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Fortune Brands: A Look At CEO Compensation

In 2009, things were looking rough for the cyclical business segments of Fortune Brands (FO); year over year sales in the Home & Security segment declined 20%, along with an 11% drop in Golf segment revenues. In 2010, (while keeping in mind the relatively weak base of YOY double digit declines) things started moving back in the right golf timeline direction business golf clubs with an overall increase in company sales of 6.7% and a 51.2% jump in operating income. Despite these results, there were two announcements that truly stood out in 2010: on December 8th, the company announced that they would split their three (Spirits, Home & Security, and Golf) business units (while retaining the Beam Global Distilled Spirits business). The reason for this move (and the first big announcement) was a stake by activist shareholder Bill Ackman, who picked up 16.68 million Donald Been Named European Tour Golfer shares golf timeline of FO (more than 10% of shares outstanding) in the six months prior to the decision at an estimated cost of roughly $700-800 million. Management “saw the light” for releasing cooped up shareholder value and agreed with his suggestions.