Tuesday, August 28, 2007

CEO of Hi-Shear Technology Whistles: "Back at Home There's Nothin' to Do."

George W. Trahan, 59, Chief Executive Officer and Chairman of the Board (since April 2000) of Hi-Shear Technology Corp. (HSR-$9.59), manufacturer of electronic firing devices and fail-safe pyrotechnic initiation and separation products for the aerospace industry, has a two-year employment agreement, which provides for 12-weeks paid vacation each year—three months of each year!

Can't seem to get my mind off of you
Back here at home there's nothin' to do
Now that I'm away
I wish I'd stayed
Tomorrow's a day of mine
That you won't be in

Who is there to tell Trahan to get his mind off of Hi-Shear and stay away for a few days? Trahan, who beneficially owns 38.3% of the common stock outstanding, can pretty much dictate the terms of his employment.

When you looked at me
I should've run
But I thought it was just for fun
I see I was wrong
And I'm not so strong
I should've known all along
That time would tell

As of May 31, 2007, the total cumulative vacation hours earned by, but unpaid to, Mr. Trahan was $594,000.

A week without you
Thought I'd forget
Two weeks without you and I
Still haven't gotten over you yet

The Agreement also provides that Trahan’s base salary shall be increased from $484,000 in fiscal 2007 to $532,000 as of February 28, 2008. Ergo, if he elects not to ‘take holiday,’ he could cumulate an additional $123,000 in fiscal 2008.

All I ever wanted
Had to get away
Meant to be spent alone

Ironically—given the industry that Hi-Shear services—the Company does not provide to Trahan a corporate jet; but, his employment contract stipulates that he is to fly in ‘first class.’

All I ever wanted
Had to get away
Meant to be spent alone
~ The Go-Go’s (
Vacation –audio clip, 1982)

In recognition of the requirements for business travel, the Company provides Mr. Trahan with the use of a Cadillac Seville (or other automobile of equivalent cost of Executive's choice). The automobile may be purchased by Mr. Trahan at the end of the lease or renewal of a new lease for just $1.00.

Beyond raised eyebrows, the 10Q Detective noted, too, that—irrespective of his past performance—if Mr. Trahan's employment with the Company is terminated for any reason other than death, permanent disability, or ‘for cause,’ Trahan shall continue to receive compensation for 48 months—or four times his annual salary! [Typically, exit packages involve a cash severance of two or three times salary plus bonus.]

Thomas R. Mooney, 70, the Co-chairman of the Board, performs consulting services for the Company, for which he received $230,000 during fiscal year 2007, which included a discretionary bonus of $36,000 earned in fiscal year 2006, pursuant to his consulting agreement with the Company (under its Executive Bonus Plan).

The Consulting Agreement provides that Mr. Mooney “will work on projects as assigned by the Company.” Curiously, his agreement does not include a requisite minimum of hours that Messer. Mooney has to work each month.

Mr. Mooney retired from active employment and as Chief Executive Officer in February 2000. Mr. Mooney served as Chief Executive Officer and Chairman of the Board from June 1994 until February 2000.

Oh—Mooney is also the other major stockholder, beneficially owning 30.6% of the common stock outstanding.

Editor David J. Phillips does not hold a financial interest in Hi-Shear Technology Corp. The 10Q Detective has a Full Disclosure Policy.

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