On not changing with the times…

May 24, 2006

Last year, when Radio Shack (RSH) announced that it had reached a transition/consulting agreement with Chairman and CEO Len Roberts that would pay him over $41K a month to provide advice for 31 months after he stepped down as Chairman and CEO, the stock was trading at around $33 a share.

Fast forward to today, when the company filed Roberts’ actual agreement in an 8-K and you’ll quickly see that little has changed: Roberts will still collect $41.6K a month through December 2008 and Radio Shack will stay pay up to $100K a year to provide Roberts with office space and an administrative assistant (no word on whether he’ll be hiring the same decorator that former Wellpoint (WLP) CEO Len Schaeffer used). But the stock price is down around 50%. And Roberts’ hand-picked successor, Dave Edmondson, resigned in disgrace after the Fort Worth Star-Telegram revealed that Edmondson had padded his resume.

So given all of this, why is Roberts getting the same deal? And exactly what sort of advice will he be providing for that kind of money? Will the new CEO — whenever he or she is named — even want this advice that they’re forced to pay for? True to form, the agreement is pretty vague and only says that Roberts is expected to devote "reasonable hours" to his work, which primarily involves helping the CEO on various tasks, such as strategic planning. But given the challenges the company faces as it tries to recover, it seems questionable as to whether this is the best use of investors’ money.

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