Circuit City’s rosy prose…

August 20, 2008

As footnoted regulars know, we love to poke at corporate-speak almost as much as we like to poke at accounting and legal-speak — the three languages used most often in corporate filings. So when struggling electronics chain Circuit City (CC) announced yesterday that one of its directors, James Marcum, was being hired as vice chairman (a job that I’ve often called the greatest job in business) and “will play a key role in leading the efforts to accelerate the pace of the company’s turnaround” we just knew the hiring letter wouldn’t disappoint:

It starts with talent; it starts with you! Congratulations! We are very pleased to extend this conditional offer of employment as Vice Chairman of Circuit City Stores, Inc. This offer of employment is contingent on the satisfactory completion of Circuit City’s pre-employment drug screening program.

There’s just something downright ironic about requesting bodily fluids in the first paragraph of a hiring letter. But, hey, that’s what the lawyers are for. The letter then goes into the various details of Marcum’s offer, including the $750K salary, a $250K signing bonus to cover Markum’s travel between his home in New Hampshire and Circuit City’s Richmond offices, and a chunk of stock options and restricted stock. Markum is also eligible to participate in the “officer evaluation program” which we footnoted back in May. Markum, a former executive at Hollywood Video, joined the board as part of a settlement with Wattles Capital Management that averted a proxy contest.

But perhaps what’s even more interesting than the hiring letter is the employment agreement that spells out various change in control scenarios, including this one: “The consummation of a plan of complete liquidation, dissolution, or sale of substantially all the assets of the Company.”

If that happens, and given the stock price and the market’s response to Marcum’s hiring, one can certainly make an argument in favor of that, Marcum will get two times salary and the full vesting of all those options. And probably a few free HD TV’s too, since the contract also calls for two years worth of perks.

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