Sorting the pieces from Aviat Networks’ filings…

September 28, 2010

While publicly-traded companies have to disclose certain facts in their SEC filings, they don’t have to make it easy for shareholders to put the pieces together in order to get the big picture.

That thought came to mind as we reviewed the proxy that Aviat Networks, Inc. (AVNW) filed September 27. The wireless technology products and services provider, headquartered in Santa Clara, Calif. and Singapore, may only have a market cap of $241 million, but it has learned the art of how to disclose interesting facts in fine print.

Here’s the background: On July 2, 2010, Aviat filed an 8-K to announce that CEO/president Harald J. Braun’s employment with the Company had ended on June 29, 2010. The accompanying press release gave no reason for Braun’s departure. Charles (“Chuck”) Kissner, who served as Chairman of the Board and became CEO at the time of Braun’s departure, said simply: “The Board and I sincerely thank Harald Braun for his contributions and leadership over the last two-plus years. Harald was a strong force in guiding the company through its post-merger transition, expanding its customer focus and leading its emergence under the new identity of Aviat Networks.

At the time Braun stepped down, no Separation Agreement was filed, but Aviat’s 8-K disclosed that:

Mr. Braun will be entitled to receive severance compensation pursuant to the terms and conditions of his Employment Agreement, dated April 8, 2008, which was previously disclosed by the Company in a Current Report on Form 8-K filed on April 9, 2008 and a copy of which was filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 28, 2008 and filed on May 6, 2008.

While all that may technically be accurate, we doubt that many investors are going to dig through Aviat’s prior filings to try and come up with a number. And – thanks to the proxy filed yesterday – they don’t have to. Instead, they simply need to find a magnifying glass and read through the fine print on page 27, where footnote (8)(c) to the Summary Compensation Table reveals that Aviat paid Braun $1,865,800 in severance benefits.

That’s pretty close to the number we would have guessed; in the April 9, 2008 8-K that Aviat (then called Harris Stratex Networks, Inc.) filed, a summary of Braun’s five-year Employment Agreement states that if the company terminated him without cause before April 8, 2011, it would pay him $1.39 million plus an extra $450,000. Predicting the exact number is impossible, though, since it was tied to yet-to-be-quantified insurance premiums, prorated bonuses, and equity interests.

All in all, it seems like a generous parting check for an executive who served Aviat less than 27 months after arriving from Nokia Siemens Networks in the spring of 2008. It works out to more than an extra $69,000 per month for each month that Braun was there.

Image source: Mykl Roventine via flickr

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