Keep spinning until the wheels fall off…
Looks as though things have gone from bad to worse at embattled asset management firm BKF Capital Group (BKFG.PK) since we last footnoted them in June 2005 (see the two-year chart here). BKF, which has been under fire for its poor investment performance and allegedly excessive compensation practices, announced last week that it was being delisted from the NYSE and that two top executives were leaving.
Given BKF’s track record, however, we don’t think anyone was surprised by last week’s trip on the spin cycle. Last Tuesday, BKF put out this press release, which claimed that CEO John Siciliano and CFO Clarke Gray had "volunteered" their resignations in order to "conserve BKF’s cash and investments". The 8-K filed late Friday, however, painted a somewhat different picture.
In the filing, it was revealed that if Siciliano stays on through the end of the year, he’ll be entitled to a cash severance payment of $950,000 and another cash payment of $700,000 if BKF can sell itself by the end of next year. Additionally, Siciliano will receive $300,000 for providing "certain consulting services" to the Company for the first six months of 2007. Gray’s deal is pretty similar, although slightly less lucrative. Still, if the goal was to conserve the Company’s cash, why is BKF paying for "consulting services" for assets that consist of cash and deferred tax assets? Maybe it’s just another one of the fund strategies that have served BKF so well this year.