It looks like ShopHQ CEO Keith Stewart and his management team have taken steps to make sure they have golden parachutes if they end up being ousted by dissident shareholders.
This week the home shopping network filed an 8-K with the Securities and Exchange Commission amending Stewart’s compensation terms and also what he would receive if there is a change of control and he is forced to exit ShopHQ.
Last year a group of ShopHQ shareholders, The Clinton Group, called for a special stockholder meeting, claiming that the home shopping network has been performing atrociously and Stewart and his team should be canned.
Here are some of the terms of Stewart contract now with ShopHQ — including a base salary of more than $700,000 smackers and a pretty sweet severance package, if necesary:
Annualized Base Salary: Mr. Stewart will receive an annualized base salary of $713,554, which may be adjusted annually by the Company’s Board of Directors (the “Board”). However, Mr. Stewart’s annualized base salary may not be decreased, unless such decrease is part of an across-the-board uniformly applied reduction affecting all senior executives of the Company.
Annual Cash Incentive: Mr. Stewart will participate in our annual cash incentive plan. He will have a target bonus opportunity equal to 75% of his base salary based on our management incentive plan. The annual incentive plan financial goal(s) are established annually and approved by the Human Resources and Compensation Committee (the “Compensation Committee”) of our Board.
Severance: If Mr. Stewart’s employment is terminated without Cause or he resigns from employment for Good Reason (each such term as described below and defined in the Amended Agreement), whether or not in connection with a change of control, he is eligible to receive 18 months of his highest annualized base salary in effect at any time during the one year period preceding his removal or resignation, 18 months of his target bonus opportunity amount determined from such annualized base salary and 18 months of medical coverage under COBRA.
The Amended Agreement also provides for the payment of severance benefits to Mr. Stewart in the event of certain terminations of employment following certain changes of control, and if such payments are made, they will be offset by the payments described in the preceding paragraph.
Mr. Stewart will be entitled to severance pay equal to 24 months of base salary, 24 months of his target bonus opportunity and continued group medical and dental insurance for 24 months if (1) an Event (as described below and defined in the Amended Agreement) occurs during the term of the Amended Agreement and (2) within one year after the occurrence of such Event, Mr. Stewart’s employment is terminated involuntarily by the Company without Cause or voluntarily by Mr. Stewart for Good Reason.
All transition and severance pay or benefits (whether or not payable in connection with an Event) are conditioned upon Mr. Stewart’s execution of an effective release in a specified form and his compliance with applicable covenants under the Amended Agreement (including non-competition, non-solicitation, non-disparagement, confidentiality and non-use covenants).
And what qualifies as a “good reason” for Stewart leaving?
Good Reason” means (i) Mr. Stewart is impacted by a mandatory relocation of his principal place of employment to a location more than 50 miles from his current office location;
(ii) the Company materially reduces Mr. Stewart’s total compensation opportunity (excluding equity), unless part of an across-the-board compensation opportunity or benefit plan reduction applicable on a similar basis to all other senior executive officers of the Company and, in that event, provided that such reduction does not exceed 5% of Mr. Stewart’s total compensation opportunity;
(iii) the Company materially breaches its obligations to pay Mr. Stewart, unless the failure to pay is a result of a good faith dispute between the Company and Mr. Stewart; or
(iv) the Company substantially diminishes Mr. Stewart’s duties, responsibilities or title such that the position held is no longer the Chief Executive Officer in title or deed or the circumstances described in clause (ii) in the definition of “Event” above occur.
The Clinton Group, by the way, has recommended that ShopHQ move its headquarters from icy Minnesota.