Wednesday, November 29, 2006

Sky High

I was so tickled by the employment contract of William Furman, President/CEO of The Greenbrier Companies (GBX) (discussed here and here), that I checked out the company's recent proxy statement to see what else might turn up. Two things did. First, Furman recently became proud partial owner of "a fleet of private aircraft." And everyone being such good friends and all, the company says it might occasionally charter one of these babies.

OK, so it’s disclosed, and assuming Greenbrier keeps its promise not to pay more than market rates when its employees fly Furman, there’s nothing illegal here. But why does a CEO insist on doing something so tacky?

The answer, presumably, is that old favorite: Because he can. An exec who gets into a sideline business and blithely takes on the public company he's running as a customer is feeling quite at home in his position. Given what it takes to fire Furman under his contract, I wouldn't be surprised if he's lounging around the office in PJs and bunny slippers.

The other thing I noticed in Greenbrier’s proxy is that in fiscal year 2006, as in the two prior years, Furman’s “other compensation” included over $400,000 for "executive life insurance." (By way of comparison, the guy’s combined salary and bonus for 2006 is only about 1.4 million.) Wow. I’ve don’t think I’ve ever seen such huge insurance premiums in a compensation table.

Exactly what is Furman getting here? They’re not telling us. In simple terms, a fact is legally material if an investor would reasonably want to know it, and if I owned Greenbrier stock I might like more detail on what those generous insurance premiums are buying. The other thing I'd like to know is whether the guy with the new fleet of jets and that whopper of a life insurance policy is planning to take flying lessons.