Just finished reading the management proxy circular and WHOA!!!
Fitzgibbon earned a total of $450k, which was well below half of what he earned in 2010 and didn’t have me shedding any tearsL
But then I noticed that they bumped his performance bonus from 50%/100% of base salary to 75%/150% which gave him a tidy raise for the year and potentially a big one going forward. I don’t really take issue with this but read on.
My eyebrows were then raised when I saw they increased his base salary 7.3% on Aug 13th instead of the usual 1% to 2%. This was 4 days after the disastrous Q2 release (see my Aug 10th post “CEO should be terminated”).
And then my blood really began to boil when they disclosed a $49,176.62 interest free loan for “club membership fees” to be cancelled and forgiven if he doesn’t resign by Dec 31st 2016. I’M SPEECHLESS!!!
What happened here? As the stock price is in free fall, he’s hitting the Board up for more money? What, did he threaten to quit after realizing he wouldn’t be making a bonus? Does the company now review pay on a semi-annual basis? And although it’s a nominal amount, why would they give him a $50k bone to boot? Is it not obvious that is just wrong? The entire Board should be ashamed.
This is the problem with a languishing stock price – it creates a culture of entitlement where everyone is focused on short-term compensation. Everyone’s stock options are so far underwater they just place no value on them. The founders of Garden of Life are selling off their shares realizing less then what they got when they sold the company and it was a fraction the size. How can a CEO reign in expenses and hold people accountable when he himself is not being held accountable? ALL IMO.