Retiring in style at EZCORP…

October 13, 2010

The principle “Buy low, Sell high” applies to pawn shops just as well as it applies to investments and other for-profit businesses. But if there was ever any doubt about what happens to some of the money that goes into a pawn shop’s cash register, consider the 8-K that EZCORP, Inc. filed October 12.

The company’s document announced that CEO/director Joseph L. Rotunda will retire on October 31. And – in between disclosing that fact and the appointment of incoming CEO Paul E. Rothamel – the filing stated that because Rotunda had served the full term of his employment agreement, which expired on October 8, 2010, he was entitled to “certain compensatory benefits.”

Those benefits happen to be pretty nice. For starters, EZCORP will give Rotunda a cash payment of $3.4 million on January 7, 2011; the amount represents a year of his base salary plus the amount of his most recent annual incentive bonus.

But he’ll also get millions more, thanks to a decision by EZCORP’s board. According to the filing, a restricted stock award given to Rotunda on October 2, 2006 gave the directors

“…the ability to accelerate the vesting of all unvested shares if Mr. Rotunda serves the full term of his employment agreement and has successfully implemented a transition plan to a new Chief Executive Officer. The Board of Directors, with the recommendation of the Compensation Committee, has determined that Mr. Rotunda has satisfied those conditions, and therefore, the Board has approved the vesting of all unvested shares, effective upon the termination of Mr. Rotunda’s employment on October 31, 2010.”

Consequently, when Halloween rolls around, Rotunda will have 567,000 newly vested shares, in addition to other shares that “would have vested in any event based on the company’s performance through the end of fiscal 2010.”

All told, the company disclosed that it expects to report an aggregate charge of about $10.8 million in the first quarter of fiscal 2011.

Rotunda’s connection to EZCORP isn’t ending with his retirement, though. Starting November 1, he’ll begin a five-year consulting gig that pays $500,000 each year, as well as an incentive bonus of between $250,000 and $500,000, healthcare benefits, and reasonable business expenses.

As far as we can tell, the only thing that’s missing from Rotunda’s retirement package is a gold watch. But given EZCORP’s 482 pawn shops scattered throughout 11 states and in Mexico, surely someone can find just the right piece to send Rotunda off in style.

Image source: jvree via flickr

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