With Borders reeling from old debts and falling sales, the bookseller’s board fired CEO George Jones in January. Yet new CEO Ron Marshall not only left his investment firm to take the job, he also promised to buy 200,000 shares of Borders stock. Even at the current depressed rate, that will cost him $125,000.
At first glance, it seems like a strong vote of confidence—but a closer look at Marshall’s employment agreement filed with the Securities and Exchange Commission suggests he’s hedged his bets. Marshall will receive a signing bonus of $250,000—more than twice what he’ll need to buy the stock—plus up to $100,000 in moving expenses (he currently lives near Minneapolis). And while Jones had options to buy Borders stock at $17.56 a share, Marshall’s options are priced at just 57¢. With the stock trading at around 62¢ a share in January, he’s already a bit ahead. And Marshall’s $750,000-a-year salary is very well protected: even if he, too, is booted or the company changes hands, he’s guaranteed most of what he’d earn under the three-year agreement. It looks as though Borders’s new leader is arriving with his golden parachute packed.