It’s been awhile since we’ve come across the type of 8-K we saw from Lithia Motors yesterday. More specifically, the type of language we saw in the filing which proffers up lifetime benefits to its soon-to-be former Executive Chairman, Sidney DeBoer.
DeBoer, who to be fair, built Lithia Motors into a company that has clearly performed well for investors, including DeBoer over the years. But judging by yesterday’s 8-K, that’s still not enough.
That’s because the filing spells out a $1.05 million payment to DeBoer for the rest of his life. That’s in addition to a $42,000 a year car payment. Again, for the rest of his life. There’s also a $210K a year payment for serving on the board of directors.
Yesterday, in his hometown paper, the Ashland Daily Tidings, DeBoer actually talked about the pay cut. “It’s a huge pay cut for me'” said DeBoer, who is attending the Pendleton Roundup this week. “But that’s good for the company, because they still get me.”
We’re not quite sure how that huge pay cut math adds up though, but we certainly applaud DeBoer’s attempts at humility. Under the transition agreement, DeBoer will step down as a named executive at the end of this year. Once that happens, the amount of information investors will receive on his compensation will be a lot more limited.
According to the summary compensation table, DeBoer has made $840K a year for the past few years, ever since his son, Bryan, was named CEO in May 2012. So $1.05 million plus another $210K a year for serving as a director seems like a huge pay increase — a 50% pay increase to be exact.
Keep in mind that in addition to his son serving as CEO, the elder DeBoer controls a majority of the voting stock due to the company’s two-tier share structure. According to the most recent proxy, DeBoer controlled 52% of the voting shares, which explains a lot about yesterday’s filing.