Discovery Communications (DSC) and its Discovery Channel has made a name for itself in part with a host of shows about rough-and-ready folks taking what comes: Storm Chasers, Man vs. Wild, Deadliest Catch, Dirty Jobs.
In the executive suite, needless to say, none of that seems to apply. Another Discovery Channel show, Gold Rush, may be more appropriate, to judge from the 8-K that Discovery filed yesterday with details of its incoming chief financial officer’s pay.
Discovery is hiring Andrew Warren away from the same post at Liz Claiborne (LIZ), where he’s been CFO since July 2007. The parting there seems amicable enough, since Warren doesn’t leave (or start at Discovery) until March. Once he starts, though, the cable network is pulling out all the stops. (Update: Warren is also getting big bucks from his former employer. See note below.)
He gets a nice salary, of course — $900,000 a year, matching what Apple CEO Tim Cook is pulling down as head of one of the biggest companies on earth — and a target bonus of the same amount. He’s also slated to get $1 million in stock options and another $1 million is restricted stock units. (Discovery’s 8-K doesn’t make clear how long it will take for those equity awards to vest, and it didn’t file Warren’s actual employment agreement yet, so we’ll have to wait to find out the terms.)
But Discovery is also making his relocation easy. Liz Claiborne, of course, is based in Manhattan, while Discovery is based 223 miles away in Silver Spring, Maryland, just outside of Washington, D.C. The company is providing unspecified relocation benefits, but “[i]n addition to the benefits under the relocation policy,” the company is also giving him as much as $30,000 this year and $20,000 next year “for travel expenses” (presumably to ease the commute until he moves to the area). Given that Delta just quoted us $892 for a round-trip, first-class, refundable, week-long flight (without a Saturday stay) from LaGuardia to Reagan National, that $50,000 should be good for a flight a week if Warren is reasonably prudent. In any event, we doubt we’ll see him on BoltBus, our preferred way to travel between NYC and DC.
Moreover, his stay in Washington will be no Man vs. Wild challenge: Warren will be traveling around the D.C. area in style, in a company-paid car — with a maximum of $1,500 a month — and “a suitable corporate apartment in the Washington, D.C. area” until as late as August 31, 2013. Just to put that in perspective, Yahoo’s monthly car-lease calculator suggests he could get a three-year lease on a BMW 650i convertible for a mere $1,300 or so a month. And five grand will get him the 2,420-square-foot, three-bedroom, two-and-a-half bath Penthouse 13 at the The Grand in nearby Bethesda, including Jacuzzi and granite counter-tops, plus a “grand piano room” and concierge among the building’s amenities.
Assuming Warren does move to D.C., his three-year employment agreement makes it tough for him not to make a bundle over the next few years. If he gets canned for anything but some pretty serious infractions, or if he leaves for the usual sorts of “good reasons” (like being demoted), Discovery is obliged to pay him his salary for the rest of the contract’s term — as much as three years, and at least one year.
But if Discovery doesn’t actually fire him, and just decides not to renew his contract, he gets the same benefits as if he had been fired. And if it does want to renew his contract, but Warren isn’t interested, Discovery has to pay him as well — half his base salary for 12 months (or $450,000 assuming he gets no raises in the meantime).
As far as we can tell, there are only a couple real catches. For one thing, Discovery seems to want to make sure that Warren actually moves down to the D.C. area. It has decreed that he won’t get a bonus in 2013 if he doesn’t. Meantime, if Warren is canned, leaves for good reason, or his contract isn’t renewed, Discovery can offset what it has to pay him with any income he gets from consulting or working elsewhere. All this, of course, is in the name of securing non-compete and similar commitments from Warren.
All told, it’s a pretty sweet deal for a position that isn’t even the top job at the company.
Update: If nothing else, it looks like Discovery is getting a savvy negotiator — Warren isn’t just getting big bucks and perks to join Discovery, he’s also getting big bucks on his way out Liz Claiborne’s door. (Of course, it might be that LIZ is forcing him out, but we’ll assume the best.)
According to an addendum to the earnings 8-K that Liz Claiborne filed just this morning, the company is accelerating the vesting on 492,500 stock options, 192,600 restricted stock units and 9,550 restricted shares, as long as Warren sticks around until March 16. Given LIZ’s stock price of a little over $8.50, we figure the options are worth some $1.6 million, and the restricted shares and RSUs another $1.7 million.
An especially nice touch: The 192,600 RSUs ($1.6 million worth at today’s price) were apparently granted as a “special retention award” on June 13 last year — which worked for all of, what, nine months?