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Fortune Brands gives pay to walk away…

At the end of July, Fortune Brands, Inc. (FO) filed an 8-K about its plan to spin-off its home and security business (which makes Moen, Master Lock, and other brands) from the part of the company that makes premium spirits (think Jim Beam, Courvoisier, Maker’s Mark, and more).

Most of it focused on who will take what roles if the spin-off should occur, and who will leave altogether. It ended with two short sentences promising new employment agreements with Chairman and CEO Bruce Carbonari and Senior Vice President and CFO Craig Omtvedt – and more disclosure once they were signed.

Fortune Brands kept its word, filing an amended 8-K yesterday that revealed the terms of its Sept. 8 agreements with Carbonari and Omtvedt that will reward them financially if events unfold as the company hopes they will.

Carbonari signed a “Success Bonus Agreement” that will pay him $1.2 million if Fortune Brands successfully spins off the home and security business to shareholders by December 31, 2011. The agreement requires Carbonari to remain employed through the end of the year in order to get the money, which is to be paid at the end of January, 2012. In the grand scheme of things, $1.2 million may not seem like much to Carbonari, whose total compensation added up to $11.23 million in 2010, according to Fortune’s most recent proxy. But as incentives go, it still seems pretty enticing to us.

Meanwhile, Senior Vice President and CFO, Craig P. Omtvedt, signed his own “Success Bonus and Consulting Agreement” that will pay off if he remains employed and the spin-off takes place by the end of this year. Although Omtvedt’s success bonus is less – $668,000 – he will get an additional $500,000 to provide advisory and consulting services through the end of 2012. That’s a lot of money in its own right, but it’s even more lucrative considering how little time Fortune is asking Omtvedt to work. The agreement states:

“…such services may not exceed 20% of the average level of services provided by Mr. Omtvedt to the Company during the 36-month period immediately preceding the commencement of the consulting period.”

Both executives agreed that for two years after the spin-off occurs, they won’t try “to obtain control or to influence the management or policies of the Company or Home & Security.” Meddling would come at a cost: The men wouldn’t get any remaining-but-unpaid sums due under the Success Bonus agreements, and – if the money had already been paid – they would have to repay 60% of it.

Carbonari has held executive positions with Fortune Brands since January, 2001; whereas Omtvedt’s tenure dates back to January, 2000. While it might be difficult to walk away from a company after helping to lead it for more than a decade, the company is giving both men plenty of reasons to simply walk away.

Image source: PhotoVandal via flickr

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Note to readers: We corrected an error about the value of the Capstone Award in yesterday’s post about DFC Global (DLLR), formerly known as Dollar Financial. We apologize for the error and want to make sure that you have an opportunity to re-read the post, if you desire to do so.

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