| Departure of Directors or Certain Officers; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Resignation of Brian T. Nicholson as Chief Financial Officer
On September 10, 2020, Brian T. Nicholson entered into a separation letter agreement with each of Extended Stay America, Inc. (“Extended Stay”) and ESH Hospitality, Inc. (“ESH REIT”) dated September 10, 2020 (the “Separation Agreement”) pursuant to which Mr. Nicholson resigned as Chief Financial Officer (“CFO”), effective as of September 10, 2020. Mr. Nicholson’s resignations did not involve any disagreement with either of Extended Stay or ESH REIT.
Pursuant to the Separation Agreement, Mr. Nicholson will provide assistance and advisory services to the new CFO of Extended Stay and ESH REIT as an employee of ESA Management, LLC from September 11, 2020 through February 12, 2021 (the “Advisory Term”). Mr. Nicholson’s outstanding restricted stock unit (“RSUs”) awards will continue to vest in accordance with their terms during the Advisory Term. At the end of the Advisory Term, Mr. Nicholson’s employment with Extended Stay will be terminated, which will be treated as a “Qualifying Termination” for purposes of the Extended Stay Executive Severance Plan (the “Executive Severance Plan”) (with such term as defined in the Executive Severance Plan). Subject to the execution and non-revocation of a release of claims in favor of Extended Stay and its affiliates, Mr. Nicholson will be entitled to receive the benefits which include cash severance, health plan benefit continuation and outplacement services. However, pursuant to the Separation Agreement, the cash severance that Mr. Nicholson will receive will be 63% of his base salary rather than 100% as provided in the Severance Plan and a target bonus equal to 100% of his base salary. In the event Mr. Nicholson’s employment is terminated by ESA Management LLC without “Cause” (as defined in the Executive Severance Plan) prior to February 12, 2021, his cash severance will be increased by the amount of base salary he would have received for the period from the date of his termination through February 12, 2021, and the portion of his then-outstanding RSUs that would have vested through February 12, 2021 will vest as of the date of his termination.
The foregoing summary of the Separation Agreement does not purport to be complete and is subject to, and qualified by its entirety by, the full text of the Separation Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report and is incorporated herein by reference.
Appointment of David Clarkson as Chief Financial Officer
On September 10, 2020, the Boards of Directors of Extended Stay and ESH REIT appointed David Clarkson as Chief Financial Officer of each of Extended Stay and ESH REIT, effective as of September 11, 2020. Mr. Clarkson, (49) has served as Vice President of Financial Planning & Analysis and Treasurer of the Company since September 2015 and Treasurer since May 2013. Mr. Clarkson served as Interim Chief Financial Officer of the Company from January 2018 until May 2018. Mr. Clarkson served as Director of Corporate Finance from May 2011 until May 2013. Prior to joining the Company in 2011, Mr. Clarkson was Vice President of Finance and Development for The Clarkson Group, a real estate company focused primarily on limited service hotel development. Between 1996 and 2004, Mr. Clarkson held various positions in finance and revenue management for the Company’s predecessor, Extended Stay America, Inc. Mr. Clarkson is a graduate of Dartmouth College, holds an MBA from the University of Miami, and is a CFA charterholder.
In connection with Mr. Clarkson’s appointment as Chief Financial Officer, Extended Stay and ESH REIT and Mr. Clarkson entered into an offer letter,
dated
September 10, 2020 (the “Offer Letter”). The Offer Letter provides that Mr. Clarkson
is
entitled to an annual base salary in cash at the rate of $350,000 per annum and receive a grant of RSUs in respect of 5,000 Paired Shares (as defined in the LTIP) under the terms of the Amended and Restated Extended Stay Long Term Incentive Plan (“LTIP”). The RSUs will vest
pro-rata
in respect of Paired Shares on each of the three anniversaries of the effective date of the Offer Letter, subject to Mr. Clarkson’s continued service to Extended Stay and ESH REIT on each vesting date.
Pursuant to the Offer Letter, commencing in 2021, Mr. Clarkson will be entitled to receive a grant of a number of RSUs having a grant date fair market value equal to base salary, fifty percent (50%) of which shall be time-vesting RSUs, and fifty percent (50%) of which shall be performance-vesting RSUs, provided that the form of equity award may be changed by the Compensation Committee consistent with the form of equity awards granted to other senior executives of Extended Stay and ESH REIT.
