As general counsel and secretary of Animal Health International Inc., Damian Olthoff is betting on the publicly traded company.
Olthoff says his annual compensation is about $300,000: roughly $150,000 of that in salary and the remainder in stock options. He says he wanted an equity position in the Westlake company. “I was not interested in a high base with no upside,” he says. “I wanted the upside potential. I was excited about the future.”
Since joining AHII in August 2005, Olthoff says he has been involved in an initial public offering and six acquisitions. AHII distributes animal health products — pharmaceuticals, vaccines, nutritional supplements — to customers in the United States and Canada such as veterinarians, commercial animal producers and retailers. The products are for animals raised as food sources, including cattle, chicken and pigs, he says. Sales for the fiscal year ending June 30, 2009, were $666.9 million, he says. The company has 100 employees at its Westlake headquarters and more than 900 total, he says.
In addition to Olthoff, AHII’s legal department employs one full-time lawyer and a paralegal. “I spend the majority of my time on commercial transactions, product sourcing agreements and looking for ways to reduce costs,” he says. “If we can obtain a product for less money from a different source, we can then pass the savings on to the customer.” Olthoff and his department also handle corporate reporting responsibilities and contracts, such as real estate contracts for the company’s 60 warehouse and retail locations, he says.
For outside counsel, Olthoff says he uses Thompson & Knight for labor and employment and Andrews Kurth for complex commercial matters. “He analyzes every issue with his tenacious legal mind but also from the standpoint of what is in the best interest of the company and the stockholders,” says Anthony Campiti, a Thompson & Knight partner in Dallas who has worked with Olthoff since 2005. A few years ago, Olthoff was investigating the theft of products from an AHII distribution warehouse, Campiti says. “Damian called me for legal advice on evidence gathering,” he says. “But he was also focused on figuring out how the theft happened, how to prevent it in the future and how can the company go about recovering product lost. This was classic Damian. He was not just looking out for legal interests, but at the company’s and shareholders’ best interest,” Campiti says.
Andrews Kurth partner Joseph Hoffman of Dallas has worked with Olthoff on complex commercial matters, joint ventures and acquisitions including AHII’s approximately $24 million acquisition in October 2007 of Kane Veterinary Supplies Ltd. of Edmonton, Canada. Hoffman says Olthoff’s knowledge of AHII’s business operations is obvious during venture and acquisition negotiations. “He knows all their [AHII] contracts and their suppliers, what they can buy stuff for and what they can sell it for,” Hoffman says. And Olthoff is accessible. “It’s easy to reach him. At 6 or 7 at night, he’s usually there,” Hoffman says.
Before joining AHII, Olthoff held two previous in-house positions. Beginning in January 2000, he worked in-house at Sprint (now SprintNextel), based in Overland Park, Kansas. He worked at Sprint for 19 months before joining TrinTel Communications Inc. in Irving as staff counsel, where he stayed for four years. For both companies, Olthoff says he was responsible for handling real estate matters and negotiating property acquisitions for communications towers. At TrinTel, Olthoff says he was involved in every aspect of the company’s real estate matters from acquiring properties to handling environmental site assessments and survey and title work and “any other thing a real estate lawyer would do on a daily basis.”
In 2005, Crown Communications Inc., based in Cannonsburg, Pa., acquired TrinTel and closed the Irving office. Olthoff and his wife were expecting their first child at the time and decided to stay in the DFW area rather than move to Pennsylvania. Olthoff says his wife saw an advertisement for an in-house counsel position for a local company that dealt with animals and she encouraged him to apply. Olthoff says he spent about an hour interviewing for the job with AHII Chief Executive Officer Jim Robison, and Robison offered him the job. Robison did not return a telephone call seeking comment.
Although his background had been in telecommunications and real estate, Olthoff says he found that understanding business issues helped him establish procedures for the AHII’s legal department. He says one of his first actions was to create a standard AHII distribution contract with terms, such as indemnity clauses, preferred by AHII. Changing the contract form created a lot of work in his first year as he renegotiated annual distribution contracts with pharmaceutical companies and other AHII vendors, he says.
In January 2007, AHII had an initial public offering. “I had a front-row seat in an IPO,” Olthoff says. “It was absolutely exciting, a new challenge.” The company used Goodwin Procter in Boston as outside counsel for the IPO, because AHII’s owners at the time, investment firm Charlesbank Capital Partners, had a working relationship with the law firm, he says. “We went through a number of amendments, a financial review, rewriting the prospectus; you name it, we did it,” he says. “It was seven days a week for six months. I was in New York every other week for drafting sessions with bankers. I loved it.”
On the Horizon
Olthoff, who lives in Trophy Club with his wife and two toddlers, grew up in an unincorporated area outside the town of Lee’s Summit, Mo. “There were more cattle around my house than there were people,” he says.
His father owned an insurance agency and introduced Olthoff to entrepreneurship. “I remember when I was growing up, dad would pick me up from school and take me to his office,” he says. Olthoff would help with filing and administrative chores.
He also remembers his parents taking a second mortgage on their home to pay bills during the hyperinflation of the late 1970s and early 1980s. “I learned really, really early on that if you want something you have to work for it,” he says.
During his junior year at the University of Missouri-Kansas City, where he earned a B.B.A. in 1996, Olthoff discovered that he would need two years of work experience before he could apply to the school’s M.B.A. program. “I didn’t like that,” he says. “I said maybe law school will be interesting.”
Olthoff says he did some research and learned that many large-company CEOs had law degrees so he decided legal training might help him in future business endeavors. He applied and was accepted at the University of Missouri-Kansas City School of Law and earned his J.D. in 1999.
Notes Olthoff, “I thought that maybe legal training would help broaden my horizons.”
His J.D. gives him a long-term perspective on AHII’s growth potential. The company’s initial stock price in 2007 was $11 per share, but recently the share price has hovered around $2, Olthoff says. “It’s a tough industry to be in right now,” he says. With the uncertain economy of the past two years and volatile feed prices, animal production has been down, he says.
“When they’re leaving cattle on the grass longer, they don’t need medication as often because they don’t come to market as quickly,” he says. But Olthoff notes that the industry is cyclical and AHII is projecting revenue growth for fiscal year 2010. About the company’s future, Olthoff says, “I’m hopeful and optimistic.”
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