Payless hints at move to NYC

Topeka Capital-Journal, The, Jun 24, 2005 by Tim Hrenchir Capital-Journal

Matthew Rubel is the incoming CEO for Payless ShoeSource

Matthew Rubel, incoming chief executive officer for Topeka-based Payless ShoeSource Inc., has bought a home in the metropolitan Kansas City area, Payless spokesman Tim Reid said Thursday.

The company wouldn't address concerns over whether it might move its headquarters or Rubel's office from Topeka to New York City, a possibility suggested in the company's 55-page employment agreement with Rubel, which was filed late Wednesday with the Securities and Exchange Commission.

The document mandates that Rubel's "place of performance" be Topeka or wherever else the Payless board of directors chooses to locate company headquarters. It gives him the right to resign for "good reason" and defines what it would accept as "good reason."

The contract stipulates that Rubel, 47, would have good reason to resign if Payless moved its headquarters or his principal office from its initial site in Topeka and increased his commute by more than 35 miles, "unless such relocation is to the New York City metropolitan area."

Reid responded Thursday that it was inappropriate for him to elaborate on anything in the contract.

"The company has a long-standing policy that it does not comment on rumors and speculation, and we're not going to deviate from that policy," he said.

Doug Kinsinger, president and chief executive officer of the Greater Topeka Chamber of Commerce, said Thursday that while he couldn't speak for Payless, he understood it was "very standard language in almost any CEO's contract" to allow an executive's resignation if the company moves its headquarters. Kinsinger suggested the mention of New York City had something to do with the fact Payless already maintains an office there.

For the past five years, Rubel has been chairman and chief executive officer of Cole Haan, a subsidiary of Nike based in Yarmouth, Maine, Reid said. Rubel, who hasn't started work at Payless, couldn't be reached Thursday. A woman who answered the phone at Cole Haan said he no longer worked there.

Rubel's Payless contract spells out an annual base salary of $1 million plus bonuses that could enable him to make another $1 million per year or more. The deal includes up to $75,000 in compensation linked to the purchase, preparation and decoration of his "new home in Kansas."

Reid said Rubel had bought a home in the metropolitan Kansas City area and would move his family to that area soon.

He said that although a specific date hadn't been set, Rubel would take office next month to replace current Payless CEO Steven J. Douglass. Payless announced May 27 that Douglass was leaving the company after 10 years as CEO as a result of a mutual agreement between him and the board of directors.

Payless is the largest Topeka-based international business, with about 1,735 employees in this city and about 27,000 worldwide. The company had $2.6 billion in sales in 2004.

The value of Payless stock on the New York Stock Exchange fell Thursday by 18 cents a share, to $19.87, after rising Wednesday by 27 cents.

Kinsinger said he considered it highly unlikely Payless would leave Topeka for New York City because the current trend is for corporate headquarters to leave larger cities for more cost- competitive situations in markets such as Topeka.

He also said the contract actually gives Payless reason to stay in Topeka by providing severance benefits that are considerably higher if Rubel leaves for good reason than if he were terminated for good cause.

"I'm very optimistic and confident that they will be remaining in our community for a long time to come," Kinsinger said.

Tim Hrenchir can be reached at (785) 295-1184 or tim.hrenchir@cjonline.com.

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Payless: Rubel to get at least $1 million