Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Rose Lee as Director and Chief Executive of the Company
On August 3, 2021, Cornerstone Building Brands, Inc. (the "Company") appointed
Rose Lee as Chief Executive Officer of the Company and as a member of the
Company's Board of Directors. Ms. Lee will commence to serve in these roles
effective as of September 6, 2021.
Ms. Lee, age 55, previously served as President, Water & Protection, of Dupont
de Nemours, Inc., from June 2019 to August 2021. Prior to such role, Ms. Lee
served as President, Safety & Construction for the Specialty Products Division
of DowDuPont from September 2017 to June 2019. Ms. Lee joined Dupont de Nemours
in January 2015 as Global Business Director, DuPont™ Kevlar® and Aramid
Intermediates. In 2016, she assumed the role of President, DuPont Protection
Solutions. Prior to joining Dupont de Nemours, Ms. Lee served in a series of
roles with increasing responsibility at Saint-Gobain, Booz-Allen consultancy and
United Technologies. Ms. Lee is a board member of Crown Holdings, Inc. Ms. Lee
earned a B.S. in aerospace engineering from Cornell University, a M.S. in
mechanical engineering from Rensselaer Polytechnic Institute, and an M.B.A. from
Massachusetts Institute of Technology.
Ms. Lee was not appointed as a director as a result of any arrangement or
understanding between Ms. Lee and any other persons. No family
relationship exists between Ms. Lee and any of the Company's directors or
executive officers. There are no related-party transactions in which Ms. Lee or
any of her immediate family members has an interest that would require
disclosure under Item 404(a) of Regulation S-K.
On August 3, 2021, the Company entered into an employment agreement with Ms.
Lee (the "Employment Agreement"). The Employment Agreement provides Ms. Lee with
a base salary of $1,000,000 per year, a target annual bonus opportunity of 120%
of her base salary, and a 2022 long-term incentive grant having a total target
grant date fair value equal to $4,000,000. In addition, in order to compensate
Ms. Lee for compensation forfeited by her when she accepted her role with the
Company, the Employment Agreement provides for a $500,000 cash signing bonus and
an $8.5 million make-whole equity award (consisting of $2 million of stock
options, $3 million of restricted stock units and $3.5 million of performance
share units). The make-whole options and make-whole restricted stock units will
have a three-year vesting schedule from Ms. Lee's start date, and the make-whole
performance share units will have the same performance-vesting and
service-vesting terms as the performance share units granted to other senior
executive officers of the Company in March, 2021. All of these equity awards are
intended to be issued under an exception to the rules of the New York Stock
Exchange for "inducement grants" but otherwise to have the same terms and
conditions as if issued under the Company's 2003 Long-Term Stock Incentive Plan,
and a press release will be issued with the number of shares of common stock
subject to these grants when determined. The Employment Agreement also includes
a severance benefit upon qualifying terminations of employment equal to two
times annual base salary and two times target bonus, plus a pro rata bonus for
the year of termination. The Employment Agreement also includes a perpetual
confidentiality covenant, and customary restrictive covenants (non-competition,
non-solicitation, non-disparagement, and non-interference) that apply during Ms.
Lee's employment and for a period of two years thereafter. The foregoing
description of the Employment Agreement is a summary and is qualified in its
entirety by reference to the full text of the Employment Agreement, a copy of
which will be filed with the Company's Quarterly Report on Form 10-Q for the
period ending October 2, 2021.
Retirement of James S. Metcalf in March, 2022
James S. Metcalf, our Chairman and Chief Executive Officer, has advised the
Board of his intention to retire from the Company after a transition period
during which he will transfer his duties and responsibilities as well as serve
as Executive Chairman. In consideration of Mr. Metcalf's agreement to remain in
the Executive Chairman role through March 31, 2022 (the "Retirement Date"), the
Company has agreed to fully vest, on the originally scheduled vesting dates, (x)
122,992 stock options and 61,496 restricted stock units granted to Mr. Metcalf
in November, 2018 and that would otherwise be forfeited on the Retirement Date
and (y) 141,509 stock options and 40,816 restricted stock units granted to Mr.
Metcalf in March, 2020 that would otherwise be forfeited on the Retirement Date.
The Company has also agreed to provide Mr. Metcalf with 180 days (rather than 60
days) to exercise his vested stock options following the Retirement Date or the
vesting date, as applicable. In addition, the Company has agreed that Mr.
Metcalf will retain the full number of performance share units granted to him in
March 2020 (consisting of 306,123 performance share units at target levels of
performance) for the balance of the performance period as if his employment had
continued for the full performance period, at which time Mr. Metcalf will earn a
number of shares of common stock based on the actual satisfaction of the
applicable performance metrics. All other equity awards that are unvested as of
the Retirement Date will be forfeited without payment. Because Mr. Metcalf is
retiring from the Company, his departure does not entitle him to severance pay
or termination benefits under the employment agreement, dated as of November 16,
2018, to which he and the Company are parties. Mr. Metcalf's employment
agreement contains certain covenants relating to confidentiality,
non-disparagement, non-competition and non-solicitation, all of which will
remain in effect in accordance with their terms following Retirement Date. The
full terms of Mr. Metcalf's retirement are expected to be embodied in a
Transition Agreement to be entered into by Mr. Metcalf and the Company. The
foregoing description of the Transition Agreement is a summary and is qualified
in its entirety by reference to the full text of the Transition Agreement, a
copy of which will be filed with the Company's Quarterly Report on Form 10-Q for
the period ending October 2, 2021.
Item 8.01 Other Events.
On August 4, 2021, the Company issued a press release announcing the retirement
of Mr. Metcalf and the appointment of Ms. Lee as Chief Executive Officer and a
member of the Board of Directors, effective as of September 6, 2021. A copy of
the Company's press release is attached as Exhibit 99.1 to this Form 8-K and is
incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
99.1 Press Release, dated August 4, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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