O'Sullivan officials want out of severance agreements

It should come as no surprise that at a time when his company owes more than $132 million, one of the steps O'Sullivan Industries' million-dollar CEO Bob Parker is asking a bankruptcy judge to take is to reject the severance agreements the company entered into with many of its departed officers, including former company president and CEO Daniel O'Sullivan.
In documents filed Friday with the U. S. Bankruptcy Court for the Northern District of Georgia, company attorneys say, "The debtors (O'Sullivan companies) currently receive limited, if any, benefits from such agreements, whereas they would owe in excess of $1.3 million in the aggregate thereunder if they are not rejected." By getting rid of these contracts, company officials say, it will benefit O'Sullivan Industries and its creditors.
As regular readers of The Turner Report know, this blog has chronicled Parker's reign, which started with the bloodbath removal of many of the people who had put O'Sullivan Industries on the map, including nearly every member of the family of company founder Thomas O'Sullivan.
Parker was brought in at a salary of $1 million a year, and stands to make another half million in bonus. After he removed the longtime O'Sullivan officials, many of whom had been with the company for two or three decades, he replaced them with former confederates of his from his former employer, Newell Rubbermaid.
The company then moved its corporate headquarters from Lamar to a suburb of Atlanta, Ga., claiming that it would help attract top-flight officials and would make it easier for the company to deal with its customers. As The Turner Report first revealed, that move had already been decided before Parker inked his contract with O'Sullivan. Even though the company's corporate headquarters was in Lamar at that time, his contract specified that if the company moved from the Atlanta area, Parker could ask for and receive a costly buyout. The same clauses were later placed in the contracts of some of the other Newell Rubbermaid expatriates.
But it is the severance agreements O'Sullivan entered into with Daniel O'Sullivan and other former company officials, among other things, that are weighing the company down, the documents filed in bankruptcy court yesterday claim.
The contracts were spelled out in court documents:
-Daniel O'Sullivan- The company entered into a retirement and consulting agreement with O'Sullivan Oct. 16, 1998, with O'Sullivan resigning as CEO immediately. He retired as a company executive on March 31, 2000. He is to be paid $11,458.33 per month to serve as a consultant until Aug. 6, 2006 (leaving $115,000 to be paid). He is also provided with health and life insurance benefits, amounting to an additional $6,000.
-Terry Riegel- On June 25, 2003, the company entered into an agreement with Riegel, calling for him to retire on Nov. 15, 2003. He is to be paid $5,000 a month as a consultant through Nov. 15, 2007 (leaving $125,000 to be paid). He and his family also receive health insurance, amounting to $18,000 over the term of the agreement.
-Howard Bass- Bass agreed to retire as of July 6, 2001, and is being paid through Dec. 31, 2006. He continues to receive health and dental insurance with about $4,000 left over the contract.
-Sheila Roland- On Dec. 20, 2000, O'Sullivan Industries entered into an agreement with her, calling for her to retire on July 6, 2001. She is still owed $1,800 in insurance benefits through Sept. 30, 2006.
-Tom Thieman- On Sept. 10, 2004, he was forced to retire effective Sept. 30, 2004. He is owed $1,500 in health and dental insurance benefits through Jan. 31, 2006.
-Richard Davidson- His agreement was entered into on Aug. 13, 2004 and he agreed to serve as a "consultant" through Dec. 31, 2005. He is owed about $1,000 in health and dental insurance benefits.
-Michael O'Sullivan- His contract was signed Oct. 28, 2004 and he is owed $1,000 in insurance benefits through Dec. 31, 2005.
-Tom Riegel- Riegel's agreement, entered into on Aug. 18, 2004, calls for him to serve as a "consultant" through Aug. 31, 2007. He is owed approximately $6,500 in insurance benefits.
-Betty Brasher- The company owes her about $1,000 in insurance benefits through Feb. 1, 2006, according to an agreement signed Jan. 2, 2002.
-Rowland Geddie- Under the terms of a contract signed Feb. 1, 1996, if Geddie is terminated with two years of a "change in control" without "good reason" he has to be provided with salary and benefits and the amount of the highest bonus he had received during the previous three years. The company says that if it is determined that it did not have good cause to remove Geddie, it could owe more than a quarter of a million dollars.
In addition to those obligations, bankruptcy court documents indicate the company is trying to get out of all sorts of agreements and leases.