Standard Pacific Homes has struck a new employment agreement with its COO Scott Stowell, reaffirming the long-time employee's place near the helm as the company re-invents itself under the control of MatlinPatterson Global Advisers.

The company's new CEO Kenneth Campbell, of MatlinPatterson, pegged Stowell as a right-hand man after two other top executives, CFO Andrew Parnes and general counsel Clay Halvorsen resigned under pressure in late February.

"I happen to be a big fan of Scott [Stowell]," Campbell said at the time of the resignations. "I think it won't take long before he's running the show anyway and I'm getting credit for it."

Under the new employment agreement, Stowell will have an annual base salary of $750,000, be eligible for a discretionary annual bonus, and receive a $2.5 million retention bonus if he stays with the company through December of 2010. He may receive 25% of the $2.5 million at the end of this year at the discretion of the company's compensation committee. If he is terminated without cause, or if he leaves for "good reason," the retention bonus will become severance.

Stowell, 51, has been the company's COO since May 2007. He was president of the Southern California Region from 2002 to 2007 and president of the Orange County Division from 1996 to 2002. He joined the company in 1986 as a project manager.

Stowell's new agreement replaces an employment agreement from December 2006 that included a "change of control" provision. The change of control agreements that were in place for the other Standard Pacific executives who recently resigned are causing problems for the company. These agreements, sometimes known as "golden parachutes," serve to protect senior executives' compensation if they leave a company, voluntarily or otherwise, after a change in control of the company.

Former CEO Stephen Scarborough and senior vice president Jari Kartozian have each filed arbitration complaints saying they weren't given what they were due when they left the company. Scarborough has said he is owed $23 million in benefits in connection with his termination last year, which was dubbed a retirement at the time. He alleges his termination was wrongful and that he was "fraudulently induced" to sign the agreement.

When Parnes and Halvorsen resigned in February they settled for 57% of the maximum they could have claimed they were owed under their bonus and change in control agreements, Standard Pacific reported at the time.

Parnes' settlement included a lump-sum payment of $2.4 million and Halvorsen took $1.6 million.

Thinning the executive ranks comes in the wake of a massive down-sizing of the company as a whole. Campbell said he is positioning it to operate as a much smaller entity and that sometimes means replacing higher-paid executives with the experience and skills to run a $4 billion company with those with skills adequate to run a $1 billion company.

Stowell's new agreement includes a clause acknowledging that the company may still get smaller.

"You acknowledge that the company is undertaking a restructuring which may reduce or otherwise alter the size and scope of the company and your responsibilities, including, without limitation, the addition or elimination of company regions and divisions, significant alterations to the company's corporate office and staff, and a restructuring, addition or elimination of various other aspects of the operations of the company."

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