Central, Halas Ink $3 Million Consulting Package

Under a consulting services agreement signed yesterday, Gus Halas, president and CEO of Central Operating Companies, will receive nearly $3 million to consult and advise for Central Garden & Pet Co. for 57 months, unless terminated earlier. The agreement kicks in at a date to be specified by Central Garden & Pet, but will be within the next six months as director John Ranelli, who becomes Central Garden & Pet’s president and CEO on Feb. 11, 2013, settles into his new role.

Gus Halas

Under the consulting deal, Halas, whose loss to the company Central said “could have an adverse material effect upon us” as recently as last December in its 2012 annual report, would receive $95,881 per month (working an average of three days per week) for the first two years of the agreement, then $19,995 per month (working an average of “up to 10 hours” per month) for the next 33 months. Total over nearly five years: $2,946,855.

This compares to his 2012 salary of $691,808, plus benefits (including $10,500 monthly housing allowance), bonuses, and stock grants. Ranelli will receive an annual salary of $673,000 and be eligible for a performance bonus of up to 75 percent of his base pay. He also receives stock options worth $1 million, vesting over five years.

Halas’s total compensation was $2,168,279 in 2012 and $3,318,729 in 2011 (He was hired in April 2011, with a focus on “transforming” the company into an integrated company with shared resources from a portfolio company of brands).

During his tenure, Central’s net income has slipped as the company has invested in efforts related to this transformation. Net income for Central’s fiscal 2012 (year ended Sept. 29, 2012) was $21.2 million, compared to $28.3 million in 2011 and $45.8 million in fiscal 2010. Revenues have grown modestly during this time, to $1.7 billion for its fiscal 2012.

Under his original employment agreement, Central could have terminated his employment without cause by giving him 24 months written notice (he would have received nine months of base pay and health benefits). Without 24 months written notice, Central could have terminated him without cause by paying an additional 24 months base pay and health benefits (33 months total).

All that said, I must disclose that I am available for consulting work.