According to a filing today with the SEC, Martha Stewart Omnimedia CEO Susan Lyne, CFO Howard Hochhauser and “other designated senior officers” can take up to $100,000 of the bonus they’d be entitled to in stock valued at 15 percent more than the cash would have been.
They do have to be continuously employed and wait three years to get it all, according to the filing. The stock conversion is valued at $19 per share, the Feb. 21 price, which means they’d lose a bit, according to today’s quoted close of $18.05.
The idea, of course, is that if they have stock instead of cash, they’ll want to make sure the company performs well for shareholders.
The full, boring filing details:
Item 5.02. … Compensatory Arrangements of Certain Officers.
(e) On February 22, 2007, the Compensation Committee of the Board of Directors of Martha Stewart Living Omnimedia, Inc. (the “Company”) approved an optional bonus conversion policy (the “Bonus Conversion Policy” or the “Policy”). Pursuant to the Policy, the CEO, CFO and other designated senior executive officers (collectively, the “Executives”) may convert up to $100,000 of the cash bonus to which they are otherwise entitled under the Company’s Annual Incentive Plan (in connection with their performance during the most recently completed fiscal year) into Restricted Stock Units (“Stock Units”) in order to give these individuals an increased sense of ownership and personal involvement in the development and financial success of the Company. To the extent that an Executive elects to receive Stock Units, such Executive will enter into a Restricted Stock Unit Agreement and will receive Stock Units representing the number of shares of the Company’s Class A common stock having a value equal to 115% of the amount of the cash bonus being converted. That number of shares will be determined based on the closing price of a share of Class A common stock as reported on the New York Stock Exchange on the last business day immediately preceding the later of (i) February, 22, 2007 (the date of adoption of the Policy) and (ii) the date on which the Committee determines the actual amount of cash bonus to be awarded to the Executive under the Company’s Annual Incentive Plan for their performance in the prior fiscal year (such later date, the “Bonus Determination Date”). Because the Policy was just adopted and the annual bonuses have been determined, the operative price for this year is $19.00, the closing price on February 21, 2007. Any Stock Units awarded pursuant to the Bonus Conversion Policy will be granted pursuant to the Company’s 1999 Stock Incentive Plan. Under the Policy, the Executive must continue to be employed by the Company in order to receive the underlying shares representing the 15% of “surplus” value, meaning the value in excess of the cash bonus amount elected to be converted, and such shares will vest in near equal annual installments over a three year period. Assuming continued employment, the Executive will be entitled to delivery of the shares underlying the award in installments of 33% at the end of the first year, 33% at the end of the second year, and 34% at the end of the third year, which installments shall each include the vested portion of the “surplus” shares. The Company’s Bonus Conversion Policy is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein, and the form of Restricted Stock Unit Award Agreement is attached as Exhibit 10.2 and is incorporated by reference herein.