Sears seeks to stem the (executive) losses…

The saga of Sears Holdings (SHLD) in its many incarnations over the years is a dramatic one, not least for investors, and we seem to once again be in one of those nail-biting chapters full of comings, goings and at least mild drama.

Some of those comings and goings, of course, are company executives. We recently read about Sears losing its fourth appliance-division chief in three years (a fellow, we note, who was originally hired as senior vice-president of innovation). The company also lost $3.1 billion last year and has plans to shutter a bunch of stores, will no longer sell clothing at others, and saw its majority shareholder seek to reassure vendors about the risks of bankruptcy. Its stock has done considerably better of late, but it’s still lagging competitors and the Dow.

Against this backdrop, and plans (or hopes?) for a turnaround, you can imagine why it might want to make sure some of its top brass stick around, and that’s what it’s been doing, to judge from some exhibits to the 10-K Sears filed yesterday.

One is an offer letter to Ronald Boire, the executive vice-president and chief merchandizing officer (and former Brookstone chief) that the company hired in January. Boire got the usual sort of pay package — salary of $800,000, a target bonus of $1.2 million (with a $600,000 minimum for 2012), and an initial stock grants of 75,000 shares vesting over three years.

But what caught our eye was a carefully structured set of three retention bonuses adding up to $600,000. He’s supposed to get $50,000 within a month after starting, and then $50,000 a quarter afte that over the next three years. For the most part, the money’s his once he gets it, though if he leaves before a quarter is up, he may have to give back some of that tranche on his way out. In addition, presumably to help tie him closer to the suburban Chicago company, there’s a $1 million restricted-stock grant that is “contingent upon you and your spouse relocating to the greater Chicago metropolitan area.”

Still, there’s evidence that Boire is hedging his bets, at least to some extent — he’s getting extensive “commuter benefits” until his relocation to the Chicago area, and unless we missed something, we don’t see a time-limit on this. In other words, if the million-dollar moving inducement doesn’t do the trick, he could stay in New York for a while. Until he does move, he gets weekly round-trip, business-class airfare between the two cities, free ground transportation to and from the airport, a $3,000-a-month temporary housing allowance, “breakfast and dinner during commuter travel in the Hoffman Estates area” (they think of everything, don’t they?), and Sears will even ship his car to Chicago for him. Finally, to the extent the Internal Revenue Service considers nay of this as income, Sears will pay him 35% of that amount to defray taxes.

The incentives aren’t just for new hires, however. Longtime executive William K. Phelan, now senior vice-president and chief accounting officer, got some sweeteners in an award letter dated in September. (We’re not clear why it’s just being filed now — contracts are normally supposed to be filed no later than the quarterly report in which they’re signed, but there can be reasons for delay.) He’s getting a nice bump-up in salary — to $525,000 from $450,000, with a corresponding target-bonus increase to $367,500 from $315,000 — as well as an increase in long-term incentive targets (to $787,500 from $675,000). But he’s also getting retention awards of $400,000, half in restricted stock vesting over three years, and half in cash.

It’s hard to say how encouraging these stay bonuses are. They could mean Sears is doing its best to make sure the best folks stick around — that whole “attract and retain” thing. But it could also be a sign of a company struggling to keep the folks it really needs to stick around. The difference is subtle, but significant.

Either way, we like the way Boire’s retention bonus, at least, is structured, spread our across a reasonably long time frame. If $1 million to move and $50,000 a quarter isn’t enough to keep him on the job, Sears — and its investors — may have bigger worries.

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