appointed President of the Company’s Route Based Services reporting segment in July 2016. Prior to the acquisition, Mr. Harrington served in various roles with DSS from 2004 to 2014, including Chief Executive Officer, President, Chief Operating Officer, West Division President, and Senior Vice President, Central Division. Prior to joining DSS, Mr. Harrington served in various roles with Coca-Cola Enterprises, Inc., including Vice President and General Manager of Coca-Cola Enterprises New York and Chicago divisions. He also served in various sales and marketing roles with Pepperidge Farm from 1979 to 1985. Mr. Harrington previously served as a member of the board of directors of the National Automatic Merchandising Association, the International Bottled Water Association and the Water Quality Association.
The Board also appointed Mr. Harrington to serve as a director on the Board, effective December 30, 2018.
In connection with Mr. Harrington’s appointment, on August 1, 2018, the Company entered into an Offer Letter setting out the terms of his employment.
Mr. Harrington will earn an annual base salary of $850,000 and is eligible to participate in the Company’s annual executive bonus plan with an annual target bonus equal to 100% of his base salary, and he has the opportunity to earn up to 200% of his base salary for achievement of goals in excess of the target goals, as approved by the Board’s Human Resources and Compensation Committee. He will also receive an annual car allowance of $16,000.
Mr. Harrington will also be entitled to up to $250,000 for relocation assistance to the Tampa, Florida area, payable following his purchase of a residence in the Tampa, Florida area. This payment is subject to repayment under certain circumstances if Mr. Harrington is terminated for Cause or voluntarily resigns from his position without Good Reason (as such terms are defined in the Severance Plan) in the first two years of his tenure as chief executive officer.
Mr. Harrington will continue to be eligible to participate in all of the Company’s benefit plans made available to its employees and senior executives. He will receive a LTI award equal to $2,300,000 when the 2019 annual awards are made to other senior executives. The LTI award will be split as follows: 25% restricted share units with time-based vesting; 37.5% stock options; and 37.5% restricted share units with performance-based vesting. The stock options and time-based restricted share units will vest ratably in three equal annual installments from the grant date, and the performance-based restricted share units will vest based upon the achievement of a specific level of cumulativepre-tax income over the three-year period ending at the end of fiscal 2021. The LTI award will be governed by the Company’s equity incentive plans and award agreements.
Mr. Harrington will participate in the Severance Plan as a “Level 1” participant, which entitles him to a cash payment equal to the sum of his annual base salary and bonus (based on target bonus if the termination occurs in 2019 or 2020, and based on the average actual bonus paid for the previous two years if the termination occurs thereafter) if his employment is terminated by the Company without Cause or by him for Good Reason (as such terms are defined in the Severance Plan).
Mr. Harrington is subject to standard confidentiality undertakings and has agreed to several restrictive covenants under the Severance Plan. He has agreed to anon-competition covenant that generally limits his ability to compete with the Company in any country in which it conducts business. He has also agreed tonon-solicitation andnon-disparagement covenants. These limitations continue during the term of employment and for a period of one year following termination, regardless of the cause of the termination.
There is no arrangement or understanding between Mr. Harrington and any other person(s) pursuant to which he was selected as chief executive officer or a director. Mr. Harrington does not have any family relationship with any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer. Other than his employment relationship, Mr. Harrington does not have a direct or indirect material interest in any transaction in which the Company is a participant.
Amendment to Cott Corporation Severance andNon-Competition Plan
On August 1, 2018, the Board approved an amendment to the Severance Plan (the “Severance Plan Amendment”) to, among other things, (i) remove the taxgross-up provision, (ii) update the definition of “Business”
to reflect the Company’s recent transformation, (iii) update certain covenants to reflect current practices and applicable law, and (iv) provide that Florida law governsnon-Canadian participants.
