NEW YORK — Tommy Hilfiger not only has a new owner, but also a new pay deal.
Under the terms of the renegotiated contract, the designer gets a fixed salary of $14.5 million for the first four years, according to a Securities and Exchange Commission filing. This compares with a previous agreement with Tommy Hilfiger Corp. that provided a salary based on percentages of the company's worldwide sales and licensing revenues.
Hilfiger has stated that he's received an equity stake from this deal.
The filing by Tommy Hilfiger Corp. with the SEC on Tuesday seeks shareholder approval of its proposed sale to private equity firm Apax Partners. It also disclosed background information on the sales process leading up to the selection of Apax as the winning bidder.
Apax submitted a bid to buy the company at $16 a share, the filing noted, but the proposal was rejected by Tommy Hilfiger Corp.'s board. The board also instructed its advisers to "inform Apax that it needed to renegotiate" Hilfiger's employment agreement to "eliminate the $20 million guaranteed minimum annual salary for four years and adjust the compensation formula so that Mr. Hilfiger would not receive more than $14.5 million in the first year."
The board requested Apax use the savings from the amended employment agreement to increase its per-share offer, according to the filing.
After Apax renegotiated Hilfiger's agreement, the private equity firm upped its per-share offer to $16.80.
The SEC filing also noted two other bidders for the company, a private equity firm and an apparel licensing company.
The unnamed private equity firm bid $15.50 a share, which the board rejected. The apparel licensing firm submitted a nonconforming bid with a valuation range of between $19 and $20.50 a share. The licensing firm initially negotiated a term sheet with its sourcing partner. As the bidding drew to a close, the licensing firm was still in the process of negotiating term sheets with potential financial sources as well as a mass market retailer.
The regulatory filing said the board didn't pursue the proposal from the licensing firm — even with the high price — because there was a lack of definitive documentation or term sheets with financial and strategic partners.The competing private equity bidder and the apparel licensing firm were not named in the filing. However, financial sources familiar with the bidding said the apparel licensing firm was Iconix, and the mass retailer was Wal-Mart Stores Inc.
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