ShopHQ CEO Keith Stewart Protects Self In Event Of Takeover

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.

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One Response to “ShopHQ CEO Keith Stewart Protects Self In Event Of Takeover”

  1. Aiden John Says:

    Dear Linda,

    So many of my colleagues I work with are avid readers of your blog. It’s the only thing out there that has any inside scoop. Its especially tricky when you work in Eden Praire when the CEO acts like Putin and thinks no one cares to see anything other than his constant droning on and on about the recovery being around the corner.
    If anyone knew all the behind the scenes things he is doing now to save his arrogant butt and the other former gang of 8, it would make you puke. But except for Keith and his mob who all just got golden parachutes when they get fired (SOON PLEAESE!!!) the rest of us who work so hard, are petrified. The business practices they are forcing on us are just insane even for VVTV.

    Linda, I know everyone has opinions and takes sides and all but from someone who still works here and very much needs to keep my job, someone needs to hear what’s happening right now.

    1. They are changing the prices of TTV’s even after they begin airing them at midnight. This has never ever happened before. QVC and HSN have gotten into serious trouble with the FCC when they did that. An its happening with Invicata of all products. Even the loyal watch geeks are up in arms. Ask any of the show hosts how they feel about THAT! You just don’t do that in this business.
    2. And speaking of Invicta. What is the deal?? Whatever the Shop HQ buyer Lubkeman has going on with Eyal, Michael Freidman at Sturhling Watches, and Hyam Fisher is just creepy. I don’t know this for sure but is it allowed when a vendor pays for a shop HQ’s employee vacation?? Why don’t we have a contract with them? They are responsible for like 20% of our total business. They have like 50 hours on air before next Thursday.
    3. Is it normal to go into the warehouse and secretly bust up product so it can be returned to the vendor???
    4. Why did they cancel the HR surveys they used to do and share with the employees? Guess why??? Keith and the execs all scored POOR!!

    This is only the tip of the iceberg in what feels like so much seedy stuff going on behind the scenes. God Willing this group will be Gone,Gone,Gone before we go out of business

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