plans to sponsor Michael Waltrip’s return to racing at Talladega next month. (As we footnoted back in 2006, Walltrip’s company helped to train the Butler boys in the art of racing). There’s no details on the deal, but then again, unlike the Butler boys, Waltrip is not a related party and it’s hard to imagine that the price-tag would be considered material.

Image source: Jayski’s Silly Season

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Thanks to a bunch of talented people at Morningstar, we’re relaunching footnotedPro, our subscription-only service, tomorrow to coincide with the start of what’s a new quarter for many people. It has a new dedicated website and will provide a more efficient back-end. Of course, the real meat is the content — based on my years of digging deep into SEC filings. Now that Sonya and Theo are up and running, I’ll be spending the bulk of my time focused on footnotedPro and hope that you’ll consider subscribing.

Instead, the topic that caught our attention in the preliminary proxy that Ford filed this morning was the disclosure that the company spent $1,191,457 in 2009 to provide security to Executive Chairman/Chairman of the Board of Directors William Clay Ford, Jr. (the great-grandson of Henry Ford).

What’s noteworthy here is that the last time the company reported how much it spent on security for Ford was the April, 2007 proxy; however, back in 2006, the company spent “only” $85,708 to keep Ford safe.

The amount spent on security for Ford wasn’t available in either the 2008 or 2009 proxies. In both years, the company’s filings stated: “…Mr. Ford is not identified as a Named Executive in the Summary Compensation Table… because he did not meet the definition of a Named Executive under SEC rules.”

There also isn’t any clue about why the security costs soared so dramatically in just three years. In fact, other than the expenditure and the statement that Ford is required to fly on private aircraft for both business and personal travel for security reasons, the only clues in the proxy led us to expect very modest expenditures. For example, there’s this passage about Ford’s 17-year-old consulting agreement:

“Under this agreement, Mr. Ford is available for consultation, representation, and other duties. For these services, Ford pays him $100,000 per year and provides facilities (including office space), an administrative assistant, and security arrangements. This agreement will continue until either party ends it with 30 days’ notice.”

And then there’s this section:

“Perquisites and Other Benefits: …For certain executive officers, including the Named Executives, we provide a home security evaluation and security system…. The safety and security (personal and financial) of our executives is critically important. We believe the benefits of providing these programs outweigh the relatively minor costs associated with them.”

The company explains that the only reason Ford is listed as a Named Executive Officer in the 2010 proxy (which is why his compensation appears on the Summary Compensation Table) is that he received performance units and stock options that have grant date values. “Consequently, Mr. Ford is included as a Named Executive pursuant to the SEC proxy rules even though he did not, and will not, receive salary, bonus, or equity awards until such time as the Committee determines the Company’s global Automotive sector has achieved full-year profitability, excluding special items.”

We’ll never know what kind of security services Ford received for nearly $1.2 million. But hopefully for that kind of money, the guy at least got a moat.

Image source: PhillipC via Flickr