Introducing the corporate time machine…

June 16, 2011

It’s not enough that shareholders underwrite the cost of many executives’ personal flights on the corporate jet, green fees, and country club dues. It now appears that some companies have invested in time machines.

At least, that’s one explanation for some of the curious applications of time that we’ve noticed in recent SEC filings.

Take, for example, the 8-K that AngioDynamics, Inc. (ANGO) filed June 14; the filing simultaneously announced the departure of President/CEO Jan Keltjens (complete with Separation Agreement) and the arrival of interim CEO Scott J. Solano. Simple enough, but here’s the way they did it:

“On June 13, 2011, Jan Keltjens resigned as the Company’s President and CEO and as a member of the Company’s board of directors effective June 8, 2011. In connection with Mr. Keltjens resignation, the Company and Mr. Keltjens entered into a Separation Agreement (the ‘Agreement’), dated June 13, 2011. The Agreement provides for Mr. Keltjens to receive a lump sum severance payment in the amount of $930,811 (subject to applicable withholdings and deductions) and continuation of his health benefits for a period of up to 24 months.”

Okay, one might quibble that a resignation on a particular day that took effect 5 days earlier – before it happened – doesn’t really demonstrate the powers of a time machine. But we’ve found other examples, as well, such as at Novellus Systems, Inc. (NVLS).

It filed an 8-K yesterday, June 15, to report that on June 9 the company had entered into an Amended Employment Agreement with its Chairman/CEO, Richard S. Hill. The new agreement brought Hill a nice raise: His base salary for FY 2010 had been $881,377 – part of a $10.556 million compensation package (according to this April, 2011 proxy) – but now the base salary component would jump to $913,120.

A raise of $31,743 is nice whenever it happens, but by putting the agreement in the time machine that Novellus Systems must keep at corporate headquarters, the effective date for Hill’s raise teleported back to January 1, 2011.

Alterra Capital Holdings, Ltd. (ALTE) did the same thing, according to a June 3 8-K. The point of the filing was to disclose a new Employment Agreement with W. Marston Becker, its CEO, since his then-current agreement would have expired this coming November. Although the new Employment Agreement clearly states that it “is made and entered into this 1st day of June, 2011” – thanks to the powers of the time machine – it became effective January 1, 2011. That presumably means that Becker’s raise (going from a base salary of $1,065,800 in FY 2010 to $1,150,000 per the new agreement) also took effect five months before it happened, giving Becker a nice extra paycheck for nearly $17,000.

In all seriousness… yes, we know that this kind of thing happens all the time. But it’s another reminder that when it comes to executive compensation, compensation committees aren’t bound by the same constraints that affect the rest of us… including, apparently, time.

Image source: Roberdan via flickr

———

See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.


Leave a Reply

You must be logged in to post a comment.