The $30K NYC apartment…

December 4, 2007

images-1.jpegSome people will pay any price to live in New York; others wouldn’t live here if you paid them. Then there’s a third category: those who get paid to live here, which now includes Fred J. Kleisner, Interim President and CEO of Morgans Hotel Group (MHGC). Under his new employment contract, which was filed late Friday, Kleisner will abide in NYC for a while, all expenses paid (and grossed up for taxes at a rate of 76%).

In fairness to Mr. Kleisner, his services are needed. A former outside director, he took the helm from CEO/President Edward Scheetz, who was forced out in September after the body of a young woman (not his wife) was found at his Las Vegas condo. According to the last 10-Q, the company fears it may be difficult to find a replacement. Meanwhile Kleisner, who has long experience in the hotel business, has stepped in.

The CEO job may be no fun for a semi-retired guy who has described himself as an avid skier and cyclist, and who yearned to play the ukulele and maybe finish his M.B.A. His deal with Morgans should ease the pain. It covers “all reasonable and actual out-of-pocket business and living expenses incurred by him in connection with his employment by the Company.” This includes relocation costs, a ‘”reasonably satisfactory automobile” (plus parking for said jalopy) and – notably – a housing allowance of up to $30,000 per month. Even in Manhattan that buys you some nice digs. He also gets first class accommodations, wife in tow, when he travels on business.

These are just the specified perks; it’s unclear whether “living expenses” include day-to-day necessities of New York life, like Chinese food and parking tickets. If not, Kleisner will have to pay those out of his $750K salary (same as Scheetz’s) which comes with a bonus of as much as 200% if he meets performance targets, but no equity awards or severance. The agreement was signed November 27, but it’s retroactive to September 20 (the day Scheetz resigned). Morgans is also picking up, and grossing up, Kleisner’s legal and accounting fees for the 2-month negotiation.

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