Mining has always been a dangerous job. But mining company executives have always had it easy compared to the workers who actually extract precious gems, metals, and minerals from under the Earth’s crust, a point underscored in the 8-K that silver and gold producer Coeur d’Alene Mines Corp. (CDE) filed at 4:35 p.m. last Friday.
Dennis Wheeler, the company’s President, Chief Executive Officer, and Chairman of the Board, informed his colleagues that he would resign on July 11 – a transition that will extract nearly $4 million in departure-related payments from Coeur d’Alene. The terms, which seem pretty generous to us, were spelled out in Exhibit 10.1.
The part that really caught our attention was the one-year consulting agreement. Now, that’s a fairly common arrangement for departing executives, but what we found to be unusual is that the company is paying Wheeler his $1 million consulting fee in a lump sum payment up front. It’s also giving him up to $75,000 to set up and maintain an office, as well as the use of a company car.
The agreement doesn’t specifically require Wheeler to put in a certain number of hours per week or per month over the next year. Rather, it obligates him to “render those services reasonably requested by Company and/or the Board on an as-needed basis during normal business hours” and adds that “The Parties agree and understand that the services performed by Executive under this Paragraph 2 shall be periodic and limited in nature.” In fact, they can be so limited that Wheeler can “accept other employment and pursue other activities and interests,” so long as they don’t prevent him from fulfilling his promises and obligations under the agreement. In our book, $1 million for an undefined work schedule is a pretty sweet gig.
The other part of the agreement gives Wheeler a payment of $2.8 million – dubbed a “Separation Benefit” – which is to be paid in a lump sum on the first pay date after the Agreement became effective. He also gets up to three years of health insurance coverage for himself and his eligible dependents (a benefit that is never cheap, but is probably more expensive since Wheeler is 68), and up to $25,000 so that he and his spouse can each get an executive physical. Considering the fact that executive physicals at a place like the Mayo Clinic typically run around $3,000, this seems like an extremely generous allowance.
In addition, all of Wheeler’s unvested stock options, stock appreciation rights, restricted stock and RSUs, and other equity interests will remain outstanding until they expire, terminate or are exercised/settled, according to their terms. Granted, Wheeler ran the company for 25 years, so you would expect a grand exit. Then again, shareholders haven’t exactly reaped the benefits, judging by the historical stock performance for much of Wheeler’s tenure.
And Wheeler gets to keep a few more nuggets on his way out the door. The Agreement states:
“…Company agrees that Executive may retain or take possession of the following objects of art located in Executive’s offices: (a) Rosenquist Print; (b) large metal bowl; and (c) miniature ivory objects.”
There’s no hint as to what the art is worth, but – in all – it’s clear that Wheeler’s 25-year expedition as CEO of Coeur d’Alene is still yielding plenty of treasure, even as it comes to an end.