Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
On September 6, 2017, GNC Holdings, Inc. (the Company)
announced that the Board of Directors of the Company (the Board) has appointed Kenneth A. Martindale to serve as Chief Executive Officer of the Company, effective on September 11, 2017. Also on September 6, 2017, the Company
announced that Robert F. Moran will step down and cease to serve as Interim Chief Executive Officer of the Company, also effective on September 11, 2017, but will remain on the Board.
The Board has also elected Mr. Moran as
Non-Executive
Chairman of the Board. Michael F. Hines
will step down and cease to serve as Chairman of the Board, but will remain on the Board. Those changes are also effective on September 11, 2017.
Mr. Martindale, age 57, was CEO of Rite Aid Stores, a position held since August 3, 2015, and President of Rite Aid Corporation, a
position held since June 2013. He previously served as Rite Aids Chief Operating Officer since June 2010. From December 2008 until June 2010, he served as Rite Aids Senior Vice President and Chief Merchandising, Marketing and Logistics
Officer. He served as
co-President
and Chief Merchandising and Marketing Officer for Pathmark Stores, Inc. from January 2006 until its acquisition by the Great Atlantic & Pacific Tea Company in
December 2007.
The Company has entered into a three-year Employment Agreement with Mr. Martindale, pursuant to which it agreed to
provide Mr. Martindale with the following compensation in connection with his service as Chief Executive Officer: (i) an annual salary of $975,000, (ii) an annual bonus opportunity of at least 150% of base salary,
pro-rated
with respect to the 2017 calendar year, which will be earned based on the Compensation and Organizational Development Committees evaluation of performance objectives established for the applicable
year, (iii) a cash relocation bonus in the amount of $100,000, (iv) on September 11, 2017, make-whole grants of restricted stock in the amounts of $600,000, which are fully vested restricted shares with transfer restrictions
that lapse on the earliest to occur of a Change in Control of GNC, the third anniversary of grant or Mr. Martindales death, disability or other separation from service for any reason; $950,000, which are unvested restricted shares
scheduled to vest on the last trading day of December 2017 subject to acceleration to the extent necessary to cover any applicable income and payroll tax withholding resulting from the recognition of ordinary income pursuant to a Section 83(b)
election (Section 83(b) Tax Liability); and $1,200,000, which are unvested restricted shares scheduled to vest in three equal installments on each of the first three anniversaries of grant subject to acceleration to the extent necessary
to cover any applicable Section 83(b) Tax Liability, and (v) on September 11, 2017, time-vested grants consisting of a grant of restricted stock in the amount of $1,900,000, which are unvested restricted shares scheduled to
vest in three equal installments on each of the first three anniversaries of grant and a grant of stock options in the amount of $1,900,000, which are also scheduled to vest in three equal installments on each of the first three anniversaries of
grant. Vesting will fully accelerate in the event of death or disability and, in the case of the make-whole awards, a separation from service by reason of involuntary termination by the Company without Cause or by Mr. Martindale voluntarily for
Good Reason, as defined in the Employment Agreement. In addition,
time-vested
awards that would have vested during the 24 month period following an involuntary termination by the Company without Cause or by
Mr. Martindale voluntarily for Good Reason will also vest.
Under the Employment Agreement, Mr. Martindale will also receive
cash severance in the event his employment is terminated by the Company without Cause or by Mr. Martindale voluntarily for Good Reason. In such event, the Company will pay Mr. Martindale two times the sum of his base salary and average
bonus paid in respect of each of the two fiscal years immediately preceding the date of termination. Target bonus amounts are used in the event his termination of employment occurs on or during the 24 month period following a Change in Control.
Mr. Martindale is also entitled to receive continued medical coverage for 18 months following termination, subject to his
co-payment
of applicable employee premiums. Mr. Martindale is entitled to
payment of legal fees of up to $25,000 in connection with the negotiation and documentation of the Employment Agreement.
Mr. Martindale has also agreed to the Companys standard senior executive restrictive
covenants including confidentiality of indefinite duration; nonsolicitation of customers; and noncompetition and
nonsolicitation/no-hire
of employees during his employment and for 24 months following his
termination of employment for any reason. The foregoing description of the terms and conditions of the Employment Agreement and terms of employment is subject to the entire agreement, which is attached as an exhibit hereto.