COSI Executive’s Compensation Dilutes Shares By Six Cents Each
COSI filed an 8K with the SEC this morning which includes the terms of their Executive Chairman’s work agreement.
It offers some interesting insights into the company, and makes us wonder: is COSI’s management more concerned with their shareholders, or their own salaries?
We took a look at the filing (PDF) earlier. Here’s what we learned:
- He’s sticking around. Mr. Forest will remain as Cosi’s Executive Chairman through the end of 2006. He will become Non-Executive Chairman indefinitely thereafter. He is not allowed to undertake any commitments that might interfere with his commitments to Cosi, though he may serve on the board of other companies or charitable institutions.
- They’re Paying for two CEOs. While serving as Executive Chairman, Mr. Forest will receive an annual base salary equal to COSI’s CEO, as well as director’s fees. He will also receive the same bonuses as the CEO. Once becoming Non-Executive Chairman, he will receive three times the other directors - a salary paid in the form of Cosi common stock. However, the agreement limits him to $200,000 in any year as Non-Executive Chairman.
- The Price: Six Cents Off Each Of Your Shares. Per the agreement, Mr. Forest will be compensated 300,000 shares of COSI stock through 2007 - about one day of trading volume. He received 200,000 shares of authorized but unissued common stock on December 12 (the effective date), and will get another 50,000 shares in both 2006 and 2007. At today’s prices, that’s worth $2.4 million.
The bottom line: By compensating this one executive with stock, COSI’s management is costing shareholders 0.78% - about 6.3 cents each.
