Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignation of Chief Executive Officer and Director
Ralph Scozzafava has stepped down as the Chief Executive Officer of Dean Foods Company (the “Company”) and resigned as a member of the Company’s Board of Directors (the “Board”), effective July 28, 2019. Mr. Scozzafava’s decision to resign was not related to a disagreement with the Company over any of its operations, policies or practices. In connection with his departure, Mr. Scozzafava will receive compensation and benefits pursuant to the Company’s Amended and Restated Executive Severance Pay Plan.
Appointment of Chief Executive Officer and Director
The Board has appointed Eric Beringause, age 61, as President and Chief Executive Officer and as a member of the Board, effective July 29, 2019. Mr. Beringause has significant experience in a broad range of food and consumer products companies. He served as the Chief Executive Officer of Gehl Foods, LLC from March 2015 to August 2018 and as Chief Executive Officer of Advanced Refreshment LLC from 2011 to 2014. He also served as President & Chief Executive Officer of Sturm Foods, Inc. from 2008 to 2011. Mr. Beringause serves on the Management Board of CP Kelco, a leading global producer of specialty hydrocolloid solutions, and on the Board of Trustees at Vassar College. Mr. Beringause holds a B.A. from Vassar College and an M.B.A. from Cornell University.
A copy of the press release announcing Mr. Beringause’s appointment is attached as Exhibit 99.1 to this report.
Agreements with Mr. Beringause
The Company entered into a letter agreement with Mr. Beringause dated July 23, 2019 (the “Offer Letter”), a copy of which is attached to this report as Exhibit 10.1 and incorporated herein by reference. Under the terms of the Offer Letter, Mr. Beringause is entitled to an initial annual base salary of $800,000 and is eligible to participate in the Company’s Chief Executive Officer Short-Term Incentive Plan (the “STI Plan”) with a cash incentive payment target equal to 110% of his annualized base salary. Mr. Beringause will also receive a one-time signing bonus in the aggregate amount of $870,000, subject to standard payroll reductions and tax withholdings, as follows: (i) $350,000 payable within 45 days after July 31, 2019; (ii) $150,000 payable 45 days after December 31, 2019; and (iii) $370,000 payable within 45 days after March 31, 2020. A portion of each payment will be subject to repayment by Mr. Beringause if his employment is terminated prior to certain dates as described in the Offer Letter. Mr. Beringause will also be eligible to receive Company benefits pursuant to Company policy and subject to the terms and conditions of the governing benefits plans and will be a beneficiary under the Company’s liability insurance policy for its directors and officers.
The Company will also grant Mr. Beringause on his Start Date (as defined in the Offer Letter) a number of Performance Vesting Stock Options (the “Performance Options”) equal to $3,000,000 divided by the Company’s closing stock price one business day before his Start Date. The Performance Options will vest, if at all, subject to the following schedule: (i) 50% of the Performance Options will vest based on the Company’s attainment of an EBITDA target approved by the Compensation Committee for the period ending 12 full months after the grant date; and (ii) 50% of the Performance Options will vest based on the Company’s attainment of an EBITDA target approved by the Compensation Committee for the period ending 24 full months after the grant date. In addition, Mr. Beringause will be eligible for consideration for future Long-Term Incentive grants under the Company’s Long Term Incentive Program, subject to determination by the Company’s Compensation Committee.
In addition, Mr. Beringause and the Company entered into a letter agreement (the “Severance Agreement”), a copy of which is attached to this report as Exhibit 10.2 and incorporated herein by reference, which provides that, if his employment is terminated by the Company without “Cause” or by Mr. Beringause for “Good Reason” (as such terms are defined in the Severance Agreement), Mr. Beringause will be entitled to (i) continuation of his base salary for a period of 12 months following such termination, (ii) a pro-rata portion of his annual cash bonus, based on the achievement of applicable performance criteria for the corresponding performance period, and (iii) the vesting of a pro-rata portion of any long-term incentive compensation awards.
2