It's no longer a Fortune 500 company, but Carthage-based Leggett & Platt is apparently so successful that everyone is wanting to hire its two top officials, CEO David Haffner and COO Karl Glassman.
The following was included in a proxy statement filed today with the Securities and Exchange Commission (SEC):
On the Committee’s recommendation, the Board entered into employment agreements with Mr. Haffner, Mr. Glassman and Mr. Flanigan in May 2009. These employment agreements expire on the date of our annual shareholder meeting in 2013. The material terms and conditions of these employment agreements are described on page 46.
The Committee determined that these agreements were in the best interests of the Company and our shareholders for the following reasons:
• The Committee was aware that Mr. Haffner and Mr. Glassman were being pursued by other companies, at much higher compensation levels.
• Effective chief financial officers are in high demand and are heavily recruited, and the Committee valued Mr. Flanigan’s retention.
• These three executive officers have long tenures with the Company and extensive knowledge of our complex industries. They work extremely well together and their potential loss would pose a hardship for the Company.
• These key leaders have been instrumental in developing and executing the strategic plan announced in 2007; accordingly, the Committee chose a four-year term for the agreements to ensure their continued commitment to the Company’s strategic objectives.
The Company also has severance benefit agreements with Mr. Haffner and Mr. Glassman, but does not offer severance benefits to any other NEOs. These agreements have been in place for several years and have no stated expiration date. They are designed to protect both the executive officers’ and the Company’s interests in the event of a change in control of the Company.
Haffner's pay package for 2010 stood at $5,454,350, according to the proxy report. Glassman was paid $3,067,386.
And since Haffner and Glassman are in such demand, their best payouts will come if they leave the company.
If Haffner decides to lay off Leggett employees, they undoubtedly receive some sort of severance pay, but it is unlikely they will pull down the $8.7 million Haffner receives his company decides to let him go without cause. If the company changes hands and the new owners decide Haffner is not going to be a part of the new management, he receies more than $30 million, the proxy statement says.
Glassman, not being as key an official as Haffner, would receive only $16 million if the company sells and he is shown the door.
Don't hold this kind of excess against Leggett's Board of Directors, though. Apparently, it's almost impossible to get a good CEO if you're only going to pay him $10 million if he's fired.