Sycamore Partners — the only company that made a bid for Talbots Inc. — will pay top executives at the troubled merchant more than $16 million in “golden parachute compensation” if the deal closes, according to a new proxy filing with the Securities and Exchange Commission.
The five-month effort to find a suitor for the classic clothier is detailed in the filing and reveals that after Talbots reached out to 49 potential investors, only private equity firm Sycamore wanted to buy the Hingham retailer.
Talbots, however, provides little insight into why Sycamore’s proposal for $3.05 per share fell apart in May and then, weeks later, the retailer accepted the firm’s scaled-back deal for $2.75 per share. Numerous stakeholders have filed lawsuits over the past month that accuse Talbots of breaching its fiduciary duty by accepting a proposal that undervalues it.
Talbots chief executive Trudy Sullivan, who planned to step down by the end of June, is now expected to stay at the helm until the takeover is completed, or, if the deal fails to close, no later than Feb. 2, 2013, according to the proxy filing.
If the merger is completed, Sullivan stands to earn more than $6.2 million in “golden parachute” compensation; Michael Scarpa, Talbots chief financial officer, will receive about $3.4 million; and executive Richard T. O’Connell Jr. will make roughly $3.3 million in compensation.
During the company’s strategic review process earlier this year, Talbots signed nondisclosure agreements with 23 parties. Seven entities — a mix of strategic and financial buyers — submitted preliminary “nonbinding indications of interest,” according to the proxy statement.
Four were selected by the Talbots board to be invited to the next phase of the strategic alternatives review process. After additional nonpublic due diligence materials were provided, including access to company management, two parties dropped out and one said it might consider a “prepackaged bankruptcy involving Talbots,” according to the proxy filing.