Smooth road ahead for Oshkosh CEO…

Sometimes what goes around really does come around.

Soon-to-depart Chief Executive Officer Robert “Bob” Bohn has been at the wheel of heavy-duty specialty truck maker Oshkosh Corporation (OSK) for the past 13 years of the company’s 93-year journey. Articles such as this one note that “Under Bohn’s leadership, Oshkosh Corporation has been transformed from a $400 million Midwest Company into a multi-billion dollar international corporation.” With a market cap of $2.44 billion, Oshkosh reported sales of $7.74 billion for the first nine months of 2010.

Earlier this week, Oshkosh announced that Bohn will retire on December 31, 2010 and hand his keys to incoming CEO, Charles L. Szews, the current president/COO. Bohn will remain as Chairman of the Board of Directors until the February 1, 2011 annual shareholders’ meeting, when current director Richard M. Donnelly inherits the post. (Simultaneously with Bohn’s departure, Oshkosh amended its bylaws to require that future Chairmen of the Board must be independent directors who haven’t served as an executive officer for the company.)

Oshkosh’s growth during Bohn’s tenure has been fueled by the military’s demand for high-tech vehicles, as well as a strategy emphasizing product diversification and the acquisition of smaller companies. Although the stock is down more than 36 percent down from its trading price in 2005, it’s up more than 204 percent from its September, 2000 trading price.

Presumably, then, many shareholders won’t mind the board’s decision to shower Bohn with a little love as he retires. In its September 23 8-K, Oshkosh disclosed that Bohn signed a Retirement Agreement. The agreement isn’t attached to the 8-K, but Oshkosh summarized its terms.

One of those terms is that “…in lieu of any bonus, long-term incentive or performance shares for the Company’s fiscal year ending September 30, 2011, Mr. Bohn will receive a bonus payment of $1,000,000, payable on his December 31, 2010 retirement date.” And there’s more:

The Retirement Agreement provides that, for the period from January 1, 2011 through November 30, 2011…, Mr. Bohn will continue his employment with the Company and make himself available to the Chief Executive Officer and the Board of Directors. During the Transition Period, Mr. Bohn will receive an aggregate salary equal to $1,000,000 and, subject to certain exceptions, will continue to participate in the Company’s benefit plans at current levels. The Retirement Agreement also provides that Mr. Bohn will receive an early retirement supplement in the amount of $1,000,000, payable proportionately over thirty-six months commencing at the end of the Transition Period….

These payments are in addition to a supplemental retirement benefit of $62,411 per month that Bohn will get (“in the form of a joint and 100% survivor annuity”) after the Transition Period ends.

In exchange, Bohn agreed not to compete with Oshkosh, disclose its secrets, or solicit employees away from the company for a few years. But since he’s leaving the company on a high note, with more than $3 million coming soon to help fund his retirement, those seem like promises that most of us would make – and keep – quite happily.

Image source: Oshkosh Corporation


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