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SUNDAY, FEBRUARY 18, 2007
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Ex-Wolverine CEO leaving with millions

For most of us, getting fired is a blow to the ego and the pocketbook. Don’t look for outgoing Wolverine Tube Chief Executive Officer Chip Manning to frequent thrift shops anytime soon, though.

In a filing with the Securities and Exchange Commission last week, Wolverine’s soon-to-be controlling shareholders unwrapped Manning’s goodbye present. For starters, he’ll receive $1.5 million in severance pay. Then, provided he does not compete with Wolverine after his departure, he gets another $1 million.

Wolverine had lots of problems not of Manning’s making, but the severance pay might not sit so well with shareholders who took a bath during his 15-month tenure as CEO. Shares dropped from about $7 to less than a dollar before the January bailout that cost Manning his job.

The company also announced that Chief Financial Officer Jed Deason, who will stay with the company after the change in control, pocketed total compensation worth $686,000 in 2006. Senior Vice President Keith Weil received $544,000.

Another interesting footnote: One of the two investors in Wolverine, The Alpine Group, tied its investment to a management agreement. Over the next two years, Alpine will receive $2.5 million for its services.

All this is subject to shareholder approval, but Wolverine shareholders are not blessed with many options at the moment.

A bargain at $254 million

The collapse of the commercial satellite market hit Boeing’s Decatur plant — now the United Launch Alliance — particularly hard. Not only were companies launching fewer satellites than expected, they were opting for cheaper launch vehicles. ULA rockets are the most expensive around.

A failed Jan. 30 launch by Sea Launch may help bring the expense of the reliable ULA rockets into perspective. An inexpensive rocket doesn’t look like such a good deal when its failure destroys a multimillion-dollar payload.

The failure also served to validate the Pentagon’s much-criticized decision to maintain two separate rocket lines at ULA’s Decatur plant. The Sea Launch rocket used a Russian-built engine similar to the one used by the Atlas 5. The similarities are such that ULA has already postponed a Feb. 22 launch pending an investigation of the failure. No problem, though, because it can still use the Delta-series rockets, which use different engines.

Delta rockets have been spectacularly reliable. Not one of the 47 launches since 2000 has failed. The Delta IV Heavy costs upward of $254 million, with a Delta II running more than $50 million.

That’s a lot of money, but reliability has value. The Dutch New Skies-8 satellite destroyed in the Sea Launch explosion cost $300 million. Also significant, it dealt a commercial setback to DirecTV’s high-definition television rollout.

Look for customers to think a little harder before taking the cheap route to space.

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Eric Fleischauer
Capital considerations

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