Item 5.02. Departure of Directors or Certain
Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) Key
Employee Incentive Plan
As
previously disclosed, on June 15, 2022 (the “Petition Date”), Revlon, Inc.
(“Revlon”) and certain subsidiaries, including Revlon Consumer Products Corporation
(“Products Corporation” and together with Revlon, the “Company”)
(the chapter 11 filing entities collectively, the “Debtors”), filed voluntary
petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy
Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy
Court”). The cases (the “Chapter 11 Cases”) are being
administered under the caption In re Revlon, Inc., et al. (Case No. 22-10760 (DSJ)).The Debtors continue to operate their
businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Bankruptcy Court.
On September 14, 2022,
the Bankruptcy Court approved a Key Employee Incentive Plan (the “KEIP”),
which had previously been approved by the Restructuring Committee of the board of directors of the Company, subject to Bankruptcy Court
approval. The KEIP was developed with the assistance of independent advisors to provide incentive-based compensation to its participants
based on performance objectives for three financial metrics: (i) tested recurring EBITDA (weighted 60%), (ii) tested cumulative operating
net cash flow (weighted 30%), and (iii) tested net sales (weighted 10%) (the “KEIP Metrics”).
The KEIP Metrics will be measured over six quarterly periods (each, a “Performance Period”),
beginning with the third quarter of 2022 and continuing through the fourth quarter of 2023, and quarterly payments will be made, to the
extent performance goals are achieved, as soon as practicable after each Performance Period. In addition to the quarterly measurement
of metrics, performance will be measured on a cumulative basis at the end of each year and a “catch-up” payment will be made
to the extent the Debtors’ aggregate performance and earned payouts based on annual performance exceed the quarterly payouts for
such year to date.
Participants in the
KEIP include Revlon’s President and Chief Executive Officer Debra Perelman, Revlon’s Chief Financial Officer Victoria
Dolan and six other key members of the Company’s management team (the “KEIP
Participants”). KEIP Participants will receive awards (each, a “KEIP
Award”), with an individual target award amount (each, a “Target
Award”), which is the amount that may be earned if performance against the goals for each of the KEIP Metrics is earned
at target. For 2022, if threshold performance is achieved for each of the KEIP Metrics, the awards may be earned from 50% to 100% of
the Target Award depending upon performance, and for 2023, the KEIP Awards may be earned from 50% to 150% of the Target Award, based
upon performance against 2023 goals for each of the KEIP Metrics. The aggregate value of Target Awards eligible to be made to the
KEIP Participants is approximately $29 million. Actual KEIP Awards may be as low as $0 for all KEIP Participants in the aggregate,
or as high as approximately $36 million for all KEIP Participants in the aggregate. The Target Awards for Revlon’s named
executive officers (“NEOs”) are as follows: approximately $14.2 million
in the aggregate over the 18-month KEIP term for Ms. Perelman and $800,000 for Ms. Dolan, for the third quarter of 2022 (the only
quarter in which she will participate in the KEIP), with maximum payments of approximately $17.7 million and $800,000,
respectively.
KEIP
Participants’ eligibility to receive KEIP Awards are subject to continued and active employment in good standing with the
Company through the end of each quarter. If a KEIP Participant is terminated with cause, such KEIP Participant will forfeit
eligibility to participate in the KEIP. If a KEIP Participant is terminated without cause or due to death or disability or resigns
for Good Reason (as defined in the award agreement), as applicable, in each case prior to the end of the applicable Performance
Period, the KEIP Participant will be eligible to receive, subject to executing a release of claims, a prorated KEIP Award based upon
the number of days actually worked out of the number of days available to work within the applicable Performance Period (with such
prorated KEIP Award based on actual performance results against the applicable performance goals for such Performance Period for the
KEIP Metrics). KEIP Participants (other than Ms. Dolan) will also be eligible to earn a prorated annual “catch up”
payment (based upon the number of days actually worked out of the number of days available to work within the applicable year and
with such prorated catch up KEIP Award based on actual performance results against the applicable performance goals for such year
for the KEIP Metrics). Other than for any payments to Ms. Dolan, payments under the KEIP are subject to a 50% clawback, and in the
case of Ms. Perelman, a 100% clawback, if a KEIP Participant’s employment is terminated prior to the earlier of (a) the
confirmation date of any plan confirmed in the Chapter 11 Cases, and (b) December 31, 2023, for any reason other than termination by
the Debtors without cause, by Ms. Perelman for Good Reason or due to death or disability.
Cautionary Statement
Regarding Forward-Looking Information
Certain statements in
this Current Report on Form 8-K are “forward-looking statements” made pursuant to the safe-harbor provisions of the
Private Securities Litigation Reform Act of 1995, as amended. The Company’s actual results may differ materially from those
anticipated in these forward-looking statements as a result of certain risks and other factors, which could include the following:
risks and uncertainties relating to the bankruptcy petitions, including but not limited to, the Company’s ability to obtain
Bankruptcy Court approval with respect to motions in the bankruptcy petitions, the effects of the bankruptcy petitions on the
Company and on the interests of various constituents, Bankruptcy Court rulings on the bankruptcy petitions and the outcome of the
bankruptcy petitions in general, the length of time the Company will operate under the bankruptcy petitions, risks associated with
third-party motions in the bankruptcy petitions, the potential adverse effects of the bankruptcy petitions on the Company’s
liquidity or results of operations and increased legal and other professional costs necessary to execute the Company’s
reorganization; the conditions to which the Company’s debtor-in-possession financing is subject and the risk that these
conditions may not be satisfied for various reasons, including for reasons outside of the Company’s control; the consequences
of the acceleration of our debt obligations; trading price and volatility of the Company’s Class A common stock and the
ability of the Company to remain listed on NYSE as well as other risk factors set forth in the Company’s Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. The Company therefore
cautions readers against relying on these forward-looking statements. All forward-looking statements attributable to the Company or
persons acting on the Company’s behalf are expressly qualified in their entirety by the foregoing cautionary statements. All
such statements speak only as of the date made, and, except as required by law, the Company undertakes no obligation to update or
revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.