Pier 1’s Not-So Confidential Agreement

Hardly a day goes by when we don’t notice a “Confidential Agreement” attached as an Exhibit to an SEC filing. The irony, of course, is that once it hits the EDGAR database, it’s not exactly confidential any longer.

Take this “Confidential Retirement Agreement” that was attached to the 10-K that Pier One filed on Tuesday. The agreement was with former CFO Charles “Cary H.” Turner, who suddenly “retired” on Feb. 10, the very same day that the company “revised” its financial guidance for fiscal 2014.

Just to be clear, by revised, we mean sharply lowered. The stock dropped 30% on the news. And much of the news coverage pinned the blame on Turner for not getting those all-important projections correct. The headline on the Bloomberg story even used the word botched to describe his performance.

Turner may have been the fall guy in the media, but according to the confidential agreement, he received a lump-sum payment of $1.1 million in “retirement benefits”, which works out to more than two years of his former base salary as CFO. That might seem like a nice prize for someone who was blamed for botching something, but based on the company’s most recent proxy (filed in May 2014), Turner should have received $5.7 million under either a “voluntary termination” an “early retirement” or an “involuntary without cause termination”, which is the way it was described in the Feb. 10 press release.

We find it hard to believe that Turner would have agreed to the $1.1 million, when he could have received five times that amount. But according to the proxy, he would have received nothing if he were terminated for cause, which appears to be the case here. There’s really no other plausible reason for him to accept the $1.1 million were that not the case.

Wouldn’t it be much simpler for everyone involved if the company just came out and said Turner was fired for cause, instead of calling it a retirement? Maybe while they’re at it, companies will stop labeling things that they file with the SEC as confidential too.