Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On January 25, 2023, The RealReal, Inc. (the "Company") announced that John E.
Koryl has been hired by the Company to serve as the Company's Chief Executive
Officer and as a member of the Company's Board of Directors (the "Board"),
effective as of February 6, 2023 (the "Start Date"). Mr. Koryl will serve as a
Class III director until the Company's 2025 annual meeting of stockholders or
upon his successor having been elected and qualified, increasing the size of the
Board from seven to eight members as of his Start Date.
Mr. Koryl, age 52, is currently serving as Advisor, Digital and Personalization
Leadership, of Canadian Tire Corporation, Limited ("CTC"), a position he has
held since August 2022. Mr. Koryl previously held the positions of President,
CTC Digital, at CTC from August 2019 to August 2022, and of Senior Vice
President, Digital, at CTC from December 2017 to August 2019. Prior to joining
CTC, Mr. Koryl was employed by Neiman Marcus Corporation from 2011 to 2017,
where has served as President, Neiman Marcus Stores and Online (2014 to 2017),
and President, Neiman Marcus Direct (2011 to 2014). Before Neiman Marcus,
Mr. Koryl held numerous management roles with Williams-Sonoma, Inc., eBay, Inc.,
UmbrellaBank, fsb, Creditland.com, and Andersen Consulting. Mr. Koryl previously
served as an independent director of the Guitar Center (2014 to 2017) and Petco
(2013), and he currently serves as an independent director of AI Tayer Group,
Insignia. Mr. Koryl completed the Stanford Executive Education Program from the
Stanford University Graduate School of Business and holds a Bachelor of Arts
degree in Psychology and Computer Applications from the University of Notre
Dame. We believe that Mr. Koryl is qualified to serve on the Board due to his
extensive business experience from his service in various senior executive
leadership roles and the perspective he will bring to the Board as Chief
Executive Officer.
There is no arrangement or understanding between Mr. Koryl and any other person
pursuant to which Mr. Koryl has been appointed as Chief Executive Officer and as
a member of the Board, and there is no family relationship between Mr. Koryl and
any of the Company's directors or executive officers. Mr. Koryl has no interest
in any transaction required to be disclosed pursuant to Item 404(a) of
Regulation S-K.
Compensation Arrangements with Mr. Koryl
Mr. Koryl entered into an offer letter (the "Offer Letter") with the Company on
January 24, 2023, providing for an annual compensation package consisting of a
base salary of $700,000 and a target bonus opportunity of 100% of base salary
(prorated for 2023). Mr. Koryl will receive no additional compensation for his
role as a member of the Board. In addition, the Offer Letter provides for a
one-time sign-on bonus in the amount of $300,000 (the "Sign-On Bonus"), payable
in the first regularly scheduled pay date following the Start Date, less
applicable withholdings and reductions. The Offer Letter also provides that
Mr. Koryl will work remotely, with regular travel to the Company's headquarters
and other business locations. If Mr. Koryl is terminated by the Company for
"cause" or resigns from the Company without "good reason" (each term, as defined
in the CIC Agreement (defined below)): (a) on or prior to the first anniversary
of the Start Date, Mr. Koryl will repay 100% of the Sign-On Bonus to the Company
within 30 days of his termination of employment; or (b) following the first
anniversary of the Start Date but on or before the second anniversary of the
Start Date, Mr. Koryl will repay 50% of the Sign-On Bonus to the Company within
30 days of his termination of employment.
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The Company will recommend that the Board grant Mr. Koryl two equity awards
following his Start Date, as follows: (a) 1,250,000 time-based restricted stock
units ("RSUs"), which will vest 25% on the first anniversary of the vesting
commencement date and in 12 substantially equal quarterly installments
thereafter, subject to Mr. Koryl's continuous employment with the Company
through the applicable vesting date; and (b) 1,500,000 performance-based
restricted stock units ("PSUs"), which will be eligible to vest over a five-year
performance period (the "Performance Period") based on (i) Mr. Koryl's
continuous employment with the Company and (ii) the Company's stock price
achievement, as summarized below:
PSUs Eligible Service Performance
Tranche(1) to Vest Condition(2) Condition(3)
1 150,000 12 months $ 5.00
2 300,000 24 months $ 7.50
3 350,000 36 months $ 10.00
4 700,000 48 months $ 15.00
(1) The PSUs will vest on the first date on which both the service condition
and performance condition are achieved for the applicable PSU tranche
(referred to herein as "time-vesting" and "performance-vesting",
respectively) during the Performance Period.
(2) Mr. Koryl must be continuously employed by the Company from the vesting
commencement date through the service period set forth above for the
applicable PSU tranche to time-vest; provided that the service condition
will be deemed satisfied (a) upon the consummation of a "change in
control" (as defined in the CIC Agreement) in which the PSUs are not
assumed or substituted or (b) upon his termination without "cause" or
resignation with "good reason" (in each case, as defined in the CIC
Agreement) (i) within the three-month period prior to a change in control
or (ii) following a change in control through the 48-month anniversary of
the vesting commencement date.
(3) The Company must achieve the stock prices set forth above during the
Performance Period for the applicable PSU tranche to performance-vest.
Stock price performance will be measured based on the 60-day
volume-weighted average price of one share of the Company's common stock
registered on Nasdaq, as well as on the last trading day prior to the
occurrence of a change in control.
The terms and conditions of these awards will be consistent with the terms and
conditions of the Company's 2019 Equity Incentive Plan (the "2019 Plan") and the
applicable executive form of award agreements. Beginning in 2025, Mr. Koryl will
also be eligible to participate in the 2019 Plan (or any successor long term
incentive plan) on an annual basis and receive annual grants of long-term
incentive awards at a level commensurate with his position.
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Mr. Koryl will enter into the Company's form Severance and Change in Control
Agreement (the "CIC Agreement") and, upon entry into the CIC Agreement, will be
entitled to the compensation and benefits described therein for the Company's
Chief Executive Officer. Mr. Koryl will also enter into the Company's Indemnity
Agreement upon or as soon as practicable after the Start Date in the same form
entered into by the Company's other executive officers.
The foregoing description of the Offer Letter is a general description only and
is qualified in its entirety by reference to the full text of the Offer Letter,
a copy of which is filed herewith as Exhibit 10.1 and incorporated herein by
reference.
Cessation of Co-Interim Chief Executive Officer Roles
Rati Sahi Levesque, President and Chief Operating Officer of the Company, and
Robert Julian, Chief Financial Officer of the Company, were appointed as
Co-Interim Chief Executive Officers on June 7, 2022 to serve in such capacity
while a search for the Company's permanent Chief Executive Officer was underway.
Effective as of the Start Date, the Co-Interim Chief Executive Officer roles
will terminate, and Ms. Sahi Levesque and Mr. Julian will remain with the
Company in their previous roles.
Item 7.01. Regulation FD Disclosure.
On January 25, 2023, the Company issued a press release regarding the foregoing.
A copy of the press release is furnished herewith as Exhibit 99.1 and is
incorporated herein by reference.
The information in Item 7.01 to this Current Report on Form 8-K, including
Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended or the Exchange Act, except as expressly set forth by specific
reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Exhibit Description
10.1 Offer Letter by and between The RealReal, Inc. and John E. Koryl,
dated January 24, 2023
99.1 Press Release dated January 25, 2023
104 Cover Page Interactive Data File (embedded within the inline XBRL
document)
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