If you can find yourself an opening, try to become a "key advisor" or "consultant" at a public company, particularly at one that just acquired your company. These tend to be fairly lucrative positions. Just look at the ka-ching! that former Skis Rossignol chairman Laurent Boix-Vives got from the surfer dudes at Quiksilver (NASDAQ:ZQK) who took over the ski maker.
When the deal was announced last March, Quiksilver reported it would pay the 79-year-old Boix-Vives and his family $320 million (split 70-30 between cash and stock) for his 43% ownership stake (and 63% of voting rights) in the ski maker and would assume $160 million in debt that Rossignol had taken on. While it was seen as a fairly sweet deal, particularly in light of the fact that Quiksilver's president was a close, personal friend of the Boix-Vives family, investors surely didn't realize the pot would be sweetened even further.
In a filing with the Securities and Exchange Commission on Tuesday, Quiksilver let it be known that in addition to the rich deal already announced, it will also be appointing Boix-Vives to the board of directors, in a position that carries a salary of $20,000 a year plus stock options. It will also sign him to a five-year consulting contract worth approximately $4.6 million at current exchange rates. Quiksilver wanted to be able to tap into Boix-Vives' storehouse of knowledge in preparation for marketing and branding the company for its coming 100th anniversary, as well as for the 2006 Winter Olympics in Italy -- all of this despite the fact that sales and profits at Rossignol have been declining for several years now.
The Boix-Vives family continues to own restricted shares in the company, and it can require Quiksilver to purchase them for an additional $32.5 million -- plus interest -- beginning in April 2010. Similarly, Quiksilver may purchase the family's stake in subsidiary Cleveland Golf for cash beginning in 2012, based on a formula conditioned on profits and P/E ratios. The Boix-Vives family retains a 36% stake in Cleveland Golf and requires Quiksilver as part of the merger agreement to distribute at least 20% of the income earned to shareholders. Since the Boix-Vives family constitutes the largest block of stock owners, they stand to profit handsomely from the arrangement.
Quiksilver is primarily a clothing company that looked to the Rossignol ski brand as a way to extend its influence beyond surfers and skateboarders. One of the company's initial plans is to manufacture jackets, ski pants, and sweaters emblazoned with the Rossignol name. As fellow Foolish contributor Rich Smith subsequently noted, however, what it plans to do with the inventory of skis and such appears to be more of a problem.
The company faces tough competition on the slopes from sporting-goods manufacturer K2 (NYSE:KTO) and on the links from Cutter & Buck (NASDAQ:CBUK), a Motley Fool Hidden Gems Watch List company. And in an effort to apparently please and placate a family friend, Quiksilver has made it harder for its shareholders to earn a decent profit on their investment.
Unless, that is, shareholders can become company consultants.
Consult with these related Foolish articles for more insight on Quiksilver:
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Fool contributor Rich Duprey owns shares of K2 but none of the other stocks mentioned in this article. The Motley Fool has a disclosure policy.
