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Candor from Acxiom on a retirement sinecure __»

Heading into the long Memorial Day weekend, it’s likely to be busy here at footnoted, what with companies slipping bad news in under the wire. So we thought we’d leave you with an extra post to read when you’re back from the cook-out. Enjoy, and we’ll see you again Tuesday morning!

With the flood of proxy season over, and the end-of-quarter rush not yet upon us, we have a little more time to reflect on some of the trends we’re seeing in the filings. And one that has left us scratching our heads a number of times this year is the retirement consulting agreement.

These are usually granted with varying fanfare to the departing chairman or chief executive, often a founder, sometimes a Johnny-come-lately. Either way, we understand that there might need to be a transition period when a key executive steps down: Not everything gets written down, relationships matter, it takes time to hand the baton; we get that.

But these puppies can stretch on for years, or pay huge sums for what may prove to be limited assistance. Sometimes they pay not for work, but for not working, at a competitor — and keep paying even posthumously. If we were the cynical sort, we might think some of these consulting contracts were little more than a retirement annuity gussied up as a service contract.

So it was almost refreshing to see the perspective Acxiom Corp. (ACXM) brought to the picture in the 10-K it filed on May 26. Three years ago, the Little Rock, Arkansas, marketing and database-management company entered into a “transition agreement” with then-Chief Executive Charles Morgan — the corporate patriarch who had been at the helm since 1975. Under the agreement, the company paid Morgan $3 million, and he “retired, and agreed to continue to serve on an interim basis until the selection of a successor by the board.”

His successor, John Meyer, came on board barely three months later, on Feb. 4, 2008. Meantime, Acxiom kept paying Morgan, at $500,000 a year, “for consulting services for approximately three years,” as the 10-K notes. Now here’s the unusually candid part:

“The Company accrued the present value of the remaining payments under this contract as of March 31, 2008 because management was not using the consulting services after March 31, 2008.”

In other words, in November 2007, Acxion agreed to pay its CEO $3 million up front and another $1.5 million over three years for consulting and transitional services. He actually provided useful services for something less than five months. That works out to perhaps $900,000 a month, or more than $5,000 an hour.

Perhaps Acxiom got its money’s worth in that brief time. At least it’s up-front about how it panned out in the long run.

Image source: Kissimmee – The Heart of Florida via Flickr

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