Fifth & Pacific Cos. Inc. has detailed the severance package for William L. McComb, who is stepping down from his role as chief executive officer of F&P, as well as employment agreements with new senior management, in an 8-K filing with the Securities and Exchange Commission Monday.
The filing noted that McComb will receive cash payments totaling $6.5 million, representing two times his base salary and target bonus. He will also receive continued medical, long-term disability and life insurance coverage for two years from his separation date. McComb will be eligible to receive an annual incentive bonus based on actual performance in 2014, prorated and subject to terms of the company’s cash bonus plan. In addition, the board agreed to nonaccelerated continued vesting of the unvested stock options on the original schedule on various future dates in 2014, 2015 and 2016. They are:
• 187,500 options granted on March 1, 2011, with an exercise price of $4.97.
• 187,500 options granted as of Sept. 1, 2011, with an exercise price of $5.05.
• 281,250 options granted as of March 1, 2012, with an exercise price of $11.10.
• 198,750 options granted on June 3, 2013, with an exercise price of $21.20.
As reported, Craig Leavitt, ceo of Kate Spade, will succeed McComb as ceo of the newly named Kate Spade & Co. Deborah Lloyd will be chief creative officer of the renamed company, and George Carrara, currently executive vice president, chief operating officer and chief financial officer of F&P, will become president and chief operating officer of the renamed company. The change of name and management changes are effective following the release of fourth-quarter earnings on Feb. 25.
As a result of the management transition, F&P estimates it will take onetime noncash severance charges of $16.5 million and cash severance charges of $6.5 million in the first quarter of 2014.
The filing noted that the initial term of Leavitt and Lloyd’s new roles will begin on the position start date and will end on Dec. 31, 2014. It will automatically renew for successive one-year periods unless the company or the executive delivers a notice of nonrenewal at least 180 days before the next automatic extension.
Leavitt will receive a base salary of $1.5 million, and Lloyd will receive $1.9 million. In addition, Leavitt will receive a target annual cash bonus opportunity equal to 150 percent of base salary, while Lloyd will have a bonus opportunity of 175 percent of base salary, with a maximum opportunity equal to 200 percent of the target opportunity. The agreement also calls for an annual long-term incentive award having a total target and/or grant date value of no less than $5 million for Leavitt and $3.275 million for Lloyd, among other incentives. Carrara’s compensation hasn’t been finalized yet.