Monday, June 30, 2008

Former Brown-Forman CFO in Fine Spirits

Phoebe A. Wood retired from her position as chief financial officer of Brown-Forman (BF.B-$75.96) at the end of the distiller’s fiscal year (April 30, 2008). In connection with her departure, Wood signed a one-year consulting agreement with the maker of Jack Daniel's, Southern Comfort and Korbel Champagne, whereby she would be available for up to eight-hours a week to assist incoming Donald Berg with his new duties as CFO.

Sounds harmless enough. What
the press release blithely ignores is that Wood is afforded the opportunity to earn an additional year of salary ($625,000)—for just being available twenty percent of working time—to help Berg, 19-year veteran of the company (who already has tenure in corporate finance, treasury, and tax matters), during the alleged transition period .

"It’s just egregious!" When one reads an article on excessive exit packages for top executives in any of a number of leading publications—BusinessWeek, Forbes, or The Wall Street Journal—prominent chief executives oft-mentioned include Home Depot’s Robert Nardelli, Pfizer’s Hank McKinnell, and ExxonMobil’s Lee Raymond, who took home a respective $225 million, $200 million, and $357 million in severance.

Activist shareholders who traditionally have advocated for more curbs on executive pay might want to sharpen their 'say-on-pay' pencils to include those little-noticed compensatory good-bye packages awarded to hundreds of departing top executives like Phoebe Woods, too.

Editor David J. Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

1 comment:

Ben T. said...

David - Excellent Blog. However, in this case, I think shareholders and owners' interest are fairly aligned since the Brown family owns the vast majority of shares and the company is not really susceptible to activist investors. Good or bad, BF has a way of taking care of people that have worked there any meaningful time.