Late last week, Sara Lee Corp. (SLE) dished up the plan to spin off its international coffee and tea business. After that, the coffee and tea business will merge and become part of a subsidiary of D.E Master Blenders. There are lots of moving parts to the deal, but we found some interesting details in the 8-K filed at 5:25 p.m. last Friday that haven’t been reported elsewhere.
There’s already a good summary of who’s staying on and who’s getting off the Sara Lee merry-go-round in the company’s press release (available here), so we won’t rehash that. However, there are noteworthy disclosures in the 8-K regarding Sean M. Connolly, who will head up the new Sara Lee Corporation.
Connolly is currently an Executive VP of the Sara Lee Corporation and chief executive of Sara Lee’s North American operations; he previously racked up executive experience at Campbell Soup Company (CPB) and The Proctor & Gamble Company (PG). As the newly anointed CEO of Sara Lee Corporation, Connolly will get a salary of $900,000 and a guaranteed annual incentive plan bonus of another $900,000, prorated to reflect his hiring date in January, 2012.
Sara Lee is also giving Connolly a one-time hiring payment of $1.65 million cash, $2.0 million shares of restricted common stock, and a bonus of $250,000. (Connolly’s Offer Letter, filed with the most recent 10-Q, explains that all these payments are to compensate him for what he lost by leaving the Campbell Soup Company.)
On top of that, though, in the years to come, Connolly will get several million dollars more in long-term incentive awards, which the company set out as follows:
“Fiscal 2012-2014 – $1.8 million grant value, with 50% awarded in performance stock units and 50% awarded in stock options
Fiscal 2013-2015 – $3.0 million grant value; form of grant to be determined.”
Meanwhile, Maria Henry will become Sara Lee’s new CFO. She’s getting a salary of $575,000 with a target bonus of another $460,000. Sara Lee is also giving Henry a one-time hiring payment of “75,000 cash (net) and $500,000 shares of restricted common stock,” and it set her long-term annual incentive award target at $1.25 million, with 50% to be awarded in performance stock units and 50% to be awarded in stock options.
A Dow Jones reporter described the purpose of all the company’s shuffling as follows: “Once a hodgepodge of household products and food brands, Sara Lee has worked to sell off businesses and narrow its focus over the past few years.” As soon as the spinoff occurs, Sara Lee will give shareholders a $3.00 per share special dividend and issue a 1-for-5 reverse stock split.
Maybe that will help to ease the sting of the most recent quarterly losses. And hey, if it doesn’t, they can always have another cup of coffee, and maybe a slice of pound cake, and pretend like the split never happened.
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