On the threshold of going public, The Santa Cruz Operation Inc is now catching flak for paying co-founder Larry Michels a $354,000 golden handshake after he was forced to leave the Santa Cruz, California company in December because of sexual harassment charges. The San Jose Mercury News, which reported the story, citing documents filed this month with the US Securities & Exchange Commission, noted that it was unclear whether the settlement was triggered by an existing employment agreement or was offered by Santa Cruz in an attempt to get the case out of the way so the stock offering could be pursued without controversy. The paper quotes an irate lawyer, accustomed to representing women pursuing harassment claims and incensed over the double standard, as saying Santa Cruz could have fired him for misconduct, employment agreement or no, and paid him nothing. This shows the company didn’t learn anything from this lesson. It’s absolutely outrageous. The Commission filing indicates that Michels, whose Santa Cruz shares would be worth around $51.1m with the offering, is receiving $16,667 a month in salary until June 1994, a total of $300,000, provided he doesn’t work for a competitor or try to get back on Santa Cruz’s board, and $3,000 a month for expenses. He is allowed to pick his successor on the board so long as the person is reasonably acceptable to the other directors. As Santa Cruz’s landlord, the partnership in which Michels is a principal gets $104,000 a month in rent. Santa Cruz has also agreed to pay the four women suing Michels on the harassment charges a total of $1.25m to settle the complaint.
