Hot off the grill at Williams Sonoma…

Last Tuesday, we took a look at Williams-Sonoma’s (WSM) retiring Chairman/CEO W. Howard Lester’s retirement package after the company disclosed its terms. Then, near the end of the week, the company reported the terms of its employment agreement with newly appointed CEO/President Laura Alber; that document was an exhibit to this 8-K, filed June 17.

Alber’s contract runs for three years and renews annually after that. Her base salary starts at $975,000 per year, which is a nice boost from the $800,000 salary she received as the company’s president. She will get $1.95 million if the company terminates her without cause, she resigns for —good reason, or she dies or becomes disabled. She—ll also get twice the amount of her past bonus, $3,000 per month for 18 months to pay for benefits, and vesting credit towards her outstanding equity awards.

Alber also signed a Management Retention Agreement (as did EVP/Chief Operating Officer/CFO Sharon McCollam). This agreement has similar terms, but it governs how much Alber will get if she is terminated within 18 months after a change in control. This agreement runs for two years and also renews automatically each year. Right off the bat, that agreement states:

——It is expected that the Company from time to time will consider the possibility of an acquisition by another company or other change of control. The Board of Directors— recognizes that such consideration can be a distraction to the Executive and can cause the Executive to consider alternative employment opportunities. The Board has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control….

The agreement is — in the company’s words — an —incentive for Alber to stay with Williams Sonoma and work to ——maximize the value of the Company upon a Change of Control for the benefit of its stockholders—.

Of course, none of us knows whether Williams Sonoma will be acquired, but there was some speculation last spring that a deal might happen. If it does, Alber will get a similar payout to what she’d get under her employment agreement if she’s terminated or leaves for cause. However, her equity awards will vest immediately, and she—ll continue to get $3,000 a month for a year (instead of 18 months, per the agreement above) to buy benefits.

Regardless of whether the company sells or not, though, Alber’s deal is undeniably a juicy one.


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