Author: Sonya Hubbard

Yesterday, Jones New York (JNY) filed an 8-K that disclosed the terms of its new employment agreement with fashion wunderkind Richard Dickson.

Next Monday, Dickson, who’s only 41, will become the President and CEO – Branded Businesses of the Company for Jones Apparel Group, Inc.  He’ll report to Wesley Card, who is giving up the title of President but will remain the company’s CEO.

Dickson’s agreement, which runs through the end of 2012, states that he’ll earn a base salary “of not less than” $1,000,000 and get a sign-on bonus of $455,000.  So long as he stays through the end of 2010, he’ll also receive an Annual Cash Incentive Target Bonus of $900,000; in future years, his bonus will be based on the achievement of set objectives.  The company is also giving Dickson $1,800,000 worth of performance-based restricted stock if he’s still there on Dec. 31, 2010.  He’ll get another 100,000 shares of restricted stock in 2010, 2011, and 2012 “to make up for unvested existing equity values” that he had with his previous employer, Mattel, Inc.  And, of course, there are the usual perks that reward one for the pressures that come with executive responsibility.

Dickson joined Mattel in 2003 and held positions of increasing responsibility during his time there. According to this article, Dickson is the guy who updated Barbie’s look and improved her popularity as a toy.  (The same piece reported that 2009 holiday sales for Barbie were up 12%, whereas the company’s overall revenues increased just 1%.)  Prior to joining Mattel, Dickson spent more than a decade working for Bloomingdale’s, and before that he launched an e-commerce beauty web site that was eventually acquired by the Estee Lauder Companies, Inc.

It’s hard to know how much better Dickson’s deal is at Jones New York than it was at Mattel.  We looked at the proxy Mattel filed last March; however, Dickson’s salary isn’t disclosed since he wasn’t one of the five highest-paid executives.

It’s a safe bet, though, that the job is a step up in compensation, along with the new responsibilities.

Image source:  Jones New York

If you read enough SEC filings, you begin to recognize certain sections like they’re old friends.  You might think, “Oh!  There’s the section on Executive Compensation Discussion & Analysis!” or “Hi, Forward-Looking Statements.  How are the Risk Factors looking today?”

But occasionally – perhaps rarely – something pops out that you’ve never noticed before.

Such was the case when we read the proxy statement that vitamin and nutritional supplement producer NBTY, Inc. (NTY) filed recently.  At the top of page 10, a passage in the “Communications  to Directors” section gave us pause:

“…After the mail is opened and screened for security purposes, it will be logged in, and (other than mail that our General Counsel determines to be trivial or obscene) then forwarded to the particular Director identified, or to the Board as a whole, as requested in the stockholder’s correspondence. Trivial items will be delivered to the Directors at the next scheduled Board meeting. Obscene items will not be forwarded.”

Really?  Do the directors receive a lot of obscenity-laced mail, or is this just one of those boilerplate sections that legal counsel adds to protect the directors just in case the company ever receives an abusive letter that – if read aloud – would turn the air in the board room blue?

Frankly, we expected to find out that it was boilerplate.  But it turns out that a search on variations of the paragraph above yielded only NBTY, Inc., which has included similar language in its proxy every year since 2004.

[As an aside, one might understand shareholder concern – if not ire – at some of the disclosures in the proxy.  For example, in the Related Transactions section on p. 31, we noticed that in FY 2009, six family members of two of the top executives received either commissions or “aggregate compensation and fringe benefits” ranging from just under $500,000 to $1.5 million.]

Now we’re curious, though.  To those of you who see or receive letters from shareholders, is obscene mail addressed to the company’s directors or top executives really a problem?  Feel free to discuss… politely, of course.

It may be winter in much of the United States, but recently one executive at The Children’s Place (PLCE) received a bumper crop of reasons to stay with the company for another 14 months.

The “carrots” in question come in the form of impressive “special bonuses” going to Susan J. Riley, the Company’s Vice President, Finance and Administration.  According to the 8-K that contains the details, the money is being paid “in recognition of her past contributions to the Company and in order to secure her future services to the Company.”

Riley will receive $1,000,000 if she stays with the company through March 31, 2010; and she’ll get another $1,000,000 if she stays with the company through March 31, 2011.  (There are also severance clauses in place that protect Ms. Riley’s right to receive this money if the company terminates her employment without cause before the end of March, 2011.)  That adds up to more than $4,700 per day just to stay in her job.  And, just in case it isn’t clear, that’s in addition to her regular paycheck.

Of course, staying in a job like Riley’s may not be so easy.  Nearly four years ago, Michelle wrote about some of the company’s odd expenditures that were disclosed in a 2006 proxy.   Since that time, the company has gone through some very public, tumultuous transitions, and a new chief executive, Jane Elfers, stepped into the job a few weeks ago.  Analysts currently have mixed projections about how they expect the stock to perform this year.

Riley has been with the company since about March, 2006 (p. 33), and she’s worn a variety of finance-related hats in that time.  According to p. 54 of last summer’s proxy, Ms. Riley earned a base salary of $534,200; add some stock and other types of compensation, and her total compensation surpassed $2 million in 2008.

In the January 22 filing, the company says that the full letter agreement will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2010.

Image source:  World Community Cookbook

Last week’s celebrity telethon and other appeals raised a lot of money for relief efforts in Haiti, where current estimates are that the January 12 earthquake in Port-au-Prince affected 3 million people and killed more than 112,000.

We wondered if any publicly-traded companies had filed SEC documents that mentioned efforts to help the beleaguered nation, where there’s a notorious lack of industry and unemployment rates of about 70 percent.

In fact, there have been, and today we’d like to honor them with footnoted’s gold star.   Here are the recipients and a brief summary of their contributions:

• Case New Holland (CNH), which manufactures agricultural and construction equipment, for deploying excavators, wheel loaders, and other equipment to the disaster site within 24 hours, and for offering the use of other heavy construction equipment to the United Nations.  The company also made a cash donation of $50,000 and offered to match employee donations (dollar-for-dollar) up to $100,000.

• Hanesbrands, Inc. (HBI), for supplying humanitarian aid to contract workers and relief agencies. The company has garment factories in Haiti and reported that operations at its plants have resumed. According to its web site, Hanesbrands, Inc. has donated $2.2 million worth of underwear (at wholesale value) to aid agencies for distribution to earthquake victims.  It is also providing food, water, and relief supplies to its Haitian workers.

• Trailer Bridge, Inc. (TRBR), which provides integrated trucking and marine freight service to (among numerous other places) the Dominican Republic.  This company partnered with a shipping customer to provide free transportation and trailers for donated medical supplies to Port-au-Prince.  (It also leased one of its vessels to the Military Sealift Command (MSC), the transportation provider for the United States Department of Defense’s relief efforts; however, this is a contract, not a donation).

• Delta Air Lines (DAL), for partnering with the American Red Cross’s relief efforts in Haiti.

• Dennis Brovarone, a director at Pure Bioscience (PURE), who donated 1,000 shares of common stock to Oxfam Haiti Emergency Relief.

To these companies and Mr. Brovarone, as well as to other companies and individuals who have contributed to the relief efforts – this gold star is for you.

As foreign work assignments go, Switzerland surely must be on a lot of short lists.

For two executives at Foster Wheeler AG (FWLT), a global engineering and construction contracting company, those assignments come with some very nice benefits… especially if they tough it out for a few years.

The company announced last month that it was moving its operating headquarters to Geneva.  The agreements are between a Foster Wheeler subsidiary and Franco Baseotto, the executive VP/CFO/Treasurer, and with Beth Sexton, the executive VP, Human Resources. According to this filing, amendments to the employment agreements are being made because the relocation to Switzerland would allow the executives to terminate their employment “for Good Reason.”

That may be technically accurate, but it’s hard to believe that highly-ranked executives are going to jump ship just because the boss asks them to work in Europe for a few years.  In this case, the company said that to avoid any doubt, the maximum length of the assignments would be five years.

Foreign assignments generally come with nice benefits:  moving and housing allowances, regular business-class travel back and forth to the States, tax gross-ups, tuition payments for children’s schools, etc., and Baseotto’s and Sexton’s agreements are no exception.

But it’s the “stay bonuses” and future stock awards that seem more unusual.  In Baseotto’s case, he “will receive a stay bonus equal to 175% of his annual base salary upon the earlier of entering into a New Addendum to the Baseotto Agreement or June 30, 2011, provided he remains in active employment until such date.”  According to the proxy filed last September, Baseotto’s base salary was $550,000.  That means that if he can tough it out in Switzerland for about a year and a half, he’ll receive another $962,500.  The agreement also says that the stay bonus “will be increased if Mr. Baseotto remains in active employment beyond June 30, 2011,…” provided he gives the required advanced notice before he resigns.  [Sexton’s agreement has a similar provision to give her 175% of her base salary, which was $388,360 as of Jan. 1, 2009.  Thus, if she stays with the company until June 30, 2011, she’ll get another $679,630.]

As if that wasn’t enough of a sweetener to take the hardship assignment of moving to Switzerland, there’s also the restricted stock: $2.5 million for Baseotto that vests over three years.

If the competition among Foster Wheeler’s executives for assignments in Switzerland wasn’t tough enough already, it probably is now.

Image Source:  Historic Hotels of Europe

January is half over, the news from Haiti is heartbreaking, and right now it seems that the snow will never melt.  In all, it’s been a tough few weeks. Fortunately, the 8-K that Red Robin (RRGB) recently filed lets us focus for a moment on something positive and bestow footnoted’s first Gold Star of 2010.

Red Robins are bright, colorful restaurants that keep kids happy with balloons, coloring pages, and visits from the company’s mascot.  Adults get to enjoy the unlimited seasoned fries and the ubiquitous sports-channelling tv’s until the food (which is, happily, several notches above fast food fare) arrives. Of course, just because a restaurant’s popular with customers like me doesn’t mean that its corporate filings are equally appealing to its investors.  But in this case, they may be.

Under the August 15, 2008 restated employment agreement that governed Chairman/CEO Dennis Mullen’s employment until this past Monday, he was “eligible to receive a cash bonus for each of the years ended December 31, 2009, 2010, 2011 and 2012 of not less than fifty-percent (50%) of his annual base salary if certain performance metrics determined by the Compensation Committee for the year ended December 31, 2009 were met.”

The company said that even though the metrics were met for 2009, the Compensation Committee requested that Mullen waive his cash bonus for 2010, 2011, and 2012.  Mullen agreed to do so.  Since he made $725,000 in base salary during 2009, the cash bonus would have been at least $362,500 this year and at least $400,000 in 2011 and 2012.

Instead, the new employment agreement states that Mullen’s bonus eligibility through 2012 “will be based solely on his participation in the Company’s annual incentive plan.” In a trade-off, the Compensation Committee increased Mullen’s annual incentive bonus target to 100% of his base salary, rather than the 90% target he had in 2009.  And it increased Mullen’s base salary from $725,000 to $800,000, although it should be noted that Mullen’s salary did not change in 2008 or 2009.

But there’s more!  It continues:

…the Amendment terminates Mr. Mullen’s right to be paid or reimbursed for personal travel expenses incurred by Mr. Mullen in commuting between Arizona and Colorado, as well as the tax gross-up related to such payments.  The Amendment also deletes the 280G tax gross-up provision…In connection with the Amendment, the Compensation Committee also determined that, when granted, 50% of the annual equity grants for 2010 to Mr. Mullen will be performance-based instead of 100% time-based.

We don’t read a lot of filings that document an executive’s willingness to waive a bonus, give up the right to be reimbursed for personal travel costs and gross-ups, and adopt a performance-based system to determine whether he will receive half of his potential equity grants. But clearly it’s worth a rare footnoted Gold Star.