| ITEM 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Appointment of President and Chief Executive Officer
On August 28, 2018, BMC Stock Holdings, Inc. (the “Company”) announced that the Board of Directors of the Company (the “Board”) has completed its search for a new chief executive officer and appointed David E. Flitman as President and Chief Executive Officer of the Company effective on or about October 1, 2018, unless the Company and Mr. Flitman mutually agree to a different date (the “Start Date”). The Company expects that Mr. Flitman’s service will commence no later than October 1, 2018. The Board also will elect Mr. Flitman to the Board effective as of the Start Date.
Mr. Flitman, 54, has served as Executive Vice President of Performance Food Group Company, a family of leading foodservice distributors, and President and Chief Executive Officer of its Performance Foodservice division since January 2015. From January 2014 to December 2014, Mr. Flitman served as Chief Operating Officer and President USA & Mexico of Univar Corporation, a global chemical distributor. Mr. Flitman joined Univar in December 2012 as President USA with additional responsibility for Univar’s Global Supply Chain & Export Services teams. From November 2011 to September 2012, he served as Executive Vice President and President Water and Process Services at Ecolab Inc., the global leader in water, hygiene and energy technologies and services. From August 2008 to November 2011, Mr. Flitman served as Senior Executive Vice President of Nalco Holding Company until it was acquired by Ecolab. He also served as President of Allegheny Power System, an electric utility that served customers in Pennsylvania, West Virginia, Virginia, and Maryland, from February 2005 to July 2008. Formerly, Mr. Flitman spent nearly 20 years in operational, commercial, and global business leadership positions at DuPont, a science and technology-based company. Since July 2017, Mr. Flitman also has served as a member of the Board of Directors of Veritiv Corporation, a North Americanbusiness-to-business distributor of packing, facility solutions, print and publishing products and services.
There is no arrangement or understanding between Mr. Flitman and any other person pursuant to which he was selected as an officer (other than his Employment Agreement, which is described below). Mr. Flitman has no family relationships with any of our directors or executive officers, and Mr. Flitman is not party to a related party transaction reportable under Item 404(a) of RegulationS-K.
Interim President and Chief Executive Officer
Mr. Flitman will succeed David L. Keltner, who has served as Interim President and Chief Executive Officer since January 10, 2018. On August 27, 2018, Mr. Keltner notified the Company that he intends to resign as Interim President and Chief Executive Officer effective on Mr. Flitman’s Start Date. Mr. Keltner will remain a director on the Board.
In recognition of Mr. Keltner’s agreement to continue to serve as Interim President and Chief Executive Officer until Mr. Flitman’s Start Date, which is beyond his originally anticipatedsix-month term, and the fact that he was not provided the opportunity to participate in the Company’s annual bonus program for 2018, on August 27, 2018, following the recommendation of the Organization and Compensation Committee (the “Compensation Committee”), the independent directors on the Board awarded Mr. Keltner a $375,000 cash bonus.
Compensation Arrangements with New President and Chief Executive Officer
In connection with Mr. Flitman’s appointment as President and Chief Executive Officer, on August 23, 2018, the Company entered into an Employment Agreement (the “Employment Agreement”) with Mr. Flitman, pursuant to which he will serve as the President and Chief Executive Officer of the Company and a member of the Board effective as of the Start Date. The term of the Employment Agreement continues indefinitely until terminated by either party as described therein.
The material terms of the Employment Agreement are as follows:
| | • | | Mr. Flitman’s initial annual base salary will be $775,000, and he will be eligible to earn an annual cash bonus in a target amount of 100% of his base salary. He will be eligible to earn apro-rated annual bonus for 2018. |
| | • | | Mr. Flitman will receive a $200,000 cashsign-on bonus, which he must repay to the Company in the event that his employment terminates under certain circumstances within one year of the Start Date. |
| | • | | On his Start Date, Mr. Flitman will receive an initial time-based restricted stock unit award valued at approximately $1,166,677 and an initial performance-based restricted stock unit award with a target value of approximately $2,333,333. Subject to Mr. Flitman’s continued employment with the Company, such time-based restricted stock units will vest in three substantially equal installments on the first three anniversaries of his Start Date, and between 0% and 200% of the performance-based restricted stock units will vest on December 31, 2021, subject to the Compensation Committee’s certification of the achievement of certain performance goals over a three-year performance period. |
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