Item 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Retention Program.
On September 9, 2021, the Board of Directors of Sunstone Hotel Investors, Inc. (the “Company”) approved a one-time retention program (the “Retention Program”) and entered into letter agreements evidencing the program (each, a “Retention Letter”) with each of its named executive officers, Bryan Giglia, Robert Springer and David Klein (each, an “Executive”).
Under the Retention Program, each Executive is eligible to receive a cash bonus subject to his continued employment with the Company through February 28, 2022. In addition, under the Retention Program the Company granted to each Executive a restricted stock award pursuant to its 2004 Long-Term Incentive Plan, which vests as to 50% of the shares subject to the award on each of February 28, 2023 and September 30, 2024, subject to the Executive’s continued employment through the applicable date. The amounts subject to the cash bonus and the restricted stock award for each Executive is set forth in the following table:
|
Executive
|
Cash Retention Award
|
Retention Equity Award
|
|
Bryan Giglia
|
$585,225
|
$1,170,450
|
|
Robert Springer
|
$496,868
|
$993,736
|
|
David Klein
|
$370,107
|
$740,214
|
Upon a termination of the Executive’s employment by the Company without “cause”, by the Executive for “good reason” or by reason of the Executive's death or disability, then (i) any then-unpaid cash bonus under the Retention Program will be paid to the Executive and (ii) any then-unvested equity award under the Retention Program will vest in full, in each case subject to the Executive’s (or his estate’s) timely execution and non-revocation of a general release of claims.
The foregoing description of the Retention Program is not complete and is subject to and qualified in its entirety by the terms of the form of Retention Letter, a copy of which is filed herewith as Exhibit 10.1 and incorporated herein by reference.
Employment Agreement.
In addition, on September 10, 2021, the Compensation Committee of the Board approved entering into an employment agreement (the “Employment Agreement”) with the Company’s Interim Chief Executive Officer, Douglas Pasquale (the “Executive”). The term of the Employment Agreement is scheduled to expire on the earlier of September 2, 2022 and the date on which the Company appoints a new Chief Executive Officer.
The Employment Agreement provides for an annual base salary of $825,000 and eligibility to receive a cash performance bonus for the term of the Employment Agreement, based on the attainment of performance goals, targeted at $1,850,000, with minimum and maximum bonus opportunities of $750,000 and $3,000,000, respectively. In addition, it provides for a one-time restricted stock award with a dollar-denominated value of $2,250,000, which will vest in full on September 2, 2022, subject to the Executive’s continued employment.
Upon a “qualifying termination” (generally defined as a termination of employment due to the expiration of the employment period, by the Company without “cause”, by the Executive for “good reason” or due to his death or disability), then the Executive will receive the performance bonus and full vesting of the one-time restricted stock award described above. The performance bonus will be equal to no less than the minimum performance bonus but, if the qualifying termination is due to the Executive’s termination without “cause”, for “good reason” or due to his death or disability, then he will receive the greater of the minimum performance bonus and a pro-rated target bonus (pro-rated to reflect his time employed through the termination date). The Company’s obligation to provide these severance payments and benefits is conditioned upon the Executive’s (or his estate’s) timely execution (and non-revocation) of a general release of claims.
The Employment Agreement also includes certain restrictive covenants, including non-solicitation and non-disparagement covenants.
The above summary of the terms of the Employment Agreement is qualified in its entirety by reference to the agreement, a copy of which is filed herewith as Exhibit 10.2 and incorporated herein by reference.
.