Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)(1) Between January 21 to January 25, 2021, the Compensation Committee of
the Company's Board of Directors approved: (i) a form of Time-Based Restricted
Unit (CEO) Agreement (the "Time-Based (CEO) Agreement") to be used to make
grants of time-based restricted stock units to the CEO, and (ii) a form of
Performance-Based Non-Qualified Stock Option (CEO) Agreement (the
"Performance-Based (CEO) NQSO Agreement") to be used to make grants of
performance-based non-qualified stock options to the CEO.
Effective January 27, 2021, the Compensation Committee approved a grant of
stock-based awards with an approximate grant date fair market value of
$3,000,000 to James J. Owens, President and Chief Executive Officer of the
Company. The Compensation Committee acknowledged that the next three years are
significant for the Company. In particular, conducting operations in a
post-COVID global environment, maximizing the synergies from the Royal
acquisition and the Company's reorganization and restructuring initiatives,
properly executing executive succession activities, and delivering sustained
returns to shareholders will be key. The continued leadership of Mr. Owens
during this period is of importance to the Board. Therefore, the Compensation
Committee determined that this award should include an element of retention and
an element of performance directly linked to shareholder returns. The grant
value is divided evenly between: (i) time-based restricted stock units which
will cliff-vest on January 27, 2024 subject to Mr. Owens remaining as CEO of the
Company until the vesting date, and (ii) performance-based non-qualified stock
options which will cliff-vest on January 27, 2024 subject to Mr. Owens remaining
as CEO of the Company until the vesting date and the number of options earned
being dependent on the Company's total shareholder return ("TSR") relative to a
set of comparator companies during the Company's fiscal years 2021 through 2023.
The Compensation Committee believes that this award value is reasonable relative
to external comparisons and within the general parameters of the Company's
existing practices. Further, this award will support the retention of Mr. Owens,
complement the existing portfolio of long-term incentives at the Company, and
provide additional alignment with shareholder interest in TSR growth. The stock
options are performance-based, as no value is delivered without share price
appreciation, which is why they represent a meaningful portion of the annual
long-term incentive program for executives. This specific performance-based
stock option grant aligns with the Company's philosophy, and further supports
pay for performance by varying the vesting of stock options based on relative
TSR performance. The Compensation Committee determined that this combination of
vehicles (time-based restricted stock units and performance-based stock options)
was best suited to support retention and drive long-term shareholder value
creation.
For the performance-based non-qualified stock option grant, a target number of
options would be earned if the Company's TSR is equal to the peer group 50th
percentile. No options will vest if the Company's TSR is below the peer group
25th percentile. The number of options may increase to 200% of the target number
if the Company's TSR is at or above the peer group 75th percentile. If the
Company's TSR is negative over the period (fiscal years 2021 through 2023), then
no more than the target number of options may vest, regardless of the Company's
relative performance over the period.
2
--------------------------------------------------------------------------------
The foregoing description is qualified in its entirety by reference to the forms
of the Time-Based Restricted Stock Unit (CEO) Award Agreement and the
Performance-Based Non-Qualified Stock Option (CEO, TSR) Award Agreement, copies
of which are filed as Exhibit 10.1 and 10.2 to this Current Report on
Form 8-K and are incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
10.1 Time-Based Restricted Stock Unit (CEO) Award Agreement
10.2 Performance-Based Non-Qualified Stock Option (CEO, TSR) Award Agreement
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
3
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses