Gone fishing — seriously…
Every now and then, we come across something in a filing that just makes us slap our head and say, “What the heck were they thinking?”. And that’s exactly what happened when we skimmed the proxy that A. Schulman (SHLM) filed yesterday. Here’s the head-slapping part:
During fiscal 2008, the Compensation Committee determined that maintaining a lease on a private airplane was no longer a cost-effective method for providing business-related transportation to our Named Executive Officers and Directors. The airplane was used only for business-related travel, and personal use was not permitted. With the termination of the lease on the airplane, it also became increasingly difficult and cost prohibitive to access our Canadian fish camp. Consequently, the fish camp, which was only used for business entertainment purposes, was offered for sale during 2008. The only offer to purchase the fish camp came from Terry L. Haines, our former Chief Executive Officer and President. Ultimately we negotiated with Mr. Haines to sell the fish camp for a purchase price of $55,000 and the transaction closed during fiscal year 2009.
There’s so much to poke at here that I almost don’t know where to begin: The leased airplane for business purposes only? The fishing camp in Canada? The fact that the airplane was no longer necessary because the fishing camp was sold? The sale of the fishing camp to the former CEO? The bargain basement price? Clearly, this is in the running for footnote of the year.
Of course, there’s a back-story here. A. Schulman has been targeted by activist investors Ramius Capital and Barrington Capital for several years now. There’s a good summary of events here and some more here. Haines left in March and oddly enough, a quick skim of his agreement doesn’t mention anything about the fishing camp, even though it does mention $2.4 million in cash, $1 million in deferred comp, lots of options, and a host of other goodies, including his laptop and his company-owned car.
Indeed, the fishing camp, which the company apparently bought in 1952, was never even mentioned in any company filings prior to last year’s proxy, which seems like an awfully odd coincidence, since it was right around the time that Ramius began its campaign.
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November 25th, 2008 at 12:55 pm
It gets my vote (for footnote of the year). Like you said, so much in just a few sentences.
I wish they had included a picture of the “camp.”
November 25th, 2008 at 2:21 pm
Why did you put “camp” in quotations? Are you implying that “camp” is a euphemism for something other than a camp? I don’t get it.
November 25th, 2008 at 2:25 pm
@ Mike: Not quite following you here. I didn’t put camp in quotes in this post. All I did was take a section of the actual filing. Maybe this was on another site that picked up the story?
November 25th, 2008 at 2:41 pm
Sorry Michelle, that was in response to the comment left by Tom Brakke above, not to your original post. Just calling out an egregious use of quotation marks…
November 25th, 2008 at 4:13 pm
ROFL, are you kidding? This is a gem of a find, Michelle. I love that access to the camp is now deemed expensive; what’s more expensive than a private airplane? The fish camp must be really remote, can’t drive there apparently. Also, did the Compensation Committee actually negotiate the sale of the fish camp? Okay, haven’t seen the other entries for “footnote of the year” but this entry is setting a high, er low?, bar. Who can beat this….
November 25th, 2008 at 4:31 pm
Sorry. I didn’t think that was an egregious use of quotation marks.
I was trying to indicate from my interest in seeing a photo that it could probably tell us a lot about the camp. Some of these sorts of things are nothing more than shacks in the wilderness. Others are fancier than you can imagine.
The quotation marks were meant to indicate that we can’t tell from the word what it really is–or whether it might be worth $55,000 or a lot more.
November 25th, 2008 at 5:03 pm
Clarification accepted. I misinterpreted that one. And you are probably right. Odds are if it was used for business entertainment purposes, the fully stocked bar and hot tub cost more than that.
November 25th, 2008 at 5:07 pm
I love how they’ve owned the camp since 1952 and the first time it made it into an SEC filing was last November. Damn those evil activist investors — ruining the world for the rest of us by forcing companies to expose this sort of thing
November 26th, 2008 at 1:29 pm
The camp is very remote and is in Canada. Near an indian reservation, I’m told. Never went there while employed at ASI but heard lots of stories of fun and frolic! These things are why are economy is where it is GREED and self-indulgence.
November 27th, 2008 at 10:54 am
I’ve been a shareholder of SHLM for several years now. I’m appalled and disgusted hearing this. I was undecided about which side to believe in recent proxy contests with the activists. Obviously, there is no question in my mind any longer. Luckily, I bought near it’s 10-year low, so I may hold on to see if Ramius and Barrigton are successful in fully enhncing shareholder value, or at least what’s going to be left of it. Thanks for the research and detective work Michelle.
November 27th, 2008 at 9:53 pm
Several former employees had tried to get access to buying this camp = I know Bill Tierney would have offered twice that amount if he could have gottten the ear of Gringo.
I am sure Bill will give you all the answers if you call him.
(781)-899-1555
December 2nd, 2008 at 11:52 am
A question occurs–Was the plane deemed expendable because the “camp” was sold? Or was the “camp” sold because the lane was no longer available? Definitely “footnote of the year” candidate.
December 24th, 2008 at 2:24 pm
The camp was certainly not a shack . In fact it was composed of 3 buildings , an old but well maintained
2 story 3 bedroom house that was used as the cook house, a five ? bedroom newer ie post 1960 single
story building with a large living area, fireplace ,showers, bath etc, an ice house and attached storage
building.. All fully furnished etc
I am sure Haines received as part of the deal the 8 14 ft aluminum boats , 9.9 horse outboard motors,
a large assortement of fishing gear rods ,reels, flys, landing nets, life jackets etc etc.
I am relaibly told that the property was appraised by Coldwell Bankers for $55,000. This does seem terribly underpriced but bear in mind it is in a depressed area of New Brunswick 2 hours from any major
centres. If appraised only as a residence in that area I have no doubt the appraisal is valid
However properly advertised in the USA eastern seaboard states and areas like Toronto and Montreal as a recreational property I am sure it would have fetched a much higher price.
December 29th, 2008 at 3:12 pm
Yes, this one is the worst!
January 8th, 2009 at 7:32 am
The camp is a shack with very little to call it more than a spot to sleep. The plane was used for almost completely, taking 5 or 6 people that needed to go to a customer, and it made more sense to use it, than going commercial. I love how a laptop that is worth about $100 is talked about. Nobody wanted the fish camp.
January 13th, 2009 at 3:28 pm
Obviously “ASI Employee Jan 8/09″ has not attended the camp or is deliberately slagging it- perhaps an
attempt to take the heat off management???