I’m addicted to Lost, though it's clear the show’s writers will never get around to answering all our burning questions. (For example, why can't Charlie, stuck on a mysterious island with a guitar and nothing else to do, teach himself a few more chords?)
There are many unanswered questions in Proxyland as well since the SEC stripped down the 8-K rules for disclosing CEO departure deals. Last week The Wall Street Journal’s Alan Murray wondered why Steve Heyer, CEO of Starwood Hotels and Resorts Worldwide, Inc. (HOT), readily gave up $35 million in severance even though the unfortunate hobby that got him ousted – sending friendly emails to young female employees – didn’t fall under the “Cause” definition in his contract. (BTW, Starwood, you might want to rethink that ticker symbol.)
Heyer’s explanation - “life’s too short” - didn’t convince Murray, who fears there's more to the story. But since Heyer is a married man we’re inclined to take his philosophical comment at face value. Still, it doesn't seem right that a board can lock itself in a room with a disgraced CEO, emerge with a deal and leave us guessing about the legal niceties.
Another company being coy with us is SafeNet, Inc. (SFNT). As you may recall, last fall SafeNet's board tossed out Chairman/CEO Anthony Caputo for options backdating and, in an unusual move, promised by the end of March to select one of two story lines: Caputo either was fired for “Cause” or resigned for "Good Reason." (In the meantime they got busy selling the firm to an outfit called Stealth Acquisition Corp, which completed its tender offer last Wednesday.) In the end, SafeNet filed an 8-K that throws off as much smoke as Lost’s goofy monster. Caputo didn’t get severance – au contraire, he's putting up money to settle a lawsuit against the company – but for purposes of exercising his stock options he was graciously treated as if he'd resigned, though not for "Good Reason."
So did Caputo's conduct constitute "Cause"? We think so, but nowhere in the documents did SafeNet use the C-word so the company's conclusion remains a mystery.
As Don Imus proved last week, some words are just too nasty to say.
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