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Revisiting a quiet goodbye at PSS World Medical…

While reading the proxy that PSS World Medical, Inc. (PSSI) filed July 14, we discovered an interesting transition that got little press when it occurred, other than by a couple of publications in Florida.

The event itself seemed surprising, in that on January 27, 2010, Jacksonville, Florida-based PSS World Medical released FY 2010 3rd quarter results that seemed to suggest things were going well. At the time, Chairman/CEO David A. Smith, Chairman and Chief Executive Officer, commented, —Our results are ahead of plan and demonstrate solid momentum in our strategic initiatives—.

Less than a week later, the company filed an 8-K to announce that Smith was out. According to that filing, PSS World and Smith —mutually agreed that his employment would end that day — February 2, 2010. He also resigned from the board of directors. The board appointed Gary Corless (previously the EVP/COO) as the new CEO.

Smith’s successor Chairman of the Board struck a conciliatory tone, thanking Smith for his “outstanding leadership during his lengthy career” and continuing, “His contributions have been instrumental in developing the Company into the industry leader it is today.

PSS World Medical gave Smith a nice severance/departure package to ease his transition into the next chapter of life. Although the 8-K contained a summary of its terms, the actual Separation Agreement wasn—t filed until May 26, 2010.

In exchange for Smith honoring —certain restrictive covenants for 24 months and signing a general release, the company paid him a severance payment of $2,718,000 million; two years— worth of ongoing group health benefits for Smith and his dependents; and an additional payment of $680,000 (called a —Restrictive Covenant Extension Payment).

The company also agreed to pay him $4,269 for unpaid base salary, $2,500 to reimburse him for business expenses, legal fees of up to $25,000 to negotiate the agreement, and outplacement and counseling expenses of up to $60,000. It also gave him a three-month window during which he could exercise his vested stock options.

Abrupt departures aren—t usually a good sign, and no explanation was given for this one. But Smith certainly didn—t leave empty-handed, and the extra millions should give him time to figure out what — if anything — he wants to do next.

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