DLTR is revising compensation agreements with three senior executives to ensure they get paid in the event of a change in control. Definitely a bullish development as management feels the heat that it has brought upon itself for egregiously failing to pull the levers at its disposal to deliver value to shareholders. We think there’s a $200 stock in play if this team fixes Family Dollar and breaks through the $1 price point in its core Dollar Tree concept. For our Black Book DLTR | Time to Get Active: CLICK HERE
The company’s compensation committee made the following two revisions to change in control severance agreements:
"Gary Philbin entered into a change in control Retention Agreement with the Company in March 2007, while serving as an executive officer, that contains a severance payment of 1.5 times his Reference Salary and Reference Bonus. The Compensation Committee determined that Mr. Philbin should receive a revised Retention Agreement that provides for a severance payment of 2.5 times his Reference Salary and Reference Bonus on account of his current position as the Company’s Chief Executive Officer."
"In addition, the Compensation Committee found that two of the Company’s current named executive officers, Mike Witynski and Duncan Mac Naughton, and certain other executives did not have change in control severance agreements with the Company, and therefore the Compensation Committee authorized the Company’s entry into the revised change in control Retention Agreement with such executives with a severance benefit of 1.5 times their Reference Salary and Reference Bonus."
Clearly there is concern from the board and management that activism or M&A is possible given the stock price and recent business performance.
The company defines change in control in the following 4 ways… the second is the most likely scenario it is protecting against, essentially a change of the majority of an incumbent board.
(i) any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity or person, or any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act, is or becomes the “beneficial owner” (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities entitled to vote in the election of directors of the Company;
(ii) during any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constituted the Board and any new directors, whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least three-fourths (3/4ths) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (the “Incumbent Directors”), cease for any reason to constitute a majority thereof;
(iii) there occurs a Transaction with respect to which the stockholders of the Company immediately prior to such Transaction do not, immediately after the Transaction, own more than 50% of the combined voting power of the Company or other corporation resulting from such Transaction; or
(iv) all or substantially all of the assets of the Company are sold, liquidated or distributed.
Current DLTR Proxy on Change in Control Payment:
