Smell something?

January 30, 2007

images-2.jpegLast May, Mueller Water Products (MWA), which makes pipes and other equipment used for water treatment systems, went public at $16.70 as part of a spin-off from Walter Industries (WLT) and it’s fair to say that the IPO hasn’t exactly been a whopping success. Indeed, other than a brief period about a month after the IPO and an even briefer period in early September, the stock has had difficulty closing above the IPO price. Of course, that didn’t stop many of the brokerage houses that took the company public from recommending the stock.

But just because investors haven’t done well doesn’t mean that everyone associated with Mueller has fared poorly. Indeed, the proxy that the company filed on Friday — it’s first — discloses some hefty payments for several top executives. Chief Operating Officer Dale Smith received a $3.5 million "transaction bonus" following Walter’s acquisition of Mueller. Two other top executives — Thomas Fish and Doyce Gaskin — received $1 million and $750K respectively. While Walter Industries did disclose Smith and Fish’s bonuses in the proxy it filed last March, it didn’t disclose Gaskin’s. Nor is it clear why this information wasn’t in any of Mueller’s filings related to the IPO. The only reference was to $10 million spent on transaction bonuses — and yes the numbers aren’t adding up since the three together equal $5.25 million — but there was no detail on where that money went. Nor is it clear where the other $4.75 million went.

Also in hiding was $45K spent on membership at a golf club for executive Raymond Torok, which the company also disclosed for the first time. Given the business that Mueller is in, it’s tempting to make a bad joke about sewage seeping through the pipes and creating a nasty smell that stretches for several miles (my early days covering Tropicana in Bradenton, Florida and that orange sludge that the PR person for the company kept insisting smelled like "freshly baked orange muffins" comes to mind). But we won’t do that right now. Use your imagination instead.

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