8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 23, 2011

SEARS HOLDINGS CORPORATION

(Exact name of registrant as specified in charter)

Delaware	000-51217	20-1920798
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
3333 Beverly Road Hoffman Estates, Illinois		60179
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (847) 286-2500

(Former name or former address, if changed since last report): Not Applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 5 -	Corporate Governance and Management
Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
	On February 23, 2011, Sears Holdings Corporation (the “Company”) announced that the Company’s Board of Directors elected Louis J. D’Ambrosio as the Company’s Chief Executive Officer and President, beginning February 24, 2011 until a successor is named. Mr. D’Ambrosio also was elected to serve on the Board of Directors until the Company’s 2011 Annual Meeting of Stockholders. He will serve on the Finance Committee and the Stock Plan Committee of the Board of Directors. W. Bruce Johnson, who had served as interim Chief Executive Officer and President, will remain with the Company as Executive Vice President and President - Off-Mall Businesses and Supply Chain. Mr. Johnson will continue to serve on the Company’s Board of Directors until the 2011 Annual Meeting of Stockholders. Mr. D’Ambrosio served as the President and Chief Executive Officer of Avaya Inc. from July 2006 to June 2008. He also served as a director of Avaya from November 2006 to June 2008. Mr. D’Ambrosio was previously Avaya’s Senior Vice President and President, Global Sales and Marketing from November 2005 until July 2006. From January 2004 until November 2005, Mr. D’Ambrosio served as Avaya’s Group Vice President, Global Sales, Channels and Marketing. From December 2002 until December 2003, Mr. D’Ambrosio was Avaya’s Group Vice President, Avaya Global Services. Before joining Avaya, Mr. D’Ambrosio spent 16 years at International Business Machines Corporation, where he held several executive posts and was a member of the worldwide management committee. His roles included leading strategy for global services, sales and marketing for software, and industry operations for Asia Pacific. Mr. D’Ambrosio currently serves as the Non-Executive Chairman of the Board of Directors of Sensus (Bermuda 2) Ltd. and Sensus USA Inc., a clean technology company. Mr. D’Ambrosio will receive an annual base salary of $1,000,000, with a sign-on bonus of $150,000 (gross) and participation in the Company’s 2011 Annual Incentive Plan (“AIP”) with a target award of 200% of his base salary. The AIP award, if payable, will be subject to pro-ration based on his start date. He will be required to repay the Company a pro rata portion of the sign-on bonus if, within 12 months of his start date, he voluntarily terminates his employment with the Company, other than for Good Reason, death or Disability, or if he is terminated by the Company for Cause (each as defined in his Executive Severance Agreement) within 12 months of his start date. He received a restricted stock award under the Company’s 2006 Stock Plan valued at $6,000,000 and will receive an additional restricted stock award equal to two times the number of shares of common stock that he purchases on the open market within a specified period. Mr. D’Ambrosio will not be eligible to participate in the Company’s Long-Term Incentive Program. He will be provided commuter benefits that include round trip transportation by charter aircraft between Philadelphia and the greater Chicago metropolitan area, ground transportation and corporate housing in the Hoffman Estates, Illinois area.

He will be responsible for any tax on imputed income arising out of his personal use of company-furnished charter aircraft. Mr. D’Ambrosio has entered into an Executive Severance Agreement with the Company, which provides, among other things, that if he is involuntarily terminated by the Company for any reason other than for Cause, death or Disability (or he voluntarily terminates his employment for Good Reason) after six months but before 12 months of employment, he will be deemed to have vested in a pro rata portion of each of his restricted stock grants that were scheduled to vest as of the first anniversary of his start date. If he is involuntarily terminated by the Company for any reason other than Cause, death or Disability (or he voluntarily terminates his employment for Good Reason) after the first anniversary of his start date, he will receive salary continuation equal to one month of base salary for each complete month worked beyond the first anniversary of his start date up to a maximum salary continuation period of twelve months, subject to mitigation. The Executive Severance Agreement also includes customary non-compete, non-solicitation and non-disclosure covenants.

A copy of the letter from the Company to Mr. D’Ambrosio relating to employment dated February 23, 2011 is attached hereto as Exhibit 10.1 and is incorporated herein by this reference. The foregoing description of the terms of the letter is qualified in its entirety by reference to the full text of the letter.

On February 23, 2011, the Company issued a press release announcing Mr. D’Ambrosio’s appointment. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by this reference.

Section 9 -	Financial Statements and Exhibits
Item 9.01	Financial Statements and Exhibits.
	(d) Exhibits An Exhibit Index has been filed as part of this Report on Page E-1, which Index is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SEARS HOLDINGS CORPORATION
By:	/s/ William K. Phelan
	William K. Phelan Senior Vice President, Controller and Chief Accounting Officer

Date: February 25, 2011

EXHIBIT INDEX

10.1 Letter from the Company to Louis J. D’Ambrosio relating to employment dated February 23, 2011.

99.1 Press release dated February 23, 2011.

E-1

EX-10.1

Exhibit 10.1

SEARS HOLDINGS	EDWARD S. LAMPERT Chairman
February 23, 2011	Sears Holdings Corporation 3333 Beverly Road Hoffman Estates, IL 60179

Louis J. D’Ambrosio

Dear Lou,

We are pleased to extend to you our offer to join Sears Holdings Corporation (“SHC”) as Chief Executive Officer and President, reporting to the Board of Directors of SHC. Your start date is February 24, 2011. This letter serves as confirmation of our offer subject to the contingencies listed below. Please note that the offer is subject to the approval of the Compensation Committee of SHC’s Board of Directors (“Compensation Committee”), the appointment to your position by the Board of Directors and your execution and delivery of this letter and an Executive Severance Agreement.

The key elements of your compensation package are as follows:

• Annual base salary at a rate of $1,000,000.

• Participation in the Sears Holdings Corporation Annual Incentive Plan (“AIP”) with a target annual incentive of 200% of your base salary. Your annual incentive award, if any, under the 2011 AIP will be prorated from your start date through January 28, 2012, the last day of SHC’s 2011 fiscal year. The 2011 AIP will be approved by the Compensation Committee by May 1, 2011. Any incentive payable with respect to a fiscal year will be paid by April 15^th of the following fiscal year, provided that you are actively employed at SHC on the last day of SHC’s 2011 fiscal year. For avoidance of doubt, you will not be eligible to participate in the Sears Holdings Corporation Long-Term Incentive Program.

• A grant of restricted SHC common stock valued at $6,000,000 under the Sears Holdings Corporation 2006 Stock Plan. The number of restricted shares granted will be determined using the NASDAQ regular market hours closing price of SHC common stock on the grant date. The grant date will be the date of approval of the Compensation Committee of this grant. The restricted shares under this grant will be scheduled to vest on a graduated basis, with 1/3^rd of the total shares vesting on each of the next three (3) anniversaries of your start date, and will be subject to the terms of a restricted stock award agreement in the form provided by SHC.

An additional restricted stock grant (“additional grant”) in an amount equal to two times (2X) the number of SHC shares purchased by you in the market within the first five (5) clear trading days after the formal public announcement of your hiring, up to a maximum purchase price by you of $1,000,000, exclusive of commission (“your aggregate stock purchases”). The additional grant date will be the second (2^nd) business day following the date upon which the General Counsel of SHC receives written notice and confirmation of the completion of your aggregate stock purchases. The restricted shares granted under this additional grant will be scheduled to vest on a graduated basis, with fifty percent (50%) of the total shares granted vesting on each of the next two (2) anniversaries of your start date, and will be subject to the terms of a restricted stock agreement in the form provided by SHC.

Louis J. D’Ambrosio

February 23, 2011

Page 2

• You will receive a one-time sign-on bonus of $150,000 (gross). This sign-on bonus will be payable within thirty (30) days following your start date. In the event you voluntarily terminate your employment with SHC, other than for Good Reason, death or Disability, or are terminated by SHC for Cause (as such capitalized terms are defined in the Agreement (defined below)) within twelve (12) months of your start date, you will be required to repay a pro rata portion of this amount to SHC within thirty (30) days of your last day worked. The pro-ration shall be based upon a fraction, the numerator of which is twelve (12) minus the number of completed months worked through your termination date and the denominator of which is twelve (12).

• You represent and warrant to SHC that (a) as of your start date with SHC, you are not a party to any agreement, written or oral, containing any non-competition provision or any other restriction (including, without limitation, any confidentiality provision) that would result in any restriction on your ability to accept and perform this or any other position with SHC or any of its affiliates and (b) you are not (i) a member of any board of directors, board of trustees or similar governing body of any for-profit, non-profit or not-for-profit entity, or (ii) a party to any agreement, written or oral, with any entity under which you would receive remuneration for your services, except as disclosed to and approved by SHC in advance of your start date. You agree that you will not (A) become a member of any board or body described in clause (i) of the preceding sentence or (B) become a party to any agreement described in clause (ii) of the preceding sentence, in each case without the prior written consent of SHC, such consent not to be unreasonably withheld. Further, you agree you will not disclose or use, in violation of an obligation of confidentiality, any information that you acquired as a result of any previous employment or otherwise.

• You will be required to sign an Executive Severance Agreement (“Agreement”). If your employment with SHC is terminated by SHC (other than for Cause, death or Disability) or by you for Good Reason (as such capitalized terms are defined in the Agreement) after six (6) months but before twelve (12) months of employment, you will be deemed to have vested in a pro rata portion of each of your restricted stock grants referred to above that you were scheduled to vest as of the first anniversary of your start date. The pro-rated determinations shall be based upon a fraction, the numerator of which is the number of completed months worked measure from your start date through your termination date and the denominator of which shall be twelve (12).

If your employment with SHC is terminated by SHC (other than for Cause, death or Disability) or by you for Good Reason (as such capitalized terms are defined in the Agreement) after completing twelve (12) months of employment (“first anniversary”), you will receive salary continuation equal to one month of base salary for each complete month worked beyond your first anniversary up to a maximum salary continuation period of twelve (12) months, and subject to mitigation. Under the Agreement, you agree, among other things, not to disclose confidential information and for twelve (12) months following termination of employment not to solicit employees. You also agree not to aid, assist or render services for any “Sears Competitor” or “Sears Vendor” (as such terms are defined in the Agreement) for twelve (12) months following termination of employment. The non-disclosure, non-solicitation, non-compete and non-affiliation provisions apply regardless of whether you are eligible for severance benefits under this Agreement. This offer is contingent upon receipt of your signed Agreement.

Louis J. D’Ambrosio

February 23, 2011

Page 3

• Your office and primary place of employment will be the Hoffman Estates, Illinois Support Center. You will be provided commuter benefits during employment. These commuter benefits will include round trip transportation by a mutually agreeable charter aircraft service between Philadelphia and the greater Chicago metropolitan area, for which you will be responsible for any tax on the imputed income. Commuter benefits will also include corporate housing in the Hoffman Estates area, and, if you do not maintain a car in Illinois, company-furnished ground transportation for use while you are in the Hoffman Estates and greater Chicago metropolitan area. You also will be provided ground transportation between your home in Philadelphia and the local airport for travel to the Hoffman Estates office. You also will be reimbursed for business travel and other business expenses in accordance with the company standard corporate travel policy, as appropriate.

• Should you decide to relocate to the greater Chicago metropolitan area, you will be eligible for relocation assistance as approved by the Compensation Committee. If you relocate, the commuter benefits described immediately above will cease as of such relocation. To receive relocation assistance, you will be required to sign a relocation repayment agreement.

• You will be eligible to receive four (4) weeks paid vacation, which will be pro-rated during your first year of service based on your start date. Added to this, you will qualify for six (6) paid National Holidays each year. You also will be eligible for up to four (4) Personal Days per year, after completing six (6) months of service.

• You will be eligible to participate in all retirement, health and welfare programs on a basis no less favorable than other senior executives of SHC, in accordance with the applicable terms, conditions and availability of those programs.

• This offer also is contingent upon satisfactory completion of a background reference check, employment authorization verification, pre-employment drug test and satisfactory review of your executive physical.

Lou, we are looking forward to you joining Sears Holdings Corporation. We are excited about the important contributions you will make to the company and look forward to your acceptance of our offer.

To accept, sign below and return this letter along with your signed Agreement to my attention.

Sincerely,
/s/ Edward S. Lampert
Edward S. Lampert
Enclosures
Accepted:
/s/ Lou D’Ambrosio	2/23/11
Louis J. D’Ambrosio	Date

EX-99.1

Exhibit 99.1

NEWS MEDIA CONTACT:

Sears Holdings Public Relations

(847) 286-8371

FOR IMMEDIATE RELEASE:

Feb. 23, 2011

SEARS HOLDINGS BOARD OF DIRECTORS APPOINTS

LOU D’AMBROSIO CEO

HOFFMAN ESTATES, Ill., - The Sears Holdings Board of Directors today announced that Lou D’Ambrosio was elected chief executive officer and president of the company. He will assume the office and join the Board of Directors effective Thursday, February 24, 2011.

Mr. D’Ambrosio was chief executive of Avaya Inc. from 2006 to 2008 and served on the company’s Board of Directors. After improving Avaya’s operating performance and driving market leadership, Mr. D’Ambrosio led Avaya through a going private transaction, delivering attractive returns to its shareholders. He stepped down from the CEO post in 2008 for medical reasons. Over the last six months, Mr. D’Ambrosio has worked closely with Sears Holdings as a consultant to the Board of Directors on key strategic and operational initiatives. Prior to joining Avaya in 2002, he spent 16 years at IBM.

Chairman of the Board of Directors, Edward S. Lampert said, “From the beginning of our CEO search, we were determined to find a leader with information and technology experience who could catalyze the transformation of our portfolio of businesses in the context of the evolution of the retail industry that is occurring more broadly. Having worked closely with Lou and observing his business acumen, compelling leadership style, performance orientation and Customer First approach, I am confident that Lou is the right person to lead and transform Sears Holdings. Lou is a proven winner and I am excited to have him as the leader of our company.”

Mr. D’Ambrosio added, “I am delighted to have the opportunity to serve the customers, associates and shareholders of Sears Holdings. Having spent the last several months working with Eddie, the Board and management, I have been impressed with the organization’s assets and its potential going forward. We have a committed team, tens of millions of customers and a storied heritage. While change and re-invention are inevitable, the opportunity in front of us is compelling and exciting. I look forward to working with the team in serving our customers in extraordinary ways, creating a special workplace, and delivering value to our shareholders.”

Mr. D’Ambrosio succeeds W. Bruce Johnson who has served as interim CEO and President during the company’s CEO search process. Simultaneously with this announcement, Mr. Johnson has been named Executive Vice President — Off-mall Businesses and Supply Chain. Mr. Johnson will continue to serve as a member of the Sears Holdings Board of Directors until the company’s annual meeting in May. “Bruce stepped into the interim CEO role three years ago and, during the period that he has served as our CEO, he has led many initiatives that have moved the company forward for our customers. The Board and I commend his character, intelligence and leadership,” said Mr. Lampert.

About Lou D’Ambrosio

Lou D’Ambrosio served as Chief Executive Officer and Board Member of Avaya, a Fortune 500 global telecommunications and technology firm. As CEO, Lou led a transformation of the organization driving market leadership and operational improvements in a highly competitive period in the industry. Lou led the company through a successful $8.3 billion private equity transaction.

Prior to becoming CEO, Lou chaired Avaya’s Operating Committee and was President of Sales and Marketing. Lou joined Avaya as SVP of its Global Services business unit. Before joining Avaya, Lou spent 16 years at IBM where he held several executive posts and was a member of the worldwide management committee. His roles included leading strategy for global services, sales and marketing for software, and industry operations for Asia Pacific.

Most recently, Mr. D’Ambrosio has served as non-executive chairman of Sensus, a clean technology leader, and on the Board of Trustees of the Jackson Laboratory and Walnut Street Theatre. Lou received his MBA from Harvard Business School and Bachelor of Science from Pennsylvania State University, summa cum laude.

About Sears Holdings Corporation

Sears Holdings Corporation (Nasdaq: SHLD) is the nation’s fourth largest broadline retailer with over 4,000 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, consumer electronics and automotive repair and maintenance. Sears Holdings is the 2010 ENERGY STAR(R) Retail Partner of the Year. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands’ End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has the Country Living collection, which is offered by Sears and Kmart. We are the nation’s largest provider of home services, with more than 11 million service calls made annually. Sears Holdings Corporation operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation. For more information, visit Sears Holdings’ website at www.searsholdings.com.