An expensive revolving door…

April 19, 2005

Over the past two years, Maxtor (MXO) investors have shelled out more than $10 million to cover the costs of two departing executives. The most recent departure was Paul Tufano, who in November was asked to resign by the board and who, according to the recent proxy, collected over $5 million on his way out the door, including $4.48 million in severance — not bad considering that he held the job for about 1 1/2 years and was canned by the board. Tufano replaced Michael Cannon in February 2003. Cannon, who resigned in January 2003, but who remains a Maxtor director, doesn’t appear to have gotten any severance — at least none that I can find in the filings — but did manage to get $5.66 million in loan forgiveness when he left. Several other executives have also resigned over the past few years, but details on their severance agreements are harder to find. In the filings, the company talks about “ERS Agreements” for senior executives, but doesn’t spell out many details, which is problematic given the revolving door. According to this article Maxtor had four different CFO’s in 2004, including Tufano. Needless to say, Maxtor shareholders haven’t quite fared so well. In 2004, the stock was down 52% and is down another 7% so far this year.

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