We broke our vow to Alcan; we must make amends

November 2, 2006

When we last checked in with aluminum maker Novelis (NVL), we were left wondering if fired CEO Brian Sturgell would leave with the keys to Novelis’ "extra" Mercedes-Benz.  Novelis, which spun off from Alcan in early 2005, is struggling with a major financial restatement and pricing pressures that have pushed many former Alcan execs out the door.

Late yesterday, Novelis finally coughed up most of the details on Sturgell’s parting gifts in this 8-K.  Looks like Sturgell will receive a separation incentive that includes (a) reimbursement for closing fees and real estate commissions (grossed up for taxes) relating to the sale of his Georgia home and (b) a lump sum payout of the "Special Termination Indemnity" payment Sturgell was promised in his employment agreement.

While the agreement didn’t specify the amount of the relocation payments, a bit of digging in prior filings gives us a pretty good guess at the lump sum Sturgell is taking home.  Turns out the "Special Termination Indemnity" payment is an amount equal to 36 months of Sturgell’s base salary and bonus, or some $5.4 million dollars based on the most recent annual proxy.  Even with a present value discount, we suspect Sturgell will be able to afford a dealership’s worth of Mercedes.

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Just a quick note to say that Michelle will be out for the next few days due to a death in her husband’s family. My regular substitute will be filling in for me. 

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