Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As previously disclosed by Skechers U.S.A., Inc. (the “Company”), the Company entered into an employment agreement with its president, Michael Greenberg, on August 7, 2015 that was amended on December 5, 2017, which provided for a term expiring on December 31, 2021. The Company entered into an employment agreement with its chief operating officer, David Weinberg, on April 2, 2018, which provided for a term also expiring on December 31, 2021.
On May 23, 2019, the Company entered into new employment agreements with Messrs. Greenberg and Weinberg that replaced the pre-existing employment agreements effective as of January 1, 2019 (the “Greenberg Agreement” and the “Weinberg Agreement”, respectively, and collectively, the “Agreements”). The initial term of the Agreements is four years, terminating on December 31, 2022, subject to recurring automatic one-year renewal terms as provided in the Agreements.
The Greenberg Agreement provides for the following compensation:
| • | | an annual base salary of not less than $4.25 million; |
| • | | an annual bonus of not less than 0.3% of the amount that the Company’s net sales for the current year exceeds its net sales for the prior year, with such bonus being calculated and paid on a quarterly basis; and |
| • | | acknowledgement of the awards of (i) 90,000 shares of the Company’s Class A Common Stock that was granted on March 30, 2016, of which 45,000 shares vested on May 1, 2019 and 45,000 shares vest on May 1, 2020, (ii) 410,000 shares of Class A Common Stock that was granted on January 12, 2018, of which 80,000 shares vested on March 1, 2019, 80,000 shares vest on March 1, 2020, and 125,000 shares vest on each of March 1, 2021 and 2022, and (iii) 125,000 shares of Class A Common Stock that was granted on January 24, 2019 and vest on March 1, 2023, subject to the terms and conditions of the Company’s 2007 Incentive Award Plan and its 2017 Incentive Award Plan, as the case may be, and the applicable restricted stock agreements previously entered into between Mr. Greenberg and the Company (the “Greenberg RSAs”). |
The Weinberg Agreement provides for the following compensation:
| • | | an annual base salary of not less than $3.1 million; |
| • | | an annual bonus of not less than 0.2% of the amount that the Company’s net sales for the current year exceeds its net sales for the prior year, with such bonus being calculated and paid on a quarterly basis; and |
| • | | acknowledgement of the awards of (i) 75,000 shares of the Company’s Class A Common Stock that was granted on March 30, 2016, of which 37,500 shares vested on May 1, 2019 and 37,500 shares vest on May 1, 2020, (ii) 327,000 shares of Class A Common Stock that was granted on January 12, 2018, of which 63,500 shares vested on March 1, 2019, 63,500 shares vest on March 1, 2020, and 100,000 shares vest on each of March 1, 2021 and 2022, and (iii) 100,000 shares of Class A Common Stock that was granted on January 24, 2019 and vest on March 1, 2023, subject to the terms and conditions of the Company’s 2007 Incentive Award Plan and its 2017 Incentive Award Plan, as the case may be, and the applicable restricted stock agreements previously entered into between Mr. Weinberg and the Company (the “Weinberg RSAs”). |
Under the terms of the Agreements, in the event that Mr. Greenberg’s employment or Mr. Weinberg’s employment is terminated by the Company for “Cause” (as defined in the Agreements), or Mr. Greenberg or Mr. Weinberg terminates his employment without “Good Reason” (as defined in the Agreements), he shall be paid his then current salary earned through the “Date of Termination” (as defined in the Agreements).
Under the terms of the Agreements, in the event that Mr. Greenberg’s employment or Mr. Weinberg’s employment is terminated by the Company without Cause, or Mr. Greenberg or Mr. Weinberg terminates his employment for Good Reason, or Mr. Greenberg’s employment or Mr. Weinberg’s employment is terminated by the Company or its successor upon or within 120 days after a Change in Control (as defined in the Agreements), subject to a release of claims by Mr. Greenberg or Mr. Weinberg, as the case may be:
| • | | he shall be paid his then current salary for the remainder of the four-year term; |
| • | | he shall be paid an annual bonus for each of the remaining years of the four-year term equal to the highest amount of the annual bonus that was earned in any year of the four-year term prior to his termination; and |
| • | | the Company shall accelerate the vesting of all restricted shares of its stock held by Mr. Greenberg or Mr. Weinberg, subject to the terms of the 2007 Plan, the 2017 Plan, and the Greenberg RSAs or Weinberg RSAs, as applicable. |
During the term of their employment, Messrs. Greenberg and Weinberg have agreed not to compete with the Company, and during the four-year term of the Agreements and for a period of one year thereafter, they have agreed not to solicit any of its employees.
The Greenberg Agreement and the Weinberg Agreement are filed as Exhibits 10.1 and 10.2, respectively, to this Form 8-K and are incorporated herein by reference.
