newsworthy
YRC’s restructuring chief pulling
down $80K a month, filing says
YRC Worldwide Inc.’s chief restructuring officer, John A.
Lamar, may have the most difficult job at the financially
troubled less-than-truckload (LTL) carrier. But he appears
to be getting well paid for the challenge.
Lamar, 69, is being compensated $80,000 a month by
YRC for a 12-month stint as “chief restructuring officer,”
according to a Nov. 8, 2010, letter sent to Lamar by James
Kissinger, YRC’s executive vice president, human resources.
The compensation period began on Nov. 8.
In addition, Lamar is eligible for a $500,000 “success fee”
based on what the letter called the “achievement of specific
objectives and business results” as determined by YRC’s
board. Any fee would be paid at the end of Lamar’s stint.
Lamar, who serves as YRC’s lead independent director,
would also receive what the letter termed “director compensation.” The letter was included in the company’s annual 10-K filing on March 14 with the Securities and Exchange
Commission (SEC).
Graef “Bud” Crystal, one of the nation’s leading experts
on executive compensation, said that in a circumstance
such as YRC’s, no set formula exists to determine if Lamar’s
compensation is excessive or in line with industry standards. “In these sorts of ‘work-out’ situations, I don’t believe
there is a metric that can be applied, other than your nose,”
Crystal said in an e-mail.
Besides his role at YRC, Lamar is chairman of Premier Truck
Leasing, a trailer-leasing firm based in Grapevine, Texas. He is
also chairman of Beef Tek LLC, a beef supply concern.
BUMPY ROAD AHEAD
Based on several recent developments, Lamar has his work
cut out for him. In its SEC filing, YRC disclosed that its
multi-employer pension funds missed a March 10 deadline
to sign on to the company’s Feb. 28 proposed restructuring
plan. The problem arose after YRC’s lenders refused to agree
to terms proposed by the company’s pension plans to raise
interest rates on YRC’s deferred pension contributions.
The inaction triggered a “milestone failure” that allows
YRC’s lenders to declare the company in default of its credit agreements, the company said in its filing. As a result,
YRC would owe $5 million if a definitive agreement is not
reached by April 29. The company hopes to complete its
restructuring plan no later than July 22.
“The required lenders have not indicated that they intend
to declare an event of default under the credit agreement,
and we are continuing to work with the parties,” YRC said in
its filing. “We cannot provide any assurance that the
required lenders will not declare an event of default under
the credit agreement. If the required lenders declare an event
go figure …
11,000
The number of trucking jobs—predominantly
drivers—that were added in February.
SOURCE: BUREAU OF LABOR STATISTICS
of default under the credit agreement, we anticipate that we
would seek protection under the U.S. Bankruptcy Code.”
The Feb. 28 agreement would provide the company with
an undetermined amount of new capital and swap some of
its debt for equity. Analysts believe the tentative agreement
satisfies the Teamsters’ requirement for $300 million in
additional capital called for under the company’s latest labor
contract, which was ratified by the rank and file in October.
As part of the agreement, the company will follow through
on its pledge to reinstate pension contributions on June 1,
2011, at a rate of 25 percent of its prior contribution rate. In
addition, the Teamsters will get two seats on YRC’s board.
In a March 15 e-mail to the company’s top executives and
sales, marketing, and support teams, Chief Marketing Officer
Greg Reid said the prior day’s filing included “cautionary language” that reflects the problems YRC faced in 2010, the
“uncertainties” posed by the current industry operating environment, and the pending completion of its restructuring.
Reid added that “it is necessary for our … disclosures to
present extensive discussion on all factors related to our
restructuring—including milestones and potential conse-
quences, and other risks.”
In a related development, Sheila Taylor, YRC’s executive
vice president and chief financial officer, left the company
March 31 to pursue interests outside the LTL industry.
William Trubeck, a YRC director since 1994, took over as
interim executive vice president and CFO.
REGIONAL BUSINESS STRONG
YRC may be facing severe financial challenges, but demand
for its regional services seems to be hanging in there.
In fact, business for Holland, one of YRC’s three regional
units, has picked up enough to justify the hiring of almost
1,000 additional drivers during 2011, Holland said March 22.
The hirings would expand Holland’s driver work force by
about 15 percent. Holland has approximately 1,700 over-the-road drivers and 5,000 city drivers, the company said.
Holland’s accelerating volumes and shortage of drivers
led its president, Jeff Rogers, to comment in a mid-February
communiqué that the unit has been forced to turn away
business from certain shippers to “avoid putting other business at risk.” ;
—M.S.
