{"id":447268,"date":"2010-03-19T10:59:16","date_gmt":"2010-03-19T14:59:16","guid":{"rendered":"http:\/\/www.footnoted.org\/?p=4623"},"modified":"2010-03-19T10:59:16","modified_gmt":"2010-03-19T14:59:16","slug":"foster-wheeler-and-the-million-dollar-consultant%e2%80%a6","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/447268","title":{"rendered":"Foster Wheeler and the million dollar consultant\u2026."},"content":{"rendered":"

\"\"<\/a>The Ides of March may have been unlucky for Julius Caesar, but it was a pretty good day for Raymond Milchovich.<\/p>\n

That\u2019s because March 15th is the day that Milchovich, the Chairman\/CEO of Foster Wheeler, Inc., (a subsidiary of Foster Wheeler AG) (FWLT), signed an agreement to retire as CEO on May 31, 2010 and become a consultant. The company filed an 8-K<\/a> and Consulting Agreement<\/a> on Thursday afternoon to disclose the new relationship. (You may recall that in January we reported<\/a> the generous contract terms Foster Wheeler gave to two executives who agreed to work in Switzerland for up to five years.)<\/p>\n

There are several interesting things about this new deal, which will officially start on June 1, 2010 and end on November 3, 2011.<\/p>\n

First, it\u2019s one of the most lucrative contracting agreements we\u2019ve read lately (though worth a bit less than this one<\/a>). Milchovich will get $104,466.67 per month as a consulting fee, which works out to $1,253,600 per year. There\u2019s also a clause stating that on the contract\u2019s anniversary or whenever the parties agree it\u2019s appropriate, \u201cthe Company shall review the Consulting Fee and determine if, and by how much, the Consulting Fee should be increased. Once the Consulting Fee has been increased hereunder, it shall not be decreased.\u201d<\/p>\n

Foster Wheeler notes that by relocating its primary office from New Jersey to Switzerland, it is in \u201cmaterial breach\u201d of its employment agreement with Milchovich. That breach would entitle Milchovich to terminate his employment \u201cfor good cause\u201d and receive a lump sum cash payment from the company, which appears to be (according to his Nov. 2008 Employment Agreement<\/a>) 200% of his 2009 base salary<\/a>, or $2,500,000.<\/p>\n

Milchovich is to work primarily in New Jersey or Florida, and there is no requirement that he work a set number of hours per month. His duties, which are described in \u201cAnnex 1\u201d to the agreement, are stated simply:<\/p>\n

\n

\u201cConsultant shall provide the Company with assistance in the transition of the Consultant\u2019s duties and responsibilities and such other business consulting services as the Board or the CEO may request, from time to time.\u201d<\/p>\n<\/blockquote>\n

In addition to his consulting fees, Milchovich may earn millions more if the company achieves its target objectives. \u00a0Per the contractual formula, his incentive fee shall be \u201cequal to the product of (i) the Consultant\u2019s monthly Consulting Fee at the rate in effect at the beginning of such fiscal year, multiplied by twelve and (ii) 130%.\u201d And the Compensation Committee can double that amount \u2013 whatever it turns out to be \u2013 if it determines that the company achieved objectives that are \u201csignificantly beyond expectations.\u201d<\/p>\n

Although the agreement specifies that Milchovich will be an independent contractor rather than employee, the company also states – rather incongruously – that he\u2019s eligible to participate in employee pension benefits plans, as well as group medical and dental plans. Foster Wheeler is also giving him $6,000 per month to pay for miscellaneous home office and car expenses, life insurance, and tax and financial planning; and furthermore, it will gross-up any amount Milchovich would owe if those benefits are taxable. \u00a0And finally, the agreement provides for large sums to be paid to Milchovich\u2019s estate if he dies, or to him if he becomes disabled or if there\u2019s a change of control at the company.<\/p>\n

Personally, we’d probably take Switzerland over Florida and especially New Jersey, especially given that state’s current budget woes<\/a>. But then again such a sweet consulting deal is hard to come by these days.<\/p>\n

<\/a><\/p>\n

<\/img><\/a>
\n<\/img><\/a><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The Ides of March may have been unlucky for Julius Caesar, but it was a pretty good day for Raymond Milchovich. That\u2019s because March 15th is the day that Milchovich, the Chairman\/CEO of Foster Wheeler, Inc., (a subsidiary of Foster Wheeler AG) (FWLT), signed an agreement to retire as CEO on May 31, 2010 and […]<\/p>\n","protected":false},"author":4072,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-447268","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/447268","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4072"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=447268"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/447268\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=447268"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=447268"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=447268"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}