The press release that Weis Markets issued on Monday, announcing the departure of CEO David J. Hepfinger was short and to the point: Hepfinger had stepped down to “pursue other interests” and Vice Chairman (not to mention son of Chairman Robert Weis) would be filling in on an interim basis. “We thank Dave for his service and contributions and wish him well in his future endeavors,” said Mr. Weis. The release sounded like most other executive comings and goings. In other words, ho hum.
But it was the “confidential separation agreement” (wink, wink) in the 8-K that Weis Markets filed on Tuesday that caught our attention. That’s because Hepfinger’s parting is one of the sweetest deals we’ve seen in awhile for someone who’s supposedly leaving on his own volition. Let us count the ways:
Hepfinger will get two payments, the first, for $2.25 million will come on Dec. 31 of this year. Another, for $1.75 million will happen in December 2014. That’s in addition to the $69,628 per month through December 2014 ($836K on an annualized basis). Hepfinger was paid $800,825 in 2012, but under a new five-year agreement signed in March of this year, his salary was bumped up to $836, so the monthly payments are equivalent to his base salary as a full-time CEO.
The company has also agreed to provide an unspecified number under the company’s short-term incentive plan. In 2012, that number was $1.9 million. There’s also additional payments under the company’s Executive Retirement Plan, but those amounts are also not spelled out in the filing.
Finally, Hepfinger will get company-paid health coverage through 2016 and since that healthcare plan clearly leaves some loopholes, he’ll also get up to $1,000 for the next two years to cover an executive physical.
The actual agreement isn’t attached to the 8-K so it’s hard to come up with an exact tallysheet. But our back-of-the-envelope math pins the number at $7 million and maybe even higher.
What makes this all particularly odd is that it was just March when Weis Markets entered into a new five-year employment agreement with Hepfinger. Obviously stuff happens, but it seems unusual that the ink of the new five-year agreement was barely dry and the amount of money being handed out is so large. We have nothing other than our intuition here, but something definitely strikes us as odd.