On Applied Signal’s generous vacation policy…

January 27, 2010

Monday marked the first snowfall in Chicago since I—ve returned from winter break. As I trudged across campus and watched the white flakes fall, I found myself wishing that I could escape to a hot, sunny climate over spring break.

Everyone needs an occasional vacation, and no one begrudges others for taking a little time off now and then. But sometimes heavy workloads make that impossible. If we’re lucky, we cancel our plans and our employer pays us for the vacation days we couldn—t use. If we’re not so lucky, we scrap the vacation plans without compensation, get back to work, and start dreaming about next year’s getaway.

And then there’s Applied Signal Technology Inc.—s (APSG) curious vacation policy, which we came across in the preliminary proxy that it filed Monday.

In the footnotes to the Summary Compensation Table, we came across a category entitled —Payments for Unused Vacation.—¯ For two of the named executive officers, the amount was just under $12,000 for 2009. But for the other three, it was substantially higher. In 2009, James Doyle, VP-Finance/CFO, received $274,432; Dr. John Treichler, Chief Technology Officer, got $234,891; and Dr. Michael Ready, Chief Marketing Officer, received $106,788. Compare that to the base salaries of the three men and the two aren’t that far off: Doyle’s base salary last year was $316K and Treichler’s was $327K, so the vacation pay nearly doubled their salaries.

The footnote to the summary comp table simply says: —Represents accrued, but unused, vacation that was paid as a result of a change to our vacation policy.

So what was the change? Well, it’s hard to say. The preliminary proxy doesn—t explain that, so we wondered if a little scuba diving through past filings might tell us more.

According to last year’s proxy, which was filed in February, the company’s vacation policy at that time was that any employee could sell back unused vacation time. But a month later, in the 10-Q the filing refers to: —payments for accrued vacation of approximately $1,181,000 due to a change in our vacation policy—.

The same is true for the quarterly report filed in June, 2009, as well as the one filed in September, 2009. They refer to the change without saying what it was. Likewise, in the annual report filed January 12, 2010, the company says: —Accrued payroll liabilities declined by approximately $2,357,000 primarily due to payments for accrued vacation of approximately $2,365,000 due to a change in our vacation policy;—.

So at this point, we know that the vacation policy changed; we know that change resulted in $2.36 million going to employees (and $616,111 going to 3 executives) for their unused vacation time; and we know that a fair amount of digging didn’t reveal an explanation for the changes.

Anyone looking for a good little mystery for his or her next vacation?

Image Source: Pasadena Now

This post was written by footnoted.org intern Kristen Scholer who is a junior at Northwestern University.

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