Costco’s gold star worthy K and contract…

It’s been awhile since we’ve handed out any gold stars here at footnoted. And what with the market mayhem, margin calls, Paulson playing hardball with the nation’s top bankers, and AIG executives showing just how stupid they can be, there hasn’t been a lot to celebrate.

But then I came across Costco’s (COST) 10K, which it filed late yesterday. At a time when companies are being super-secretive about their risk exposure to some of the toxic sludge that’s brought down other companies — Merrill’s (MER) reluctance to discuss its exposure to Lehman is just one example — Costco lays it out there. Here’s a snippet:

Subsequent to the end of 2008, Lehman Brothers Holdings Inc. (Lehman) filed a petition under Chapter 11 of the U.S. Bankruptcy Code. At August 31, 2008, we held $2.3 million of Lehman securities, within the Columbia portfolio, purchased by the fund manager prior to receipt of our pro-rata allocation of the fund’s investments in December 2007. As of October 14, 2008, we do not have an estimate of the recovery value of the Lehman securities.

Costco also discusses some risks related to Sigma Finance, a $27 billion SIV which is a giant mess, as well as BlackRock (BLK) and Merrill.

There was one other thing that stood out in Costco’s filing: it’s new employment agreement with CEO Jim Sinegal. At under 1 page — as opposed to some of the 30-page agreements lately, it’s the type of employment agreement that even the brain behind footnoted can understand.

Image source: Ed Betz, Associated Press