UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 2, 2006 (May 1, 2006)
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Bob Evans Farms, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-1667 31-4421866
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3776 South High Street, Columbus, Ohio 43207
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(Address of principal executive offices) (Zip Code)
(614) 491-2225
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On May 2, 2006, Bob Evans Farms, Inc. (the "Company") issued a news
release announcing the appointment of Steven A. Davis as the Chief Executive
Officer of the Company and as a member of the Company's Board of Directors (the
"Board"), effective May 1, 2006. A copy of this news release is attached as
Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by
reference.
In connection with Mr. Davis' appointment as Chief Executive Officer,
the Company and Mr. Davis entered into an Employment Agreement, effective May 1,
2006, setting forth the terms of Mr. Davis' employment (the "Employment
Agreement"). The following summary of the material terms and conditions of the
Employment Agreement is not complete and is qualified in its entirety by
reference to the complete Employment Agreement attached as Exhibit 99.2 to this
Current Report on Form 8-K and incorporated herein by reference.
Term
The Employment Agreement has an initial term of three (3) years
commencing May 1, 2006, and ending April 30, 2009. The Employment Agreement will
automatically renew for successive one-year terms unless either the Company or
Mr. Davis provides the other with written notice of non-renewal at least sixty
(60) days prior to the expiration of any term.
Compensation
In order to recompense Mr. Davis for his compensation, bonus and equity
lost or forfeited in connection with his previous employment and to further
induce Mr. Davis to join the Company, the Employment Agreement provides that Mr.
Davis will receive a grant of 10,000 shares of the Company's common stock and a
grant of 20,166 shares of restricted stock of the Company. The restricted stock
will vest over three (3) years commencing June 13, 2007, in equal amounts of
6,722 shares per year. The Employment Agreement states that both grants must be
made within forty-five (45) days after Mr. Davis commences employment with the
Company. The number of shares subject to these grants was calculated using an
assumed price of the Company's stock of $30.00 per share, and the Employment
Agreement provides that the number of shares actually granted will be adjusted
to reflect the actual price of the Company's common stock on the grant date
(whether higher or lower than $30.00 per share).
As compensation for his services to the Company, the Employment
Agreement provides that Mr. Davis will receive a base salary of $650,000 per
year. Mr. Davis' base salary may be increased, but may not be decreased, in the
sole discretion of the Compensation Committee of the Board. Mr. Davis is also
eligible to receive an annual cash bonus as may be determined in the sole
discretion of the Compensation Committee of the Board. Mr. Davis' target cash
bonus for the 2007 fiscal year is 70% of his base salary ($455,000).
In addition to his base salary and annual cash bonus, Mr. Davis is also
eligible to participate in the Company's Performance Incentive Plan subject to
the discretion of the Compensation Committee of the Board. For fiscal 2007, Mr.
Davis' target incentive compensation ("Target Incentive Compensation") under the
Performance Incentive Plan is 250% of his base salary ($1,625,000) payable in
the form of stock options and restricted stock. Mr. Davis will automatically
receive a grant of stock options with a value equal to 25% of his Target
Incentive Compensation ($406,250) calculated using the closing price of the
Company's common stock on the Nasdaq National Market on the grant date, the
Black-Scholes valuation model and a discount based on vesting requirements. The
remaining 75% of Mr. Davis' Target Incentive Compensation ($1,218,750) is
at-risk and will be awarded in the form of restricted stock of the
Company only if the Company achieves certain objective performance goals to be
established by the Compensation Committee of the Board at its June 2006 meeting.
If the performance goals established by the Compensation Committee are exceeded,
the at-risk portion of Mr. Davis' Target Incentive Compensation may be increased
up to an additional 50% ($609,375).
Mr. Davis will also be granted an option to purchase 18,000 shares of
the Company's common stock. The stock option will be granted at the June 2006
meeting of the Compensation Committee and will have an exercise price equal to
the closing price of the Company's common stock on the Nasdaq National Market on
that date. The stock option will vest over three (3) years commencing June 13,
2007, in equal amounts of 6,000 shares per year.
Benefits
Mr. Davis is eligible to participate in any of the Company's health,
disability, group term life insurance, pension, retirement, profit sharing and
bonus plans, and any other perquisites and fringe benefits that may be extended
from time to time to the Company's next most senior executive officer. Mr. Davis
is eligible to participate in the Bob Evans Farms, Inc. and Affiliates Second
Amended and Restated Supplemental Executive Retirement Plan and the Bob Evans
Farms, Inc. and Affiliates Second Amended and Restated Executive Deferral
Program in accordance with the terms of those plans. Mr. Davis is also entitled
to equity-based compensation awards that may be extended from time to time at
the level extended to the Company's next most senior executive officer, subject
to the discretion of the Compensation Committee of the Board, the terms and
conditions of the Company's equity-based compensation plans and award
agreements, and the provisions of the Employment Agreement. Additionally, the
Company will provide Mr. Davis with a minimum of four (4) weeks paid vacation
and the use of an automobile or a monthly automobile allowance of $1,846.00 per
month, subject to the discretion of the Compensation Committee.
Relocation Expenses
The Employment Agreement provides that Mr. Davis will be reimbursed for
his relocation expenses in accordance with Company policy, including
house-hunting trips, closing costs related to the purchase of a residence in the
Columbus, Ohio area, moving expenses and temporary housing. The Company will
also pay Mr. Davis $50,000 to cover unitemized miscellaneous relocation
expenses. Additionally, the Company will, at Mr. Davis' option, purchase his
residence in the Louisville, Kentucky, area for a price to be determined on the
basis of independent appraisals of the home's fair market value.
The Company will reimburse Mr. Davis up to $10,000 for legal fees he
incurred in connection with the negotiation of the Employment Agreement.
Confidentiality/Discoveries
The Employment Agreement contains an agreement by Mr. Davis to maintain
the confidentiality of the Company's confidential information and to assign to
the Company the rights to any and all inventions, designs, improvements,
discoveries and processes developed by Mr. Davis, alone or with others, during
his employment with the Company. If Mr. Davis assists the Company with the
protection of any intellectual property after the termination of his employment,
he will be paid for his services at an hourly rate equal to 50% of his salary at
the time his employment is terminated divided by 2,500.
Non-Competition/Non-Solicitation
During his employment, Mr. Davis may not, without the prior written
consent of the Board, directly or indirectly, as an employee, employer,
consultant, agent, principal, partner, shareholder, corporate officer, director,
member, manager or through any other kind of ownership (other than ownership of
securities of publicly held corporations of which Mr. Davis owns less than three
percent (3%) of any class of outstanding securities), affiliation, association,
or in any other representative or individual capacity, engage in or render any
services to any business in North America engaged in the family or casual dining
restaurant industry, or in any other segment of the restaurant industry in which
the Company or any subsidiary of the Company may become involved prior to the
termination of Mr. Davis' employment with the Company (the "Non-Competition
Provisions").
During Mr. Davis' employment and the two (2)-year period following the
termination of his employment with the Company for any reason, Mr. Davis may
not, for himself or for any third party, employ or hire any employee of the
Company, or solicit, induce, recruit or cause any employee of the Company to
terminate his/her employment for the purpose of joining, associating, or
becoming employed with any other business or activity (except as otherwise
agreed to in writing by the Board).
Termination Upon Death
If Mr. Davis dies during his employment, then his beneficiary will be
entitled to: (1) the amount of Mr. Davis' accrued but unpaid base salary as of
the date of his death, including the value of unused vacation days; (2) payment
for any unreimbursed business expenses incurred by Mr. Davis prior to his death;
and (3) any rights and benefits provided under the Company's plans and programs,
determined in accordance with their applicable terms and provisions.
Termination by the Company Upon Disability
If Mr. Davis suffers a "Disability," then the Company may terminate his
employment upon not less than thirty (30) days prior written notice. The
Employment Agreement defines a "Disability" as Mr. Davis' inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months.
During any period that Mr. Davis fails to perform his duties as a result of a
Disability, he will continue to receive his base salary until his employment is
terminated less any amounts payable to Mr. Davis under the Company's disability
benefit plan(s).
If the Company elects to terminate Mr. Davis' employment as a result of
a Disability, he will be entitled to: (1) the amount of his accrued but unpaid
base salary as of the date his employment is terminated, including the value of
unused vacation days; (2) payment for any unreimbursed business expenses he
incurred prior to the termination of his employment; and (3) any rights and
benefits provided under the Company's plans and programs, determined in
accordance with their applicable terms and provisions.
Termination by the Company for Cause
Under the Employment Agreement, the Company will have "Cause" to
terminate Mr. Davis' employment at any time if Mr. Davis:
o is convicted or pleads no contest to any felony or other serious
criminal offense;
o breaches any material provision of the Employment Agreement
(other than the provisions related to confidentiality,
intellectual property, non-competition and non-solicitation) or
habitually neglects to perform his duties (other than for reasons
related to illness, injury, temporary disability or "Good
Reason") and such breach or neglect is not corrected within ten
(10) business days after receipt of written notice from the
Board;
o breaches any provision of the Employment Agreement related to
confidentiality, intellectual property, non-competition and
non-solicitation, and such breach is not corrected within five
(5) business days after receipt of written notice from the Board;
o intentionally acts in material violation of any applicable law
relating to discrimination or harassment;
o engages in any inappropriate relationship with an employee,
customer or supplier of the Company, or misuses or abuses Company
property and/or resources;
o violates any material Company policy applicable to senior
executives; or
o acts, without Board direction or approval, in a manner that is
materially injurious to the Company's financial condition.
If the Company elects to terminate Mr. Davis' employment for Cause, he
will be entitled to: (1) the amount of his accrued but unpaid base salary as of
the date his employment is terminated, including the value of unused vacation
days; (2) payment for any unreimbursed business expenses he incurred prior to
the termination of his employment; and (3) any rights and benefits provided
under the Company's plans and programs, determined in accordance with their
applicable terms and provisions. Additionally, the Non-Competition Provisions
will continue for twenty-four (24) months following the termination of Mr.
Davis' employment.
Termination by the Company Without Cause or by Mr. Davis for Good
Reason
The Company may terminate Mr. Davis' employment for any reason upon
fourteen (14) days prior written notice. Also, Mr. Davis may terminate his
employment at any time for "Good Reason" if the Company: (a) breaches its
obligations to pay any salary, benefit or bonus due under the Employment
Agreement; (b) requires Mr. Davis to relocate more than 50 miles from the
greater Columbus, Ohio, area; or (c) diminishes Mr. Davis' functional
responsibilities in a substantial and negative manner, and the Company fails to
remedy any such event within ten (10) business days after its receipt of written
notice from Mr. Davis (which notice must be provided within thirty (30) days
following the occurrence of the event).
If the Company terminates Mr. Davis' employment for any reason other
than death, Disability or Cause, or if Mr. Davis terminates his employment for
Good Reason, then Mr. Davis will be entitled to: (1) the amount of his accrued
but unpaid base salary as of the date his employment is terminated, including
the value of unused vacation days; (2) payment for any unreimbursed business
expenses he incurred prior to the termination of his employment; (3) any rights
and benefits provided under the Company's plans and programs, determined in
accordance with their applicable terms and provisions; (4) any prior year
earned, but unpaid bonus; (5) continuation of his base salary for twenty-four
(24) months (payable in 24 equal monthly installments); (6) a pro-rated bonus
for the then current fiscal year as approved by the Compensation Committee; and
(7) payment of premiums under the Company's group
health and medical policies on behalf of Mr. Davis for up to twenty-four (24)
months for coverage substantially similar to that provided to Mr. Davis and his
dependents on the date his employment is terminated. Additionally, the
Non-Competition Provisions will continue for twenty-four (24) months following
the termination of Mr. Davis' employment.
Voluntary Termination by Mr. Davis
Mr. Davis may resign from the Company upon not less than sixty (60)
days prior written notice. If Mr. Davis voluntarily terminates his employment,
then he will be entitled to: (1) the amount of his accrued but unpaid base
salary as of the date his employment is terminated, including the value of
unused vacation days; (2) payment for any unreimbursed business expenses he
incurred prior to the termination of his employment; and (3) any rights and
benefits provided under the Company's plans and programs, determined in
accordance with their applicable terms and provisions. Additionally, the
Non-Competition Provisions will continue for twenty-four (24) months following
the termination of Mr. Davis' employment.
Termination Upon Expiration of Employment Agreement
If either the Company or Mr. Davis provides the other party with notice
of non-renewal at least sixty (60) days prior to the expiration of any term of
the Employment Agreement, then Mr. Davis' employment will terminate at the end
of such term.
If Mr. Davis provides the notice of non-renewal, then he will be
entitled to: (1) the amount of his accrued but unpaid base salary as of the date
his employment is terminated, including the value of unused vacation days; (2)
payment for any unreimbursed business expenses he incurred prior to the
termination of his employment; and (3) any rights and benefits provided under
the Company's plans and programs, determined in accordance with their applicable
terms and provisions. Additionally, the Non-Competition Provisions will continue
for twenty-four (24) months following the termination of Mr. Davis' employment.
In the event that the Company provides the notice of non-renewal, then
Mr. Davis will be entitled to: (1) the amount of his accrued but unpaid base
salary as of the date his employment is terminated, including the value of
unused vacation days; (2) payment for any unreimbursed business expenses he
incurred prior to the termination of his employment; and (3) any rights and
benefits provided under the Company's plans and programs, determined in
accordance with their applicable terms and provisions. In addition, Mr. Davis
may elect to continue the Non-Competition Provisions in which event he will also
be entitled to receive his base salary for each month during which he elects to
continue the Non-Competition Provisions (up to a maximum of twenty-four (24)
months).
Benefit Plans/Offset
If Mr. Davis' employment is terminated for any reason, then (1) his
participation in all of the Company's compensation and benefit plans will cease
upon the effective termination date and all unvested bonuses, equity awards and
other like items will immediately lapse, except as otherwise provided in the
applicable Company plans or the Employment Agreement and (2) all amounts owed by
Mr. Davis to the Company will become immediately due and payable, and the
Company will have the right to offset such amounts against any amounts the
Company owes to Mr. Davis.
Change in Control Agreement
The Employment Agreement contemplates that the Company and Mr. Davis
will enter into a Change in Control Agreement substantially in a form of the
comparable agreement provided to the Company's next most senior executive
officer. If an event or a series of related events entitle Mr. Davis to payments
under both the Employment Agreement and the Change in Control Agreement, he will
be entitled to the payments due under the Change in Control Agreement reduced by
the amounts (if any) received under the Employment Agreement before the payments
become due under the Change in Control Agreement, and no further payments will
be due under the Employment Agreement.
Waiver of Statutes of Limitations
Any claim or lawsuit relating to the Employment Agreement or Mr. Davis'
employment with the Company must be filed no more than six (6) months after the
date of the action or conduct that is, or gives rise to, the subject of the
claim or lawsuit.
Compliance with Section 409A of the Internal Revenue Code
Portions of the Employment Agreement are or may be subject to Section
409A of the Internal Revenue Code of 1986, as amended. The Employment Agreement
provides that (1) it will be administered in a manner that will avoid penalties
under Section 409A while adhering as closely as possible to the intent of the
Employment Agreement and (2) within the period prescribed by the Internal
Revenue Service for this purpose, the Company and Mr. Davis will work in good
faith together to amend the Employment Agreement (without any further
consideration from or to either party) to ensure that its terms comply with
Section 409A. In the event that the parties cannot, as a matter of tax law, make
changes to the Employment Agreement that would avoid tax penalties under Section
409A, the Company will pay Mr. Davis an income tax "gross up" payment such that
Mr. Davis will be made whole for any penalties he incurs due to accelerated
taxation and penalties.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES.
As noted under Item 1.01 above, Mr. Davis' Employment Agreement
provides that he will receive a grant of 10,000 shares of the Company's common
stock. These shares will not be registered under the Securities Act of 1933, as
amended (the "Act"), at the time of grant in reliance on the exemption afforded
by Section 4(2) of the Act. The number of shares subject to this grant was
calculated using an assumed price of the Company's stock of $30.00 per share,
and the Employment Agreement provides that the number of shares actually granted
will be adjusted to reflect the actual price of the Company's common stock on
the grant date (whether higher or lower than $30.00 per share).
ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS.
On May 2, 2006, the Company announced the appointment of Steven A.
Davis as the Chief Executive Officer of the Company, effective May 1, 2006. The
Board also elected Mr. Davis as a member of the Board, effective May 1, 2006, to
fill the vacancy created by the resignation of Stewart K. Owens on August 9,
2005. Mr. Davis has been elected to the class of directors whose terms of office
will expire at the Company's upcoming Annual Meeting of Stockholders scheduled
for September 11, 2006 (the "2006 Annual Meeting"). The Board intends to
nominate Mr. Davis for re-election to the Board at the 2006 Annual Meeting.
Mr. Davis, age 47, has served in various capacities for Yum! Brands,
Inc. (and its predecessors) since 1993. He has served as the President, Long
John Silver's/A&W and Yum! Multibranding since 2002. Previously, Mr. Davis
served in a variety of operations management and other executive positions in
Yum! Brands' Pizza Hut division, including Senior Vice President of Concept
Development. Prior to 1993, Mr. Davis was employed by Kraft General Foods for
nine years. His last position with Kraft was as Director of Marketing for All
American Gourmet. Mr. Davis was also elected to the Board of Diriectors of
EMBARQ Corp., a local communications services provider, effective May 1, 2006.
The information provided under Item 1.01 of this Current Report on Form
8-K regarding the Employment Agreement entered into between the Company and Mr.
Davis is incorporated herein by reference.
There are no family relationships between Mr. Davis and the Company's
directors, executive officers or persons nominated or chosen by the Company to
become directors or executive officers.
In connection with Mr. Davis' appointment as the Company's Chief
Executive Officer, Larry C. Corbin resigned as the Company's Interim Chief
Executive Officer and President effective May 1, 2006. Mr. Corbin will retain
his position as a director of the Company as a member of the class of directors
whose terms will expire at the 2006 Annual Meeting. The Board intends to
nominate Mr. Corbin for re-election to the Board at the 2006 Annual Meeting.
On May 2, 2006, the Company issued a news release announcing Mr. Davis'
appointment as the Company's Chief Executive Officer and election as a director
of the Company as well as the resignation of Mr. Corbin as the Company's Interim
Chief Executive Officer and President. A copy of this news release is furnished
as Exhibit 99.1 and is incorporated herein by reference.
ITEM 7.01. REGULATION FD DISCLOSURE.
On May 2, 2006, the Company issued a news release announcing Mr. Davis'
appointment as the Company's Chief Executive Officer and election as a director
of the Company as well as the resignation of Larry C. Corbin as the Company's
Interim Chief Executive Officer and President. A copy of this news release is
furnished as Exhibit 99.1 and is incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired -- Not Applicable
(b) Pro Form Financial Information -- Not applicable
(c) Exhibits:
99.1 Press Release issued by Bob Evans Farms, Inc. on May 2, 2006
99.2 Employment Agreement, effective May 1, 2006, by and between
Bob Evans Farms, Inc. and Steven A. Davis
[Remainder of page intentionally left blank; signature on following page.]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BOB EVANS FARMS, INC.
Dated: May 2, 2006 By: /s/ Donald J. Radkoski
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Donald J. Radkoski
Chief Financial Officer, Treasurer
and Secretary
INDEX TO EXHIBITS
Current Report on Form 8-K
Dated May 2, 2006
Exhibit No. Description
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99.1 Press Release issued by Bob Evans Farms, Inc. on May 2, 2006
99.2 Employment Agreement, effective May 1, 2006, by and between
Bob Evans Farms, Inc. and Steven A. Davis