Ambushed Again?

images44.jpgMilitary vehicle supplier and once highflier Force Protection (FRPT) just can’t learn from its mistakes. South Carolina-based Force Protection has suffered a series of mishaps during the past year, including a series of “scathing” reviews from the U.S. Defense Contract Audit Agency and significant market share loss in its lucrative line of mine-resistant ambush-protected (“MRAP”) vehicles. Shares of the stock have fallen 80% in the last three months alone.

Much of the blame for Force Protection’s missteps has been placed on the shoulders of CEO Gordon McGlinton, who is often described by his distractors as a “leadership training guru” with little or no manufacturing experience. McGlinton also came under fire for his ties to the outside consultants he urged FRPT to hire. Therefore, it was no surprise when FRPT announced yesterday that McGlinton was retiring at the end of January.

What was surprising, however, was the deal hammered out with McGlinton’s replacement, Board Chairman and FRPT President, Michael Moody. According to the press release, Moody was named Interim CEO “while a search is conducted to select a CEO from internal and external candidates.” In the related 8-K, however, it notes that Moody is entitled to

(i) severance payments equal to three months’ salary in the event that he is not selected by the Board as the Chief Executive Officer and does not remain with the Company, and (ii) relocation benefits in the amount of $30,000 payable upon separation from the Company.

So Moody is Chairman of the very Board that must decide whether he gets appointed as CEO or receives a nice consolation prize just for playing?

Curiously, Moody has little, if any, more manufacturing experience than the man he is replacing. He has served as Force Protection’s Audit Committee Chairman since his election to the Board in 2006, and his background is primarily in financial analysis, auditing, and regulatory reporting.

More questionable insider dealing and another CEO with no manufacturing experience…sounds like Force Protection’s shareholders have been ambushed again.