All in all, it’s a great move for YTB, especially with the way this all this developed. This isn’t some band aid or hasty move that didn’t have input or thought put from everyone involved. Not with the Board of Directors YTB now has. Gone are the “good ol’ boys” and “buddy system” and in with some very promising and talented executives.Wow, it was not too long ago that he was cheering on the same Board filled with "good ol' boys" and "buddys". What has changed? Is this an admission of a complete failure of corporate governance?
But be clear, the deal Van Patten got was not the same deal that Tomer got. The base salary was slashed by nearly 15%. Tomer still is the Top Director in the company and earns off of every recruit. Tomer still retains the overrides on sales from the IBCs (Internet Business Centers). But look at the two base compensation programs:
Van Patten:
The Company and Mr. Van Patten have executed an employment agreement with a term of twelve months, beginning October 6, 2009 and expiring October 4, 2010. The Company has agreed to pay Mr. Van Patten an annual base salary of $300,000. Mr. Van Patten will be eligible to receive an annual performance bonus equal to 2% of the Company’s annual earnings before taxes if the earnings are greater than $500,000 but less than $1.5 million, 2.25% if the earnings before taxes are greater than $1.5 million but less than $3.0 million, or 2.5% if the earnings before taxes are greater than $3.0 million. The Company has also agreed to provide Mr. Van Patten with a monthly car allowance of $1,000, and he will be eligible to receive management-level employee benefits. Either party can terminate the agreement at any time without recourse.And Tomer:
Under their employment agreements with the Company, each of Messrs. J. Scott Tomer, J. Kim Sorensen, J. Lloyd Tomer and Michael Y. Brent will serve in their positions for five-year terms, earning starting annual base salaries (in fiscal 2008) of $325,000,which shall increase in increments of $25,000 for each successive year under the agreements. Each employment agreement automatically renews for additional one year terms at the then-current base salary upon the expiration of the initial term or any successor term if either party does not provide notice of non-renewal at least 90 days prior to such expiration. Each of Messrs. J. Scott Tomer, J. Kim Sorensen, J. Lloyd Tomer and Michael J. Brent will be eligible for a cash bonus equal to a percentage of the Company’s net pre-tax income for each year in which such income surpasses certain thresholds, in the following percentages:(i) 2.0%, if net pre-tax income is at least $500,000, but less than $1,500,000; (ii) 2.25%, if net pre-tax income is at least $1,500,000 but less than $3,000,000; and (iii) 2.5%, if net pre-tax income is at least $3,000,000.
And one other item the press release did not address was that Andy Cauthen was also forced from his President and COO position within the company (YTB International) and will remain as Secretary of the Corporation as well as COO and President of the subsidiary YTB Marketing reporting to Scott Tomer.
