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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On July 20, 2018, Lowe’s Companies, Inc. (the “Company”) appointed Joseph M. McFarland III as Executive Vice President, Stores, effective as of August 15, 2018 (the “Effective Date”).
Mr. McFarland,48, has served as Executive Vice President/ Chief Customer Officer of major retailer J. C. Penney Company, Inc. since March 2018 and Executive Vice President of Stores and Home Merchandising Categories from 2016 to 2018. Previously, he was at The Home Depot, Inc., serving as President of the Northern Division from 2014 to 2015 and President of the Western Division from 2007 to 2014. Mr. McFarland served in a variety of other roles at The Home Depot, Inc., from 1994 to 2007 and served in the United States Marine Corps from 1987 to 1993.
On July 18, 2018, the Company and Mr. McFarland entered into an offer letter (the “Offer Letter”). Pursuant to the Offer Letter, during the term of his employment with the Company, Mr. McFarland will receive (i) an annual base salary of $750,000, (ii) eligibility for an annual cash incentive bonus with a target payout of 100% of Mr. McFarland’s annual base salary, provided that Mr. McFarland’s annual cash incentive bonus for the current fiscal year will be $375,000 so long as he remains employed through the end of the fiscal year, (iii) eligibility for an annual equity incentive award grant (consisting of a mixture of performance‑based restricted share units, time‑based restricted shares, stock appreciation rights, stock awards and/or stock options) with a target award value equal to $3,000,000, provided that Mr. McFarland’s annual equity incentive award grant for the current fiscal year will consist of (a) time‑based restricted shares with an award value of $850,000, which such grant will vest in full on the third anniversary of the grant date, and (b) nonqualified stock options with an award value of $850,000, which such grant will vest in equal annual installments on the first three anniversaries of the grant date, in each case generally subject to Mr. McFarland’s continued employment with the Company through the applicable vesting date, (iv) a sign‑on equity incentive grant consisting of (a) time‑based restricted shares with an award value of $375,000, which such grant will vest in full on the third anniversary of the grant date, and (b) nonqualified stock options with an award value of $375,000, which such grant will vest in equal annual installments on the first three anniversaries of the grant date, in each case generally subject to Mr. McFarland’s continued employment with the Company through the applicable vesting date, (v) a sign-on cash bonus in the amount of $500,000, payable on the first pay check following 90 days of continuous employment, (vi) reimbursement for certain expenses incurred by Mr. McFarland in connection with his relocation to the Charlotte, North Carolina area, (vii) reimbursement of up to $12,000 annually for costs incurred by Mr. McFarland for his personal tax and financial planning, (viii) four weeks of vacation per year and (ix) an annual executive physical exam. Mr. McFarland is also eligible to participate in those change in control, retirement, welfare and fringe benefits programs available to senior executives of the Company generally. Pursuant to the Offer Letter, Mr. McFarland is subject to certain non‑competition restrictions that apply during the term of his employment and for six (6) months thereafter, certain non‑solicitation restrictions that apply during the term of his employment and for twelve (12) months thereafter and certain confidentiality restrictions that apply indefinitely.
The foregoing summary of Mr. McFarland’s compensation and terms of employment generally is not complete and is qualified in its entirety by the Offer Letter, a copy of which a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the current fiscal quarter.
There are no family relationships between Mr. McFarland and any director or executive officer of the Company, and Mr. McFarland has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S‑K.