Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, March 22, 1995 TAG: 9503220071
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Knight-Ridder Newspapers
DATELINE: TROY, MICH. LENGTH: Long
The conversation with Chairman Donald Perkins was meant to map out the next week's board of directors meeting. Instead, they charted Antonini's crash course out of Kmart. Within 21/2 hours, they agreed to end Antonini's reign as president and chief executive officer and his 31-year career with the discount retailer. His resignation was announced Tuesday.
The decision happened so quickly that details on Antonini's severance agreement still are being worked out. However, Kmart's documents indicate that he will receive monthly salary and bonus checks for two years and, possibly, a $400,000 annual pension after that.
Perkins and other members of Kmart's board have weighed for some time whether Antonini was more help or hindrance. Perkins said he saw the decision as a balance scale. On one side were the costs and disruptions of having Antonini stay and on the other the costs and disruptions of having him go.
``The scale got sufficiently imbalanced that when Joe and I discussed this yesterday morning, we agreed that it [resigning] was the right thing to do,'' Perkins said in an interview Tuesday.
Kmart immediately launched a search for a new chief executive officer. With Antonini gone, it should be easier for Kmart to recruit new management talent. Perkins also announced that two executives will take over in an interim arrangement so that Kmart continues to move forward.
Antonini leaves Kmart with much work undone. Many Kmart stores remain shabby and outdated and many others are not making money or barely profitable. Even new stores still suffer from too much of the wrong inventory and not enough of the right merchandise. Kmart's stock languishes; its profits are piddling and costs much higher than at Wal-Mart and other competitors.
Ron Petrie, a retail analyst at Roney & Co., said, ``I suspect that the average shopper or employee won't notice any difference'' with Antonini gone.
Still, Perkins praised Antonini's legacy in a taped broadcast to Kmart store employees. ``Joe has done a great deal to modernize this business,'' he said, citing the store remodeling program, the move into international markets and the recruitment of executive talent.
``I admire Joe's loyalty to Kmart and his willingness to say what is right for Kmart will be right for me,'' Perkins told employees.
Employees, analysts and even Kmart's customers have speculated that Antonini would leave Kmart since his defeat at the annual shareholders meeting last June. Shareholders jeered at Antonini and voted against his plan to create a new stock structure and partial spinoff of some specialty retail chains Kmart owned.
Then in January, the board split Antonini's duties. It named Perkins, a tall former supermarket executive from Chicago, as chairman, again fueling the speculation that Antonini would be eased out.
No single event tipped the scales in favor of Antonini's departure. Instead, relentless calls from major shareholders who wanted Antonini's head, who wanted a serious change at Kmart, pressured Perkins and the board. Perkins said institutional investors started calling him the day he was named chairman on Jan. 17.
Analysts said Antonini's departure removes a major distraction for Kmart's board and its remaining executives, who need to stay focused on cutting costs and defining a new merchandising strategy and image for the troubled retailer.
But higher sales and improved profits probably won't show up until the second half of the year at the earliest, said Prudential Securities' L. Wayne Hood. ``Just because he left today, doesn't mean things will get better tomorrow,'' Hood said.
Antonini declined to talk to the media, and left Kmart's Troy, Mich., headquarters by midafternoon.
In a statement, he said: ``With the help of the new management team, we have set a solid framework to improve Kmart's performance. Unfortunately, various external factors have made it increasingly difficult for our organization to focus on the tasks at hand. Therefore, in agreement with the Board, I am relinquishing my job as president and CEO.''
Antonini's employment agreement calls for him to receive his monthly salary for 24 months if he ends his employment ``for good reason.'' Antonini's base salary in 1993 was $893,000.
He also will receive any bonus that he would have earned for this year - even though he will not be at Kmart to spearhead improvements which could produce a bonus. In 1993, only a few Kmart executives earned a bonus; Antonini did not. Kmart has not yet disclosed 1994 salary or bonus information.
Antonini, who is 53, also may be eligible for a pension from Kmart, although that is not certain since some pensions do not take effect until the employee retires at 55 years old. His pension, if he gets it, would be between $360,000 and $405,000, based on information from Kmart's 1994 proxy statement.
Kmart's board also could give Antonini a payout under a ``supplemental executive retirement plan'' which goes to executives who retire before 65.
Retail and marketing consultant Frederick Marx said Antonini appeared ``upbeat, always upbeat'' when he saw him two weeks ago at a charity event. Despite the negative headlines, intense scrutiny and high stress, ``Joe could take it. He didn't duck it,'' Marx said. But Marx and others said Antonini became concerned about the effect of all the negative press on his wife and two teen-age children.
Taking over for Antonini, until a permanent CEO is hired, are Anthony Palizzi, 52, Kmart's general counsel, as interim president, and Ronald Floto, 52, executive vice president, Super Kmart Centers, as interim chairman of the management executive committee. A new CEO may be in place by the annual shareholders meeting May 23.
by CNB