Predators Ball Recalled

Fairchild Corp filed a lengthy document last week giving details of a lawsuit involving their long time CEO. Some of you may remember Jeffrey Steiner, who wields a controlling interest in the Company (market cap – $75 million), as a stalwart client of Mike Milken when the company was called Banner Industries. The resolution of the suit is that Steiner is returning $1.5 million to Fairchild for legal expenses related to defending himself against fraud charges in France. Actually, Fairchild is taking the money out of what it owes to Steiner’s SERP account so that he can pay the Company (maybe he doesn’t have the cash).

What’s more interesting in the filing is the list of corporate governance issues. Here’s a sampling: 1) His son Eric (age 43) has been a director since 1988 and President and COO since 1998; 2) Steiner was paid a $5 million bonus in 2003 for arranging the sale of the Company’s largest division to Alcoa – this on top of a $2.5 million salary; 3) The sale to Alcoa triggered a provision in Steiner’s employment contract that resulted in an additional payment of more than $6 million; 4) Not to be outdone, Eric Steiner received a $2.3 million bonus in 2003 for the sale to Alcoa on top of his $725,000 salary and a “change of control” payment of another $5.4 million; 5) But wait – the other 2 top executives split $4.8 million for facilitating the same deal; 6) non-interest bearing loans to officers were discontinued in 2002 but about $1 million is still outstanding; 7) Steiner’s daughter has been an employee for many years (with an interest free loan); her husband was previously a director of Banner; Steiner’s other son Thierry, was an employee for 4 years 8) In 2003, the Company reimbursed Steiner almost $900,000 for use of his aircraft and helicopter; 9) there’s more, but how about this – in 2004 the Company reimbursed Steiner about $43,000 for use of his apartment in France and another $34,000 for security personnel at his residence.