Executive Transition at True Religion Sudden, But Not Cheap__»

May 19, 2010

Even though we don—t buy the pricey jeans produced by True Religion Apparel, Inc. (TRLG), we know they’re popular. And after reading the 8-K that the company filed May 17, we gained a little insight into why the company’s least expensive pair of jeans retails for nearly $200.00.

Monday’s filing announced that Michael Buckley had —ceased to be President of the company on May 12. The accompanying press release explained that Buckley was leaving the company —to pursue other interests.

Considering that Buckley had served as the company’s president for four years, his departure seems surprisingly sudden. A peek at past filings doesn’t reveal any hint that Buckley planned to leave the company. However, two days before he resigned, Buckley started selling shares of the company’s stock; in all, he sold 150,000 shares over a three-day period that ended on the day that he resigned. Yet according to the Form 4 that disclosed the transactions, Buckley still owns 193,429 shares of True Religion stock – a sizable stake in the company, to be sure.

The filing doesn’t mention whether Buckley is getting any severance compensation from the company, but we—ll watch for future disclosures on that subject.

At the same time that the company announced Buckley’s departure, it announced the appointment of new company president Michael Egeck, who will start on June 4, 2010. Egeck has about a decade’s worth of experience in the apparel industry, and he comes to True Religion following a stint as interim President at Affliction Holdings, LLC.

Egeck got a three-year employment agreement with the company that will automatically renew annually. The agreement states that he—ll start with a base salary of $650,000 that is —subject to increase (but not decrease), a 2010 cash bonus of $369,973 if the company meets its target performance goals (and more, if it exceeds its goals). He also received 100,000 restricted shares of common stock as an inducement to join the company that will vest in equal amounts over three years. If the stock price remains near its current trading price of $28.01 when the shares finally vest, that benefit could be worth a few million dollars to Egeck.

Executive transitions are usually costly, and this one is no exception. At least in this case, both the incoming and the departing presidents have plenty of money to buy fancy jeans, if they’re so inclined.

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