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A million dollar guarantee…

Growing up, my grandfather repeatedly told me that the only things in life that were guaranteed were death and taxes. But AutoNation (AN) seems to have expanded that definition when it comes to one of their top executives.

Yesterday, the company announced that COO Michael Maroone was joining the company’s board. In that same release, the company noted that Maroone, whose employment contract was set to expire in December, had inked a new deal, though the release provided no details of the deal. But in an exhibit to an 8-K filed yesterday, Maroone is guaranteed a bonus equal to his annual salary of $1 million. In the filing, the language guaranteeing the bonus is actually underlined.

Now, Maroone, who joined the company back in 1997 when AutoNation purchased his chain of dealerships, may very well be an effective executive. But guaranteeing a hefty bonus should not be part of any company’s compensation strategy. Just think of it like restaurant service in Europe. A built-in guarantee often means mediocre service.