Where’s the traffic cop?

October 23, 2006

traffic.jpgThe 8-K filed by Safenet Inc. (SFNT) late Friday had so many different things going on that it almost should have come with a traffic cop tucked into the filing. For one, there were five separate employment agreements — two for outgoing Chairman and CEO Tony Caputo and outgoing CFO Carole Argo and three for incoming executives Walter Straub, Chris Fedde, and John Frederick, all of whom have had various roles at the company, but whose executive appointments were announced last week as part of the ongoing stock option probe.

Among the more interesting things in this Friday night document dump was an announcement that the company planned to pony up $250 million to Citigroup’s (C) Citibank unit, rather than fight a "notice of acceleration" because the company has still not filed its Q for the quarter ended June 30. There’s also the 50,000 options for incoming Chairman and CEO Straub that vest immediately. There’s also a "success bonus" for Chris Fedde if Safenet is sold within a year, plus full vesting of any options, and a gross-up for taxes. And a clause that if the company is sold, Frederick has to be made CFO of the new company or be allowed to resign for "good reason", a legal term that kicks in additional incentives.

And speaking of legalese, the filing also includes some details about the terms of the resignations of both Caputo and Argo, who will remain at the company is a transition role until the end of  the year. Under the two agreements, the board’s personnel committee has until March 31, 2007 to let the two executives know whether their respective resignations were for "cause", which essentially means they were fired, or whether it was for "good reason" which doesn’t.

That’s lots of stuff packed into one filing on a late Friday afternoon.

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