Saks Fifth Avenue's top two executives entered into new evergreen employment agreements, providing Stephen I. Sadove, chairman and chief executive officer, with basically similar compensation, but providing Ron Frasch, president and chief merchandising officer, with greater rewards.
According to a Securities and Exchange Commission filing Tuesday, Sadove's agreement provides:
- A salary of not less than $1,060,000 a year.
- An annual bonus having a target value of not less than 150 percent of salary.
- An annual long-term equity incentive award having a target value of not less than $3,375,000.
- Other benefits including transportation services, reimbursement for financial and tax planning, annual physical examinations and five weeks of paid vacation.
Meanwhile, Frasch will receive:
- A salary of not less than $1,050,000 a year.
- An annual bonus having a target value of not less than 75 percent of salary.
- An annual long-term equity incentive award having a target value of not less than $1 million.
- Benefits similar to those given to Sadove.
In an interview, Sadove said his employment agreement is not much different from his previous contract, but is more in line with "current best industry practices" and does involve less payout in the event of termination, such as in a sale of the company leading to a change in control.
He added, however, that Frasch is getting greater compensation based on performance, and noted that Frasch receives two special equity awards. The filing indicated one for 75,000 shares of restricted stock and another for 75,000 performance shares.
For both executives, the agreements provide substantial severance benefits, entitling them two times salary and one times target bonus; the bonus earned for the prior fiscal year if not yet paid; a prorated bonus for the fiscal year in which the termination occurs if such termination occurs in the second half of the fiscal year; pro rata vesting of equity awards, except for earned performance shares, which vest in full; reimbursements for medical coverage for the executive and his dependents for 18 months, and the normal employee discount for life.
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