Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Tim O. Martin as Chief Operating Officer and Chief Financial Officer
On August 3, 2022, the Company announced that Tim O. Martin, 53, will join the Company and be appointed as the Chief Operating Officer and Chief Financial Officer of the Company, effective as of September 12, 2022 (the “Effective Date”). In connection with such appointment of Mr. Martin, effective as of the Effective Date and subject to Mr. Martin’s commencement of employment with the Company on the Effective Date, (i) Michael Salmon will voluntarily transition to the newly created role of Chief Strategy Officer of the Company, (ii) Mr. Martin will assume the responsibilities of the principal financial officer of the Company currently held by Chinwe Abaelu, and Ms. Abaelu will continue to perform her duties as Chief Accounting Officer of the Company, and (iii) Tanner MacDiarmid will cease to serve as the Interim Chief Financial Officer of the Company.
Mr. Martin is joining the Company from Guitar Center, Inc., where he most recently served as Executive Vice President and Chief Financial Officer from October 2012 to July 2022. From December 2009 to July 2012, Mr. Martin was the Chief Financial Officer of Lands’ End, a division of Sears Holdings Corporation and a leading direct merchant of family apparel and accessories and home products. Mr. Martin was previously employed at Coldwater Creek, Inc., a multi-channel specialty retailer of women’s apparel, gifts, jewelry and accessories, serving as Vice President of Finance and Chief Accounting Officer from August 2006 to August 2007 and as Chief Financial Officer from September 2007 to November 2009. Prior to that, Mr. Martin served as Chief Accounting Officer and as Vice President of Finance/Global Commercial Operations for Amgen Inc., a pharmaceutical company, from August 2003 to May 2006.
On August 1, 2022, the Company and Mr. Martin entered into an employment agreement that sets forth the terms of Mr. Martin’s employment as the Company’s Chief Operating Officer and Chief Financial Officer (the “Employment Agreement”). The Employment Agreement does not provide for a fixed term of employment. Pursuant to the Employment Agreement, Mr. Martin will be eligible to receive the following: (i) an initial annual base salary of $800,000, less required deductions and withholdings, (ii) an annual bonus with a target opportunity equal to 80% of base salary, less required deductions and withholdings, with Mr. Martin’s annual bonus for fiscal year 2022 to be paid based on target achievement and prorated for his service during the 2022 fiscal year, and (iii) an initial equity award under the Company’s 2021 Long-Term Incentive Plan (the “LTIP”), as described in further detail below.
Upon a termination of Mr. Martin’s employment by the Company without “Cause” or a resignation by Mr. Martin for “Good Reason” (each as defined in the Employment Agreement), subject to Mr. Martin’s execution and non-revocation of a release of claims and continued compliance with restrictive covenants, Mr. Martin will receive the following severance benefits: (i) payment of an amount equal to 100% of base salary in effect at the time of termination, less required deductions and withholdings, payable in equal installments in accordance with the
Company’s regular payroll practices over the 12-month period following such date of termination, and (ii) subject to Mr. Martin’s timely election for continued coverage under COBRA, the Company will pay the COBRA premiums necessary to continue the health insurance coverage in effect for Mr. Martin and/or his eligible dependents as of such date of termination until the earliest of (x) 12 months following such termination date, (y) the expiration of Mr. Martin’s eligibility for continuation coverage under COBRA, and (z) the date Mr. Martin becomes eligible for substantially equal group health insurance coverage in connection with new employment.
The Employment Agreement provides for the following restrictive covenants: (i) non-competition during the term of Mr. Martin’s employment and any period thereafter in which Mr. Martin is receiving severance benefits pursuant to the Employment Agreement, (ii) non-solicitation of employees for two years following termination of employment, (iii) during the term of Mr. Martin’s employment, an agreement not to acquire, assume or participate in any position, investment or interest known by Mr. Martin to be adverse or antagonistic to the Company or in any entity that is in competition with the business of the Company or any of its affiliates, (iv) mutual perpetual non-disparagement, (v) perpetual non-disclosure of confidential information, and (vi) assignment of intellectual property.
Under the Employment Agreement, subject to approval by the Compensation Committee of the Board of Directors of the Company, as soon as reasonably practicable following the Effective Date, Mr. Martin will be granted an equity award under the LTIP with a value equal to $3,000,000, calculated based on the fair market value of the Company’s common stock as of the applicable grant date. Such award will be granted as follows: (i) one-third in the form of time-based restricted stock units of the Company, (ii) one-third in the form of performance-based restricted stock units of the Company, and (iii) one-third in the form of time-based stock options of the Company, with a per share exercise price of each such stock option to be equal to the per share fair market value of the Company’s common stock as of the applicable grant date.
The foregoing description of the material terms of the Employment Agreement is not complete and is qualified in its entirety by reference to the full text of the Employment Agreement attached hereto as Exhibit 10.1 and is incorporated by reference herein.
The Company will also enter into an indemnification agreement with Mr. Martin in connection with his appointment as the Chief Operating Officer and Chief Financial Officer of the Company. The indemnification agreement will be in substantially the same form as the indemnification agreement for the other officers of the Company that was filed as Exhibit 10.22 to the Company’s Registration Statement on Form S-1, filed with the SEC on June 30, 2021. There are no other transactions with Mr. Martin which would require disclosure under Item 404(a) of Regulation S-K and Mr. Martin is not a party to any arrangement or understanding regarding his selection as an officer. There are no family relationships between Mr. Martin and any director or executive officer of the Company.