Monday, March 05, 2007

When Worlds Don't Collide

We've observed before that Proxyland is a place of paradox. Today we report that in this magical locale it is possible simultaneously to retire, be employed, and get a raise, even if you don't know exactly when all of this will happen. Except for the raise, which already took effect.

On Friday, Compuware Corporation (CPWR) filed an 8-K along with a short document called a "Post-Retirement Consulting Agreement." Apparently Chairman and CEO Peter Karmanos, Jr., on some date that hasn’t happened yet and upon which he and the company will harmoniously agree, will “retire.” In the meantime his salary, set at an even 1 million last June, just went up by $50,000.

Upon “retirement" he’ll transform into “an employee in a consulting role.” The contract specifies no job title, required hours or duties, but for four years Mr. Karmanos will continue to receive annual bonuses (unquantifiable right now) and retain all his medical and insurance benefits - even his vision plan - plus an office, secretarial help, and a car. His stock options won't expire. He'll also receive a year’s salary - pegged to whatever he’s being paid at “retirement” - stretched over the four years of “employment.” (The salary figure, oddly, has a floor of 1.2 million, more than he’s making now.)

If the company decides it no longer needs his “consulting” services, he’ll still get the salary and benefits for the entire four years and all his stock options will vest as he heads out the door.

So is this a new job or merely a cushy severance arrangement? It depends on how Mr. Karmanos spends the time, I guess. He can put on a suit, get in his company car and head to his office each morning to glare at his secretary over the rims of his company-paid eyeglasses. Or he can head to the links to relish his retirement, knowing if a ball whacks him in the head and he ends up in the emergency room, his “employer” has him covered.