Exit from Gardner Denver came with big bucks…
There have been some big transitions at Gardner Denver, Inc. (GDI) recently, the 153-year-old company that makes industrial pumps, compressors, blowers, and more. The news that its president and CEO, Barry L. Pennypacker, suddenly resigned on July 13 got some attention, but the juicy 8-K that the company filed five days later did not.
Anytime a CEO resigns immediately, it always makes us wonder. Of course, it’s impossible for us to know whether Pennypacker’s departure had been in the works for a while. But if his exit was really as sudden as it appeared to outsiders, then the terms of his departure package were hammered out in just two days.
In exchange for signing the July 15 Waiver and Release Agreement, Gardner Denver agreed to pay Pennypacker a lump sum cash severance payment of nearly $1.38 million. Next year, he’s also going to get a pro-rated long-term cash bonus award for the three year performance period ending December 31, 2012, up to a maximum bonus of $2.4 million. He has until October 11, 2012 to exercise any vested stock options, although he forfeited any unvested stock options and unvested RSU awards. And finally, Gardner Denver is paying him a lump sum equal to 6 months’ worth of COBRA premiums; however, if Pennypacker hasn’t landed a new job at the 9-month mark (April, 2013) or the 1-year mark of his departure (July, 2013), the company agreed to continue paying his COBRA premiums for up to a year.
Pennypacker became Gardner Davis’s president and CEO in January, 2008, according to this year’s proxy, which the company filed in March. His bio was filled with praise at the time, noting that:
“Mr. Pennypacker’s extensive managerial and operational expertise has proven invaluable to the Company and the Board during the recent worldwide economic downturn. His foresight to make crucial operational improvements and his continued vision in implementing the Gardner Denver Way has been a significant factor in the Company’s success. His leadership in addressing the issues facing the Company has provided our Board with the insight necessary to strategically plan for the Company’s future successes.”
Pennypacker also stated in the Waiver and Release that “I hereby agree that there is no disagreement with GDI on any matter relating to GDI’s operations, policies or practices.” However, apparently not everyone believes that.
While this article in Reuters reported that Pennypacker’s resignation was a surprise to many, it went on to quote an analyst who opined that Pennypacker’s “aggressive style” had been the source of conflicts with some of his executive colleagues and members of the board. In 2010, for example, he decided to move the company‘s headquarters from Illinois to Pennsylvania.
When Pennypacker resigned, Gardner Davis promptly appointed its Vice President and CFO, Michael M. Larsen, to take on additional duties as the interim CEO. We’re all for multi-tasking, but given that the company guided lower last week for the third quarter (which may or may not be related to Pennypacker’s sudden departure), Larsen will clearly have his hands full trying to fill both roles.
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