J.C. Penney COO, Talent Chief Join Martha Stewart Living Board
NEW YORK - J.C. Penney's COO and chief talent officer have joined the board of Martha Stewart Living Omnimedia following the retailer's investment last week that gave it a 16.6 percent stake in the lifestyle media company, according to a regulatory filing late Monday.
The filing said that MSLO has increased the number of directors on its board from nine to 11, as expected, and that it has added J.C. Penney COO Michael Kramer and chief talent officer Daniel Walker.
J.C. Penney CEO Ron Johnson previously worked at Target and at Apple where he pioneered the Apple stores and their Genius Bar concept.
The filing also detailed the number of J. C. Penney stores that will be part of the commercial agreement between the firms. The retailer is obligated to build and support for 10 years dedicated Martha Stewart stores in approximately 600 J. C. Penney stores, it said. "Except for the company’s current licensing relationships, the commercial agreement prohibits the company from licensing certain home product categories to specified retailers," the filing from MSLO said.
MSLO previously said that it is expected to receive more than $200 million from J. C. Penney over the initial 10-year contract period of the commercial arrangement that is part of their deal.
The filing detailed that the deal requires J. C. Penney to make at least $172.4 million in payments to MSLO, but the company explained where possible upside from that would come from.
Specifically, for the product categories covered by the initial launch, J. C. Penney is obligated to make minimum guaranteed payments against commissions generated on sales in an aggregate amount of $113.5 million, Monday's filing showed. The agreement also requires J.C. Penney to pay an annual design fee, commit to an annual marketing spend to promote the MSLO products, some of which must be spent to advertise in MSLO properties.
"The minimum guaranteed payment for any year is subject to increase if the actual commissions from the prior year exceed the minimum guaranteed payment for such year by a specified percentage," MSLO added. "The minimum guaranteed payments will also increase in the event additional product categories beyond the initial product categories are launched."
Kramer is responsible for finance, investor relations, corporate strategy and information technology. From 2008 to 2011, he was president and CEO of the Kellwood Company, a designer, manufacturer and marketer of fashion brands. He is also a former CFO of Abercrombie & Fitch where he worked from 2005 to 2008 and a former Apple executive. From 2000 to 2005, he served as CFO of the Apple retail business at the tech giant.
Walker is responsible for all human resources functions. He is also a former Apple executive and also worked at The Gap, among others.
MSLO said in its filing that it has not yet determined which committees of the board Kramer and Walker would join. Both have waived their rights to receive compensation in connection with their roles as members of the board. However, they will be reimbursed, just like other directors, for "reasonable expenses incurred in connection with their participation in board and committee meetings," MSLO said.