Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers; Compensatory Arrangement of Certain Officers.
Appointment of New Chief Executive Officer and Director; Employment Agreement
with New Chief Executive Officer
On January 6, 2020, Mr. David Conn and Sequential Brands Group Inc. (the
"Company" or "Sequential") entered into an employment agreement (the "Employment
Agreement") for Mr. Conn to serve as the Company's Chief Executive Officer and
Director effective January 6, 2020. Concurrently with Mr. Conn's appointment,
Mr. Chad Wagenheim, the Company's President, ceased to act as principal
executive officer of the Company.
Mr. Conn, age 52, brings with him over 25 years of experience and vast knowledge
in brand management and marketing. Most recently, he served as CEO of ThreeSixty
Brands, where he played a significant role in acquiring and relaunching the
iconic FAO Schwarz and Sharper Image brands. As CEO of ThreeSixty Brands, Conn
leveraged his broad expertise to develop a go-to market strategy for the FAO
Schwarz brand that featured scaled distribution with major retailers and a
direct-to consumer rollout including an experiential, award winning, FAO Schwarz
NYC flagship store, and an e-commerce platform. Prior to ThreeSixty Brands, he
served as CEO and board member of True Religion, a global lifestyle brand with
over 2000 employees and 180 retail stores. While there, he led the development
and rollout of an innovative new retail concept and omni-channel platform.
Before joining True Religion, Conn served as President of VF Corporation's newly
formed retail licensed brands division and led VF's acquisition of premium denim
brand Rock & Republic. From 2004 to 2008, he served as Executive Vice President
of Iconix Brand Group, where he joined at its inception and oversaw it during a
period of significant growth. A graduate of Boston University, Conn served in
various roles early in his career at BMG Columbia House and Candie's Inc.
Mr. Conn's employment with the Company is at will unless and until terminated as
provided in the Employment Agreement. Under the terms of the Employment
Agreement, Mr. Conn will receive an annual base salary of $600,000, which may be
increased from time to time at the discretion of the Board. The Employment
Agreement also provides that Mr. Conn will be eligible to participate in the
Company's annual bonus program for executives and will have a target annual
bonus opportunity equal to 100% of his base salary, based upon the Company
achieving certain adjusted EBITDA performance or financial targets to be
determined by the Board.
In connection with the commencement of his employment, the Company provided for
inducement grants (the "Inducement Grants") with respect to the Company's common
stock, $0.01 par value, of 200,000 shares of restricted stock, 400,000
restricted stock units vesting in three equal annual installments and 900,000
performance stock units to be eligible for vesting for the fiscal years ended
2020, 2021 and 2022 subject to achievement of performance goals to be determined
by the Board. The Inducement Grants were made as an inducement award and were
not granted under the Company's 2013 Stock Incentive Plan (the "2013 Plan") but
are subject to the same terms and conditions as provided in the 2013 Plan.
The Employment Agreement also provides that Mr. Conn will be entitled to certain
severance benefits if his employment ceases under specified circumstances. If
Mr. Conn is terminated without cause or resigns for good reason, he will receive
(i) an amount equal to one year of base salary; (ii) a pro-rata portion of his
annual bonus for the year of termination, based on actual results for such year,
(iii) subsidized COBRA coverage for up to 12 months and (iv) full vesting of any
unvested portion of the 400,000 restricted stock units granted upon his
commencement of employment. Payment of these severance benefits is subject to
the requirement that Mr. Conn execute a release of claims against the Company
and its affiliates. Finally, the Employment Agreement also contains customary
confidentiality, non-competition, non-solicitation, intellectual property and
indemnification provisions.
The Employment Agreement is attached as Exhibit 10.1 hereto and is incorporated
herein by reference.
Departure of Chief Financial Officer; Appointment of New Interim Chief Financial
Officer and Principal Financial and Accounting Officer
On January 6, 2020, Mr. Peter Lops resigned from his position as Chief Financial
Officer of Sequential, as a result of which Mr. Lops ceased to be its principal
financial and accounting officer. Per a transition agreement between Sequential
and Mr. Lops dated January 6, 2020 (the "Transition Agreement"), Mr. Lops has
agreed to act as a consultant to the Company through March 31, 2020, for which
he will be paid a total of $112,500. The Transition Agreement includes customary
terms and conditions, including a release of claims. A copy of the Transition
Agreement is attached hereto as Exhibit 10.2 and is incorporated herein by
reference.
Also, effective January 6, 2020, Daniel Hanbridge, age 42, who has been employed
by the Company since January 2017 and most recently served as Vice President of
Finance, was appointed as Senior Vice President and Interim Chief Financial
Officer and, in such capacity, will act as principal financial and accounting
officer.
Mr. Hanbridge's employment with the Company is at will unless and until
terminated as provided in his employment letter, as amended (the
"Letter"). Under the terms of the Letter, Mr. Hanbridge will receive an annual
base salary of $250,000, which may be increased from time to time at the
discretion of the Compensation Committee of the Board. The Letter also provides
that Mr. Hanbridge will be eligible to participate in the Company's annual bonus
program and will have a target annual bonus opportunity equal to 40% of his base
salary, based upon the Company achieving certain performance or financial
targets to be determined by the Board. In recognition of his promotion and his
extraordinary individual performance during 2019, Mr. Hanbridge will receive a
discretionary bonus of $50,000 to be paid by March 31, 2020 (the "Discretionary
Bonus"). In recognition of his valuable services to the Company, Mr. Hanbridge
will also receive a long-term cash incentive bonus in lieu of a stock grant of
$50,000 (the "LTI Bonus") to be paid in two installments as follows: (a) $5,000
by January 15, 2020; and (b) $45,000 by October 1, 2020. The Letter also
provides that if Mr. Hanbridge is terminated without cause, he will receive an
amount equal to six months base salary, plus the Discretionary Bonus and the LTI
Bonus. Payment of the severance is subject to the requirement that Mr. Hanbridge
execute a release of claims against the Company and its affiliates.
The Letter is attached as Exhibit 10.3 hereto and is incorporated herein by
reference.
Item 7.01. Regulation FD Disclosure.
On January 6, 2020, Sequential issued a press release announcing the appointment
of Mr. Conn as Chief Executive Officer as discussed in Item 5.02. A copy of the
press release is furnished as Exhibit 99.1 and is incorporated herein by
reference.
On January 9, 2020, Sequential issued a press release announcing the Inducement
Grants. A copy of the press release is furnished as Exhibit 99.2 and is
incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
Employment Agreement between Sequential Brands Group, Inc. and David
10.1 Conn, dated January 6, 2020.
Transition Agreement between Sequential Brands Group, Inc. and Peter
10.2 Lops, dated January 6, 2020.
Employment Letter between Sequential Brands Group, Inc. and Daniel
10.3 Hanbridge, dated January 6, 2020.
Employment Letter between Sequential Brands Group, Inc. and Daniel
10.4 Hanbridge, dated December 1, 2016.
99.1 Press release.
99.2 Press release.
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