Trudy F. Sullivan has landed a big pay package with Talbots Inc., where she becomes president and chief executive officer on Aug. 6, succeeding Arnold Zetcher.
The 57-year-old Sullivan, formerly president of Liz Claiborne, signed a four-and-a-half-year employment contract with Talbots. According to a Securities and Exchange Commission 8-K document filed last week by the Hingham, Mass.-based Talbots, Sullivan will receive:
-- An initial annual base salary of $1 million, to be reviewed annually for increases.
-- An annual incentive bonus of 120 percent of her salary.
-- A special inducement award of $3.05 million in cash.
-- Up to $1.8 million to make good from various compensation arrangements she leaves behind at Liz Claiborne Inc., payable in cash, restricted stock or a combination of both.
-- 350,000 shares of restricted stock in Talbots vesting 25 percent on March 15, 2008, 25 percent exactly a year later and 50 percent another year after.
-- 325,000 stock options, vesting in three equal installments over eight years.
Sullivan was also granted life insurance, relocation benefits and up to $40,000 for legal and advisory fees related to her negotiations with Talbots on her employment and compensation.
Talbots also said in its SEC filing that Sullivan's compensation will cost the company approximately 8 cents to 10 cents a diluted share in the 2007 fiscal year.
One of Sullivan's first big decisions will be to select a new chief merchant to succeed Harold B. Bosworth Jr., who said last week he was retiring after a decade with the company. A search for his successor has begun. It's likely there will be additional management changes after Sullivan takes the helm. Bosworth continues as executive vice president and chief merchandising officer until July 27. He joined Talbots in 1997 as senior vice president and general manager for Talbots Kids, and later Talbots Mens, which he launched. He was promoted to his current position in January 2003.
Before Talbots, Bosworth served as senior vice president of retail for men's luxury brand Ermenegildo Zegna.
Sullivan will be challenged to reverse Talbots' slumping sales and profit trends, modernize the merchandise, and turn around the J. Jill division, which also has product issues and was purchased by Talbots last year, after outbidding Claiborne.It's also possible Sullivan will examine Claiborne's portfolio of brands for possible acquisitions by Talbots. Claiborne is expected to shed some labels as part of a major restructuring to be detailed this week by its chief executive, William L. McComb.
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