Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 20, 2017, Jason T. Mazzola resigned from his position as President and Chief Executive Officer (CEO) of Citi Trends, Inc. (the Company) to pursue another opportunity. On March 21, 2017, the Companys board of directors (the Board) appointed Bruce D. Smith, the Companys current Chief Financial Officer (CFO), Chief Operating Officer (COO) and Secretary, to serve as the Acting Chief Executive Officer (Acting CEO), effective March 23, 2017. Mr. Smith will maintain his CFO, COO and Secretary titles, and the Company will conduct a search for a permanent CEO. Mr. Smith, age 58, has served as the Companys CFO, COO and Secretary since March 2015. Prior to that role, he served as the Companys
Executive Vice President and CFO from March 2010 to March 2015, and Senior Vice President and CFO from April 2007 to March 2010.
In connection with his promotion to Acting CEO, Mr. Smith will receive a base salary of $500,000 per year, and will be eligible to earn an annual cash incentive with a target value equal to 100% of his base salary. The annual incentive will be earned based on achievement of pre-established performance goals, which include the attainment of earnings targets for the Company, with the potential to earn up to 200% of the target amount, to the extent the performance goals are achieved at maximum levels. The annual incentive will be prorated to reflect the portion of the Companys fiscal year that Mr. Smith serves as Acting CEO. In addition and in connection with his promotion, on March 23, 2017, Mr. Smith was granted an award of 7,500 shares of restricted stock, which shares will vest in three equal annual installments on each of the first three anniversaries of the grant date, subject to Mr. Smiths continued employment with the Company. Mr. Smith will continue to be eligible to participate in the Companys other incentive, retirement and welfare benefit plans available to other senior officers of the Company. Mr. Smith will also continue to be subject to his existing Employment Non-Compete, Non-Solicit and Confidentiality Agreement and Severance Agreement, each of which he entered into with the Company on May 1, 2013. These agreements were filed as Exhibits 10.1 and 10.5, respectively, to the Companys quarterly Report on Form 10-Q for the quarter ended August 3, 2013.
In order to assist Mr. Smith in his transition to Acting CEO and to provide for the orderly succession of senior management responsibilities, the Board also appointed R. Edward Anderson, the Boards current non-executive Chairman, to serve as Executive Chairman of the Board, effective March 23, 2017. While serving as Executive Chairman, Mr. Anderson will receive a base salary of $350,000 per year, and will be eligible to earn an annual cash incentive with a target value equal to 100% of his base salary. The annual incentive will be earned based on achievement of pre-established performance goals, which include the attainment of earnings targets for the Company, with the potential to earn up to 200% of the target amount, to the extent the performance goals are achieved at maximum levels. The annual incentive will be prorated to reflect the portion of the Companys fiscal year that Mr. Anderson serves as Executive Chairman.
In connection with his resignation as President and Chief Executive Officer, Mr. Mazzola also resigned his position as a director of the Company on March 21, 2017. His resignation was not the result of any disagreement with the Company on any matter relating to the Companys operations, policies or practices. Following Mr. Mazzolas resignation, on March 21, 2017, the Board reduced the size of the Board from seven to six members.
On March 23, 2017, the Company issued a press release announcing Mr. Mazzolas resignation and the appointment of Mr. Smith and Mr. Anderson to their new positions, which press release is attached to this report as Exhibit 99.1 and is incorporated herein by reference.
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