Looks like the CFO of American Italian Pasta (NYSE:PLB) stayed around just long enough to collect his bonus. Now he's following the example of other company top executives -- and beating feet for the door.
Last October, the pasta maker was beset by problems nearly as bad as an ergot fungus outbreak. Its chairman suddenly resigned, and the president and CEO followed him to the exits within months. Two weeks later, the company revealed a host of errors that would require it to restate its financials all the way back to 2002. As a matter of fact, American Italian Pasta still hasn't filed any of its financial reports since last year's second quarter.
In the midst of this worsening financial crisis, and undoubtedly in an effort to stem the executive defections, the company awarded its CFO a $290,000 bonus. But it came with a catch: It would be paid in two installments, and he'd have to stay around until June to collect the full amount. Apparently, he's fulfilled his end of the bargain, as the pasta maker just announced that the CFO would be leaving for greener pastures. There were no details on what, if any, severance package was negotiated for his loyalty.
American Italian Pasta was once a market darling, but it fell hard when interest in the low-carb fad gripped the country. While companies like egg producer Cal-Maine (NASDAQ:CALM) soared as consumers turned to protein-rich diets, American Italian Pasta and its fellow pasta makers stumbled. Monterey Gourmet Foods (NASDAQ:PSTA), formerly Monterey Pasta, once traded as high as $20 a share, but now borders on penny-stock land. New World Pasta was driven to bankruptcy.
Despite reporting yesterday that third-quarter revenues inched up almost 3% over last year, American Italian Pasta also said it would face a worsening financial picture because of rising durum wheat prices. It can only raise prices so far to offset the costs, so investors should expect to see continued declines in margins and earnings. Retail sales, such as those made to Wal-Mart (NYSE:WMT) and other grocery stores, rose 8.4%, accounting for roughly three-quarters of all sales. That increase was just able to offset an 11% decline in sales to institutional customers like Sysco (NYSE:SYY), which compose the other 25% of American Italian Pasta's revenues.
But it won't amount to much anyway, until American Italian Pasta finally files its delinquent statements. The pasta maker says it should do so by the first quarter of 2007. Meanwhile, beleaguered shareholders can keep an eye out for the next executive handout.
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Fool contributor Rich Duprey owns shares of Wal-Mart, but does not own any of the other stocks mentioned in this article. You can see his holdings here . Sysco is a Motley Fool Income Investor pick. The Motley Fool has a disclosure policy .
