NEW YORK — Gene Kahn's golden parachute from May Department Stores Co. is worth at least $6.1 million and is laced with fringe benefits.
The former chairman and chief executive officer has a separation agreement that includes: an annual salary of $1.5 million, paid in equal installments during a two-year noncompete period; a onetime, $1.5 million retirement payment, and a onetime performance bonus of $1.6 million, according to a Securities and Exchange Commission filing on Tuesday.
The retailer said in the filing that the employment agreement with Kahn took effect on Jan. 15, the day after he resigned, and will extend until Jan. 14, 2007. May and Federated Department Stores agreed to a $17 billion merger about six weeks after Kahn's resignation. Shareholders of the companies approved the deal last week.
In the SEC filing, May Co. said the agreement with Kahn "is the result of negotiations between the executive compensation and development committee of the company's board of directors and Mr. Kahn that spanned the period from Jan. 14 to July 14. The executive compensation and development committee comprises independent, nonmanagement directors."
Kahn was awarded a transaction bonus of $900,000 for the $3.2 billion purchase of Marshall Field's from Target Corp. He also is allowed as much as $50,000 in "outplacement services" and "an administrative support allowance of up to $10,000 per month during the noncompete period."
Kahn also will be reimbursed for any legal fees and expenses incurred "in an aggregate amount not to exceed $150,000," while also receiving an undisclosed amount of "fringe benefits" and the continued vesting of any outstanding stock options, according to the SEC documents.
"In addition, Mr. Kahn is entitled to post-employment health and life insurance benefits under the company's post-retirement health and life insurance plan," the retailer said in the filing.
Kahn became ceo and president of May Co. since 1998, and became chairman in May of 2001. Since 2001, the department store retailer has struggled to deliver consistent top-line growth. In fiscal years 2002, 2003 and 2004, the firm posted revenue declines of 2.3, 4.8 and 1.1 percent, respectively. In 2005, sales jumped 8.2 percent, but were down 0.5 percent when compared with 2001.
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