Shopping.com Chief Back Part Time--at Higher Pay
Robert McNulty, who resigned last week as chairman and chief executive of Shopping.com Inc., will get an $83,000-a-year pay increase by working as a part-time consultant to the Internet retailer, which is under investigation by federal regulators.
McNulty will earn $258,000 annually under a three-year consulting contract, which requires him to work 30 hours a week. When he left the company, his salary was $175,000.
“That does seem strange,” said Graef Crystal, corporate pay critic and editor of the Crystal Report. “One theory might be if he’s going to hurt the shareholders less by working part time, then he should get paid more money.”
Shopping.com’s officers and directors, including McNulty, are under investigation by the Securities and Exchange Commission in connection with possible manipulation of the company’s stock, company documents show. The SEC suspended shares trading for 10 days in March because it was concerned about a lack of accurate information from the company.
McNulty founded Shopping.com in November 1996 and owns 1,322,500 shares, or a 31% stake. The Corona del Mar company has a market value of about $96 million.
The former CEO will be paid $500,000 to give up the four years remaining on his employment contract.
The buyout agreement exempts McNulty from any losses due to lawsuits stemming from his actions at the company.
In addition, he received five-year options to buy 150,000 shares of Shopping.com stock at $16 a share, and his consulting company, Cyber Depot Inc., received options for 100,000 shares at $21 each. If exercised at Wednesday’s closing stock price of $24.13, McNulty and Cyber would net more than $1.53 million before taxes and brokerage fees.
The bonus and consulting agreement were disclosed in an SEC filing late Tuesday.
Shopping.com’s new CEO, home-improvement retailing expert John Markley, gets $175,000 in salary. He said he has no comment about McNulty’s consulting fees, adding: “I made my deal with the company.”
McNulty wasn’t available for comment. In his resignation letter, filed with the SEC, he complained about the SEC’s investigation.
“It appears that the Securities and Exchange Commission has yet to investigate the true market manipulators,” McNulty said in his June 1 letter. He said those individuals are the traders who sold Shopping.com’s stock short, betting that its price would decline. He described short selling as a “reprehensible business.” In a short sale, an individual sells borrowed shares, hoping to replace them with stock bought later at a lower price, keeping the difference in price as profit.
Shopping.com is traded over the counter. It withdrew its application for listing on the Nasdaq Small Cap stock market last year after receiving an indication that the application would be denied.
In October 1995, McNulty agreed to a permanent injunction against violating securities laws to settle an SEC allegation that he orchestrated “a complex scheme to defraud investors” in four other publicly traded retail companies.
McNulty neither admitted nor denied wrongdoing.