July 10 (Bloomberg) -- Coach Inc. will reduce its departing chief creative director Reed Krakoff’s annual bonus by $3 million if a binding agreement for the sale of his label isn’t reached by July 29.
Krakoff’s maximum bonus was 200 percent of salary under his employment agreement, Coach said in a regulatory filing with the U.S. Securities and Exchange Commission today, without disclosing its amount. In September, the handbag maker said his current salary was $2.85 million.
Krakoff decided not to renew his contract, which expires in June 2014, to concentrate exclusively on his namesake brand, Coach said in April. The company said at the time it was exploring strategic options for his brand, which may involve a sale to a group in which Krakoff would participate.
Coach last month named Stuart Vevers as its new executive creative director to replace Krakoff and help steer the handbag maker’s evolution into a lifestyle brand.
Vevers joins New York-based Coach from the leather goods brand Loewe, owned by LVMH Moet Hennessy Louis Vuitton SA, where he has been creative director since 2008.
Coach has made a number of top executive changes this year, including naming Victor Luis as intended chief executive officer. It is working to become a full lifestyle brand that outfits customers from head to toe as rivals such as Michael Kors Holdings Ltd. and Tory Burch LLC challenge its dominance of the handbag market.
Coach rose 1 percent to $58.60 in New York today. The shares rose 5.6 percent this year, trailing the 16 percent gain for the Standard & Poor’s 500 Index.
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