Some more tidbits:
1) Fender entered into a contract with Cordoba Music Group for guitar cases, and thinks they will do $515,000 in business with them. Cordoba's CEO is Larry Thomas, the CEO of Fender's, son. I am not sure if I was on the board of Fender that I would have let this fly, even as a private company. That is just me though.
2) They have a research and development department that is made up of almost 100 employees, out of a total of 2500 employees. That is a lot of R&D people. That is all I am going to say about that.
3) They claimed that they successfully integrated Tacoma into its business. I thought they shuttered Tacoma due to QC issues. I am not so sure about that, or maybe I am just upset that they never made a lefty Tacoma Thunderchief.
4) They have a compensation package that is fairly heavy on rewarding short term performance, given that the trend is to move away from any bonuses based on short term metrics for C-Suite officers. Generally, that is not good, and is criticized by corporate governance experts.
All right, that is all I have. Sorry if I focused on the negative, I tend to do that. Having said that, Fender has rely leveraged Leo Fender's work a long time ago, and has been able to make steady income off of it for a long time. They appear to ebe a very stabe lbusienss, and have a good mix . I wish there was more information on their subs, and a breaking out of financial performance on a subsidiary basis, but it did not happen. Oh well, hope this was helful.
Fender going public
Re: Fender going public
See my explanation above for why they raised prices. According to some people, it was a result of an antitrust violation.AzWhoFan wrote:that was the year of the 30% price hike on most everything "Fender". They rolled back prices somewhat in '08.
Re: Fender going public
I had totally forgot about that lawsuit!velalv wrote:Interestingly enough, the prices of that era are now the subject of litigation. Apparently, Fender got sued for engaging in anti-competitive conduct that resulted in higher amplifier and guitar prices from 2004-2009. The suit was against Guitar Center and Fender (Giambusso v. NAMMM, Guitar Center, and is not consolidated as In Re Musical Instruments and Equipment Antitrust Litigation. Should be interesting to see how that goes.
Re: Fender going public
any details about Mr. Thomas' package and paycheck and bonuses?
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KingOfAmps
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Re: Fender going public
Yeah... crazy read!
Thanks!
Thanks!
F Bass BN5 • ZON Legacy Elite 5 • ZON Sonus Elite 5 Fretless • ZON Sonus BG5 • Fender Custom Shop '64 NOS Jazz • Fender Custom Shop '75 NOS Jazz • Fender ADE Precision • Music Man SR4
Re: Fender going public
Your welcome guys! I tend to ask a lot of noob questions, so I figured this is one way to give back to the board.
Anyhow, AZWhobass asked about Larry Thomas's pay package. The Fender S-1 does discuss his pay package, and the other four top officers. (It's required by SEC), and board of directors. The board of directors each get about $45,000 in salary, and a total package worth between $150,000- $170,000. For board of directors, that is about right for a company of Fender's size. (Bigger companies are at $250,000 total for directors).
As for Mr. Thomas, his compensation package was worth about $5,700,000 in 2011. There are two things that caught my attention about his pay package.
1) His pay package was way, way more than any of the other named officers. Their CFO made about $2,000,000, and the next person down made $860,000. This seems a bit weird. There is typically not such a huge drop off between the CEO and other officers in pay. There is usually a big difference, but not this skewed.
2) Larry Thomas got around $250, 000 in perks, about half of that is what called a tax gross-up, which means the company paid for his taxes that he incurred in receiving those perks, and probably other things as well. Hard to know exactly from this form.
3) I thougth the next paragraph was very interesting, I will just cut and paste, and leave you all to decide the implications.
As part of his 2011 amended and restated employment agreement, additional changes were made for the period beginning January 1, 2012, including the elimination of certain travel and commuting perquisites, and clarification regarding coordination of retiree medical care with Medicare. His 2011 amended and restated employment agreement also eliminated the excise tax gross-up provision under his original agreement, which would have grossed Mr. Thomas up for any excise taxes under Section 4999 of the Code in connection with severance and other benefits received that are contingent upon a change of control of the company. The amended agreement instead applies a modified provision, which provides Mr. Thomas with the greater of (i) the after-tax benefit assuming his change in control severance and other benefits are cut back to the amount that would not subject him to an excise tax under Section 4999 of the Code or (ii) the after-tax benefit (after taking into account the excise tax that the executive would have to pay), assuming no cutback was applied (this provision is referred to as a “Modified Cap”).
3)
Anyhow, AZWhobass asked about Larry Thomas's pay package. The Fender S-1 does discuss his pay package, and the other four top officers. (It's required by SEC), and board of directors. The board of directors each get about $45,000 in salary, and a total package worth between $150,000- $170,000. For board of directors, that is about right for a company of Fender's size. (Bigger companies are at $250,000 total for directors).
As for Mr. Thomas, his compensation package was worth about $5,700,000 in 2011. There are two things that caught my attention about his pay package.
1) His pay package was way, way more than any of the other named officers. Their CFO made about $2,000,000, and the next person down made $860,000. This seems a bit weird. There is typically not such a huge drop off between the CEO and other officers in pay. There is usually a big difference, but not this skewed.
2) Larry Thomas got around $250, 000 in perks, about half of that is what called a tax gross-up, which means the company paid for his taxes that he incurred in receiving those perks, and probably other things as well. Hard to know exactly from this form.
3) I thougth the next paragraph was very interesting, I will just cut and paste, and leave you all to decide the implications.
As part of his 2011 amended and restated employment agreement, additional changes were made for the period beginning January 1, 2012, including the elimination of certain travel and commuting perquisites, and clarification regarding coordination of retiree medical care with Medicare. His 2011 amended and restated employment agreement also eliminated the excise tax gross-up provision under his original agreement, which would have grossed Mr. Thomas up for any excise taxes under Section 4999 of the Code in connection with severance and other benefits received that are contingent upon a change of control of the company. The amended agreement instead applies a modified provision, which provides Mr. Thomas with the greater of (i) the after-tax benefit assuming his change in control severance and other benefits are cut back to the amount that would not subject him to an excise tax under Section 4999 of the Code or (ii) the after-tax benefit (after taking into account the excise tax that the executive would have to pay), assuming no cutback was applied (this provision is referred to as a “Modified Cap”).
3)
Re: Fender going public
For anyone who is less of a concept person, and really wants to see Fender's numbers-- feel free to take a look at their audited financials which start toward the back if that is your thing.
http://sec.gov/Archives/edgar/data/7679 ... x293340_11
http://sec.gov/Archives/edgar/data/7679 ... x293340_11