Mar 18, 2008 2:41 PM
Life Time’s Akradi Gives Up His Salary
CHANHASSEN, MN -- Bahram Akradi, CEO of Life Time Fitness, Chanhassen, MN, announced last week that he would forgo his cash salary and cash incentive compensation this year, and this week, the compensation committee of the company’s board approved his decision. Instead, Akradi will receive his entire 2008 compensation in the form of restricted stock. The move is Akradi’s effort to demonstrate his confidence in the value of the company.
Since the release of the company’s 2007 financials in late February, Life Time’s stock has fallen to its lowest numbers in 52 weeks. On March 13, the stock closed at $27.47. The stock started out the year at $47.30.
The company’s fourth quarter 2007 and year 2007 financials showed that the company is growing its net income by more than 20 percent. Membership growth also continued but at a slower pace. Some analysts saw the slower membership growth as a sign that the company was not immune to the squeeze in the economy. Other analysts are concerned that Life Time borrows much of its money to fund its growth (spending about $35 million on each new club), and its rapid expansion in the last few years has increased the company’s long-term debt to $555 million.
Akradi said in a call with analysts in February that the company’s 2008 revenue is likely to be between $780 million and $800 million, which was below Wall Street analysts’ expectations of $806.8 million.
Akradi will receive 188,960 shares of restricted stock that will vest annually over four years beginning March 1, 2009. The number of restricted shares vesting on each annual date is subject to reduction by up to 25 percent if the company does not meet certain financial performance measures for fiscal 2008.
The committee also approved increased awards of restricted stock, as compared to last year, in lieu of no increase to salary or cash incentive compensation for the company’s other named executive officers.
The company also scheduled its annual shareholders’ meeting for April 24 at the company’s corporate office in Chanhassen.
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