Saks Inc. wants a long-term relationship with Ron Frasch.
Frasch, who joined Saks in 2004 and has been its president and chief merchandising officer for two years, stands to collect $3 million in cash awards if he remains with the company until 2014. The human resources and compensation committee of Saks’ board voted to give him the money, contingent upon his continued employment, in three equal installments on the third, fourth and fifth anniversaries of the grant, according to a Form 8-K filed with the Securities and Exchange Commission Monday.
Frasch would receive the full amount if he were let go due to a change in control of the company. If he is terminated for another reason but without cause, he would receive $1.5 million after two years, after Feb. 25, 2011; $2 million after three years, and the full amount for more than three years. He would forfeit the cash if he were to resign or be terminated for cause.
None of the other executive officers mentioned in the SEC document received such a cash incentive.
In 2007, Frasch was paid $3.82 million — $1.05 million in salary and the remainder in bonuses and other incentives. The total figure was up nearly $1 million from the 2006 amount of $2.87 million. By contrast, due to an $8.55 million option award in 2006, the total compensation of Stephen I. Sadove, Saks’ chief executive officer, dropped to $5.8 million from $14.1 million. The corresponding 2008 figures have not yet been released.
Saks’ compensation committee also established the 2009 bonus and incentive terms for its executive officers, which are based on the performance measures of EBITDA and expense reduction and include corporate objectives.
Frasch owned 474,771 shares of Saks stock when the company filed its definitive proxy with the SEC last April. At the time, those holdings were worth more than $5.9 million, but their value has since fallen to under $1.1 million based on Saks closing price of $2.25 on Tuesday.
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