But the company caught our attention this week because its directors decided to give themselves a big raise, as laid out in an exhibit to the 10-Q the company filed on Tuesday morning. It seems to be that time of year: We’ve been seeing a number of boards giving themselves big payouts of various kinds, including the recent decision at Google (GOOG) to double director stock grants.

Until January 1 this year, non-employee directors at AmerisourceBergen got a modest annual cash retainer of $60,000. That’s now jumped to $100,000 — a 67% cash raise (though directors may opt to take 50% or more of it in equity). Chairman Richard C. Gozon will get $150,000 instead of the $90,000 he was getting, also a 67% bump.

Meantime, the board decided to give one another an annual equity award of $125,000, payable in either restricted stock or restricted stock units, as the mood strikes each director. That’s up 25% from an annual grant of $100,000 in stock options.

There’s a little give-and-take involved as well. For example, last month’s proxy says directors are eligible for an initial grant of $50,000 restricted stock units on first taking a board seat; that is no longer mentioned in the new arrangement. But then, the new retainer and equity grant make up the difference in less than a year — and for sitting directors, the change is more or less irrelevant.

The new arrangement also appears to eliminate a variety of per-meeting fees; previously, directors got $3,000 for each in-person board meeting attended ($7,500 for the board chairman), and $1,500 for each committee meeting, with half that much paid out for conference calls. Committee chairs got between $3,000 (for the governance and nominating committee) and $5,000 (for the audit and corporate responsibility and the compensation and succession planning committees) per meeting, also cut to 50% for a “telephonic meeting.”

So under the old pay arrangements, the board’s five meetings in fiscal 2011 meant up to $15,000 more for each director and $37,500 more for the board chairman, assuming 100% attendance and all in-person gatherings. The compensation committee met six times — an extra $30,000 for the chairman and $9,000 for each committee member, again, assuming in-person meetings and perfect attendance. The Audit Committee met 12 times — $60,000 more for the chairman and $18,000 for the committee members.

On that front, pay will come down a smidgen: The audit-committee chair will get an extra $20,000 a year instead of per-meeting payments; the comp-committee chair will get an extra $15,000 a year; and the governance and finance committee chairs will get $10,000 each.

Relative to some of the board pay we’ve seen, these may sound like picayune numbers, but they add up. Last year, AmerisourceBergen’s directors each wound up taking home $200,000 or more once you factor in stock, options and perks. (OK, technically, one director made just $199,002.) The total tab was $1.76 million, for at most a couple dozen meetings. We’re pretty sure the new rules will increase that figure, but we’ll have to wait until the company’s next proxy, early next year, to be sure.

Meantime, AmerisourceBergen directors continue to get one benefit that’s increasingly valuable in today’s world: 100% company-paid coverage of all prescription drugs, not only for the directors themselves, but for their spouses and any children under age 26. Only one director used this benefit last year, to judge from the proxy: Charles H. Cotros, and it’s hard to figure out just what it cost, given that it’s wrapped up in a $17,586 “other compensation” figure that also includes dividends paid on restricted shares.

As for AmerisourceBergen’s shareholders, it’s hard to tell how happy they might be with the change. The company did eke out a minimal gain over the medical distribution business, to judge from total-return figures on Morningstar.com, but it was small, at 1.2 percentage points. More recently, it’s been trailing its peers, however, so we’ll see how things look in a little over a year, when the board’s 2012 pay is added up in its proxy.

Image source: Money Meeting image via Shutterstock.com

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There’s more to boardroom maneuvering than pay hikes, and at footnotedPro, we keep an eye out for the ones that matter: signals that could indicate future M&A activity, regulatory headaches or other market-moving developments. For more information or to inquire about a trial subscription, email Todd Serpico. Find out what you’re missing in the filings. 

Consider, for example, the new Amended Employment Agreement that Coventry Health Care, Inc. (CVH) just gave to its chief executive, Allen F. Wise; the agreement was filed with the SEC along with this 8-K on February 6. The agreement extends Wise’s job through December 31, 2013 and creates the possibility that he could be more than $15 million wealthier by the time the agreement ends.

Wise has a long history with Coventry. He joined the company’s board of directors in 1996 and served as president and CEO from October 1996 to December 2004, when he retired. Following that move, he was named Chairman of the Board in January, 2005. But within a few years, Coventry’s stock price fell by 75%, prompting the man who succeeded Wise as chief executive, Dale Wolf, to resign suddenly. Coventry’s directors asked Wise to come back and in January, 2009, he resumed his former role.

When Wise started his second stint as CEO, his 2009 employment agreement provided for some nice touches – a signing bonus worth $5.5 million, 300,000 Performance Share Units (PSUs), and 1 million stock options – in addition to a salary of $600,000 per year. The company explained in its April, 2011 proxy that it

“…equalized base salaries for certain named executive officers to $600,000 to foster a sense of teamwork. Our management team is highly collaborative, and each member of the team is expected to be fully engaged in all aspects of our business.”

Perhaps that sense of teamwork is firmly established, or maybe it’s just not so important anymore, because Wise’s new agreement raised his base salary to $900,000 a year. But, as before, he also got some forms of compensation that are worth far more than his paycheck.

Last month, Coventry gave Wise a batch of Restricted Stock Units (RSUs) and PSUs with a grant-date value of $7.6 million. Whether the RSUs will vest depends on Coventry meeting its earnings per share target in 2012; if it does so, they will vest, half at the end of 2012, and half at the end of 2013. The PSUs, meanwhile, will vest if certain EPS and revenue growth targets are met. Both types of equity awards will be settled in cash, and Wise will get his money in early 2014.

Wise’s new employment agreement also promises to make a second $7.6 million award in January, 2013. While the vesting criteria are similar (but tied to targets for 2013), Coventry once again promised to settle things at the end of that year and pay Wise in cash in mid-February, 2014.

Judging from this morning’s earnings report, Wise seems determined to charge ahead, making reference to Coventry’s “forecast of double digit revenue growth coupled with operating earnings and EPS growth.” But, of course, there is still much work to do. Coventry’s performance in the past year lagged behind both the S&P 500 and other companies in the health care plan industry. If the company’s performance improves dramatically, we suspect that investors may find Wise’s employment agreement more palatable than they currently do.

Image source: Chopping the vegetables via Shutterstock

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]]> http://www.footnoted.com/my-big-fat-deal/slicing-into-an-employment-agreement-from-coventry/feed/ 0 http://www.footnoted.com/my-big-fat-deal/down-100-million-but-not-entirely-out-at-nabors/ http://www.footnoted.com/my-big-fat-deal/down-100-million-but-not-entirely-out-at-nabors/#comments Tue, 07 Feb 2012 15:38:28 +0000 Theo Francis http://www.footnoted.com/?p=6703 Eugene M. Isenberg is getting a lot of attention — and deservedly so — for giving up the $100 million that his employer, Nabors Industries (NBR), owed him for naming another man chief executive of the company Isenberg had run for a quarter-century.

That give-back is remarkable, as with most things involving Isenberg, Nabors and compensation. But there are a few details that have been mostly overlooked in the coverage, including what could prove to be years of gainful employment for Isenberg and lifetime health-care for him and his wife. It doesn’t begin to add up to what he’s giving up, but it’s instructive nonetheless.

Isenberg, of course, has made a ton of money in his years running Nabors. From 2008 to 2010 alone, his total compensation came to nearly $109 million, almost all of it in cash, according to the company’s most recent proxy, filed in late April. His flat $100-million severance deal — triggered when the company named then-Chief Operating Officer Anthony G. Petrello to replace him as CEO in October, even as he stayed on as chairman — was a replacement for a richer, $264-million arrangement that triggered shareholder objections after it came to light. (The Wall Street Journal’s Mark Maremont laid out the whole scenario in a piece last fall.)

Now, even that scaled-back (but still remarkable) payout is gone, as is $7 million in a “deferred bonus” account. The 8-K that Nabors filed yesterday makes clear that it is being replaced by a kind of $6.6 million posthumous bequest to Isenberg’s heirs — the money will be put in escrow at a healthy 6% fixed interest until the 82-year-old Isenberg’s death. (He also gets that lifetime health-care, plus dental coverage and life insurance.) Another piece from Maremont and colleague Joann Lublin in the WSJ indicates that Isenberg would like the company to give a “substantial portion” of what he surrendered to charity; the company apparently plans to make a donation, but not anything like the full $100 million.

But the new agreement with Isenberg also has another provision that caught our attention: An indefinite post with the company at an estimated $50,000 a year, or more. Here’s the official language from the 8-K, which is simpler than the agreement itself:

“Mr. Isenberg will continue as Chairman of the Board, but will not stand for reelection as a director when his term expires in June 2012; at that time, he will be appointed Chairman Emeritus for a three-year term, which will be extended for additional one-year terms unless terminated by him or by the Company, and receive cash compensation equal to other nonemployee directors…”

Nabors’ most recent proxy shows that directors get a base cash retainer of $50,000 a year, plus extra for chairmen and those in other key roles; total pay for directors, including equity, ranged from $280,000 to more than $526,000 in 2010 — very much on the high end of what we tend to see. The automatic extender means that Isenberg is likely to keep the job until he doesn’t want it any more.

What isn’t said explicitly in the 8-K, but is spelled out in the agreement itself, is that the board could bump that amount up by as much or as little as it sees fit:

“In the sole discretion of the Board of Directors of Nabors Bermuda, for serving as Chairman Emeritus and a goodwill ambassador, Executive may receive additional compensation and benefits.”

Unfortunately, we may never find out what the board sees as appropriate. Once top executives lose their august titles, they tend to disappear from proxy filings, and it isn’t clear whether Isenberg’s “chairman emeritus” title will be a true board seat — in which case his pay will show up with that of other directors — or whether it’s a largely honorary title.

We think it’s unlikely that the board is going to return Isenberg to anything like the eight-figure pay packages he’s been accustomed to. Still, an indefinite contract for an indefinite amount of money is a pretty big question-mark. Given Nabors’ past pay practices — at least until someone kicks up a fuss — it’s one worth keeping an eye on.

Image source: Money via Shutterstock.com

Each exec got a total compensation package of $9 million or more; and we noticed that former chief executive Léo Apotheker got $30.4 million – a number respectably in the middle of our prior estimate of what he would walk away with. (See our post on the Worst Footnote of 2011 for details.) And yet (other than a nod in passing from CNNMoney here) another well-paid leader at HP largely escaped the compensation klieg lights.

That person is the executive chairman, Raymond J. Lane, who received equity awards and a little cash in fiscal 2011 that added up to nearly $10.65 million. Lane started out as simply a director, but his role quickly evolved into much more than that. His pay followed suit.

To provide a little context on Lane’s compensation, let’s first consider the fact that Lane’s fellow directors made between $290,676 and $355,868, if they served a full year. Each got an annual $100,000 cash retainer (or an equivalent amount in shares, if they preferred) and an annual $175,000 equity retainer. Directors got $2,000 more for each board meeting or committee meeting they attended in excess of six, and committee chairs got more cash for their extra work.

As stated, Lane started out as a director. So how, and when, did he end up getting so much more than his fellow directors? Lane was elected to the board on September 30, 2010, and later tapped to be the non-executive Chairman of the Board on November 1 of the same year. At the time, the board awarded him 45,000 RSUs that would vest equally over three years, starting with the first anniversary of the grant, so long as he remained in that position. The proxy then notes:

“No other compensation was paid to Mr. Lane for his service on the Board from November 1, 2010 until the 2010-2011 Board term ended on March 23, 2011. For the remainder of fiscal 2011, Mr. Lane received the same compensation paid to other non-employee directors.”

On September 22, 2011, Lane’s title changed to executive Chairman of the Board, and — in addition to the change in title — the board gave him an equity retainer in the form of a non-qualified option to purchase 1,000,000 shares of HP common stock. The award vests according to a fairly complicated formula (p. 28, if you’re interested), but the gist is that he gets 200,000 over three years just for keeping the executive chairman’s title, another 400,000 over three years if Lane stays in the job and HP’s share price “has met or exceeded 120% of the exercise price of the option for at least 20 consecutive trading days”, and the final 400,000 if he stays even longer and the stock prices stays at 140% of his option price for at least 20 consecutive trading days.

Perhaps HP’s board has learned its lesson from the Léo Apotheker chapter, whose departure forced the company to pay out tens of millions of dollars for a short-term chief executive. Whether Lane ultimately receives the full value of the $10.65 million award depends on him both sticking around and helping to turn around HP’s stock price, which is currently trading almost 40% lower than it did one year ago. For investors, some stability and share-price gains would no doubt be welcome changes.

Image source: Bulb mark on blackboard, via Shutterstock

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When it comes to disclosure and executive exits, however, we’d like to think someone over at Choice Hotels was paying attention: An executive vice-president is being shown the door again, and the hotel chain seems to be going more or less by the book. The book, of course, is the severance terms the company’s lawyers had written in advance. The outgoing EVP is Bruce Haase, whose broad portfolio included global brands, marketing and operations, and the executive is going to get pretty much what he was promised.

Not that it’s easy to figure that out. The 8-K that Choice Hotels filed yesterday was a model of brevity, at just under 350 words. Unfortunately, it could probably have been boiled down to just a sentence or so: “Go take a look at his employment agreement, and the amendments attached to the 8-K.”

We should stress that in this case, there’s no indication that Haase is leaving under any kind of a cloud. The filing simply says his departure “will be deemed a termination without cause under Mr. Haase’s Non-Competition, Non-Solicitation and Severance Benefit Agreement.” But there are also no numbers to make clear what’s happening. The document simply refers readers back to that melodiously named “Non-Competition, Non-Solicitation and Severance Benefit Agreement” and a new amendment, dated January 27. The amendment is attached as another brief document, but unfortunately it amounts to a laundry-list of changes, without saying much about the original terms. Similarly, a two-page Transition Services Agreement spells out his pay and benefits entirely in reference to his earlier agreement and the recent amendment (and federal law, which isn’t all that illuminating either).

Given time and a little effort, it is possible to piece all this together — that’s how we can tell you it works out to something like $2.7 million, going by the proxy that Choice Hotels filed on March 31, 2011 (or maybe a smidgen less, given the 6.6% decline in the company’s stock since the end of 2010).

Most of that is cash, at 18 months’ salary ($600,000) and the equivalent of a bonus target of $220,000, or 55% of salary. Health benefits and outplacement services — last month’s amendment says he can use any outplacement firm he wishes — amounts to another $38,000 or so. Some $248,967 represents the pension he can start drawing at age 65 (he’s now about 50 years old). The rest — some $1.7 million — comes from from the continued vesting of stock and options over the 18 months after his termination. Not included in there, as far as we can tell, is the $4.3 million or so he’s accumulated in his deferred compensation account, including more than $370,000 in employer contributions and company-paid earnings for 2010 alone.

Beyond the fact that they could have made it a lot easier for shareholders to get the complete picture, we do have one other (small) bone to pick with Choice Hotels: The company first mentioned that Haase would be leaving in a separate 8-K filed on January 20 — and good on them for doing so; we’ve seen companies do less for more prominent executives. But in that two-sentence filing, Choice Hotels said cryptically that, three days before, it and Haase had “agreed that Mr. Haase will relinquish his title and authority as an officer” on January 31, and that “this event will occur in connection with Mr. Haase’s planned departure from the Company” in the second quarter. That wording makes it sound like this was some long-planned transition, though we don’t see any previous reference to the move.

Anyway, we can pick nits — we’re good at that — but Choice Hotels is at least moving in the right direction, in terms of sticking to the severance terms it already has on the books instead of cooking up ad-hoc arrangements. Now maybe the company can work on making its disclosures a little more investor-friendly.

Image source: Business travelers exiting photo via Shutterstock.

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After spending 37 years with Lockheed Martin, Ralph D. Heath, Executive Vice President of the Lockheed Martin Aeronautics Company, is ready to retire. Heath has served in that role since January, 2005 and – based on the information in the 10-K filed in February, 2011 – is (or soon will be) 63 years old. Although his official date to step down as the Executive VP of Aeronautics is April 1, Heath agreed to keep working as an Executive Vice President until April 30, reporting to President and Chief Operating Officer Christopher E. Kubasik during that last month. Accordingly, his official retirement date is set for May 1.

Between now and then, Heath will continue to earn his salary (calculated at $63,333 a month, or $760,000 per year) and benefits. But after May 1 he is set to get a nice check from the company and a consulting agreement, described in the filing as follows:

“Following his retirement, Mr. Heath will be paid $950,000 as part of the transition arrangement contingent upon executing a written release of claims…

Heath also agreed to provide “transitional consulting services” pursuant to a year-long consulting agreement. He can’t work more than 52 days between May 1, 2012 and April 30, 2013, but he will be paid $5,000 per day for his troubles. Lockheed Martin hasn’t filed either the Transition Agreement or the Consulting Agreement yet; but those may be filed shortly, or they may be filed with the annual report, which will probably be filed near the end of this month. However, given the $950,000 initial payment, and assuming Heath works the maximum number of 52 days as a consultant, his new, post-retirement gig is worth $1.21 million.

Of course, Heath will actually be retiring with far more money than that, having labored for so many years for the world’s largest defense contractor. In the March, 2011 proxy, the company disclosed that Heath’s interests in a variety of executive benefit plans (including the retirement plan and a supplemental plan, a Deferred Compensation account, a supplemental pension, and his various equity interests at the time) had an aggregate value of more than $15.78 million, assuming a termination date of December 31, 2010. That number is most certainly higher now, both because Heath continued to get equity awards in 2011 and because the stock is trading about 3.4% higher than it did a year ago.

Within the past couple of weeks, Secretary of Defense Leon Panetta announced that he was rescinding probation of Lockheed Matin’s F-35B program because of the great progress made in 2011. Thus, even with the looming budget cuts, at least Heath is making his exit on a high note.

Image source: Lockheed Martin Corp.

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Pinching pennies at the front door may actually be helpful for the company, however, given the significant cash that Wal-Mart has promised to pony up to a couple of  executives, according to an 8-K filed January 25.

One such executive is Rosalind G. Brewer, who was promoted into the role of president and CEO of Sam’s Clubs and will start her job on February 1 with a base salary of $800,000. She won’t have an employment agreement, but the 8-K revealed that her target cash bonus under the Management Incentive Plan (MIP) for the next fiscal year is set at 160% of her base salary, or $1.28 million, and she could get as much as $1.6 million.

Brewer will also get an annual equity award, including performance shares with a target value of $2,625,000 and restricted shares with a value of $875,000. The first award is subject to performance criteria over a three-year period; the second award vests on the third anniversary of the grant date.

But apparently the new salary, potential bonus, and up to $3.5 million in equity awards don’t really compensate Brewer adequately for her promotion, because the filing then adds:

“Ms. Brewer will also receive two additional awards of performance shares in connection with her promotion effective February 1, 2012, subject to approval of the CNGC [Compensation, Nominating and Governance Committee]. The first additional performance share award will have a target value of approximately $1,846,952, and will vest on the first anniversary of the grant date. The second additional performance share award will have a target value of approximately $1,797,014, and will vest on the second anniversary of the grant date.”

Thus, if the company’s performance meets whatever criteria are set by the Compensation, Nominating and Governance Committee, Brewer could get more than $3.64 million extra, which – to our way of thinking – even beats a celebratory promotion lunch at a swanky restaurant in Bentonville. Brewer also gets to use Wal-Mart’s jet for personal reasons “for a limited number of hours,” and the company is paying her relocation costs as she moves from Atlanta to Bentonville.

As for current Sam’s Club CEO and president, Brian Cornell, who joined the company in 2009, he advised his employer that he and his wife want to “move back to the Northeast for family reasons.” But even though he will cease being an executive on January 31, the filing notes that he will continue as “an associate” through April 1, 2012 (albeit one who gets “personal use of the Company aircraft for a limited number of hours”). The 2011 proxy doesn’t reveal Cornell’s base salary, but the 2010 proxy listed it as $800,000 at the time.

Although none of us will probably get an invitation to help Brewer celebrate her promotion, Wal-Mart made an announcement this morning that everyone can look forward to: The midnight party at 2,700 Wal-Marts to celebrate the DVD release of Twilight Saga: Breaking Dawn Part 1 set for February 10 is a go, complete with Edward and Bella collectibles, giveaways, and “Twilight-themed” bakery goods.

Image source: Wal-Mart, Inc.

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On January 18, we published our 2012 footnotedPro M&A report, naming 10 companies we see as likely deal targets based on our close reading of SEC filings. To inquire about purchasing a copy, or to find out more about subscribing to footnotedPro, where we highlight hidden opportunities and easy-t0-miss red flags well in advance of the market, please email Todd Serpico.

Then there are the part-time jobs pretty much anyone would love to have: corporate directorships. Earlier this month, Michelle footnoted how Google (GOOG) seems to have decided to double the value of the one-time stock grant for new directors, to $1 million, from $500,000. But in recent weeks, some other director pay arrangements have also caught our eye.

Like a lot of companies, WGL Holdings, a Washington, D.C.-area natural gas supplier, lets directors defer some of their pay, and promises to pay them interest on the deferrals. But it turns out that WGL goes further, according to the proxy it filed on Friday, guaranteeing its director a minimum of 8% interest, or, if it’s higher, the “weekly average yield to maturity for 10-year U.S. Government fixed interest rate securities issued at the time of the deferral…” For one director (Melvyn J. Estrin), that meant $89,932 in interest gains in fiscal 2011, or just over a third of his total compensation, and more than his $75,000 in stock awards for the year. It meant $48,309 for James F. Lafond, or just under a quarter of his total pay, and $30,005 for George P. Clancy, or 15% of his total compensation. (We wouldn’t mind getting rates like that on our savings — it would sure help pay the area’s higher-than-average gas bills.)

At first glance, director pay at laser-maker Coherent Inc. (COHR) looks relatively reasonable: The various annual retainers, displayed in a nice table on page 9 of its proxy, range from a base $40,000 for all board members, to $6,500 additional for governance-committee members. But it adds up fast: total compensation ranges from $258,385 for investor L. William Krause (who sits on at least four corporate boards) to $479,629 for Jay T. Flatley, CEO of aggressively independent Illumina (ILMN), who received $390,149 in stock options as part of that.

By contrast, the 8-K filed by Intermec Inc. (IN), an RFID and wireless-identification company, is something we don’t see very much: The company appears to have actually reduced what it’s paying board members. Directors will now receive restricted stock units with a grant-date value of $100,000, instead of RSUs worth $80,000 plus options valued at $80,000. Given the total pay reported in the company’s April proxy, that’s a significant change, assuming nothing offsets the cut: Last year, most of Intermec’s directors made $184,564 all-in — on the low side of what we tend to see.

Another company caught our attention with relatively low director pay — sort of. That’s TFS Financial (TFSL), a $2.9 billion market-cap thrift holding company in Cleveland, which filed a proxy on January 9 reporting annual pay of just $51,000 to $74,000 for six of its full-year directors. Of course, two new directors got $501,500 in new stock awards for joining the board, vesting over five years (or on retirement, which essentially means leaving after age 72; both are in their mid-60s).

Any way you slice it, it boils down to nice (or very nice) pay for part-time work, and we’re haven’t even seen filings from most of the outliers yet. Stay tuned.

Image source: boardroom via Shutterstock.com

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On January 18, we published our 2012 footnotedPro M&A report, naming 10 companies we see as likely deal targets based on our close reading of SEC filings. To inquire about purchasing a copy, or to find out more about subscribing to footnotedPro, where we highlight hidden opportunities and easy-t0-miss red flags well in advance of the market, please email Todd Serpico.

Last week we wrote about an American executive who got a sweet deal after his employer decided to move its headquarters from Chicago to London. But you needn’t worry that there will be some kind of executive vacuum here in the States:  Yesterday we found an equally impressive agreement that will soon transplant a London-based executive to New York.

The executive in question is C. William Eccleshare, who has been working as the Chief Executive Officer—International of Clear Channel Outdoor Holdings, Inc. (CCO). The company just promoted Eccleshare to the position of CEO of the entire company Clear Channel Outdoor Holdings (including its indirect parent entities, CC Media Holdings, Inc. and Clear Channel Communications, Inc.), which means that he will oversee operations here in the United States and internationally.

Clear Channel included a summary of the terms in Eccleshare’s new employment agreement in an 8-K filed January 24; presumably the agreement itself will be filed soon. The agreement’s term runs through December 31, 2014 and will automatically renew each year thereafter until one side or the other wants to end it. Eccleshare will get an annual salary of $1 million, but that’s just the tip of the compensation iceberg. He will also get a performance bonus under the new agreement that has a target of “not less than” $1 million, although he may earn up to twice that amount; and he can also earn up to $300,000 more for what Clear Channel is calling an “Additional Bonus Opportunity.”

Subject to the Compensation Committee’s approval (and does anyone out there think they won’t give it?), the board also agreed to give Eccleshare $4 million worth of Restricted Stock Units, or RSUs. The vesting of 25% of those RSUs is tied to performance targets, but the rest will vest in 50% increments on the third and fourth anniversaries of Eccleshare’s appointment as CEO.

Clear Channel is certainly doing what it can to make Eccleshare’s move to New York easier:  Besides paying for all “reasonable expenses” associated with the move, it’s also giving him an extra $200,000 to cover those little odds and ends that aren’t “otherwise covered by the Company’s relocation policy.” And then there’s this:

“…for the duration of Mr. Eccleshare’s assignment in New York City, [Clear Channel will] reimburse Mr. Eccleshare up to $20,000 per month, fully grossed-up for applicable taxes, for housing in New York City.”

That is enough to rent a 2,700 square foot, 4 bedroom, 4 bathroom apartment on the Upper East Side that boasts some nice touches like Mahogany and oak wood, imported Italian marble, Subzero appliances, and – of course – a doorman.

The full value of the free housing benefit will depend on how long Eccleshare stays in this role and whether this contract will continue renewing annually after the end of 2014, or whether at some point the parties will amend the agreement and change the terms. Eccleshare is young, though. His age in the February, 2011 10-K was listed as 55, which means that he’s probably around 56 by now; thus, a long-term stay in New York would add up to a significant amount of money.

And we can’t overlook the impending departure of Ronald H. Cooper, Chief Executive Officer—Americas, who will leave his job “no later than” February 29, 2012. The 8-K disclosed that Cooper signed a Severance Agreement and General Release (not filed yet) that will pay him a lump sum cash Severance Payment of $2,547,600, plus a 2011 bonus of $385,100.

Apparently, when it comes to money flowing from Clear Channel’s checkbook to its executives, the motto is “Easy come… easy go.”

Image source:  Check and fountain pen via Shutterstock

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On January 18, we published our 2012 footnotedPro M&A report, listing 10 companies we see as likely deal targets, based on our close reading of SEC filings. To inquire about purchasing a copy, or to find out more about subscribing to footnotedPro, where we highlight hidden opportunities and easy-t0-miss red flags well in advance of the market, please email Todd Serpico.

Correction: The headline on an early version of this post incorrectly said O’Donnell would get “free” clothing instead of discounted clothing. My apologies for the error.

American Eagle Outfitters (AEO) describes itself as offering “high-quality, on-trend clothing, accessories and personal care products at affordable prices.” But while it pours effort into making the case that its clothes are a good deal, it put far less into making clear just how good a deal its retiring chief executive got on his way out the door.

As retirement (or severance) packages go, James O’Donnell is no Samuel Palmisano. But he is getting a handsome sum as he steps down from the top job at American Eagle Outfitters on January 28, a move that was telegraphed at least as far back as March. (Sonya footnoted his replacement’s compensation package the day before Thanksgiving.)

The 8-K that AEO filed to disclose O’Donnell’s package is pretty spare: The only dollar figures in it are $552,500 and $2.21 million — the least and most, respectively, that O’Donnell can make from a one-year post-employment consulting gig he’s getting from American Eagle. (Unusually, any amount over the base $552,500 will be “based on attainment of performance goals for the Company’s 2012 fiscal year,” which sounds more like a bonus to us than like consulting fees, but OK.)

Other elements of the package are described blandly as “his deferred compensation,” “a lump sum retirement benefit determined in accordance with the O’Donnell Employment Agreement,” “severance equal to one year of his base salary less the accrued but unpaid cost of his personal use of the Company aircraft…” and so on.

It turns out that all of this vagueness probably adds up to something like $15.6 million.

The breakdown is fairly straightforward: a year’s base salary, or $1.7 million based on last year’s pay; that lump-sum retirement benefit, or $3.6 million (essentially salary plus bonus “for the highest compensated fiscal year of the prior seven fiscal years,” according to last year’s proxy); a 2011 cash bonus ($612,817 last year); his long-term incentive plan account balance ($1.2 million as of the proxy); his deferred-comp account ($2.4 million, the proxy says); and continued vesting for his stock options, restricted stock units and performance shares ($6.1 million as of last year’s proxy).

His options are underwater, so they’re valued at $0 in the above calculation, which could change if AEO’s stock price rises appreciably in the near future. And as intriguing as it sounds, that “accrued but unpaid cost of his personal use of the Company aircraft” turns out to reduce his severance by just $65,000, according to the text of his Succession Agreement.

Oh, and O’Donnell also gets a lifetime “discount on Company merchandise generally applicable to active employees” for himself and his spouse. The company’s benefits website simply describes its discount for employees as “great.” But judging from various rate-your-employer websites (including comments on this one, as well as comments on Yahoo Answers), it does sound pretty good, if you like the clothes, ranging from 25% for clearance items to 40% or even 50% for regular and new merchandise.

It would take a heck of a lot of $10 tank-tops to make much of a difference for O’Donnell financially, much less for AEO investors, who haven’t exactly had a blockbuster year. Then again, they’ve done pretty well overall since O’Donnell took the helm, so maybe they won’t begrudge him a few $19.99 Mohawk Trapper Hats. And hey, we’d sure love to see him in one.

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Bonus: iPad Watch – We’ve been noticing for a while that departing executives are frequently getting to keep their treasured company-issued iPads. We like Apple’s software and hardware here at footnoted, but for the life of us, we haven’t been able to figure out a legitimate business case for an iPad at most companies (including ours — or believe me, I’d be lobbying to expense mine, stat). Now we’ve found support for our skepticism in an 8-K filed by Smart Balance (SMBL) after 5 p.m. on Friday. According to the accompanying Separation Agreement and Release, departing CFO Alan Gever is being allowed to keep his laptop, iPad, cell phone and cell-phone number. However,

“Prior to his Separation Date, Gever shall provide the Company access to his laptop and Blackberry to purge all Company data and information.”

No mention is made of purging Gever’s iPad — presumably because, like his cell phone, it doesn’t hold any company data or information worth purging.

Image source: AEO clearance website (no, really, it’s for sale — or check out the model with reindeer horns for just $14.99)

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On January 18, we published our 2012 footnotedPro M&A report, listing 10 companies we see as likely deal targets, based on our close reading of SEC filings. To inquire about purchasing a copy, or to find out more about subscribing to footnotedPro, where we highlight hidden opportunities and easy-t0-miss red flags well in advance of the market, please email Todd Serpico.