Item 11. Executive Compensation
In 2015, our Board of Directors placed a priority on reviewing our governance and compensation policies. The goal of that review was to establish policies that
provide appropriate compensation to attract and retain strong leadership, while ensuring the overall compensation program is aligned with both the Companys performance and stockholders best interests. As a result of this review, in 2015
and to date in 2016, the Company has already made numerous governance and compensation changes that are directly responsive to feedback received from our investors. At our 2015 annual meeting, our stockholders voted in favor of the Companys
executive compensation program. The Company and the Compensation Committee continue to review our policies and programs and consider additional changes, where they are warranted.
Compensation Discussion and Analysis
Summary of Key Actions in Response to Stockholder Feedback
During 2014 and 2015, we spoke to or met with each of our largest stockholders, representing approximately 70% of our outstanding shares of common stock in
the aggregate. Based on discussions with these stockholders to identify their concerns, in 2015 and to date in 2016, the Compensation Committee has made important changes to our governance and compensation practices as highlighted below, and, as
further discussed throughout this Compensation Discussion and Analysis.
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Investor Concern:
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Compensation Committee Response:
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Absence of Peer Group Benchmarking
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We have established a compensation peer group against which we evaluated compensation levels in 2015 for purposes of setting 2016 total direct compensation opportunities for our named executive officers.
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Long Term Incentive Design
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In 2016 we implemented a new performance-based, long-term incentive program (the 2016 LTIP) with clearly defined goals and
targets for certain key employees, including our named executive officers as of March 31, 2016, which provides for equity grants based on the achievement of specified financial goals. Specifically, the 2016 LTIP provides for restricted share unit
(RSU) awards, which vest in three equal installments annually over a three-year period, and long term performance share unit (PSU) awards, which, other than with respect to Mr. Haugh, cliff vest after three years based on adjusted operating income
performance targets established by the Compensation Committee. The terms of Mr. Haughs PSUs are described below. The 2016 LTIP eliminates the catch-up feature previously used in our PSU awards, as well as our prior practice of
making an annual payout of earned PSUs. Instead, the LTIP generally requires that the grantee remain subject to continued employment for the entirety of the performance period (thereby ensuring that the ultimate value of the PSU award remains
at risk and subject to stock price performance for the duration of the performance period).
Beginning in 2016, the Compensation Committee has committed to eliminate the historical practice of determining annual cash bonuses on a solely discretionary
basis.
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Automatic Single-Trigger Vesting on a Change of Control
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We have amended the Amended and Restated 2009 Equity Incentive Plan to require double-trigger change of control vesting on all equity awards granted after October 20, 2015. Accordingly, all 2016 LTIP awards are subject
to double-trigger vesting.
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Absence of Anti-Pledging Policy
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We have adopted an anti-pledging policy under which directors and executive officers are prohibited from pledging shares.
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We recognized that as of October 20, 2015 (the date of adoption of the anti-pledging policy), 300,668 shares were subject to outstanding pledges. However, no future pledges are permitted and the pledged shares are excluded for
purposes of determining compliance with stock ownership requirements under the stock ownership policy described below.
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Absence of Stock Ownership Policy
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We adopted a rigorous stock ownership policy under which our current named executive officers and directors must own a minimum specified multiple of their base salary or annual cash retainer. For the CEO, the multiple is six (6)
times base salary; for the other named executive officers, the multiple is three (3) times base salary; and for non-employee directors the multiple is five (5) times the annual cash retainer. Unvested equity awards and unexercised stock options do
not count toward the definition of owned shares, nor do shares subject to outstanding pledges. Named executive officers and non-employee directors who are not in compliance with the stock ownership guidelines are subject to share retention
requirements.
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Introduction
The purpose of this Compensation Discussion and Analysis is to provide the information necessary for understanding the compensation philosophy, policies and
decisions that are material to the compensation of our principal executive officer, our principal financial officer and our three other most highly compensated executive officers (we refer to these officers as our named executive
officers) during 2015.
Certain named executive officers who served during 2015 are no longer employees of the Company, as further discussed
throughout this Form 10-K/A, including below under Governance Structure and Management Updates. This Compensation Discussion and Analysis will place in context the information regarding our 2015 named executive officers contained in the
tables and accompanying narratives that follow this discussion.
In 2015, our named executive officers were:
Current Employees
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F. Peter Cuneo
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Executive Chairman of the Board (Former Interim Chief Executive Officer and Director)
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David Jones
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Executive Vice President and Chief Financial Officer
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David Blumberg
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Executive Vice President and Chief Strategy Officer (Former Interim Chief Financial Officer)
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Jason Schaefer
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Executive Vice President, General Counsel and Secretary
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Former Employees
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Neil Cole
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Former Chief Executive Officer, President and Chairman of the Board
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Jeff Lupinacci
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Former Executive Vice President and Chief Financial Officer
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Seth Horowitz
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Former Chief Operating Officer
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Recent Board and Management Updates
Recent board and management updates include:
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Chairman and Chief Executive Officer Transition
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On August 5, 2015, Neil Cole resigned from his positions as the Companys Chief Executive Officer, President, Chairman of our Board of Directors, and as a Director.
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On August 6, 2015, our Board of Directors appointed F. Peter Cuneo, a current director, as the Companys Interim Chief Executive Officer and Chairman of our Board. In connection with such appointment,
Mr. Cuneo resigned from his roles as Chairperson of our Audit Committee and as a member of our Compensation Committee.
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On February 18, 2016, our Board of Directors entered into an employment agreement with John Haugh, as the Companys President effective February 23, 2016 and as President and Chief Executive Officer
effective April 1, 2016. Mr. Haugh also was appointed to the Board of Directors effective February 23, 2016. See Narrative Disclosure to Summary Compensation Table and Plan-Based Awards TableEmployment Agreements
Current Employees below for a description of John Haughs employment agreement.
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Mr. Cuneo served as our Interim Chief Executive Officer through March 31, 2016. On April 1, 2016, Mr. Cuneo, who has been Chairman of the Board since August 2015, became Executive Chairman of the
Board.
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Chief Financial Officer Transition
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In March 2015, Jeff Lupinacci, our former Executive Vice President and Chief Financial Officer, ceased to be an employee of the Company.
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From March 2015 to July 2015, David Blumberg, who was then our Executive Vice President and Head of Strategic Development, assumed the additional role of Interim Chief Financial Officer.
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On June 10, 2015, David Jones was appointed Executive Vice President and Chief Financial Officer, effective July 6, 2015
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Chief Operating Officer
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In April 2015, Seth Horowitz, the Companys former Chief Operating Officer, ceased to be an employee of the Company. At that time, the Company determined not to seek a new Chief Operating Officer, and
Mr. Horowitzs responsibilities were assumed by our broader management team. The Company may reconsider the Chief Operating Officer role at a later date.
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Appointment of Lead Director During Mr. Cuneos Interim CEO Role
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On August 6, 2015, our Board of Directors appointed Drew Cohen, a current director and the Chairperson of our Governance/Nominating Committee, as the Companys Lead Director, to serve until such time as
Mr. Cuneo is no longer serving as the Interim Chief Executive Officer. As of April 1, 2016, Mr. Cohen is no longer serving in the Lead Director role.
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Appointment of New Audit Committee Chairperson and Compensation Committee Member
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On August 6, 2015, our Board of Directors appointed Sue Gove as the Chairperson of the Audit Committee and as a member of the Compensation Committee in light of Mr. Cuneos resignation from such roles (in
connection with his appointment as Interim Chief Executive Officer). Ms. Gove remains in these roles.
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Separation of CEO and Chairman Roles
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Given that Mr. Haugh was externally recruited to serve as the Companys President and CEO and Mr. Cuneo, having served as both an independent director and interim CEO, is intimately familiar with the
Companys operations, the Board believes that separation of the chairman and CEO roles is most appropriate at the present time. While there is no plan to reunite these roles at the present time, the Board will continue to evaluate our
governance structure as circumstances evolve.
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pdates Regarding Stockholder Outreach and the Companys Approach to Address
Stockholder Concerns
During 2014 and 2015, we spoke to or met with each of our largest stockholders, representing approximately 70% of our outstanding
shares of common stock in the aggregate. In connection with our stockholder outreach, and in light of the results of our Say on Pay vote last year, where we received approximately 71% stockholder approval, we have continued a comprehensive review of
our compensation and governance programs with Frederic W. Cook & Co., Inc. (Cook & Co.), our Compensation Committees independent, third-party compensation consultant.
Based on our discussions with stockholders, we have made several changes to our governance and compensation practices as described earlier and in detail
below.
Recent Changes in Response to Stockholder Outreach
Adoption of Compensation Peer Group for 2016 Benchmarking Compensation (the 2016 Compensation Benchmarking Peer Group)
Cook & Co. assisted the Compensation Committee in its identification of the 2016 Compensation Benchmarking Peer Group of public companies against
which the Company benchmarked its 2016 executive compensation. The 2016 Compensation Benchmarking Peer Group is generally comprised of companies in our industry, reflects a portfolio of characteristics relevant to Iconix business operations
and is similar from a size perspective. With regard to size comparability, as a result of Iconixs unique business model in which a large portion of our profits are generated through licensing of our brands rather than direct retail sales, we
evaluated peers primarily based on market capitalization, profitability and margin parameters rather than GAAP-based reported revenue. The Compensation Committee has approved the following 2016 Compensation Benchmarking Peer Group:
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Cherokee Inc.
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Perry Ellis Inc.
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Choice Hotels
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Sequential Brands Inc.
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Deckers Outdoor Corporation
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Sothebys
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Fossil Inc.
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Steve Madden
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G-III Apparel Group Ltd.
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Tumi Holdings Inc.
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Kate Spade & Co.
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Vera Bradley, Inc.
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Meredith Corp.
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Vince Holding
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Movado Group, Inc.
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Wolverine World Wide, Inc.
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Oxford Industries, Inc.
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The 2016 Compensation Benchmarking Peer Group will be used for benchmarking the 2016 total direct compensation opportunity of
our executive officers. In addition, in 2016 we established a special one-time, performance-based incentive plan for certain key employees, including our named executive officers, as noted below under Our Named Executive Officers Compensation
for 2015. The PSUs granted under this plan cliff vest in three years and are based on total shareholder return as measured against the 2016 Compensation Benchmarking Peer Group. A separate comparator group may be established in the future for
assessing relative performance with respect to future PSUs and other performance-based awards.
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Implementation of Double Trigger Change in Control Provisions
In 2015, we amended our Amended and Restated 2009 Equity Incentive Plan, referred to as the Plan, to provide for double trigger change in control
provisions. These provisions provide that, upon a change in control (as defined in the Plan), in the event that a successor company assumes or substitutes awards under the Plan, unvested equity awards do not accelerate unless, within 24 months
following such change in control, the Plan participant is terminated without cause or leaves for good reason. However, if a successor company in the change in control does not assume or substitute awards under the Plan, then all outstanding awards
immediately vest. Double trigger provisions, as opposed to single trigger provisions, will apply to all future grants made under the Plan after October 20, 2015.
Adoption of Anti-Pledging Policy
In 2015,
the Board of Directors adopted an anti-pledging policy that prohibits any additional pledges of Company securities by named executive officers or directors of the Company following the adoption of such policy.
Adoption of Stock Ownership Guidelines
In
2015, the Company adopted stock ownership guidelines based on best practices. Among other features, the new guidelines provide for our named executive officers and directors to own shares of the Companys stock at the following levels:
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Chief Executive Officer:
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6X annual base salary
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Other Named Executive Officers:
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3X annual base salary
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Directors:
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5X annual cash retainer
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Unvested equity awards, unexercised options and pledged shares do not count towards the definition of owned shares. Named
executive officers and directors who are not in compliance will be subject to stock retention requirements.
Elimination of Discretionary Bonuses
for Named Executive Officers in 2016 and 2015 Executive Incentive Plan
For 2016, the Compensation Committee committed to eliminate the
historical practice of determining annual cash bonuses for executives on a solely discretionary basis, and to adopting a performance-based annual cash incentive program for 2016 and thereafter. Additionally, at its 2015 Annual Meeting, the Company
received stockholder approval of the Companys 2015 Executive Incentive Plan to provide for tax deductibility under Section 162(m) of the Internal Revenue Code for such awards.
Key Features of Our Executive Compensation Program
What we do
Pay for Performance
. We have adopted
the 2016 LTIP, which provides for grants that are tied to our long-term business goals. Because these PSUs are earned only at the end of the three-year performance period, they remain at risk (over the term) based on performance metrics.
Clawback Policy
. We have adopted a clawback policy that applies if there is a restatement of our financial statements that is required, within the
previous three years, to correct accounting errors due to material non-compliance with any financial reporting requirements under the federal securities laws. This applies to equity as well as cash payments that were paid based on performance
metrics.
Anti-Pledging Policy
. We have adopted a policy that prohibits directors and executive officers from pledging any additional shares of the
Companys common stock in the future.
Stock Ownership Guidelines
. The Company has adopted stock ownership guidelines for its named executive
officers and directors to provide for ownership maintenance of the Companys equity.
Anti-Hedging Policy
. We have a policy prohibiting
directors and named executive officers from engaging in hedging transactions, which include puts, calls and other derivative securities, with respect to the Companys equity securities.
Double Trigger Change in Control Provision
. We have implemented amendments to our Amended and Restated Equity Incentive Plan to provide for
double trigger change in control provisions.
Independence of our Compensation Committee and Advisor.
The Compensation Committee, which
is comprised solely of independent directors, utilizes the services of Cook & Co., as an independent compensation consultant. Cook & Co. reports to the Compensation Committee, does not perform any other services for the Company,
and has no economic or other ties to the Company or the management team that could compromise its independence or objectivity.
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What we dont do
No gross-ups
. We do not have any provisions requiring the Company to gross-up salary or bonus compensation to cover taxes owed by our executives.
No Excess Perquisites and Limited Retirement and Health Benefits
. We have a 401k program and have never had a defined benefit plan. We do not maintain
any supplemental executive retirement plans or other pension benefits.
No option repricing or exchanges without stockholder approval; No
liberal share recycling
. We have not engaged in the activities below and they are prohibited by our amended and restated Equity Incentive Plan:
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Buying out underwater options for cash.
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Pursuant to the terms of our amended and restated Equity Incentive
Plan, we have not permitted shares not actually issued (due to net issuance of shares upon exercise of options or vesting of stock grants and performance awards) to be returned to the available pool and regranted.
No dividends or dividend equivalents on unvested awards
. We do not pay dividends or dividend equivalents on unvested shares of restricted stock or
unearned PSU awards.
No catch-up feature on 2016 PSU awards.
We have eliminated the catch up feature on PSU awards under
the 2016 LTIP and the special one-time, performance-based incentive plan.
Objectives of our Executive Compensation Program
The Companys goals for its executive compensation program are to:
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Attract, motivate and retain a talented, entrepreneurial and creative team of executives who will provide leadership for the Companys success in dynamic and competitive markets.
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Align pay with performance as well as with the long-term interests of stockholders by linking payouts to pre-determined performance measures that promote long-term stockholder value.
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Promote stability in the executive team and establish continuity of the service of named executive officers, so that they will contribute to, and be a part of, the Companys long-term success.
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Mr. Haughs Employment as President and Chief Executive Officer, Appointment as Director and Employment Agreement
On February 18, 2016, we entered into an employment agreement with Mr. Haugh that provides for his employment as our President, as of
February 23, 2016, and as our President and Chief Executive Officer, as of April 1, 2016. Mr. Haugh was also appointed a Director of our Company on February 23, 2016, but does not receive any additional remuneration for this
role. The terms of Mr. Haughs employment agreement are described below under Narrative Disclosure to Summary Compensation Table and Plan-Based Awards TableEmployment Agreements Current Employees.
In negotiating Mr. Haughs agreement, the Compensation Committee believed that Mr. Haughs extensive experience in executive positions at
several leading consumer products companies, history of business leadership and experience as a director on a public company board made him well-qualified for the position, and determined that his compensation package was commensurate with his
experience. In addition, the Compensation Committee sought input and advice from Cook & Co. on benchmarking of Mr. Haughs compensation package against other chief executive officers at companies in our 2016 Compensation
Benchmarking Peer Group. The Compensation Committee believes that Mr. Haughs compensation package provides him with appropriate remuneration as well as long-term incentives that align his interests with those of our stockholders.
Mr. Cuneos Appointment as Interim Chief Executive Officer in 2015 and related Employment Agreement, Appointment as Executive Chairman in 2016
and related Employment Agreement
On September 8, 2015, we entered into an employment agreement with Mr. Cuneo that provided for his
employment as our Interim Chief Executive Officer, as of August 6, 2015. Mr. Cuneos employment agreement was terminated upon our appointment of John Haugh as Chief Executive Officer, and no severance was paid in connection with such
termination.
At the time of Mr. Cuneos appointment, the Compensation Committee believed that Mr. Cuneo was uniquely situated to serve as
our Interim Chief Executive Officer as a result of his previous executive experience and his tenure on the Companys Board. Additionally, the Board and the Compensation Committee believed that they needed to respond quickly in filling the role
of Interim Chief Executive Officer, and Mr. Cuneo was willing to devote his full time to the Company and step into the role immediately on a full time basis, in spite of his other business ventures and responsibilities. Based on these factors,
the Compensation Committee believed that Mr. Cuneos compensation package was appropriate and provided adequate incentive for Mr. Cuneo to fulfill the obligations set forth by the Board.
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On April 28, 2016, we entered into an employment agreement with Mr. Cuneo that provides for his employment
as our Executive Chairman, as of April 1, 2016. The material terms of Mr. Cuneos proposed and former employment agreements are described below under Narrative Disclosure to Summary Compensation Table and Plan-Based Awards
TableEmployment Agreements Current Employees.
Roles of Management and the Compensation Committee in Compensation Decisions
Compensation of our executive officers, including the named executive officers, has been determined by the Board of Directors pursuant to recommendations made
by the former Chief Executive Officer, the former Interim Chief Executive Officer and the Compensation Committee. The Compensation Committee is responsible for, among other things, reviewing and making recommendations as to the compensation of our
executive officers; administering our equity incentive and stock option plans; reviewing and making recommendations to the Board of Directors with respect to incentive compensation and equity incentive and stock option plans; evaluating our Chief
Executive Officers performance in light of corporate objectives; and setting our Chief Executive Officers compensation based on the achievement of corporate objectives. Because it is a unique role, the Compensation Committee determined
Mr. Cuneos compensation as Interim Chief Executive Officer based on alternative criteria than that which was utilized in determining Mr. Haughs compensation.
The Compensation Committee has given great consideration to the relative merits of cash and equity as a device for retaining and motivating the named
executive officers. In determining the size and type of equity-based awards to each named executive officer, the Compensation Committee considers an individuals performance, an individuals pay relative to others, contractual commitments
pursuant to employment or other agreements, the value of already-outstanding grants of equity and alignment of the executives interests with those of our stockholders. Upon recommendations from our former Chief Executive Officer, the
Compensation Committee approved equity-based awards to named executive officers (other than our former Chief Executive Officer). With respect to our former Chief Executive Officer, the Compensation Committee had discussions with him, and utilized J.
F. Reda and Associates as its third party, independent compensation consultant to assist in determining an appropriate compensation package.
Effective
October 2015, the Compensation Committee retained Cook & Co. as its external, independent compensation consultant for advice and assistance on executive compensation matters. The Compensation Committee has assessed the independence of
Cook & Co. pursuant to the NASDAQ listing standards and SEC rules and is not aware of any conflict of interest that would prevent Cook & Co. from providing independent advice to the Committee concerning executive compensation
matters.
Elements of Compensation
To accomplish our
compensation objectives, our compensation program for 2015 principally consisted of performance-based equity awards in the form of PSU awards, long-term equity awards in the form of RSU awards, base salaries and annual cash bonuses and stock awards.
These elements were designed to provide a competitive mix of compensation that balanced retention and performance in a simple and straightforward manner. The compensation program was designed to ensure that the named executive officers
compensation was tied to the Companys long-term and short-term performance. The Company does provide certain limited perquisites to its named executive officers. The Company has no supplemental retirement plan.
Base salary.
Base salary represents amounts paid during the fiscal year to named executive officers as direct, guaranteed compensation under
their employment agreements for their services to us. Base salaries are used to compensate each named executive officer for day-to-day operations during the year, and to encourage them to perform at their highest levels. We also use our base salary
as an incentive to attract top quality executives and other management employees. Moreover, base salary and increases to base salary are intended to recognize the overall experience, position within our company and expected contributions of each
named executive officer to us. None of our employment agreements for current executive officers provide automatic salary increases.
Annual Cash
bonuses
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Beginning in 2016, the Compensation Committee has committed to eliminate the historical practice of determining annual cash bonuses on a solely discretionary basis. We award bonuses to promote the achievement of our
short-term, targeted business objectives by providing competitive incentive reward opportunities to our executive officers who can significantly impact our performance towards those objectives. Further, a competitive bonus program enhances our
ability to attract, develop and motivate individuals as members of a talented management team.
Equity-based compensation.
In 2015, there
were three types of equity based grants made to the named executive officersinitial grants when a named executive officer is hired, performance-based grants and retention grants, which are typically made in connection with new employment
agreements or renewals of expiring agreements. An initial grant when an executive officer is hired or otherwise becomes a named executive officer serves to help us to recruit new executives and to reward existing officers upon promotion to higher
levels of management. Because these initial grants are structured as an incentive for employment, the amounts of these grants may vary from executive to executive depending on the particular circumstances of the named executive officer and are
usually recommended by the Chief Executive Officer and approved by the Compensation Committee. Retention grants made in connection with renewals of employment agreements are designed to compensate our named executive officers for their expected
ongoing
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contributions to our long-term performance. Generally, restricted stock awards granted to named executive officers as either initial or annual performance grants vest in equal installments over
the term of the agreement, or a period determined by the Compensation Committee, typically beginning on the first anniversary of the date of grant. Beginning in 2016, equity awards are made pursuant to the Companys 2016 LTIP, which
provides for long term incentive based grants as more fully described above.
Perquisites and other personal benefits
.
During 2015,
our named executive officers received a limited amount of perquisites and other personal benefits that we paid on their behalf. These consisted of payments of life insurance premiums and car allowances, totaling $107,691, in the aggregate for all of
our named executive officers.
Post-termination compensation
.
We have entered into employment agreements with each of our named
executive officers. Each of these agreements provides for certain payments and other benefits if the executives employment terminated under certain circumstances, including, in the event of a change in control. As noted above,
we amended our Plan to implement double trigger change in control provisions with respect to future grants. These provisions provide that, upon a change in control, as defined in the Plan, in the event that a successor company assumes or
substitutes awards under the Plan, unvested equity awards do not accelerate unless, within 24 months following such change in control, the Plan participant is terminated without cause or leaves for good reason. However, if a successor company in the
change in control does not assume or substitute awards under the Plan, then all outstanding awards would immediately vest. See Executive CompensationNarrative to Summary Compensation Table and Plan-Based Awards TableEmployment
Agreements and Executive CompensationPotential Payments Upon Termination or Change in Control for a description of the severance and change in control benefits.
Our Named Executive Officers Compensation for 2015
Base Salaries
Historically, the base
salaries of our named executive officers were determined based on the Compensation Committees assessment of competitive base salary levels and consistent with the relevant executives position, skill set, experience and length of service
with the Company. Base salaries are set forth in the named executive officers employment agreement. Base salaries are reviewed periodically by the Compensation Committee in light of market practices and changes in responsibilities, and as
noted for Mr. Cuneo, the unique nature of his role as Interim Chief Executive Officer.
Annual Performance-Based Cash Bonus Compensation
For 2015, no annual performance-based cash bonus compensation was paid.
Equity-based Compensation
Equity-based
compensation is typically awarded in the form of PSUs, RSUs, and shares of restricted stock.
Historical PSUs Outstanding as of December 31, 2015
As of December 31, 2015, the following tranches of PSUs issued prior to 2016 were outstanding: 2011 PSUs, 2013 PSUs, 2014 PSUs and 2015 PSUs. The
2011 PSUs outstanding relate solely to Mr. Cole and are discussed below. Each tranche of such historical PSUs has absolute performance metrics for EBITDA Growth, EPS Growth and Free Cash Flow, in differing percentages and different base years
as described below. In addition, with respect to EBITDA Growth and EPS Growth, vesting may occur based on the Companys relative achievement of such growth as compared to the historical PSU Performance Comparator Group as described below. This
historical PSU Performance Comparator Group is reviewed and adjusted annually by the Compensation Committee, prior to the start of the applicable performance period.
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Absolute MetricsGeneral
The metric requirements for each vesting period were set at the date of grant and each year a certain portion of PSUs are available to vest, based on the
Companys achievement of such metrics. The EBITDA and EPS requirements for each year were set based on the EBITDA and EPS reported by the Company with compounded annual growth from the year in which the PSUs were granted, with a target rate of
10% compounded annual growth and threshold rate of 5% compounded annual growth. The Free Cash Flow metric was set at $125 million for each tranche of such historical PSUs. During our stockholder outreach, we learned that some of our stockholders
believed that the performance metrics of our historical PSUs were not difficult to achieve. We have noted below where certain performance metrics were not met and such corresponding PSUs did not vest. For all named executive officers other than
Mr. Blumberg, PSUs granted prior to 2016 vest 33 1/3% based on EBITDA Growth, 33 1/3% based on EPS Growth and 33 1/3% based on Free Cash Flow. With respect to unearned 2013 PSUs and 2014 PSUs related to EBITDA Growth and EPS Growth, each are
eligible for a catch up, as described below. For a discussion of Mr. Blumbergs historical PSUs, which included a component for acquisitions, please see Mr. Blumbergs Performance Based Restricted Stock Awards
for a description of the applicable PSU metrics. With respect to PSUs granted in 2016, as described below, among other changes to the terms of future PSU awards, the Company eliminated the catch up feature and intends to eliminate such
feature in all future grants.
Relative MetricsGeneral
If the Absolute EBITDA Growth or Absolute EPS Growth metrics applicable to historical PSUs are not fully met, additional vesting may be achieved if the
Compensation Committee determines that the relative metrics would yield such vesting. The Relative EBITDA Growth and Relative EPS Growth performance metrics are determined by reference to what percentile the Actual EBITDA Growth and Actual EPS
Growth achieved by the Company during the performance period places the Company as compared to the 2014 Performance Comparator Group, as updated, determined by the Compensation Committee prior to the beginning of the relevant performance period. The
following vesting will occur based on relative metrics if higher than what would vest based on absolute metrics: If the Company places in the 50
th
percentile for a metric, 50% of the target PSUs
eligible for vesting based on such metric will vest; if the Company places in the 90
th
percentile or higher for a metric, up to 100% of the PSUs eligible for vesting based on such metric will
vest; and if the Company places below the 50
th
percentile for a metric, none of the PSUs eligible for vesting based on such metric will vest. However, if there is no positive EBITDA Growth or EPS
Growth on an actual basis during the period, no more than 50% vesting for the relevant metric will occur.
The 2014 PSU Performance Comparator Group
utilized for relative metric vesting is based on companies in GICS codes 25203010 (Apparel, Accessories and Luxury Goods) and 25203020 (Footwear) with comparable revenue and earnings levels (comprised of annual revenue between $100 million and $5
billion and EBITDA and EPS greater than zero in the most recent fiscal year).
For periods prior to 2015, the Compensation Committee had engaged James F.
Reda Associates, an independent consultant, to regularly review the peer group, and recommend changes as necessary, to ensure there is a consistent calculation of measures of performance. Below is the relative historical PSU Performance Comparator
Group that was used to determine Relative EBITDA Growth and Relative EPS Growth performance metrics under each tranche of our PSUs granted prior to 2016:
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Carters Inc.
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Gildan Activewear Inc.
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Rocky Brands, Inc.
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Cherokee Inc.
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Hanesbrands Inc.
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Skechers U.S.A., Inc.
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Columbia Sportswear Company
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Kate Spade & Co.
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Superior Uniform Group Inc.
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Crocs, Inc.
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lululemon athletic inc.
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Tumi Holdings Inc.
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Deckers Outdoor Corporation
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Madden Steven Ltd.
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Under Armour Inc.
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Delta Apparel, Inc.
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Movado Group Inc.
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Vera Bradley, Inc.
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Fossil, Inc.
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Oxford Industries, Inc.
|
|
VF Corp.
|
G-III Apparel Group Ltd.
|
|
PVH Corp.
|
|
Wolverine World Wide, Inc.
|
Excluded from this group for the computation of the relative performance calculations were certain companies that did not meet
the criteria for each of the specific performance metrics or that no longer filed public information.
The PSUs granted prior to 2016 contain a catch-up
feature for the EBITDA Growth and EPS Growth metrics. The catch-up feature provides that if, in any year, Absolute Growth within either the EBITDA Growth or EPS Growth metric does not result in vesting, because (i) the Absolute Growth required
for maximum vesting was not achieved, or (ii) vesting was achieved based on Relative Growth, then, in later years, Absolute Growth will be measured cumulatively to include the Absolute Growth that did not result in vesting, in order to allow
vesting of the earlier years unvested PSUs (i.e. those that did not vest based on Absolute Growth or Relative Growth) and then, if available, to those of a later year. If, in any year, Absolute Growth within a category exceeds the percentage
required for maximum vesting in such category, the excess growth shall be carried back into earlier years (to allow vesting to the extent not previously achieved by virtue of Absolute Growth or Relative Growth) or forward into later years (so that
cumulative Absolute Growth in the later year is measured from the point required to achieve maximum vesting in the earlier year).
12
Discussion of Historical PSUs
2013 PSUs
We granted 2013 PSUs to
Mr. Schaefer that vest as described in the section below entitled Mr. Schaefers Performance Based Restricted Stock Award. Mr. Blumberg received 2013 PSUs that vest as described in the section below entitled Mr.
Blumbergs Performance Based Restricted Stock Awards. Mr. Cuneo assumed the role of Interim Chief Executive Officer in August 2015 and Mr. Jones joined the Company in July 2015, therefore neither of them received any grants of
2013 PSUs. Mr. Horowitz received 2013 PSUs that were available to vest as described in the section below entitled Mr. Horowitzs Performance Based Restricted Stock Awards. As Mr. Horowitz ceased to be an executive officer
of the Company in April 2015, he forfeited 17,400 unvested 2013 PSUs. Neither of Messrs. Cole or Lupinacci received any grants of 2013 PSUs. The Absolute Growth metrics for the 2013 PSUs are $125 million Free Cash Flow, and, with respect to EBITDA
and EPS, the Absolute Growth metrics for the year ended December 31, 2015 are set forth below.
2013 PSU Absolute Metrics
|
|
|
Performance Metric
|
|
Requirement
|
Target Absolute EBITDA Growth
|
|
EBITDA of $290.9 million
|
Threshold Absolute EBITDA Growth
|
|
EBITDA of $253.1 million
|
Target Absolute EPS Growth
|
|
EPS of $2.04
|
Threshold Absolute EPS Growth
|
|
EPS of $1.77
|
The relative metrics applicable to the 2013 PSUs were calculated in the manner described above under Relative
Metrics. For 2015, none of the 2013 PSUs vested with respect to either the Absolute or Relative EBITDA metrics, or the Absolute or Relative EPS metrics.
2014 PSUs
Mr. Horowitz received 2014
PSUs that were available to vest as described in the section below entitled Mr. Horowitzs Performance Based Restricted Stock Awards. As Mr. Horowitz ceased to be an executive officer of the Company in April 2015, he forfeited
61,182 unvested 2014 PSUs. Mr. Lupinacci received 2014 PSUs that were available to vest as described in the section below entitled Mr. Lupinaccis Performance Based Restricted Stock Awards. As Mr. Lupinacci ceased to be an
executive officer of the Company in March 2015, he forfeited 39,407 unvested 2014 PSUs. None of Messrs. Cole, Blumberg or Schaefer received any grants of 2014 PSUs. Mr. Cuneo assumed the role of Interim Chief Executive Officer in August 2015
and Mr. Jones joined the Company in July 2015, therefore neither of them received any grants of 2014 PSUs.
2015 PSUs
Mr. Jones received 2015 PSUs that are available to vest as described in the section below entitled Mr. Joness Performance Based Restricted
Stock Awards. None of Messrs. Cuneo, Blumberg, Schaefer or the Companys former named executive officers received any grants of 2015 PSUs. The Absolute Growth metrics for the 2015 PSUs are $125 million Free Cash Flow, and, with respect to
EBITDA and EPS, the Absolute Growth metrics for the year ended December 31, 2015 are set forth below.
2015 PSU Absolute Metrics
|
|
|
Performance Metric
|
|
Requirement
|
Target Absolute EBITDA Growth
|
|
EBITDA of $ 232.1 million
|
Threshold Absolute EBITDA Growth
|
|
EBITDA of $ 221.6 million
|
Target Absolute EPS Growth
|
|
EPS of $ 1.63
|
Threshold Absolute EPS Growth
|
|
EPS of $ 1.56
|
The relative metrics applicable to the 2015 PSUs were calculated in the manner described above under Relative
Metrics. None of the 2015 PSUs vested with respect to either the Absolute or Relative EBITDA metrics, or the Absolute or Relative EPS metrics.
13
Mr. Cuneos Performance Based Restricted Stock Awards
Mr. Cuneo has not received any PSU awards.
Mr. Joness Performance Based Restricted Stock Awards
Under the terms of his employment agreement, Mr. Jones was awarded 34,217 historical PSUs that are subject to performance vesting as described above under
2015 PSUs. Mr. Joness 2015 PSUs vested as to 6,842 2015 PSUs on December 31, 2015 and as to 13,687 2015 PSUs on each of December 31, 2016 and 2017, subject to the following performance criteria: 33 1/3% of the 2015 PSUs vest
based on the achievement of EBITDA Growth; 33 1/3% of the 2015 PSUs vest based on the achievement of EPS Growth; and 33 1/3% of the 2015 PSUs vest based on the achievement of Free Cash Flow. The goals for EBITDA Growth, EPS Growth and Free Cash Flow
are set forth above under 2015 PSUs. In 2015, up to 6,842 2015 PSUs were available to vest and 2,281 2015 PSUs vested based on achievement of the Free Cash Flow performance metric set forth above
.
Mr. Blumbergs Performance Based Restricted Stock Awards
As Mr. Blumberg is our Executive Vice President, Chief Strategy Officer, certain of Mr. Blumbergs PSUs awards have different performance
metrics from those of the other named executive officers.
In February 2013, Mr. Blumbergs contract was amended, herein referred to as the 2013
amendment. Under the 2013 amendment, Mr. Blumberg was awarded 200,000 2013 PSUs that are subject to performance vesting described above under 2013 PSUs. Of the 2013 PSUs, two thirds were available to vest in three equal installments beginning
on December 31, 2013, subject to the following performance criteria: 22.22% of the 2013 PSUs vest based on the achievement of EBITDA Growth; 22.22% of the 2013 PSUs vest based on the achievement of EPS Growth; and 22.22% of the 2013 PSUs vest
based on the achievement of Free Cash Flow. The goals for EBITDA Growth, EPS Growth and Free Cash Flow are set forth above under 2013 PSUs. The remaining one third of Mr. Blumbergs 2013 PSUs were available to vest upon the
closing of Acquisitions (for this purpose, the acquisition must have had a value (as defined in the 2013 amendment) of $5 million) during the extension term, which was the period from February 2, 2013 through January 31, 2016, unless
earlier terminated. During the extension term, approximately 5.56% of the 2013 PSUs could vest upon the closing of an Acquisition, in respect of up to two Acquisitions per year (resulting in aggregate vesting of 11.11% of the 2013 PSUs in such
year), subject to the ability for a credit to be applied in future years for Acquisitions in excess of two completed in any year and the ability to make up a deficit of less than two Acquisitions in prior years. If the Company closed Acquisitions
with an aggregate value of $200 million or more between February 1, 2013 and January 31, 2016 (the term of the 2013 amendment), all of the Acquisition-based 2013 PSUs would be deemed to have vested on January 31, 2016, subject to
Mr. Blumbergs continued employment. In 2015, up to 77,778 of Mr. Blumbergs 2013 PSUs were available to vest and 9,875 of the 2013 PSUs vested based on achievement of the Free Cash Flow performance metric listed above, other
than the portion related to Acquisitions. In 2015, 37,040 of Mr. Blumbergs 2013 PSUs vested based on our consummation of the Strawberry Shortcake and Pony Acquisitions.
The 2013 amendment expired on January 31, 2016 and the Company entered into a new employment agreement with Mr. Blumberg dated February 24,
2016, herein referred to as the 2016 employment agreement. The 2016 employment agreement provides for Mr. Blumberg to be eligible to participate in the Companys long term incentive plan, but no longer provides him the right to receive
PSUs based on Acquisitions.
Mr. Schaefers Performance Based Restricted Stock Award
Under the terms of his employment agreement, Mr. Schaefer was awarded 41,640 2013 PSUs that are subject to performance vesting as described above under
2013 PSUs. Mr. Schaefers 2013 PSUs vest as to 5,949 2013 PSUs on December 31, 2013 and as to 11,897 2013 PSUs on each of December 31, 2014, 2015 and 2016, subject to the following performance criteria: 33 1/3% of the 2013 PSUs
vest based on the achievement of EBITDA Growth; 33 1/3% of the 2013 PSUs vest based on the achievement of EPS Growth; and 33 1/3% of the 2013 PSUs vest based on the achievement of Free Cash Flow. The goals for EBITDA Growth, EPS Growth and Free Cash
Flow are set forth above under 2013 PSUs. In 2015, up to 11,897 of Mr. Schaefers 2013 PSUs were available to vest and 3,966 of such 2013 PSUs vested based on the achievement of the Free Cash Flow performance metric set forth
above.
Mr. Horowitzs Performance Based Restricted Stock Award
Under the terms of the 2014 amendment to his employment agreement, Mr. Horowitz was awarded 69,279 2014 PSUs that were subject to performance vesting as
described above under 2014 PSUs. Mr. Horowitz ceased to be an employee of the Company in April 2015 and forfeited all remaining unvested 2014 PSUs and unvested 2013 PSUs.
14
Mr. Lupinaccis Performance Based Restricted Stock Award
Under the terms of his employment agreement, Mr. Lupinacci was awarded 47,322 2014 PSUs that were subject to performance vesting as described above under
2014 PSUs. Mr. Lupinacci ceased to be an employee of the Company in March 2015 and forfeited all remaining unvested 2014 PSUs.
2016
LTIP
In 2016, the Company granted performance-based equity awards and long-term equity awards to named executive officers and other key employees,
which include PSUs that vest based on the Companys achievement of adjusted operating income targets for the performance period (January 1, 2016 through December 31, 2018). The specific performance-based equity awards made to named
executive officers under the 2016 LTIP are as follows: on February 23, 2016, Mr. Haugh was granted 196,850 PSUs and on March 31, 2016, Mr. Jones was granted 67,083 PSUs, Mr. Blumberg was granted 64,919 PSUs and Mr. Schaefer
was granted 54,099 PSUs. Other than for Mr. Haugh, under the 2016 LTIP earned PSUs will vest on the third anniversary of the grant date assuming continued employment through such date (other than for instances of retirement, involuntary
termination not for cause, and voluntary termination with good reason, death and disability, in which case payouts will be made at the end of the three-year performance period based on actual performance and pro-rated to reflect actual years
completed, and based on performance as certified by the Committee). Mr. Haughs 2016 PSUs are governed by the terms of his employment agreement pursuant to which: one-third of Mr. Haughs PSUs will be converted into time-based
awards on each of December 31, 2016, 2017 and 2018, based on actual performance as of the date of termination as certified by the Compensation Committee, and such time based awards will vest on December 31, 2018, subject to
Mr. Haughs employment until such date (other than if, prior to December 31, 2018, Mr. Haugh is terminated by us without cause or for him for good reason, in which case any time-based awards to which PSUs shall have converted
will vest and be settled on December 31, 2018, subject to Mr. Haughs compliance with the applicable terms of his employment agreement).
The specific long-term equity awards made to named executive officers under the 2016 LTIP are as follows: On March 31, 2016, Mr. Jones was granted 33,041
RSUs, Mr. Blumberg was granted 31,975 RSUs and Mr. Schaefer was granted 26,646 RSUs. These RSUs vest one third annually on each of March 31, 2017, 2018 and 2019. In accordance with the terms of his employment agreement, On March 31,
2016, Mr. Haugh received 62,112 RSUs which vest one third annually on each of February 22, 2017, 2018 and 2019.
2016 Retention Plan
As previously announced in Form 8-K filed with the SEC on January 13, 2016, in 2016 the Company established a special one-time, performance-based
incentive plan consisting of cash and equity awards for employees, including all named executive officers other than Mr. Cuneo. Under this plan, Messrs. Jones, Blumberg and Schaefer received cash retention awards of $350,000 ($150,000 of which
was previously paid); $200,000 and $200,000, respectively. The cash retention awards will be paid in four equal installments following each quarter of 2016 only if the named executive officer is employed by the Company on the date the payment is
due. Additionally, if there is a change of control of the Company, and the named executive officers employment is thereafter terminated without cause, then all remaining payments under such cash retention award shall be accelerated and shall
be immediately due and payable. The first quarterly installment payments of such cash retention awards were made just after March 31, 2016.
Under
the retention plan our named executive officers received the following equity grants, Mr. Jones received 155,000 PSUs, Mr. Blumberg received 155,000 PSUs, and Mr. Schafer received 120,000 PSUs. These PSUs issued under such plan cliff
vest in three years and are based on total shareholder return (TSR) as measured against the 2016 Compensation Benchmarking Peer Group listed above. The vesting schedule is as follows:
|
|
|
TSR of less than 35%
|
|
0% vesting
|
|
|
TSR between 35% and 50%
|
|
25%-50% vesting (linear interpolation)
|
|
|
TSR between 50% and 75%
|
|
50%-100% vesting (linear interpolation)
|
|
|
TSR at 75% or above
|
|
100% vesting
|
There will be interpolation on a straight line basis (i.e. linearly interpolated) between 35% and 50% and between 50% and 75%
achievement. These awards are also subject to the double trigger change of control provisions contained in the Companys Equity Incentive Plan.
15
Stock Ownership Guidelines
The Company has adopted stock ownership guidelines which are considered best practices and require our executives and directors to own shares of the
Companys stock. Stock ownership guidelines have been set at the following levels:
|
|
|
Chief Executive Officer:
|
|
6X annual base salary
|
Other Named Executive Officers:
|
|
3X annual base salary
|
Directors:
|
|
5X annual cash retainer
|
Unvested and unearned restricted stock, RSUs, PSUs and unexercised stock options do not count towards stock ownership targets.
Pledged shares do not count towards stock ownership guidelines.
There is no required timeframe in which executives and directors must attain the stock
ownership targets. However, until the stock ownership target is achieved, a stock retention ratio applies as follows:
|
|
|
Chief Executive Officer:
|
|
100% of net profit shares
|
Other Named Executive Officers:
|
|
50% of net profit shares
|
Directors:
|
|
100% of net profit shares
|
For this purpose, net profit shares means shares received on vesting or earn out of restricted stock, RSUs and
PSUs, net of shares used to pay withholding taxes and shares received on the exercise of stock options, net of shares tendered or withheld for payment of exercise price and withholding taxes.
Tax Deductibility and Accounting Ramifications
The
Compensation Committee generally takes into account the various tax and accounting ramifications of compensation awarded to our executives. When determining amounts of equity-based grants to executives, the Compensation Committee also considers the
accounting expense associated with the grants.
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public
corporations for compensation in excess of $1 million paid for any fiscal year to a companys CEO or to any of the companys other three most highly compensated executive officers (other than the CFO). The statute generally exempts
qualifying performance-based compensation from the deduction limit if certain conditions are met. We review the tax impact of our executive compensation on the Company as well as on the executive officers. In addition, we review the impact of our
programs against other considerations, such as accounting impact, stockholder alignment, market competitiveness, effectiveness and perceived value to employees. Because many different factors influence a well-rounded, comprehensive executive
compensation program, some compensation might not, on some occasions, be deductible by the Company under Section 162(m) of the Internal Revenue Code.
Assessment of Compensation-Related Risks
The
Compensation Committee is responsible for assessing the risks associated with the Companys compensation practices, policies and programs. This assessment is performed to determine if such risks arising from such practices are appropriate or if
they are reasonably likely to have a material adverse effect on the Company. The Compensation Committee performed this assessment and believes that, for 2015, the compensation policies did not incentivize our employees to take unnecessary risks.
Clawback
Based on recent restatements, the Company
is currently analyzing the impact of clawback provisions on previously granted incentive compensation.
Summary
We believe that the recent changes to our governance structure, including implementation of separate Chairman and Chief Executive Officer roles, as well as
changes to our compensation practices, address concerns raised by stockholders in our stockholder outreach. These changes include amending our Amended and Restated 2009 Equity Incentive Plan to implement double trigger provisions to
equity awards made following the date of such amendment, adopting the 2016 LTIP a performance-based long-term incentive plan, adopting an anti-pledging policy and adopting stock ownership guidelines. In addition, our Compensation Committee
continues to work closely with its independent compensation consultant, Cook & Co., to complete a comprehensive review of our compensation programs and our plans to identify and implement additional changes to our compensation practices and
philosophy, as may be advisable. We are conducting this review to ensure that our compensation program is competitively designed and optimizes talent recruitment and retention, which are critical to our business and incentivize our executives to
achieve key operational and strategic priorities that support our short- and long-term strategic objectives and create long term stockholder value. Additionally, we must ensure that our compensation program is flexible so that we can be responsive
to feedback from our investors.
Compensation Committee Report
The Compensation Committee of our Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis for 2015 appearing in
this Report. Based on such reviews and discussions, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Report for filing with the SEC.
COMPENSATION COMMITTEE
Mark Friedman, Chairperson
Barry Emanuel
Sue Gove
16
SUMMARY COMPENSATION TABLE
The following table includes information for 2015, 2014 and 2013 with respect to our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary
($)
(a)
|
|
|
Bonus
($)
(b)
|
|
|
Stock
Awards
($)
(c)
|
|
|
Option
Awards
($ )
(d)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(e)
|
|
|
Change in
Pension
Value
and Non-
qualified
Deferred
Compensation
Earnings
($)
(f)
|
|
|
All Other
Compensation
($)
(g)
|
|
|
Total
($)
(h)
|
|
|
|
|
|
|
|
|
|
|
|
Peter Cuneo
(1)
Interim Chief
Executive Officer
|
|
|
2015
|
|
|
$
|
1,354,375
|
|
|
$
|
|
|
|
$
|
1,176,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,530,375
|
|
|
|
2014
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
2013
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
David Jones
(2)
Executive Vice
President and Chief Financial Officer
|
|
|
2015
|
|
|
$
|
280,966
|
|
|
$
|
150,000
|
|
|
$
|
1,766,966
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,000
|
(4)
|
|
$
|
2,206,932
|
|
|
|
2014
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
2013
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
David Blumberg
(3)
Executive
Vice President and Chief Strategy Officer
|
|
|
2015
|
|
|
$
|
550,000
|
|
|
$
|
475,000
|
|
|
$
|
250,024
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
18,000
|
(4)
|
|
$
|
1,293,024
|
|
|
|
2014
|
|
|
$
|
550,000
|
|
|
$
|
350,000
|
|
|
$
|
247,876
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
18,000
|
(4)
|
|
$
|
1,165,876
|
|
|
|
2013
|
|
|
$
|
550,000
|
|
|
$
|
|
|
|
$
|
6,050,000
|
|
|
$
|
|
|
|
$
|
500,000
|
|
|
$
|
|
|
|
$
|
18,000
|
(4)
|
|
$
|
7,118,000
|
|
|
|
|
|
|
|
|
|
|
|
Jason Schaefer
Executive Vice President and General Counsel
|
|
|
2015
|
|
|
$
|
433,333
|
|
|
$
|
275,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
18,000
|
(4)
|
|
$
|
726,333
|
|
|
|
2014
|
|
|
$
|
400,000
|
|
|
$
|
200,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
18,000
|
(4)
|
|
$
|
618,000
|
|
|
|
2013
|
|
|
$
|
131,667
|
|
|
$
|
|
|
|
$
|
1,426,586
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
6,000
|
(4)
|
|
$
|
1,564,253
|
|
|
|
|
|
|
|
|
|
|
|
Neil Cole
(6)
Former President
and Chief Executive Officer
|
|
|
2015
|
|
|
$
|
875,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
52,941
|
(5)
|
|
$
|
2,052,941
|
|
|
|
2014
|
|
|
$
|
1,500,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,125,000
|
|
|
$
|
|
|
|
$
|
53,628
|
(5)
|
|
$
|
2,678,628
|
|
|
|
2013
|
|
|
$
|
1,500,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,175,000
|
|
|
$
|
|
|
|
$
|
59,354
|
(5)
|
|
$
|
3,734,354
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Lupinacci
(7)
Former
Executive Vice President and Chief Financial Officer
|
|
|
2015
2014
2013
|
|
|
$
$
$
|
150,000
404,167
|
|
|
$
$
$
|
|
|
|
$
$
$
|
2,338,772
|
|
|
$
$
$
|
|
|
|
$
$
$
|
|
|
|
$
$
$
|
|
|
|
$
$
$
|
4,500
13,500
|
(4)
(4)
|
|
$
$
$
|
154,500
2,756,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seth Horowitz
(8)
Former Chief Operating Officer
|
|
|
2015
|
|
|
$
|
182,292
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,250
|
(5)
|
|
$
|
187,542
|
|
|
|
2014
|
|
|
$
|
609,091
|
|
|
$
|
|
|
|
$
|
3,583,447
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
18,000
|
(5)
|
|
$
|
4,210,538
|
|
|
|
2013
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
(a)
|
Salary includes, as applicable, base salary and pro-rated salaries for changes made to base salary during the year, as defined in the employment agreements.
|
(b)
|
Bonuses are fixed incentive and/or percentage incentive, as provided for in the applicable employment agreements or were discretionary, as determined by the Compensation Committee upon the recommendation of the Chief
Executive Officer (however, as noted throughout the Compensation Discussion and Analysis herein, the Compensation Committee has committed to eliminate the historical practice of awarding annual cash bonuses on a solely discretionary basis for 2016).
No discretionary annual cash bonus awards were made by the Company in respect of 2015.
|
17
(c)
|
The amounts shown in this column represent the aggregate grant date fair value in 2015, 2014 and 2013 with respect to shares of restricted stock, including PSUs and RSUs. See Note 5 to Notes to the Consolidated
Financial Statements included in our Annual Report on Form 10-K for a discussion for the relevant assumptions used in calculating grant date fair value.
|
(d)
|
Option awards include, as applicable, Iconix options and equity-based compensation instruments that have option-like features, and amounts represent grant date fair value.
|
(e)
|
Non-equity incentive plan compensation represents the dollar value of all amounts earned during the fiscal year pursuant to non-equity incentive plans. For 2015, Mr. Cole did not earn a cash bonus pursuant to his
employment agreement. For 2014, Mr. Cole received a cash performance-based bonus of $1,125,000, pursuant to his employment agreement and the Executive Incentive Bonus Plan. The performance target for 2014 was as follows: $1,125,000 was earned
for our achievement of approximately $263.8 million of EBITDA, which represents 98% of the targeted EBITDA previously established by the Board of Directors. For 2013, Mr. Cole received a cash performance-based bonus of $2,175,000 pursuant
to his employment agreement and the Executive Incentive Bonus Plan. The performance target for 2013 was as follows: $2,175,000 was earned for our achievement of approximately $261.8 million of EBITDA, which represented 110% of the targeted
EBITDA previously established by the Board of Directors. In accordance with SEC rules, the 2014 and 2013 performance-based cash bonuses paid to Mr. Cole have been reflected in this table under the Non-Equity Incentive Plan Compensation
column. Mr. Blumberg received a $350,000 discretionary bonus and $125,000 as a bonus for service as interim CFO from March 2015 to July 2015. Mr. Blumberg received a cash payment of $500,000 in 2013 for our consummation of two acquisitions
in 2013, each of which had a value (as defined in his employment agreement) of less than $30 million. Mr. Blumberg received no cash payments for consummation of acquisitions in 2014.
|
(f)
|
Change in pension value and non-qualified deferred compensation earnings represents the aggregate increase in actuarial value to the named executive officer of all defined benefit and actuarial plans accrued during the
year and earnings on non-qualified deferred compensation. There were no defined benefit plans, actuarial plans, or non-qualified deferred compensation for 2015, 2014 or 2013.
|
(g)
|
All other compensation includes, as applicable, car allowances and life insurance premiums (see the list of perquisites in footnotes (1) and (2) below).
|
(h)
|
Total compensation represents all compensation from us earned by the named executive officer for the year.
|
(1)
|
Mr. Cuneo served as our Chairman of the Board and Interim Chief Executive Officer from August 2015 until April 2016. Mr. Cuneo now serves as Executive Chairman of the Board.
|
(2)
|
Mr. Jones joined the Company in July 2015.
|
(3)
|
In addition to his role as Executive Vice President and Chief Strategy Officer, Mr. Blumberg served as our Interim Chief Financial Officer from March 2015 until July 2015.
|
(4)
|
Represents amounts paid by the Company for executives car allowances.
|
(5)
|
Represents premiums paid by us on a life insurance policy for the benefit of the beneficiaries of Mr. Cole, as well as a car allowance.
|
(6)
|
Mr. Cole ceased to be an executive officer of the Company in August 2015. Mr. Cole served as the Companys Chairman, President and Chief Executive Officer from February 1993 to August 2015.
|
(7)
|
Mr. Lupinacci ceased to be an executive officer of the Company in March 2015. Mr. Lupinacci served as our Chief Financial Officer from April 2014 to March 2015.
|
(8)
|
Mr. Horowitz ceased to be an executive officer of the Company in April 2015.
|
GRANTS OF
PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
|
Estimated Future
Payouts Under
Non-Equity
Incentive Plan Awards
|
|
|
Estimated Future
Payouts Under
Equity
Incentive Plan Awards
|
|
|
All
Other
Stock
Awards:
Number
of Shares
of Stock
or
Units
(#)
|
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or Base
Price
of Option
Awards
($/Sh)
($)
|
|
|
Closing
Price of
Common
Stock
Units on
Date of
Grant
($)
|
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
|
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
|
Peter Cuneo
|
|
|
8/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
$
|
19.60
|
|
|
$
|
1,176,000
|
|
David Jones
|
|
|
6/10/2015
6/10/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,217
|
|
|
|
|
|
|
|
34,217
|
|
|
|
|
|
|
|
|
|
|
$
$
|
25.82
25.82
|
|
|
$
$
|
883,483
883,483
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
|
Estimated Future
Payouts Under
Non-Equity
Incentive Plan Awards
|
|
|
Estimated Future
Payouts Under
Equity
Incentive Plan Awards
|
|
|
All
Other
Stock
Awards:
Number
of Shares
of Stock
or
Units
(#)
|
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or Base
Price
of Option
Awards
($/Sh)
($)
|
|
|
Closing
Price of
Common
Stock
Units on
Date of
Grant
($)
|
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
|
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
|
David Blumberg
|
|
|
4/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,503
|
|
|
|
|
|
|
|
|
|
|
$
|
26.31
|
|
|
$
|
250,024
|
|
Jason Schaefer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neil Cole
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Lupinacci
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seth Horowitz
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See the Narrative Disclosure to the Summary Compensation Table and Plan-Based Awards Table for a discussion of Mr. Coles cash bonuses. Mr. Cole received no grants of plan-based awards in 2015.
|
(2)
|
Mr. Lupinacci ceased to be an executive officer of the Company in March 2015.
|
(3)
|
Mr. Horowitz ceased to be an executive officer of the Company in April 2015.
|
NARRATIVE DISCLOSURE TO
SUMMARY COMPENSATION TABLE AND PLAN-BASED AWARDS TABLE
Employment Agreements
The Compensation Committee determines the compensation, including related terms of employment agreements with us for those who have them, for each of the named
executive officers. The summaries below relate to employment agreements of our named executive officers. For a discussion of performance metrics, please see the discussion under Compensation Discussion and Analysis.
Current Employees
F. Peter Cuneo
2015 Employment Agreement
On
September 9, 2015, we entered into an employment agreement, effective August 6, 2015 (referred to as the 2015 employment agreement), with F. Peter Cuneo in connection with our employment of Mr. Cuneo as Interim Chief Executive
Officer.
Pursuant to the 2015 employment agreement, Mr. Cuneo received a monthly salary of $275,000 for the period beginning on August 6, 2015
and ending six months thereafter, referred to as the initial term. In the event that we had hired a successor Chief Executive Officer prior to the expiration of the initial term, Mr. Cuneo would have continued to receive a monthly salary of
$275,000 for the remainder of the initial term. If, prior to the expiration of the initial term, Mr. Cuneo had resigned as Interim Chief Executive Officer without good reason, as defined in the 2015 employment agreement, no further
salary would have been payable following such resignation. Mr. Cuneo was not eligible for a bonus in connection with the initial term. The initial term automatically renewed for an additional six-month period, referred to as the second term,
because a successor Chief Executive Officer had not been appointed prior to the expiration of the initial term. During the second term, Mr. Cuneos monthly salary was reduced to $137,500 for the months served by him prior to March 31,
2016. Mr. Cuneo received an award of 60,000 fully vested shares of the Companys common stock on August 6, 2015, priced at $19.60 per share (the closing price of the common stock on such date). Mr. Cuneo received a grant of an
additional 60,000 fully vested shares on the first day of the second term, and such shares were priced at $6.80 per share (the closing price of the common stock on such date). Mr. Cuneo was eligible for a discretionary cash bonus equal to up to
100% of his six-month salary in respect of the second term. Mr. Cuneo did not receive a discretionary cash bonus.
If Mr. Cuneos
employment were terminated by us for cause or by him without good reason (each as defined in the 2015 employment agreement), he would have received his earned and unpaid base salary through the date of termination. If his
employment had been terminated during the initial term by us without cause or by him for good reason, he would have received, in addition to the foregoing, an amount equal to his base salary for the balance of the initial term.
The 2015 employment agreement also contained confidentiality provisions.
2016 Employment Agreement
Mr. Cuneo has
served as our Executive Chairman since April 1, 2016. On April 28, 2016, we entered into an employment agreement with Mr. Cuneo related to his service in this role. The material terms of the agreement will provide for an annual salary
of $480,000 for the period ending December 21, 2016, and for Mr. Cuneo will receive a pro-rated amount of such salary reflecting the commencement of this role on April 1, 2016. The agreement will not provide for equity grants to
Mr. Cuneo. The termination and confidentiality provisions described above in the summary of Mr. Cuneos 2015 employment agreement are expected to be generally the same in the 2016 employment agreement.
19
John Haugh
On February 18, 2016, we entered into an employment agreement with Mr. John N. Haugh that provides for the employment of Mr. Haugh as our
President as of February 23, 2016 (the Commencement Date) and as our President and Chief Executive Officer commencing April 1, 2016 and continuing until February 23, 2019 (the Term).
Pursuant to the employment agreement, Mr. Haugh is entitled to an annual base salary of not less than $1,000,000.
Under the employment agreement, Mr. Haugh is entitled to participate in our executive bonus program and is eligible to receive bonuses of up to 100% of
his base salary, with increases of up to a maximum of 200% of his base salary. With respect to 2016, he will receive a minimum annual bonus of 100% of his base annual salary provided we have positive net income for the year ended December 31,
2016.
Mr. Haugh is also entitled to various benefits, including benefits available to our other senior executives and certain expenses for his
relocation to the New York metropolitan area, up to a maximum of $300,000.
Pursuant to the employment agreement, Mr. Haugh was granted a one-time
award of PSUs equal to a number of shares of Common Stock with a fair market value on the date of the grant of $1,500,000 (196,850 PSUs), which are scheduled to cliff vest on December 31, 2018, based on performance criteria
consistent with those contained in agreements relating to annual performance-based awards issued to our other executives. Mr. Haugh also was granted RSUs of an aggregate fair market value of $500,000 as of the date of grant (62,112 RSUs), which
are scheduled to vest in three annual installments on February 22, 2017, 2018 and 2019, respectively, subject to Mr. Haughs continuous employment with us on the applicable vesting date. We will consider granting PSUs and RSUs or
other cash or equity-based long-term incentives in future years, taking into account market levels, Mr. Haughs performance and other factors, considering $2,000,000 as the annual guideline for the aggregate fair market value of such
awards, subject to approval by the Compensation Committee.
In addition, pursuant to the employment agreement, Mr. Haugh was granted a make-whole
inducement award (the Make-Whole Inducement Award) with an aggregate value of $3,800,000, payable (i) $1,923,000 in cash, as soon as practicable after the Commencement Date, subject to Mr. Haughs being required to return
such payment to us upon termination of his employment without good reason during the first 12 months after the Commencement Date, under certain circumstances, and (ii) by the grant, on the Commencement Date, of time-vested
restricted Common Stock units (Make-Whole RSUs) with an aggregate fair market value of $1,877,000 as of the date of grant (246,325 Make-Whole RSUs). The Make-Whole RSUs will vest in three equal annual installments on each of
February 22, 2017, 2018 and 2019, subject to Mr. Haughs continuous employment with us on the applicable vesting date.
In addition,
pursuant to the employment agreement, Mr. Haugh was granted PSUs equal to a number of shares of Common Stock with a fair market value on the Commencement Date of $1,500,000 (the Employment Inducement PSUs) (196,850 Employment
Inducement PSUs) which will cliff vest at the end of a three year performance period ending on February 22, 2019 (the Performance Period) based on achievement of relative total shareholder return over the Performance
Period measured against the comparator group selected by the Compensation Committee. To receive these PSUs, Mr. Haugh must be employed during the entire Performance Period.
If Mr. Haughs employment is terminated by us for cause or by him without good reason (each as defined in the employment
agreement), he would receive his (a) earned and unpaid base salary through the date of termination, (b) reimbursement for any unreimbursed expenses properly incurred and paid through the date of termination, (c) payment for any
accrued but unused vacation time in accordance with our policies, (d) such vested accrued benefits, and other payments, if any, to which Mr. Haugh (and his eligible dependents) may be entitled under and in accordance with the terms and
conditions of the employee benefits arrangements, plans and programs of the Company, other than any severance pay plan ((a) through (d), the Amounts and Benefits) and (e) all vested shares in respect of Mr. Haughs equity
awards.
If Mr. Haughs employment is terminated by us without cause or by him for good reason, he will receive the
Amounts and Benefits and (a) an amount equal to two times the applicable base salary, which amount shall be payable in equal installments during the Non-Compete Term (as defined in the employment agreement); (b) any annual bonus earned but
unpaid for the prior year (the Prior Year Bonus); (c) a pro rata portion of Mr. Haughs annual bonus for the fiscal year in which his termination occurs based on actual results for such year, payable at such time as
bonuses for the
20
year are paid to our executives generally (the Pro Rata Bonus); (d) subject to Mr. Haughs timely election of continuation coverage under COBRA with respect to our
group health insurance plans in which Mr. Haugh participated immediately prior to the date of termination (COBRA Continuation Coverage) and continued payment by Mr. Haugh of premiums for such plans at the active
employee rate, we shall provide COBRA Continuation Coverage for a limited time frame (the Medical Continuation Benefits); and (e) any unvested amounts subject to equity awards granted under the employment agreement are to vest
to the extent provided in the applicable equity award agreement.
If Mr. Haughs employment is terminated by us without cause or for
good reason within 12 months after a change in control (as defined in the employment agreement), he would receive in a lump sum, in cash, within 15 days after termination, an amount equal to two times the sum of (a) the
applicable base salary and (b) the average annual bonus award to Mr. Haugh for the two fiscal years prior to such change in control, except that, with respect to a change in control in 2016 or 2017, the amount of
clause (b) shall equal the target annual bonus for such year (100% of the applicable base salary). In addition, Mr. Haugh will receive (x) payments in the amounts contemplated, and on the dates specified in relation to the Prior Year Bonus
and Medical Continuation Benefits and immediate vesting and distribution of (y) unvested RSUs issued pursuant to the Make-Whole Inducement Award and the converted Employment Inducement PSUs. Upon death, the employment agreement provides
we will pay to Mr. Haugh or his estate, (a) the Amounts and Benefits; (b) the Prior Year Bonus; and (c) the Pro Rata Bonus. If terminated for disability, the employment agreement provides we will pay to Mr. Haugh, the same
benefits as granted upon death but including, the Medical Continuation Benefits. Upon death or disability, (a) 100% of the then remaining unvested Make-Whole Inducement Awards will immediately vest and will be distributed within 30 days of such
termination and (b) unvested shares subject to other equity awards granted will vest if and to the extent provided for in the applicable equity award agreement.
The employment agreement with Mr. Haugh also contains confidentiality provisions, non-competition and non-solicitation provisions for a specified period.
David Jones
On June 10, 2015, we entered into
an employment agreement with Mr. David Jones that provides for the employment of Mr. Jones as our Executive Vice President and Chief Financial Officer for a term commencing July 6, 2015 (the Commencement Date) and
continuing until December 31, 2017.
Pursuant to the employment agreement, Mr. Jones is entitled to an annual base salary of not less than
$575,000.
Under the employment agreement, Mr. Jones is entitled to participate in our executive bonus program and is eligible to receive bonuses of
up to 100% of his base salary or such maximum amount available under any executive bonus program generally applicable to our senior executives, provided that Mr. Jones will receive a minimum annual bonus of $125,000 for the period from the
Commencement Date through December 31, 2015 and $250,000 for each of the 2016 and 2017 calendar years. Under the employment agreement, Mr. Jones also received a one-time transition payment of $100,000 (the Transition Payment).
Mr. Jones is also entitled to various benefits, including benefits available to our other senior executives and certain automobile benefits.
Pursuant to the employment agreement, Mr. Jones was granted an award of 34,217 RSUs which are scheduled to vest in three annual installments on
December 31, 2015, 2016 and 2017 of 6,843, 13,687 and 13,687 RSUs, respectively, subject to Mr. Jones continuous employment with us through each applicable vesting date as well as other terms and conditions of the respective award
agreement.
In addition, pursuant to the employment agreement, Mr. Jones was granted an award of 34,217 PSUs of which 2,281 shares underlying such
PSUs vested as of December 31, 2015 as follows: no shares vested based on achievement of EBITDA of $172.8 million, no shares vested based on achievement of $1.03 diluted earnings per share, and 2,281 vested based on achievement of $125 million
of Free Cash Flow. Additionally, 13,687 PSUs may vest on each of December 31, 2016 and 2017, respectively, subject to the achievement of EBITDA, diluted earnings per share and Free Cash Flow performance metrics for those years.
If Mr. Joness employment is terminated by us for cause or by him without good reason (each as defined in the employment
agreement), he would receive his earned and unpaid base salary through the date of termination. If his employment is terminated by us without cause or by him for good reason, he would receive, in addition to the foregoing, an amount equal to his
base salary for the remaining agreement term of the agreement, any unpaid portion of the Transition Payment, any earned but unpaid annual bonus for a prior year or completed period (the prior year bonus), plus, if any such resignation or termination
occurs following our first fiscal quarter of any year, a pro rata portion of his annual bonus for such year. If his employment is terminated by us without cause or by him for good reason within 12 months of a change in control (as
defined in the employment agreement), he would also receive an amount equal to $100 less than three (3) times the average of the annual cash compensation received by him on or after July 6, 2015 in his capacity as an employee of the
Company during the base period (as defined in Section 280G of the Internal Revenue Code) subject to an excess parachute payment limitation (as defined in Section 280G). Annual cash compensation includes base salary
plus any bonus payments paid to him.
21
The RSUs and PSUs granted to Mr. Jones are subject to forfeiture upon the termination of his employment
under certain circumstances. Upon a change in control, all of Mr. Joness unvested RSUs and PSUs shall vest. Upon termination for death or disability, all of Mr. Joness unvested RSUs and PSUs shall vest. Upon termination by us
for cause or by Mr. Jones without good reason, his unvested RSUs and PSUs shall be forfeited. Upon termination by us without cause or by Mr. Jones with good reason, all of Mr. Joness unvested RSUs shall vest and that portion of
his PSUs subject to vesting in the year of termination based on performance goals achieved as of the termination shall vest.
The Jones employment
agreement also contains confidentiality provisions and non-competition and non-solicitation provisions for a specified period.
David Blumberg
2009 Employment Agreement
On February 26,
2009, we entered into an employment agreement with Mr. David Blumberg, effective as of January 1, 2009 (referred to as the 2009 employment agreement), that provided for the employment of Mr. Blumberg as our Head of Strategic
Development for a three-year term. From November 2006 until the commencement of his employment with us in 2009, Mr. Blumberg provided consulting services to us. From March 2015 to July 2015, Mr. Blumberg served as our Interim Chief
Financial Officer. Mr. Blumbergs employment agreement did not change as a result of his service in this role. In 2015, the Company awarded Mr. Blumberg a cash bonus of $475,000, $350,000 of which was discretionary and $125,000 of
which was for his service as Interim Chief Financial Officer from March 2015 through July 2015.
Pursuant to the 2009 employment agreement,
Mr. Blumberg was entitled to an annual base salary of not less than $400,000. In addition, Mr. Blumberg was entitled to payments after the closing by us or our subsidiaries of an acquisition (as defined in the 2009 employment
agreement) in or of any entity, business, brand, trademark, service mark, patent, license, revenue stream or other asset during the term of the 2009 employment agreement and, under certain circumstances, for a 90 day period after termination of the
2009 employment agreement. Subject to an annual acquisition payment cap of 2.5 times his then current base salary, Mr. Blumberg was to receive $500,000 for acquisitions that had a value (as defined in the 2009 employment agreement),
of $30 million or more and $250,000 for acquisitions with a lesser value. Under Mr. Blumbergs 2009 employment agreement, the value of an acquisition generally meant the projected gross revenue stream to be derived by us from
such acquisition during the first complete year following the closing of the acquisition.
In addition, under the 2009 employment agreement
Mr. Blumberg was also entitled to receive an award of up to 107,476 shares of our common stock, referred to as the award shares. For each acquisition that closed during a calendar year, one sixth of the shares would vest at the end of such
calendar year subject to an annual vesting cap specified in the 2009 employment agreement. On December 31, 2011 and 2010, a total of 35,826 and 17,913, respectively, of the award shares were granted to Mr. Blumberg and vested pursuant to
the 2009 employment agreement. Mr. Blumberg is also entitled to various benefits, including benefits available to our other senior employees including an automobile allowance and certain life insurance and medical and dental benefits.
If Mr. Blumbergs 2009 employment were terminated by us for cause or by him without good reason (each as defined in the 2009
employment agreement), he would have received his earned and unpaid base salary through the date of termination and shares of common stock in respect of any already vested stock awards, including award shares, or, if the award shares had not been
granted, the vested portion of the alternate payment described below. In addition, subject to the acquisition cap, Mr. Blumberg would have received the acquisition payment for any acquisition that closed within 90 days of his termination. If
his employment were terminated by us without cause or by him for good reason, he would have received, in addition to the foregoing, an amount equal to his base salary for the remaining 2009 agreement term plus any earned but unpaid annual bonus for
a prior year or other completed period (the prior year bonus) and any unvested portion of his stock award would have vested. In addition, subject to the acquisition cap, he would have received the acquisition payment for any acquisition that closed
within 90 days of such termination. If his employment was terminated by us without cause or by him for good reason within 12 months of a change in control (as defined in the 2009 employment agreement), in addition to the foregoing
payments he would have received had he been terminated without a change of control, he would also have received an amount equal to equal to $100 less than three (3) times the greater of (i) $400,000 or (ii) the average of the annual
cash compensation received by him on or after January 1, 2009 in his capacity as an employee of the Company during the base period (as defined in Section 280G of the Internal Revenue Code) subject to an excess
parachute payment limitation (as defined in Section 280G). Annual cash compensation includes base salary plus any acquisition payments and acquisition bonus payments paid to him. If Mr. Blumbergs employment had terminated as a
result of his disability or death, he or his estate would have been entitled to any earned and unpaid base salary, any prior year bonus, any unvested portion of his stock award (which would have vested) and, subject to the acquisition cap, the
acquisition payment for any acquisition that closed within 90 days of the date of death or disability.
22
2012 Employment Agreement
On March 5, 2012, we entered into a new employment agreement with Mr. David Blumberg, effective as of January 1, 2012 (referred to as the 2012
employment agreement), that provided for the employment of Mr. Blumberg as our Head of Strategic Development. The 2012 employment agreement replaced the 2009 employment agreement and provided for the continued employment of Mr. Blumberg
until January 31, 2013.
Under the 2012 employment agreement, Mr. Blumberg was entitled to an annual base salary of not less than $400,000 and
he was eligible to receive cash bonuses based on the achievement of certain designated performance goals related to Acquisitions. In addition, Mr. Blumberg was granted an award of 37,800 performance-based restricted shares of the Companys
common stock, subject to vesting upon the closing of eligible acquisitions (as defined in the 2012 employment agreement) during the term of the 2012 employment agreement. The 2012 employment agreement provided for no other share-based awards. The
other terms and conditions of the 2012 employment agreement are materially consistent with the 2009 employment agreement. For a discussion of performance goals and what Mr. Blumberg received for 2012, see Compensation Discussion and
AnalysisMr. Blumbergs Performance Based Restricted Stock Awards andCash Bonus Compensation.
2013 Amendment
In February 2013, we entered into an amendment to the 2012 employment agreement, effective as of February 1, 2013 (referred to as the 2013
amendment), that provided for the employment of Mr. Blumberg as our Head of Strategic Development through January 31, 2016. Pursuant to the 2013 amendment, Mr. Blumberg was entitled to an annual base salary that was not less than
$550,000. In addition, Mr. Blumberg was granted an award of 50,000 time-vested restricted stock units which vested in three equal annual installments on December 31, 2013, 2014 and 2015, subject to Mr. Blumbergs continued
employment on the applicable vesting date. Mr. Blumberg also received 200,000 performance-based restricted shares of the Companys common stock, subject to vesting upon the closing of eligible acquisitions during the term of the 2013
amendment and the attainment of specified levels of EBITDA, adjusted earnings per share (diluted) and Free Cash Flow. For a description of these performance goals, see Compensation Discussion and AnalysisMr. Blumbergs
Performance Based Restricted Stock Awards andCash Bonus Compensation. Both the RSUs and PSUs granted to Mr. Blumberg were subject to forfeiture upon the termination of the executives employment under certain
circumstances. Upon a change in control, all of Mr. Blumbergs unvested PSUs and RSUs would have vested. Upon termination for death or disability, all of Mr. Blumbergs unvested PSUs and RSUs would have vested. Upon termination
by the Company for cause or the executive without good reason, Mr. Blumbergs unvested RSUs and PSUs would have been forfeited. Upon termination by the Company without cause or by the executive with good reason, that portion of
Mr. Blumbergs PSUs subject to vesting in the year of termination based on performance goals achieved as of the termination, and all of Mr. Blumbergs unvested RSUs, would have vested. Following July 2013, Mr. Blumberg was
no longer entitled to cash payments for Acquisitions. All Acquisitions are approved by our Board of Directors. We believe this mitigated any risk related to Mr. Blumbergs prior compensation upon completion of acquisitions. In addition,
per the terms of Mr. Blumbergs 2016 employment agreement noted below, he is no longer entitled to equity payments for Acquisitions.
The 2013
amendment also contained confidentiality provisions and non-competition and non-solicitation provisions for a specified period.
The 2013 amendment
expired as of January 31, 2016.
2016 Employment Agreement
On February 24, 2016, we entered into an employment agreement with Mr. David Blumberg (referred to as the 2016 employment agreement) that provides
for the employment of Mr. Blumberg as our Executive Vice President, Chief Strategy Officer for a term that will continue until terminated by us or by Mr. Blumberg in accordance with the terms of the employment agreement (the
Term).
Under the 2016 employment agreement, Mr. Blumberg is entitled to an annual base salary of not less than $600,000 per year,
retroactive to January 1, 2016.
Pursuant to the 2016 employment agreement, Mr. Blumberg is entitled to participate in our executive bonus
program and is eligible to receive bonuses with a target amount equal to 60% of his base salary (the Target Bonus Amount).
Mr. Blumberg
is also entitled to various benefits, including benefits available to our other senior executives, and is eligible to participate in our long term incentive plan.
If Mr. Blumbergs employment is terminated by us for cause or by him without good reason (each as defined in the 2016
employment agreement), he would receive his (a) earned and unpaid base salary through the date of termination, (b) reimbursement for any unreimbursed expenses properly incurred and paid through the date of termination, (c) payment for
any accrued but unused vacation time in accordance with our policies and (d) such vested accrued benefits, and other payments, if any, to which Mr. Blumberg (and his eligible dependents) may be entitled under and in accordance with the
terms and conditions of the employee benefits arrangements, plans and programs of the Company, other than any severance pay plan ((a) through (d), the Amounts and Benefits).
23
If his employment is terminated by us without cause or by him for good reason, he will
receive the Amounts and Benefits and (a) a lump sum cash payment in an amount equal to the sum of (x) Mr. Blumbergs then current annual base salary plus (y) his Target Bonus Amount for the year in which such termination of
employment occurs; (b) any annual bonus earned but unpaid for the prior year (the Prior Year Bonus); and (c) subject to Mr. Blumbergs timely election of continuation coverage under COBRA with respect to our group
health insurance plans in which Mr. Blumberg participated immediately prior to the date of termination (COBRA Continuation Coverage) and continued payment by Mr. Blumberg of premiums for such plans at the active
employee rate, we shall provide COBRA Continuation Coverage for a limited time frame (the Medical Continuation Benefits).
If Mr.
Blumbergs employment is terminated by us without cause or by him for good reason within 12 months after a change in control (as defined in the 2016 employment agreement), he would receive in a lump sum, in
cash, within 15 days after termination, an amount equal to $100 less than 3 times Mr. Blumbergs annualized includable compensation for the base period (as defined in Section 280G of the Internal Revenue Code of 1986);
provided, however, that such lump sum severance payment will be reduced to prevent any excess parachute payment (as defined in Section 280G of the Internal Revenue Code of 1986). Mr. Blumberg will also be entitled to receive
the payment or provision of the Amounts and Benefits, plus payment of the Prior Year Bonus and Medical Continuation Coverage.
Upon death, the 2016
employment agreement provides we will pay to Mr. Blumbergs estate, (a) the Amounts and Benefits; (b) the Prior Year Bonus; and (c) a pro-rata portion of Mr. Blumbergs annual bonus for the fiscal year in which
Mr. Blumbergs termination occurs based on actual results for such year. If terminated for disability, the employment agreement provides we will pay to Mr. Blumberg, the same benefits as granted upon death but including, the Medical
Continuation Benefits.
The 2016 employment agreement with Mr. Blumberg also contains confidentiality provisions, non-competition and
non-solicitation provisions for a specified period.
Jason Schaefer
On August 19, 2013, we entered into an employment agreement with Mr. Jason Schaefer that provides for the employment of Mr. Schaefer as our
Executive Vice President and General Counsel for a term commencing September 9, 2013 (the Commencement Date) and continuing until December 31, 2016.
Pursuant to the employment agreement, Mr. Schaefer is entitled to an annual base salary of not less than $400,000.
Under the employment agreement, Mr. Schaefer is entitled to participate in our executive bonus program and is eligible to receive bonuses of up to 100%
of his base salary (such amount was prorated for the period from the Commencement Date through December 31, 2013) or such maximum amount available under any executive bonus program generally applicable to our senior executives.
Mr. Schaefer did not receive a discretionary bonus in 2013; Mr. Schaefer did receive a discretionary bonus in 2014 and 2015.
Mr. Schaefer
is also entitled to various benefits, including benefits available to our other senior executives and certain automobile benefits.
In addition, pursuant
to the employment agreement, Mr. Schaefer was granted an award of 41,640 PSUs of which 3,966 shares underlying such PSUs vested as of December 31, 2015 as follows: no shares vested based on achievement of EBITDA of $172.8 million, no
shares vested based on achievement of $1.03 diluted earnings per share, and 3,966 vested based on achievement of $125 million of Free Cash Flow. Additionally, 11,897 PSUs may vest on December 31, 2016, subject to the achievement of EBITDA,
diluted earnings per share and Free Cash Flow performance metrics for such year.
If Mr. Schaefers employment is terminated by us for
cause or by him without good reason (each as defined in the original employment agreement), he would receive his earned and unpaid base salary through the date of termination. If his employment is terminated by us without
cause or by him for good reason, he would receive, in addition to the foregoing, an amount equal to his base salary for the remaining agreement term of the agreement plus any earned but unpaid annual bonus for a prior year or completed period (the
prior year bonus). If his employment is terminated by us without cause or by him for good reason within 12 months of a change in control (as defined in the employment agreement), he would also receive an amount equal to $100 less than
three (3) times the average of the annual cash compensation received by him on or after September 9, 2013 in his capacity as an employee of the Company during the base period (as defined in Section 280G of the Internal
Revenue Code) subject to an excess parachute payment limitation (as defined in Section 280G). Annual cash compensation includes base salary plus any bonus payments paid to him.
24
The PSUs granted to Mr. Schaefer are subject to forfeiture upon the termination of his employment under
certain circumstances. Upon a change in control, all of Mr. Schaefers unvested PSUs shall vest. Upon termination for death or disability, all of Mr. Schaefers unvested PSUs shall vest. Upon termination by us for cause or by
Mr. Schaefer without good reason, his unvested PSUs shall be forfeited. Upon termination by us without cause or by Mr. Schaefer with good reason, that portion of his PSUs subject to vesting in the year of termination based on performance
goals achieved as of the termination shall vest.
The Schaefer employment agreement also contains confidentiality provisions and non-competition and
non-solicitation provisions for a specified period.
Former Employees
Neil Cole
Term Sheet
With respect to Mr. Cole, and in connection with his resignation on August 5, 2015, we entered into a binding term sheet with Mr. Cole which sets forth the
material terms to be included in a mutually agreed upon Separation Agreement and Release. Pursuant to the binding term sheet, the Company and Mr. Cole mutually agreed to treat Mr. Coles stepping down as Chief Executive Officer of the Company
as a termination without cause by the Company or a termination with good reason by Mr. Cole for purposes of his employment agreement.
The binding term sheet states that Mr. Cole is entitled to severance and benefits including $2.75 million and a pro rata portion of Mr. Coles bonus for
fiscal 2015 based on Mr. Coles employment through the date he stepped down and based on actual performance results for the full fiscal year. The performance results for 2015 resulted in no payout to Mr. Cole with respect to this bonus. Mr.
Cole is entitled to also 18 months of COBRA benefits continuation, acceleration of 75% of Mr. Coles 68,306 unvested 2011 RSUs. Mr. Cole was also entitled potential acceleration of up to 455,373 of Mr. Coles unvested PSUs (such PSUs
include 113,843 PSUs that are eligible for catch up). None of the catch up shares were earned and 113,844 PSUs vested on achievement of the Companys free cash flow metric. No further PSUs are eligible for vesting.
Mr. Cole is entitled to the delivery 1,181,684 2008 RSUs, the issuance and delivery of which Mr. Cole had previously agreed to defer. In accordance with his
former employment agreement, Mr. Cole will be subject to a non-compete through August 5, 2016. To ensure an orderly transition, Mr. Cole served as a special advisor to the Company until September 30, 2015 and was paid $125,000 per month for August
2015 and September 2015.
Employment Agreement
On
January 28, 2008, we entered into an employment agreement, effective as of January 1, 2008, as amended on May 21, 2008, December 24, 2008 (referred to as the original employment agreement) and June 17, 2011 (referred to as
the June 2011 amendment), with Neil Cole, Chairman of the Board, President and Chief Executive Officer. This employment agreement, as amended through June 17, 2011, is referred to as the employment agreement. Pursuant to the June
2011 amendment, the current term of the employment agreement commenced on June 17, 2011, and continued until December 31, 2015, unless further extended or earlier terminated as provided for in the employment agreement. Mr. Cole ceased
to be to be an executive officer of the Company in August 2015.
Consistent with our philosophy on executive compensation, Mr. Coles
employment agreement provided that a substantial portion of his compensation was in the form of long-term equity incentives, including performance stock incentives that vested upon the achievement of specific metrics defined in the agreement,
particularly, growth in EBITDA, market capitalization and stock price as measured by targets established and certified by the Compensation Committee.
In
connection with negotiating the employment agreement (including certain amendments thereto) with Mr. Cole, the Compensation Committee retained J. F. Reda and Associates as its third party, independent compensation consultant. In connection with
the June 2011 amendment, in order to assist the Compensation Committee, J. F. Reda and Associates performed market research as to CEO compensation levels in similarly capitalized companies in the industry, as well as companies that had achieved
similar growth. As various aspects of our business, operations and management are unique, the Compensation Committee utilized the J. F. Reda and Associates research as one resource, rather than a stand-alone tool, in assessing the appropriate level
of compensation and other terms under Mr. Coles employment agreement, including the June 2011 amendment.
RSUs and PSUs
Under the June 2011 amendment, Mr. Cole was entitled to an annual base salary of $1,500,000 for the year ended December 31, 2013. Mr. Cole was
entitled to such increases (but not decreases) as determined by the Board of Directors from time to time, and there was no increase for 2013 or 2014. In connection with the June 2011 amendment, Mr. Cole received an extension signing bonus of
$3,000,000.
Pursuant to the terms of the original employment agreement, Mr. Cole was granted 1,181,684 time-based restricted common stock units, or
2008 RSUs, and 787,789 performance-based restricted common stock units, or 2008 PSUs, under our 2006 Equity Incentive Plan and 2009 Equity Incentive Plan. The 2008 RSUs were available to vest in five substantially equal annual
installments, commencing December 31, 2008. The 2008 PSUs were subject to vesting in four equal annual installments based on our achievement of the following pre-determined performance goals: 50% were tied to the achievement of EBITDA
Growth, 25% were tied to the achievement of market cap growth, and 25% were tied to the achievement of stock price growth. Both grants were subject to forfeiture or acceleration upon the termination of Mr. Coles employment under certain
circumstances. In addition, Mr. Coles ability to sell or otherwise transfer the common stock underlying the 2008 RSUs and the 2008 PSUs while he was employed by us was subject to certain stock ownership requirements.
Mr. Cole was the only executive with PSUs that were granted in 2008, referred to as the 2008 PSUs. The last performance year for the 2008 PSUs was December 31, 2012. Of the 2008 PSUs, 60% of them were forfeited by Mr. Cole for the
Companys failure to meet the performance criteria, illustrating the difficulty of achieving these metrics. The 2008 RSUs have vested, subject to the limitations described below, and the 2008 PSUs have no further performance periods.
Pursuant to the June 2011 amendment, Mr. Cole was granted 204,918 time-based 2011 RSUs and 1,219,945 2011 PSUs. The 2011 RSUs were subject to vesting in
three substantially equal annual installments, subject to Mr. Coles continuous employment with us on the applicable vesting date, the first of which vested on December 31, 2013. The 2011 PSUs vested based on our achievement of
certain pre-determined performance goals during the four fiscal years beginning with the fiscal year ended December 31, 2012. These goals were based on EBITDA (33
1/3
% of PSUs), diluted
earnings per share excluding extraordinary items (33
1/3
% of PSUs) and Free Cash Flow (33
1/3
% of PSUs). For a discussion of performance
metrics and achievement of such metrics for 2014, see Compensation Discussion and AnalysisEquity-Based CompensationPSUs.
25
Both the 2011 RSUs and 2011 PSUs were subject to forfeiture upon the termination of Mr. Coles
employment under certain circumstances. Both the 2011 RSUs and the 2011 PSUs were subject to the terms and conditions of the 2009 Equity Plan and the respective award agreements.
On December 24, 2008, we entered into an agreement with Mr. Cole which amended his original employment agreement and the related 2008 RSU
agreement to provide, among other things for the deferral of the issuance to Mr. Cole of the 1,181,684 shares of our common stock which he was entitled to receive under the 2008 RSUs granted to him under the original employment agreement
until the earlier of (i) the date Mr. Cole is no longer employed by either (a) us or (b) any corporation or other entity owning, directly or indirectly, 50% or more of our outstanding common stock, or in which we or any such
corporation or other entity owns, directly or indirectly, 50% or more of the outstanding capital stock (determined by aggregate voting rights) or other voting interests or (ii) a change in control (as defined in the employment agreement). In
consideration of Mr. Coles agreement to delay the distribution to him of such shares of our common stock to which he will be entitled to receive under the 2008 RSUs as noted above, the agreement also provided for the award to
Mr. Cole of an annual cash bonus to be granted under our 2008 Executive Incentive Bonus Plan. This bonus feature terminated with the year ended December 31, 2012. As discussed in the description of Mr. Coles separation agreement
above, the Company will distribute these 1,181,684 RSUs to Mr. Cole on April 1, 2016.
Salary and Other Benefits
Mr. Cole was also entitled to various benefits, including benefits available to our other senior executives and certain automobile, air travel and life
insurance benefits pursuant to the employment agreement.
In addition to his salary and benefits, Mr. Cole was eligible to receive an additional
annual cash bonus for each completed calendar year, including as a performance goal thereunder the targets specified in the employment agreement. This cash bonus could not exceed 150% of Mr. Coles base salary for the year ended
December 31, 2011 and could not exceed 200% of his base salary for each fiscal year of the term the employment agreement ended after December 31, 2011. The bonus was to be a percentage of the base salary determined based on the level of
our consolidated EBITDA against a target level established for such year by the Compensation Committee, in its sole discretion, but with prior consultation with Mr. Cole. Such cash bonus percentages were as follows:
For the fiscal year ended December 31, 2011:
|
|
|
|
|
Annual Level of Targeted EBITDA Achieved
|
|
% of Base Salary
|
|
less than 80%
|
|
|
0
|
%
|
80% (threshold)
|
|
|
50
|
%
|
90%
|
|
|
75
|
%
|
100% (target)
|
|
|
100
|
%
|
105%
|
|
|
110
|
%
|
110%
|
|
|
122.5
|
%
|
115%
|
|
|
135
|
%
|
120% or more (maximum)
|
|
|
150
|
%
|
For fiscal years ended after December 31, 2011:
|
|
|
|
|
Annual Level of Targeted EBITDA Achieved
|
|
% of Base Salary
|
|
less than 80%
|
|
|
0
|
%
|
80% (threshold)
|
|
|
50
|
%
|
90%
|
|
|
75
|
%
|
100% (target)
|
|
|
100
|
%
|
105%
|
|
|
120
|
%
|
110%
|
|
|
145
|
%
|
115%
|
|
|
170
|
%
|
120% or more (maximum)
|
|
|
200
|
%
|
Mr. Coles annual bonus, if earned, was to be paid in a lump sum cash payment in the calendar year following the
calendar year for which such bonus was earned.
Termination Provisions
Under Mr. Coles employment agreement, if we had terminated Mr. Coles employment for cause or if Mr. Cole had terminated
his employment without good reason, he would have received his earned and/or accrued but unpaid compensation, other than any bonus compensation, then due to him and shares of common stock in respect of any of his already vested 2011 RSUs
and 2011 PSUs. If we
26
had terminated Mr. Coles employment without cause or if Mr. Cole had terminated his employment for good reason, he would have received, in addition to the foregoing, an amount
equal to two times his base salary then in effect plus any previously earned but unpaid annual bonus for a prior fiscal year and a pro-rata portion of the annual bonus for the year of termination. In addition, that portion of his 2011 PSUs subject
to vesting in the year of termination based on performance goals achieved as of the date of termination, and 75% of his unvested 2011 RSUs, would have vested. If Mr. Coles employment had been terminated by us without cause or by him for
good reason within 12 months of a change in control, the amount of his base salary-related payment would have increased to three times, instead of two times, his base salary then in effect. On a change in control, any remaining unvested 2011 PSUs
and 2011 RSUs would have vested immediately.
If Mr. Coles employment had terminated as a result of his disability or death, he or his estate
would have been entitled to any previously earned and unpaid compensation then due to him plus any previously earned but unpaid annual bonus for the prior fiscal year, and a pro-rata portion of the annual bonus for the year of such termination. In
addition, in respect of termination as result of a disability, that portion of his 2011 PSUs subject to vesting in the year of termination based on performance goals achieved as of the date of termination, and 50% of his unvested 2011 RSUs, would
have vested. In respect of a termination as a result of death, 100% of the remaining unvested 2011 PSUs and 2011 RSUs would have vested.
The employment
agreement with Mr. Cole also contained certain non-competition and non-solicitation covenants restricting certain activities for periods equal to the term of the agreement and any renewal period plus one and two years, respectively, after the
agreement is terminated for any reason. See further discussion above under Mr. Coles Former Employment Agreement.
Jeff Lupinacci
On March 18, 2014, we entered into an employment agreement effective April 7, 2014 with Jeff Lupinacci, who is no longer an executive
officer of our Company. The employment agreement provided for the employment of Mr. Lupinacci as our Executive Vice President and Chief Financial Officer through December 31, 2016. Mr. Lupinacci ceased to be to be an executive officer
of the Company in March 2015.
Under the employment agreement, Mr. Lupinacci was entitled to an annual base salary of not less than $550,000 through
December 31, 2014 and not less than $600,000 annually through the remainder of the term. In addition, Mr. Lupinacci was entitled to participate in our executive bonus program and was eligible to receive bonuses of up to 100% of his base
salary or such maximum amount available under any executive bonus program generally applicable to our senior executives
Mr. Lupinacci was also
entitled to various benefits, including benefits available to our other senior executives and certain automobile benefits.
Pursuant to his employment
agreement, Mr. Lupinacci was granted an award of 13,881 RSUs which vest in installments of 3,786 (which vested on December 31, 2014), 5,048 and 5,047 (which would have vested on December 31, 2015 and December 31, 2016,
respectively, but were forfeited).
In addition, pursuant to his employment agreement, Mr. Lupinacci was granted an award of 47,322 2014 PSUs of
which 7,915 shares underlying such 2014 PSUs vested as of December 31, 2014 as follows: no shares vested based on achievement of EBITDA Growth of $263.8 million, 3,077 shares vested based on achievement of $2.24 EPS Growth, and 4,837 vested
based on achievement of $125 million of Free Cash Flow. See Mr. Lupinaccis Performance Based Stock Awards above for a more detailed discussion.
If Mr. Lupinaccis employment were terminated by us for cause or by him without good reason (each as defined in the original
employment agreement), he would have received his earned and unpaid base salary through the date of termination. If his employment were terminated by us without cause or by him for good reason, he would have received, in addition to the foregoing,
an amount equal to his base salary for the remaining term of the agreement plus any earned but unpaid annual bonus for a prior year or completed period (the prior year bonus), plus, if any such resignation or termination had occurred following our
first fiscal quarter of any year, a pro rata portion of his annual bonus for such year. In addition, he would have received vesting of 100% of his PSUs and 75% of his RSUs. If his employment were terminated by us without cause or by him for good
reason within 12 months after a change in control (as defined in the employment agreement), he would have also received an amount equal to $100 less than three (3) times the average of the annual cash compensation received by him on
or after April 7, 2014 in his capacity as an employee of the Company during the base period (as defined in Section 280G of the Internal Revenue Code) subject to an excess parachute payment limitation (as defined in
Section 280G). Annual cash compensation includes base salary plus any bonus payments paid to him.
The RSUs and 2014 PSUs granted to
Mr. Lupinacci were subject to forfeiture upon the termination of his employment under certain circumstances. Upon a change in control, all of Mr. Lupinaccis unvested RSUs and 2014 PSUs would have vested. Upon termination for death or
disability, all of Mr. Lupinaccis unvested RSUs and 2014 PSUs would have vested. Upon termination by us for cause or by Mr. Lupinacci without good reason, his unvested RSUs and 2014 PSUs would have been forfeited. Upon termination by
us without cause or by Mr. Lupinacci with good reason, a pro rata portion of his unvested 2014 PSUs for such year and 75% of his unvested RSUs would have vested.
27
The Lupinacci employment agreement also contained confidentiality provisions and non-competition and
non-solicitation provisions for a specified period.
Seth Horowitz
On March 18, 2014, we entered into an amendment of our employment agreement with Seth Horowitz dated April 2, 2012, that provided for
Mr. Horowitzs employment as our Chief Operating Officer for a term commencing March 18, 2014 (the Commencement Date) and continuing until December 31, 2016. Mr. Horowitz had previously served as the President of
the Companys Mens Division pursuant to the April 2, 2012 employment agreement. Mr. Horowitz ceased to be an employee or executive officer of the Company in April 2015.
Pursuant to the amendment to our employment agreement with him, Mr. Horowitz was entitled to receive a base annual salary of not less than $625,000.
Under the amendment to his employment agreement, Mr. Horowitz was also entitled to participate in our executive bonus program and was eligible to receive
bonuses of up to 100% of his base salary or such maximum amount available under any executive bonus program generally applicable to our senior executives.
Mr. Horowitz was also entitled to various benefits, including benefits available to our other senior executives and certain automobile benefits.
Pursuant to the amendment to his employment agreement, Mr. Horowitz was granted an award of 19,794 RSUs which were scheduled to vest in two equal
installments on December 31, 2015 and December 31, 2016, respectively. However, as Mr. Horowitz ceased to be an executive officer of the Company in April 2015, none of these grants will vest.
In addition, pursuant to the amendment to his employment agreement, Mr. Horowitz was granted an award of 69,279 2014 PSUs of which 8,097 shares
underlying such 2014 PSUs vested as of December 31, 2014 as follows: no shares vested based on achievement of EBITDA Growth of $263.8 million, 3,148 shares vested based on achievement of $2.24 EPS Growth, and 4,949 vested based on achievement
of $125 million of Free Cash Flow. Additionally, 31,491 2014 PSUs could have vested on December 31, 2015 and 29,691 2014 PSUs could have vested on December 31, 2016, subject to the achievement of EBITDA, diluted earnings per share and Free
Cash Flow performance metrics for those years, however these 2014 PSUs have been forfeited by Mr. Horowitz, as they are subject to continued employment.
Pursuant to the terms of the April 2, 2012 employment agreement, Mr. Horowitz was granted 75,000 shares of restricted stock which were subject to
vesting in three equal installments on April 2, 2013, April 2, 2014 and April 2, 2015, respectively. In addition, also prior to his promotion to the position of Chief Operating Officer, Mr. Horowitz received a grant of
30,000 2013 PSUs pursuant to our PSU Program for senior executives (other than our executive officers), which were scheduled to vest in two remaining installments of 8,400 and 9,000, in December 2015 and 2016, respectively subject to the
Companys achievement of pre-determined performance metrics. Of Mr. Horowitz 2013 PSUs, 8,200 of them vested based on the performance metrics in respect of 2014. Remaining 2013 PSUs will not vest, as they are subject to continued
employment and Mr. Horowitz ceased being employed by the Company in April 2015. See Mr. Horowitz Performance Based Stock Awards above for a more detailed discussion.
If Mr. Horowitzs employment had been terminated by us for cause or by him without good reason (each as defined in the
original employment agreement), he would have received his earned and unpaid base salary through the date of termination. If his employment had been terminated by us without cause or by him for good reason, he would receive, an amount equal to
(i) the greater of his base salary for the remaining term of the agreement and (ii) six months of his then applicable base salary, plus any earned but unpaid based on the Companys achievement of pre-determined goals over a four-year
period annual bonus for a prior year or completed period (the prior year bonus), and, in the event any such resignation or termination occurs following our first fiscal quarter of any year, a pro rata portion of his annual bonus for such year. If
his employment had been terminated by us without cause or by him for good reason within 12 months after a change in control (as defined in the employment agreement), he would also have received an amount equal to $100 less than three
(3) times the average of the annual cash compensation received by him on or after April 2, 2012 in his capacity as an employee of the Company during the base period (as defined in Section 280G of the Internal Revenue Code)
subject to an excess parachute payment limitation (as defined in Section 280G). Annual cash compensation included base salary plus any bonus payments paid to him.
The RSUs and PSUs granted to Mr. Horowitz were subject to forfeiture upon the termination of his employment under certain circumstances. Upon a change in
control, all of Mr. Horowitzs unvested RSUs and PSUs would have vested. Upon termination for death or disability, all of Mr. Horowitzs unvested RSUs and a pro rata portion of his PSUs for such year would have vested. Upon
termination by us for cause or by Mr. Horowitz without good reason, his unvested RSUs and PSUs would have been forfeited. Upon termination by us without cause or by Mr. Horowitz with good reason, his unvested RSUs and a pro rata portion of
his unvested PSUs for such year would have vested.
28
The amendment to the Horowitz employment agreement also contains confidentiality provisions and non-competition
and non-solicitation provisions for a specified period.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information with respect to outstanding equity-based awards at December 31, 2015 for our named executive officers.
|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Options
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
|
|
|
Vesting
Date of
Shares or
Units of
Stock That
Have Not
Vested
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That
Have
Not Vested
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
|
|
|
(#)
|
|
|
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
Peter Cuneo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Jones
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,687
|
|
|
|
12/31/2016
|
|
|
|
93,482
|
|
|
|
13,687
|
|
|
|
93,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,687
|
|
|
|
12/31/2017
|
|
|
|
93,482
|
|
|
|
13,687
|
|
|
|
93,482
|
|
|
|
|
|
|
|
|
|
|
|
|
David Blumberg
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
22.51
|
|
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
18.36
|
|
|
|
10/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
17.16
|
|
|
|
9/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason Schaefer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,897
|
|
|
|
81,256
|
|
|
|
|
|
|
|
|
|
|
|
|
Neil Cole
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Lupinacci
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seth Horowitz
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As described above under Narrative Disclosure to Summary Compensation Table and Plan-based Awards TableEmployment AgreementFormer EmployeesNeil ColeTerm Sheet there were 455,373
shares of common stock underlying PSUs that were eligible for vesting for Mr. Cole subject to the terms of a binding term sheet that we entered into with him. These shares included 113,843 shares of common stock underlying 2011 PSUs that vested
on December 31, 2015, and, therefore, no equity awards were outstanding at December 31, 2015.
|
(2)
|
Mr. Lupinacci ceased being an executive officer in March 2015.
|
(3)
|
Mr. Horowitz ceased being an executive officer in April 2015.
|
29
Grant dates and vesting dates for all outstanding equity awards at December 31, 2015 are as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Securities
Underlying
Unvested
Restricted
Stock(1)
(#)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
|
Grant Date
|
|
|
Vesting Date
|
|
Peter Cuneo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Jones
|
|
|
13,687
|
|
|
|
|
|
|
|
7/6/2015
|
|
|
|
12/31/2016
|
|
|
|
|
13,687
|
|
|
|
|
|
|
|
7/6/2015
|
|
|
|
12/31/2017
|
|
|
|
|
13,687
|
|
|
|
|
|
|
|
7/6/2015
|
|
|
|
12/31/2016
|
|
|
|
|
13,687
|
|
|
|
|
|
|
|
7/6/2015
|
|
|
|
12/31/2017
|
|
|
|
|
|
|
David Blumberg
|
|
|
4,752
|
|
|
|
|
|
|
|
4/30/2015
|
|
|
|
4/30/2016
|
|
|
|
|
4,751
|
|
|
|
|
|
|
|
4/30/2015
|
|
|
|
4/30/2017
|
|
|
|
|
|
|
Jason Schaefer
|
|
|
11,897
|
|
|
|
|
|
|
|
9/9/2013
|
|
|
|
12/31/2016
|
|
|
|
|
|
|
Neil Cole(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Lupinacci(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seth Horowitz(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes both restricted stock and performance-based awards.
|
(2)
|
Mr. Cole resigned in August 2015. See Narrative Disclosure to Summary Compensation Table and Plan-Based Awards TableEmployment AgreementsFormer EmployeesNeil ColeTerm Sheet.
|
(3)
|
Mr. Lupinacci ceased being an executive officer in March 2015.
|
(4)
|
Mr. Horowitz ceased being an executive officer in April 2015.
|
30
OPTION EXERCISES AND STOCK VESTED
The following table sets forth certain information regarding exercise of options and vesting of restricted stock held by our named executive officers during
the year ended December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise(1)
(#)
|
|
|
Value
Realized on
Exercise(2)
($)
|
|
|
Number of
Shares
Acquired on
Vesting (#)
|
|
|
Value
Realized on
Vesting ($)
|
|
Peter Cuneo(3)
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
$
|
1,176,000
|
|
|
|
|
|
|
David Jones(4)
|
|
|
|
|
|
|
|
|
|
|
6,843
|
|
|
$
|
46,740
|
|
|
|
|
|
|
|
|
|
|
|
|
2,281
|
|
|
$
|
15,579
|
|
|
|
|
|
|
David Blumberg(5)
|
|
|
|
|
|
|
|
|
|
|
46,916
|
|
|
$
|
320,436
|
|
|
|
|
|
|
|
|
|
|
|
|
16,667
|
|
|
$
|
113,836
|
|
|
|
|
|
|
|
|
|
|
|
|
5,940
|
|
|
$
|
156,281
|
|
|
|
|
15,000
|
|
|
$
|
166,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jason Schaefer(6)
|
|
|
|
|
|
|
|
|
|
|
3,966
|
|
|
$
|
27,088
|
|
|
|
|
|
|
Neil Cole(7)
|
|
|
|
|
|
|
|
|
|
|
113,844
51,230
|
|
|
$
$
|
777,555
1,036,373
|
|
|
|
|
|
|
Jeff Lupinacci (8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seth Horowitz (9)
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
$
|
170,750
|
|
(1)
|
The number of shares reflects the gross amount issued upon the exercise of the options and does not give effect to the withholding of a portion of the shares by us to satisfy certain withholding tax liability of the
person exercising the options.
|
(2)
|
Included in this column is the aggregate dollar amount realized by the named executive officer upon exercise of the options.
|
(3)
|
Represents a grant of 60,000 fully vested shares of restricted stock on August 6, 2015 in connection with Mr. Cuneos employment as Interim Chief Executive Officer.
|
(4)
|
Represents 6,843 shares of common stock underlying 2015 RSUs that vested on December 31, 2015 and 2,281 shares of common stock underlying 2015 PSUs that were deemed earned by the Compensation Committee for the year
ended December 31, 2015.
|
(5)
|
Represents 16,667 shares of common stock underlying 2013 RSUs that vested on December 31, 2015 and 52,856 shares of common stock underlying 2013 PSUs that were deemed earned by the Compensation Committee for the
year ended December 31, 2015.
|
(6)
|
Represents 3,966 shares of common stock underlying 2013 PSUs that were deemed earned by the Compensation Committee for the year ended December 31, 2015.
|
(7)
|
As noted above under Narrative Disclosure to Summary Compensation Table and Plan-Based Awards TableEmployment AgreementsFormer EmployeesNeil ColeTerm Sheet such shares representing
common stock underlying 51,230 2011 RSUs that vested as of August 5, 2015 and 113,844 2011 PSUs that were deemed earned by the Compensation Committee for the year ended December 31, 2015 have not been delivered to Mr. Cole and are
subject to the terms of the binding term sheet.
|
(8)
|
Mr. Lupinacci ceased to be an executive officer of the Company in March 2015 and forfeited his remaining 61,182 unvested 2014 PSUs.
|
(9)
|
Represents 25,000 shares of restricted stock that vested on April 2, 2015 pursuant to the terms of Mr. Horowitzs April 2, 2012 employment agreement. Mr. Horowitz ceased to be an executive
officer of the Company in April 2015 and forfeited the right to receive 61,182 unvested 2014 PSUs, 17,400 unvested 2013 PSUs.
|
31
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
As noted under Narrative to Summary Compensation Table-and Plan-Based Awards TableEmployment Agreements, we have entered into
employment agreements with each of our named executive officers. These agreements provide for certain payments and other benefits if a named executive officers employment with us is terminated under circumstances specified in his or her
respective agreement, including a change in control of the Company. A named executive officers rights upon the termination of his or her employment will depend upon the circumstances of the termination. With respect to
Messrs. Lupinacci and Horowitz, they ceased to be executive in March 2015 and April 2015, respectively. Following their resignation, no further payments were made to them. With respect to Mr. Cole, please see the description of
Mr. Coles Term Sheet set forth in Narrative Disclosure to Summary Compensation Table and Plan-Based Award TableEmployment AgreementsFormer EmployeesNeil ColeTerm Sheet described above. Therefore, none
of Messrs. Cole, Horowitz or Lupinacci are included in the tables below.
The receipt of the payments and benefits to the named executive officers under
their employment agreements are generally conditioned upon their complying with customary non-solicitation, non-competition, confidentiality, non-interference or non-disparagement provisions. By the terms of such agreements, the executives
acknowledge that a breach of some or all of the covenants described herein will entitle us to injunctive relief restraining the commission or continuance of any such breach, in addition to any other available remedies. Except as provided in the
footnotes below, the following table provides the term of such covenants following the termination of employment as it relates to each named executive officer:
|
|
|
|
|
|
|
|
|
Covenant
|
|
Peter Cuneo
|
|
David Jones
|
|
David Blumberg
|
|
Jason Schaefer
|
|
|
|
|
|
Confidentiality
|
|
Infinite duration
|
|
Infinite duration
|
|
Infinite duration
|
|
Infinite duration
|
|
|
|
|
|
Non-solicitation
|
|
None
|
|
(1)
|
|
(2)
|
|
(3)
|
|
|
|
|
|
Non-competition
|
|
None
|
|
(1)
|
|
(2)
|
|
(3)
|
|
|
|
|
|
Non-interference
|
|
None
|
|
(1)
|
|
(2)
|
|
(3)
|
|
|
|
|
|
Non-disparagement
|
|
None
|
|
None
|
|
None
|
|
None
|
(1)
|
Covenant runs from June 10, 2015 (the date of named executives employment agreement with the Company) until December 31, 2017.
|
(2)
|
Covenant runs from February 24, 2016 (the date of named executives 2016 employment agreement with the Company) until 12 months after the date of named executive officers termination (as defined in the
2016 employment agreement) with respect to specified competing entities as specifically set forth in the 2016 employment agreement.
|
(3)
|
Covenant runs from August 19, 2013 (the date of named executives employment agreement with the Company) until December 31, 2016.
|
32
Termination Payments (without a change in control)
The table below includes a description and the amount of estimated payments and benefits that would be provided by us (or our successor) to each of the named
executive officers under each employment agreement, assuming that a termination circumstance occurred as of December 31, 2015 and a change in control had not occurred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Payment
|
|
Termination Event
|
|
Peter Cuneo
|
|
|
David Jones (1)
|
|
|
Jason
Schaefer(1)
|
|
|
David
Blumberg(1)
|
|
Payment of earned but unpaid salary, unreimbursed expense, and accrued but unused vacation
time(2)
|
|
Termination for Cause or by executive without Good Reason
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
|
|
|
|
Earned but unpaid bonuses(2)
|
|
Termination without Cause or by executive for Good Reason, death or disability
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
|
|
|
|
Lump Sum Severance Payment
|
|
Termination without Cause or by executive for Good Reason
|
|
$
|
343,750
|
|
|
$
|
1,150,000
|
|
|
$
|
450,000
|
|
|
$
|
45,834
|
|
|
|
|
|
|
|
Pro rata portion of current year bonuses
|
|
Disability, termination without Cause, or termination by executive for Good Reason
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
|
|
|
|
Continued coverage under medical, dental, hospitalization and life insurance plans
|
|
Disability, termination without Cause, or termination by executive for Good Reason
|
|
|
None
|
|
|
$
|
59,294
|
|
|
$
|
58,794
|
|
|
$
|
59,009
|
|
(1)
|
See employment agreement descriptions beginning on page 33 for information regarding acceleration of vesting and forfeiture of PSUs and RSUs. This chart illustrates hypothetical termination events (without a change in
control) as of December 31, 2015.
|
(2)
|
At December 31, 2015 each named executive officer is assumed to have received all such payments.
|
Payments Upon Termination Following a Change of Control
In addition to the payments made upon termination by the Company without cause or termination by the executive for good reason the employment agreement with
Mr. Schaefer provides that, if, within twelve months of a change in control, their employment is terminated by us without cause or they terminate their employment with us for good reason, as all such terms
are defined in each employment agreement, we are obligated to make a lump-sum severance payment to each such named executive officer equal to $100 less than three times the named executive officers annualized includable compensation for
the base period (as defined in Section 280G of the Internal Revenue Code). Under the same circumstances, our prior employment agreement with Mr. Blumberg obligates us to make a lump-sum severance payment to Mr. Blumberg equal to
$100 less than three times the greater of (i) $400,000 or (ii) the average of the annual cash compensation received by Mr. Blumberg on or after the effective date of his employment agreement in his capacity as an employee of the
Company during the base period (also as defined in Section 280G of the Internal Revenue Code).
Under the circumstances described in the
preceding paragraph, all of the named executive officers (other than Mr. Cuneo) would be entitled to an accelerated vesting and payment of stock options and restricted stock awards granted to that named executive officer. However, the sum of
any lump sum payments, the value of any accelerated vesting of stock options and restricted stock awards, and the value of any other benefits payable to the named executive officer, may not equal or exceed an amount that would constitute an
excess parachute payment (as defined in Section 280G of the Internal Revenue Code). In respect of these named executive officers, such payment is due within 15 days of the date of such termination.
33
The following table quantifies the estimated maximum amount of payments and benefits under our employment
agreements and agreements relating to awards granted under our equity incentive and stock option plans to which the named executive officers would have been entitled upon termination of employment if we had terminated their employment without cause
within twelve (12) months following a change in control of our Company that (by assumption) occurred on December 31, 2015 and prior to the expiration of their respective employment agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Cash
Severance
Payment
($)
|
|
|
Continuation of
Medical/Welfare
Benefits
($)
|
|
|
Present
Value of
Accelerated
Vesting of
Equity
Awards
($)(1)
|
|
|
Present
Value of
Accelerated
Payment of
Bonus
($)
|
|
|
Total
Termination
Benefits
($)
|
|
Peter Cuneo
|
|
$
|
343,654
|
|
|
$
|
0
|
(3)
|
|
$
|
409,800
|
|
|
$
|
0
|
|
|
$
|
753,454
|
|
David Jones
|
|
$
|
2,537,992
|
|
|
$
|
52,294
|
|
|
$
|
467,404
|
|
|
$
|
0
|
|
|
$
|
2,538,799
|
(4)
|
Jason Schaefer
|
|
$
|
2,220,086
|
|
|
$
|
58,794
|
|
|
$
|
81,257
|
|
|
$
|
0
|
|
|
$
|
1,784,369
|
(4)
|
David Blumberg
|
|
$
|
2,877,191
|
(2)
|
|
$
|
59,009
|
|
|
$
|
64,905
|
|
|
$
|
0
|
|
|
$
|
3,001,105
|
(4)
|
34
(1)
|
This amount represents: (a) with respect to all PSUs, or RSUs granted during the 2015 calendar year, the unrealized value of the unvested portion of the respective named executive officers PSUs and/or such
RSUs based upon the closing price of our common stock on December 31, 2015, and (b) with respect to all other RSUs, the present value of the accelerated vesting of such RSUs. Additionally, this analysis presumes that PSUs with a vesting
date of December 31, 2015, whether forfeited on such date or not forfeited on such date, would have become vested in full upon a change of control on December 31, 2015. For 280G purposes, we have assumed that the accelerated vesting of
RSUs on a change in control is a change in control payment.
|
(2)
|
This amount assumes no extension of Mr. Blumbergs employment agreement after December 31, 2015, though we entered into an employment agreement with Mr. Blumberg on February 24, 2016.
|
(3)
|
Mr. Cuneo is not enrolled in any medical plans and does not receive welfare benefits.
|
(4)
|
The employment agreement of the named executive officer requires that the total termination benefits that the named executive officer would otherwise be entitled to receive upon a change of control be reduced to the
maximum amount that will not result in receipt by the named executive officer of an excess parachute payment as defined under 280G of the Code (the 280G Cutback). The total termination benefits reported in this chart have
been reduced by the 280G Cutback, without having reduced any particular component of such benefits.
|
DIRECTOR COMPENSATION
The Compensation Committee determined that for each full year of service as a director of our company during 2015, each non-employee member of
the Board of Directors would receive a cash payment of $80,000 payable one half on January 1
st
and one half on July 1
st
, and a number
of shares of restricted stock with an aggregate value of $100,000 based on the closing price of the first trading day of each new year, with all of such shares vesting in full on July 1
st
of
the year of grant. Additionally, each Chairperson of the Audit, Compensation and Governance Committees would receive additional cash payments of $25,000, $20,000 and $15,000, respectively.
As described above in Compensation Discussion and Analysis, in 2015 the Company made certain changes to Mr. Cuneos compensation, in
connection with his appointment to the additional role of Interim Chief Executive Officer from August 6, 2015 to March 31, 2016. In connection with the newly-established role of Lead Director, the Compensation Committee set compensation
for the Lead Director position at $40,000 annually, in addition to the director compensation amounts noted above. For 2015, Mr. Cohen received the director compensation amounts noted above, plus a pro-rata portion of $40,000 based on his
appointment to the additional role of Lead Director beginning August 6, 2015. As previously noted, Mr. Cohen ceased serving as Lead Director on April 1, 2016.
As previously disclosed in a press release furnished with a Form 8-K on August 12, 2015, the Company formed a Special Committee of the Board of Directors
in 2015. Each member of the Special Committee received fees for his or her work in 2015. In addition, following Mr. Coles resignation in 2015, the Board of Directors formed an Executive Search Committee to conduct a search for our new
President and Chief Executive Officer. Each member of the Executive Search Committee also received fees for his or her work in 2015.
The following table
sets forth compensation information for 2015 for each person who served as a member of our Board of Directors at any time during 2015 who is not also a current executive officer. An executive officer who serves on our Board of Directors does not
receive additional compensation for serving on the Board of Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned
or Paid
in Cash
($)
|
|
|
Stock
Awards
($)
(1)
|
|
|
Option
Awards
($)
(9)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Peter Cuneo(2)
|
|
|
168,790
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
268,790
|
|
Drew Cohen(3)
|
|
|
294,629
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
394,629
|
|
Barry Emanuel(4)
|
|
|
170,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
270,000
|
|
Mark Friedman(5)
|
|
|
208,500
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
100,000
|
(6)
|
|
$
|
408,500
|
|
James A. Marcum(7)
|
|
|
155,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
255,000
|
|
Sue Gove(8)
|
|
|
186,081
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
286,081
|
|
(1)
|
Represents the aggregate grant date fair value. See Note 5 to Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for a discussion for the relevant assumptions used in calculating
grant date fair value.
|
35
(2)
|
Fees earned or paid in cash to Mr. Cuneo include (i) $80,000 attributable to annual cash director fees; (ii) $73,871 attributable to Special Committee fees from April to August 5, 2015; and
(iii) $14,919 attributable to pro-rated portion of annual Audit Committee chairman fee from January 1, 2015 to August 5, 2015. From August 6, 2015 until March 31, 2016, while he served in the role of Interim Chief Executive
Officer, Mr. Cuneo did not receive any additional compensation for his service as a director. See Summary Compensation Table and Narrative Disclosure to Summary Compensation Table and Plan-Based Awards TableEmployment
Agreements above for a description of Mr. Cuneos employment agreement and details regarding his compensation as Interim Chief Executive Officer.
|
(3)
|
Fees earned or paid in cash to Mr. Cohen include (i) $80,000 attributable to annual cash director fees; (ii) $150,000 attributable to Special Committee fees from April to November 2015; (iii) $16,129
attributable to pro-rata portion of Lead Director fee; (iv) $15,000 attributable to annual Nominating and Governance Committee chairman fee; (v) $12,500 attributable to CEO Search Committee co-chair fee; and (vi) $21,000 attributable
to CEO Search Committee fees from August to December 2015.
|
(4)
|
Fees earned or paid in cash to Mr. Emanuel include (i) $80,000 attributable to annual cash director fees; (ii) $75,000 attributable to Special Committee fees from April to November 2015; and
(iii) $15,000 attributable to CEO Search Committee fees from August to December 2015.
|
(5)
|
Fees earned or paid in cash to Mr. Friedman include (i) $80,000 attributable to annual cash director fees; (ii) $75,000 attributable to Special Committee fees from April to November 2015;
(iii) $20,000 attributable to annual Compensation Committee chairman fee; (iv) $12,500 attributable to CEO Search Committee co-chair fee; and (v) $21,000 attributable to CEO Search Committee fees from August to December 2015.
|
(6)
|
Represents $100,000 in consulting fees in connection with a consulting arrangement entered into with Mr. Friedman relating to the provision by Mr. Friedman of investor relations services as noted below under
Item 13. Certain Relationships and Related Transactions, and Director Independence.
|
(7)
|
Fees earned or paid in cash to Mr. Marcum include (i) $80,000 attributable to annual cash director fees and (ii) $75,000 attributable to Special Committee fees from April to November 2015.
|
(8)
|
Fees earned or paid in cash to Ms. Gove include (i) $80,000 attributable to annual cash director fees; (ii) $75,000 attributable to Special Committee fees from April to November 2015; (iii) $10,081
attributable to pro-rated portion of annual Audit Committee chairman fee for the period August 6, 2015 to December 2015; and (iv) $21,000 attributable to CEO Search Committee fees from August to December 2015.
|
(9)
|
In 2015, there were no outstanding options at fiscal year end for directors. As described above, directors annual equity awards vest in full on July 1
st
of
the year of grant. In 2015, there were no unvested stock awards at fiscal year end for directors.
|
Director Compensation for
2016.
Following its annual review of director compensation, the Compensation Committee determined that, other than for Messrs. Cuneo and Cohen, it would not alter cash fees or equity awards for director compensation, and therefore, for each
full year of service as a director of our company during 2016, each non-employee member of the Board of Directors will receive a cash payment of $80,000 payable one half on January 1
st
and one half on July 1
st
, and a number of shares of restricted stock with an aggregate value of $100,000 based on the closing price of the first trading day of each new year, with such shares
vesting in full on July 1
st
of the year of grant. Additionally, each Chairperson of the Audit, Compensation and Governance Committees will receive additional cash payments of $25,000, $20,000
and $15,000, respectively.
In his role as Executive Chairman, Mr. Cuneo will not receive director compensation. Instead, he will be compensation as
discussed under Narrative Disclosure to Summary Compensation Table and Plan-Based Awards TableEmployment Agreements Current Employees above. In addition to the cash fees and equity awards noted above, for 2016 Mr. Cohen
will receive a pro-rata portion of Lead Director compensation for the period January 1, 2016 until March 31, 2016.