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Former Sears CEO to get paid through 2010

BY HBSDEALER Staff

In a proxy statement filed by Sears Holdings, the company said it will pay its former CEO his $1 million base salary annually through March 24, 2010.

Sears Holdings announced in January that president and CEO Aylwin B. Lewis would step down from his role. Lewis also stepped down from the Sears Holdings board of directors.

Lewis has been replaced in the interim by W. Bruce Johnson, who currently serves as executive vp – supply chain and operations. He will receive an increased salary of $900,000, up from $745,224 last year, according to the statement. Sears Holdings is searching for a new CEO, during a time the company is planning a restructuring of it corporate structure.

The Chicago-based parent of Kmart and Sears stores has been struggling of late, with fourth-quarter earnings down 47.5 percent year-over-year and sales down 6.8 percent.

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Kickback scheme may have involved millions

BY HBSDEALER Staff

More details have emerged in the case involving four Home Depot merchants who were terminated last July for allegedly accepting bribes from some of their suppliers. Three of those buyers were named in a civil complaint filed by the U.S. Attorney’s Office in Atlanta, which claims they were the recipients of vehicles, properties, appliances, cash sums and other gifts.

Most of the alleged bribes took place from late 2005 to July 2007, although an earlier scheme involving a product development merchant may have operated from 2002 to 2005.

Home Depot spokesman Ron DeFeo said the company continues to cooperate with the authorities in their investigation, which so far has involved the Internal Revenue Service, the FBI and the Bureau of Alcohol, Tobacco and Firearms.

No criminal charges have been filed, and a Justice Department spokesman in Atlanta would not comment on the investigation. But the civil complaint, filed December 2007, alleges mail and wire fraud and attempted money laundering. Based on these violations, the federal government is attempting to seize gym equipment, homes, a 2004 Cadillac Escalade and a 2006 Infiniti SUV.

James Robinson, Home Depot’s divisional merchandise manager for hard flooring, was home on Dec. 12 when federal agents came for the Infiniti and the Cadillac. Hired by Home Depot in 1999, Robinson had worked as the global products manager for tile from 2001 until his promotion in April 2006.

According to the complaint, Robinson used bribe money to purchase two pieces of property near Nashville, Tenn., both of which are in forfeiture proceedings. On Dec. 21, Robinson voluntarily turned over $146,000 in cash to federal agents in the presence of his lawyer, court papers state.

Ronald Johnston, Home Depot’s global product manager for rugs since April 2005, received cash payments, a 2004 Cadillac Escalade, a fully equipped fitness room, a home theater installation, a refinished basement and $8,276 worth of high-end kitchen appliances in bribes, the government asserts. Johnston’s home in Marietta, Ga., now on the market for $839,000, is also subject to government forfeiture.

The third merchant named in the complaint, Anthony Tesvich, worked for Home Depot as a product development merchant, responsible for finding global sources for flooring products. Prosecutors allege that Tesvich collected more than $10 million from foreign suppliers from 2002 to 2005 and deposited the money into bank accounts that he controlled. The government also claims that Tesvich, who resigned from Home Depot in 2005, acted as a middleman in the subsequent kickback schemes involving the other merchants.

International suppliers who had relationships with Tesvich, according to the complaint, are: Willieco, a Taiwanese manufacturer of vinyl tile; Chevron, a Chinese power tool maker; DC Mill, a maker of doormats in India; Taizhou Eagle Group, a supplier of plastic ceiling panels and rug pads in China; and Travertine Brothers, a stone tile supplier in Turkey.

Roberto Jakubowicz, CEO of Megatrade, told authorities that he mailed checks directly to Robinson in exchange for increased sales with Home Depot. Megatrade, based in Venezuela, makes ceramic tile.

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Sherwin-Williams cuts outlook for first quarter

BY HBSDEALER Staff

Cleveland-based paint and coatings giant Sherwin-Williams has cut its first-quarter outlook due to rising costs of raw materials and lower-than-expected sales in the United States. Still, the company said results from its global group will be higher than expected.

In a conference call with investors on the amended sales projections, Sherwin-Williams CEO Christopher Connor said, “The length and severity of the housing market decline has caused a business and segment mix change that is contributing to this earnings shortfall.”

Connor said the company plans job cuts to deal with the lower demand in the DIY market, at distribution centers, manufacturing facilities and stores. While the company originally forecast adding about 100 new stores next year, it also has trimmed that outlook to 40 or 50 net new stores, with some closures planned.

Overall, the company lowered its first-quarter earnings-per-share forecast to between 56 cents and 61 cents, compared with the earlier forecast of 72 cents to 80 cents.

Sherwin-Williams manufactures paint under the Krylon and Dutch Boy brands and operates more than 3,300 company-owned stores in the United States.

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