Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Vivek Sankaran, President, Chief Executive Officer and Director
On March 29, 2019, Albertsons Companies, Inc. (the “Company”) announced that Vivek Sankaran, age 56, will become the President and Chief Executive Officer of the Company, effective April 25, 2019 (the “Commencement Date”). James L. Donald, the Company’s current President and Chief Executive Officer, and Leonard Laufer, a current director of the Company, will becomeCo-Chairmen of the Board of Directors of the Company (the “Board”) upon Mr. Sankaran joining the Company on the Commencement Date. In addition, the Board has agreed to nominate Mr. Sankaran to serve as a member of the Board effective as of the Commencement Date.
There is no arrangement or understanding with any person pursuant to which Mr. Sankaran is being appointed President, Chief Executive Officer and director. There are no family relationships between Mr. Sankaran and any director or executive officer of the Company, and he is not a party to any transaction requiring disclosure under Item 404(a) of RegulationS-K.
Mr. Sankaran previously served from January 2019 to March 2019 as Chief Executive Officer of PepsiCo Foods North America, which includesFrito-Lay North America(“Frito-Lay”). There he led PepsiCo, Inc.’s (“PepsiCo”) snack and convenient foods business. Prior to that, Mr. Sankaran served as President and Chief Operating Officer ofFrito-Lay from April 2016 to December 2018; Chief Operating Officer ofFrito-Lay from February 2016 to April 2016; Chief Commercial Officer, North America of PepsiCo from 2014 to February 2016, where he led the company’s cross-divisional performance across its North American customers; Chief Customer Officer ofFrito-Lay from 2012 to 2014; Senior Vice President and General Manager ofFrito-Lay’s South business unit from 2011 to 2012; and Senior Vice President, Corporate Strategy and Development of PepsiCo from 2009 to 2010. Before joining PepsiCo in 2009, Mr. Sankaran was a partner at McKinsey and Company, where he served various Fortune 100 companies, bringing a strong focus on strategy and operations. Mr. Sankaranco-led the firm’s North American purchasing and supply management practice and was on the leadership team of the North American retail practice. Mr. Sankaran has an MBA from the University of Michigan, a master’s degree in manufacturing from the Georgia Institute of Technology and a bachelor’s degree in mechanical engineering from the Indian Institute of Technology in Chennai.
Mr. Sankaran’s employment agreement with the Company (the “Employment Agreement”) provides for an initial term that will expire on the third anniversary of the Commencement Date, and thereafter automatically renew for additionalone-year periods unless either party provides written notice at leastone-hundred twenty days prior to the end of the then-current term.
Pursuant to the Employment Agreement, on the Commencement Date, Mr. Sankaran will become entitled to receive:
| | • | | an annual base salary of $1,500,000; |
| | • | | an annual performance bonus targeted at 150% of his base salary; and |
| | • | | asign-on retention award of $10,000,000, payable in three installments as follows: (i) 50% on the Commencement Date; (ii) 25% on theone-year anniversary of the Commencement Date; and (iii) 25% on thetwo-year anniversary of the Commencement Date, subject to his continued employment with the Company on each such date. |
Further, in connection with his appointment, on the Commencement Date, Mr. Sankaran will be granted profits interests (“Units”) in each of Albertsons Investor Holdings LLC and KIM ACI, LLC, the owners of the common stock of the Company. 50% of the Units will vest in installments on each of the first, second, third, fourth and fifth anniversary of the Commencement Date, and 50% of the Units will vest in installments at the end of each of the Company’s 2019, 2020, 2021, 2022 and 2023 fiscal years based on the Company’s attainment of performance criteria for each such fiscal year, in each case subject to Mr. Sankaran’s continued employment with the Company. The Units are subject to accelerated vesting upon a termination of employment as set forth in the respective grant agreements.
If Mr. Sankaran’s employment terminates due to his death or he is terminated due to disability, subject to his (or his legal representative’s, as appropriate) execution of a release, he or his legal representative, as appropriate, would be entitled to receive:
| | • | | the earned but unpaid portion of any bonus earned in respect of any completed performance period prior to the date of termination; |
