Relaxing their standards at La-Z-Boy…
Americans can thank La-Z-Boy Inc. (LZB) for fostering our real national pastime, the one where we lounge in huge recliners watching huge flat-screen TVs. Now the company may inspire me to adopt a lazy approach to SEC filings, in which I will no longer bother reading CD&As because they may turn out to be meaningless anyway.
Forget whatever La-Z-Boy said in last year’s proxy about its long-term equity plan. In an 8-K filed Monday, the company said it was trashing the performance targets and time frames embedded in the equity grants it made last July to 120 employees, including the firm’s top management. Why? Because “based on current market conditions and the Company_¥s performance in the first two quarters of fiscal 2008, the performance targets in the Awards now appear to be unrealistic.”
This shows a lot of pessimism, considering the awards were supposed to be based on 3 years of performance – fiscal years 2008 through 2010. It’s not clear how much the performance targets have been lowered, since this is one of those firms that doesn’t disclose specific metrics. But while the grants in question are still labeled “long-term,” half of the awards will now be tied to La-Z-Boy’s results for the last 4 months of its current fiscal year, which ends in April.
In its last earnings release, the firm lowered its previous guidance and reported a 12% drop in net sales, blaming its troubles largely on “the decline in consumer confidence and the overall uncertain economic environment.” It’ll be interesting to see if other companies use the slings and arrows of a slowing economy as an excuse to relax their performance standards. Meanwhile, the rest of us will relax in our La-Z-Boys and watch the stock market tank.