When Richard P. Crystal takes command of beleaguered Merry-Go-Round Enterprises Inc. in early August, he will be handed $350,000. When he permanently relocates to Maryland to run the Joppa-based fashion retailer, the new president and chief executive will get another $200,000.
Combined, the two payments amount to a $550,000 signing bonus, part of a package worth well in excess of $3 million over three years, according to documents filed in U.S. Bankruptcy Court.
Yet it is not an unseemly amount considering industry standards and the challenge he faces: rejuvenating a company in Chapter 11 bankruptcy that has lost tens of millions of dollars over the past two years.
"The proposed terms of employment are commensurate with contract terms offered to similarly situated senior executives, and are based upon the nature of the tasks Mr. Crystal will be undertaking, as well as the risks he is assuming by accepting the senior executive position with a debtor-in-possession involved in on-going Chapter 11 proceedings," the company asserted in court filings.
Mr. Crystal, an R.H. Macy & Co. executive who will become Merry-Go-Round's fourth CEO in the past two years, will earn a base salary of $650,000 in each of the first two years, according to court documents. In his third year, his salary will increase to $700,000.
In addition, Mr. Crystal is guaranteed a $250,000 bonus in his first year under terms of his employment agreement, which awaits bankruptcy court approval at a July 7 hearing.
In years two and three, his bonuses can range from 25 percent to 100 percent of base salary, depending on the company's performance.
Mr. Crystal is succeeding turnaround specialists Thomas Shull, chairman and CEO, and James Kenney, president and chief operating officer, whose crisis-management firm, Meridian Ventures, was paid a $95,000 monthly fee for running the company since mid-January.
Under terms of the agreement, Mr. Crystal will also receive stock options, relocation expenses, life and disability insurance, reimbursement for legal fees, a $20,000 annual car allowance, four weeks of paid vacation yearly, a letter of credit and a severance package, court documents show.
Mr. Crystal could not be reached for comment.
The unanimous choice of Merry-Go-Round's search committee, Mr. Crystal entered into an employment agreement on June 28 after a six-month selection process.
Mr. Crystal, 50, recently resigned as chairman of Macy's product development division, where he was responsible for all private-label product development worldwide. He also served as chairman and CEO of Macy's specialty stores division.