Talbots CEO Paid $1.2 Million to Offset Pension Hit

Discussion
Jun 23, 2009
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By George
Anderson

Some eyebrows
have been raised after a decision by the Talbots Inc. board to pay chief
executive Trudy Sullivan $1.2 million (six payments of $200,000 over
a six-month period) to compensate her for a cut in retirement benefits.
Ms. Sullivan saw her earning power take a hit after the company
froze its pension and executive retirement plans in a cost-cutting move.

According
to a Boston Business Journal report,
Talbots’ board said it approved the payment because it was “required
to provide a substantially comparable benefit” due to recent changes
that had affected Ms. Sullivan’s pension and supplemental executive retirement
plan.

Talbots, like
many other retailers, has struggled during the recession and has taken
a number of steps to improve its position including cutting 695 jobs
(325 in the past two weeks), freezing benefits, closing underperforming
locations and finding a buyer for its J. Jill chain earlier this month.

Ms. Sullivan,
who earned a base salary of $1 million in 2008 also received $4.7 million
from stock sales and additional compensation, according to a Boston
Globe
report.

Discussion
Question: Will the decision by Talbots to pay Trudy Sullivan $1.2 million
to compensate for lost retirement benefits create a credibility issue
for the CEO with rank and file workers at the company?

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13 Comments on "Talbots CEO Paid $1.2 Million to Offset Pension Hit"


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Max Goldberg
Guest
11 years 10 months ago

Yes!

Al McClain
Guest
Al McClain
11 years 10 months ago

Whatever the spin put on this, it is a very bad PR move. It will tick off those shoppers who read about it, and demoralize their staff and store level employees. And then, as usual, there will be the mumbo jumbo talk about “we all have to pitch in together to turn this company around.” It’s just that some have to pitch in more than others.

Dick Seesel
Guest
11 years 10 months ago

It’s not just about the appearance to rank-and-file members of the Talbots team, but also to the outside world. This company has been a big disappointment to the investment community and the CEO has been unable to provide the right answers so far. It’s not as though the rest of her compensation package is unfair by any means considering their comp sales shortfalls and self-confessed merchandising mistakes. This looks like a very questionable decision by the board.

Len Lewis
Guest
Len Lewis
11 years 10 months ago

Who do they think they are–Merrill Lynch?

The arrogance, insensitivity and–yes–stupidity of so many companies these days never ceases to amaze me. I’m not against executive compensation and I don’t want the government controlling it. After all, we are not communists. But let’s work to put some sense and sensibility into executive compensation. It must be performance based and based on Talbots’ performance. I’d rethink the numbers.

Gene Hoffman
Guest
Gene Hoffman
11 years 10 months ago

Like too many boards, the Talbot directors raise their hands in affirmation of stupid actions (such as the gift to its CEO) and reduce the sum total of human understanding within Talbots. The answer to the question is “yes.”

Doron Levy
Guest
Doron Levy
11 years 10 months ago

The answer is Yes (shaking my head). It’s almost like there is a news blackout in the boardrooms of America.

W. Frank Dell II
Guest
11 years 10 months ago

This is just another example of where Boards of Directors have lost their backbone. Many firms have stopped contributions to 401 K plans and all employees have seen their investments drop. To make whole the CEO simply sends the wrong message.

Carol Spieckerman
Guest
11 years 10 months ago

I can’t join in the indignation-fest. Talbot’s was REQUIRED to offset Ms. Sullivan’s retirement benefit reductions as part of her contract (signed in 2007). Unfortunate timing? You bet. Avoidable? Nope.

jack flanagan
Guest
11 years 10 months ago

Her contract may have ‘required’ she be made whole. She and the company could have mutually agreed that she wouldn’t be. I’m in the camp that says her results to date would suggest a more humble approach of sharing the pain would be in order.

As for the Board, a little leadership and common sense would seem to have been absent when this offset was being considered.

Craig Sundstrom
Guest
11 years 10 months ago

Yes.

(That the Board had required itself to do so will not improve matters…likely it will make them even worse.)

John Hyman
Guest
11 years 10 months ago

Someone used “leader” and “board” in the same sentence… what’s up with that? This is just one more example in a long line of examples that the members of the club take care of their own.

Mark Lilien
Guest
11 years 10 months ago

In the past 12 months, the S&P 500 is down 30% and Talbots’ stock is down 50%. Yes, it’s easy to complain about CEO compensation when business is bad, and there’s a huge compensation gap between most retailing folks and their CEOs, so Talbots is no exception.

But the CEOs who take modest (in comparison) compensation (Jim Sinegal, Costco, for example) generally have huge stock positions. Their stock appreciation becomes their compensation. Sam Walton made many millionaires out of his employees, while he paid very modest wages.

Christopher P. Ramey
Guest
11 years 10 months ago

In the scheme of things this isn’t a lot of money. But, there is a civil war is being waged against business and highly-paid executives. A little creativity would have been prudent.

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