A Comfortable Send-Off from Spectrum Brands…

May 14, 2010

Everyone loves a happy ending, don—t they? We’re betting that’s certainly true for Kent Hussey, who recently retired from Spectrum Brands, Inc. (SPB) after serving as CEO for about three years and putting in nearly 14 years with the company.

Atlanta-based Spectrum Brands, which produces goods under the brands Rayovac, Remington, and Cutter, announced in February that it will merge with Russell Hobbs, Inc. a Florida company that makes small household appliances bearing brands such as Black & Decker, George Foreman, and Toastmaster. (Russell Hobbs, Inc. was previously known as Salton, Inc. until it changed its name in Dec. 2009.) The merger comes on the heels of a tumultuous 2009 for Spectrum; the company filed a Chapter 11 bankruptcy petition in February, 2009 and emerged with a reorganization plan on August 28, 2009.

After the merger occurs in the next month or so, the companies will create a $3 billion consumer products company and be a subsidiary of SB Holdings, a newly created Delaware holding corporation.

In the Definitive Merger Proxy Statement that Spectrum Brands filed May 12, the company disclosed that Hussey will continue as the Chairman of the Board of Directors either until the companies merge or August 12, 2010, whichever occurs first. He—ll also work as a consultant for the new company for three years for the relatively modest fee of $250,000 per year. (We say “relatively modest” because Hussey got a 2009 base salary of more than three times that amount and received a total compensation package of nearly $6.3 million last year, according to Spectrum’s annual report.)

Hussey’s other benefits are even more lucrative. (The company actually first disclosed the terms in this Separation and Consulting Agreement which received little notice, perhaps because it was filed on April 15, or perhaps because it was an attachment to this 8-K.)

Besides the consulting fee, Hussey will get:

——(2) a lump-sum cash payment of $1,800,000; (3) a lump-sum cash payment of $3,712,500 (plus interest) six months after Mr. Hussey’s retirement [he officially retired April 13, 2010]; (4) a lump-sum cash payment equal to the annual bonus Mr. Hussey would have earned with respect to fiscal year 2010 based on actual performance for fiscal 2010 on a prorated basis; (5) a lump-sum cash payment of Mr. Hussey’s Long Term Incentive Plan award of $1,237,500; and (6) the lapsing of the restrictions on Mr. Hussey’s restricted stock (222,222 shares).

Hussey also gets the right to purchase his company car for $100, he will receive the company’s welfare benefits (including long term care and long term disability insurance) until September 30, 2012, he’ll be reimbursed for tax preparation and financial planning services for a period of ten years, he gets medical, dental, and life insurance benefits for a period of ten years, and he’ll also be reimbursed for the legal fees he incurred to negotiate his Separation Agreement.

In exchange for receiving all that money, Hussey agreed not to compete with Spectrum until the end of his consulting agreement or a period of two years, whichever occurs later. He also agreed not to reveal confidential information about Spectrum or disparage the company.

But, really, after receiving millions of dollars to fund a nice retirement, why would he want to do any of those things?

Image source: Defense Finance and Accounting Service

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