Three of the Cadence Design Systems executives who resigned in the middle of the month have not quite left the building. In a regulatory filing about the resignations, Cadence has revealed that Kevin Bushby, Bill Porter, James Miller and RL Smith McKeithen have each agreed to stay on for six months, earning up to $250,000 apiece, "to provide services to Cadence related to the transition of his prior executive responsibilities".
They will not be the only payments the executives receive on the way out the door from the San Jose-based EDA company. At the end of July, the directors, along with former CEO Mike Fister had their contracts revised. The revisions centred around the benefits, such as healthcare, and payments the men would receive should they be "terminated without cause", which is what happened in mid-October according to the 20 October 8-K filing.
When Fister joined, his termination agreement was structured to provide him with a salary of $24,000 for a year on his departure together with a couple of lump-sum payments: 1.8x salary and 1.8x annual target bonus. In July, shortly after the cancellation of the bid for Mentor Graphics, Fister's contract was altered to provide him with a total of four times his peak annual salary. He earned a salary of $1m in 2007.
The termination contracts for Bushby, Porter and Miller, as well as acting co-CEO Kevin Palatnik, were also tinkered with. Unlike Fister's, the changes were not as substantial but confirmed that Bushby, Porter and Miller would receive roughly double their respective annual salaries. In Bushby's case, that means a total of $1m. Porter would net $900,000 and Miller $800,000. McKeithen's contract was altered at the start of April to pay him up to $800,000 on departure.
Two years' worth of the former directors' options also vest on their leaving. However, given how far underwater they must be right now, partly thanks to the misplaced $24m announced last week, that is not likely to mean much.
Totalling that lot up, it will cost Cadence in the region of $8m cash to say goodbye to the bulk of its former senior executive team.
And the costs keep rising for Cadence with two legal firms deciding to file class-action suits against the company over the events that led to its sudden loss in share value. Dyer & Berens and Federman & Sherwood have filed separate actions just today. Another three legal firms are understood to be looking at class actions.