By DAVID MOON, Moon Capital
Management December 11, 2005
In
the past, I've written about the startling gems you can find hidden in the
corporate filings that companies make with the Securities and Exchange
Commission. If you own shares of stock in a company and don't read the filings,
you are doing yourself a financial disservice. If you enjoy good clean
voyeuristic fun and you don't read the filings, you're missing a great, free
source of entertainment. Here are a few from the stack on the corner of my
desk.
Earlier this year the
media conglomerate Gannett (the parent company of WBIR Television) accelerated
the vesting schedule for options held by employees on more than 3.7 million
shares of Gannett stock. The employees were supposed to get full ownership
rights over three years. Instead, the board decided to give them full immediate
ownership of the options, allowing them to exercise the options and
theoretically pocket the profit differential between the exercise and market
price of the stock.
At the time, the market
price of the stock was a few dollars less than the exercise price of the
options, so there wasn't an immediate profit. But if Gannett stock began to
rise, the executives and other employees wouldn't have to wait three years to
pocket the millions of dollars of gains.
In a sort of weird
justice, Gannett stock has steadily fallen since the move and now sits $20 a
share lower than when the options were fully vested. They are currently
worthless.
* * *
Some people spend a lot
more to go on vacation than others. In 2004, Goody's CEO Robert Goodfriend
received a salary of $1.2 million. In addition to that amount, however, he also
used the company's aircraft for personal trips totaling another $464,000 in
'variable' expenses. That amount doesn't include little things like the purchase
price of the airplane or pilots' salaries ' just incidentals like fuel and oil
changes. It equals 39% percent of Goodfriend's salary.
I've always been
intrigued by check-cashing businesses. Twenty-five years ago in college, I
couldn't understand why people would pay Gus at Good Times Deli a dollar to cash
a $20 check. We didn't have ATMs in those days, but the bank would cash your
check for free, if you'd just plan ahead a bit. And most of the refreshment
houses I visited would trust a man and let him, as they say in the old country,
'pay on the never never.'
These check-cashing
places must make a fortune. I read that they charge the equivalent of hundreds
of percent a year in interest. That is, unless you work for Dollar Financial and
you're the CEO.
Dollar Financial is one
of those check-cashing money machines. A few weeks ago in a footnote of a proxy
statement, the company revealed that CEO Jeffrey Weiss was somewhat like other
customers to whom Dollar Financial advances cash: he had borrowed money from the
company. Unlike other borrowers, however, CEO Weiss had the interest on his loan
forgiven by the company. $2.3 million of it. Merry Christmas,
Jeff.
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).
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