Sitting on this board is no gamble…

October 18, 2011

Machine test

Kids, forget doctor, forget firefighter, forget astronaut. And as for teacher, well But forget all that. When you grow up, you want to sit on the board of WMS Industries (WMS).

Sure, you may have never heard of the company — it’s a slot-machine and lottery-terminal maker in suburban Chicago, with a $1.1 billion market-capitalization — and you’d probably have to move to Waukegan, Illinois, to work at headquarters. Being the next Steve Jobs or Warren Buffett would doubtless be a lot more fun.

But if you’re after a little less pressure and a nice paycheck, you could do worse than the boardroom of WMS Industries, at least to judge by the proxy it filed yesterday.

All but two of the company’s nine directors made more than $300,000 last year, and one made a whopping $752,690. Generally, all but $150,000 of that is in cash or company-paid benefits, too, including “amounts reimbursed under a medical reimbursement plan” and in some cases the cost of director’s primary health-insurance as well, life-insurance premiums and the cost of bringing spouses to board meetings.

The workload doesn’t look outrageously heavy, either, though it’s busier than some boards we’ve seen: The board met eight times last year, while committees met either four times (the Nominating and Corporate Governance Committee), eight times (the Compensation Committee), or 13 times (the Gaming Compliance and the Audit and Ethics committees).

Maybe more to the point, results don’t seem to be a major factor in all of this. The company saw its stock price fall nearly 30% during the fiscal year covered by the proxy, and total return for the company’s stock has trailed its competitors badly both over the last 12 months and so far this year.

But no matter. Because when you’re ready to retire — or, really, leave the board for whatever reason — WMS continues to take care of you for the next four years as a “director emeritus”. For each year you were on the board, you get $1,500 in the first year, $1,500 in the second year, and $750 in each of the third and fourth years. So for example, director Edward W. Rabin Jr., the retired president of Hyatt Hotels who’s been on WMS’s board since 2005, would get $27,000 if he were to step down this year; former Nevada Gaming Control Board member Bobby L. Siller, a director for just three years, would get $13,500. In return, the only requirement is that the director

“(i) is willing to assist our Board from time to time upon request by our Board, (ii) agrees not to use our trade secrets or confidential information and (iii) agrees not to solicit our employees on behalf of competitors.”

Then there’s Louis J. Nicastro, the director making north of $750,000 and a former CEO and chairman of the company (and father of fellow director and former CEO Neil D. Nicastro, who made $323,607). Most of that — about $448,000 — comes from a blandly named “Advisory Services Agreement” dating to May 2008. The agreement renews itself automatically for another year each June, unless one of the parties cancels it on 90 days notice (and really, why would Nicastro want to?). In return for his $450,000 a year, Nicastro

“provides business advisory services to us as requested from time to time by our Board, Lead Director, Chairman or the Chair of any of our committees of the Board.”

There isn’t a lot more detail in the proxy, but by going back to the agreement itself, we discovered that the original agreement was just three years because, in the words of the company to Nicastro, “you indicated that you would like to establish a finite period during which you will commit to be so constantly available…” (The original agreement also provides lifetime medical and dental reimbursement above and beyond regular insurance for Nicastro and his wife, should she survive him.)

Apparently that reluctance to be at the company’s beck and call faded with time, because an amendment in September 2010 extended the pact by two years, to June 30 of next year. It’s too bad companies that sign consulting agreements with their directors don’t have to provide an accounting of just what, and how much, the director actually does; we can only imagine that would make for some interesting reading.

In any case, last year’s amendment also ensured that Nicastro will benefit from the company’s Director Emeritus program if and when he finally does step down.

As we said, there may be nobler aspirations for the youth of today. But really, why bother if gigs like this are available?

Image source: Markusram via Flickr

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