Federated Buy Would Leave Broadway CEO With $3 Million

Broadway Stores Inc. Chief Executive David Dworkin could pocket a $3-million lump sum if Federated Department Stores Inc.’s proposed purchase of the retailer is completed.

The payment would be part of a severance plan the struggling retailer put in place July 31, two weeks before Broadway agreed to be bought by Federated in a stock swap, according to a form S-4 filed with the Securities and Exchange Commission.

Under the plan, Dworkin would receive a lump sum of $3 million--or three years’ base pay--within two weeks of a change in control of the Los Angeles-based company. As part of his employment contract, he would have received two years of pay, or $2 million.

The plan also covers five other executives, including Chief Financial Officer John Haeckel. They would receive smaller payments upon change of control or if they lost their jobs within a year of a takeover.

Cincinnati-based Federated’s purchase of the financially strapped retailer--which saved Broadway from seeking bankruptcy protection and would give Federated a larger presence on the West Coast--is expected to close in October.

Industry analysts value the stock swap at $373.3 million. In addition, Federated would assume Broadway Stores’ debt of $1.3 billion.

Federated owns, among others, the Bullock’s, Macy’s and Bloomingdale’s retail chains.