Item 1.01
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Entry into a Material Definitive Agreement.
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On
March 13, 2017, the Compensation Committee of our Board of Directors made a special one-time award to certain key executives in
connection with the acquisition of Donna Karan International Inc. One-half of the amount of each award will be paid in cash and
the other half will be made in the form of performance-based Restricted Stock Units (“RSUs”). The Compensation Committee
believes that the acquisition was a transformative event for G-III and that it was appropriate to recognize the roles played by
the Company’s key executives in consummating this acquisition.
The total value of the special award made
to each key executive officer (one-half as cash and one-half as RSUs) is as follows: Morris Goldfarb, Chairman and Chief Executive
Officer-$4,000,000; Sammy Aaron, Vice Chairman and President-$2,500,000; Wayne S. Miller, Chief Operating Officer-$550,000; Neal
S. Nackman, Chief Financial Officer-$200,000; and Jeffrey Goldfarb, Executive Vice President-$350,000.
The RSUs will be issued pursuant to our
2015 Long-Term Incentive Plan, as amended (the “2015 Plan”). The number of shares covered by each RSU will be determined
by dividing the dollar amount of the RSU award (one-half of each special award) by the closing price of our common stock on the
second trading day after release of our earnings for the fiscal year ended January 31, 2017.
Each
RSU award will be subject to performance-based and time-based vesting conditions. The performance-based vesting condition will
be satisfied if (and only if)
either the performance goal in clause (a) or (b) (each, a “Performance Condition”)
is attained:
(a)
the amount of the consolidated earnings before interest and financing charges, net, depreciation, amortization and income
tax expense of the Donna Karan business is at least $25,000,000 in either the fiscal year ending January 31, 2018, January 31,
2019 or January 31, 2020; or
(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 ending on or prior to March 28, 2019 is at least $30.00
(which is approximately 23% above the closing price on the trading date prior to the date of the Compensation Committee meeting
at which the special awards were made) or (ii) if the stock price performance condition in clause (b) is not satisfied, during
the period beginning subsequent to March 28, 2019 and ending on or prior to March 28, 2020 is at least $31.50 (which is approximately
29% above the closing price on the trading date prior to the Compensation Committee meeting at which the special awards were made).
If
either of the Performance Conditions is met, then, the RSUs will become vested as to one-third of the shares on each of
March 28, 2018, March 28, 2019 and March 28, 2020 (the “Time-Based Vesting Condition”), subject to each executive’s
continuous employment or service with us through the applicable Time-Based Vesting Condition date.
If
n
either of the Performance Conditions is satisfied, we will not issue any shares of common stock pursuant to the RSU awards.
If one of the Performance Conditions is satisfied
after
the first
Time-Based Vesting Condition date (March 28, 2018), then, at the time the Performance Condition is met, we will
issue the shares of common stock that would have been issued on any prior Time-Based Vesting Condition date as if the Performance
Condition had been met on or prior to that date.
The
number of shares of common stock to which
any unvested RSUs relate will be subject to appropriate adjustment 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.