Thursday, February 01, 2007

Retired CEO of NCI Building Systems Stays for a "Rich" Journey

Back on January 19, our friend, Michelle Leder, did a nice job in highlighting the absurd severance package for NCI Building Systems’ (NCS-$57.93) retiring CEO Albert R. Ginn, Jr. Michelle penned on her blog, "Ginn, who stepped down at the end of 2006, is getting a ten-year consulting agreement that will pay him an annual salary of $200,000 for each of 2008 and 2009 and of $100,000 for 2010 through December 2017."

A.J. Ginn’s separation and consulting agreement with this Houston-based supplier of metal products to commercial builders stipulates that he need only work—up to a maximum—of 240 hours per year through 2009; During years 3-10 of the Advisory Period, Messer. Ginn agreed to perform the consulting services up to a maximum time commitment of
120 hours per year.

“We are confident that the future will hold many new accomplishments for NCI. Please join us on our journey to success.” –A.R. Ginn

The 10Q Detective had to dig through several other 8-K filings to unearth the specifics of A.J. Ginn’s change-in-control agreement.

“There is only one step from the sublime to the ridiculous.” – Napoleon Bonaparte
  1. Ginn is not be obligated to perform such services at times or places when they would interfere with the Employee’s pursuit of other personal and business interests;
  2. From July 1, 2007 through the Transition Date, the Company may provide to Ginn an office as the Company (at its discretion). In addition, the Company shall make available to the Employee an administrative assistant through the Transition Date;
  3. The Company will utilize the services of Ginn as a pilot for one or more of its corporate aircraft on an as needed basis! [Ed. note. In all our years, we have NEVER been witness to a consultancy agreement containing this particular clause.];
  4. At the recommendation of the Board, Ginn will continue to be eligible for awards of restricted stock of the Company.

Mr. A.R. Ginn’s supplemental retirement benefits existing on December 31, 2006 vested in full upon his retirement as CEO. The annual benefit payable to Messer Ginn is $200,000 per year for ten years.

Mr. Ginn is the beneficial owner of 357,947 shares, or 1.78%, of the Common Stock outstanding of NCI, worth an estimated $20.7 million.

NCI will record an expense in the fourth fiscal quarter of approximately $503,000 after-tax, or approximately $0.03 per diluted share, for the net present value of consulting fees to be paid to Mr. Ginn under the Agreement during such period.

The Board believes that retaining “Mr. A.R. Ginn’s expertise based on his more than 40 years of experience in the industry is of significant value to the Company.” Does that include his services as a pilot, too?

Editor David J Phillips does not hold a financial interest in NCI Building Systems, Inc. The 10Q Detective has a Full Disclosure policy.

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