Squinting to find the silver lining at Sears…

March 19, 2012

Sometimes you can get eyestrain trying to find the silver lining in a cloudy situation.

We’re talking about Sears Holdings Corporation (SHLD) again, which has been in the headlines a lot lately. Besides Theo’s post last Thursday (about Sears’ efforts to stem executive losses), there have been reports like this one (the hope that a technology-driven loyalty program will help stanch last year’s $3.1 billion loss) and this one (how the planned closure of 62 more stores will result in countless job losses).

So here’s the silver lining, faint as it may be. The proxy that Sears filed last Friday at 5:00 p.m. revealed that a few jobs seem quite secure – namely, those of the busy pilots who squire Louis J. D—Ambrosio, chief executive and president, around in the corporate jet.

You see, even though D’Ambrosio joined Sears 14 months ago, he opted to keep his house in Philadelphia rather than move to the greater Chicago area, where Sears’ headquarters is located. It’s common for executives to do that for a few months, perhaps while kids finish the school year, or maybe while a spouse winds up a job or the family gets its home ready to sell.

But the filing contains no clues that – more than a year after taking the reins at Sears – D’Ambrosio’s situation is in fact temporary. There’s nothing in the proxy about the company wanting or expecting him to move to Chicago at some point, as was the case for the new executive vice-president and chief merchandising officer Sears hired in January. Sears promised Ronald Boire $1 million of restricted stock after he moved to the greater Chicago area.

While the proxy season is still near the start, the $793,224 that Sears spent so that D’Ambrosio could commute between Chicago and Philly on a chartered plane is one of the bigger numbers we’ve seen in quite awhile. The proxy noted that the cost also included two commercial flights between the two cities. It’s not as if these two cities are difficult to travel between. A quick search of Kayak shows that there are plenty of non-stop flights between the two and that the typical ticket costs around $300. At that rate, flying home every weekend would cost under $16,000. So why is Sears (or more specifically, their shareholders) ponying up more than 50 times that amount just because D’Ambrosio doesn’t want to commit to living in Chicago?

And that’s not all. Sears also paid $3,651 for D’Ambrosio’s commuter travel using company-furnished vehicles; $6,981 for ground transportation between his home and the airport in Philadelphia; and $29,985 for corporate housing in the Hoffman Estates, Illinois area, where Sears’ offices are. It also paid D’Ambrosio a tax gross-up of $18,196 “on imputed income arising out of the foregoing commuter benefits, except that he is responsible for any tax on imputed income arising out of his personal use of Company-furnished charter aircraft.”

Now perhaps D’Ambrosio really may be able to work some magic on Sears. But is it really worth an extra $852,000 so that D’Ambrosio can continue to live in Philadelphia? That’s a hard one to swallow!

Image source: Sun bursting through clouds, via Shutterstock

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Over at footnotedPro, we comb through SEC filings to find what other investors miss. Last year, we called four M&A targets weeks or months ahead of an announcement. For more information about subscribing to footnotedPro, or to inquire about our 2012 M&A report, contact us.


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