Bank Chairman Robert N. Wildrick will be paid $3.5 million under a two-year noncompete agreement, Bank said in a filing late Friday with the U.S. Securities and Exchange Commission. The former Bank CEO will be paid $1 million once the acquisition closes, which is expected in the third quarter, and the balance over the two years.
The buyout also provides for a payment to Wildrick of $1.8 million in additional fees under a previous consulting agreement. The fees cover extra services through March 8, the filing said.
In addition, Wildrick can earn up to $500,000 from March 11 through the closing of the merger, which the companies announced Tuesday. Wildrick became a consultant for Bank in September 2008.
Other top executives are eligible for cash retention bonuses, including a $1.5 million payment to Bank CEO and President R. Neal Black if he remains with the company for 75 days after the merger.
"It's a very standard executive retention and buyout" package, said Karyl Leggio, dean of Loyola University Maryland's Sellinger School of Business and Management.
A noncompete agreement for a two-year period also is a typical time frame in so-called "golden parachute" agreements meant to compensate executives for lost employment opportunity, Leggio said.
"The expectation is you are pretty stale after two years, and the company has changed enough that the impact of your involvement in the industry is lessened," Leggio said. "The company will be very different and your positional power has decreased because you're not involved in the industry."
The merger deal, which would pay Bank's stockholders $65 a share cash, would create a $3.5 billion retail powerhouse with 1,700 stores across the United States and about 23,000 employees. But it could mean job losses in Maryland, where Bank traces its roots to 1905.
Under the SEC filing, retention bonuses for other Bank executives include $1 million for David E. Ullman, chief financial officer; $500,000 for Robert B. Hensley, executive vice president for human resources and real estate; $500,000 for Gary M. Merry, executive vice president for store and catalog operations; and $300,000 for James W. Thorne, executive vice president of merchandising. To earn the bonus, all would need to stay with the chain for three months after the merger.
The incentives are meant to retain the executives for a period of time to help as Men's Wearhouse integrates with the Jos. A. Bank chain. But all the executives may not leave.
"A good number may stay put and may work for Men's Wearhouse," Leggio said.