Some weekend reading for the Jacuzzi?

January 6, 2006

Two months ago, the WSJ noted that money manager Bruce Sherman “relaxes by reading 10-K reports in his Jacuzzi”. For others who relax like this, we’d like to recommend a little weekend reading, though it’s not a 10-K.

Still, the proxy that Jacuzzi Brands (JJZ) filed yesterday makes for some pretty interesting reading, and helps put into perspective some of the earnings woes announced last month. Among the more interesting parts was the section on employment agreements with former executives, including former CEO Donald Devine.

Though Devine ran the company for a little over 8 months, he managed to walk away $2.29 million richer, according to the proxy. That’s in addition to the $1.1 million in stock options, which makes his stint pretty lucrative, even though investors didn’t fare quite as well. Another short-term executive, Robert Hennemuth, a vp for human resources, got $275K in severance plus 5,200 shares of restricted stock.

But what makes this even stranger is that Jacuzzi never really provided any explanation for these executive changes. There doesn’t appear to be a press release on their site for either departure. Why promote a guy to the CEO spot in December only to have him leave by August? And, perhaps more importantly, how has the disruption in management — at a time when one would assume that Jacuzzis are in heavy demand due to the surge in new, larger homes — impacted the company’s investment potential?

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