| ITEM 5.02. | Departure of Directors or Certain Officers; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Appointment of Levi Strauss & Co. President
On November 8, 2022, Levi Strauss & Co. (the “Company”) announced the appointment of Michelle Gass as the Company’s President, effective on or about January 2, 2023. The Company anticipates that Ms. Gass will be elevated to the role of Chief Executive Officer of the Company on or before the date that is 18 months after her first date of employment. The Company’s board of directors (the “Board”) approved Ms. Gass’ appointment and her principal terms of employment on November 6, 2022. The Company anticipates that it will enter into an employment agreement (the “Employment Agreement”) with Ms. Gass prior to her first date of employment. The principal terms of her employment are summarized below.
Ms. Gass, 54, most recently served as the Chief Executive Officer of Kohl’s Corporation, a public company, beginning in May 2018. Prior to her role as Chief Executive Officer, she served as Kohl’s Chief Merchandising and Customer Officer from 2015 to 2018 and Chief Customer Officer from 2013 to 2015. Before joining Kohl’s, Ms. Gass held a variety of leadership roles at Starbucks Corporation across marketing, global strategy, and merchandising for more than 16 years, including President, Starbucks Europe, Middle East and Africa and Executive Vice President, Marketing and Category. Ms. Gass began her career at Procter and Gamble in product development and brand management.
Ms. Gass’ employment is expected to commence on or about January 2, 2023 (the “Effective Date”) and may be terminated at-will by either party, with or without notice. She will receive a base salary of $1,475,000 per year, participate in the Company’s Annual Incentive Plan with an initial target bonus of 175% of her base salary, and will be eligible to participate in the benefit and perquisite programs (including relocation policy) available to Company executives. She will be eligible to receive equity grants in 2023 as part of our annual executive equity grant cycle, which grants will have an aggregate value of $7,550,000 and consist of (a) restricted stock units (“RSUs”) subject to four-year ratable vesting with a value of $1,887,500, (b) stock appreciation rights (“SARs”) subject to four-year ratable vesting with a value of $1,887,500 and (c) performance-based RSUs subject to performance vesting terms that will be determined at the time of grant with a value of $3,775,000. She will also receive a one-time signing bonus of $8,100,000, a sign-on RSU grant with a value of $8,100,000, which vests in two equal installments at six months and 12 months following the Effective Date and a sign-on SAR grant with a value of $8,100,000, 50% of which vests one year following the Effective Date and the remainder of which vests in two 25% installments on the subsequent two anniversaries of Effective Date, subject to her continued employment through each vesting date (except as set forth below) and subject to an obligation to repay or return all or part of such sign-on payments and awards in certain circumstances including certain separations from service and certain changes in the value of prior awards upon which the value of the sign-on equity awards was based. All equity grants will be made under the Company’s 2019 Equity Incentive Plan (the “2019 Plan”).
Ms. Gass will be generally entitled to receive the benefits provided by the Company’s Senior Executive Severance Plan, including the right to receive payments in the event of a qualifying termination of employment following a change in control of the Company, as modified by the Employment Agreement. These benefits, as modified, are as follows. If Ms. Gass’ employment is terminated by the Company without cause, or by Ms. Gass with good reason, she will receive severance equal to 24 months of her then-current base salary (including if she resigns because she has not been promoted to Chief Executive Officer within 18 months of her first date of employment), up to 18 months of COBRA and life insurance continuation, a pro rata bonus, continued equity award vesting during the severance period of awards granted at least 12 months prior to the date of termination, a post-termination exercise period that commences at the end of the severance period and accelerated vesting of the sign-on equity awards. In the event her employment is terminated by the Company without cause, or by Ms. Gass with good reason within 18 months following a change in control of the Company, she will receive severance in a lump sum equal to three times the sum of her then-current base salary and annual target bonus, up to 18 months of COBRA and life insurance continuation, a pro rata bonus, accelerated vesting of performance awards at target and accelerated vesting of the sign-on equity awards.
Ms. Gass is expected to enter into an indemnification agreement with the Company (the “Indemnification Agreement”) in substantially the same form as the Company has entered into with other executive officers and directors. The Indemnification Agreement requires the Company to indemnify and advance expenses to her to the fullest extent permitted by law with respect to any action, suit, proceeding, inquiry or investigation in which she is involved as a party or otherwise because she is or was a director, officer, employee, agent or fiduciary of the Company.
