NEW YORK — Whoever eventually ends up buying Neiman Marcus Group, Burt Tansky is likely to be a happy man.
As speculation continues to swirl over potential bidders for the luxury retailer and some observers predicted a deal could come within weeks, Neiman Marcus late Friday said in a regulatory filing that Tansky, its president and chief executive officer, and 10 other high-ranking executives had been given golden parachutes potentially worth millions should things not work out with any new owner.
Based on Tansky’s 2004 base salary, his severance package alone could be worth at least $3.75 million under the new agreement.
Meanwhile, names of potential bidders for Neiman’s continued to swirl in the market. As reported, four consortia are said to be forming to eye a bid for Neiman’s, including one led by Texas Pacific Group and an unidentified strategic partner. Speculation on the possible strategic partner ranges from Nordstrom Inc. to Lane Crawford of Hong Kong.
A spokeswoman for Nordstrom said Friday, “We do not comment on specific acquisitions rumors or speculation.” Executives at Lane Crawford could not be reached for comment.
As for the severance agreements, financial sources who have been tracking the sale process said on Friday that the Neiman board is essentially “protecting” its executive team in case a buyer decides it no longer needs them. One hedge fund source called the move “typical” when you have a board that has already expressed an interest in selling the company.
According to the 8-K form filed with the Securities and Exchange Commission, the executives who signed agreements also include Karen W. Katz, president and ceo of Neiman Marcus Stores; James E. Skinner, senior vice president and chief financial officer; Brendan L. Hoffman, president and ceo of Neiman Marcus Direct, and James J. Gold, president and ceo of Bergdorf Goodman.
The severance agreements come into play in the event of a “change in control” of the company and the termination of the executive’s employment by the company without cause within two years following the change in control.
In such a scenario, the executive would receive a cash severance package equal to two times annual base salary, a target bonus and the continuation of certain benefits such as outplacement benefits, accelerated vesting of benefits under the retailer’s retirement plans and continuing coverage under the firm’s group health and life insurance plans for two years. In the case of Tansky, he gets three times his annual base salary, plus the target bonus and certain other benefits, which includes three years of the firm’s group health and life insurance plans.
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