Taking a look at ABTL's recent proxy, we get the following numbers and facts:
CEO pay: CEO Jeffrey H. Coats was paid $779,000 (excluding options compensation) in 2011. Of that amount a whopping $212,000 was used to pay for relocation expenses. We would note that there were also relocation expenses for Coats in 2010 and 2009. Does Coats move every year? I think ABTL should provide an explanation for recurring "relocation expenses" for the CEO. Personally, I have never understood why a company should pay for an executive's relocation, as the executive should be paying out of their own pocket, but that's for another post.
In terms of Coat's actual salary, while the number seems in range for a CEO of a small public company, the reality is that it is quite high for a company reporting meager profits, like ABTL. In 2011, ABTL's entire EBITDA was around $3 million, so a CEO salary of $700K seems a bit too much.
Incidentally, and perhaps more importantly, Coats owns a measly 454,000 shares of ABTL (417,000 of which are due to options). With ABTL's stock beneath $1, Coats should step up and purchase a significant amount of shares with the money he has received as compensation. Coat's recent purchase of around 12,000 shares of ABTL stock is laughable, considering his compensation level.
The Real Problem: Board Pay is Outrageous!
However, the reality is that Coat's compensation is not the real problem. The issues with ABTL is rather the compensation of certain Board members. Notably, Michael Fuchs, the Chairman of ABTL, was paid whopping $75,000 in compensation in 2011. Mr. Fuchs has been the Chairman of ABTL since 1998, and based on the current stock price of ABTL, he has done nothing but destroy shareholer value during that timeframe. Fuchs should immediately cease to take any compensation from ABTL and quite possibly resign as Chairman. His compensation is outrageous.
In terms of the rest of the Board, Fuch's fellow Board Member, Mark Kaplan, who has also been a board member since 1998 and overseen a massive decline in shareholder value, received $72,000 for his useless contributions in 2011. Janet Thompson received $52,000 and Jeff Stibel, perhaps the only Board member that we think can actually provide any meaningful contribution to the company, was paid $32,000.
As with Fuchs, we think that the entire Board of ABTL is vastly overpaid for the little service they provide to the company. Furthermore, considering how much money they have cost shareholders over the years, their positions on the Board are highly questionable, and we think they should be ousted. It is surprising that larger institutional shareholders of the company, of which there are admittingly few, have not called for the resignation of the Board.
