NEW YORK – William L. McComb will earn a minimum of $1.3 million a year as chief executive officer and a director of Liz Claiborne Inc. and could triple his salary if bonus requirements are met.
In a Form 8-K filing with the Securities and Exchange Commission Wednesday, Claiborne said that McComb, who succeeds Paul Charron as Claiborne CEO on Nov. 6, will receive a $400,000 hiring bonus to compensate for annual bonus money forfeited as a result of his departure from Johnson & Johnson Inc., where he served as group chairman. The term of the initial contract is three years.
In addition to his $1.3 million paycheck, McComb can earn a target bonus of 100% of his annual salary or as much or as little as 200% or 0% of his salary, depending on the degree to which performance goals established by Claiborne’s compensation committee are realized, according to the SEC document. During the current fiscal year, the amount of the target bonus will be prorated based on the term of his employment with the company. That amount is based on earnings per share and return on invested capital goals for 2006.
McComb will also be awarded numerous stock options that in most cases increasingly vest on the anniversary of his addition to the company and which will be tied to the company’s stock price on his first day at Claiborne.
McComb’s employment agreement also provides for compensation in the event that he is terminated “without cause” or leaves for “good reason” or if his employment ends due to a change in control at the firm. He would receive $4 million and other compensation if terminated wtihout cause or if he relinquished his post for good reason. If he were to leave within three years of a change in control, he would be entitled to a so-called “golden parachute” equal to three times the sum of his annual salary and average bonus, plus other amounts.
As reported, Paul Charron will continue as chairman of Claiborne until Dec. 31, at which time he will hold the title chairman emeritus for three years. He will provide consulting services for one year following his Dec. 31 retirement and receive $750,000 for his services, in addition to $75,000 to be paid on July 1, 2007.
Kay Koplovitz will serve as non-executive chairman of the board, effective Jan. 1, and will receive an additional cash retainer of $100,000 per year.