Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Amended and Restated Employment Agreement with Chief Executive Officer
On December 12, 2017 (the Effective Date), Smart & Final Stores, Inc. (the Company) entered into an amended and restated employment agreement with David G. Hirz, President and Chief Executive Officer of the Company, which agreement replaces and supersedes all prior employment agreements between the Company and Mr. Hirz (the Amended Employment Agreement). The Amended Employment Agreement provides for a three-year term from the Effective Date, with automatic one-year extensions unless either party gives written notice of non-renewal not later than 180 days prior to the third anniversary of the Effective Date or any anniversary thereafter.
Under the Amended Employment Agreement, in addition to the severance benefits to which Mr. Hirz was eligible under his previous employment agreement, if Mr. Hirz Retires (as defined in the Amended Employment Agreement) after July 20, 2019 and before December 31, 2020, he will be eligible to receive (a) a two-year acceleration of vesting of all outstanding options to purchase common stock of the Company (Existing Options) and (b) with respect to certain of his awards of restricted stock of the Company, immediate vesting of the lesser of (i) 50% of the total number of shares of restricted stock subject to the applicable award as of the date of grant and (ii) all of the restricted stock subject to the applicable award as of the date of such termination (Existing Restricted Stock), in each case insofar as granted prior to the date of the termination of Mr. Hirzs employment and held by him on such date.
If Mr. Hirz Retires on or after December 31, 2020 and before December 31, 2022, he will be eligible to receive (a) continued payment of his then-current base salary for a period of 12 months following termination and (b) immediate vesting of (i) all Existing Options and (ii) all Existing Restricted Stock, in each case granted prior to the date of the termination of Mr. Hirzs employment and held by him on such date. If Mr. Hirz is terminated by the Company without Cause or resigns for Good Reason (each as defined in the Amended Employment Agreement) on or after December 31, 2020, he will be eligible to receive immediate vesting of (x) all Existing Options and (y) all Existing Restricted Stock, in each case insofar as granted prior to the date of the termination of Mr. Hirzs employment and held by him on such date.
If Mr. Hirz Retires on or after December 31, 2022, he will be eligible to receive (a) continued payment of his then-current base salary for a period of 24 months following termination, (b) a pro-rated share of the Annual Bonus (as defined in the Amended Employment Agreement), the amount of which will not exceed 10% of Mr. Hirzs then-current Base Salary, and (c) the immediate vesting of (i) all Existing Options and (ii) all Existing Restricted Stock, in each case insofar as granted prior to the date of the termination of Mr. Hirzs employment and held by him on such date.
Compensatory Arrangements with Certain Named Executive Officers
Effective December 8, 2017 (the Grant Date), the compensation committee of the board of directors (the Committee) of the Company made special performance-linked discretionary compensation awards to Mr. Hirz and Derek R. Jones, President,
Cash & Carry
. The awards are intended to provide a strong incentive for the retention of these officers in a competitive market for executives in the grocery industry. Additionally, the performance goals are intended to align Mr. Hirzs and Mr. Jones equity compensation to the achievement of the long-term strategic goals of the Company. Mr. Hirz received 279,329 shares of restricted stock and Mr. Jones received 61,452 shares of restricted stock, in each case, granted pursuant to the Smart & Final Stores, Inc. Amended and Restated 2014 Stock Incentive Plan.
Vesting of the shares of restricted stock is subject to satisfaction of both time-based and performance-based vesting criteria as established by the Committee (the Performance Goals) and set forth in the related award agreements (each an Award Agreement and, collectively, the Award Agreements). The shares of restricted stock vest upon the later of (i) the date on which the Performance Goals are achieved and (ii) the third anniversary of the Grant Date, subject to Mr. Hirzs or Mr. Jones, as applicable, continued employment with the Company on such date. If the Performance Goals related to either Award Agreement are not achieved by the expiration of the Performance Period (as defined in the Award Agreements), the shares of restricted stock related to such Award Agreement will be forfeited.
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Additionally, on the Grant Date, the Committee made special discretionary compensation awards in the form of grants of restricted stock to the named executive officers of the Company listed below in the amounts set forth below:
Named Executive Officer
|
|
Restricted Stock Grant
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Scott R. Drew, EVP,
Smart & Final
Operations
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61,452
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Richard N. Phegley, SVP and Chief Financial Officer
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61,452
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Eleanor E. Hong, SVP and Chief Marketing and Strategy Officer
|
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33,519
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Edward Wong, SVP, Supply Chain and CIO
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33,519
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The Committee determined to
make special discretionary compensation awards
to the named executive officers in recognition of the Companys performance in the face of a challenging business environment. The shares of restricted stock vest upon the third anniversary of the Grant Date, subject to the respective named executive officers continued employment with the Company on such date.
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