On September 14, 2006, the Board of Directors of The Yankee Candle Company, Inc. (YCC) authorized the Company to enter into an Executive Severance Agreements with the Chairman of the Board and CEO Craig W. Ryden, President and COO Harlan M. Kent, CFO Bruce H. Besanko, as well as each of the other six top executives of the Company:
If any of the executives terminate their employment for “Good Reason” [is there any other kind?], or if the employment is terminated within two years following a “Change in Control” of the Company (without Cause) the executives will be entitled to receive severance benefits consisting of the following primary components:
a continuation of medical and dental benefits (subject to the severance period acknowledged for each so-named executive); a one-time payment of their incentive award target under the executive compensation plan, pro rated based on the number of days of that fiscal year for the so-named executive was employed; Messrs. Ryden, Kent, Besanko could each receive (up to) an estimated $726,243, $200,000, and $187,000, respectively; and, a one-time payment of the following amount: (1) in the case of CEO Ryden, an estimated $2.40 million; (2) in the case of the COO Kent, an estimated $912,000; (3) for the CFO Besanko, an estimated $653,190; and, (4) in the case of the Senior Vice Presidents, 100% of the sum of their base salary plus incentive award targets;
Immediately prior to a Change in Control Event,
all stock options held by the executives shall become fully vested (Ryden-540, 300 shares; Kent-155, 000 shares; and, Besanko- 60,000 shares); each executive will be entitled to receive 66-2/3% of the target number of performance shares specified in the Award of Performance Shares Agreement covering the three fiscal years ending December 31, 2005, December 30, 2006 and December 29, 2007 (Ryden-29, 700 shares, Kent-6, 666 shares, and Besanko-6, 666 shares); and,
each so-named participating executive who remains employed by the Company for at least three months following a Change in Control Event will be entitled to a Special Retention Bonus, ranging from 20% -- to – 50% of their respective annual base salaries. Messrs. Rydin, Kent, and Besanko will receive an estimated $145,248, $81,605, and $124,230, respectively.
These Executive Severance Agreements smell as sweet as a Yankee candle—as long as a Change in Control event was to happen by April 1, 2007….
“We always have time enough if we will but use it aright.” – Johanne W. Goethe
The scented-candle maker announced on Wednesday that is being sold to a Chicago-based private equity investment firm, Madison Dearborn Partners, LLC.
Under the agreement, Madison Dearborn will pay approximately $1.4 billion in cash, or $34.75 a share, and assume about $300 million in debt. The Company expects the transaction to close in the first quarter of 2007—one does not need to be a member of Mensa International to suppose that the deal will close by April 1, 2007.
Chairman and CEO Ryden said, " This transaction was in the best interest of our shareholders.”
In the case of Ryden and the other senior executives, his comment rings loud and true.
Editor David J Phillips does not have any financial position in YCC.