An 8-K filed by Standard Pacific Corp. March 25 makes the sudden departure of its CEO Stephen Scarborough March 20 look even more like it was born less of a desire by Scarborough to retire than of a decision by him or the board, or both, to part ways.
The retirement agreement filed with the SEC gave Scarborough, 62, a "lump sum severance payment" of $1.25 million in lieu of any salary, bonus, or equity and other compensation for 2008.
In addition to the lump sum severance, the agreement immediately vested his 42,000 shares of restricted stock, which would not have vested until 2009 and 2010, and 280,000 stock options that would not have vested until 2010 and 2011.
Ordinarily, he would have only 90 days after vesting to exercise the options, but the board agreed to extend his option deadline until April 2010. That has great value if the stock rises from its current trough by then.
Also, the company has agreed to pay his COBRA insurance premiums through February 2011, pay him $109,611.19 in unused vacation time, release him from certain claims, and not disparage him. Plus, he gets to keep his cell phone.
Scarborough agreed not to disclose confidential company information, disparage Standard Pacific, or solicit any of the company's employees for two years, and he released the company from claims he may have against it.
In addition to logging in Scarborough's retirement agreement, the SEC filing also stated that the board voted to reduce the authorized number of directors from nine to eight in the wake of the departure of Jeffrey V. Peterson, who was elevated from independent board member to CEO. It also agreed to pay Peterson a base salary of $850,000.
A slip of the tongue by Peterson during the announcement meeting last week also hinted that Scarborough's departure was not just inspired by a desire to retire.
"This is a resignation by Steve, or I say a retirement; Steve has submitted his retirement," Peterson said during the announcement call. "Certainly this is something that he has given thought to."