To follow-up on what we mentioned on the last podcast (and forgot to put up a news entry for), we now have word of at least twenty FUNimation employee layoffs, in addition to (or including; the wording is vague) the two we had noted last show, including their Chief Operating Officer, Brian Burke.

I wanted to bring into the limelight something which I again noted on the podcast but did not have in front of me at the time. Upon FUNimation’s acquisition by Navarre, they entered into a special employment agreement with Gen Fukunaga, President and CEO of FUNimation. The exact wording from their various SEC filings over the years is as follows:

In connection with the FUNimation acquisition, the Company entered into an employment agreement with a key FUNimation employee providing for his employment as President and Chief Executive Officer of FUNimation Productions, Ltd. (“the FUNimation CEO”) until May 11, 2010 at a base salary of $350,000 per year. Among other items, the agreement provides the FUNimation CEO with the ability to earn two performance-based bonuses in the event that certain financial targets are met by the FUNimation business during the fiscal years ending March 31, 2006 through March 31, 2010. Specifically, if the total earnings before interest and tax (“EBIT”) of FUNimation during the fiscal years ending March 31, 2006 through March 31, 2008 is in excess of $90.0 million, the FUNimation CEO is entitled to receive a bonus payment in an amount equal to 5% of the EBIT that exceeds $90.0 million; however, this bonus payment shall not exceed $5.0 million. Further, if the combined EBIT of the FUNimation business is in excess of $60.0 million during the period consisting of the fiscal years ending March 31, 2009 and 2010, the FUNimation CEO is entitled to receive a bonus payment in an amount equal to 5% of the EBIT that exceeds $60.0 million; however, this bonus payment shall not exceed $4.0 million. No amounts have been expensed or paid under this agreement as the targets have not been achieved.

The global business community is struggling, so it comes as no surprise to see FUNimation taking measures such as these layoffs to stay ahead of the game, similar to various other organizations. With this employment agreement in mind, however, one can not help but raise an eyebrow when we get quotes like this:

“This decision was not taken lightly and thoughtful consideration was given as to how this move would affect our customers, vendors and employees,” said Gen Fukunaga, president and CEO of FUNimation Entertainment. “However, we must anticipate and adapt to the current economic climate. This action is expected to streamline our processes as we manage our business for long-term growth.”

It is perfectly fine, acceptable, and expected that a company will do everything to keep itself afloat and the leader in its industry; do not misunderstand the information we are trying to get across. However, let none of us forget that come March 2010, Gen Fukunaga gets a personal hefty pay-out up to $5 million if they meet financial expectations.

Coincidentally, Atari’s own contract with FUNimation to produce games for the Dragon Ball franchise expires in January 2010.