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Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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On November 26, 2019, the Company announced
the election of Peter R. Sachse, a current member of the Company’s Board of Directors and the Special Advisor to the CEO,
to the position of Interim Chief Executive Officer, effective as of December 9, 2019. Bruce D. Smith will resign as Chief Executive
Officer, effective as of December 9, 2019, but, as previously disclosed, will continue to serve as President and Secretary and
remain a member of the Company’s Board of Directors until February 1, 2020.
Mr. Sachse, age 61, has served as a director
of the Company and the Special Advisor to the CEO of the Company since June 2019. Mr. Sachse also serves as director at the Sachse
Family Fund, an early stage investor in digital startups, since March 2017. Previously, Mr. Sachse spent 34 years in various
positions at Macy’s, Inc., including as the Chief Growth Officer from February 2016 until January 2017, Chief of Innovation
and Business Development from February 2015 to February 2016, Chief Stores Officer from February 2012 to February 2015, Chief Marketing
Officer from February 2009 to February 2012 (a title which he also held from June 2003 to May 2007), and President of Corporate
Marketing from May 2007 to February 2009. Mr. Sachse was also Chairman and Chief Executive Officer of the macys.com division
of Macy’s, Inc. from April 2006 to February 2012. Mr. Sachse has served as a director of Mattress Firm since February
2019, and previously served as a director of XO Group Inc., a media and technology company that provides content, tools, products
and services for couples who are planning weddings, creating a home, and starting a family, from February 2010 until December 2018
and from October 2006 through April 2007, and as an observer to the board from April 2007 to February 2010. Mr. Sachse also
previously served as a director of Charitybuzz Inc., a for-profit internet company that raises funds for nonprofit organizations
through online charity auctions with celebrities and brands, from 2012 until 2015. Prior to serving in these roles, Mr. Sachse
was President and Chief Operating Officer of The Bon Marche, a department store chain launched in Seattle. He began his retail
career with Macy’s, Inc. in Kansas City. He also served as Executive Vice President/General Merchandise Manager at Macy’s
East and later as Vice Chair/Director of Stores of Macy’s East.
In connection with his election as Interim
Chief Executive Officer, Mr. Sachse will receive base compensation of 54,166.67 per month, and will receive a $70,000 starting
bonus. Mr. Sachse will be eligible to receive an annual cash bonus for fiscal year 2020 based upon achievement of certain performance
goals, with a target amount equal to 100% of his annualized base compensation and an opportunity to earn up to 200% of the target
amount to the extent performance goals are exceeded. In addition, Mr. Sachse will be granted a fully vested stock award having
a value of $400,000, with the number of shares determined based on the stock price on December 9, 2019. Mr. Sachse will be eligible
for additional awards of restricted stock units (RSUs) having an aggregate value of $800,000 as of December 9, 2019, to be granted
in nine monthly installments, with the number of RSUs granted in each installment determined by dividing $88,889 by the stock price
on December 9, 2019, with each grant contingent on Mr. Sachse serving as Interim Chief Executive Officer on the grant date. The
RSUs will vest and convert to shares in three equal installments on December 9, 2020, December 9, 2021 and December 9, 2022, subject
to Mr. Sachse continuing to serve as Interim Chief Executive Officer or as a member of the Board of Directors on the vesting date.
A copy of the press release announcing the
election of Mr. Sachse is filed as Exhibit 99.1 to this Current Report on Form 8-K, and the portion of the press release relating
to such election is incorporated herein by reference.