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The company told the SEC yesterday that earlier this year, the first couple of maternity clothing got some very nice benefits from the Philadelphia-based company though SERPs (Supplemental Executive Retirement Plans), whose purpose is "to provide the executives with supplemental pension benefits following their cessation of employment." It said Mothers Work made an initial contribution to a "grantor trust" of $2.66 million on April 30 for the couple. No further contributions will be made during the current fiscal year. If the company changes hands or either executive is terminated without cause, then the benefits will fully vest.
Does this mean a Matthias retirement is in the offing? The company declined our request for comment. The Matthias' SERP was part of a five-year employment agreement that Dan and Rebecca signed in March. At that time the Matthias' company justified the SERPs by saying they were an "essential" incentive to "provide for the continued employment" of the Matthias themselves. Each Matthias gets a base salary of $531,803 plus targeted restricted stock awards of at least 15,000 shares.
SERP agreements are common. That irks corporate governance watchdogs, particularly in companies that aren't doing well. Wall Street analysts expect Mothers Work to post a loss of 20 cents per share in the quarter and project its revenue to decline 3.2 percent, to $138.2 million, according to Thomson Financial. Once a Wall Street favorite, Mothers Work now is in Wall Street's doghouse. Its share price has plummeted more than 50 percent this year.
We called Dan Pedrotty, director of the AFL-CIO's Office of Investment, and described the details of the Matthias' SERP agreements. He said: "We take the view that there should be some justification for them. You are setting up a situation where there isn't a level playing field between the execs and the rest of the employees." (MWRK has about 2,600 employees).
For their part, Rebecca Matthias has acknowledged the company faces "a continued difficult overall economic and retail environment." She holds the title of president and chief creative officer and has blamed the company's woes on changing fashion trends.
