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2000 CFO Pay: Former Critical Path CFO Received a $250,000 Bonus

Other execs made big bucks on stock options.
Michelle GabrielleMay 22, 2001

Mark J. Rubash, who served as EVP and CFO of Critical Path, Inc. in 2000, and then resigned at year-end, less than two months before the company warned of accounting irregularities, took home $430,888, including a $250,000 bonus, according to the company’s recently released proxy.

Rubash also received $180,888 in salary.

The company, which provides E-mail software and services to large corporate customers, said in its proxy that the bonus was paid in connection with a settlement agreement and mutual release he entered into with the San Francisco-based messaging services provider in December 2000.

In February, Critical Path Inc., warned that it may need to restate financial results due to possible accounting irregularities. It also said it had been contacted by the Securities and Exchange Commission and was “cooperating fully” with its inquiry.

On Feb. 2, the company placed President David Thatcher and Vice President of worldwide sales William Rinehart on administrative leave.

On Feb. 9, Critical Path said the two executives were dismissed and that Chief Executive Doug Hickey had “decided to step down.”

Earlier this month, it admitted that the changes were greater than originally anticipated.

Meanwhile, Critical Path’s three executives who resigned made out quite well too.

For example, Rinehart realized $10,058,310 in realized gains from exercised options. He also drew a $194,000 salary and $25,000 bonus. Total compensation: $10,277,310.

Thatcher exercised $7,338,228 in options. He also enjoyed a $309,000 salary and a $185,000 bonus. His total compensation: $7,832,228.

Hickey’s package was more modest. He had to settle for a $350,000 salary, $250,000 bonus, $61,281 in “other compensation,” which includes $38,400 for use of a corporate apartment, $10,881 for use of a corporate automobile and $12,000, for investment advisory fees.

In addition, the company’s executive chairman of the board, David C. Hayden, who did not resign and has not been accused of any wrongdoing, realized more than $71 million from exercised options in 2000. He also took home nearly $325,000 from salary and bonus.

In December 2000, Lawrence P. Reinhold joined Critical Path to replace Rubash. Prior to joining Critical Path, he was a managing partner at PricewaterhouseCoopers’s Midwest Region Technology, Information/Communications and Entertainment (TICE) practice. He also served on the leadership team for the entire U.S. TICE practice.

Reinhold graduated Summa Cum Laude from San Diego State University with a degree in accounting and also holds a master of business administration degree from San Diego State University.

The company revised its third- quarter “pro forma” loss, excluding nonrecurring items, to $18.6 million, or 30 cents per share, from the previously reported loss from operations of $8.7 million, or 14 cents per share. Revenue was reduced to $35.3 million from $45 million previously reported.

For the fourth quarter, the company’s loss from operations was revised to $23.3 million, or 33 cents per share, compared with the loss from operations of $11.5 million, or 16 cents per share, that was previously reported. Revenue was reduced to $42.3 million from $52 million.

Last month, the company had said it planned to revise its fourth- quarter loss from operations to between $19 million and $21.5 million, or 27 cents to 30 cents per share, and reduce revenue by between $6.5 million and $8 million.

For all of 2000, Critical Path said its loss from operations was revised to $78.9 million, or $1.31 per share, compared with the loss from operations of $57.2 million, or 95 cents per share, that it previously reported. Revenue was reduced to $135.7 million from $155 million.

Including acquisition-related expenses, charges, investment losses and other items, Critical Path reported a net loss of about $1.85 billion for 2000, much wider than the $511.4 million bottom-line loss it previously reported.

The company also said it has instituted new policies and procedures, including those for approving and signing sales contracts to ensure against future accounting irregularities.

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