Pillsbury Chief Could Leave Job With $8 Million

Pillsbury Co. Chairman Philip L. Smith, who arrived at the food and restaurant company less than four months ago, could depart nearly $8 million richer under the pending takeover by Grand Metropolitan PLC, according to documents reviewed Wednesday.

The British liquor, gambling, food and specialty products conglomerate is expected to take control of Pillsbury in late January or early February and say goodby to Smith, who had been hired to replace William H. Spoor as chairman and chief executive.

Smith’s tenure was dominated by Pillsbury’s unsuccessful battle against Grand Met’s hostile takeover attempt, which ended Sunday with Pillsbury accepting a negotiated offer of $5.7 billion, or $66 a share.

In Smith’s only full quarter with the company, Pillsbury experienced a 38% decline in quarterly earnings compared to the same period a year ago. Chiefly because the company took a $21.5-million charge to pay expenses related to the takeover battle, Pillsbury’s profit for the three months ended Nov. 30 was $44.8 million, compared to $72.5 million a year ago.

Smith, 54, left his job as chairman and chief executive at General Foods Corp. to replace Spoor, who had come out of retirement briefly in February to replace John M. Stafford.

As part of Smith’s employment agreement, he received 30,000 shares of Pillsbury stock worth $2.17 million under the buyout, according to Pillsbury’s 1988 proxy statement. He had purchased 3,000 shares before joining Pillsbury and will receive under the terms of his contract an additional 30,000 shares because of the change in control, according to the proxy statement.

Additional Benefits

That would give Smith 63,000 shares to tender at $66 a share for $4.15 million. And that doesn’t take into account additional shares that Smith will earn under the company’s four-year management incentive plan. The Wall Street Journal reported Wednesday that Smith will be able to tender 75,000 Pillsbury shares for a total of $4.95 million in all.

In addition, Smith’s base salary at Pillsbury is $625,000 a year plus a minimum annual bonus of $375,000 for the year ended May 31, 1989, according to the proxy statement. He would be entitled under the takeover to an additional $2 million because of a modified agreement approved in November by Pillsbury’s board.