Untying details in the Timberland deal…

August 30, 2011

The Swartz family has always been the driving force behind The Timberland Company (TBL), dating back to 1952, when Nathan Swartz bought half of what was then called the Abington Shoe Company. As the years rolled by, family members joined the business, the company changed its name to the one we know now, and – in due time – those fabulous shoes and nearly indestructible boots were born.

The Swartzes are still running the show today, and it shows in the payout that family members (and executives) are getting in a deal recently announced to sell the company: Between various family members, their trusts, and a foundation, they collectively control approximately 73.5% of the combined voting power of the common stock. And that’s why – after the company announced that it was being acquired by the V. F. Corporation (VFC) for $43 a share – it told its own shareholders in the August 24 DEFM 14C (merger proxy) that

“…no further action by any other of Timberland’s stockholders is required to adopt the Merger Agreement or to authorize the transactions contemplated thereby.”

Or, in other, slightly less polite words, “Thanks for owning our stock, but we’ve already decided to sell and you really can’t stop us.”

The $2 billion deal, which is expected to close in the third quarter of this year, will put the Timberland brand in the hands of the company that makes clothing under well-known brands such as Lee, Wrangler, The North Face, Nautica, and others. According to the press release that V. F. published June 13, “…The acquisition… should add approximately $700 million to VF’s 2011 revenues.” That’s a lot of money, yet it’s just a portion of the $1.6 billion in revenues that Timberland expects for the entire year.

The merger proxy discloses that in exchange for selling their interests in the company, Timberland’s officers and directors will receive some fairly hefty checks. As one might expect, the largest payout will go to President/CEO Jeffrey B. Swartz, who has led the company for the past 13 years. The filing estimates that Swartz will get more than $37.24 million, which includes payment for his equity interests (more than $26.87 million) as well as “Golden Parachute” compensation, perks, and a gross-up to pay taxes (collectively worth more than $10.36 million).

The other named executive officers will also get large checks, according to page 45 of the filing. Vice President and Chief Financial Officer Carrie W. Teffner is set to get more than $4.88 million; Chief Brand Officer Michael J. Harrison will get more than $10.93 million; Senior Vice President and Chief Administrative Officer Carden N. Welsh will get more than $12.28 million; and Vice President and General Counsel Danette Wineberg will get nearly $4.16 million.

And what about long-time Chairman of the Board Sidney W. Swartz? By selling his millions of shares of Class A and B stock, he will receive more than $214 million, and The Swartz Foundation (of which Sidney is one of two trustees) will receive nearly $110 million. That’s enough to buy a lot of footwear… and just about anything else a guy could want.

Image source: The Timberland Company

——

Risk avoidance is critical in the current market environment. Over on FootnotedPro, we shine a spotlight on potential problems well in advance of the market. For more information or to inquire about a trial subscription, please contact us.

Leave a Reply

You must be logged in to post a comment.