Who's Filing Now?

Once again, as Wall Street waits for happy hour, we Fools wade into 8-K filings that, if the timing is to be believed, executives would rather you not read.

Filings like this one from Longs Drug Stores (NYSE: LDG  ) , which says that certain members of the pharmacy's management team stand to earn millions in bonuses. CEO Warren Bryant, for example, could earn more than $2.5 million by my math.

Aren't scripts for Hollywood?
Trouble is, we don't know exactly what he and his fellow executives need to do for shareholders in order to cash in. Quoting from the 8-K:

The executive officers of the Company listed below are eligible to receive performance-based compensation for Fiscal Year 2008 based on the Company's achievement of certain adjusted operating income, same store front-end sales growth, and script count growth. [Emphasis mine.]

If these don't strike you as typical metrics, you're right. Not that there's anything wrong with that -- firms report progress in non-GAAP form all the time. Sirius Satellite Radio (Nasdaq: SIRI  ) and XM Satellite Radio (Nasdaq: XMSR  ) would have to be two of the most popular.

Longs makes the list because its results contain the impact of closed stores and other discontinued operations. So what's the problem? Search the fourth-quarter press release. Nowhere is there a mention of "certain adjusted operating income" or "same store front-end sales growth" or "script count growth." Same goes for the 10-K.

And that smells funny. Publish the metrics, Longs. That's the only way for shareholders -- that is, your owners -- to know whether Bryant and others deserve the millions they stand to earn this fiscal year.

Really, it's a better opportunity
But my favorite filing this week comes from toolmaker Black & Decker (NYSE: BDK  ) , which reported that group vice president Thomas Koos resigned to become CEO of Jacuzzi Brands. Construction tools chief Bruce Brooks is to take Koos' place.

There's little here to arouse suspicion. Even the quote from CEO Nolan Archibald is pretty bland: "We thank Tom Koos for his contributions to the success of the consumer business, and we wish him well in his next endeavor."

Awwwww. Can't you just feel the love? Get me a cup of tea and a sweater. And turn on Oprah while you're at it.

Actually, wait. Let's have a look at how Koos did before we call this a well-deserved group hug and move on. What do we find? Uh-oh. Sales were down 7% in the fourth quarter. Per-share earnings, meanwhile, fell 27% over the same period.

We can't blame all that on Koos, right? Right. Trouble is, power tools and accessories accounted for 73.5% of Black & Decker's revenue in 2006 and, within that division, consumer tools were among the poorest performers. Quoting from the most recent 10-K:

Sales of the consumer power tools and accessories business in the United States decreased at a low single-digit rate primarily as a result of lower consumer power tool and pressure washer sales, which were partially offset by the sales of the acquired Vector business. Excluding the sales of the acquired Vector business, sales of the consumer power tools and accessories business declined at a low double-digit rate from the 2005 level with sales down across most channels and product lines. Actions taken by major retailers to reduce inventory levels also negatively impacted the U.S. consumer power tools and accessories business in 2006. [Emphasis mine.]

Yuck.

With 15 years in the PR biz, I can tell you that Black & Decker probably pitched this messy job to Brooks as a "turnaround opportunity." Meanwhile, Koos, who probably had enough of "turnaround opportunities" in his six years in the executive ranks at B&D, heads for safer waters at Jacuzzi Brands.

Oh, wait, that's not right either. Jacuzzi was struggling for years before business development superstar Apollo Investment (Nasdaq: AINV  ) agreed to buy the firm for $1.25 billion in cash and assumed debt. The transaction was completed last month.

That means Koos is leaving one "turnaround opportunity" for another. Anyone want to bet that Archibald, tired of poor consumer sales, is sad Koos went looking for a new gig? I wouldn't.

That's all for this week. Think you've found a late filing we Fools should see? Let me know.

Get all the inside information you need in our collection of investing newsletters. From wallflowerish small caps to swashbuckling Rule Breakers, we've got something for every investor. Get in on the action today; all of our newsletters offer a 30-day risk-free trial. There's no obligation to subscribe.

Fool contributor Tim Beyers, who is ranked 1,426 out of more than 24,900 in our Motley Fool CAPS investor intelligence database, usually favors two scoops of ice cream over the inside scoop. Tim didn't own stock in any of the companies mentioned in this story at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on SEC filings, Foolishness, and investing in general may be found in his blog. Apollo Investment Corp. is a Motley Fool Income Investor recommendation. XM is a former Rule Breakers recommendation. The Motley Fool's disclosure policy may be filed under "F" for fair, or Foolish.


Read/Post Comments (0) | Recommend This Article (22)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 524506, ~/Articles/ArticleHandler.aspx, 12/17/2014 11:12:57 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement