Item 1.01
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Entry into a Material Definitive Agreement.
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On
January 27, 2017, the Compensation Committee of our Board of Directors granted restricted stock units pursuant to our 2015 Long-Term
Incentive Plan, as amended (the “2015 Plan”) that will enable the following persons to receive shares of our common
stock, subject to satisfaction of specified conditions, as follows: (i) up to 159,336 shares to Morris Goldfarb, our Chairman and
Chief Executive Officer, who is also a Director; (ii) up to 122,566 shares to Sammy Aaron, our Vice Chairman and President, who
is also a Director; (iii) up to 81,710 shares to Wayne S. Miller, our Chief Operating Officer; (iv) up to 16,342 shares to Neal
S. Nackman, our Chief Financial Officer; and (v) up to 40,855 shares to Jeffrey Goldfarb, our Executive Vice President, who is
also a Director.
The
above-named persons will be entitled to receive these shares of our common stock only if
the performance conditions in clauses
(a) and (b) set forth below are satisfied:
(a)
(i) the amount of our consolidated earnings before interest and financing charges, net, and income tax expense (“EBIT”)
for the fiscal year ending January 31, 2019, subject to certain adjustments for non-recurring items, is at least 25% greater than
EBIT for the fiscal year ending January 31, 2017, subject to certain adjustments for non-recurring items and excluding the results
of the Donna Karan business for such fiscal year (“Adjusted Fiscal 2017 EBIT”) or (ii) if the performance condition
in clause (a)(i) is not satisfied, our EBIT for the fiscal year ending January 31, 2020, subject to certain adjustments for non-recurring
items, is at least 50% greater than Adjusted Fiscal 2017 EBIT; and
(b)
the average closing price per share of our common stock on the Nasdaq Global Select Market over a twenty consecutive trading day
period
(i) during the period beginning on the date of grant and on or prior to January 31, 2019 is at least $30.30 (which
is 20% above the closing price on the date of the Compensation Committee meeting, January 27, 2017 (the “Reference Date”)
or (ii) if the stock price performance period in clause (b)(i) is not satisfied, during the period beginning subsequent to January
31, 2019 and ending on or prior to January 31, 2020 is at least $31.5625 (which is 25% above the closing price on the Reference
Date)
(clauses (a) and (b) together, the “Performance Conditions”).
In
addition, the right to receive shares of common stock
pursuant to the above-described restricted stock unit grants will
become vested as to 50% of the shares on each of January 27, 2019 and January 27, 2020 (the “Time Vesting Condition”).
A
grantee must remain employed by us or otherwise perform service for us
in order to receive shares of our common stock pursuant
to the above-described restricted stock unit grants after both Performance Conditions have been satisfied. If both Performance
Conditions are not satisfied within the above-described time periods, we will not issue any shares of common stock pursuant to
the restricted stock unit grants. If both Performance Conditions are satisfied at any time during the above-referenced time periods,
we will issue shares of common stock in respect of all annual installment periods of the Time Vesting Condition for which shares
have not previously been issued.
The number of shares of common stock to which
the restricted stock units relate and the vesting price will be appropriately adjusted in the event of stock splits, stock dividends
and other extraordinary corporate events.
A
copy of the form of
Restricted Stock Unit Agreement for these grants under the 2015 Plan is filed herewith as Exhibit 10.1.