Lustrous deal for new CEO at Regis…
When ambitious B-school students start classes in a few weeks, we bet that few of them will arrive harboring dreams of running a chain of hair salons. But – based on the 8-K that Regis Corp. (RGS) filed July 17 — maybe they should add that to their list of career options.
As Regis announced about a week ago, it hired Daniel J. Hanrahan to start as its president and CEO on August 6. Hanrahan comes to Regis after 7 years as first President and then CEO of Celebrity Cruises at Royal Caribbean Cruises Ltd. (RCL). The filing disclosed the “general terms” he made to lead Regis (there’s a clause that the full terms of the employment agreement are still being finalized), and suffice it to say that the deal (the terms of which were also reported here) is as lustrous as the tresses on a catwalk model.
Now Regis is something of a frequent flyer here at footnoted. We first footnoted them back in September 2005 and footnoted them again in April 2007, when the stock was trading at about $40 a share (it’s currently trading at less than half that). So there’s a bit of a history here.
But as the press release noted, Hanrahan represents a fresh start for the company and he’ll be paid handsomely. For starters, he’ll get a base salary of $850,000. He’s eligible to receive up to about $1.06 million (125% of salary) as an annual incentive award, and the company has guaranteed that he will receive that much for the fiscal year ending June 30, 2013.
Of course, what would any self-respecting employment agreement be without the long-term incentive program? Through that, Regis agreed to give Hanrahan equity awards worth $2.25 million, which will be allocated in the form of 20% restricted stock units (RSUs), 40% performance share awards, and 40% stock appreciation rights (SARs).
And then there are “two special equity awards” that he’ll get when he starts work. To get these, though, Hanrahan has to stay with the company for a few years, and he has a pretty lofty goal that concerns the stock price, which is currently trading at about $17.61 per share:
“The first grant will consist of restricted stock having a value equal to $2,016,500 that will vest in full at the end of five years. The second grant will consist of 20,000 restricted stock units that will vest if the Company’s stock trades above $35 for 20 consecutive trading days at some time during the five year period beginning with his commencement of employment.”
And if Hanrahan takes a hit when he sells his current home, Regis agreed to pay him one-half of any loss he incurs, up to a maximum of $100,000.
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