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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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Announcement of Chief Executive Officer
On February 13, 2020, the Company announced that the Company’s Board of Directors (the “Board”) has named Jon Oringer, currently Chief Executive Officer and Chairman of the Board, as Executive Chairman of the Company, effective April 1, 2020. Stan Pavlovsky, the Company’s current President and Chief Operating Officer, will become the Company’s Chief Executive Officer and a director, also effective April 1, 2020. Mr. Oringer and the Board agreed to these transitions on February 11, 2020.
Mr. Pavlovsky, 48, has served as the Company’s President and Chief Operating Officer since June 2019, and previously served as the Company’s Co-Chief Operating Officer and Head of Strategic Operations from April 2019 to June 2019. Prior to joining the Company, Mr. Pavlovsky served as the Executive Vice President, President of Meredith Digital at Meredith Corporation, a media and marketing company, from August 2016 through March 2019. From March 2013 through August 2016, Mr. Pavlovsky served as President of Allrecipes.com, a Meredith company. Prior to joining Meredith, Mr. Pavlovsky was Vice President eCommerce, Merchandising & Marketing at Walgreens Boots Alliance, Inc., a pharmacy store chain, from June 2011 through March 2013. Mr. Pavlovsky previously spent several years at Drugstore.com, an internet retailer in health and beauty care products, which was acquired by Walgreens in 2011, serving in several capacities, including serving in his final years as Vice President, Drugstore.com. Mr. Pavlovsky holds a B.A. from California State University, Northridge and an M.B.A. from City University of Seattle.
Effective April 1, 2020, Mr. Pavlovsky has been appointed as a Class I director of the Company with a term expiring at the Company’s 2022 annual meeting of stockholders. The size of the Board will accordingly be increased to seven.
There is no agreement or understanding between Mr. Pavlovsky and any other person pursuant to which he was selected as Chief Executive Officer and a director of the Company, nor is there any family relationship between Mr. Pavlovsky and any of the Company’s directors or other executive officers. There are no transactions in which Mr. Pavlovsky has an interest requiring disclosure under Item 404(a) of Regulation S-K.
Employment Agreements
In connection with the transition of Mr. Oringer’s role, on February 11, 2020, the Company entered into an amendment to the employment agreement between Mr. Oringer and the Company as well as an amendment to the severance and change in control agreement between Mr. Oringer and the Company, reflecting, in each case, Mr. Oringer’s new title and role.
In connection with Mr. Pavlovsky’s appointment as Chief Executive Officer, on February 11, 2020, the Company entered into a second amendment to the employment agreement, as previously amended, between Mr. Pavlovsky and the Company, pursuant to which Mr. Pavlovsky’s title, base salary, bonus percentage and certain definitions were updated for Mr. Pavlovsky’s new role.
The foregoing descriptions of Mr. Oringer’s and Mr. Pavlovsky’s employment agreement amendments do not purport to be complete and each is qualified in its entirety by reference to the complete text thereof, copies of which will be filed as Exhibits 10.5(d), 10.5(e) and 10.24(c), respectively, to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
Form of Performance Stock Unit Award Agreement
On February 11, 2020, the Compensation Committee approved a new form of performance-based stock unit award agreement (the “Form PSU Award Agreement”) under the Company’s Amended and Restated 2012 Omnibus Equity Incentive Plan (the “2012 Plan”) in relation to performance-based stock units (“PSUs”) to be awarded to eligible employees at the Company. The Form PSU Award Agreement provides for the grant of performance stock units which generally vest at the end of the performance period specified therein, but only results in the issuance of shares if the Company achieves specified thresholds of revenue growth year over year (“Revenue Growth”) and Adjusted EBITDA margin (as described in the Form PSU Award Agreement) during such performance period. The exact number of shares issuable pursuant to the Form PSU Award Agreement depends on level of the Company’s achievement against the Revenue Growth targets, which are weighted as 25% of the final achievement percentage, and Adjusted EBITDA margin targets, which are weighted as 75% of the final achievement percentage, which targets will be set by the Compensation Committee for the three annual performance periods covered by the award. In general, payout can range from 0 shares to 150% of the target number of shares subject to the PSUs, depending on the level of achievement.
The foregoing description is subject to, and qualified in its entirety by, the 2012 Plan, which was filed on February 27, 2015 with the Company’s Annual Report on Form 10-K as Exhibit 10.2 and is incorporated herein by reference, and the Form PSU Award Agreement, which is filed with this report as Exhibit 10.1 and is incorporated herein by reference.
Equity Awards
In connection with Mr. Oringer’s appointment as Executive Chairman and Mr. Pavlovsky’s appointment as Chief Executive Officer, the Compensation Committee of the Board (the “Compensation Committee”) determined to grant each of Mr. Oringer and Mr. Pavlovsky equity awards, with a grant date of April 1, 2020, comprised of PSUs and time-based restricted stock units (“RSUs”), as set forth below:
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Name
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Total Value
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Value of PSUs
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Value of RSUs
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Jon Oringer
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$4,500,000
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$4,500,000
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N/A
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Stan Pavlovsky
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$5,500,000
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$4,500,000
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$1,000,000
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The number of shares subject to the PSU and RSU grants will be determined by dividing the cash value of the award by the average of the closing price for a share of the Company’s common stock during the 30 trading-day period ending on March 31, 2020 (the trading date immediately prior to the grant date), rounded down to the nearest whole number of shares.
PSUs
The awards of PSUs will be measured against performance goals set by the Compensation Committee for each year during a three-year performance period starting on January 1, 2020, and ending on December 31, 2022 (each fiscal year, an “Annual Performance Period”), and the number of shares of common stock of the Company that may eventually vest following the end of each Annual Performance Period, will be between 0% and 150% of an executive’s target shares, depending on his continued service with the Company and the extent to which the performance goals will have been achieved at the end of each Annual Performance Period.
The foregoing description of the PSU awards for Mr. Oringer and Mr. Pavlovsky is a summary and is qualified in its entirety by reference to the form of PSU Award Agreement, which is filed with this report as Exhibit 10.1, and the terms of which are incorporated herein by reference.
RSUs
The RSUs to be granted to Mr. Pavlovsky, as described above, vest in equal annual installments over three years, subject to Mr. Pavlovsky’s continued service with us. The RSU awards will be granted under our 2012 Plan using the form of RSU award agreement previously filed by the Company with its Quarterly Report on Form 10-Q on November 4, 2016 as Exhibit 10.1. The foregoing description of the RSUs awards for Mr. Pavlovsky is a summary and is qualified in its entirety by reference to the amended form of RSU award agreement, which was filed on November 4, 2016 with the Company's Quarterly Report on Form 10-Q as Exhibit 10.1, and the terms of which are incorporated herein by reference.