Neiman Suing Questrom’s New Bosses

Allen I. Questrom, the corporate turnaround artist who was handed a $12-million contract to rescue Campeau Corp.’s giant department store divisions, has triggered a $19-million dispute: His old employer, Neiman Marcus, is seeking damages from his new bosses for luring him away.

The retailing industry was jolted Feb. 2 when Questrom, 49, was named chairman and chief executive of Campeau’s Federated Department Stores and Allied Stores units. Questrom, credited with revitalizing such retail chains as Bullock’s, said two weeks earlier that he rebuffed Campeau’s overtures and would remain president and chief executive of the Dallas-based Neiman Marcus chain, a division of Neiman Marcus Group.

“We wanted him to stay and we were surprised when he said he’d leave,” said Peter Farwell, a vice president of Neiman Marcus Group.

In a case announced Monday and filed in Texas state court in Dallas, Neiman Marcus Group asked for $7 million in actual damages and $12 million in punitive damages and accused Questrom’s new employers with “tortious interference” in recruiting the executive. Named as defendants were Federated, Allied and Olympia & York, a big Campeau shareholder that played an instrumental role in hiring Questrom.

Neiman Marcus Group said the defendants pursued Questrom even though “they knew or should have known that Questrom had a valid employment contract” extending until September, 1991. The defendants declined to comment, saying they had not seen the suit, and Questrom could not be reached.

Questrom’s three-year contract with Neiman Marcus guaranteed him at least $900,000 a year. His five-year agreement with Federated and Allied provided a signing bonus of $2 million and minimum annual pay of $2 million.

“Allen is widely recognized as one of the top retailing executives in the country today, and when you lose someone of that stature, it hurts,” Farwell said.

Farwell said that Questrom’s departure has bred no personal bitterness among Neiman Marcus officials but that they feel he should have lived up to his contract’s commitments.

He said that even when “you work hard to reach a contract, people don’t seem to feel that it’s binding.”

Farwell said the suit seeks damages only and is not a move to get Questrom back. He noted that Terry J. Lundgren, the former president of Bullocks Wilshire in Los Angeles, was quickly named to replace Questrom, his longtime mentor.

The selection of Questrom to head Allied and Federated, the company where he had spent most of his career, was widely viewed as a boon to the two concerns’ turnaround efforts. Overburdened by takeover debts, Allied and Federated filed for Chapter 11 bankruptcy court protection Jan. 15.