There have been so many changes at Collective Brands, Inc. (PSS) in the past year that those who are left must feel like they’ve been on one doozy of a roller coaster ride. Be that as it may, the ride has surely been more thrilling for some than for others.
Last June, the company lost its chairman, chief executive, and president, Matthew Rubel, who apparently agreed with the board that it was time to go. Then, by the end of August – following a string of losses – Collective Brands announced that it would “conduct a review of strategic and financial alternatives to further enhance shareholder value” by selling off all, or some parts, of the company. (That process continues, as this Bloomberg article from early February explains.) Collective Brands also said last summer that it planned to “close approximately 475 under-performing and low-volume, non-strategic stores in the next three years with more than 300 of those closings coming by the end of this fiscal year.” It achieved that goal, as we’ll explore in a minute.
The 10-K that Collective Brands filed March 22 includes the disclosure of a $10 million charge related to Rubel’s departure. The filing stated: “These charges included a one-time cash payment of $6.8 million and the acceleration of share-based compensation expense related to outstanding awards of $3.2 million.” Considering that’s nearly twice what Rubel earned in total compensation for FY 2008 ($5.1 million) and almost 25% more than his total compensation for FY 2010 ($7.78 million), according to the 2011 proxy, that’s not bad for separation pay.
Rubel’s severance package garnered little attention at the time, although Collective Brands did file a “Waiver and Release”, Exhibit 10.1, along with an 8-K on June 15, 2011. After reviewing those documents, it’s clear that Rubel’s departure had been in the works for some time before it was announced; that’s apparent from the extensive details in the Waiver and Release, the exact language both parties agreed would be in the press release, and some very detailed Appendices spelling out exactly what Rubel would get, and why. Yet those documents – which aren’t ones that even brilliant legal minds could whip up and approve before noon – are dated the same day that Rubel’s departure was announced.
Rubel’s separation payment isn’t breaking news, but it became more interesting when viewed in the context of a related topic in the 10-K. Collective Brands ended up closing 298 of the underperforming Payless stores and 54 Stride Rite stores in 2011, for a total of 352 closed stores. The filing doesn’t say how many hundreds of employees lost their jobs, but it does disclose that the company paid them a collective $2.4 million in severance, or roughly 25% of the value of Rubel’s separation package.
When Rubel parted ways with the company, he left on a gracious note, saying “I wish the Company and its employees all the best as I pursue a new chapter in my career.” Of course, it’s easier to be gracious when one doesn’t have to worry about missing a mortgage payment.
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