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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(e)
Amendment to Shawn Nelson
Employment Agreement
On October 2, 2019, The Lovesac
Company (the “Company”) and Shawn Nelson entered into a Frist Amendment to Employment Agreement (the “Nelson
Amendment”) that amends Mr. Nelson's amended and restated employment agreement, dated October 26, 2017. The Nelson
Amendment, amends, among other things, the terms upon which Mr. Nelson is eligible to receive an annual bonus. The Nelson Amendment
provides that Mr. Nelson shall receive an annual bonus of up to 75% of his base salary, provided that he achieves performance targets
determined by the Board of Directors (the “Board”) (or the Compensation Committee). In the event that the Company achieves
at least 90% of all of its annual performance targets for the applicable completed fiscal year, the annual bonus in respect of
such fiscal year shall be 20% of his base salary. In the event that the Company achieves at least 100% of all of its annual performance
targets for the applicable completed fiscal year, the annual bonus in respect of such fiscal year shall be 60% of his base salary.
In the event that the Company achieves at least 110% of all of its annual performance targets for the applicable completed fiscal
year, the annual bonus in respect of such fiscal year shall be 75% of his base salary. Performance between 90% and 110% of the
applicable performance targets will be interpolated relative to the next threshold on a linear basis and, in the case of multiple
performance targets, by determining the average percentage achieved for the performance targets.
The foregoing summary of the amendment is
qualified in its entirety by reference to the letter agreement, which is attached to this Current Report
as Exhibit 10.1 and which is incorporated by reference into this Item 5.02.
Amendment to Jack Krause
Employment Agreement
On October 2, 2019, the Company
and Jack Krause entered into a Frist Amendment to Employment Agreement (the “Krause Amendment”) that amends Mr.
Krause’s amended and restated employment agreement, dated October 26, 2017. The Krause Amendment, amends, among
other things, the terms upon which Mr. Krause is eligible to receive an annual bonus. The Krause Amendment provides that Mr. Krause
shall receive an annual bonus of up to 75% of his base salary, provided that he achieves performance targets determined by the
Board (or the Compensation Committee). In the event that the Company achieves at least 90% of all of its annual performance targets
for the applicable completed fiscal year, the annual bonus in respect of such fiscal year shall be 20% of his base salary. In the
event that the Company achieves at least 100% of all of its annual performance targets for the applicable completed fiscal year,
the annual bonus in respect of such fiscal year shall be 60% of his base salary. In the event that the Company achieves at least
110% of all of its annual performance targets for the applicable completed fiscal year, the annual bonus in respect of such fiscal
year shall be 75% of his base salary. Performance between 90% and 110% of the applicable performance targets will be interpolated
relative to the next threshold on a linear basis and, in the case of multiple performance targets, by determining the average percentage
achieved for the performance targets.
The foregoing summary of the amendment is
qualified in its entirety by reference to the letter agreement, which is attached to this Current Report
as Exhibit 10.2 and which is incorporated by reference into this Item 5.02.
Amendment to Donna Dellomo
Employment Agreement
On October 2, 2019, the Company
and Donna Dellomo entered into a Frist Amendment to Employment Agreement (the “Dellomo Amendment”) that amends
Ms. Dellomo’s amended and restated employment agreement, dated October 26, 2017. The Dellomo Amendment, amends,
among other things, the terms upon which Ms. Dellomo is eligible to receive an annual bonus. The Dellomo Amendment provides that
Ms. Dellomo shall receive an annual bonus of up to 60% of her base salary, provided that she achieves performance targets determined
by the Board (or the Compensation Committee). In the event that the Company achieves at least 90% of all of its annual performance
targets for the applicable completed fiscal year, the annual bonus in respect of such fiscal year shall be 15% of her base salary.
In the event that the Company achieves at least 100% of all of its annual performance targets for the applicable completed fiscal
year, the annual bonus in respect of such fiscal year shall be 50% of her base salary. In the event that the Company achieves at
least 110% of all of its annual performance targets for the applicable completed fiscal year, the annual bonus in respect of such
fiscal year shall be 60% of her base salary. Performance between 90% and 110% of the applicable performance targets will be interpolated
relative to the next threshold on a linear basis and, in the case of multiple performance targets, by determining the average percentage
achieved for the performance targets.
The foregoing summary of the amendment is
qualified in its entirety by reference to the letter agreement, which is attached to this Current Report
as Exhibit 10.3 and which is incorporated by reference into this Item 5.02.
Non-Employee Director Compensation
Policy
On October 2, 2019, at the recommendation
of the Compensation Committee of the Board, the Board approved the granting of 6,490 restricted stock units (“RSUs”)
to each of the non-employee directors in accordance with a Restricted Stock Units Agreement (“Grant Agreement”)
pursuant to the Company’s Amended and Restated 2017 Equity Incentive (the “2017 Plan”).
Unless the RSUs are forfeited
pursuant to the 2017 Plan or the Grant Agreement, (i) 3,245 shall vest on the first anniversary of the grant date, and (ii) 3,245
which shall vest 50% on the first anniversary of the date of the grant and 50% on the second anniversary of the date of the grant.
Each RSU represents the right to receive one share of the Company’s common stock upon vesting of the RSU.
The foregoing description of
the Grant Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Grant
Agreement, the form of which is filed as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.
Additionally, on October 2, 2019,
at the recommendation of the Compensation Committee of the Board, the Board approved providing cash compensation of $40,000 per
year to non-employee directors Shirely Romig and Walter McLallen, to be effective June 5, 2019. Mr. McLallen will also receive
$10,000 per year as chair of the Audit Committee of the Board.