What’s Watts paying for?

March 27, 2009

Yesterday, on Dealbook, I wrote about two former bank executives who were still collecting a paycheck and/or perks long after they had left the company. Turns out that Hugh McColl (formerly of Bank of America) and Ed Crutchfield (formerly of First Union which became Wachovia and is now Wells Fargo) are not alone.

In the proxy that Watts Water Technologies (WTS) filed earlier this week, it disclosed paying nearly $500K in consulting fees to former CEO Timothy Horne. Horne stepped down six years ago, but under an agreement signed several years earlier, he agreed to provide 300 to 500 hours of consulting services to the company “so long as he was physically able.” While the proxy doesn’t say how many hours of consulting Horne provided last year, if he provided 500 hours, that works out to an hourly rate of $957 an hour; if it was 300, the hourly rate works out to nearly $1600. Those figures ought to sit well with the 400 employees that Watts said it was laying off, according to this article.

In addition to the hefty consulting fees, Watts agreement with Horne also covers secretarial services and other expenses like tax and financial planning, a club membership and even routine automobile maintenance. He also gets an office at Watts’ headquarters in North Andover, Mass.

While the disclosure itself isn’t new — Watts first provided details of the contract in 2001, about five years after the deal was inked — the amount that Watts paid Horne is a new disclosure. Maybe Watts shareholders can click their heels and hope that a future filing will provide details on exactly what services are being provided for that kind of money.

If you find other examples of former executives still collecting hefty paychecks — remember SEC rules only require the company to disclose pay and perk details for existing executives, send us a note or post the details below.

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