UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Form 10-K/A
(Amendment No. 1)1
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x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year endedFiscal Year Ended September 30, 20162021
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¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
to
_
Commission file number: 1-4219
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| | | | Name of Registrant, State of Incorporation, Address of Principal Offices and Telephone No. | | | | IRS Employer Identification No. |
| 1-4219 | | | | Spectrum Brands Holdings, Inc. 3001 Deming Way, Middleton, WI 53562 | | | | 74-1339132 |
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HRG Group, Inc.
(Exact name of registrant as specified in its charter)
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| | | | (a Delaware limited liability company) 3001 Deming Way, Middleton, WI 53562 | | | | 27-2812840 |
Securities registered pursuant to Section 12(b) of the Act:
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Delaware | 74-1339132 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
450 Park Avenue, 29th Floor, New York, NY | 10022 |
(Address of principal executive offices) | (Zip Code) |
(212) 906-8555
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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Securities Registered Pursuant to Section 12(b) of the Act: |
Title of Each Class | | | | | | | | Name of Each Exchangeeach exchange on Which Registeredwhich registered |
| Spectrum Brands Holdings, Inc. | | | | Common Stock, Par Value $0.01 par value | | | | New York Stock Exchange |
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| SB/RH Holdings, LLC | | | | None | | | | None |
Securities Registered Pursuantregistered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is aregistrants are well-known seasoned issuer,issuers, as defined in Rule 405 of the Securities Act: Yes x No ¨Act.
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| Spectrum Brands Holdings, Inc. | | Yes ☒ | | No ☐ | | |
| SB/RH Holdings, LLC | | Yes ☐ | | No ☒ | | |
Indicate by check mark if the registrant isregistrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes ¨ No xAct.
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| Spectrum Brands Holdings, Inc. | | Yes ☐ | | No ☒ | | |
| SB/RH Holdings, LLC | | Yes ☐ | | No ☒ | | |
Indicate by check mark whether the registrantregistrants (1) hashave filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x or No ¨.
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| Spectrum Brands Holdings, Inc. | | Yes ☒ | | No ☐ | | |
| SB/RH Holdings, LLC | | Yes ☒ | | No ☐ | | |
Indicate by check mark whether the
registrant hasregistrants have submitted electronically
and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation
S-T (section
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files).
Yes x or No ¨.Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ | | | | | | |
| Spectrum Brands Holdings, Inc. | | Yes ☒ | | No ☐ | | |
| SB/RH Holdings, LLC | | Yes ☒ | | No ☐ | | |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer,
or a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer” andfiler,” “smaller reporting company”
and “emerging growth company in Rule
12b-2
of the Exchange Act.: | | | | | | | | | | | | | | | | | | | | |
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Spectrum Brands Holdings, Inc. | | | X | | | | | | | | | | | | | | | | | |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Large Accelerated Filer | xSpectrum Brands Holdings, Inc. | | Accelerated Filer☐ | ¨ | |
Non-accelerated FilerSB/RH Holdings, LLC | ¨ | (Do not check if a smaller reporting company)☐ | Smaller reporting company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2
of the Exchange Act). Yes ¨ or No x | | | | | | |
| Spectrum Brands Holdings, Inc. | | Yes ☐ | | No ☒ | | |
| SB/RH Holdings, LLC | | Yes ☐ | | No ☒ | | |
The aggregate market value of the
commonvoting stock held by
non-affiliates
of
the registrant, computed by reference toSpectrum Brands Holdings, Inc. was approximately $3,592 million based upon the closing price
as ofon the last business day of the registrant’s most recently completed second fiscal quarter
March 31, 2016, was approximately $1,498.0 million.(April 4, 2021). For the sole
purposepurposes of making this calculation,
the term
“non-affiliate” “non-affiliate”
has been interpreted to exclude directors and executive officers and other affiliates of the registrant. Exclusion of shares held by any person should not be construed as a conclusion by the registrant or an admission by any such person
or that such person is an “affiliate” of the Company, as defined by applicable securities
laws.law.ThereAs of January 2, 2022, there were 200,188,839outstanding 41,023,773 shares of the registrant’sSpectrum Brands Holdings, Inc.’s common stock, outstanding par value $0.01 per share.
SB/RH Holdings, LLC meets the conditions set forth in General Instruction I(1)(a) and (b) of Form10-K
and has therefore omitted the information otherwise called for by Items 10 to 13 of Form10-K
as
of December 31, 2016. Documents Incorporated By Reference: None.allowed under General Instruction I(2)(c).
DOCUMENTS INCORPORATED BY REFERENCE
ThisSpectrum Brands Holdings, Inc. and SB/RH Holdings, LLC are filing this Amendment No. 1 on Form 10-K/A (this “Form 10-K/A”) to thetheir Annual Report on Form 10-K of the Company for the fiscal year ended September 30, 2016,2021 (“Fiscal 2021”) that was filed with the Securities and Exchange Commission (the “SEC”(“SEC”) on November 23, 20162021 (the “Original Form 10-K”) is being filed solely for the sole purpose of including certain of the information required by Part III of Form 10-K.
As required by Rule
12b-15,
in connection with this Form 10-K/A, the Company’s Principal Executive Officer and Principal Financial Officer are providing Rule
13a-14(a)
certifications
as included herein.
Except as described above, or otherwise explicitly set forth herein, this Form 10-K/A does not purport to modify or update the disclosures in, or exhibits to, the Original 10-K. Furthermore, this Form 10-K/A does not change any previously reported financial results, nor does it10-K or to update the Original Form 10-K to reflect events occurring after the date of the Original 10-K. Information not affected by this Form 10-K/A remains unchanged and reflects the disclosures made at the time the Original 10-K was filed.such filing.
UnlessExcept as otherwise indicated or the context requires otherwise, in this Form 10-K/A,specified, all references herein to the “Company,” “HRG,“Spectrum Brands,” “we,” “us” or “our” refer to HRG Group,Spectrum Brands Holdings, Inc. (formerly, Harbinger Group Inc.) and where applicable, its consolidated subsidiaries; “FGL” refers to Fidelity & Guaranty Life (formerly, Harbinger F&G, LLC) and, where applicable, its consolidated subsidiaries; “Fiscal 2013”“Fiscal” refers to the fiscal year ended September 30 2013; “Fiscal 2014” refersof each applicable year.
| DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Our Nominating and Corporate Governance Committee (“NCG Committee”) considers and chooses nominees for our Board with the primary goal of presenting a well-qualified slate of candidates who will serve the interests of our Company and our shareholders, taking into account the attributes of each candidate’s professional skillset and credentials, as well as gender, age, ethnicity and personal background. In evaluating nominees, our NCG Committee reviews each candidate’s background and assesses each candidate’s independence, skills, experience and expertise based upon a number of factors. We seek directors with the highest professional and personal ethics, integrity and character that have experience at the governance and policy-making level in their respective fields. Our NCG Committee reviews the professional background of each candidate to determine whether each candidate has the fiscal year ended September 30, 2014; “Fiscal 2015” refersappropriate experience and ability to effectively make important decisions as a member on our Board. Our NCG Committee also determines whether a candidate’s skills and experience complement and enhance the fiscal year ended September 30, 2015; “Fiscal 2016” refers to the fiscal year ended September 30, 2016; “Fiscal 2017” refers to the fiscal year ending September 30, 2017; “Front Street” refers to Front Street Re (Delaware) Ltd.collective skills and where applicable, its consolidated subsidiaries; “Front Street Cayman” refers to Front Street Re Cayman Ltd. and, where applicable, its consolidated subsidiaries; “HGI Energy” refers to HGI Energy Holdings, LLC and, where applicable, its consolidated subsidiaries; “HGI Funding” refers to HGI Funding, LLC and, where applicable, its consolidated subsidiaries; “Salus” refers to Salus Capital Partners, LLC and, where applicable, its consolidated subsidiaries; and “Spectrum Brands” refers to Spectrum Brands Holdings, Inc. and, where applicable, its consolidated subsidiaries.experience of our existing Board members.
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Item 10. | Directors, Executive Officers and Corporate Governance |
BOARD OF DIRECTORS
In accordance withWe are committed to ensuring that female and minority candidates are among the pool of individuals from which new Board nominees are selected. We have steadily advanced this objective by appointing to our Restated Bylaws (our “Bylaws”), asBoard a number of candidates, all of whom are from a diverse background. As of the date of this report, we are proud to have the benefit of a Board, the majority of which is composed of female and diverse background members.
Our directors collectively represent a robust and diverse set of skills and experience, which we believe positions our boardBoard and its committees well to effectively oversee the execution of directors (our “Board”our business strategy and to advance the interests of the Company and its stakeholders. The following table summarizes some of the key categories of skills and experience of our current directors:
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Director Skills and Experiences |
✓100%: International Business Experience | | ✓100%: Business Operations |
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| | ✓86%: Corporate Governance |
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✓100%: Corporate Strategy & Business Development | | ✓100%: Ethics/Corporate Social Responsibility |
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✓86%: Executive Leadership & Management | | ✓71%: Finance/Capital Management & Allocation |
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✓100%: Mergers & Acquisitions | | ✓71%: Public Company Executive Experience |
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✓71%: Marketing/Sales or Brand Management | | ✓71%: Human Resources & Compensation |
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✓86%: Accounting/Auditing | | ✓100%: Public Company Board Experience |
In accordance with our Third RestatedBy-laws
(our“By-Laws”),
our Board currently consists of
eightseven members. In accordance with our
Amended and Restated Certificate of Incorporation
(as amended, our(our “Charter”), our Board is
currently divided into three classes (designated as Class I, Class II and Class III, respectively).
AsAt our last annual stockholders meeting in August of
2021, our stockholders approved an amendment to our Charter tode-classify
our Board. Pursuant to such charter amendment (i) our current Class I directors would stand for election at our 2022 annual meeting and would stand for election forone-year
terms thereafter, (ii) our current Class II directors would stand for election at our 2023 annual meeting and would stand for election forone-year
terms thereafter, (iii) our current Class III directors would stand for election at our 2024 annual meeting and would stand for election forone-year
terms thereafter, and (iv) beginning in 2024, all directors would stand for election forone-year
terms at the
date2024 annual meeting. In 2024, our Board would be fully declassified. The names of
this report, the threeour seven current directors and their respective classes,
ages, Board tenures and committee memberships are
comprised of the directorseach set forth
below. In addition toin the following table:
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| | I | | 52 | | 2018 | | | | o | | ● | | |
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| | I | | 61 | | 2021 | | o | | | | | | |
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| | I | | 61 | | 2021 | | o | | | | | | |
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| | II | | 61 | | 2018 | | o | | | | o | | |
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| | II | | 49 | | 2020 | | ● | | o | | | | |
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| | III | | 49 | | 2018 | | | | | | | | |
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Lead Independent Director | | III | | 58 | | 2018 | | | | ● | | o | | |
| * | The term of our Class I directors expires at our 2022 annual stockholders meeting, our Class II directors expires at our 2023 annual stockholders meeting, and our Class III directors expires at our 2024 annual stockholders meeting. |
| ** | Tenure represents service on the Board of the Company following themerger on July 13, 2018 of HRG Group, Inc. (now known as Spectrum Brands Holdings, Inc.) with its majority owned subsidiary, Spectrum Brands Legacy, Inc. (formerly known as Spectrum Brands Holdings, Inc.) (“SPB Legacy”). |
| *** | Committee membership: A = Audit Committee, C = Compensation Committee, NCG = NCG Committee; • indicates committee Chair, o indicates committee member. |
Set forth below are biographies for each of our directors, accompanied by descriptions of some of their key skills and experiences. The absence of any given category of key skills or experiences from the list preceding a director’s biography does not necessarily signify a lack of qualification in any such directors, Mr. Eugene I. Davis, served as director of the Company and a member of certain committees of the Board from February 2014 to August 2016.category.
Class I Directors - Terms Expiring 2017
Andrew A. McKnight, age 39, was appointed as a director | | | | |
Independent Director since October 2018 Race/Ethnicity: African American | | |
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Independence & Committees: ● Chair of our NCG Committee | | ● Corporate Strategy & Business Development ● Ethics/Corporate Social Responsibility ● Executive Leadership & Management ● International Business Experience ● Marketing/Sales or Brand Management ● Public Company Executive Experience ● Public Company Board Experience | | |
Sherianne James was appointed to our Board in October 2018. Ms. James has served as Chief Marketing Officer of Essilor of America since August 2017 and SVP of Customer Engagement since March 2020, and previously was Vice President, Consumer Marketing for the company since July 2016. From February 2011 to July 2016, she held positions of increasing responsibility in marketing and operations for Transitions Optical, a division of Essilor of America, culminating in her role as Vice President of Transitions Optical from April 2014 to July 2016. From July 2005 through December 2010, Ms. James was Senior Marketing Manager for Russell Hobbs/Applica. She previously held a number of key project manager, research manager and brand manager positions with Kraft Foods, Inc. and, later, Kraft/Nabisco Foods from June 1995 to June 2005. Ms. James earned a B.S. degree in chemical engineering from the University of Florida in 1994 and an MBA from Northwestern University’s Kellogg Graduate School of Management in 2002. Ms. James currently serves as Chair of our NCG Committee and is a member of our Compensation Committee. | | |
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Independent Director since April 2021 Race/Ethnicity: African American |
Independence & Committees: | | ● Corporate Strategy & Business Development ● Ethics/Corporate Social Responsibility ● Executive Leadership & Management ● Finance/Capital Management & Allocation ● International Business Experience ● Marketing/Sales or Brand Management ● Public Company Board Experience ● Technology/Cyber-Security |
Leslie L. Campbell was appointed to our Board in April 2021. Since 2015, Mr. Campbell has been the owner and Chief Executive Officer of Campbell & Associates LLC, a product development and engineering company. From 2013 to 2015, he served as Executive Vice President at AAMP Global, a vehicle technology company where he was responsible for engineering, research and development, new product development and operations. From 2002 to 2013, Mr. Campbell served in various senior roles of increasing responsibility in the engineering department for Applica Consumer Products, including serving the last six years of his tenure as Vice President of Engineering Quality and Regulatory where he was responsible for the design and development of new products and the maintenance of existing core product lines. From 1999 to 2002, Mr. Campbell served as Chief Engineer for B/E Aerospace where he was responsible for the design and development of galley products for commercial airlines. From 1995 to 1999, Mr. Campbell served as a Senior Research Engineer for Baker Hughes. From 1990 to 1995, he served as Senior Engineer at the Johnson Space Center (NASA) and from 1989 to 1990 he was a Senior Engineer at General Electric – Aerospace Division. Mr. Campbell has extensive experience in product development and product design and product quality and safety standards. Mr. Campbell received an undergraduate degree in engineering from the University of Florida. Mr. Campbell currently serves as a member of our Audit Committee. |
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Independent Director since April 2021 |
Independence & Committees: | | ● Corporate Strategy & Business Development ● Ethics/Corporate Social Responsibility ● Executive Leadership & Management ● Human Resources & Compensation ● International Business Experience ● Marketing/Sales or Brand Management ● Public Company Board Experience ● Public Company Executive Experience |
Joan Chow was appointed to our Board in April 2021. From February 2016 until October 2021, Ms. Chow served as Chief Marketing Officer of the Greater Chicago Food Depository. From 2007 to August 2015, Ms. Chow was the Executive Vice President and Chief Marketing Officer at ConAgra Foods, Inc. ConAgra Foods, now known as Conagra Brands, is one of North America’s leading packaged food companies. Prior to joining ConAgra in 2007, Ms. Chow was employed for nine years with Sears Holdings Corporation in various marketing positions of increasing responsibility, having served as Senior Vice President/Chief Marketing Officer of Sears Retail immediately prior to taking the position with ConAgra. Prior to that, she served in executive positions with Information Resources Inc. and Johnson & Johnson Consumer Products, Inc. Ms. Chow currently serves as Chair of the Compensation Committee and a member of the Governance Committee at Welbilt Inc. and is also a director at Energy Recovery, Inc. as well as High Liner Foods, where she is on the Human Resources Committee. She has previously served as a director of The Manitowoc Company, RC2 Corporation, and Feeding America. Ms. Chow has extensive leadership experience in retail and consumer packaged goods marketing, advertising, branding, consumer insights, and digital/social marketing and human resources matters. Ms. Chow has an M.B.A. from the Wharton School of the University of Pennsylvania and a B.A. with distinction from Cornell University. Ms. Chow currently serves as a member of our Audit Committee. |
Andrew Whittaker, age 55, has served as a director of HRG since July 2014. Mr. Whittaker has been the Vice Chairman of Leucadia National Corporation (“Leucadia”), a significant stockholder of HRG, since 2014 and has been Vice Chairman of Jefferies Group LLC (“Jefferies”), a subsidiary of Leucadia, since 2002. Mr. Whittaker has served as a member of the board of directors of Jefferies Finance LLC since 2004. Mr. Whittaker has been a member of the Jefferies Executive Committee for the past 20 years. He was formerly the Co-Head of Investment Banking at Jefferies. Mr. Whittaker has over 28 years of investment banking experience in a broad range of industries. Mr. Whittaker received an M.B.A. from Harvard Business School and a B.A. from Dartmouth College.
Class II Directors - Terms Expiring 2018
Joseph S. Steinberg, age 72, has served as Chairman | | |
Independent Director since July 2018 Race/Ethnicity: Caucasian |
Independence & Committees: | | ● Corporate Strategy & Business Development ● Ethics/Corporate Social Responsibility ● Executive Leadership & Management ● Finance/Capital Management & Allocation ● Human Resources & Compensation ● International Business Experience ● Marketing/Sales or Brand Management ● Public Company Board Experience ● Public Company Executive Experience |
Hugh R. Rovit was appointed to our Board in July 2018. From June 2010 until July 2018, Mr. Rovit served as one of the directors of Spectrum Legacy. Prior to that time, he served as a director of SBI from August 2009 to June 2010. Mr. Rovit is currently Chief Executive Officer of S’well, Inc., a global manufacturer and marketer of reusable stainless-steel bottles and accessories. He previously served as Chief Executive Officer of Ellery Homestyles, a leading supplier of branded and private label home fashion products to major retailers, offering curtains, bedding, throws and specialty products, from May 2013 until its sale in September 2018 to a strategic competitor. Previously, Mr. Rovit served as Chief Executive Officer of Sure Fit Inc., a marketer and distributor of home furnishing products from 2006 through 2012 and was a Principal at turnaround management firm Masson & Company from 2001 through 2005. Previously, Mr. Rovit held the positions of Chief Financial Officer of Best Manufacturing, Inc., a manufacturer and distributor of institutional service apparel and textiles, from 1998 through 2001 and Chief Financial Officer of Royce Hosiery Mills, Inc., a manufacturer and distributor of men’s and women’s hosiery, from 1991 through 1998. Mr. Rovit is also a director of GSC Technologies, Inc. and previously served as a director of PlayPower, Inc., Nellson Nutraceuticals, Inc., Kid Brands Inc., Atkins Nutritional, Inc., Oneida, Ltd., Cosmetic Essence, Inc., Xpress Retail and Twin Star International. Mr. Rovit received his B.A. degree from Dartmouth College and has an MBA from Harvard Business School. Mr. Rovit is a member of our Audit Committee and NCG Committee. |
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Independent Director since October 2020 |
Independence & Committees: ● Chair of our Audit Committee | | ● Corporate Strategy & Business Development ● Ethics/Corporate Social Responsibility ● Finance/Capital Management & Allocation ● Human Resources & Compensation ● International Business Experience ● Public Company Board Experience |
Gautam Patel was appointed to our Board in October 2020. Mr. Patel has served as Managing Director of Tarsadia Investments, a private investment firm based in Newport Beach, California, since 2012. In that role, Mr. Patel has led a team of investment professionals to identify, evaluate and execute principal control equity investments across sectors including life sciences, financial services and technology. Prior to joining Tarsadia, Mr. Patel served as Managing Director at Lazard from 2008 to 2012, where he led financial and strategic advisory efforts in sectors including transportation and logistics, private equity and healthcare. Prior to that, Mr. Patel served in a variety of advisory roles at Lazard from 1999 to 2008, including restructuring, bankruptcy and corporate reorganization assignments in 2001 and 2008. From 1994 to 1997, Mr. Patel was an Analyst at Donaldson, Lufkin & Jenrette, where he worked on mergers and acquisitions as well as high-yield and equity financings. Mr. Patel is currently a Board Member of Amneal Pharmaceuticals (NYSE: AMRX). Mr. Patel also serves on the board of Casita Maria Center for Arts and Education, a New York-based nonprofit organization which aims to empower children through arts-based education. Mr. Patel received a B.A. from Claremont McKenna College, a B.S. from Harvey Mudd College, an MSc from the London School of Economics and an MBA from the University of Chicago. Mr. Patel currently serves as Chair of our Audit Committee and as a member of our Compensation Committee. |
Curtis A. Glovier, age 52, has served as a director of HRG since February 2015. Mr. Glovier currently serves as the Chairman and Chief Executive Officer of PENSCO Trust Company, a wholly-owned subsidiary of Opus Bank, a publicly traded bank, and as Senior Executive President, Head of Wealth Services of Opus Bank and as Senior Managing Director in the Merchant Banking division. Mr. Glovier has also served on the board of directors of Opus Bank since September 2010. From May 2007 until July 8, 2016, Mr. Glovier was a Managing Director at Fortress, which through its affiliated funds, is a significant stockholder of HRG. Prior to that, Mr. Glovier served as a Managing Director and Co-Head of the Middle Market Buyout Group at Perseus, LLC. Prior to joining Perseus, LLC in 2000, he was a Managing Director of Nassau Capital. Prior to joining Nassau Capital, Mr. Glovier worked at Goldman, Sachs & Co. in the Mergers & Acquisitions, Structured Finance and Leveraged Buyout groups, and was also a management consultant at The Boston Consulting Group. Mr. Glovier has served as a director of several companies in a variety of industries, including the financial services, branded consumer products, pharmaceutical and alternative energy areas. He formerly served on the board of directors of CarCor Investment Holdings LLC, Omnisure Group, LLC and SNAAC Investors LLC. Mr. Glovier holds a B.A. from Princeton University, a M.Ec. from James Cook University in Australia, and an M.B.A. as a Palmer Scholar from The Wharton School at the University of Pennsylvania.
David M. Maura, age 44, has served as a director of HRG since May 2011, and as the Chairman of Spectrum Brands, a subsidiary of HRG, since July 2011, and as the interim Chairman of the board of directors of Spectrum Brands and as one of its directors since June 2010. Mr. Maura served as a Managing Director and Executive Vice President of Investments of HRG from October 2011 until November 2016. Prior to becoming Managing Director and Executive Vice President of Investments at HRG, Mr. Maura was a Vice President and Director of Investments of Harbinger Capital Partners, LLC (“Harbinger Capital”). Prior to joining Harbinger Capital in 2006, Mr. Maura was a Managing Director and Senior Research Analyst at First Albany Capital, where he focused on distressed debt and special situations, primarily in the consumer products and retail sectors. Prior to First Albany, Mr. Maura was a Director and Senior High Yield Research Analyst in Global High Yield Research at Merrill Lynch & Co. Mr. Maura was a Vice President and Senior Analyst in the High Yield Group at Wachovia Securities, where he covered various consumer product, service and retail companies. Mr. Maura began his career at ZPR Investment Management as a Financial Analyst. During the past five years, Mr. Maura has served on the board of directors of Russell Hobbs, Inc. (formerly Salton, Inc.), Applica Incorporated, and Ferrous Resources Ltd. Mr. Maura received a B.S. in Business Administration from Stetson University and is a CFA charterholder.
Class III Directors - Terms Expiring 2019
Omar M. Asali, age 46, has | | |
Race/Ethnicity: Caucasian |
Independence & Committees: | | ● Corporate Strategy & Business Development ● Ethics/Corporate Social Responsibility ● Executive Leadership & Management ● Finance/Capital Management & Allocation ● Human Resources & Compensation ● International Business Experience ● Public Company Board Experience ● Public Company Executive Experience ● Risk Management & Oversight |
David M. Maura was appointed our Executive Chairman and our Chief Executive Officer in July 2018. Previously, he had served as the Executive Chairman, effective as of January 2016, and as Chief Executive Officer, effective as of April 2018, of SPB Legacy. Prior to such appointment, Mr. Maura served asnon-executive Chairman of the board of directors of SPB Legacy since July 2011 and served as interim Chairman and as one of the directors of SPB Legacy since June 2010. Mr. Maura was a Managing Director and the Executive Vice President of Investments at HRG Group, Inc. (now known as Spectrum Brands Holdings, Inc.) (“HRG Group”) from October 2011 until November 2016 and had been a member of HRG Group’s board of directors from May 2011 until December 2017. Mr. Maura previously served as a Vice President and Director of Investments of Harbinger Capital Partners LLC (“Harbinger Capital”) from 2006 until 2012. Prior to joining Harbinger Capital in 2006, Mr. Maura was a Managing Director and Senior Research Analyst at First Albany Capital, Inc., where he focused on distressed debt and special situations, primarily in the consumer products and retail sectors. Prior to First Albany, Mr. Maura was a Director and Senior High Yield Research Analyst in Global High Yield Research at Merrill Lynch & Co. Previously, Mr. Maura was a Vice President and Senior Analyst in the High Yield Group at Wachovia Securities, where he covered various consumer product, service, and retail companies. Mr. Maura began his career at ZPR Investment Management as a Financial Analyst. Mr. Maura served as Chairman, President and Chief Executive Officer of Mosaic Acquisition Corp., a special purpose acquisition company, from October 2017 to January 2020, when the company merged with Vivint Smart Home, Inc. (“Vivint”). Mr. Maura served as an outside director on Vivint’s board until March 2020 when he resigned from the board of Vivint. He previously served on the boards of directors of Ferrous Resources, Ltd., Russell Hobbs, and Applica. Mr. Maura received a B.S. degree in business administration from Stetson University and is a CFA charterholder. |
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Lead Independent Director since July 2018 Race/Ethnicity: Caucasian |
Independence & Committees: ● Chair of our Compensation Committee | | ● Corporate Strategy & Business Development ● Ethics/Corporate Social Responsibility ● Executive Leadership & Management ● Finance/Capital Management & Allocation ● Government Relations / Public Policy ● Human Resources & Compensation ● International Business Experience ● Marketing/Sales or Brand Management ● Public Company Board Experience ● Public Company Executive Experience ● Risk Management & Oversight |
Terry L. Polistina was appointed to our Board in July 2018. From June 2010 until July 2018, Mr. Polistina served as one of the directors of SPB Legacy. Since July 2018, Mr. Polistina has also served as the Lead Independent Director of the Board. Prior to that, he served as a director of SBI from August 2009 to June 2010. Mr. Polistina served as the President, Small Appliances of SPB Legacy beginning in June 2010 and became President - Global Appliances of SPB Legacy in October 2010 until September 2013. Prior to that, Mr. Polistina served as the Chief Executive Officer and President of Russell Hobbs from 2007 until 2010. Mr. Polistina served as Chief Operating Officer at Applica from 2006 to 2007 and Chief Financial Officer from 2001 to 2007, at which time Applica combined with Russell Hobbs. Mr. Polistina previously served as a director of privately held Entic, Inc. Mr. Polistina received an undergraduate degree in finance from the University of Florida and holds an MBA from the University of Miami. Mr. Polistina is the Chair of our Compensation Committee, is a member of our NCG Committee, and serves as the Lead Independent Director of the Board. |
Our Executive Officer of HRG since March 2015, as President of HRG effective as of October 2011 and as Acting President since June 2011. Mr. Asali has also served as a director of HRG since May 2011. Mr. Asali is responsible for overseeing the day-to-day activities of HRG, including M&A activity and overall business strategy for HRG and HRG’s underlying subsidiaries. Mr. Asali has been directly involved in all of HRG’s acquisitions across all sectors, and he is actively involved in HRG’s management and investment activities. Mr. Asali is also the Vice Chairman of Spectrum Brands and a member of the Board of the Directors of FGL, Front Street Cayman and NZCH Corporation (formerly, Zap.Com Corporation, “NZCH”), each a subsidiary of HRG. Prior to becoming President of HRG, Mr. Asali was a Managing Director and Head of Global Strategy of Harbinger Capital. Prior to joining Harbinger Capital in 2009, Mr. Asali was the co-head of Goldman Sachs Hedge Fund Strategies (“Goldman Sachs HFS”) where he helped manage approximately $25 billion of capital allocated to external managers. Mr. Asali also served as co-chair of the Investment Committee at Goldman Sachs HFS. Before joining Goldman Sachs HFS in 2003, Mr. Asali worked in Goldman Sachs’ Investment Banking Division, providing M&A and strategic advisory services to clients in the High Technology Group. Mr. Asali previously worked at Capital Guidance, a boutique private equity firm. Mr. Asali began his career working for a public accounting firm. Mr. Asali received an M.B.A. from Columbia Business School and a B.S. in Accounting from Virginia Tech.Officers
Frank Ianna, age 67, has served as a director of HRG since April 2013. Mr. Ianna served as director of Sprint Corporation from 2009 until August 2015. Mr. Ianna served as a director of Clearwire Corporation from November 2008 until June 2011 and as a director of Tellabs, Inc. from 2004 until 2013. Mr. Ianna served on the board of trustees of the Stevens Institute of Technology between 1997 and 2007 and as chairman of its subsidiary, Castle Point Holdings, Inc., between 2006 and 2007. Mr. Ianna has also served as a director of a number of private companies and non-profit organizations. Mr. Ianna retired from AT&T, Inc. in 2003 after a 31-year career serving in various executive positions, most recently as President of AT&T Network Services. Mr. Ianna serves as a consultant for McCreight & Company, a consulting company based in Connecticut. Mr. Ianna received his undergraduate degree from the Stevens Institute in Electrical Engineering in 1971 (BEEE), and his Master’s Degree from MIT in 1972 (MSEE) and completed the Program for Management Development (PMD), an Executive Education Program of the Harvard Business School in 1985.
Gerald Luterman, age 73, has served as a director of HRG since April 2013. Mr. Luterman has been a director of Florida Community Bank since January 2010. Mr. Luterman has served as a director of a number of private companies and non-profit organizations. Mr. Luterman was Interim Chief Financial Officer of NRG Energy, Inc. (“NRG”) from November 2009 through May 2010. Mr. Luterman was Executive Vice President and Chief Financial Officer of KeySpan Corporation from August 1999 to September 2007. Mr. Luterman has more than 30 years of experience in senior financial positions with companies including American Express Company, Booz Allen & Hamilton, Inc., Emerson Electric Company and Arrow Electronics. Mr. Luterman also served as a director of NRG from April 2009 to 2014, IKON Office Solutions, Inc. from November 2003 until August 2008 and U.S. Shipping Partners L.P. from May 2006 until November 2009. Mr. Luterman previously qualified as a Canadian Chartered Accountant and graduated from McGill University in Montreal, earning a Bachelor of Commerce Degree in Economics in 1965 and an M.B.A. from Harvard Business School in 1967.
EXECUTIVE OFFICERS
The following sets forth certain information with respect to theOur executive officers of the Company as of the date of this report. All officers of the Company serve at the discretion of our Board. Our Board selected each of our executive officers because his or her background provides each executive with the experience and skillset geared toward helping us succeed in our business strategy. Our management team is composed of seasoned executives who focus on the performance of our Company to drive long-term outcomes for us. We are committed to ensuring that female and minority candidates are among the pool of individuals from which new executive officers are selected. We are proud to have the benefit of a woman and a candidate from a diverse background on our executive team.
Included in the discussion below is information regarding our executive officers who do not serve as directors of our Company. See “” above for certain information regarding David Maura, our only director-employee.
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Executive Vice President, Chief Operating Officer since October 2018 Race/Ethnicity: Caucasian |
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Randal D. Lewis was appointed our Chief Operating Officer in October 2018 and Executive Vice President in September 2019. He has direct responsibility for all operating divisions. Mr. Lewis was previously the President of our Global Consumer Division from March 2018, which included our Global Auto Care, Global Pet Care and Home & Garden business unit. Prior to that, he was President of our Pet, Home & Garden business unit since November 2014. Previous to that, he was Senior Vice President and General Manager of our Home & Garden business since January 2011. From April 2005 to January 2011, Mr. Lewis served as our Home & Garden business’s Vice President, Manufacturing and Vice President, Operations. Prior to that, Mr. Lewis held various leadership roles from October 1997 to April 2005 with the former owners of United Industries Corporation, which is now owned by the Company and from January 1989 to October 1997 Mr. Lewis worked at Unilever. Mr. Lewis earned a B.S. degree in mechanical engineering from the University of Illinois, Urbana-Champaign. |
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Senior Vice President and Chief Human Resources Officer since November 2021 Race/Ethnicity: Caucasian |
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Rebeckah Long was appointed our Senior Vice President, Global Human Resources in September 2019 and was promoted to Senior Vice President and Chief Human Resources Officer in November 2021 and has direct responsibility for consistent delivery and execution of the Human Resources function globally. Ms. Long previously served as Vice President of Global Human Resources of Spectrum Brands since April 2019. Prior to that, she was Human Resource Business Partner for several business divisions within Spectrum Brands since March 2008, with a focus on talent strategy and organizational effectiveness. Prior to joining Spectrum Brands, she was the Regional Human Resources Manager for United Rentals, Inc. from June 2000 to February 2008 and was responsible for the integration of over 25 businesses into the United Rentals portfolio. Ms. Long earned a B.S. degree in economics from Illinois State University. |
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Executive Vice President, Chief Financial Officer since November 2019 Race/Ethnicity: Caucasian |
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Jeremy W. Smeltser was appointed our Executive Vice President on October 1, 2019 and was appointed our Chief Financial Officer on November 17, 2019. He previously served as Vice President and Chief Financial Officer of SPX Flow, Inc. (“SPX Flow”). Prior to his role at SPX Flow, he served as Vice President and Chief Financial Officer of SPX Corporation, where he served in various roles, including as Vice President and Chief Financial Officer, Flow Technology and became an officer of SPX Corporation in April 2009. Mr. Smeltser joined SPX Corporation in 2002 from Ernst & Young LLP, where he was an audit manager in Tampa, Florida. Prior to that, he held various positions with Arthur Andersen LLP in Tampa, Florida and Chicago, Illinois, focused primarily on assurance services for global manufacturing clients. Mr. Smeltser earned a B.S. degree in accounting from Northern Illinois University. |
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Executive Vice President, General Counsel and Corporate Secretary since October 2018 Race/Ethnicity: Asian (Middle Eastern) |
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Ehsan Zargar was appointed our Executive Vice President, General Counsel and Corporate Secretary on October 1, 2018. Mr. Zargar is responsible for the Company’s legal, environmental, social and governance (“ESG”), health and safety, insurance, and real estate functions. In addition, Mr. Zargar takes a leading role in setting, negotiating and implementing the Company’s M&A, capital markets and other strategic activities. Previously, Mr. Zargar also led the Company’s executive compensation program. From June 2011 until July 2018, Mr. Zargar held a number of increasingly senior positions with HRG Group, a publicly-listed acquisition company, including serving as its Executive Vice President and Chief Operating Officer from January 2017 until July 2018, as its General Counsel since April 2015 and as Corporate Secretary since February 2012. During his time at HRG Group, Mr. Zargar took a leading role in setting, negotiating and implementing HRG Group’s M&A, capital markets and other strategic activities. Mr. Zargar has extensive experience serving on private and public boards and committees of portfolio companies, including setting and overseeing senior management compensation programs. From August 2017 until July 2018, Mr. Zargar served as a director of SPB Legacy. From November 2006 to June 2011, Mr. Zargar worked in the New York office of Paul, Weiss, Rifkind, Wharton & Garrison LLP. Previously, Mr. Zargar practiced law at another major law firm focusing on general corporate matters. Mr. Zargar received a law degree from Faculty of Law at the University of Toronto and a B.A. from the University of Toronto. |
The following table provides an overview of our corporate governance practices.
| | | | |
Name |
✓ Diverse Board and executive team ✓ Majority voting and a director resignation policy ✓ Stock ownership guidelines ✓ Global Environmental, Social and Governance Policy ✓ Global Energy and Greenhouse Gas Policy | | Position |
Omar M. Asali* | | Director, Chief Executive Officer and President |
George C. Nicholson | | Senior Vice President, Chief Accounting Officer and Chief Financial Officer✓ Independent lead director ✓ Majority of the Board composed of independent directors ✓ All committees composed entirely of independent directors ✓ Board declassifying process underway ✓ Related person transactions policy ✓ All members of our Audit Committee are financial experts |
* For more information regarding
Lead Independent Director
Mr. Asali, see “Board of Directors” above.
George C. Nicholson, age 58, has served as Senior Vice President and Chief Accounting Officer of HRG since November 2015. On January 20, 2017, Mr. NicholsonPolistina was appointed to our Board, and as Chief Financial Officerour Lead Independent Director in July 2018. In his capacity as our Lead Independent Director, Mr. Polistina:
presides at all meetings of the Company. Mr. Nicholson served as Acting Chief Financial Officer from January 4, 2016Board at which the Chairman of the Board is not present;
presides at all executive sessions of the independent members of the Board and has the authority to January 20, 2017. Mr. Nicholson also call meetings of the independent members of the Board;
serves as a directorliaison between the management and Senior Vice President,the independent members of the Board and provides our Chief AccountingExecutive Officer (“CEO”) and Acting Chief Financial Officerother members of NZCH. Previously, management with feedback from executive sessions of the independent members of the Board;
reviews and approves the information to be provided to the Board;
reviews and approves meeting agendas and coordinates with management to develop such agendas;
approves meeting schedules to assure there is sufficient time for discussion of all agenda items;
if requested by major shareholders, ensures that he is available for consultation and direct communication;
interviews, along with the Chair of our NGC Committee, Board and senior management candidates and makes recommendations with respect to Board candidates and hiring of senior management;
consults with other members of our Compensation Committee with respect to the performance review of our CEO and other member of our senior management team; and
performs such other functions and responsibilities as requested by the Board from time to time.
Mr. Nicholson was employed by HGI Asset Management Holdings, LLC, a subsidiary of HRG, from May 2013 to November 2015.Maura serves as our Executive Chairman and our CEO. Given Mr. Nicholson servedMaura’s broad experience in mergers and acquisitions, the consumer products and retail sectors and finance and investments, as Vice Presidentwell as his role in SPB Legacy’s strategy and Controller of Fidelity & Guaranty Life Insurance Company, a subsidiary of FGL (“FGL Insurance”) from August 2007 through May 2013. Prior to joining FGL Insurance, Mr. Nicholson served as Chief Accounting Officer of Capital Bank Corporation from September 2005 to August 2007 and previously held executive positions at Nationwide Mutual Insurance Company and London Pacific Life & Annuity Company. Mr. Nicholson spent 10 years with Ernst & Young ending as a Senior Manager specializinggrowth since 2010, our Board believes that it is in the energy and financial services industry. Mr. Nicholson is a Certified Public Accountant and holds an M.B.A. degree from the University of Kentucky and a B.B.A. degree from Eastern Kentucky University.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) requires our directors, executive officers, and the persons who beneficially own more than 10% of the common stock, par value $0.01 per share,best interest of the Company (the “Common Stock”)for Mr. Maura to concurrently serve as our Executive Chairman and securities convertible into shares of Common Stock (together with the Common Stock, “Subject Shares”), to file with the SEC initial reports of ownership and reports of changes in ownership of Subject Shares. Directors, officers and greater than 10% beneficial owners of the Subject Shares are required by the SEC’s regulations to furnish us with copies of all forms they file with the SEC pursuant to Section 16(a) of the Exchange Act. Based solely on the reports filed with the SEC, we believe that these persons have complied with all applicable filing requirements during Fiscal 2016.CEO.
In accordance with the New York Stock Exchange Listed Company Manual (the “NYSE Rules”), and our Corporate Governance Guidelines, a majority of our Board is comprisedrequired to be composed of independent directors. All of our directors, except for David Maura (our Chairman and we haveCEO), qualify as independent directors. More specifically, our Board has affirmatively determined that none of the following directors has a material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company): Leslie L. Campbell, Joan Chow, Sherianne James, Terry L. Polistina, Hugh R. Rovit and Gautam Patel. Our Board has adopted the definition of “independent director” set forth under Section 303A.02 of the NYSE Rules to assist it in making determinations of independence. Our Board has determined that the directors referred to above currently meet these standards and qualify as independent.
Meetings of Independent Directors
The Company generally holds executive sessions at each Board and committee meeting. In his capacity as our Lead Independent Director, Mr. Polistina presides over executive sessions of the entire Board and the Chair of each committee presides over the executive sessions of that committee.
Committees Established by Our Board of Directors
Our Board has designated three principal standing committees: our Audit Committee, (“Audit Committee”), aour Compensation Committee, (“Compensation Committee”) and a Nominating and Corporate Governanceour NCG Committee, (“NCG Committee”), each of which havehas a written charterscharter addressing each such committee’s purpose and responsibilities and are comprisedinclude such duties that the Board may designate, from time to time. Our Board, directly or through one or more of its committees, provides oversight on our management’s efforts to promote corporate social responsibility and sustainability, including efforts to advance initiatives regarding the environment, diversity, equity and inclusion, human rights, labor, health and safety and other matters. Each such committee is composed entirely of independent directors.
Our Audit Committee has been established in accordance with Section 303A.06 of the NYSE Rules and Rule10A-3
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the purpose of overseeing the Company’s accounting and financial reporting processes and audits of our financial statements. Our Audit Committee is responsible for monitoring (i) the integrity of our financial statements, (ii) our independent registered public accounting firm’s qualifications and independence, (iii) the performance of our internal audit function and independent auditors and (iv) our compliance with legal and regulatory requirements. The responsibilities and authority of our Audit Committee are described in further detail in the Charter of the Audit Committee, as adopted by our Board in July 2018, a copy of which is available at our website www.spectrumbrands.com under “Investor Relations—Corporate Governance Documents
The current members of our Audit Committee are Gautam Patel (Chair), Joan Chow, Leslie L. Campbell, and Hugh R. Rovit. Our Board has determined that all members of our Audit Committee qualify as an “audit committee financial experts” as defined in the rules promulgated by the SEC in furtherance of Section 407 of the Sarbanes-Oxley Act of 2002. Our Board has determined that all members of our Audit Committee qualify as independent, as such term is defined in Section 303A.02 of the NYSE Rules, Section 10A(m)(3)(B) of the Exchange Act and Exchange Act Rule10A-3(b).
Our Compensation Committee is responsible for (i) overseeing our compensation and employee benefits plans and practices, including our executive compensation plans and our incentive compensation and equity-based plans, (ii) evaluating and approving the performance of our Executive Chairman and CEO and other executive officers in light of those goals and objectives and (iii) reviewing and discussing with management our compensation discussion and analysis disclosure and compensation committee reports in order to comply with our public reporting requirements. The responsibilities and authority of our Compensation Committee are described in further detail in the Charter of the Compensation Committee, as adopted by our Board in November 2020, a copy of which is available at our website www.spectrumbrands.com under “Investor Relations—Corporate Governance Documents
The current members of our Compensation Committee are Terry L. Polistina (Chair), Sherianne James, and Gautam Patel. Our Board has determined that all members of our Compensation Committee qualify as independent, as such term is defined in Section 303A.02 of the NYSE Rules.
Our NCG Committee is responsible for (i) identifying and recommending to our Board individuals qualified to serve as our directors and on our committees of our Board, (ii) advising our Board with respect to board composition, procedures and committees, (iii) developing and recommending to our Board a set of corporate governance principles applicable to the Company and (iv) overseeing the evaluation process of our Board, the committees of the Board, the individual directors and our Executive Chairman and CEO. The responsibilities and authority of our NCG Committee are described in further detail in the Charter of the NCG Committee, as adopted by our Board in July 2018, a copy of which is available at our website www.spectrumbrands.com under “Investor Relations—Corporate Governance Documents.
The current members of our NCG Committee are Sherianne James (Chair), Terry L. Polistina, and Hugh R. Rovit. Our Board has determined that all members of our NCG Committee qualify as independent, as such term is defined in Section 303A.02 of the NYSE Rules.
Board and Committee Activities
During Fiscal 2021, our Board held a total of twelve meetings and acted by unanimous written consent on a total of three occasions. Our Audit Committee held a total of six meetings during Fiscal 2021. Our Compensation Committee held six meetings and acted by unanimous written consent on two occasions during Fiscal 2021. Our NCG Committee held six meetings and acted by unanimous written consent on two occasions during Fiscal 2021.
During Fiscal 2021, all of our directors attended 100% of the meetings of the Board and committees on which they served.
Our Practices and Policies
Corporate Governance Guidelines and Code of Ethics and Business Conduct
Our Board has adopted our Corporate Governance Guidelines to assist it in the exercise of its responsibilities. These guidelines reflect our Board’s commitment to monitor the effectiveness of policy and decision makingdecision-making, both at our Board and management level, with a view to enhancing stockholder value over the long term. TheOur Corporate Governance Guidelines address, among other things, our Board and Board committee composition and responsibilities, director qualifications standards and selection and evaluation of our CEO. In addition, pursuant to these guidelines, our Board has formalized a process by which our directors are assessed annually by our NCG Committee. The assessment includes a peer review process and evaluates the Board as a whole, the committees of the Chairman ofBoard and the individual directors. In carrying out this assessment, we may retain an external evaluator to assist our Board and our Chief Executive Officer.
NCG Committee at least every three years. Our Board has adopted a Code of Business Conduct and Ethics Policy for Directors, Officersdirectors, officers and Employeesemployees and a Code of Ethics for Chiefthe Principal Executive and Senior Financial Officers to provide guidance to allour CEO, Chief Financial Officer (“CFO”), principal accounting officer or controller and our business segment chief financial officers or persons performing similar functions.
Majority Voting and Director Resignation Policy
During Fiscal 2019, our Board adopted a majority voting policy for the election of
directors. Pursuant to this policy, which applies in the case of uncontested director elections, a director must be elected by a majority of the votes cast with respect to the election of such director. For purposes of this policy, a “majority of the votes cast” means that the number of shares voted “for” a director must exceed the number of shares voted “against” that director and abstentions and brokernon-votes
are not counted as “votes cast.” The policy also provides that in the event that an incumbent director nominee receives a greater number of votes “against” than votes “for” his or her election, he or she must (within five business days following the final certification of the related election results) offer to tender his or her written resignation from the Board to the NCG Committee. The NCG Committee will review such offer of resignation and will consider such factors and circumstances as it may deem relevant, and, within 90 days following the final certification of the election results, will make a recommendation to the Board concerning the acceptance or rejection of such tendered offer of resignation. The policy requires the decision of the Board to be promptly publicly disclosed.
In October 2020, our Board adopted a Board Diversity Policy. The purpose of this policy is to set out the basic principles to be followed to ensure that the Board has the appropriate balance of skills, experience, and diversity of perspectives necessary to enhance the effectiveness of the Board and to maintain the highest standards of corporate governance. Pursuant to this policy, selection of Board candidates will be based on a range of perspectives with reference to the Company’s business model and specific needs, including, but not limited to, talents, skills and expertise, industry experience, professional experience, gender, age, race, language, cultural background, educational background, and other similar characteristics.
The Company believes it is improper and inappropriate for our directors, officers, and employees and certain of their family members (each, a “Subject Person”) to engage in hedging, short-term or speculative transactions involving the Company’s securities. Our anti-hedging policy, which we further strengthened during Fiscal 2019, applies to all Subject Persons. The Company prohibits Subject Persons from engaging in (i) derivative, speculative, hedging or monetization transactions in Company securities (including, but not limited to, any trading on derivatives (such as swaps, forwards, and/or futures) of Company securities that allow a stockholder to lock in the value of Company securities in exchange for all or part of the potential upside appreciation in the value of such stock), (ii) short sales (i.e., selling stock the Subject Person does not own and borrowing shares to make delivery) or (iii) buying or selling puts, calls, options or other derivatives in respect of Company securities.
In addition, the Company believes it is improper and inappropriate for any Subject Person to engage in pledging transactions involving the Company’s securities. During Fiscal 2019, we adopted a robust anti-pledging policy, which prohibits Subject Persons from pledging or encumbering Company securities as collateral for a loan or other indebtedness. This prohibition includes, but is not limited to, holding such shares in a margin account as collateral for a margin loan or borrowing against Company securities on margin. Any pledges (and any modifications or replacements of such pledges) that existed prior to the adoption of our policy are grandfathered unless otherwise prohibited by applicable law or Company policy and so long as any modification or replacement of anypre-existing
pledge does not result in additional shares being pledged. Securities Trading Policy
Our Company believes that it is appropriate to monitor and prohibit certain trading in the securities of our Company. Accordingly, trading of the Company’s securities by directors, executive officers and certain other employees who are so designated by the office of the Company’s General Counsel is subject to trading period limitations or must be conducted in accordance with a previously established trading plan that meets SEC requirements. At all times, including during approved trading periods, directors, executive officers and certain other employees notified by the office of the Company’s General Counsel are required to obtain preclearance from the Company’s General Counsel or his designee prior to entering into any transactions in Company securities, unless those transactions occur in accordance with a previously established trading plan that meets SEC requirements.
Transactions subject to our principal executive officer, principal accounting officer or controller or persons performing similar functions. securities trading policy include, among others, purchases and sales of Company stock, bonds, options, puts and calls, derivative securities based on securities of the Company, gifts of Company securities, contributions of Company securities to a trust, sales of Company stock acquired upon the exercise of stock options, broker-assisted cashless exercises of stock options, market sales to raise cash to fund the exercise of stock options and trades in Company’s stock made under an employee benefit plan.
Stock Ownership Guidelines
Our Board has adoptedbelieves that our directors, named executive officers (“NEOs”) and certain of the Company’s other officers and employees should own and hold Company common stock to further align their interests with the interests of stockholders and to further promote the Company’s commitment to sound corporate governance.
To memorialize this commitment, effective January 29, 2013, our Board, upon the recommendation of our Compensation Committee, established stock ownership and retention guidelines (the “SOG”) applicable to the Company’s directors, NEOs and all other officers of the Company and its subsidiaries with a
corporate governance policy prohibitinglevel of Vice President or above (such officers and our NEOs, our “Covered Officers”). Effective January 1, 2020, the Company improved and enhanced the SOG to further align it with best practices by: (i) increasing our directors’ and Covered Officers’ retention requirement from 25% to 50% of their netafter-tax
shares received under awards granted until they reach their required stock ownership under the SOG; and (ii) extending the applicable time period for our directors and
Covered Officers to achieve the minimum ownership requirements to five years from the date of eligibility or promotion. Even when the required stock ownership is obtained, all employee incentive plan participants, including NEOs, are subject to an additional stock retention requirement requiring them to retain at least 50% of their netafter-tax
shares of Company stock received under awards for one year after the date of vesting. Under the updated SOG, our directors are expected to achieve stock ownership with a value of at least five times their annual cash retainer. In addition, our Covered Officers are expected to achieve the levels of stock ownership indicated below (which equal a dollar value of stock based on a multiple of the Covered Officer’s base salary).
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Retained (Multiple of Base
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| | 5x Cash Retainer | | 5 years |
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Executive Chairman and CEO | | 5x Base Salary | | 5 years |
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Chief Operating Officer, CFO, General Counsel and Presidents of our Business Units | | 3x Base Salary | | 5 years |
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| | 2x Base Salary | | 5 years |
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| | 1x Base Salary | | 5 years |
The stock ownership levels attained by a director or a Covered Officer are based on shares directly owned by the director or Covered Officer, whether through earned and vested restricted stock units (“RSU”) or performance stock units (“PSU”) or restricted stock grants or open market purchases. Unvested restricted shares, unvested RSUs and PSUs and stock options do not count toward the ownership goals; provided, that, effective January 1, 2020, unvested time-based restricted stock and unvested time-based RSUs count toward the ownership goals. On a quarterly basis, our Compensation Committee reviews the progress of our directors and Covered Officers in meeting these guidelines. In some circumstances, failure to meet the guidelines by a director or a Covered Officer could result in additional retention requirements or other actions by our Compensation Committee.
Compensation Clawback Policy
We have adopted a Compensation Clawback Policy setting forth the conditions under which applicable incentive compensation provided to our executive officers from (i) hedgingmay be subject to forfeiture, disgorgement, recoupment or diminution (“clawback”). This policy provides that our Board or our Compensation Committee shall require the economic risk associated withclawback or adjustment of incentive-based compensation to the ownershipCompany in the following circumstances:
| ● | | As required by Section 304 of the Sarbanes Oxley Act of 2002, which generally provides that if the Company is required to prepare an accounting restatement due to material noncompliance as a result of misconduct with financial reporting requirements under the securities laws, then the CEO and CFO must reimburse the Company for any incentive-based compensation or equity compensation and profits from the sale of the Company’s securities during the12-month period following initial publication of the financial statements that had been restated; |
| ● | | As required by Section 954 of the Dodd-Frank Act and Rule10D-1of the Exchange Act, which generally require that, in the event the Company is required to prepare an accounting restatement due to its material noncompliance with financial reporting requirements under the securities laws, the Company may recover from any of its current or former executive officers who received incentive compensation, including stock options, during the three-year period preceding the date on which the Company is required to prepare a restatement based on the erroneous financial reporting, any amount that exceeds what would have been paid to the executive officer after giving effect to the restatement; and |
| ● | | As required by any other applicable law, regulation or regulatory requirement. |
Additionally, our Board or Compensation Committee in their discretion may require that any executive officer who has been awarded incentive-based compensation shall forfeit, disgorge, return or adjust such compensation in the following circumstances:
| ● | | If the Company suffers significant financial loss, reputational damage or similar adverse impact as a result of actions taken or decisions made by the executive officer in circumstances constituting illegal or intentionally wrongful conduct or gross negligence; or |
| ● | | If the executive officer is awarded or is paid out under any incentive compensation plan of the Company on the basis of a material misstatement of financial calculations or information or if events coming to light after the award disclose a material misstatement which would have significantly reduced the amount of the award or payout if known at the time of the award or payout. |
The awards and incentive compensation subject to clawback under this policy include vested and unvested equity awards, shares acquired upon vesting or lapse of restrictions, short- and long-term incentive bonuses and similar compensation, discretionary bonuses, any other awards or compensation under the Company’s equity plans and any other incentive compensation plan of the Company. Any clawback under this policy may, in the discretion of our
Common Stock,Board or
(ii) pledgingCompensation Committee, be effectuated through the reduction, forfeiture or cancellation of awards, the return ofpaid-out
cash or exercised or released shares, adjustments to future incentive compensation opportunities or in such other manner as our
Common Stock, unless,Board and Compensation Committee determine to be appropriate, except as otherwise required by law.
In addition, under the Company’s equity plans, any equity award granted may be cancelled by our Compensation Committee in its sole discretion, except as prohibited by applicable law, if the participant, without the consent of the Company, while employed by or providing services to the Company or any affiliate or after termination of such employment or service, violates anon-competition,
non-solicitation
ornon-disclosure
covenant or agreement or otherwise engages in activity that is in conflict with or is adverse to the interests of the Company or any affiliate, including fraud or conduct contributing to any financial restatements or irregularities engaged in, as determined by our Compensation Committee in its sole discretion. Our Compensation Committee may also provide in any award agreement that the participant will forfeit any gain realized on the vesting or exercise of such award and must repay the gain to the Company, in each case
first pre-approvedexcept as prohibited by
our General Counsel. Our Board has also adopted an equity retention policyapplicable law, if (i) the participant engages in any activity referred to in the preceding sentence or (ii) the amount of any such gain is in excess of what the participant should have received under the terms of the award for
any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error). Additionally, awards are subject to clawback, forfeiture or similar requirements to the extent required by applicable law (including without limitation Section 304 of the Sarbanes-Oxley Act and Section 954 of the Dodd-Frank Act). Equity awards issued have included these provisions. The Company’s risk assessment and management function is led by the Company’s senior management,
and our non-executive Directors.which is responsible forday-to-day
Director Independence
Our Board has determined that Messrs. Glovier, Ianna, Luterman, McKnight, Steinberg and Whittaker, each a non-management director, qualify as independent directors under our Corporate Governance Guidelines and the NYSE Rules. Under our Corporate Governance Guidelines and the NYSE Rules, no director qualifies as independent unless our Board affirmatively determines that the director has no material relationship with HRG. Based upon information requested from and provided by each director concerning their background, employment and affiliations, our Board has determined that eachmanagement of the independent directors named above has no material relationshipCompany’s risk profile, with HRG, nor has any such person entered into any material transactions or arrangements with HRG or its subsidiaries, and is therefore independent under the NYSE Rules. In making such determination, our Board considered a variety of factors, including certain ordinary course of business transactionsoversight from time to time between us and certain entities affiliated with non-management directors, and determined that our non-management directors qualify as independent directors under our Corporate Governance Guidelines and the NYSE Rules.
Meetings of Independent Directors
We generally hold executive sessions at each Board and committee meeting. The Chairman of our Board presides over executive sessions of the entire Board and the chairman of each committee presides over the executive session of that committee.
Board Structure and Risk Oversight
Mr. Steinberg serves as the Chairman of our Board and Mr. Asali serves as a member ofits committees. Central to our Board andBoard’s oversight function is our President and Chief Executive Officer. Mr. Asali is responsible for overseeing the day-to-day activities of the Company, including M&A activity and overall business strategy for the Company and its subsidiaries.
Our management is responsible for understanding and managing the risks that we face inAudit Committee. In accordance with our business, and our Board is responsible for overseeing management’s overall approach to risk management. Our Board receives, reviews and discusses reports on the operations of our businesses from members of management and members of management of our subsidiaries as appropriate. Our Board also fulfills its oversight role through the operations of our NCG Committee, Audit Committee and Compensation Committee. OurCharter, our Audit Committee is responsible for oversight of corporate finance and financial reporting-related risks, including those related to our accounting, auditing and financial reporting practices. Our Compensation Committee is responsible for the oversight of the financial reporting process and internal controls. In this capacity, our compensation policies and practices, including conducting annual risk assessments of our compensation policies and practices. Our NCGAudit Committee is responsible for assistingreviewing and evaluating guidelines and policies governing the process by which senior management of the Company and the relevant departments of the Company, including the internal audit department, assess and manage the Company’s exposure to risk, as well as the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures.
The Company has implemented an annual formalized risk assessment process. In accordance with this process, a governance risk and compliance committee of certain members of senior management has the responsibility to identify, assess and oversee the management of risk for the Company. This committee obtains input from other members of management and subject matter experts as needed. Management uses the collective input received to measure the potential likelihood and impact of key risks and to determine the adequacy of the Company’s risk management strategy. Periodically, representatives of this committee report to our Audit Committee on its activities and the Company’s risk exposure. In addition, the Company maintains an information security program that supports the security, confidentiality, integrity, and availability of our information technology systems. In connection with such program, the Board is briefed by management on information security matters and employees receive information security awareness training. In the past three years, we have not experienced an information security breach and we maintain an appropriate information security risk insurance policy.
In Fiscal 2021, our management and our Audit Committee reviewed our reporting processes and took a number of actions to further enhance such processes. In connection with such efforts, we made changes to our internal control over financial reporting in order to remediate the material weakness that we disclosed in our Form10-K
for the fiscal year ended September 30, 2020. Remediation of this material weakness was completed during Fiscal 2021. See Item 9A of our Original Form10-K
for a detailed discussion of this remediation process. Environmental, Social and Governance Matters
We are committed to sustainability and recognize the impact our business has on the world. We believe in making a positive difference in the communities in which we live and work and strive to discharge our corporate social responsibilities from a global perspective and throughout every aspect of our operations. Our Board recognizes the negative effect poor environmental practices and human capital management may have on us and our returns. Our Board carefully considers and balances the impact on the environment, people and the communities of which we are a part in deciding how to operate our business. Our Board receives periodic reports regarding our risk exposure and risk mitigation efforts in these areas.
While our corporate social responsibility commitments address many areas, we focus on four key priorities: product and content safety, environmental sustainability, human rights and ethical sourcing and diversity and inclusion.
| ● | | – Product safety is essential to upholding our consumers’ trust and expectations and we embed quality and safety processes into every product we deliver. This includes embracing our responsibility to create safe, high-quality products and marketing them responsibly. It is an important part of how we uphold our commitments to all our consumers. |
| ● | | Environmental Sustainability |
| ● | | – Treating people with fairness, dignity and respect and operating ethically in our supply chain are our core values. We demonstrate these deep beliefs in the way we treat our employees and in the expectations and requirements we have of those with whom we do business. We work with our third-party factories and licensees to ensure all products are manufactured in safe and healthy environments and the human rights of workers in our supply chain are being upheld. |
| ● | | –We believe that supporting equality and promoting inclusion across our business and society makes the world a better place for all. We know that the more inclusive we are as a company, the stronger our business will be. We support the personal and professional growth of our diverse worker base, with a goal of positively impacting their lives and well-being. |
To further these priorities, the Board has adopted, among other things, (i) an Environmental Policy, which sets forth our commitment to the health and safety of our employees and protection of the environment across our global operations; (ii) a Human Rights Policy, which sets forth our commitment to respect and promote human rights, including the protection of minority groups’ rights and women’s rights, in furtherance of the guidance set forth in, among others, the Universal Declaration of Human Rights, UN Guiding Principles on Business and Human Rights, the International Labor Organizations Declaration on Fundamental Principles and Rights at Work, and the Organization for Economic Cooperation and Development for Multinational Enterprises; (iii) a Global Energy and Greenhouse Gas (GHG) Policy, which sets forth our commitment to the protection of the environment, preservation of natural resources, and the effective management and reduction of energy and GHGs by, among other things, identifying opportunities for purchasing direct, renewable energy in key markets and requiring energy considerations when making investments for major renovations and new capital equipment and major construction; and (iv) a Global Environmental, Social and Governance Policy, which sets forth our commitment to ESG.
Related-Person Transactions Policy
Our Board has adopted a written policy for the review, approval and ratification of transactions that involve related persons and potential conflicts of interest. See “Certain Relationships and Related Transactions
Transfer of Our Shares of Common Stock
Our Company has substantial deferred tax assets related to net operating losses and tax credits (together, “Tax Attributes”) for U.S. federal and state income tax purposes. These Tax Attributes are an important asset of the Company because we expect to use these Tax Attributes to offset future taxable income. The Company’s ability to utilize or realize the carrying value of such Tax Attributes may be impacted if the Company experiences an “ownership change” or certain other events under applicable tax rules. If an “ownership change” were to occur, we could lose the ability to use a significant portion of our Tax Attributes, which could have a material adverse effect on the Company’s results of operations and financial condition.
Accordingly, we have adopted certain transfer restrictions designed to limit an “ownership change.” These transfer restrictions are subject to certain exceptions, including, among others, prior approval of a Prohibited Transfer by our Board. As previously disclosed, our Board
with reviewinghas grantedpre-approvals
to certain large institutional investors and
making recommendationstheir affiliates. The foregoing description of the transfer restrictions contained within our Charter is not complete and is qualified in its entirety by reference to
our Board regarding our overall corporate governance, including board and committee composition, board nominees, size and structure and director independence, our corporate governance profile and ratings, and our political participation and contributions.the full text of the Charter, which is incorporated by reference into this report. Governance Documents Availability
We have posted our Corporate Governance Guidelines, Code of Business Conduct and Ethics for Directors, Officersdirectors, officers and Employees,employees, Code of Ethics for Chiefthe Principal Executive and Senior Financial Officers, Director Resignation Policy, Board Diversity Policy, Global ESG Governance Policy, Global Energy and Greenhouse Gas Policy, Human Rights Policy, Environmental Policy, Charter,By-laws,
Audit Committee Charter, Compensation Committee Charter and NCG Committee Charter on our website www.spectrumbrands.com under the heading “Corporate Governance” at www.HRGgroup.com“Investor Relations—Corporate Governance Documents
HRG.the Company. Inquiries must be directed to the Investor Relations Department at HRG Group,Spectrum Brands Holdings, Inc., 450 Park Avenue, 29th floor, New York, New York 10022.3001 Deming Way, Middleton, WI 53562. INFORMATION ABOUT COMMITTEES OF THE BOARD OF DIRECTORS
Our
Audit Committee, Compensation Committee
is responsible for approving, subject to review by our Board as a whole, compensation programs for ournon-employee
directors. In that function, our Compensation Committee considers market and
NCG Committeepeer company data regarding director compensation and annually evaluates the Company’s director compensation practices in light of that data and the characteristics of the Company as a whole, with the assistance of its independent compensation advisors. Our director compensation program for eachnon-employee
director is described in the table and discussion below. Mr. Maura, our only director who is an employee of the Company, does not receive compensation for his service as a director.Director Compensation Table for Fiscal 2021
Under our director compensation program, during each fiscal year, eachnon-employee
director receives an annual grant of RSUs equal to that number of shares of the Company’s common stock with a value on the date of grant of $125,000. Additionally, each director is eligible to receive an annual cash retainer of $105,000 which is paid quarterly. The Lead Independent Director (Mr. Polistina) receives an additional annual cash retainer of $40,000 and an additional annual equity retainer amount of $20,000. Directors are permitted to make an annual election to receive all of their director compensation (including for service on committees of our Board) in the form of Company stock in lieu of cash. For Fiscal 2021, the grants of RSUs were
our Board’smade on December 22, 2020 or, forpro-rated
grants following initial appointment to the Board after such date, on May 12, 2021. All such RSUs vested on October 1, 2021. For Fiscal 2021, compensation for service on the standing committees
during Fiscal 2016. Our Board held 25 meetings during Fiscal 2016. In addition, a special committee of the independent directors of our Board,
operated onwas paid in an
ad hoc basis duringannual amount as follows below. | | | | | | |
| | | | | |
| Audit | | $ | 20,000 | | | None |
| Compensation | | $ | 15,000 | | | None |
| NCG | | $ | 15,000 | | | None |
The table set forth below, together with its footnotes, provides information regarding compensation paid to our directors in Fiscal 2016.2021.
| | | | | | | | | | | | |
| | Fees Earned or Paid in Cash (2) | | | | | | | | |
| Leslie L. Campbell | | $36,894 | | $ | 70,825 | | | $644 | | $ | 108,363 | |
| Joan Chow | | $49,192 | | $ | 58,544 | | | $533 | | $ | 108,268 | |
| Sherianne James | | $ - | | $ | 279,666 | | | $4,741 | | $ | 284,408 | |
| Norman S. Matthews | | $ - | | $ | 262,573 | | | $4,452 | | $ | 267,024 | |
| Gautam Patel | | $ - | | $ | 262,573 | | | $4,452 | | $ | 267,024 | |
| Terry L. Polistina | | $180,000 | | $ | 165,511 | | | $2,806 | | $ | 348,317 | |
| Hugh R. Rovit | | $ - | | $ | 262,573 | | | $4,452 | | $ | 267,024 | |
| Anne Ward (6) | | $ - | | $ | 262,573 | | | $4,452 | | $ | 267,024 | |
| (1) | This table includes only directors who received compensation during Fiscal 2021. |
| (2) | Amounts reflected in this column include the annual retainer fees and committee Chair fees paid in cash to the applicable director during Fiscal 2021. Mses. James and Ward and Messrs. Matthews, Patel and Rovit elected to take all of their retainer in stock in lieu of cash. |
| (3) | Amounts in this column represent the aggregate grant date fair value of each award computed in accordance with FASB ASC Topic 718. The value was computed by multiplying the number of shares underlying the stock award by the closing price per share of the Company’s common stock on each grant date (or, as applicable, the last trading date immediately prior to the grant date if the grant date fell on a date when the New York Stock Exchange was closed), which was $74.32 for grants made on December 22, 2020 and $92.34 for grants made on May 11, 2021. The directors received the following number of RSUs, which vested on October 1, 2021: Mr. Campbell, 767; Ms. Chow, 634; Ms. James, 3,763; Mr. Mathews, 3,533; Mr. Patel, 3,533; Mr. Polistina, 2,227; Mr. Rovit, 3,533; and Ms. Ward, 3,533. |
| (4) | As of September 30, 2021, Mses. Chow, James and Ward held 634, 3,763 and 3,533 outstanding unvested RSUs, respectively, and Messrs. Campbell, Matthews, Patel, Polistina and Rovit held 767, 3,533, 3,533, 2,227 and 3,533 outstanding unvested RSUs, respectively. |
| (5) | Reflects dividend equivalents paid on RSUs which vested during Fiscal 2021 and which were not factored into the grant date fair value of the RSUs. |
| (6) | As of August 2021, Ms. Ward ceased to serve as a director of the Company. |
Compensation Committee Interlocks and Insider Participation
As of the date hereof, our Audit Committee is composed of Messrs. Luterman (Chairman), Glovier and Ianna. Our Board determined that allThe current members of our AuditCompensation Committee qualify as independent under applicable SEC rules (including Exchange Act rule 10A-3)are Terry L. Polistina (Chair), NYSE RulesSherianne James, and the Company’s Corporate Governance Guidelines. Messrs. Luterman and Ianna also qualify as “audit committee financial experts” as defined by Item 407(d)(5)(ii)Gautam Patel. During Fiscal 2021, none of Regulation S-K. Messrs. Luterman and Ianna werethe members of our Compensation Committee were an officer or employee of the Audit Committee for the entirety ofCompany. In addition, during Fiscal 2016. Mr. Glovier was appointed as a member2021, none of our Audit Committee in August 2016 and Mr. Davis, a former HRG director,executive officers served as a member of the Audit Committee until August 2016. Our Audit Committee held five meetings during Fiscal 2016.compensation committee of any other entity that has one or more executive officers serving on our Board or our Compensation Committee.
Our Audit Committee has been delegated the authority to, among other things, (i) appoint
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and replace the independent auditor; (ii) determine the compensation and oversight of the independent auditor; (iii) pre-approve all auditing services and permitted non-audit services, including the fees and terms thereof, to be performed for the Company by its independent auditor; (iv) provide oversightAnalysis (the “CD&A”) section summarizes our general philosophy with respect to the Company’s internal control and procedures; and (v) prepare any reports required by law to be prepared by the Audit Committee. Our Audit Committee operates under, and has the responsibility and authority set forth in, the written charter adopted by our Board, which can be viewed on our website, www.HRGgroup.com, under the heading “Corporate Governance.”
Compensation Committee
As of the date hereof, our Compensation Committee is composed of Messrs. Ianna (Chairman), Glovier, Luterman, McKnight and Steinberg. Messrs. Ianna, Glovier, Luterman and Steinberg were members of the Compensation Committee for the entirety of Fiscal 2016. Mr. McKnight was appointed as a member of the Compensation Committee in July 2016 and Mr. Davis, a former HRG director, served as a member of the Compensation Committee until August 2016. Our Board determined that all memberscompensation of our Compensation Committee qualify as independent under applicable SEC rules, NYSE RulesCEO, CFO, and the Company’s Corporate Governance Guidelines. Our Compensation Committee held 10 meetings duringour three most highly paid executive officers in Fiscal 2016.
Our Compensation Committee has been delegated the authority to, among other things, (i) review and recommend to2021 (collectively, our Board corporate goals and objectives relevant to our“named executive officer compensation and recommend to our Board the compensation level of our executive officers; (ii) make recommendations to our Board with respect to executive officer compensation and benefits, including incentive-compensation and equity-based plans for executive officers; (iii) review and recommend to our Board any employment agreementsofficers” or severance or termination arrangements to be made with any of our executive officers; and (iv) review
and discuss with management our compensation discussion and analysis disclosure and compensation committee reports in order to comply with our public reporting requirements. Our Compensation Committee operates under, and has the responsibility and authority set forth in, the written charter adopted by our Board, which can be viewed on our website, www.HRGgroup.com, under the heading “Corporate Governance.”
NCG Committee
As of the date hereof, our NCG Committee is composed of Messrs. Ianna (Chairman), Glovier, Luterman, McKnight and Steinberg. Messrs. Ianna, Glovier, Luterman and Steinberg were members of the NCG Committee for the entirety of Fiscal 2016. Mr. McKnight was appointed as a member of our NCG Committee in July 2016 and Mr. Davis, a former HRG director, served as a member of the NCG Committee until August 2016. Our Board determined that all members of our NCG Committee qualify as independent under applicable SEC rules, NYSE Rules and the Company’s Corporate Governance Guidelines. Our NCG Committee held two meetings during Fiscal 2016.
Our NCG Committee has been delegated the authority to, among other things, (i) develop and recommend to our Board for approval the criteria for Board membership and identify individuals qualified to become members of our Board; (ii) as directed by our Board from time to time, either select or recommend to our Board for selection director nominees for the next annual meeting of stockholders or to fill vacancies on our Board; (iii) assist the Board in determining whether individual directors have material relationships with our Company that may interfere with their independence; and (iv) develop, review and assess at least annually the adequacy of the Company’s corporate governance principles and guidelines, the Board’s and management’s review of the Company’s risk oversight process, and make recommendations to the Board as the NCG Committee deems appropriate. Our NCG Committee operates under, and has the responsibility and authority set forth in, the written charter adopted by our Board, which can be viewed on our website, www.HRGgroup.com, under the heading “Corporate Governance.”
|
| |
Item 11. | Executive Compensation |
COMPENSATION DISCUSSION AND ANALYSIS
“NEOs”). This sectionCD&A provides an overview and analysis of ourthe compensation programprograms and policies for our NEOs, the material compensation decisions made by our Compensation Committee under thosesuch programs and policies and the material factors considered by the Compensation Committee in making those decisions. The discussion below is intended to help you understand the detailed information provided in our executive compensation tables and put that information into context within our overall compensation program.philosophy.
Fiscal 2021 Named Executive Officers
Our NEOs for Fiscal 2021 were:
| | |
| | Chief Executive Officer and Executive Chairman |
| |
| | Executive Vice President and Chief Financial Officer |
| |
| | Executive Vice President and Chief Operating Officer |
| |
| | Executive Vice President, General Counsel and Corporate Secretary |
| |
| | Senior Vice President and Chief Human Resources Officer |
Highlights/Executive Summary
Our executive compensation program is designed to link pay for performance, encourage prudent decision-making and create a balanced focus on short-term and long-term performance and value creation. Our executive compensation is heavily weighted toward variable compensation, as described in more detail below, which is central to our philosophy that a significant portion of compensation align with the achievement of performance goals. The seriesthree primary components of tables following this Compensation Discussionour executive compensation are base salary, our Management Incentive Program (“MIP”) and Analysis provides more detailed information concerning compensation earned or paidour equity based, long-term incentive program (“LTIP”). Our MIP and LTIP include goals tied directly to the performance of the Company.
| ● | | In a year marked by significant headwinds, including supply chain disruptions and inflationary pressures, we delivered impressive financial results, stock price performance and returns to shareholders, as described below. |
| ● | | We continued to focus on long-term strategy and growth in support of our strategic shift to a consumer staples business, including through the planned $4.3 billion sale of our Hardware and Home Improvement (“HHI”) division, the closing of which is subject to receipt of regulatory approvals which are expected in 2022. |
| ● | | We continued our transformational changes in corporate governance practices, as shown through increased Board diversity representation on our Board, our implementation of a diversity, equity, and inclusion program for employees, and our continued advancement of ESG initiatives. |
We are proud of the success we had in Fiscal 2016,2021 and the returns to our investors during this period. From the last day of Fiscal 2015 and2020 on September 30, 2020 to the end of Fiscal 2014 for the following individuals (each a “named executive officer” during Fiscal 2016):
Omar M. Asali, a Director,2021 on September 30, 2021, our President and Chief Executive Officer;
David M. Maura, a Director,stock price rose 67.4% from $57.16 to $95.67, and our former Managing Director and Executive Vice Presidentstock price has continued to rise to close at $101.72 as of Investments;
George Nicholson, our Senior Vice President, Chief Financial Officer and Chief Accounting Officer; and
Thomas A. Williams, our former Executive Vice President and Chief Financial Officer.
As previously disclosed, Mr. Williams’ employment withDecember 31, 2021 for a 78% stock price increase since the Company terminated on January 1, 2016, which was prior to the completionbeginning of Fiscal 2016; Mr. Maura’s employment with2021.
Our Fiscal 2021 Accomplishments
Over the past several years, we commenced or completed substantial and transformative changes at our Company terminated on November 28, 2016, which was after the completion of Fiscal 2016; and it is expected that Mr. Asali’s employment with the Company will cease in Fiscal 2017.
Executive Summary
Highlights for Fiscal 2016
During Fiscal 2016, we executeddelivered on a number of strategic initiatives, including:
At HRG,important accomplishments. These changes positioned the Company well to not only survive but thrive during Fiscal
2016 we increased2021, notwithstanding the challenges posed by theCOVID-19
pandemic, supply chain disruptions and inflation on both our
“Net Asset Value” (as defined below) from both the beginningsupply chain and customer base. Some of
these transformative changes and important accomplishments are summarized below under five broad categories: (i) management team and Board member composition, (ii) corporate governance, (iii) strategic and long-term growth and (iv) our Fiscal
20162021 results. Our transformative changes and
the end of Fiscal 2014, which are discussed further below. We believe that Net Asset Value is a good proxy for creation of valueinitiatives were designed to provide significant and positive outcomes for the Company and
its stockholders.our shareholders.At HRG, simplifying our corporate structure by selling our remaining interest in Compass Production Partners, L.P. (“Compass”), selling our remaining 51.0% interest in CorAmerica Capital, LLC (“CorAmerica”), winding down the operations
Management and progressing the wind down of Salus.Board Member Composition
At Spectrum Brands, refinancing a portion of its indebtedness to extend maturities and reduce borrowing costs by issuing €425.0 million aggregate principal amount of 4.00% notes due 2026 and using the proceeds to repay a portion of the amounts outstanding on the 6.375% notes due 2020 and amending its credit agreement.
At Spectrum Brands, integrating the recent acquisition of the Global Auto Care business and realizing synergies through a series of initiatives to consolidate certain operations and reduce operating costs, including the exit of certain facilities.
At FGL, continuing to pursue the closing of the merger with Anbang Insurance Group Co., Ltd. and FGL.
At Salus, recovering $45.4 million on the loan to a significant borrower in default, exceeding the previous estimate of recovery and reversing $18.0 million of previously recorded allowance for bad debt.
At HGI Energy, completing the sale of the Holly, Waskom and Danville assets for a total cash consideration of $153.4 million and using the proceeds primarily to reduce Compass’ borrowings under its credit facility.
At HGI Energy, completing the saleWe are very proud of our equity interests in Compassmanagement team, which includes a top notch, talented, and stable leadership team to a third party for a cash purchase price of $145.0 million with the proceeds received reduced by the outstanding balance of Compass’ existing credit facility of $125.2 million.deliver financial performance and execute our growth strategy.
The foregoing is a highlight summary of only certain of HRG’s performance measures as of the end of Fiscal 2016. For a more complete understanding and evaluation of the business and financial results ofOur Board believes that the Company and its subsidiaries, youstakeholders are encouragedbenefited by a highly skilled board with a significant variety of expertise and experiences and diversity across race, gender, and ethnicity. On April 12, 2021, we appointed Joan Chow and Leslie Campbell, each an independent, highly qualified, and diverse background candidate, to readour Board. These appointments were made in response to shareholder feedback and in furtherance of the Company’s other reports filed with the SEC.
Summary of Sound Governance Features ofBoard’s commitment to advancing our Compensation Programs for Fiscal 2016
Listed below are someBoard’s knowledge base and skill set and advancing diversity and gender inclusion. As part of the Company’s more significantshareholder engagement program and its commitment to improved corporate governance, the Board previously adopted a Board Diversity Policy, which is further described on
page 16 of
this Form 10-K/A.
We believe that our senior management team and Board provide a skillset that aligns with our going forward operating model and business strategy and has contributed to the success we had in Fiscal 2021 and that we envision in upcoming years.
We have also advanced our aim of promoting diversity and are proud that at leasttwo-thirds
of our board members come from diverse backgrounds,one-third
of our Board is composed of female members and our five NEOs include a woman and an executive from a diverse background. Corporate Governance Best Practices
We are proud that our corporate governance practices are regularly updated to reflect best practices such as appointing a lead independent director, increasing diversity among our Board and executive team, declassifying our Board (which is underway and will be fully completed by our 2024 annual stockholders meeting), appointing independent directors as a majority of the Board, having fully independent Audit, Compensation and NCG committees of the Board, and having an independent compensation consultant. We have also adopted or strengthened a number of our corporate governance policies, including our corporate governance and code of ethics policies, our majority voting and director resignation policy, our related person transaction policy, our anti-hedging policy, our anti-pledging policy and our stock ownership policy.
We have also continued our efforts to promote our ESG initiatives by adopting a number of new policies and procedures, including adopting a new global environmental, social and governance policy, a new global energy and greenhouse gas policy and further strengthening our environmental policy and human rights policy. See “Directors, Executive Officers and Corporate Governance-CorporateGovernance-Our
Practices and Policies”. Strategy and Long-Term Growth
The focus of our strategic goals are:
| ● | | Investing internally for organic growth, which generates our highest return on investment |
| ● | | Strengthening our brands through consumer insights, research and development, innovation and advertising and marketing to drive vitality and profitable organic growth |
| ● | | Returning capital to our shareholders via dividends and opportunistic share repurchases |
| ● | | Disciplined M&A activity as we pursue accretive strategic acquisitions that are synergistic and/or help drive additional value creation |
While the impacts ofCOVID-19
over the past year are creating extreme volatility in the year-over-year andcomparisons of our businesses, overall we believe that
wereconsumer demand remains positive in
effect during Fiscal 2016, which were adoptedour categories and the strong performance of our brands continues to drive
performancegrowth.
The following graphs show our significantly improved financial strength.
Full Year 2021 - Continuing Operations Only
Full Year 2021 – Proforma Including HHI Discontinued Operations
Our efforts to reinvest in and reignite growth across our business units are driving tangible and impressive results. We believe that our transformational activities described above positioned us to meet the challenges and succeed in Fiscal 2021.
Below is a summary of our Fiscal 2021 highlights.
| ● | | We completed a number of strategic transactions, including the acquisitions of Armitage Pet Care in our Global Pet Care segment and Rejuvenate cleaning products in our Home & Garden segment. |
| ● | | We entered into a purchase agreement to sell our HHI segment for $4.3 billion to ASSA ABLOY, the closing of which is subject to receipt of regulatory approvals which are expected in 2022, with the anticipated transaction to close in Fiscal 2022. With the planned divestiture, our HHI business has been classified as discontinued operations. This transaction is expected to give us $3.5 billion inafter-tax proceeds, which we intend to use to reduce our debt, return capital to shareholders via share repurchases, and invest strategically for organic growth and acquisitions. |
| ● | | We continue to make incremental and meaningful investments in consumer insights, new product innovation and marketing in our brands to raise awareness and drive future organic growth across each of the businesses. |
| ● | | We remain focused on our ongoing Global Productivity Improvement Program as we complete our global operating model transformation to create a better, faster, and stronger company. |
| ● | | We achieved and exceeded our Fiscal 2021 operating plan and delivering on commitments while navigating a challenging supply chain environment with continued supply interruptions and inflationary pressures growing during the year across all business units. |
| ● | | Our net sales from continuing operations increased $376.0 million or 14.3% and our organic net sales increased 7.8%. Including our HHI business, net sales growth was $650 million or 16.4%. |
| ● | | Our net income from continuing operations increased to $15.3 million with diluted earnings per share of $0.35, with combined net income including discontinued operations of $189.6 million and diluted earnings per share of $4.39. |
| ● | | We achieved Adjusted EBITDA of $391.8 million, representing an increase of 21.0% from Fiscal 2020, with combined Adjusted EBITDA of $689.2 million, including HHI discontinued operations, representing an increase of 18.8%. |
| ● | | We had full year cash flow from operations of $288.4 million, including HHI discontinued operations. |
| ● | | We continue to maintain a strong balance sheet with over $760 million of total liquidity at year end, including a $187.9 million cash balance and approximately $575 million available on our cash flow revolver as of September 30, 2021, and a net debt to Adjusted EBITDA leverage ratio of 3.5 times for the combined Company, including HHI discontinued operations. |
| ● | | We returned $197.3 million to shareholders by repurchasing 1.6 million shares of common stock for $125.8 million and paying $71.5 million in dividends. |
| ● | | We advanced our ESG efforts by promoting diversity, inclusion and equity at our Board and with our employees, enhanced our corporate structure in line with best practices and adopted a number of policies and practices to further enhance our environmental and sustainability efforts. |
Detailed information regarding thenon-GAAP
financial measures described above is provided below in Appendix A. Fiscal 2021 Executive Compensation Overview
Our Fiscal 2021 executive compensation program includes base salary, annual bonus or MIP and the LTIP program. This program was designed after taking into account feedback from shareholders, based on our robust outreach efforts. Highlights of our executive compensation program in Fiscal 2021 included the following:
|
✓ Our NEOs’ base salaries and annual bonus targets remained the same as in Fiscal 2020. ✓ Our NEOs’ compensation is in line with market. ✓ Our 2021 LTIP equity grants, consistent with our 2020 LTIP equity grants, provided for three performance metrics weighted equally (Adjusted Return on Equity, Adjusted EBITDA and Adjusted Free Cash Flow). |
Our Compensation Governance Best Practices
We have adopted significant policies with respect to our executive compensation programs, which help to further align our executives’ interests with those of our stockholders. shareholders.
| | | | | | |
| | |
| ✓ | | We maintain an independent Compensation Committee with an ongoing review of our compensation philosophy and practices. | | | | We provide reasonable post-employment provisions and have post-employment restrictive and executive cooperation covenants. |
| | | |
| ✓ | | We consider the voting results of our annual advisory vote on executive compensation, and in the most recent annual advisory vote, approximately 97% voted in favor. | | | | We strongly align pay and performance by placing 87.9% of our CEO’s ongoing compensation opportunity and 78.7% (on average) of our other current NEOs’ ongoing compensation opportunities at risk and earned on the basis of Company performance. |
| | | |
| ✓ | | We continue to engage in robust shareholder outreach to understand shareholder feedback and input on a variety of matters, including business strategy, compensation programs and corporate governance. | | | | We have a robust clawback policy that requires forfeiture or recoupment upon an accounting or financial restatement or certain other acts resulting in financial loss, reputation damage or other similar adverse impacts to the Company, a described in greater detail under the section titled “Compensation Clawback Policy |
| | | |
| ✓ | | We annually assess our compensation program and have determined that the risks associated with our compensation policies are not reasonably likely to result in a material adverse effect on the Company and its subsidiaries taken as a whole. | | | | For new employment agreements entered into during Fiscal 2019 and thereafter, we have provided that upon termination of employment any performance-based awards are forfeited. |
| | | |
| ✓ | | We maintained our robust compensation alignment policies through our (i) stock ownership guidelines that require 50% of the net after-tax portion of our directors’, NEOs’ and other Covered Officers’ shares must be retained to satisfy our stock ownership requirements; (ii) robust anti-pledging policy; and (iii) robust anti-pledging policy. | | | | 70% of our equity-based awards and 74% to 80% of our regular incentive compensation are based on achievement of performance. The remainder is time-based equity that is still subject to market risk. |
| | | | | | |
| | |
| | We do not provide any gross-ups for golden parachutes. | | | | We do not provide for accelerated vesting of equity upon retirement for our NEOs. |
| | | |
| | We do not make loans to executive officers or directors. | | | | We do not provide for single-trigger vesting of equity. |
| | | |
| | We do not allow our NEOs to purchase stock of the Company on margin, enter into short sales or buy or sell derivatives in respect of securities of the Company. | | | | We do not provide excessive perquisites and our NEOs do not participate in defined benefit pension plans or nonqualified deferred compensation plans. |
| | | |
| | We do not provide immediate vesting on equity based awards and have committed to one-year minimum vesting requirement for all awards granted under the Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan (the “2020 Equity Plan”), subject to limited exceptions. | | | | We do not guarantee minimum bonuses to our NEOs. |
| | | |
| | We do not grant discounted options and we do not reprice stock options without shareholder approval. | | | | We do not pay any dividends on unearned and unvested equity awards, unless and until earned and vested. Our 2020 Equity Plan further enhanced this practice by explicitly prohibiting the payment of dividends on unvested equity awards. |
Our Board takes its management oversight responsibilities seriously. Our key values are predicated on strong and effective governance, independent thought and decision-making and a commitment to driving shareholder value. We received strong support from our shareholders with a vote of approximately 97% with respect to our executive compensation at our 2021
Annual Meeting. This followed a vote of 84% from our shareholders with respect to our executive compensation in the prior year. As discussed below, we highly value the input of our shareholders and took this into account as we designed our programs.
What we learn through our ongoing engagements is regularly shared with our Board and incorporated into our disclosures, plans and practices, as deemed appropriate.
We maintain a consistent and proactive approach to communicating with our shareholders, including our quarterly earnings calls,non-deal
road shows and participating in both equity and debt conferences on a regular basis. In addition, each year during proxy season we take the following actions: | ● | | We engage the proxy solicitation firm, Okapi Partners, to (i) assist in a robust shareholder outreach process to discuss ourgo-forward strategies and (ii) facilitate the opportunity for shareholders to individually and directly engage with certain members of management. |
| ● | | We engage in discussions with a major proxy advisory firm as necessary to understand its perspective on our compensation programs and best practices generally in executive compensation programs. |
| ● | | We reach out to our top 20 shareholders to discuss and engage in dialogue with our shareholders with respect to our Company, including our corporate governance and compensation practices. |
Partially in response to such feedback below and input from a proxy advisory firm, we made the following changes over the past two years:
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| | | | |
| | |
● Shareholders raised concern on our use of Adjusted EBITDA and Adjusted Cash Flow on both MIP and LTIP. | | | | ✓ We introduced a third performance metric (Adjusted Return on Equity), which is weighted equally with Adjusted EBITDA and Adjusted Free Cash Flow for our LTIP equity performance program. ✓ Additionally, for the Fiscal 2021 annual MIP, we added a Net Sales measure (weighted at 20% for Fiscal 2021) to our existing measures of Adjusted Free Cash Flow and Adjusted EBITDA (each weighted at 40% for Fiscal 2021). ✓ For Fiscal 2022, our Compensation Committee modified the weighting of the three performance metrics under the annual MIP, such that Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales will all be equally weighted. |
● Shareholders told us that the size of our NEO salaries and annual bonus targets were appropriate. | | | | ✓ Our NEOs’ base salaries and annual bonus targets remained the same in Fiscal 2021 as in Fiscal 2020. |
● Shareholders asked us to enhance our stock ownership guidelines. | | | | ✓ We strengthened our stock ownership guidelines by increasing, as of January 1, 2020, to 50% the netafter-tax portion of our directors’, NEOs’ and other Covered Officers’ shares that they must retain to satisfy our stock ownership requirements. |
● Shareholders did not express concern with our perquisites program and other compensation practices | | | | ✓ Nonetheless, at his own initiative, our CEO voluntarily eliminated his tax planning, financial assistance benefit and his executive automobile allowance. |
● A proxy advisory firm raised concerns regarding our anti-hedging policy | | | | ✓ We further strengthened our anti-hedging policy. In addition, on our initiative, we adopted a robust policy prohibiting the pledging of our stock. |
● Shareholders expressed interest in the declassification of our Board | | | | ✓ We began to declassify the Board, a process which will be completed by 2024. |
● Shareholders supported our commitments to diversity | | | | ✓ We continued our efforts to promote diversity and inclusion through implementing a diversity, equity, and inclusion program for employees and enhancing diversity at our Board and executive team. |
During our dialogue with shareholders in Fiscal 2021, we received the following feedback:
| ● | | Shareholders were generally supportive of our compensation structure and our compensation consultant, Willis Towers Watson (“WTW”). |
| ● | | Shareholders commended us on deleveraging our balance sheet and noted that they would prefer we continue to operate with less leverage. |
| ● | | Shareholders noted that they focus on our ESG efforts and that they would welcome continued advancement of our ESG efforts. |
| ● | | As described on page 20 herein, in order to promote our ESG efforts, we have also adopted a number of new policies and procedures and intend to continue to review and enhance our ESG processes, procedures and disclosures. |
| ● | | Shareholders told us they appreciate the declassification of the Board. |
| ● | | Shareholders told us they appreciate the diversity of our Board, both in terms of gender diversity and racial/ethnic diversity, and the advancement of our Company’s diversity, equity and inclusion initiative. |
We continue to engage in rigorous shareholder outreach and are doing so in Fiscal 2022 to understand shareholder views and input on a variety of matters.
Compensation Overview and Philosophy
Our compensation programs
practicesare administered by our Compensation Committee. In Fiscal 2021, these programs were based on ourphilosophy in which variable compensation represents a majority of an executive’s potential compensation. The variable incentive compensation programs continued our focus on the Company-wide goals of increasing growth and
policiesearnings, maximizing free cash flow generation and building for superior long-term shareholder returns. Each year, the Compensation Committee and the Company, along with the assistance of an independent compensation consultant, go through a thoughtful process to review risks and opportunities applicable to the Company.In establishing our compensation programs for Fiscal 2021, our Compensation Committee continued to partner with WTW as independent compensation consultants and evaluated the compensation programs with reference to a peer group of 14 companies, as outlined in the section below, “Role of Committee-Retained Consultants.”
Background on Compensation Considerations
Our Compensation Committee pursued several objectives in determining our executive compensation programs for Fiscal 2021:
| ● | | To attract and retain highly qualified executives for the Company and in each of our business segments. |
| ● | | To align the compensation paid to our executives with our overall corporate business strategies while leaving the flexibility necessary to respond to changing business priorities and circumstances. |
| ● | | To align the interests of our executives with those of our shareholders and to reward our executives when they perform in a manner that creates value for our shareholders. |
In order to pursue these objectives, our Compensation Committee:
| ● | | Considered the advice of WTW on executive compensation issues and program design, including advice on the corporate compensation program as it compared to our peer group companies. |
| ● | | Conducted an annual review of total compensation for each NEO, including the compensation and benefit values offered to each executive and other compensation factors. |
| ● | | Consulted with our CEO and other members of senior management with regard to compensation matters and met in executive session without management to evaluate management’s input. |
| ● | | Solicited comments and concurrence from other Board members regarding its recommendations and actions. |
| ● | | Considered the feedback of our shareholders and the Say on Pay vote results. |
Philosophy on Performance-Based Compensation
Our Fiscal 2021 executive compensation programs were designed so that, at target levels of performance, a significant portion of the value of each NEO’s annual compensation (which varies by individual) would be based on the achievement of Company-wide Fiscal 2021 performance objectives. In approving these programs, our Compensation Committee concluded that a combination of annual fixed base pay and incentive-based pay provided our NEOs with an appropriate mix of cash compensation and equity-based compensation.
For Fiscal 2021, the percentage of ongoing target annual compensation that wasat-risk
(that is, variable cash compensation and equity awards) for our CEO was 87.9% and for the other current NEOs was 78.7% as a group. The chart below sets forth the percentage of target compensation that was fixed compared toat-risk
for the CEO and the other current NEOs as a group.
To highlight the alignment of the incentive plans with shareholder interests, our ongoing annual and long-term incentive programs (whether equity or cash-based) in Fiscal 2021 were predominantly performance-based with (i) our MIP being 100% performance-based and (ii) the three-year LTIP being 70% performance-based.
The remainder of each executive’s compensation was made up of amounts that did not vary based on performance. For each of our NEOs, thesenon-performance-based
amounts are
reviewedset forth in agreements with the executives as described in “—Executive Compensation Tables
Termination and re-evaluated periodically,Change in Control
Executive-Specific Provisions regarding Employment, Termination and Change in Control
and are subject to
changeannual review and potential increase by our Compensation Committee. These amounts are determined by our Compensation Committee considering the executive’s performance, current market conditions, the Company’s financial condition at the time such compensation levels are determined, compensation levels for similarly situated executives with other companies, experience level and the duties and responsibilities of such executive’s position. Our Compensation Decision Making Process
Our Compensation Committee engages in a robust process in making compensation decisions. In Fiscal 2021, our Compensation Committee retained WTW as its independent consultants to assist in formulating and evaluating executive and director compensation programs. In addition, our Compensation Committee consulted with our CEO regarding the Company’s compensation plans and performance targets, however, our CEO did not participate in any discussions with respect to his own compensation. From time to time, our Compensation Committee also consulted with other senior executives of our Company and outside counsel.
WTW provided advice on the executive compensation implications of changes to our business (including our Global Productivity Improvement Plan, demand, and supply interruptions), our corporate governance and compensation structure and the philosophy of our executive compensation plans. During Fiscal 2021, our Compensation Committee periodically requested WTW to:
| ● | | Provide comparative market data for our peer group and other groups on request, with respect to compensation matters. |
| ● | | Analyze our compensation and benefit programs relative to our peer group, including our mix of performance-based compensation,non-variable compensation and the retentive features of our compensation plans in light of the Company’s strategies and prospects. |
| ● | | Review the plan designs, including the performance metrics selected, for our various incentive plans and make recommendations to our Compensation Committee on appropriate plan designs to support the overall corporate strategic objectives. |
| ● | | Advise our Compensation Committee on compensation matters and management proposals with respect to compensation matters. |
| ● | | Assist in the preparation of our Compensation Discussion and Analysis disclosure and related matters. |
| ● | | On request, participate in meetings of our Compensation Committee. |
In order to encourage an independent viewpoint, our Compensation Committee and its members (i) had access to WTW at any time without management present and (ii) consulted from time to time
and at any time.with each other, othernon-management
What We Did For Fiscal 2016
Pay for Performance Philosophy: We designed our Fiscal 2016 executive compensation programs to pay for performance and a significant portionmembers of our executives’ compensation was not guaranteed. Target compensation was established for our executive officers at the beginning of Fiscal 2016 byBoard and WTW without management present.
WTW, with input from management and our Compensation Committee, and our named executive officers had an opportunity to earn actual compensation that varied from target,developed a peer group of companies based on achievement against pre-establisheda variety of criteria, including type of business, revenue, assets and market capitalization. The composition of this peer group is reviewed annually and, if appropriate, revised, based on changes in business orientation of peer group companies, changes in financial size or performance targets.of the Company and the peer group companies and any mergers, acquisitions, spin-offs or bankruptcies of the companies in the peer group or changes at our Company. WTW reviewed this peer group, and confirmed that there were no changes for Fiscal 2021. The variable componentpeer group utilized consisted of the following 14 companies:
| | | | |
✓ Central Garden and Pet Company | | ✓ Fortune Brands Home & Security, Inc. | | |
✓ Church & Dwight Co., Inc. | | | | ✓ Nu Skin Enterprises, Inc. |
| | | | ✓ The ScottsMiracle-Gro Company |
✓ Edgewell Personal Care Company | | | | ✓ Tupperware Brands Corporation |
✓ Energizer Holdings, Inc. | | | | |
Our Compensation Committee reviews market data as part of assessing the appropriateness and reasonableness of our compensation program was designed to reward performancelevels and contribution tomix of pay. Although our corporate and financial objectives.
Independent Executive Compensation Consultants: During Fiscal 2016, our Compensation Committee worked with Hodak Value Advisors (“Hodak”), its independent executive compensation consultant, and separate outside counsel, as it determined appropriate.
Mitigation of Undue Risk: Our Fiscal 2016 compensation program had provisions to mitigate undue risk, including mechanisms that were designed to be partially subject to forfeiture (see “Clawback Policy,” “Malus Provision” and “Subsequent Events After Fiscal 2016 Year End” below) and related target performance for Fiscal 2016 to past performance.
Clawback Policy: Our equity awards allow the Company to recover payouts in the event that recoupment is required by applicable law (including pursuant to Sarbanes-Oxley and the Dodd-Frank Wall Street Reform and Consumer Protection Act) or a participant receives for any reason any amount in excess of what should have been received (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error).
Malus Provision: Our Fiscal 2016 annual bonus program provided for an automatic deferral of payouts in excess of two times the target bonus pool and deferred cash compensation from prior years was subject to reduction if the Company did not meet certain specified performance criteria in Fiscal 2016. For Fiscal 2016, the Company satisfied the applicable performance criteria and, as a result the Malus provisions of our 2016 annual bonus program were not applicable (see “How We Determine Each Element of Compensation” and “Subsequent Events After Fiscal 2016 Year End”).
Negative Discretion and Other Reductions: Our Fiscal 2016 annual bonus program provided our Compensation Committee with the right to exercise negative discretion to reduce awards under the bonus plan.
Award Caps: Amounts that could be earned under our Fiscal 2016 annual bonus program by any individual were capped at $20 million per year (“Award Cap”).
Equity Retention: We maintain an equity retention policy for senior management, requiring each member of senior management to retain ownership of at least 25% of his or her covered shares, net of taxes and transaction costs, until the earlier of (i) the date of such senior management member’s termination of employment with the Company or (ii) the date such person is no longer a member of senior management.
What We Did Not Do for Fiscal 2016
No 280G or Section 409A Excise Tax Gross-Ups: We do not provide “gross-ups” for any taxes imposed with respect to Section 280G (change of control) or Section 409A (nonqualified deferred compensation) of the Internal Revenue Code.
No Pensions or Supplemental Pensions: Our named executive officers are not provided with pension or supplemental executive retirement plans.
No Single-Trigger Equity Acceleration: In Fiscal 2016, we did not provide our named executive officers “single-trigger” equity vesting upon a change of control of the Company.
No Repricing of Underwater Stock Options without Stockholder Approval: We do not lower the exercise price of any outstanding stock options, unless stockholders approve this.
No Discounted Stock Options: The exercise price of our stock options is not less than 100% of the fair market value of our Common Stock on the date of grant.
No Unauthorized Hedging or Pledging: Our Board has adopted a corporate governance policy prohibiting our directors and executive officers from (i) hedging the economic risk associated with the ownership of our Common Stock and (ii) pledging our Common Stock, unless, in each case, first pre-approved by our General Counsel.
Compensation Philosophy and General Objectives
For Fiscal 2016, our executive compensation philosophy was focused on pay for performance and was designed to reflect appropriate governance practices aligned with the needs of our business. We granted target levels of compensation that were designed to attract and retain employees who are able to meaningfully contribute to our success. Our Compensation Committee considered several factors in designing target levels of compensation, including, but not limited to, historical levels of pay for each executive, actual turnover in the executive ranks, market data on the compensation of executive officers at similar companies, and its judgment about retention risk with regards to each executive relative to their importance to the Company. In reviewing market data, our Compensation Committee reviewed the total compensation of executives in the same or similar positions in an appropriate market comparison group, which includes business development or private equity companies, adjusting the total compensation observed at these peers for their size relative to the Company. The peer group consisted of the same seventeen companies from Fiscal 2015: American Capital, Ltd., Apollo Global Management, LLC, Blackstone Group LP, Capital Southwest Corp, Carlyle Group, Compass Diversified Holdings, Harris & Harris Group, Hercules Tech Growth Cap, Icahn Enterprises, KKR, Kohlberg Capital Corp, Leucadia, Loews Corp, Main Street Capital Corp, MCG Capital Corp, Safeguard Scientifics Inc. and Triangle Capital Corp. The Compensation Committee does not use market data to target specific components ofa particular range for total compensation such as salary or bonuses, and instead determines the target total level of compensation necessarycompared to be competitive for each executive in the relevant market for that executive’s talent.
Components of Executive Compensation
Our Fiscal 2016 compensation program generally had three basic elements: salary, incentive compensation and other benefits. Salary and benefits are designed to aid in the retention of our employees. Incentive compensation generally consists of bonuses for individual and company performance, and may be awarded as cash or equity. Equity awards will typically be vested over a period of years to enhance both retention and alignment of interests.
We believe that the various components of our executive compensation program are effective in attracting and retaining our employees and providing a strong alignment of their interests with those of our stockholders. Although each element of compensation described below is considered separately, our Compensation Committee makes its determinations regarding each individual component of the compensation program in the context of the aggregate effect on total compensation for each named executive officer.
The principal elements of compensation for our named executive officers in Fiscal 2016 were:
base salary;
variable compensation potential consisting of cash and equity payouts; and
limited benefits.
How We Determine Each Element of Compensation
Our Compensation Committee is responsible for our executive compensation program design and administration, including a review ofpeer group, it does take this information into account when establishing our compensation programs and evaluation of management performance and awards consistentprograms.
In accordance with our bonus plan. In Fiscal 2016, our Compensation Committee was advised by Hodak, its independent executive compensation firm, and separate outside counsel, as it deemed appropriate.
In light of SEC rules, and NYSE Rules, our Compensation Committee considered the independence of its compensation consultant,WTW including an assessment of the following factors: (i) other services provided to the Company by the consultant;each consultant, (ii) fees paid by the Company as a percentage of the consulting firm’s total revenue;revenue, (iii) policies or procedures maintained by the consulting firmWTW that are designed to prevent a conflictconflicts of interest;interest, (iv) any business or personal relationships between the individual consultants involved in the engagement and any member of our Compensation Committee;Committee, (v) any Company stock owned by the individual consultants involved in the engagement;engagement and (vi) any business or personal relationships between our executive officers and the consulting firmconsultants or the individual consultants involved in the engagement. Our Compensation Committee has concluded that no conflictconflicts of interest exists that would prevent our compensation consultantprevented WTW from independently representingadvising our Compensation Committee during Fiscal 2021. WTW received $158,329 for executive and director compensation consulting in fiscal 2021. WTW also provided consulting services relating to our health and benefit plans during Fiscal 2021, for which it received approximately $180,000. The Compensation Committee reviewed these additional consulting services, while considering the potential effects on WTW’s independence.
In Fiscal 2021, our ongoing annual compensation for our NEOs included the following elements:
| | | | | | |
| | | | | | |
| | ● Forms basis for competitive compensation package | | ● Base salary reflects competitive market conditions, individual performance and internal parity | | ● Performance of the individual is considered by the Compensation Committee, which is advised by its independent compensation consultant, when setting and reviewing base salary levels and continued employment |
| | | |
| | ● Motivate achievement of strategic priorities relating to key annual financial metrics | | ● Target bonus opportunities are determined by competitive market practices and internal parity ● Actual bonus payouts, which can range from0-250% of target for the CEO and0-200% of target for our other NEOs are determined based on achievement of financial metrics established at the beginning of the performance period | | ● For Fiscal 2021, 80% is equally weighted between Adjusted EBITDA and Adjusted Free Cash Flow and the remaining 20% is based on Net Sales. For Fiscal 2022, Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales will all be equally weighted |
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LTIP: Restricted Stock Units (majority is performance-based and remainder is time-based) | | ● Align compensation with key drivers of the business ● Encourage focus on long-term shareholder value creation | | ● Size of award determined by competitive market practices, corporate and individual performance and internal parity and retention considerations | | ● Long-term incentive awards focusing on cumulative performance over three-year period ending Fiscal 2023, based on equally weighted Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted Return on Equity ● The majority of each of the new long-term incentive awards (70%) are performance-based |
The annual base salaries for our NEOs were initially set forth in each executive’s employment agreement or separate letter agreement and such salaries may be increased from time to time by our Compensation Committee.
Base Salary
TheIn determining the initial annual base salary of our named executive officers is intended to provide a level of fixed compensation that contributes to the attractionfor each NEO or retention of our named executive officers. For Fiscal 2016,in making any subsequent increases, our Compensation Committee considered the market conditions at the time such compensation levels were determined, that the Company’s financial condition at the time such compensation levels were determined, compensation levels for similarly situated executives at other companies, experience level and the duties and responsibilities of such executive’s position.
Base salary levels are subject to evaluation from time to time by our Compensation Committee to determine whether increases are appropriate. Our NEOs’ base salaries provided to our named executive officers represented an appropriate level of fixed compensation relative to each such named executive officer’s respective target total compensation, which varies by positionremained the same in accordance with each such executive officer’s job responsibilities and contributions to our Company.Fiscal 2021 as in Fiscal 2020.
For Fiscal 2016, Messrs. Asali and Maura were eligible toOur management personnel, including our NEOs, participate in our annual cash bonus MIP, which is designed to compensate executives and other managers based on achievement of annual corporate, business segment, and/or divisional financial goals. Under the MIP bonus plan, 100% of the annual bonus is performance-based and no bonus is paid if the relevant performance metrics are not achieved.
Under the MIP, each participant has the opportunity to earn a bonus amount that is 100% contingent upon achieving the annual performance goals set by our Compensation Committee and reviewed by our Board. Particular performance goals are established during the first quarter of the relevant fiscal year and reflect our Compensation Committee’s views of the critical indicators of corporate success in light of primary business priorities. The specific financial targets with respect to performance goals are then set by our Compensation Committee based on our annual operating plan, as approved by our Board, during the first quarter of the relevant fiscal year. The annual operating plan includes performance targets for the Company as a whole, as well as for each business segment.
The Fiscal 2021 MIP design included a minimum financial threshold level for each of Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales, below which no payout would be earned with respect to that objective. The achievement of the goals of Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales is determined and earned independently of one another.
For the purposes of our MIP and LTIP, Adjusted EBITDA and Adjusted Free Cash Flow have the following meanings:
means net earnings before interest, taxes, depreciation and amortization, but excluding restructuring, acquisition and integration charges and otherone-time
charges. The result of the formula in the preceding sentence is then adjusted by the Compensation Committee
(the “2016 Bonus Plan”). The 2016 Bonus Planin good faith so as to negate the effects of any dispositions; provided,
for annual bonuseshowever, that Adjusted EBITDA resulting from businesses or products lines acquired (in Board approved transactions) during the applicable fiscal year will, to the extent reasonably and in good faith determined by the Compensation Committee to be
comprisedappropriate, be included in the calculation from the date of
two components.acquisition. “Adjusted Free Cash Flow”
The
first component wasresult of the formula in the preceding sentences is then adjusted by the Compensation Committee reasonably and in good faith so as to negate the effects of any dispositions; provided, however, that Adjusted Free Cash Flow resulting from businesses or products lines acquired (in Board approved transactions) during the fiscal year will, to the extent reasonably and in good faith determined by the Compensation Committee to be appropriate, be included in the calculation from the date of acquisition.For purposes of our MIP, “” means the amount of revenue generated less returns, cash discounts, trade rebates, and other spend or consumer offers that result in a reduction of revenue in accordance with generally accepted accounting principles in the U.S. GAAP. Net Sales achievement will be net of FX currency translation impact (e.g. achievement will exclude positive or negative impact(s) as a result of converting local currency sales into U.S. dollars), will include amounts in the annual operating plan relating to acquisitions completed in the prior year and will exclude amounts from acquisitions completed in the current year. Since our LTIP measures performance over three years, we are able to effectively focus on the achievement of significant and sustained improvements in performance and strategic initiatives over the long term. For Fiscal 2021, we provided our LTIP grants in the form of time-based RSUs and performance-based PSUs that will be eligible to vest after the three-year period ending September 30, 2023. These awards have the features described below.
| ● | | 70% of the award vests based on three-year cumulative performance against the following three equally weighted measures: Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted Return on Equity. The relatively large performance component of these awards is believed to serve as a valuable incentive to drive long-term outcomes for our Company and shareholders. There is an opportunity to earn up to 125% of target PSUs if superior performance is achieved. |
| ● | | 30% will vest at the end of the three-year service period. The relatively small time-based component of these awards as part of our overall compensation mix is believed to serve as an important long-term retention and risk mitigation feature. |
For purposes of our LTIP, “Adjusted Return on Average Equity
See “-Fiscal 2021 Compensation ComponentPay-Outs-LTIP
Fiscal 2021 Compensation ComponentPay-Outs
The annual base salaries at the end of Fiscal 2021 for our NEOs are set forth below:
| | |
| |
at the end of Fiscal 2021 |
| | $ 900,000 |
| |
| | $ 500,000 |
| |
| | $ 550,000 |
| |
| | $ 400,000 |
| |
| | $ 300,000 |
Management Incentive Plan
For Fiscal 2021, our MIP award levels achievable at target for each participating NEO were as follows:
In response to shareholder feedback, we added Net Sales as an individualadditional metric to our Fiscal 2021 MIP. Our Compensation Committee established the following weightings for Fiscal 2021:
| ● | | 40% Adjusted Free Cash Flow |
For Fiscal 2022, our Compensation Committee approved modifying the weighting of the three performance metrics, such that Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales will all be equally weighted.
The table below shows the applicable levels of performance required to achieve threshold, target and maximum payouts for each of the three performance metrics in Fiscal 2021. The performance metrics for each of our NEOs were equal to those established for the Company as a whole. The maximum MIP bonus (the “individual bonus”)payable is 250% of target for Mr. Maura and 200% for our other NEOs. As described in the table below, Mr. Maura achieved payouts of 206.4% based on Adjusted EBITDA achievement, 100% based on Adjusted Free Cash Flow and 250% based on Net Sales. All other NEOs achieved payouts of 200% based on Adjusted EBITDA achievement, 100% based on Adjusted Free Cash Flow and 200% based on Net Sales.
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Performance Required to Achieve Bonus % as Indicated ($ in millions) |
| |
| |
| |
| |
| | | |
|
| | 40% | | $560.71 | | $623.01 | | $685.31 | | $689.30 | | 200% |
| | 40% | | $234.00 | | $260.00 | | $286.00 | | $260.00 | | 100% |
| | 20% | | $3,991.42 | | $4,201.49 | | $4,411.56 | | $4,614.00 | | 200% |
| (1) | Mr. Maura is eligible to receive a maximum MIP equal to 250% of target if we achieve Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales of $716.462 million, $299.000 million and $4,516.691 million, respectively, and achieved Fiscal 2021 Payout Factors of 206.40%, 100.00% and 250.00%, respectively with respect to the target amount. |
Our Fiscal 2021 LTIP grants cover service and cumulative performance over the three-year period commencing October 1, 2020 and ending September 30, 2023. Of the total grant, 70% is in the form of PSUs and will vest based on the achievement of personal performance goalscumulative Adjusted EBITDA, cumulative Adjusted Free Cash Flow and Adjusted Return on Equity over the
second component was a corporate bonus (the “corporate bonus”) three-year period. The remaining 30% is in the form of RSUs, which will vest based on the achievement of corporate performance measured in terms of the change in the Company’s “Net Asset Value” (as defined below) from the beginning of the Company’s fiscal year tocontinued service, with cliff vesting at the end of such three-year period. In addition, with respect to the Company’s fiscal year end (“NAV Return”), in excessPSU component of the LTIP, there is an opportunity to earn additional PSUs if superior performance is achieved (subject to a threshold NAV Return, which for Fiscal 2016cap of 125% of the target PSUs).
The chart below sets forth the number of PSUs and RSUs each NEO was set at $230.7 million (the “Fiscal 2016 Threshold NAV Return”), which represented a seven percent (7%) increase from the Company’s NAVgranted in Fiscal 2014. Because2021 pursuant to the Company’s NAV Return was negative in Fiscal 2015,LTIP.
| | | | | | | | | | | | |
| |
| | |
| | |
| |
| | | 58,064 | | | | 24,885 | | | | 14,516 | |
| | | 10,753 | | | | 4,608 | | | | 2,688 | |
| | | 23,656 | | | | 10,138 | | | | 5,914 | |
| | | 17,205 | | | | 7,373 | | | | 4,301 | |
| | | 3,763 | | | | 1,613 | | | | 941 | |
The table below shows the 2016 Bonus Planthree performance metrics for our NEOs and the applicable levels of performance required thatto achieve threshold, target and maximum vesting of PSUs.
| | | | | | | | | | | | |
Performance Measure (in $ millions) | |
| | |
| | |
| |
| | $ | 1,869.0 | | | $ | 1,953.0 | | | $ | 1,974.5 | |
| | $ | 780.0 | | | $ | 874.1 | | | $ | 898.7 | |
Adjusted Return on Equity | | | 13.50% | | | | 14.80% | | | | 15.20% | |
Under the NAV Return exceedLTIP, the Company’s NAV Return for Fiscal 2014. In Fiscal 2016, the Company produced a NAV Returnthree performance goals may be earned independently of $663.8 million.one another. The 2016 Bonus Plan provided that 12%achievement of the excess of the NAV Return for Fiscal 2016 over the Fiscal 2014 NAV Return would be allocated to fund the corporate bonus pool for bonuses to Mr. Asali, Mr. Maura and certain other key employees. For Messrs. Asali and Maura, for Fiscal 2016, 85% of their target annual bonus was the corporate bonus (based on NAV Return) and 15% was the individual bonus based on performance of individual goals. The performance goals for each of our NEOs will be measured on a consolidated Company-wide basis. Acquisitions by the individual bonus wereCompany are included in the Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted Return on Equity calculations, subject to the negative discretion of our Compensation Committee. Awards for performance between threshold and target levels and between target and maximum levels, will be determined based on linear interpolation. If threshold performance level is not achieved for any of the three performance goals, then no PSUs will be earned.
Our Compensation Committee also provided in the award agreements for our NEOs that such officers are required to hold at least 50% of the net shares they receive (after any shares withheld by the Company for tax purposes) until such NEO achieves the required stock ownership. Thereafter they are required to hold 50% of the netafter-tax
shares they receive for at least one year following vesting. In addition, our NEOs and all other officers at the Vice President level or higher, are subject to the share ownership and retention guidelines discussed above (see “Directors, Executive Officers and Corporate Governance-CorporateGovernance-Our
Practices and Policies-Stock Ownership Guidelines
Deferral and Post-Termination Benefits
Retirement Benefits
. Our Company maintains a 401(k) plan for our employees, including our NEOs.Supplemental Executive Life Insurance Program
.During Fiscal 2021, each of Messrs. Maura, Smeltser, Lewis and Zargar participated in a program pursuant to which the Company, on behalf of each participant, made an annual contribution on October 1 equal to 15% of such participant’s base salary as of that date into a Company-owned executive life insurance policy for such participant. The investment options for each such policy are selected by the insurance provider.Post-Termination Benefits
. As described below, the Company had entered into agreements with our NEOs which govern, among other things, post-termination benefits payable to each such NEO should his or her employment with the Company terminate. In each case, the receipt of post-termination benefits are subject to the NEO’s execution of a waiver and release agreement in favor of the Company and continued compliance with post-employment restrictive covenants and other executive cooperation.The Company provides certain limited perquisites and other benefits to certain executives, including our NEOs. Among these benefits are financial and tax planning services, car allowances or leased car programs, executive medical exams and executive life and disability insurance. Mr. Maura has voluntarily agreed to cease receiving any benefits for financial or tax planning services and his automobile allowance. Similarly, we do not providegross-ups
for our other NEOs. Important Compensation Policies and Guidelines
Timing and Pricing of Stock-Based Grants
The Company provides stock, restricted stock, RSUs and PSUs as part of the compensation program made available to directors, NEOs and other employees. With respect to annual or special grants of stock or restricted stock, these are generally made on the date or as soon as practicable following the date on which such grants are approved by our Compensation Committee on an individual basis. Participants could earn between 0 and 200% of their individual target bonus based onor our Board, or, if the award dictated a subsequent date or the achievement of a particular event prior to grant, as soon as practicable after such subsequent date or achievement of such event. The granting of stock, to the individual performance goals.
NAV Return is believed to be a good proxy for creation of value forextent granted by the Company, and its stockholders because it encourages, amongwill generally be granted the day after the second business day following the public dissemination of the Company’s financial results or such other things, the generation of cash flowdate as determined by the Company’s subsidiaries and transactions resulting in appreciationGeneral Counsel, using that day’s NYSE adjusted market close price to convert to a round number of shares. For purposes of valuing awards made under our equity plans, the assets of the Company and its subsidiaries. If in Fiscal 2016, the Company had not produced a NAV Return greater than $230.7 million, no corporate bonuses would have been earned.
For the purpose of the foregoing calculation, the Company’s “Net Asset Value”grant price is generally calculated by (i) starting with the valueclosing sale price of the Company’s “Net Asset Value,” as such term is defined incommon stock on the exchange on which the Company’s Certificate of Designation of Series A Participating Convertible Preferred Stock of the Company dated as of May 12, 2011 (the “Preferred Stock Certificate”), (ii) then subtracting from such amount the Company’s deferred tax liabilities, (iii) then adding to such amount the Company’s capital contributions to fund start-up businesses, which is subject to a $20 million cap, (iv) then adding to such amount the Company’s deferred financing costs, (v) then adding to such amount the value of the Company’s assets that have not been appraised, which is subject to a $50 million cap, (vi) then eliminating the effect of any increase in legacy liabilities associated with our predecessor entity, Zapata Corporation and its subsidiaries, (vii) then adding to such amount expenses incurred in connection with completing any acquisitions by the Company within the past twelve months, and (viii) excluding any accretion on preferred stock (calculated in the manner contained in the Preferred Stock Certificate).
For Fiscal 2016, our Compensation Committee established only objective performance goals for Mr. Asali’s individual bonus, which were (i) receipt of $51 million of dividends and other sources of cash, (ii) identify two companies thatshares are undervalued with attractive financial or strategic characteristics that meet or exceed investment committee criteria, and (iii) meet or exceed all debt covenants.
For Fiscal 2016, our Compensation Committee established only objective performance goals for Mr. Maura’s individual bonus, which were (i) Spectrum Brands’ achievement of $925 million of adjusted EBITDA (as defined below), (ii) Spectrum Brands’ achievement of $500 million of adjusted free cash flow and (iii) receipt of $45 million of dividends by the Company from Spectrum Brands. For the purposes of Mr. Maura’s performance measure, “adjusted EBITDA” was defined as reported operating income plus certain defined add-backs for depreciation, amortization, acquisition, integration and restructuring related charges.
Basedlisted on the strong corporate and individual performance during Fiscal 2016, Messrs. Asali and Maura each would have been eligible to receive a bonus at approximately the Award Cap under the 2016 Bonus Plan. Notwithstanding the foregoing, as further described below in the Section titled “Subsequent Events After Fiscal 2016 Year End”, in connection with certain changes in the strategic objectives and direction of the Company, the Company and Messrs. Asali and Maura mutually agreed in November 2016 to enter into alternative arrangements with the Company. As a result, instead of compensation pursuant to the 2016 Bonus Plan, Messrs. Asali and Maura received compensation for Fiscal 2016 pursuant to such arrangements. For further details on the bonus amounts paid to Messrs. Asali and Maura for Fiscal 2016, see the section titled “Subsequent Events After Fiscal 2016 Year End” and the “Summary Compensation Table”.
Mr. Nicholson did not participate in the 2016 Bonus Plan, but instead, pursuant to his employment agreement with the Company was eligible to receive a bonus target amount equal to $275,000, subject to his achievement of performance goals.
Mr. Williams did not participate in the 2016 Bonus Plan given that his employment with the Company terminated prior to the end of Fiscal 2016.
Initial Long Term Equity Grant
Historically, we grant service-based initial long term equity to our named executive officers when our Compensation Committee or Board determines that it would be to the advantage and in the best interests of the Company and its stockholders to grant such equity, as an inducement to enter into or remain in the employ of the Company or as an incentive for increased efforts during such employment. No initial long term equity grants were made to our named executive officers in Fiscal 2016.
Benefits
During Fiscal 2016, we provided our named executive officers with standard medical, dental, vision, disability and life insurance benefits available to employees generally.
We limit the use of perquisites as a method of compensation and provide executive officers with only those perquisites that we believe are reasonable and consistent with our overall compensation program to better enable us to attract and retain superior employees for key positions. In this regard, our named executive officers are eligible to participate in a flexible perquisite account under our FlexNet Program, which permits them to be reimbursed for certain eligible personal expenses, up to a per year cap of $50,000 for Messrs. Asali, Maura and Williams and $25,000 for Mr. Nicholson. Eligible expenses include, but are not limited to, reimbursement for tax preparation, legal services, education programs, health and wellness programs, technology and personal computers, wills and estate planning services and transportation services. Participants are responsible for payment of taxes on FlexNet payments. Reimbursements, at participants’ elections, can be net of taxes and/or include an estimated tax payment, subject to the annual maximum reimbursement cap. Further, we may provide from time to time in our discretion reimbursement for other employment related expenses. The perquisites provided to the named executive officers are quantified in the Summary Compensation Table below.
We sponsor a 401(k) Retirement Savings Plan (the “401(k) Plan”) in which eligible participants may defer a fixed amount or a percentage of their eligible compensation, subject to limitations. In Fiscal 2016, we made discretionary matching contributions of up to 5% of eligible compensation.
HRG Subsidiary and Affiliate Fees
During Fiscal 2016, certain of our employees provided certain services to certain of our subsidiaries and were compensated for such services during Fiscal 2016. At the discretion of our Compensation Committee, compensation such persons are otherwise entitled to receive from the Company may be reduced by all, none or a portion of the compensation received from our subsidiaries. During Fiscal 2016, Mr. Asali received director fees from Spectrum Brands and FGL in the form of equity, which was valued by our Compensation Committee at $383,092 and compensation that Mr. Asali was entitled to receive from HRG in Fiscal 2016 was reduced by such amount. On January 20, 2016, Mr. Maura and the Company entered into a Subsidiary Service Agreement (the “Services Agreement”). Separately, on January 20, 2016, Mr. Maura and Spectrum Brands entered into an employment agreement (“SPB Agreement”). Pursuant to the SPB Agreement, in addition to Mr. Maura’s continuing role as an employee and director of the Company, Mr. Maura also serves as the Executive Chairman of the board of directors of Spectrum Brands. Pursuant to the Services Agreement, the Company and Mr. Maura agreed to reduce certain compensation that Mr. Maura has received or will receive from the Company by compensation that Mr. Maura has received or will receive from Spectrum Brands in the future. In connection with entering into the SPB Agreement, in February 2016, Spectrum Brands granted to Mr. Maura fully vested shares of Spectrum Brands common stock valued at $6,000,000 on the dateday of the grant (the “Initial Equity Grant”). Mr. Maura’sdate.
The Company did not grant stock options to its employees during Fiscal 2016 compensation from HRG was reduced by the Initial Equity Grant2021 and by (i) an annual bonus granted by Spectrum Brands to Mr. Maura valued at $1,243,312, (ii) an annual equity award granted by Spectrum Brands to Mr. Maura valued at $3,000,000 (iii) an equity award granted by Spectrum Brands to Mr. Maura valued at $4,500,000 and (iv) the director fees granted by Spectrum Brands to Mr. Maura valued at $101,607. For further details, see the Spectrum Brands Definitive Proxy Statement filed on December 21, 2016. In addition, pursuant to the Services Agreement, Mr. Maura no longer receives a base salary from the Company while he receives a base salary from Spectrum Brands, and as of April 20, 2016, no longer participated in the Company’s benefit plans (except for the Company’s FlexNet program). The Subsidiary Services Agreement was terminated in connection with the Maura Separation and Release Agreement (as defined below) because Mr. Maura became a full time employee of Spectrum Brands.
Risk Review
Our Compensation Committee reviewed, analyzed and discussed the incentives created by our 2016 Bonus Plan. Our Compensation Committee does not believeanticipate that any aspectit will use options as part of our 2016 Bonus Plan encouraged our named executive officers to take unnecessary or excessive risks. Our 2016 Bonus Plan had provisions to mitigate undue risk, including clawbacks and the use of negative discretion.its compensation program going forward.
Compensation in Connection with Termination of Employment and Change-In-Control
In determining our employees’ compensation packages, our Compensation Committee recognizes that an appropriate incentive in attracting talent is to provide reasonable protection against loss of income in the event the employment relationship terminates without fault of the employee. Thus, compensation practices in connection with termination of employment generally have been designed to achieve our goal of attracting highly qualified executive talent. During Fiscal 2016, Messrs. Asali, Maura and Nicholson had employment agreements which provided for termination compensation in the form of payment of bonuses and salary and benefit continuation ranging from six to twenty-four months following involuntary termination of employment. During Fiscal 2016, our compensation programs did not provide for any “golden parachute” tax gross-ups to any named executive officer. During Fiscal 2016, we also did not provide any of our named executive officers any “single-trigger” payments due to the occurrence of a change of control of the Company.
In connection with the termination of Mr. Williams’ employment on January 1, 2016, and pursuant to the Retention and Release Agreement, dated August 6, 2015 between the Company and Mr. Williams, Mr. Williams received certain payments and benefits upon his termination of employment, as described under the heading “Compensation and Benefits - Summary Compensation Table.”
In addition, as described more fully under the Section titled “Subsequent Events After Fiscal 2016 Year End”, the Company entered into a transition agreement with Mr. Asali and a separation agreement with Mr. Maura in November 2016 that, among other things, provides Messrs. Asali and Maura with certain payments upon termination of employment.
You can find additional information regarding our practices in providing compensation in connection with termination of employment to our named executive officers under the heading “Payments Upon Termination and Change of Control” below.
Impact of Tax and Accounting Considerations
With respect to taxes, Section 162(m)The overriding consideration when evaluating the pay level or design component of any portion of our executives’ compensation is the effectiveness of the Internal Revenue Code imposes a $1 million limit onpay component and the deductionshareholder value that a company may claim in any tax year with respect to compensation paid to each of its Chief Executive Officermanagement and three other named executive officers (other than the Chief Financial Officer), unless certain conditions are satisfied. Certain types of performance-based compensation are generally exempted fromCompensation Committee believe the $1 million limit. Performance-based compensation can include income from stock options, performance-based restricted stock, and certain formula driven compensation that meets the requirements of Section 162(m).pay component reinforces. In structuring the compensation for our named executive officersNEOs, our Compensation Committee will review a variety of factors includingwhich may include the deductibility of such compensation under Section 162(m), of the Internal Revenue Code, to the extent applicable. However, this is not the driving or most influential factor. Ourfactor and the Compensation Committee has approved and is expected to approve in the future, non-deductible compensation arrangementspast and specifically reserves the right to do so.pay or approve nondeductible compensation currently and in the future.
Advisory Vote on Executive Compensation Tables
Our Compensation CommitteeThe following tables and our Board considered the results of our stockholder vote regarding the non-binding resolution on executive compensation presented at the 2014 Annual Meeting, where 91.16% of votes cast approvedfootnotes show the compensation program describedearned for service in the Company’s proxy statement for the 2014 Annual Meeting. Our Compensation Committeeall capacities during Fiscal 2021, Fiscal 2020, and our Board have continued to maintain a generally similar compensation philosophy.
At the 2014 Annual Meeting, a majority of our stockholders approved, as recommendedFiscal 2019 by our
Board, a proposal for our stockholdersNEOs. We refer you to
be provided with the
opportunity to cast a non-binding advisory vote on compensation“Compensation Discussion and Analysis”
“Termination and Change in Control Provisions”
of
our named executive officers every three years. Our Board believed that this
frequency is appropriate as a triennial vote would provide the Company with sufficient time to engage with stockholders to understand and respond to the “say-on-pay” vote results and to put in place any changes to the Company’s compensation program as a result of such discussions, if necessary. The next stockholder advisory (non-binding) vote on executive compensationreport as well as
a vote on the
frequencycorresponding footnotes to the tables for material factors necessary for an understanding of the
say-on-pay vote will be held at our upcoming 2017 Annual Meeting.Subsequent Events After Fiscal 2016 Year End
As described further below, following the completion of Fiscal 2016, the Company entered into a Transition Agreement with Mr. Asali and a Separation and Release Agreement with Mr. Maura. It is expected that Mr. Asali’s employment with the Company will cease in Fiscal 2017 and Mr. Maura’s employment with the Company ceased on November 29, 2016. In connection with the foregoing and certain changescompensation detailed in the
strategic objectives and direction of the Company, the Company, in consultation with thetables entitled“Summary Compensation Committee and its compensation advisors, determined thatTable,” “All Other Compensation Table for Fiscal 2017 2021”
and
thereafter, compensation arrangements will no longer be based on the NAV Return of the Company and the NAV bonus plan was terminated effective as of September 30, 2016. In January 2017, the Company also entered into retention agreements with its remaining executives (other than Mr. Asali and Mr. Maura) that specify the potential amounts of bonus payments for Fiscal 2017. For more information see “Nicholson Retention Letter” below.Asali Transition Agreement
On November 17, 2016, the Company announced that Mr. Asali plans to leave the Company. In connection with the foregoing, on November 17, 2016, the Company and Mr. Asali entered into a Transition Agreement (the “Asali Transition Agreement”). The Asali Transition Agreement provides that Mr. Asali will receive from the Company (i) for Fiscal 2016, a bonus of $8,000,000 in cash and (ii) for Fiscal 2017, a bonus for $3,000,000 in cash, on the earlier of March 31, 2017 and the date on which the Company announces that it has entered into definitive documentation which, if the transactions contemplated thereby were consummated, would result in a sale, merger, change in control or other strategic transaction of or involving the Company and substantially all of its assets (such a transaction, a “Transaction”, and such date, an “Announcement Date”). In addition, Mr. Asali would be eligible to receive an additional payment of $3,000,000 (or such higher amount as determined by the Board), if (x) the Company enters into definitive documentation with respect to a Transaction, Mr. Asali remains employed through the Announcement Date and shareholder approval of the Transaction contemplated in connection with the Announcement Date is obtained or (y) there is a Specified Triggering Event (defined below) on or prior to the Announcement Date, and within 18 months following such Specified Triggering Event the Company enters into definitive documentation, and obtains the required shareholder approvals, with respect to a Transaction.
The Asali Transition Agreement provides that Mr. Asali’s last day of employment will be the earliest of the date of his (i) death, (ii) termination for disability, (iii) termination by the Company without cause or the date he resigns for good reason, (iv) the Announcement Date (clauses (i) through (iv) each, a “Specified Triggering Event”) or (v) termination for cause or resignation
without good reason. Mr. Asali will continue to receive payment of his base salary and any unpaid vacation time and unreimbursed business expenses through the date his employment ends. Following his separation after a Specified Triggering Event and subject to his compliance with terms of the Asali Transition Agreement, Mr. Asali will receive a $500,000 cash payment as severance and COBRA reimbursement for a period of up to 12 months. In addition, Mr. Asali’s options and restricted stock awards, which were scheduled to vest and settle on November 29, 2016, will continue to vest and settle on November 29, 2016 and his options and restricted stock, which were scheduled to vest and settle in November 29, 2017, will vest and settle on the earlier of March 31, 2017, the Announcement Date, a Specified Triggering Event or a change in control of the Company.
Mr. Asali remains subject to certain non-solicitation restrictions of the Company’s employees for 18 months post-termination of employment and confidentiality provisions indefinitely. The Asali Transition Agreement also contains a customary mutual release of claims.
Maura Separation and Release Agreement
On November 28, 2016, the Company and Mr. Maura, entered into a Separation and Release Agreement (the “Maura Separation and Release Agreement”) pursuant to which Mr. Maura resigned his employment with the Company effective November 29, 2016, but will continue to serve as the Executive Chairman of Spectrum Brands and as a member of the Company’s Board of Directors. The Services Agreement was terminated in connection with the Maura Separation and Release Agreement.
In connection with the foregoing, Mr. Maura received a lump sum cash payment of $500,000 and will receive COBRA reimbursement for a period of up to 12 months. In addition, Mr. Maura’s 48,408 unvested options and 110,212 remaining shares of unvested restricted stock that were each awarded prior to November 28, 2016 fully vested, but shall be exercisable/settled on November 29, 2017.
Mr. Maura received a bonus for Fiscal 2016, consisting of (i) $1,540,000 payable in cash in December 2016, (ii) $1,815,080 payable in cash on November 1, 2018 and (iii) a fully vested option to acquire 318,190 shares of common stock of the Company on December 14, 2016. Such options will be exercisable as follows: 30,626 on the date of grant, 30,626 on the first anniversary of the date of grant, 128,469 on the second anniversary of the date of grant and 128,469 on the third anniversary of the date of grant. Mr. Maura also received a cash bonus of $2,150,000 for Fiscal 2017. The cash bonuses for Fiscal 2016 and Fiscal 2017 shall not be subject to clawback or forfeiture based on the NAV of the Company in Fiscal 2017 or thereafter. Mr. Maura also received any earned but unpaid salary and any unpaid vacation time and unreimbursed business expenses through November 29, 2016.
Mr. Maura remains subject to certain non-solicitation restrictions of the Company’s employees for 18 months post-termination of employment and confidentiality provisions indefinitely. The Maura Separation and Release Agreement also contains a customary mutual release of claims.
Nicholson Retention Letter
On January 20, 2017, the Company and Mr. Nicholson entered into a retention letter agreement (the “Nicholson Retention Agreement”) pursuant to which Mr. Nicholson will be employed by the Company as its Senior Vice President, Chief Financial Officer and Chief Accounting Officer, effective as of January 20, 2017. In addition, his base salary will be increased to $325,000 effective as of January 1, 2017 and he will receive a one-time bonus equal to $100,000 within ten days after January 20, 2017. Subject to Mr. Nicholson’s continued employment with the Company through the earliest of November 30, 2017, the date the Company files its Annual Report on Form 10-K for Fiscal 2017 or an earlier date selected by the Company (the “Retention End Date”), he will receive (i) a retention payment equal to $325,000 and (ii) a bonus equal to $400,000. The separation payment is in lieu of the separation payments Mr. Nicholson was entitled to receive under his employment agreement, and the bonus represents Mr. Nicholson's bonus for Fiscal 2017 through the Retention End Date (Mr. Nicholson is not entitled to any other bonus through the Retention End Date). In addition, he will be eligible to receive COBRA reimbursement for a period of up to 12 months if his employment is terminated. Mr. Nicholson will also receive these payments if his employment is terminated by the Company without Cause or by Mr. Nicholson for Good Reason. However, if Mr. Nicholson's employment is terminated by the Company for Cause or if he resigns without Good Reason, he will not be eligible for the retention payment, bonus and COBRA reimbursement. The retention payment, bonus and COBRA reimbursement are conditioned upon Mr. Nicholson’s execution of a customary release and will be in lieu of any severance or bonus payments pursuant to his employment agreement. Mr. Nicholson will be entitled to receive accrued but unpaid base salary, unused vacation time accrued and unreimbursed business expenses incurred through the date of termination.
COMPENSATION AND BENEFITS
Summary Compensation Table
The following table discloses compensation for Fiscal 2016, Fiscal 2015 and Fiscal 2014 received by Messrs. Asali, Maura, Nicholson and Williams, each of whom was a “named executive officer” for all or a portion of Fiscal 2016. As disclosed in greater detail elsewhere in this report, Mr. William’s employment with the Company terminated on January 1, 2016, Mr. Maura’s employment with the Company terminated on November 29, 2016 and Mr. Asali and the Company have entered into a Transition Agreement pursuant to which his employment with the Company is expected to cease during Fiscal 2017.
In reading the table below, it should be noted that under the Company’s bonus plan, the Company does not pay any bonuses with respect to any fiscal year until the completion of such fiscal year. Pursuant to SEC disclosure rules, cash compensation payable for any fiscal year is included in the column titled “Non-Equity Incentive Plan Compensation” for such fiscal year (although no amounts are actually payable until after the end of such fiscal year). However, in the case of equity awards, the SEC disclosure rules require that the Summary Compensation Table and the Grants of Plan-Based Awards Table include for each fiscal year the aggregate fair value, as of the grant date, of equity awards granted only during the applicable fiscal year. Since under the Company’s bonus plan equity compensation for any fiscal year is not granted until the completion of such fiscal year, the value of such equity is not included in the Summary Compensation Table or the “Grants of Plan-Based Awards Table for such year, but in accordance with SEC rules is, or will be, as applicable, included in next year’s compensation disclosure. For more details, please see footnote (2) to the Fiscal 2021.”
Summary Compensation Table.Table
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock Awards ($) (1) (2) | | Option Awards ($) (1) (2) | | Non-Equity Incentive Plan Compensation ($) (3) | | All Other Compensation ($) (4) | | Total ($) (5) |
| Omar M. Asali, President and Chief Executive Officer | | 2016 | | 500,000 |
| | — |
| | 242,786 |
| | 46,454 |
| | 8,000,000 |
| | 50,000 |
| | 8,839,240 |
|
| | 2015 | | 500,000 |
| | — |
| | 10,348,776 |
| | 1,809,401 |
| | 171,000 |
| | 50,000 |
| | 12,879,177 |
|
| | 2014 | | 500,000 |
| | — |
| | 12,227,772 |
| | 2,017,608 |
| | 7,886,000 |
| | 138,839 |
| | 22,770,219 |
|
| David M. Maura, former Executive Vice President and Managing Director | | 2016 | | 150,824 |
| | — |
| | 191,356 |
| | 36,613 |
| | 3,355,080 |
| | 50,000 |
| | 3,783,873 |
|
| | 2015 | | 500,000 |
| | — |
| | 5,044,576 |
| | 866,770 |
| | 135,000 |
| | 50,000 |
| | 6,596,346 |
|
| | 2014 | | 500,000 |
| | — |
| | 11,889,468 |
| | 1,966,376 |
| | 3,844,000 |
| | 50,000 |
| | 18,249,844 |
|
| George C. Nicholson, Senior Vice President, Chief Accounting Officer and Chief Financial Officer | | 2016 | | 275,000 |
| | — |
| | — |
| | — |
| | 300,000 |
| | 38,250 |
| | 613,250 |
|
| | 2015 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | 2014 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Thomas A. Williams, former Executive Vice President
and Chief Financial Officer (6) | | 2016 | | 125,000 |
| | — |
| | — |
| | — |
| | — |
| | 464,570 |
| | 589,570 |
|
| | 2015 | | 500,000 |
| | 1,000,000 |
| | 3,721,321 |
| | 648,673 |
| | — |
| | 63,000 |
| | 5,932,994 |
|
| | 2014 | | 500,000 |
| | — |
| | 4,554,840 |
| | 750,825 |
| | 2,836,000 |
| | 62,750 |
| | 8,704,415 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | | | | | | | | | |
| | |
| | |
| | | | |
| | | 2021 | | | $ | 900,000 | | | $ | – | | | $ | 5,399,980 | | | $ | 1,941,300 | | | $ | 365,045 | | | $ | 8,606,325 | |
| | | 2020 | | | $ | 900,000 | | | $ | – | | | $ | 8,411,326 | | | $ | 1,442,813 | | | $ | 194,219 | | | $ | 10,948,358 | |
| | | 2019 | | | $ | 900,000 | | | $ | – | | | $ | 13,588,411 | | | $ | 5,000,000 | | | $ | 199,711 | | | $ | 19,688,122 | |
| | | 2021 | | | $ | 500,000 | | | $ | – | | | $ | 1,000,001 | | | $ | 640,000 | | | $ | 203,184 | | | $ | 2,343,185 | |
Executive Vice President and | | | 2020 | | | $ | 500,000 | | | $ | – | | | $ | 1,000,030 | | | $ | 513,000 | | | $ | 136,699 | | | $ | 2,149,729 | |
| | | | | | | | | | | – | | | | | | | | | | | | | | | | | |
| | | 2021 | | | $ | 550,000 | | | $ | – | | | $ | 2,199,989 | | | $ | 792,000 | | | $ | 231,422 | | | $ | 3,773,411 | |
Executive Vice President and | | | 2020 | | | $ | 550,000 | | | $ | – | | | $ | 3,161,022 | | | $ | 634,838 | | | $ | 173,120 | | | $ | 4,518,980 | |
| | | 2019 | | | $ | 447,788 | | | $ | – | | | $ | 4,075,662 | | | $ | 500,000 | | | $ | 145,954 | | | $ | 5,169,404 | |
| | | 2021 | | | $ | 400,000 | | | $ | – | | | $ | 1,600,028 | | | $ | 384,000 | | | $ | 229,191 | | | $ | 2,613,219 | |
Executive Vice President, General Counsel, and | | | 2020 | | | $ | 400,000 | | | $ | – | | | $ | 2,881,385 | | | $ | 307,800 | | | $ | 156,598 | | | $ | 3,745,783 | |
| | | 2019 | | | $ | 400,000 | | | $ | – | | | $ | 4,691,949 | | | $ | 500,000 | | | $ | 114,538 | | | $ | 5,706,487 | |
| | | 2021 | | | $ | 300,000 | | | $ | – | | | $ | 349,978 | | | $ | 458,000 | | | $ | 22,998 | | | $ | 1,130,976 | |
Senior Vice President and | | | 2020 | | | $ | 300,000 | | | $ | – | | | $ | 382,050 | | | $ | 230,850 | | | $ | 21,326 | | | $ | 934,226 | |
Chief Human Resources Officer | | | 2019 | | | $ | 231,607 | | | $ | – | | | $ | 626,206 | | | $ | 53,750 | | | $ | 18,602 | | | $ | 930,165 | |
|
| |
| (1) | All stock and option awards were granted under the Harbinger Group Inc. 2011 Omnibus Equity Award Plan, as amended (the “2011 Plan”). These columns reflect the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718 (disregarding any risk of forfeiture assumptions). For a discussion of the relevant valuation assumptions, See Note 18 to Consolidated Financial Statements included in the Original 10-K. |
(2) | The equity awards presented in this table were granted in November and December 2015 pursuant to the bonus plan for Fiscal 2015 (the “2015 Bonus Plan”). The equity awards made pursuant to the 2015 Bonus Plan were not included in the Summary Compensation Table or Grants of Plan-Based Awards Table in our report for Fiscal 2015 because such awards were not granted until after the end of our Fiscal 2015. These awards were disclosed, however, in the Compensation Discussion and Analysis in our report for Fiscal 2015. Pursuant to the 2015 Bonus Plan, the following grants were made in November 2015: (A) On November 24, 2015, Mr. Asali was granted (i) $121,386 in the form of 8,714 fully vested shares of our Common Stock, (ii) $121,400, in the form of 8,715 shares of restricted stock which vest on November 29, 2016, and (iii) $46,454, in the form of nonqualified stock options to purchase 9,163 shares of our Common Stock which vest as follows: 4,581 were vested on the date of grant and 4,582 on November 29, 2016. (B) On November 24, 2015, Mr. Maura was granted (i) $95,685, in the form of 6,869 fully vested shares of our Common Stock, (ii) $95,671, in the form of 6,868 shares of restricted stock which vest on November 29, 2016 and (iii) $36,613, in the form of nonqualified stock options to purchase 7,222 shares of our Common Stock which vest as follows: 3,611 were vested on the date of grant and 3,611 on November 29, 2016. |
(3) | For Fiscal 2016, reflects the cash portion of the incentive awards earned by our named executive officers. Amounts in excess of two times the target corporate bonus pool are deferred to subsequent years, resulting in the deferral from amounts listed in this column of $1,815,000 for Mr. Maura to be paid out in November 2018. In addition, Mr. Maura received compensation from Spectrum Brands for services performed in Fiscal 2016, as fully disclosed in their Proxy Statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, filed on December 21, 2016. |
(4) | For Fiscal 2016, (i) for Mr. Asali, amounts in this column represent the value of his FlexNet cash benefit of $50,000, utilized for transportation and financial services; (ii) for Mr. Maura, amounts in this column represent the value of his FlexNet cash benefit of $50,000, utilized for health and welfare programs, transportation and financial services; (iii) for Mr. Nicholson, amounts in this column represent the value of his FlexNet cash benefit of $25,000, utilized for health and welfare programs, finance and technology services and $13,250 in matching contributions pursuant to the Company’s 401(K)plan and (iv) for Mr. Williams, amounts in this column represent severance payments pursuant to the Williams Retention Agreement. |
(5) | See section titled “HRG Subsidiary and Affiliate Fees” above for a discussion of the compensation received by certain of our named executive officers from our subsidiaries during Fiscal 2016. Such amounts are not reflected in this table. |
(6) | Mr. Williams’ Fiscal 2016 base salary represents the amount he earned from September 30, 2014 through January 1, 2016, which was the date his employment with the Company terminated. |
Agreements with Named Executive Officers
Employment Agreements with Messrs. Asali, Maura and Williams
On February 11, 2014, the Company entered into amended and restated employment agreements with Messrs. Asali, Maura and Williams. Each amended and restated employment agreement provides for a one year term which automatically renews each October 1, subject to earlier termination. The amended and restated employment agreements provide for an annual base salary of $500,000 and entitle the executives to participate in the Company’s annual bonus plan comprised of a mix of cash and equity. Messrs. Asali, Williams and Maura previously received an initial equity grant of stock options and restricted stock, in connection with each executive’s entry into his original employment agreement.
Retention Agreement with Mr. Williams
The Company and Mr. Williams entered into a Retention and Release Agreement, dated August 6, 2015, as described more fully under the heading “Compensation and Benefits - Payments Upon Termination and Change of Control.”
Employment Agreement with Mr. Nicholson
On November 19, 2015, the Company entered into an employment agreement with Mr. Nicholson as its Senior Vice President and Chief Accounting Officer, and on December 26, 2015, Mr. Nicholson was promoted to the additional position of Acting Chief Financial Officer of the Company, effective as of January 4, 2016. Mr. Nicholson’s annual base salary was $275,000 and Mr. Nicholson is also eligible for an annual bonus in a target amount equal to $275,000. Mr. Nicholson is subject to certain non-competition and non-solicitation restrictions for six months following termination of employment, as well as perpetual confidentiality and non-disparagement provisions. As described more fully under the heading “Subsequent Events After Fiscal 2016 Year End”, in Fiscal 2017, Mr. Nicholson’s base salary was increased and he was also promoted to Chief Financial Officer.
Grants of Plan-Based Awards for Fiscal 2016
The following table provides information concerning awards granted in Fiscal 2016 to our named executive officers.
In reading the table below, it should be noted that SEC disclosure rules require that this table include for each fiscal year the aggregate fair value, as of the grant date, of equity awards granted only during the applicable fiscal year. Since under the Company’s bonus plan equity compensation for any fiscal year is not granted until the completion of such fiscal year, the value of such equity is not included in the Summary Compensation Table or the Grants of Plan-Based Awards Table for such year, but in accordance with SEC rules is, or will be, as applicable, included in next year’s compensation disclosure. For more details, please see footnote (2) to the Summary Compensation Table.
|
| | | | | | | | | | | | | | | | | | | | | |
| Name | | Grant Date | | Estimated Possible Payouts Under Non- Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of Stock or Units (2) | | All Other Option Awards: Number of Securities Underlying Options (2) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value ($) (3) |
| | | Threshold | | Target ($) (1) | | Maximum | | | | |
| Omar M. Asali | | | | | | 2,500,000 |
| | | | | | | | | | |
| | | 11/24/2015 | | | | | | | | | | 9,163 |
| | 13.93 |
| | 46,454 |
|
| | | 11/24/2015 | | | | | | | | 17,429 |
| | | | | | 242,786 |
|
| David M. Maura | | | | | | 2,000,000 |
| | | | | | | | | | |
| | | 11/24/2015 | | | | | | | | | | 7,222 |
| | 13.93 |
| | 36,613 |
|
| | | 11/24/2015 | | | | | | | | 13,737 |
| | | | | | 191,356 |
|
| George C. Nicholson | | | | | | 275,000 |
| | | | | | | | | | |
| | | 11/24/2015 | | | | | | | | | | — |
| | — |
| | — |
|
| | | 11/24/2015 | | | | | | | | — |
| | | | | | — |
|
| Thomas A. Williams | | | | | | — |
| | | | | | | | | | |
| | | 11/24/2015 | | | | | | | | | | — |
| | — |
| | — |
|
| | | 11/24/2015 | | | | | | | | — |
| | | | | | — |
|
|
| |
(1) | For Messrs. Asali and Maura, this reflects the target payouts pursuant to the 2016 Bonus Plan and for Mr. Nicholson this reflects the target payout pursuant to his employment agreement, in each case, with respect to services performed for the Company during Fiscal 2016. The maximum bonus payment to any individual under the 2016 Bonus Plan with respect to any year is subject to the $20 million Award Cap. |
(2) | All restricted stock and option awards made in Fiscal 2016 were granted pursuant to the 2015 Bonus Plan. |
(3) | This column reflects the aggregate grant date fair value of the option and stock awards computed in accordance with FASB ASC Topic 718 (disregarding any risk of forfeiture assumptions). For a discussion of the relevant valuation assumptions, see Note 18 to Consolidated Financial Statements included in the Original 10-K. |
Outstanding Equity Awards as of September 30, 2016
|
| | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Securities Underlying Unexercised Options Exercisable | | Number of Securities Underlying Unexercised Options Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | | Option Exercise Price ($) (1) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested | | | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) |
| Omar M. Asali | | 1,000,000 |
| | — |
| | | — |
| | 4.86 |
| | 2/14/2022 | | — |
| | | — |
|
| | | 544,900 |
| | — |
| | | — |
| | 8.52 |
| | 11/29/2022 | | — |
| | | — |
|
| | | 255,681 |
| | 153,410 |
| (3) | | — |
| | 11.76 |
| | 11/29/2023 | | 382,117 |
| (3) | | 5,999,237 |
|
| | | 86,290 |
| | 253,942 |
| (4) | | — |
| | 13.36 |
| | 11/29/2024 | | 578,153 |
| (4) | | 9,077,002 |
|
| | | 4,581 |
| | 4,582 |
| (5) | | — |
| | 13.93 |
| | 11/29/2025 | | 8,715 |
| (5) | | 136,826 |
|
| David M. Maura | | 435,920 |
| | — |
| | | — |
| | 8.52 |
| | 11/29/2022 | | — |
| | | — |
|
| | | 239,795 |
| | 157,978 |
| (6) | | — |
| | 11.76 |
| | 11/29/2023 | | 393,496 |
| (6) | | 6,177,887 |
|
| | | 69,032 |
| | 96,816 |
| (7) | | — |
| | 13.36 |
| | 11/29/2024 | | 220,424 |
| (7) | | 3,460,657 |
|
| | | 3,611 |
| | 3,611 |
| (5) | | — |
| | 13.93 |
| | 11/29/2025 | | 6,868 |
| (5) | | 107,828 |
|
| George C. Nicholson | | — |
| | — |
| | | — |
| | — |
| | | | — |
| | | — |
|
| Thomas A. Williams | | 100,821 |
| | — |
| | | — |
| | 8.52 |
| | 11/29/2022 | | — |
| | | — |
|
| | | 96,648 |
| | 55,738 |
| (8) | | — |
| | 11.76 |
| | 11/29/2023 | | 138,836 |
| (8) (10) | | 2,179,725 |
|
| | | 34,516 |
| | 87,828 |
| (9) | | — |
| | 13.36 |
| | 11/29/2024 | | 199,960 |
| (9) (10) | | 3,139,372 |
|
|
| |
(1) | The exercise price of all equity awards is equal to the fair market value (closing sale price of our Common Stock) on the date of grant. |
(2) | The amounts in this column reflect the fair market value of the unvested restricted stock based on the closing stock price of $15.70 on the last trading day in Fiscal 2016. |
(3) | Mr. Asali’s unvested option awards will vest as follows: 153,410 on November 29, 2016. Mr. Asali’s restricted stock will vest as follows: 382,117 on November 29, 2016. |
(4) | Mr. Asali’s unvested option awards will vest as follows: 126,971 on November 29, 2016 and 126,971 on November 29, 2017. Mr. Asali’s restricted stock will vest as follows: 289,077 on November 29, 2016 and 289,076 on November 29, 2017. Pursuant to the Asali Transition Agreement, the options and restricted stock scheduled to vest in November 29, 2017 will vest on the earlier of March 31, 2017 or a change of control, subject to continued employment or upon a Specified Triggering Event. |
(5) | Messrs. Asali’s and Maura’s unvested option awards and restricted stock vested November 29, 2016. |
(6) | Mr. Maura’s unvested option awards will vest as follows: 157,978 on November 29, 2016. Mr. Maura’s restricted stock will vest as follows: 393,496 on November 29, 2016. Pursuant to the Maura Separation and Release Agreement, the options vested when the release became effective and such vested options will become exercisable on the dates that the options were otherwise scheduled to vest. |
(7) | Mr. Maura’s unvested option awards will vest as follows: 48,408 on November 29, 2016 and 48,408 on November 29, 2017. Mr. Maura’s restricted stock will vest as follows: 110,212 on November 29, 2016 and 110,212 on November 29, 2017. Pursuant to the Maura Separation and Release Agreement, the options vested when the release became effective and such vested options will become exercisable on the dates that the options were otherwise scheduled to vest. |
(8) | Mr. Williams’ unvested option awards will vest as follows: 55,738 on November 29, 2016. Mr. Williams’ restricted stock will vest as follows: 138,836 on November 29, 2016. |
(9) | Mr. Williams’ unvested option awards will vest as follows: 43,914 on November 29, 2016 and 43,914 on November 29, 2017. Mr. Williams’ restricted stock will vest as follows: 99,980 on November 29, 2016 and 99,980 on November 29, 2017. |
(10) | Mr. Williams’ employment terminated on January 1, 2016. The numbers in the table reflect the gross number of shares that were unvested. However, pursuant to the terms of his release agreement in January 2016, 67,102 shares were withheld from the 138,836 shares and 96,945 shares were withheld from the 199,960 shares for tax purposes and the following shares were withheld for tax purposes: for the bonus plan for Fiscal 2013, 6,102 shares were withheld and for the bonus plan for Fiscal 2014, 96,645 shares were withheld. |
Option Exercises and Stock Vested in Fiscal 2016
|
| | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards |
| Name | | Number of Shares Acquired on Exercise | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting | | | Value Realized on Vesting ($) (7) |
| Omar M. Asali | | — |
| | — |
| | | 441,340 |
| (1) | | 6,041,945 |
|
| | | | | | | | 382,118 |
| (2) | | 5,231,195 |
|
| | | | | | | | 98,228 |
| (3) | | 1,344,741 |
|
| | | | | | | | 8,714 |
| (4) | | 121,386 |
|
| David M. Maura | | 177,500 |
| | 1,461,287 |
| (6) | | — |
| | | — |
|
| | | | | | | | 353,072 |
| (1) | | 4,833,556 |
|
| | | | | | | | 393,497 |
| (2) | | 5,386,974 |
|
| | | | | | | | 78,582 |
| (3) | | 1,075,788 |
|
| | | | | | | | 6,869 |
| (4) | | 95,685 |
|
| Thomas A. Williams | | 70,000 |
| | 705,439 |
| (5) | | — |
| | | — |
|
| | | | | | | | 48,178 |
| (1) | | 659,557 |
|
| | | | | | | | 138,836 |
| (2) | | 1,900,665 |
|
| | | | | | | | 39,291 |
| (3) | | 537,894 |
|
| | | | | | | | 67,102 |
| (8) | | 861,590 |
|
| | | | | | | | 96,645 |
| (9) | | 1,240,922 |
|
|
| |
(1) | Represents restricted stock awards granted pursuant to the bonus plan for Fiscal 2012, which vested on November 29, 2015. |
(2) | Represents restricted stock awards granted pursuant to the bonus plan for Fiscal 2013, which vested on November 29, 2015. |
(3) | Represents restricted stock awards granted pursuant to the bonus plan for Fiscal 2014, which vested on November 29, 2015. |
(4) | Represents stock awards granted pursuant to the 2015 bonus plan which were fully vested on the November 24, 2015 grant date. |
(5) | The value realized on exercise is based on a weighted average stock price derived from a stock price range of $14.88 to $14.93 during a series of exercises that occurred during Fiscal 2016. |
(6) | The value realized on exercise is based on a weighted average stock price derived from a stock price range of $13.00 to $13.27 during a series of exercises that occurred during Fiscal 2016. |
(7) | The value realized on vesting is based on the stock price of $13.93 on November 24, 2015 and $13.69 on November 30, 2015. |
(8) | Represents restricted stock awards granted pursuant to the bonus plan for Fiscal 2013, which vested on January 8, 2016. |
(9) | Represents restricted stock awards granted pursuant to the bonus plan for Fiscal 2014, which vested on January 8, 2016. |
Pension Benefits
For Fiscal 2016, the Company did not maintain any defined benefit pension plan for the benefit of our named executive officers.
Nonqualified Deferred Compensation
Our annual bonus program provides for an automatic deferral of payouts in excess of two times the target bonus pool, subject to clawback in later years if certain bonus thresholds are not met. These cash amounts, payable on a deferred basis pursuant to the 2012, 2013 and 2014 Bonus Plans, were previously included as “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table for such fiscal years.
|
| | | | | | | | |
| Name | | Registrant Contributions in Last Fiscal Year | | Aggregate Balance at Last Fiscal Year End |
| Omar M. Asali | | $ | — |
| | $ | 2,943,000 |
|
| David M. Maura | | — |
| | 1,122,000 |
|
| Thomas A. Williams | | — |
| | 1,018,000 |
|
Payments Upon Termination and Change of Control
Termination Payments Payable to Messrs. Asali and Maura
The following describes payment that Messrs. Asali and Maura would have been entitled to receive had their employment been terminated in Fiscal 2016 under certain circumstances; however, as noted above in the section titled “Subsequent Events after Fiscal 2016 Year End”, Messrs. Asali and Maura did not receive the payments described below and have entered into new arrangements with the Company that will govern their respective termination payments during Fiscal 2017 (such arrangements
do not provide for enhanced severance upon a Change in Control of the Company). If during the term of the amended and restated employment agreements, the Company terminates an executive’s employment without “Cause” (as defined in each amended and restated employment agreement) or if the executive terminates his employment for “Good Reason” (as defined below), subject to the executive executing a general release of claims in favor of the Company, the Company is required to pay or provide the executive with: (i) his base salary for twelve months in continuing installments; (ii) vesting of the initial equity grant on the dates it would otherwise have vested (and the restrictions on the restricted stock will lapse) had executive continued to be an active employee of the Company; (iii) vesting of 100% of the unpaid deferred cash portion, if any, of annual bonuses awarded for years prior to the year of termination, with payment on the same scheduled payment dates (provided that the deferral shall not be for more than four years) and vesting of 100% of the unvested equity portion, if any, of annual bonuses awarded for years prior to the year of termination, with such vesting to occur on the same dates that such equity would otherwise vest had the executive continued to be an active employee of the Company; (iv) eligibility to receive a pro-rata annual bonus for the year of termination, based on achievement of performance, provided that the cash portion of such bonus shall be paid and the equity portion of such bonus shall be granted in the same proportion of cash and equity that are granted to other Company executives, and 50% of such amounts shall be paid within 74 days after the end of the fiscal year and the remaining 50% shall be paid on the first anniversary of such date and (v) COBRA reimbursement for a period of up to twelve (12) months (the “Benefits Continuation”). In addition, the Company shall pay the executive any accrued but unpaid base salary and vacation time and any properly incurred but unreimbursed business expenses.
In addition, during the period beginning sixty days prior to a Change in Control (as defined in each amended and restated employment agreement) or, if earlier, upon the signing of a definitive agreement to enter into a Change in Control (which in each case actually results in a Change in Control) and ending upon the first anniversary of such Change in Control, if the Company terminates the executive’s employment without Cause or if the executive terminates his employment for Good Reason, then in lieu of the severance described above, the Company shall pay or provide the executive with: (i) the sum of two times (x) his base salary and (y) the greater of (A) target variable compensation (per the relevant year’s bonus plan) or (B) $2.5 million, payable in installments over 24 months; (ii) vesting of the initial equity grant as set forth above; (iii) vesting of 100% of any unvested equity for annual bonuses awarded prior to the year of termination; (iv) 100% vesting of the unpaid deferred cash portion, if any of annual bonuses awarded for years prior to the year of termination, with payment within 74 days after the Change in Control or cessation of employment (unless Section 409A of the Internal Revenue Code requires payment on the original payment dates); (v) eligibility for a pro rata annual bonus for the year of termination, based on achievement of performance determined in accordance with the employment agreement, provided that 50% of such amounts shall be paid in cash within 74 days after the end of the fiscal year and the remaining 50% shall be paid in cash on the first anniversary of such date; (vi) outplacement services; and (vii) COBRA reimbursement for up to 18 months.
Upon a termination of employment due to the executive’s death or “Disability” (as defined in the employment agreements), the Company shall pay or provide such executive with (i) payment of any non-deferred portion of the annual bonus for the prior year which was earned but unpaid, (ii) the Benefits Continuation, subject to receiving a signed waiver and general release of claims from the executive, and (iii) any accrued but unpaid base salary and vacation time and any properly incurred but unreimbursed business expenses.
“Good Reason” for each of Messrs. Asali and Maura means the occurrence, without an executive’s express written consent, of any of the following events: (A) a material diminution in executive’s authority, duties, responsibilities or title; (B) a diminution of base salary; (C) a change in the geographic location of the executive’s principal place of performance of his services to a location more than thirty (30) miles outside of New York City that is also more than thirty (30) miles from his primary residence at the time of such change, except for travel consistent with the terms of the employment agreement; (D) the Company gives notice that the term of the employment agreement is not to be extended so long as the executive continues to perform his duties for the Company through the end of the term and separates from the Company at the end of the term; (E) a material breach by the Company of the employment agreement; (F) the failure by the Company to provide for executive’s participation in an annual bonus arrangement (whether paid annually or over a period not to exceed four fiscal years); or (G) the Company’s material reduction in the target amount or maximum bonus opportunity that may be earned under the Company’s bonus arrangement if the performance criteria are satisfied (and for Mr. Asali only, modification of the Company’s bonus arrangement in a manner that materially reduces executive’s reasonable opportunity to achieve such bonus, relative to executive’s prior participation). In addition, for Mr. Asali only, Good Reason includes if Mr. Asali is not re-nominated to the Board (unless such nomination would violate any legal restriction or order or would cause the Board to be in breach of its fiduciary obligations). An executive must give the Company a written notice (specifying in detail the event or circumstances claimed to give rise to Good Reason) within ninety (90) days after the executive has knowledge that an event constituting Good Reason has occurred, or is deemed to have occurred and must give the Company thirty (30) days to cure. If not cured, the executive must actually terminate his or her employment within 120 days following the event constituting Good Reason; otherwise, that event will no longer constitute Good Reason (except with respect to (D) above).
Termination Payments Payable to Mr. Nicholson
The following describes the payments that Mr. Nicholson would have been entitled to receive had his employment been terminated under certain circumstances during Fiscal 2016.
If during the term of his employment agreement, the Company terminates Mr. Nicholson’s employment without “Cause” (as defined in his employment agreement) or if Mr. Nicholson resigns his employment for “Good Reason” (as defined below), then, subject to receiving a signed separation agreement and general release of claims from Mr. Nicholson, the Company shall pay or provide Mr. Nicholson with (i) severance equal to twelve months base salary, and (ii) payment of any annual bonus for the prior year which was earned but unpaid. In addition, the Company shall pay Mr. Nicholson any accrued but unpaid base salary and vacation time and any properly incurred but unreimbursed business expenses.
“Good Reason” for Mr. Nicholson means the occurrence, without an executive’s express written consent, of any of the following events: (A) a material diminution in executive’s authority, duties, responsibilities or title (provided that it shall not constitute Good Reason if Mr. Nicholson is required to report to the Chief Financial Officer or another designee of the CEO); (B) a diminution of base salary; (C) a change in the geographic location of the executive’s principal place of performance of his services to a location more than thirty (30) miles outside of New York City that is also more than thirty (30) miles from his primary residence at the time of such change, except for travel consistent with the terms of the employment agreement; or (D) a material breach by the Company of the employment agreement. Mr. Nicholson must give the Company a written notice (specifying in detail the event or circumstances claimed to give rise to Good Reason) within twenty-five (25) days after the executive has knowledge that an event constituting Good Reason has occurred, and must give the Company thirty (30) days to cure. If not cured, the executive must actually terminate his employment within 120 days following the event constituting Good Reason; otherwise, that event will no longer constitute Good Reason.
Williams Retention Agreement
Mr. Williams’ employment was terminated on January 1, 2016 and he received payments pursuant to a Retention and Release Agreement (“the Williams Retention Agreement”) entered into with the Company in August 2015. The Williams Retention Agreement provided that, subject to Mr. Williams’ providing a customary release of claims and his compliance with his post-termination restrictive covenants, the Company will pay and provide him the following: (i) $500,000 payable over a period of twelve (12) months following the termination date; (ii) vesting on March 5, 2016 of unvested options to purchase 35,000 shares of Company stock that were awarded to Mr. Williams in 2012; (iii) vesting of 100% of the unpaid deferred cash portion of Mr. Williams’ annual bonuses awarded for years prior to the termination date, in an amount equal to $3,126,000 with payment thereof to be on the dates such bonuses are paid to other senior executives of the Company; (iv) continued vesting of 100% of the unvested options to purchase shares of Company stock and the unvested shares of restricted stock of the Company, that were awarded to Mr. Williams in respect of the annual bonuses for years prior to the termination date, such that such options and restricted stock units shall vest on the dates they would otherwise vest had Mr. Williams remained an employee of the Company; and (v) COBRA reimbursement for a period up to twelve (12) months following the Designated Date, with an approximate value equal to $39,800. Pursuant to the Williams Retention Agreement, Mr. Williams also received a cash bonus for Fiscal 2015 equal to $1 million. Except for such bonus, Mr. Williams was not entitled to, and did not receive, any other bonus for Fiscal 2015 and Fiscal 2016. Mr. Williams received payment of his base salary and any unpaid vacation time and unreimbursed business expenses through the termination date. Mr. Williams remains subject to post-employment restrictive covenants in favor of the Company, including certain non-competition restrictions for six (6) months post-termination of employment, certain non-solicitation restrictions for eighteen (18) months post-termination of employment, and four year post-employment cooperation provision.
Summary of Termination Payments
The following table sets forth amounts of compensation that would have been paid to Messrs. Asali, Maura and Nicholson if their employment was terminated without Cause or for Good Reason. The amounts shown assume that such termination was effective as of September 30, 2016.
As discussed above, Mr. Williams is not included in the summary table below because he was no longer employed on September 30, 2016 and received the amounts described above under the heading “Williams Retention Agreement.” In addition, as noted above in the section titled “Subsequent Events after Fiscal 2016 Year End”, Messrs. Asali and Maura did not receive the payments described below and have entered into new arrangements with the Company that will govern their respective termination payments during Fiscal 2017.
Termination without Cause or for Good Reason
|
| | | | | | | | | | | | | | | | |
| Name | | Cash Severance (1) | | Prior Year Annual Bonus (2) | | Benefits Continuation (3) | | Total |
| Omar M. Asali | | $ | 500,000 |
| | $ | 19,362,834 |
| | $ | 39,727 |
| | $ | 19,902,561 |
|
| David M. Maura | | 500,000 |
| | 11,615,918 |
| | 39,727 |
| | 12,155,645 |
|
| George C. Nicholson | | 275,000 |
| | — |
| | — |
| | 275,000 |
|
|
| |
(1) | This column reflects payment of twelve months of base salary, payable in continuing installments. |
(2) | This column reflects vesting of 100% of the unpaid deferred cash portion under prior year bonus plans and vesting of 100% of the unvested equity portion granted pursuant to prior year bonus plans, based on the closing stock price of $15.70 on the last trading day in Fiscal 2016. In addition, Messrs. Asali and Maura would each be entitled to receive their actual bonus for Fiscal 2016 because they worked through the last day of that fiscal year. |
(3) | This column reflects COBRA premium reimbursements for 12 months, which are also payable if the executive’s employment is terminated due to death or Disability. |
The following table sets forth amounts of compensation that would have been paid to Messrs. Asali, Maura and Nicholson if their employment was terminated without Cause or for Good Reason during the period that begins sixty days prior to a Change in Control and ends upon the first anniversary of such Change in Control. The amounts shown assume that such termination was effective as of September 30, 2016. As noted above in the section titled “Subsequent Events after Fiscal 2016 Year End”, Messrs. Asali, Maura and Nicholson did not receive the payments described below and have entered into new arrangements with the Company that will govern their respective termination payments during Fiscal 2017 (such arrangements do not provide for enhanced severance upon a Change in Control).
Upon a Termination without Cause or for Good Reason within Change of Control Period
|
| | | | | | | | | | | | | | | | | | | | |
| Name | | Cash Severance (1) | | Prior Year Annual Bonus (2) | | Benefits Continuation (3) | | Outplacement Services (4) | | Total |
| Omar M. Asali | | $ | 6,000,000 |
| | $ | 19,362,834 |
| | $ | 59,590 |
| | $ | 15,000 |
| | $ | 25,437,424 |
|
| David M. Maura | | 6,000,000 |
| | 11,615,918 |
| | 59,590 |
| | 15,000 |
| | 17,690,508 |
|
| George C. Nicholson | | 275,000 |
| | — |
| | — |
| | — |
| | 275,000 |
|
|
| |
(1) | For Messrs. Asali and Maura, this column reflects the sum of two times (x) base salary and (y) the greater of (A) target bonus compensation or (B) $2.5 million, payable in installments over 24 months. |
(2) | This column reflects payment of 100% of the unpaid deferred cash portion under prior year bonus plans and vesting of 100% of the unvested equity portion granted pursuant to prior year bonus plans, based on the closing stock price of $15.70 on the last trading day in Fiscal 2016. In addition, Messrs. Asali and Maura would each be entitled to receive their actual bonus for Fiscal 2016 because they worked through the last day of that fiscal year. |
(3) | This column reflects COBRA premium reimbursement payments for up to 18 months for Messrs. Asali and Maura. In addition, COBRA premium reimbursements are payable for 12 months if the executive’s employment is terminated due to death or Disability. |
(4) | This column reflects estimated payments for outplacement services. |
Director Compensation
Directors who are not employees of the Company (“non-employee directors”) receive an annual retainer of $80,000 (paid on a quarterly basis). Non-employee directors also receive an annual equity award of $80,000, granted as restricted stock or restricted stock units, which vest on the last date of the Company’s fiscal year, subject to continued service on the Board on such date.
In addition, newly elected non-employee directors receive a commencement equity award of $80,000, granted as restricted stock or restricted stock units, to vest in full on the one-year anniversary of the commencement of each such director’s service on the Board. Newly elected directors are only entitled to receive the annual equity award in the first fiscal year commencing immediately following the date such newly elected director becomes a member of the Board.
For Fiscal 2016, compensation for service on the standing committees of the Board is paid in quarterly installments as follows:
|
| | | | | | | | |
| Committee | | Chair Annual Retainer | | Member Annual Retainer |
| Audit | | $ | 26,000 |
| | $ | 15,000 |
|
| Compensation | | 15,000 |
| | 6,000 |
|
| Nominating and Corporate Governance | | 10,000 |
| | 5,000 |
|
In addition, if a non-employee director attends in excess of 20 in-person committee meetings of our Board in one fiscal year, then such director receives $1,500 for each meeting in excess of 20 that such director attends.
We maintain a non-employee director share retention requirement, requiring each non-employee director to retain ownership of 100% of his or her covered shares, net of taxes and transaction costs, until the earlier of (i) the date of such director’s termination of employment or (ii) the date such person is no longer a director.
On November 24, 2015, equity awards of 5,743 restricted stock were granted to each of Messrs. Ianna, Luterman, Steinberg, and Whittaker for Fiscal 2016 services, which vested on September 30, 2016. In addition, on November 28, 2015, fully vested initial stock awards of 11,486 were granted to each of Messrs. Steinberg and Whittaker for Fiscal 2014 and 2015 services.
Director Compensation Table
The following table shows for Fiscal 2016 certain information with respect to the compensation of the directors of the Company, excluding Omar M. Asali and David Maura, whom did not receive any compensation for service as a director of HRG and whose compensation for their service as officers of HRG is disclosed above in the section entitled “Summary Compensation Table.”
|
| | | | | | | | | | | | |
| Name (1) | | Fees Earned or Paid in Cash | | Stock Awards (2) | | Total |
| Frank Ianna (3) | | $ | 112,250 |
| | $ | 80,000 |
| | $ | 192,250 |
|
| Gerald Luterman (3) | | 117,000 |
| | 80,000 |
| | 197,000 |
|
| Joseph S. Steinberg (3) (4) | | 91,000 |
| | 240,000 |
| | 331,000 |
|
| Eugene I. Davis (5) | | 105,416 |
| | — |
| | 105,416 |
|
| Andrew Whittaker (3) (4) | | 80,000 |
| | 240,000 |
| | 320,000 |
|
| Curtis Glovier | | 22,526 |
| | — |
| | 22,526 |
|
| Andrew A. McKnight (6) | | — |
| | — |
| | — |
|
|
| |
(1) | Messrs. Maura and Asali were employees of our Company and did not receive any compensation from the Company for their services as HRG directors. See section titled “Summary Compensation Table.” |
(2) | This column reflects the aggregate grant date fair value of the awards computed in accordance with ASC Topic 718. For a discussion of the relevant ASC 718 valuation assumptions, see Note 2, Significant Accounting Policies and Practices, of the Notes to Consolidated Financial Statements, included in our Annual Report on Form 10-K for Fiscal 2021. For Fiscal 2021, this column reflects grants under the LTIP. If the maximum performance under the LTIP was achieved then the value of the awards in Fiscal 2021 would have been as follows: Mr. Maura ($6,344,972); Mr. Smeltser ($1,174,990); Mr. Lewis ($2,584,991); Mr. Zargar ($1,880,023); and Ms. Long ($411,237) in each case based on the stock price on the date of grant. At the lowest level of performance, the performance-based restricted stock unit awards are forfeited. The amounts shown in this column do not reflect the actual payout. |
| (2) | For Fiscal 2021, this column represents cash amounts earned under the Company’s 2021 MIP. For additional detail on the 2021 MIP and the determination of the awards thereunder, please refer to the discussion under the heading “Compensation Discussion and Analysis-Fiscal 2021 Compensation ComponentPay-Outs-Management Incentive Plan” and the table entitled “Grants of Plan-Based Awards Table for Fiscal 2021” and its accompanying footnotes. The incentive awards payable under the 2019 MIP to our NEOs were settled in shares of common stock in lieu of cash and so are reported under Stock Awards. For Ms. Long, this amount also includes a cash bonus payment of $170,000 made in Fiscal 2021 pursuant to an election Ms. Long made prior to becoming an executive officer to receive a portion of an earlier incentive award opportunity in the form of a future fixed cash payment. Ms. Long is not entitled to any remaining payments in respect of such award. |
| (3) | Please see the following table for the details of the amounts that comprise the All Other Compensation column. |
All Other Compensation Table for Fiscal 2021
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | |
| | |
| | |
| | |
| | | | | | | | | | |
| | $ | — | | | $ | 9,659 | | | $ | — | | | $ | 9,750 | | | $ | 75,606 | | | $ | 270,030 | | | $ | — | | | $ | 365,045 | |
| | $ | 20,000 | | | $ | 4,564 | | | $ | 23,066 | | | $ | 4,712 | | | $ | 75,000 | | | $ | — | | | $ | 75,842 | | | $ | 203,184 | |
| | $ | 20,000 | | | $ | 11,158 | | | $ | 19,746 | | | $ | 11,837 | | | $ | 82,500 | | | $ | 86,181 | | | $ | — | | | $ | 231,422 | |
| | $ | 20,000 | | | $ | 3,057 | | | $ | 21,479 | | | $ | 9,750 | | | $ | 60,000 | | | $ | 114,905 | | | $ | — | | | $ | 229,191 | |
| | $ | — | | | $ | 1,826 | | | $ | 12,000 | | | $ | 6,300 | | | $ | — | | | $ | 2,873 | | | $ | — | | | $ | 22,998 | |
| (1) | Mr. Maura voluntarily eliminated his financial planning and car allowance payments beginning in Fiscal 2020. |
| (2) | The Company provides an allowance for expenses related to financial planning and tax preparation services, up to $20,000 annually, to Messrs. Smeltser, Lewis and Zargar. For Fiscal 2021, these allowances were paid out to Messrs. Smeltser, Lewis and Zargar in April 2021. |
| (3) | The amount represents the life insurance premium paid for Fiscal 2021. The Company provides life insurance coverage equal to three times (two times, for Ms. Long) base salary for each executive officer. |
| (4) | The Company sponsors a leased car or car allowance program. Under the leased car program, costs associated with using a vehicle are provided, which also include maintenance, insurance and license and registration. Under the car allowance program, the executive receives a fixed monthly allowance. As noted above, beginning with Fiscal 2020, Mr. Maura has given up his car allowance. |
| (5) | Represents amounts contributed under the Company-sponsored 401(k) retirement plan. |
| (6) | This amount reflects the premium paid by the Company equal to 15% of base salary toward individual supplemental life insurance policies. |
| (7) | This amount reflects dividend equivalents paid in respect of RSUs held by NEOs which vested during Fiscal 2021 and were not factored into the grant date fair value of the RSUs. |
| (8) | This amount reflects the relocation expenses paid by the Company to Mr. Smeltser in Fiscal 2021. |
Grants of Plan-Based Awards Table for Fiscal 2021
The following table and footnotes provide information with respect to equity grants made to our NEOs during Fiscal 2021 as well as the range of future payouts undernon-equity
incentive plans for our NEOs indicated. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | 11/10/2020 (1) | | $ | 0 | | | $ | 1,125,000 | | | $ | 2,812,500 | | | | | | | | | | | | | | | | | | | | | |
| | | 12/16/2020 (2) | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | — | | | | 58,064 | | | | 72,580 | | | | 24,885 | | | $ | 5,399,980 | |
| | 11/10/2020 (1) | | $ | 0 | | | $ | 400,000 | | | $ | 800,000 | | | | | | | | | | | | | | | | | | | | | |
| | | 12/16/2020 (2) | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | — | | | | 10,753 | | | | 13,441 | | | | 4,608 | | | $ | 1,000,001 | |
| | 11/10/2020 (1) | | $ | 0 | | | $ | 495,000 | | | $ | 990,000 | | | | | | | | | | | | | | | | | | | | | |
| | | 12/16/2020 (2) | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | — | | | | 23,656 | | | | 29,570 | | | | 10,138 | | | $ | 2,199,989 | |
| | 11/10/2020 (1) | | $ | 0 | | | $ | 240,000 | | | $ | 480,000 | | | | | | | | | | | | | | | | | | | | | |
| | | 12/16/2020 (2) | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | — | | | | 17,205 | | | | 21,506 | | | | 7,373 | | | $ | 1,600,028 | |
| | 11/10/2020 (1) | | $ | 0 | | | $ | 180,000 | | | $ | 360,000 | | | | | | | | | | | | | | | | | | | | | |
| | | 12/16/2020 (2) | | $ | 0 | | | $ | 0 | | | $ | 0 | | | | — | | | | 3,763 | | | | 4,704 | | | | 1,613 | | | $ | 349,978 | |
| (1) | Represents the threshold, target and maximum payouts under the Fiscal 2021 MIP. The actual amounts earned under the plan for Fiscal 2021 are disclosed in the Summary Compensation Table above as part of the column entitled “Non-Equity Incentive Plan AwardsCompensation Discussion and Analysis-Fiscal 2021 Compensation ComponentPay-Outs-Management Incentive Plan |
| (2) | Represents the number of RSUs and PSUs awarded under the Fiscal 2021 LTIP grants and shows (a) the threshold, target and maximum payouts, denominated in the number of shares of stock, in respect of PSUs and (b) the number of shares of stock underlying the RSUs. See “Compensation Discussion and Analysis-Fiscal 2021 Compensation ComponentsPay-Outs-LTIP |
| (3) | Except as otherwise noted, reflects the value at the grant date value based upon the probable outcome of the relevant performance conditions. This amount is consistent with the estimate of aggregate compensation costs to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, (disregardingexcluding the effect of any riskestimated forfeitures. |
Outstanding Equity Awards at the End of Fiscal 2021
The following table and footnotes set forth information regarding outstanding options and restricted stock unit awards as of September 30, 2021 for our NEOs. The market value of shares that have not vested was determined by multiplying $95.67, the closing market price of the Company’s stock on September 30, 2021, the last trading day of Fiscal 2021, by the number of shares.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | | 64,142 | | | $ | 72.92 | | | | 11/29/2023 | | | | – | | | $ | – | | | | – | | | $ | – | |
| | | | 26,743 | | | $ | 82.85 | | | | 11/25/2024 | | | | – | | | $ | – | | | | – | | | $ | – | |
| | | | 1,164 | | | $ | 86.38 | | | | 11/24/2025 | | | | – | | | $ | – | | | | – | | | $ | – | |
| | | | 51,309 | | | $ | 95.43 | | | | 11/28/2026 | | | | – | | | $ | – | | | | – | | | $ | – | |
| | | | | | | | | | | | | | | | 35,817 | (4) | | $ | 3,426,612 | | | | 104,466 | (5) | | $ | 9,994,262 | |
| | | | | | | | | | | | | | | | 26,012 | (6) | | $ | 2,488,568 | | | | 60,693 | (7) | | $ | 5,806,499 | |
| | | | | | | | | | | | | | | | 24,885 | (8) | | $ | 2,380,748 | | | | 58,064 | (9) | | $ | 5,554,983 | |
| | | – | | | | – | | | | – | | | | 4,817 | | | $ | 460,842 | | | | 11,240 | (7) | | $ | 1,075,331 | |
| | | | | | | | | | | | | | | | 4,608 | (8) | | $ | 440,847 | | | | 10,753 | (9) | | $ | 1,028,740 | |
| | | – | | | | – | | | | – | | | | 9,949 | (4) | | $ | 951,821 | | | | 29,019 | (5) | | $ | 2,776,248 | |
| | | | – | | | | – | | | | – | | | | 10,597 | (6) | | $ | 1,013,815 | | | | 24,727 | (7) | | $ | 2,365,632 | |
| | | | – | | | | – | | | | – | | | | 10,138 | (8) | | $ | 969,902 | | | | 23,656 | (9) | | $ | 2,263,170 | |
| | | 3,958 | | | $ | 72.92 | | | | 11/29/2023 | | | | – | | | | – | | | | – | | | | – | |
| | | | 5,009 | | | $ | 82.86 | | | | 11/25/2024 | | | | – | | | | – | | | | – | | | | – | |
| | | | – | | | | – | | | | – | | | | 10,613 | (4) | | $ | 1,015,346 | | | | 30,953 | (5) | | $ | 2,961,274 | |
| | | | – | | | | – | | | | – | | | | 7,707 | (6) | | $ | 737,329 | | | | 17,983 | (7) | | $ | 1,720,434 | |
| | | | – | | | | – | | | | – | | | | 7,373 | (8) | | $ | 705,375 | | | | 17,205 | (9) | | $ | 1,646,002 | |
| | | – | | | | – | | | | – | | | | 1,658 | (4) | | $ | 158,621 | | | | 4,836 | (5) | | $ | 462,660 | |
| | | | – | | | | – | | | | – | | | | 1,686 | (6) | | $ | 161,300 | | | | 3,934 | (7) | | $ | 376,366 | |
| | | | – | | | | – | | | | – | | | | 1,613 | (8) | | $ | 154,316 | | | | 3,763 | (9) | | $ | 360,006 | |
| (1) | This column shows the number of forfeiture assumptions).outstanding RSUs subject to time-based vesting. |
(3)(2) | On November 24, 2015, equity awardsThe market value is based on the per share closing price of 5,743 restrictedour common stock were granted to each of Messrs. Davis, Ianna, Luterman, Steinberg, and Whittaker, which vested on September 30, 2016.2021 ($95.67). |
| (3) | This column shows the number of Fiscal 2019, 2020 and 2021 LTIP PSUs subject to performance-based vesting. For the FY19 PSU grants, we have shown the actual shares that become vested based on performance through fiscal 2021year-end. For the FY20 and FY21 PSU grants, because the performance metrics have not been satisfied as of the date of this report, we have shown the number of PSUs that would be payable upon the target level of performance. |
| (4) | On November 28, 2015, fullyThese Fiscal 2019 LTIP RSUs cliff vested initial stock awards of 11,486 were granted to each of Messrs. Steinberg and Whittaker for Fiscal 2014 and 2015 services.on December 3, 2021. |
| (5) | These Fiscal 2019 LTIP PSUs cliff vested on December 3, 2021. |
| (6) | These Fiscal 2020 LTIP RSUs cliff vest on December 2, 2022, subject to continued employment. |
| (7) | These Fiscal 2020 LTIP PSUs cliff vest on December 2, 2022, subject to continued employment and achievement of the applicable performance metrics. |
| (8) | These Fiscal 2021 LTIP RSUs cliff vest on December 4, 2023, subject to continued employment. |
| (9) | These Fiscal 2021 LTIP PSUs cliff vest on December 4, 2023, subject to continued employment and achievement of the applicable performance metrics. |
Option Exercises and Stock Vested During Fiscal 2021
The following table and footnotes provide information regarding option exercises and stock awards vesting during Fiscal 2021 for our NEOs.
| | | | | | | | | | | | | | | | |
| | | | | | | |
| | Number of Shares
Acquired on
Vesting | | | | | | Number of Shares
Acquired on
Exercise | | | Value Realized on
Exercise | |
| | | 80,366 | | | $ | 5,231,827 | (1) | | | 60,294 | | | $ | 2,381,613 | (2) |
| | | – | | | $ | – | | | | – | | | | – | |
| | | 25,649 | | | $ | 1,669,750 | (3) | | | – | | | | – | |
| | | 34,198 | | | $ | 2,226,290 | (4) | | | – | | | | – | |
| | | 855 | | | $ | 55,661 | (5) | | | – | | | | – | |
| (1) | The amount for Mr. Davis resignedMaura in this column represents the value realized upon the vesting of 80,366 RSUs on November 21, 2020. The value was computed by multiplying the number of shares vested by the closing price per share of the Company’s common stock on such vesting date, which was $65.10 on November 21, 2020. |
| (2) | The amount for Mr. Maura in this column represents the value realized upon exercising 60,294 options on September 10, 2021. The value was computed by multiplying the number of shares exercised by the closing price per share of the Company’s common stock on such exercise date of $92.33 minus the per share exercise price of $52.83. |
| (3) | The amount for Mr. Lewis in this column represents the value realized upon the vesting of 25,649 RSUs on November 21, 2020. The value was computed by multiplying the number of shares vested by the closing price per share of the Company’s common stock on such vesting date, which was $65.10 on November 21, 2020. |
| (4) | The amount for Mr. Zargar in this column represents the value realized upon the vesting of 34,198 RSUs on November 21, 2020. The value was computed by multiplying the number of shares vested by the closing price per share of the Company’s common stock on such vesting date, which was $65.10 on November 21, 2020. |
| (5) | The amount for Ms. Long in this column represents the value realized upon the vesting of 855 RSUs on November 21, 2020. The value was computed by multiplying the number of shares vested by the closing price per share of the Company’s common stock on such vesting date, which was $65.10 on November 21, 2020. |
None of our NEOs participated in any pension plans during, or as of the end of, Fiscal 2021.
Non-Qualified
Deferred CompensationNone of our NEOs participated in any Companynon-qualified
deferred compensation programs during, or as of the end of, Fiscal 2021. Termination and Change in Control Provisions
Awards under the Company Equity Plan
For purposes of these incentive plans, “change in control” generally means the occurrence of any of the events listed below and “Applicable Company” means the Company or SPB Legacy with respect to the former equity plan of SPB Legacy which was assumed by the Company:
| (i) | the acquisition, by any individual, entity or group of beneficial ownership of more than 50% of the combined voting power of the Applicable Company’s then outstanding securities; |
| (ii) | individuals who constituted our Board at the effective time of the plan and directors who are nominated and elected as their successors from time to time cease for any reason to constitute at least a majority of our Board; |
| (iii) | consummation of a merger or consolidation of the Applicable Company or any direct or indirect subsidiary of the Applicable Company with any other entity, other than (A) a merger or consolidation which results in the voting securities of the Applicable Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) more than 50% of the combined voting power of the voting securities of the Applicable Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, (B) a merger or consolidation effected to implement a recapitalization of the Applicable Company (or similar transaction) in which no individual, entity or group is or becomes the beneficial owner, directly or indirectly, of voting securities of the Applicable Company (not including in the securities beneficially owned by such individual, entity or group any securities acquired directly from the Board effective August 31, 2016 and he forfeitedApplicable Company or any of its direct or indirect subsidiaries) representing 50% or more of the 5,743 sharescombined voting power of restricted stock granted on November 24, 2015. |
(6) | Mr. McKnight joined the Board on July 21, 2016. Mr. McKnight is entitled to, but has not yet received compensation for his servicesApplicable Company’s then outstanding voting securities or (C) a merger or consolidation affecting the Applicable Company as a directorresult of HRG.which a Designated Holder (as defined below) owns after such transaction more than 50% of the combined voting power of the voting securities of the Applicable Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or |
| (iv) | approval by the shareholders of the Applicable Company of either a complete liquidation or dissolution of the Applicable Company or the sale or other disposition of all or substantially all of the assets of the Applicable Company, other than a sale or disposition by the Applicable Company of all or substantially all of the assets of the Applicable Company to an entity, more than 50% of the combined voting power of the voting securities of which are owned by shareholders of the Applicable Company in substantially the same proportions as their ownership of the Applicable Company immediately prior to such sale; provided that, in each case, it shall not be a change in control if, immediately following the occurrence of the event described above (i) the record holders of the common stock of the Applicable Company immediately prior to the event continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following the event or (ii) the Harbinger Master Fund, the Harbinger Special Situations Fund, HRG and their respective affiliates and subsidiaries (the “Designated Holders”) beneficially own, directly or indirectly, more than 50% of the combined voting power of the Applicable Company or any successor. |
Executive-Specific Provisions Regarding Employment, Termination and Change in Control
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONCurrently,Our Compensation Committee periodically evaluates the appropriateness of entering into employment agreements, severance agreements or other written agreements with the Company’s NEOs to govern compensation and other aspects of the employment relationship. During Fiscal 2021, the Company and/or its wholly owned subsidiary, SBI, had written employment agreements with its NEOs as follows: (i) an Employment Agreement, dated January 20, 2016, as amended and restated on dated April 25, 2018, with Mr. Maura (the “Maura Employment Agreement”); (ii) an employment agreement, dated September 9, 2019, with Mr. Smeltser (the “Smeltser Employment Agreement”); (iii) an employment agreement dated September 9, 2019, with Mr. Lewis (the “Lewis Employment Agreement”); (iv) an employment Agreement, dated October 1, 2018, with Mr. Zargar (the “Zargar Employment Agreement”); and (v) a letter agreement, dated September 9, 2019, with Ms. Long (the “Long Letter Agreement”), which was supplemented by a severance agreement with Ms. Long dated September 9, 2019 (the “Long Severance Agreement”).
Pursuant to the Maura Employment Agreement, the initial term was until April 24, 2021, subject to earlier termination, with automaticone-year
renewals thereafter. The Maura Employment Agreement provides Mr. Maura with an annual base salary as Executive Chairman of $700,000 and an annual base salary of $200,000 for the duration of his services as CEO and he will be eligible to receive a performance-based MIP bonus for each fiscal year, based on a target of 125% of his total base salary, as may be applicable at the time (the “Target Amount”), paid during the applicable fiscal year during the term of the Maura Employment Agreement, provided the Company achieves certain annual performance goals as established by our Board and/or our Compensation Committee. If such performance goals are met, the MIP bonus will be payable in cash. If Mr. Maura exceeds the performance targets, the bonus will be increased in accordance with the formula approved by the Compensation Committee no later than the close of the first quarter of the year following the applicable fiscal year; provided that the bonus will not exceed 250% of the Target Amount.
Under the terms of the Maura Employment Agreement, Mr. Maura was entitled to receive a performance-based EIP grant with a target value of $3.2 million for his service as Executive Chairman and CEO and a performance-based S3B grant with a target value of $3 million, each in accordance with those programs grant cycles. In Fiscal 2019, our Compensation Committee is composedeliminated the EIP and S3B bonus programs and replaced them with our performance based LTIP bonus program. Based on the review of Messrs. Frank Ianna (Chairman), Curtis A. Glovier, Gerald Luterman, Andrew A. McKnight and Joseph S. Steinberg. Nonepeer groups, Mr. Maura received an LTIP grant with target value of $5.4 million for Fiscal 2021. In addition, at the discretion of the members of our Compensation Committee and/or the Board, Mr. Maura is also eligible to receive future grants and/or participate in future multi-year incentive programs.
The Maura Employment Agreement also provides Mr. Maura with, among other things: (i) four weeks of paid vacation for each full year; (ii) eligibility for Mr. Maura to participate in the Company’s executive auto lease program which Mr. Maura has ever been onewaived beginning in Fiscal 2020; (iii) a stipend for income tax filings and returns preparation and advice and estate planning advice which Mr. Maura has waived; and (iv) eligibility for Mr. Maura to participate in any of our officers or employees. In addition, during Fiscal 2016, none of ourthe Company’s insurance plans and other benefits, if any, as the benefits are made available to other executive officers served as a member of the boardCompany.
Under the Maura Employment Agreement, Mr. Maura is entitled to receive severance benefits if his employment is terminated under certain circumstances. In general, termination as Executive Chairman and as CEO is determined separately, so that termination from either position will generally provide for payments in respect only of directorsthat position and a termination from both positions will provide for payments in respect of both positions.
In the event that Mr. Maura is terminated with “cause” or terminates his employment voluntarily, other than for “good reason,” from his role as Executive Chairman or as CEO or all his roles, Mr. Maura’s compensation (with respect to such roles) and other benefits (in the case where he is terminated from all his roles) provided under his employment agreement cease at the time of such termination and Mr. Maura is entitled to no further compensation committeeunder his employment agreement with respect to such role. Notwithstanding this, the Company would pay to Mr. Maura accrued compensation and benefits and continuation of any other entity that has one or more executive officers serving on our Board or our Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The information contained in this report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC or subject to the liabilities of Section 18 of the Exchange Act, exceptCompany medical benefits to the extent required by law.
If Mr. Maura’s role as CEO is terminated (without terminating his role as Executive Chairman), without “cause,” by the Company, by Mr. Maura for “good reason,” due to Mr. Maura’s death or disability or upon a Company-initiatednon-renewal
or upon a change in control, Mr. Maura will be entitled to receive the following severance benefits: (i) the vesting of $250,000 of his outstanding time-based equity awards, based on grant-date value, as determined by the Compensation Committee; (ii) a cash payment of $500,000 ratably monthly in arrears over the12-month
period following such termination; and (iii) aportion, in cash, of the annual MIP bonus related to the base salary that
we specifically incorporate itMr. Maura would have earned for the fiscal year in which termination occurs. Notwithstanding the foregoing, if Mr. Maura’s employment is terminated in a CIC Termination (as defined below) during the initial term of the Maura Employment Agreement, then instead of the payment in clause (ii) above, he will receive a cash payment equal to the greater of (x) a cash amount equal to $500,000 or (y) a cash amount equal to his then-current base salary times the number of months remaining in the initial term, with aamount being calculated for any partial month in that time period. In addition to the payments above, if Mr. Maura’s employment (as Executive Chairman) is terminated by
reference intothe Company without “cause,” by Mr. Maura for “good reason,” upon Mr. Maura’s death or disability or upon a
document filedCompany-initiatednon-renewal
of his employment agreement, the Company shall pay or provide for Mr. Maura: (i) (a) a cash payment equal to 1.5 times the base salary in effect immediately prior to his termination, plus (b) a cash payment equal to 1.0 times his target annual MIP bonus of 125% of his then-current base salary, each payable ratably on a monthly basis over the18-month
period immediately following his termination; (ii) theportion, in cash, of the annual MIP bonus (if any) he would have earned for the fiscal year in which such termination occurs if his employment had not ceased, to be paid at the same time such bonus would have been paid to Mr. Maura for such fiscal year if his employment had not terminated; (iii) for the18-month
period immediately following such termination, provide Mr. Maura and his dependents with medical insurance coverage and other employee benefits on a basis substantially similar to those provided to Mr. Maura and his dependents by the Company immediately prior to the date of termination at no greater cost to Mr. Maura or the Company than the cost to Mr. Maura and the Company immediately prior to such date; and (iv) payment of accrued vacation time pursuant to Company policy. In addition, all unvested outstanding time-based equity awards will promptly vest as provided in the applicable equity award agreements. Notwithstanding the foregoing, if Mr. Maura’s employment is terminated in a CIC Termination during the initial term of the Maura Employment Agreement, then instead of the payment in clause (i)(a) above, he will receive a cash payment equal to the greater of (x) a cash amount equal to 1.5 times his then-current base salary or (y) a cash amount equal to his then-current base salary times the number of months remaining in the initial term, with aamount being calculated for any partial month in that time period.
If Mr. Maura’s employment is terminated by the Company without “cause” (and not due to death or disability) or by Mr. Maura for “good reason” during the period that begins 60 days prior to the occurrence of a change in control (or, in limited cases, earlier) and ends upon the first anniversary of the change in control (a “CIC Termination”), then Mr. Maura will receive all severance benefits available to him as if he terminated his employment for “good reason” and all of his outstanding and unvested performance-based equity awards will vest in full (at the target level).
The payment of the severance payments and vesting of equity awards described above with respect to a termination of Mr. Maura’s employment are conditioned upon Mr. Maura’s execution of a release of claims in favor of the Company and its controlled affiliates and Mr. Maura’s compliance with thenon-competition,
non-solicitation,
non-disparagement
and confidentiality restrictions set forth in his employment agreement. Thenon-competition
andnon-solicitation
provisions extend for 18 months following Mr. Maura’s termination and confidentiality provisions extend for seven years following Mr. Maura’s termination. Under the Maura Employment Agreement, (a) “good reason” is defined as the occurrence of any of the following events without Mr. Maura’s consent: (i) any reduction in Mr. Maura’s annual base salary or target MIP bonus opportunity then in effect; (ii) the required relocation of Mr. Maura’s office at which he is principally employed as of April 25, 2018 to a location more than 50 miles from such office or the requirement by the Company that Mr. Maura be based at a location other than such office on an extended basis, except for required business travel; (iii) a substantial diminution or other substantive adverse change in the nature or scope of Mr. Maura’s responsibilities, authorities, powers, functions or duties; (iv) a breach by the Company of any of its other material obligations under the Securities ActMaura Employment Agreement; or (v) the failure of 1933the Company to obtain the agreement of any successor to the Company to assume and agree to perform the Maura Employment Agreement; and (b) “cause” is defined, in general, as the occurrence of any of the following events: (i) the commission by Mr. Maura of any deliberate and premeditated act taken by Mr. Maura in bad faith against the interests of the Company that causes or is reasonably anticipated to cause material harm to the Company; (ii) Mr. Maura has been convicted of or pleads nolo contendere with respect to, any felony or of any lesser crime or offense having as its predicate element fraud, dishonesty or misappropriation of the property of the Company that causes or is reasonably anticipated to cause material harm to the Company; (iii) the habitual drug addiction or intoxication of Mr. Maura which negatively impacts his job performance or Mr. Maura’s failure of a company-required drug test; (iv) the willful failure or refusal of Mr. Maura to perform his duties as set forth in the employment agreement or the Exchange Act.willful failure or refusal to follow the direction of our Board, which is not cured after 30 calendar days’ notice; or (v) Mr. Maura materially breaches any of the terms of the Maura Employment Agreement or any other agreement between himself and the Company and the breach is not cured within 30 calendar days after written notice from the Company.
Agreement with Mr. Smeltser
On September 9, 2019, the Company entered into an employment agreement with Jeremy W. Smeltser. Pursuant to the Smeltser Employment Agreement, the initial term was until September 30, 2020 and thereafter is subject to automaticone-year
renewals, subject to earlier termination. Pursuant to the Smeltser Employment Agreement, Mr. Smeltser will receive an annual base salary of $500,000, subject to periodic review and increase by the Compensation Committee, in its discretion. Beginning in Fiscal 2022, Mr. Smeltser’s annual base salary was increased by 10% to $550,000. In addition, Mr. Smeltser will receive a performance-based cash bonus under the MIP for each fiscal year (commencing with Fiscal 2020) during the term of the agreement. The MIP bonus will be based on a target of 80% (and a maximum of 160%) of Mr. Smeltser’s base salary paid during the applicable fiscal year, provided that the Company achieves certain annual performance goals as established by the Board and/or Compensation Committee. If such performance goals are met, the MIP bonus will be payable in cash, provided that Mr. Smeltser remains employed with the corporation on the date the bonus is paid. The Smeltser Employment Agreement provides that on or prior to December 31, 2019, Mr. Smeltser will receive an equity or equity based award with a grant date value of $1,000,000 and that for each subsequent fiscal year ending during the term (commencing with Fiscal 2021), he shall be eligible to receive an equity or equity based award with a target value of 200% of his base salary. Beginning in Fiscal 2022, Mr. Smeltser’s annual equity award grant date target value was increased by 18% to $1,180,000.
The Smeltser Employment Agreement also provides Mr. Smeltser with certain other compensation and benefits, including: (i) relocation reimbursement of up to $75,000 as well as the use of a Company-funded apartment for up to 12 months; (ii) four weeks of paid vacation for each full year; (iii) eligibility to participate in any of the Company’s insurance plans and other benefits, if any, as are made available to other executive officers of the Company; and (iv) eligibility for Mr. Smeltser to participate in the Company’s executive auto lease program during the term of the employment agreement.
The Smeltser Employment Agreement contains the following provisions applicable upon the termination of Mr. Smeltser’s employment with the Company and/or in the event of a change in control of the Company.
In the event that Mr. Smeltser is terminated with “cause” or terminates his employment voluntarily, other than for “good reason,” Mr. Smeltser’s salary and other benefits provided under his employment agreement cease at the time of such termination and Mr. Smeltser is entitled to no further compensation under his employment agreement. Notwithstanding this, Mr. Smeltser would be entitled to continue to participate in the Company’s medical benefit plans to the extent required by law. Further, upon any such termination of employment, the Company would pay to Mr. Smeltser accrued pay and benefits.
If the employment of Mr. Smeltser with the Company is terminated by the Company without “cause,” by Mr. Smeltser for “good reason,” or is terminated due to Mr. Smeltser’s death or disability, Mr. Smeltser is entitled to receive certain post-termination benefits, detailed below, contingent upon execution of a separation agreement with a release of claims agreeable to the Company and Mr. Smeltser’s compliance with thenon-competition,
non-solicitation,
non-disparagement
and confidentiality restrictions set forth in his employment agreement. In such event the Company will: (i) pay Mr. Smeltser (a) 1.5 times his base salary in effect immediately prior to his termination, plus (b) 1.0 times his target annual bonus award for the fiscal year in which such termination occurs, ratably over the18-month
period immediately following his termination; (ii) pay Mr. Smeltser theportion of the annual bonus (if any) he would have earned pursuant to any annual bonus or incentive plan maintained by the Company with respect to the fiscal year in which such termination occurs if his employment had not ceased, to be paid at the same time such bonus would have been paid to Mr. Smeltser for such fiscal year if his employment had not terminated; (iii) for the18-month
period immediately following such termination, arrange to provide Mr. Smeltser and his dependents with medical and dental benefits on a basis substantially similar to those provided to Mr. Smeltser and his dependents by the Company immediately prior to the date of termination, subject to his electing COBRA coverage; and (iv) pay Mr. Smeltser his accrued vacation time pursuant to Company policy. In addition, all unvested outstanding time-based equity awards will vest on abasis and all performance-based awards will be forfeited. Thenon-competition
andnon-solicitation
provisions extend for 18 months following Mr. Smeltser’s termination and confidentiality provisions extend for up to seven years following Mr. Smeltser’s termination. Mr. Smeltser is also subject to a cooperation provision that extends for six years following Mr. Smeltser’s termination. The definitions of “good reason” and “cause” under the Smeltser Employment Agreement are similar to the definitions of such terms in the Maura Employment Agreement.
Agreements with Mr. Lewis
On September 9, 2019, Mr. Lewis was promoted to the office of Executive Vice President and entered into the Lewis Employment Agreement, which superseded a prior severance agreement. Pursuant to the Lewis Employment Agreement, the initial term was until September 30, 2020 and thereafter is subject to automaticone-year
renewals, subject to earlier termination. Pursuant to the Lewis Employment Agreement, Mr. Lewis will receive an annual base salary of $550,000, subject to periodic review and increase by the Compensation Committee, in its discretion. In addition, Mr. Lewis will receive a performance-based cash bonus under the MIP for each fiscal year (commencing with Fiscal 2020) during the term of the agreement. The MIP bonus will be based on a target of 90% (and a maximum of 180%) of Mr. Lewis’s base salary paid during the applicable fiscal year, provided that the Company achieves certain annual performance goals as established by the Board and/or Compensation Committee. If such performance goals are met, the MIP bonus will be payable in cash, provided that Mr. Lewis remains employed with the corporation on the date the bonus is paid. The Lewis Employment Agreement provides that on or prior to December 31, 2019, Mr. Lewis shall receive an equity or equity based award with a grant date value of $2,200,000 and that for each subsequent fiscal year ending during the term (commencing with Fiscal 2021), he shall be eligible to receive an equity or equity based award with a target value of 400% of his base salary.
The Lewis Employment Agreement also provides Mr. Lewis with certain other compensation and benefits, including: (i) four weeks of paid vacation for each full year; (ii) eligibility to participate in any of the Company’s insurance plans and other benefits, if any, as are made available to other executive officers of the Company; and (iii) eligibility for Mr. Lewis to participate in the Company’s executive auto lease program during the term of the employment agreement.
The Lewis Employment Agreement contains the following provisions applicable upon the termination of Mr. Lewis’s employment with the Company and/or in the event of a change in control of the Company.
In the event that Mr. Lewis is terminated with “cause” or terminates his employment voluntarily, other than for “good reason,” Mr. Lewis’s salary and other benefits provided under his employment agreement cease at the time of such termination and Mr. Lewis is entitled to no further compensation under his employment agreement. Notwithstanding this, Mr. Lewis would be entitled to continue to participate in the Company’s medical benefit plans to the extent required by law. Further, upon any such termination of employment, the Company would pay to Mr. Lewis accrued pay and benefits.
If the employment of Mr. Lewis with the Company is terminated by the Company without “cause,” by Mr. Lewis for “good reason,” or is terminated due to Mr. Lewis’s death or disability, Mr. Lewis is entitled to receive certain post-termination benefits, detailed below, contingent upon execution of a separation agreement with a release of claims agreeable to the Company and Mr. Lewis’s compliance with thenon-competition,
non-solicitation,
non-disparagement
and confidentiality restrictions set forth in his employment agreement. In such event the Company will: (i) pay Mr. Lewis (a) 1.5 times his base salary in effect immediately prior to his termination, plus (b) 1.0 times his target annual bonus award for the fiscal year in which such termination occurs, ratably over the18-month
period immediately following his termination; (ii) pay Mr. Lewis theportion of the annual bonus (if any) he would have earned pursuant to any annual bonus or incentive plan maintained by the Company with respect to the fiscal year in which such termination occurs if his employment had not ceased, to be paid at the same time such bonus would have been paid to Mr. Lewis for such fiscal year if his employment had not terminated; (iii) for the18-month
period immediately following such termination, arrange to provide Mr. Lewis and his dependents with medical and dental benefits on a basis substantially similar to those provided to Mr. Lewis and his dependents by the Company immediately prior to the date of termination, subject to his electing COBRA coverage; and (iv) pay Mr. Lewis his accrued vacation time pursuant to Company policy. In addition, all unvested outstanding time-based equity awards will vest on abasis and all performance-based awards will be forfeited. Thenon-competition
andnon-solicitation
provisions extend for 18 months following Mr. Lewis’s termination and confidentiality provisions extend for up to seven years following Mr. Lewis’s termination. Mr. Lewis is also subject to a cooperation provision that extends for six years following Mr. Lewis’s termination. The definitions of “good reason” and “cause” under the Lewis Employment Agreement were similar to the definitions of such terms in the Maura Employment Agreement.
Agreement with Mr. Zargar
On September 13, 2018, the Company and SBI and Mr. Zargar entered into an employment agreement which became effective as of October 1, 2018. The initial term of the Zargar Employment Agreement was until September 30, 2021, subject to earlier termination, with automaticone-year
renewals thereafter. The Zargar Employment Agreement provides Mr. Zargar with an annual base salary of $400,000 and he will be eligible to receive a performance-based management incentive plan bonus for each fiscal year starting in Fiscal 2019, based on a target of at least 60% of the then-current base salary (the “Target Amount”) paid during the applicable fiscal year during the term, provided the Company achieves certain annual performance goals as established by the Board and/or the Compensation Committee. If such performance goals are met, the bonus will be payable in cash. If Mr. Zargar exceeds the performance targets, the bonus will be increased in accordance with the formula approved by the Compensation Committee provided that the bonus will not exceed 200% of the Target Amount. Mr. Zargar will also be eligible for future equity awards under the Company’s equity plan at the discretion of the Compensation Committee and/or Board and will be eligible to participate in future multi-year incentive programs as may be adopted from time to time. The Zargar Employment Agreement also provides Mr. Zargar with certain other compensation and benefits, including the following: (i) four weeks of paid vacation for each full year; (ii) eligibility for Mr. Zargar to participate in the Company’s executive auto lease program; (iii) a stipend for corporate apartment and income tax filings and returns preparation and advice and estate planning advice; and (iv) eligibility for Mr. Zargar to participate in any of the Company’s insurance plans and other benefits, if any, as the benefits are made available to other executive officers of the Company.
Under the Zargar Employment Agreement, Mr. Zargar is entitled to receive severance benefits if his employment is terminated under certain circumstances. In the event that Mr. Zargar is terminated with “cause” or terminates his employment voluntarily, other than for “good reason,” Mr. Zargar’s compensation and other benefits provided under his employment agreement cease at the time of such termination and Mr. Zargar is entitled to no further compensation under his employment agreement with respect to such role. Notwithstanding this, the Company would pay to Mr. Zargar accrued compensation and benefits and continuation of Company medical benefits to the extent required by law.
If Mr. Zargar’s employment is terminated by the Company without “cause,” by Mr. Zargar for “good reason” (as defined below) or by reason of death or by the Company for disability or upon a Company-initiatednon-renewal,
he will be entitled to the following severance benefits: (i) a cash payment equal to 2.99 times his then-current base salary, (ii) a cash payment equal to 1.5 times his then-current target annual MIP bonus, each payable ratably on a monthly basis over the18-month
period following termination; (iii) aportion, in cash, of the annual bonus Mr. Zargar would have earned for the fiscal year in which termination occurs if his employment had not ceased; (iv) for the18-month
period following termination provide
Mr. Zargar and his dependents with medical insurance coverage and other employee benefits on a basis substantially similar to those provided to Mr. Zargar and his dependents by the Company immediately prior to the date of termination at no greater cost to Mr. Zargar or the Company than the cost to Mr. Zargar or the Company immediately prior to such date; and (v) payment of accrued vacation time pursuant to Company policy. In addition, all unvested outstanding performance-based and time-based equity awards will immediately vest in full (at target) as provided in the applicable equity award agreements.
In the case of termination, severance payments and vesting are conditioned upon Mr. Zargar’s execution of a release of claims in favor of the Company and its affiliates and Mr. Zargar’s compliance with thenon-solicitation,
non-disparagement
and confidentiality restrictions set forth in his employment agreement. Thenon-solicitation
provisions extend for 18 months following Mr. Zargar’s termination and the confidentiality provisions extend for seven years following Mr. Zargar’s termination. Mr. Zargar is also subject to atwo-year
cooperation provision. The definitions of “good reason” and “cause” under the Zargar Employment Agreement are similar to the definitions of such terms in the Maura Employment Agreement.
On September 9, 2019, the Company entered into the Long Letter Agreement and the Long Severance Agreement with Ms. Long. Pursuant to the Long Letter Agreement, effective as of September 9, 2019, Ms. Long was promoted to Senior Vice President, Global Human Resources Officer for the Company and was promoted to Senior Vice President and Chief Human Resources Officer effective November 2021. Effective as of September 9, 2019, Ms. Long’s base salary was increased from $250,000 to $300,000(pro-rated
for Fiscal 2019). Beginning in Fiscal 2020, Ms. Long’s target bonus was increased from 40% to 60% and her long-term incentive award for Fiscal 2021 is $350,000. Beginning in Fiscal 2022, Ms. Long’s base salary was increased by 20% to $360,000 and equity award grant date target value was increased by 40% to $490,000. Pursuant to the Long Severance Agreement, if Ms. Long’s employment is terminated by the Company without cause, she will receive as severance 52 weeks of base pay and (subject to her timely election of COBRA) 52 weeks of continued medical coverage. The receipt of severance benefits is conditioned upon her execution of an effective and irrevocable release of claims as well as continued compliance with her post employment restrictive covenants, including12-month
non-compete
andnon-solicit,
a5-year
confidentiality provision, a6-year
cooperation provision and perpetualnon-disparagement
provisions. “Cause” for purposes of the Long Severance Agreement generally means: (i) the commission by Ms. Long of any theft, fraud, embezzlement or other material act of disloyalty or dishonesty with respect to the Company (including the unauthorized disclosure of confidential or proprietary information of the Company); (ii) Ms. Long’s conviction of or plea of guilty or nolo contendere to, a felony or other crime of moral turpitude, disloyalty or dishonesty; (iii) Ms. Long’s willful misconduct or gross neglect in the performance of Ms. Long’s job duties and responsibilities to the Company; (iv) the willful or intentional failure or refusal by Ms. Long to follow the written and specific, reasonable and lawful directives of Ms. Long’s supervisor or the Company’s senior management team, which failure or refusal to perform (to the extent curable) is not completely cured to the Company’s reasonable satisfaction within 15 days after receipt of a written notice from the Company detailing such failure or refusal to perform, provided that in no event shall the Company be required to provide more than one such notice or cure period (to the extent a cure period is applicable) within any12-month
period; (v) the failure or refusal by Ms. Long to perform her duties and responsibilities to the Company or any of its affiliates, which failure or refusal to perform (to the extent curable) is not completely cured to the Company’s reasonable satisfaction within 15 days after receipt of a written notice from the Company detailing such failure or refusal to perform, provided that in no event shall the Company be required to provide more than one such notice or cure period (to the extent a cure period is applicable) within any12-month
period; (vi) Ms. Long’s breach of any of the terms of this Agreement, any other agreement between Ms. Long and the Company or any Company policy, which breach (to the extent curable) is not cured to the Company’s reasonable satisfaction within 15 days after receipt of a written notice from the Company to Ms. Long of such breach, provided that in no event shall the Company be required to provide more than one such notice or cure period (to the extent a cure period is applicable) within any12-month
period; (vii) Ms. Long engages in conduct that discriminates against or harasses any employee or other person providing services to the Company on the basis of any protected class such that it would harm the reputation of the Company or its affiliates if Ms. Long was retained as an employee, as determined by the Company in good faith after a reasonable inquiry; or (viii) Ms. Long engages in intentional, reckless or negligent conduct that has or is reasonably likely to have an adverse effect on the Company’s business or reputation, as determined by the Company in good faith. Amounts Payable upon Termination or Change in Control
The following tables set forth the amounts that would have been payable at September 30, 2021 to each of our NEOs who were employed by the Company as NEOs on the last day of Fiscal 2021 under the various scenarios for termination of employment or a change in control of the Company had such scenarios occurred on September 30, 2021.
| | | | | | | | | | | | | | | | |
| | Termination Scenarios (Assumes Termination on 9/30/2021) | |
| |
| | |
| | |
| | |
| |
| | $ | – | | | $ | 2,425,000 | | | $ | 2,425,000 | | | $ | 2,425,000 | |
| | $ | – | | | $ | 1,941,300 | | | $ | 1,941,300 | | | $ | 1,941,300 | |
Equity Awards (Intrinsic Value) (3) | | $ | – | | | $ | | | | $ | – | | | $ | – | |
Unvested Restricted Stock | | $ | – | | | $ | 8,295,928 | (4) | | $ | 8,295,928 | (4) | | $ | 27,652,839 | (5) |
| | $ | – | | | $ | – | | | $ | – | | | $ | – | |
| | $ | – | | | $ | 10,589 | | | $ | 10,589 | | | $ | 10,589 | |
| | $ | – | | | $ | 24,000 | | | $ | 24,000 | | | $ | 24,000 | |
Accrued, Unused Vacation (8) | | $ | – | | | $ | 18,639 | | | $ | 18,639 | | | $ | 18,639 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| (1) | Reflects cash severance payment, under the applicable termination scenarios, of $500,000 for termination of the role of CEO, plus 1.5x Executive Chairman base salary and 1.0x the Fiscal 2021 Executive Chairman target bonus. Payments are to be made in monthly installments over 12 or 18 months (for the CEO and Executive Chairman payments, respectively) subject to the requirements of Section 409A of the Internal Revenue Code. |
| (2) | Reflects annual MIP bonus for Fiscal 2021 payable at 173% of target. Payment is subject to Section 409A of the Internal Revenue Code. |
| (3) | Reflects value of accelerated vesting of equity awards, if any, using a stock price of $95.67 which was the Company’s closing price on September 30, 2021. |
| (4) | Upon a termination without cause or due to death or disability or for resignation with good reason, all time-based RSUs would be payable. |
| (5) | Upon a termination in connection with a change in control that occurs between 60 days prior to the change in control and theone-year anniversary of the change in control, all RSUs and PSUs would be subject to accelerated vesting at target. |
| (6) | Reflects 18 months of insurance and other benefits continuation for the Executive and any dependents. |
| (7) | Reflects 12 months of car allowance continuation, which Mr. Maura is currently electing not to receive. |
| (8) | Represents compensation for 43.1 hours of unused vacation time in Fiscal 2021. |
| | | | | | | | | | | | | | | | |
| | Termination Scenarios (Assumes Termination on 9/30/2021) | |
| |
| | |
| | | | | |
| |
| | $ | – | | | $ | 1,150,000 | | | $ | 1,150,000 | | | $ | 1,150,000 | |
| | $ | – | | | $ | 640,000 | | | $ | 640,000 | | | $ | 640,000 | |
Equity Awards (Intrinsic Value) (3) | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Unvested Restricted Stock | | $ | – | | | $ | 280,878 | (4) | | $ | 280,878 | (4) | | $ | 280,878 | (4) |
| | $ | – | | | $ | – | | | $ | – | | | $ | – | |
| | $ | – | | | $ | 10,589 | | | $ | 10,589 | | | $ | 10,589 | |
| | $ | – | | | $ | 22,684 | | | $ | 22,684 | | | $ | 22,684 | |
Accrued, Unused Vacation (7) | | $ | – | | | $ | 10,355 | | | $ | 10,355 | | | $ | 10,355 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| (1) | Reflects cash severance payment, under the applicable termination scenarios, of 1.5x base salary and 1.0x the Fiscal 2021 target bonus. Payments are to be made in monthly installments over 18 months subject to the requirements of Section 409A of the Internal Revenue Code. |
| (2) | Reflects annual MIP bonus for Fiscal 2021 payable at 160% of target. Payment is subject to Section 409A of the Internal Revenue Code. |
| (3) | Reflects value of accelerated vesting of equity awards, if any, using a stock price of $95.67 which was the Company’s closing price on September 30, 2021. |
| (4) | Upon a termination without cause or due to death or disability, for resignation with good reason or termination in connection with a change in control, all PSUs will be forfeited. In addition, RSUs will vest pro rata based on days worked during the vesting period (December 2, 2019 through December 2, 2022 for the 2020 LTIP RSUs and December 4, 2020 through December 4, 2023 for the 2021 LTIP RSUs). |
| (5) | Reflects 18 months of insurance and other benefits continuation for the Executive and any dependents. |
| (6) | Reflects 12 months of car allowance continuation. |
| (7) | Represents compensation for 43.1 hours of unused vacation time in Fiscal 2021. |
| | | | | | | | | | | | | | | | |
| | Termination Scenarios (Assumes Termination on 9/30/2021) | |
| |
| | |
| | |
| | |
| |
| | $ | – | | | $ | 1,320,000 | | | $ | 1,320,000 | | | $ | 1,320,000 | |
| | $ | – | | | $ | 792,000 | | | $ | 792,000 | | | $ | 792,000 | |
Equity Awards (Intrinsic Value) (3) | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Unvested Restricted Stock | | $ | – | | | $ | 1,781,160 | (4) | | $ | 1,781,160 | (4) | | $ | 1,781,160 | (4) |
| | $ | – | | | $ | – | | | $ | – | | | $ | – | |
| | $ | – | | | $ | 10,589 | | | $ | 10,589 | | | $ | 10,589 | |
| | $ | – | | | $ | 27,228 | | | $ | 27,228 | | | $ | 27,228 | |
Accrued, Unused Vacation (7) | | $ | – | | | $ | 814 | | | $ | 814 | | | $ | 814 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| (1) | Reflects cash severance payment, under the applicable termination scenarios, of 1.5x the Executive’s current base salary plus 1.0x the Fiscal 2021 target bonus. Payments are to be made in monthly installments over 18 months, subject to the requirements of Section 409A of the Internal Revenue Code. |
| (2) | Reflects annual MIP bonus for Fiscal 2021 payable at 160% of target. Payment is subject to the requirements of Section 409A of the Internal Revenue Code. |
| (3) | Reflects value of accelerated vesting of equity awards, if any, using a stock price of $95.67 which was the Company’s closing price on September 30, 2021. |
| (4) | Upon a termination without cause or due to death or disability, for resignation with good reason or termination in connection with a change in control, all PSUs will be forfeited. In addition, RSUs will vest pro rata based on days worked during the vesting period (December 3, 2018 through December 3, 2021 for the 2019 LTIP RSUs, December 2, 2019 through December 2, 2022 for the 2020 LTIP RSUs and December 4, 2020 through December 4, 2023 for the 2021 LTIP RSUs). |
| (5) | Reflects 18 months of insurance and other benefits continuation for the Executive and any dependents. |
| (6) | Reflects 12 months of car lease payment continuation. |
| (7) | Represents compensation for 3.1 hours of unused vacation time in Fiscal 2021. |
| | | | | | | | | | | | | | | | |
| | Termination Scenarios (Assumes Termination on 9/30/2021) | |
| |
| | |
| | |
| | |
| |
| | $ | – | | | $ | 1,556,000 | | | $ | 1,556,000 | | | $ | 1,556,000 | |
| | $ | – | | | $ | 384,000 | | | $ | 384,000 | | | $ | 384,000 | |
Equity Awards (Intrinsic Value) (3) | | $ | – | | | $ | – | | | $ | – | | | $ | | |
Unvested Restricted Stock | | $ | – | | | $ | 8,193,466 | (4) | | $ | 8,193,466 | (4) | | $ | 8,193,466 | (4) |
| | $ | – | | | $ | – | | | $ | – | | | $ | – | |
| | | | | | | | | | | | | | | | |
| | Termination Scenarios (Assumes Termination on 9/30/2021) | |
| |
| | |
| | |
| | |
| |
| | $ | – | | | $ | 10,589 | | | $ | 10,589 | | | $ | 10,589 | |
| | $ | – | | | $ | 25,093 | | | $ | 25,093 | | | $ | 25,093 | |
Accrued, Unused Vacation (7) | | $ | – | | | $ | 23,669 | | | $ | 23,669 | | | $ | 23,669 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| (1) | Reflects cash severance payment, under the applicable termination scenarios, of 2.99x the Executive’s current base salary plus 1.5x the Fiscal 2021 target bonus. Payments are to be made in monthly installments over 18 months, subject to the requirements of Section 409A of the Internal Revenue Code. |
| (2) | Reflects annual MIP bonus for Fiscal 2021 payable at 160% of target. Payment is subject to the requirements of Section 409A of the Internal Revenue Code. |
| (3) | Reflects value of accelerated vesting of equity awards, if any, using a stock price of $95.67 which was the Company’s closing price on September 30, 2021. |
| (4) | Upon a termination without cause or in connection with a change in control or for resignation with good reason or for death or disability, all RSUs and PSUs would be subject to accelerated vesting at target. |
| (5) | Reflects 18 months of insurance and other benefits continuation for the Executive and any dependents. |
| (6) | Reflects 12 months of car allowance continuation. |
| (7) | Represents compensation for 123.1 hours of unused vacation time in Fiscal 2021. |
| | | | | | | | | | | | | | | | |
| | Termination Scenarios (Assumes Termination on 9/30/2021) | |
| |
| | |
| | |
| | |
| |
| | $ | – | | | $ | 300,000 | | | $ | 300,000 | | | $ | 300,000 | |
| | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Equity Awards (Intrinsic Value) (4) | | $ | – | | | $ | – | | | $ | – | | | $ | – | |
Unvested Restricted Stock | | $ | – | | | $ | – | (5) | | $ | – | (5) | | $ | – | (5) |
| | $ | – | | | $ | – | | | $ | – | | | $ | – | |
| | $ | – | | | $ | 10,589 | | | $ | 10,589 | | | $ | 10,589 | |
| | $ | – | | | $ | 12,000 | | | $ | 12,000 | | | $ | 12,000 | |
Accrued, Unused Vacation (8) | | $ | – | | | $ | 5,348 | | | $ | 5,348 | | | $ | 5,348 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| (1) | Should the executive resign with good reason, the severance payment will not be payable. |
| (2) | Reflects cash severance payment, under the applicable termination scenarios, of 52 weeks of weekly salary. |
| (3) | No payment would be required under existing agreements. |
| (4) | Reflects value of accelerated vesting of equity awards, if any, using a stock price of $95.67 which was the Company’s closing price on September 30, 2021. |
| (5) | Upon a termination without cause or due to death or disability, for resignation with good reason or termination in connection with a change in control, all RSUs and PSUs would be forfeited. |
| (6) | Reflects 18 months of insurance and other benefits continuation for the Executive and any dependents. |
| (7) | Reflects 12 months of car allowance continuation. |
| (8) | Represents compensation for 37.1 hours of unused vacation time in Fiscal 2021. |
Compensation Committee Report
Our Compensation Committee has reviewed and discussed the
section of this report entitled“Compensation Discussion and Analysis contained in this report Analysis”
with
our management. Based on
thatthis review and discussion,
our Compensationthe Committee
has recommended to our Board that the Compensation Discussion and Analysis be included in this
report.THE COMPENSATION COMMITTEE
Frank Ianna (Chairman)
Curtis Form 10-K/A. Glovier
Gerald Luterman
Andrew A. McKnight
Joseph S. Steinberg
Terry L. Polistina (Chair)
Fiscal 2021 CEO Pay Ratio
Under rules adopted by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), we are required to determine and disclose the ratio of the annual total compensation of our CEO to that of our global median employee.
To determine the median employee, we made a determination from our global employee population, excludingnon-U.S.
locations to the extent that the total employees excluded in these locations in aggregate did not exceed 5% of our total employee population at the time of the determination. We established a consistently applied compensation measure of annualized base pay, converted to U.S. dollars based on applicable exchange rates as of September 30, 2021. Our population was evaluated as of September 30, 2021 and reflects paid compensation for the entire fiscal year. Where allowed under the rule, we have annualized compensation for employees newly hired during Fiscal 2021. Based on the above determination, the total compensation (using the same methodology as we use for our NEOs as set forth in the Summary Compensation Table in this report) for the median employee is $19,342. Using the CEO’s total compensation of $8,606,325 under the same methodology, the resulting ratio is 445:1. The pay ratio reported here is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above.
|
| |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Beneficial Ownership Table
The following table below shows the number of sharessets forth information regarding beneficial ownership of our Common Stock beneficially ownedcommon stock as of December 31, 2016January 2, 2022, by:
each of our directors;
each of ournamed executive officers for Fiscal 2016;
each person who is known toby us to beneficially own more than 5% of the outstanding shares of our outstanding Common Stock (thecommon stock (each, a “5% stockholders”Stockholder”);
our NEOs for Fiscal 2021;
each of our directors; and
all directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC. Determinations as to the identity of 5% stockholders, the number of shares of our Common Stock beneficially owned by 5% stockholders and former directors and officers, including shares of our Common Stock which may be acquired by them within 60 days,Stockholders is based upon filings with the SEC as indicated in the footnotes to the table below.and other publicly available information. Except as otherwise indicated, we believe, based on the information furnished or otherwise available to us, that each person or entity named in the table has sole voting and investment power with respect to all shares of our Common Stockcommon stock shown as beneficially owned by them, subject to applicable community property laws. AsThe percentage of December 31, 2016, there were 200,188,839beneficial ownership set forth below is based upon 41,023,773 shares of Common Stockcommon stock issued and outstanding (including sharesas of restricted stock).
Included in the computationclose of business on January 2, 2022. In computing the number of shares of our Common Stock outstanding andcommon stock beneficially owned by a person and the percentage ownership of that person, in the table below are shares of our Common Stockcommon stock that are subject to vested options, warrants or restricted stock unitsas well as options and RSUs held by that person that are currently exercisable or become exercisable, orexpected to vest as applicable, within 60 days of December 31, 2016.January 2, 2022, are all deemed outstanding. These shares of our Common Stock are not, however, deemed outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o HRG Group,Spectrum Brands Holdings, Inc., 450 Park Avenue, 29th floor, New York, New York 10022.3001 Deming Way, Middleton, WI 53562.
| | | | | | | | |
Name and Address of Beneficial Owner | | Number of
Shares Beneficially
Owned | | | Percent of
Outstanding
Shares | |
| | | | | | | | |
| | | 5,621,827 | | | | 13.7 | % |
| | | 3,766,026 | | | | 9.2 | % |
| | | |
Our Directors and Named Executive Officers | | | | | | | | |
| | | 2,295 | | | | * | |
| | | 1,854 | | | | * | |
| | | 9,996 | | | | * | |
| | | 68,341 | | | | * | |
| | | 8,777 | | | | * | |
| | | 732,756 | | | | 1.8 | % |
| | | 5,974 | | | | * | |
| | | 36,632 | | | | * | |
| | | 37,693 | | | | * | |
| | | 16,369 | | | | * | |
| | | 102,058 | | | | * | |
| | | |
All Directors and Executive Officers as a Group | | | 1,022,745 | | | | 2.5 | % |
|
| | | | | | |
| Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class |
| 5% Stockholders | | | | |
| Leucadia National Corporation (1) | | 46,633,479 |
| | 23.29 | % |
| CF Turul Group (2) | | 32,994,740 |
| | 16.48 | % |
| Our Directors and Executive Officers | | | | |
| Omar M. Asali (3) | | 3,727,815 |
| | 1.84 | % |
| Curtis A. Glovier | | 5,092 |
| | * |
|
| Frank Ianna | | 27,351 |
| | * |
|
| Gerald Luterman | | 27,351 |
| | * |
|
| David M. Maura (4)** | | 1,956,529 |
| | * |
|
| Joseph S. Steinberg | | 22,321 |
| | * |
|
| Andrew Whittaker | | 22,321 |
| | * |
|
| Thomas A. Williams (5)** | | 714,821 |
| | * |
|
| Andrew A. McKnight | | — |
| | * |
|
| George C. Nicholson | | — |
| | * |
|
| All current directors and executive officers as a group (9 persons) (6) | | 6,522,294 |
| | 3.26 | % |
* Indicates less than 1% of our outstanding Common Stock
** As disclosed in greater detail herein, Mr. Williams’ and Mr. Maura’s employment with the Company was terminated during Fiscal 2016 and Fiscal 2017, respectively. Mr. Maura still serves on the Board.
| * | Indicates less than 1% of our outstanding common stock. |
| |
| (1) | Based solely on a Schedule 13D, Amendment No. 2,13G/A, filed with the SEC on November 26, 2014, Leucadia is the beneficial owner of 46,633,479 shares of our Common Stock, including the 28,000,000 shares Leucadia may from time to time sell and receive the proceeds from such sale for its own account.February 8, 2021. The address of LeucadiaFMR LLC is 520 Madison Avenue, New York, New York 10022.245 Summer Street, Boston, Massachusetts 02210. |
| (2) | Based solely on a Schedule 13D, Amendment No. 5,13G/A, filed with the SEC on July 27, 2016, CF Turul LLCFebruary 10, 2021. The address of Vanguard Group Inc. is 100 Vanguard Blvd, Malvern, Pennsylvania 19355. |
| (3) | Mr. Campbell and Ms. Chow were appointed to the beneficial owner of 32,994,740Board in April 2021. |
| (4) | Includes shares of our Common Stock. The 32,994,740 shares excludes one share of our preferredcommon stock owned by CF Turul, which cannot be converted into Common Stock. As described in the Schedule 13D, each of Fortress Credit Opportunities Advisors LLC, Fortress Credit Opportunities MA Advisors LLC, Fortress Credit Opportunities MA II Advisors LLC, FCO MA LSS Advisors LLC, Fortress Credit Opportunities MA Maple Leaf Advisors LLC, Fortress Global Opportunities (Yen) Advisors LLC, Drawbridge Special Opportunities Advisors LLC, Fortress Special Opportunities Advisors LLC, FIG LLC, Fortress Operating Entity I LP, FIG Corp., Fortress Investment Group LLC, Mr. Peter L. Briger, Jr., and Mr. Constantine M. Dakolias (collectively, the “CF Turul Group”) may also be deemed to be the beneficial owner of our shares of Common Stock beneficially owned by CF Turul, assuming the effectiveness of a joint investment committee agreement. The business address of CF Turul is c/o Fortress Investment Group LLC, 1345 Avenue of the Americas, 46th Floor, New York, New York 10105. |
(3) | Includes 1,551,400 shares of Common Stock and 2,176,415 shares of Common Stock underlying options that have vested or will vest within 60 days of December 31, 2016. Does not include 126,971 shares subject to unvested options that do not vest within 60 days of December 31, 2016.for Mr. Maura totaling 143,358. |
|
| (5) | |
(4) | Includes 967,548 shares of Common Stock and 988,981 shares of Common Stockcommon stock underlying options that have vested or will vest within 60 days of December 31, 2016. Does not include 335,972 shares underlying unvested options that do not vest within 60 days of December 31, 2016. |
(5) | Includes 383,184 shares of Common Stock and 331,637 shares of Common Stock underlying options that have vested or will vest within 60 days of December 31, 2016. Does not include 43,914 shares underlying unvested options that do not vest within 60 days of December 31, 2016. |
(6) | Includes 3,025,261 shares of Common Stock and 3,497,033 shares of Common Stock underlying options, warrants or restricted stock units that are currently exercisable or become exercisable, or vest, as applicable, within 60 days of December 31, 2016. Does not include 506,857 shares underlying unvested options and warrants that do not vest within 60 days of December 31, 2016.for Mr. Zargar totaling 8,967. |
Changes in ControlDelinquent Section 16(a) Reports
To the knowledgeSection 16(a) of the Company, there are no arrangements, including any pledge by any personExchange Act requires our directors, officers and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the CompanySEC. Based solely upon review of Forms 3, 4 and 5 (and amendments thereto) furnished to us during or anyin respect of its parents,Fiscal 2021 and written representations from certain
reporting persons and except as set forth in the operation of which may, at a subsequent date, resultsucceeding sentence, we believe that all Section 16(a) filing requirements applicable to our directors, executive officers and 10% stockholders were satisfied in a change in control of the Company, other than ordinary default provisions that may be contained in our Charter or Bylaws, or trust indentures, or other governing instruments relating to the securities of the Company.
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth informationtimely manner during Fiscal 2021 with respect to compensation plans under which our equity securities are authorized for issuance asthe Company. During Fiscal 2021, due to an administrative error, each of September 30, 2016:
|
| | | | | | | | | | |
| Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (in thousands) (a) | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (in thousands) (c) |
| Equity compensation plans approved by security holders | | 7,448 |
| | $ | 7.50 |
| | 9,065 |
|
| Equity compensation plans not approved by security holders | | — |
| | — |
| | — |
|
| Total | | 7,448 |
| | $ | 7.50 |
| | 9,065 |
|
Our stockholders have approvedDavid M. Maura, Randal D. Lewis, Ehsan Zargar and Rebeckah Long filed one late report with respect to the adoption of: (i) the 2011 Plan, pursuant to which incentive compensationvesting of certain restricted stock units and performance compensation awards may be provided to employees, directors, officersstock units and consultantsthe disposition of share of the Company orCompany’s common stock to satisfy such person’s tax liability resulting from such vesting.
Contents
|
| |
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Our Board has adoptedPolicies on Transactions with Related Persons
All of the Company’s executive officers, directors and employees are required to disclose to the Company’s General Counsel all transactions which involve any actual, potential or suspected activity or personal interest that creates or appears to create a Statementconflict between the interests of Policythe Company and the interests of their executive officers, directors or employees. In cases involving executive officers, directors or senior-level management, the Company’s General Counsel will investigate the proposed transaction for potential conflicts of interest and then refer the matter to the Company’s Audit Committee to make a full review and determination. In cases involving other employees, the Company’s General Counsel, in conjunction with Respect to Related Party Transactions (the “Related Party Transactions Policy”). A “Related Party Transaction” is definedthe employee’s regional supervisor and the Company’s Director of Internal Audit, will review the proposed transaction. If they determine that no conflict of interest will result from engaging in the Related Party Transactions Policyproposed transaction, then they will refer the matter to the Company’s CEO for final approval.
The Company’s legal department and financial accounting department monitor transactions for an evaluation and determination of potential related-person transactions that would need to be disclosed in the Company’s periodic reports or proxy materials under generally accepted accounting principles and applicable SEC rules and regulations.
In addition, under our Corporate Governance Guidelines, our directors are prohibited from taking for themselves opportunities related to the Company’s business that are presented to them in their capacity as any financial transactiona director for the Company’s benefit, from using our property, information or any series of similar transactionsposition for personal gain or from competing with the Company for business opportunities if such opportunities were presented to them in which we aretheir capacity as a participantdirector for the Company’s benefit. If the Company’s disinterested Board members determine that the Company will not pursue an opportunity that relates to our business and consent to a director then personally pursuing the opportunity, then the director may do so. The Company has declined and in the future may decline, such opportunities and our directors may pursue such opportunities.
For more information on the Company’s policies and procedures for review and approval of related-person transactions, please see the Company’s Code of Ethics for the Principal Executive Officer and Senior Financial Officers and the Spectrum Brands Code of Business Conduct and Ethics, each of which
is posted on the Company’s website at www.spectrumbrands.com under “Investor Relations—Corporate Governance Documents.
Transactions with Significant Stockholders
INFORMATION REGARDINGNON-GAAP
FINANCIAL MEASURES This report containsnon-GAAP
metrics such as organic net sales and Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization). While we believe organic net sales and Adjusted EBITDA are useful supplemental information, such adjusted results are not intended to replace our financial results in accordance with Accounting Principles Generally Accepted in the United States (“GAAP”) and should be read in conjunction with those GAAP results. We define organic net sales as net sales excluding the effect of changes in foreign currency exchange rates and/or impact from acquisitions (where applicable). We believe thisnon-GAAP
measure provides useful information to investors because it reflects regional and operating segment performance from our activities without the effect of changes in currency exchange rate and/or acquisitions. We use organic net sales as one measure to monitor and evaluate our regional and segment performance. Organic growth is calculated by comparing organic net sales to net sales in the prior year. The effect of changes in currency exchange rates is determined by translating the period’s net sales using the currency exchange rates that were in effect during the prior comparative period. Net sales are attributed to the geographic regions based on the country of destination. We exclude net sales from acquired businesses in the current year for which there are no comparable sales in the prior period. The following is a
related person (i.e.,reconciliation of net sales to organic net sales for the fiscal year ended September 30, 2021 compared to net sales for the fiscal year ended September 30, 2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | Effect of
Changes in
Currency | | | Net Sales
Excluding
Effect of
Changes in
Currency | | | | | |
| | | Net Sales
September 30,
2020 | | | | |
| | $ | 1,260.1 | | | $ | (31.1 | ) | | $ | 1,229.0 | | | $ | — | | | $ | 1,229.0 | | | $ | 1,107.6 | | | $ | 121.4 | | | | 11.0 | % |
| | | 1,129.9 | | | | (18.4 | ) | | | 1,111.5 | | | | (99.5 | ) | | | 1,012.0 | | | | 962.6 | | | | 49.4 | | | | 5.1 | % |
| | | 608.1 | | | | — | | | | 608.1 | | | | (23.2 | ) | | | 584.9 | | | | 551.9 | | | | 33.0 | | | | 6.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 2,998.1 | | | $ | (49.5 | ) | | $ | 2,948.6 | | | $ | (122.7 | ) | | $ | 2,825.9 | | | $ | 2,622.1 | | | $ | 203.8 | | | | 7.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
. Adjusted EBITDA is a
director, officer, beneficial owner of more than 5% of any classnon-GAAP
metric used by management that we believe provides useful information to investors because it reflects the ongoing operating performance and trends of our
capital stock segments, excluding certainnon-cash
based expenses and/or
a family member or controlling or controlled entitynon-recurring
items during each of the
foregoing persons) hascomparable periods. It also facilitates comparisons between peer companies since interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA is also used for determining compliance with the Company’s debt covenants. EBITDA is calculated by excluding the Company’s income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from net income. Adjusted EBITDA further excludes:
Stock based and other incentive compensation costs that consist of costs associated with long-term compensation arrangements and other equity-based compensation based upon achievement of long-term performance metrics under the Company’s LTIP; and generally consist ofnon-cash,
stock-based compensation. During the year ended September 30, 2021, other incentive compensation also includes incentive bridge awards issued due to changes in the Company’s LTIP that allowed for cash based payment upon employee election but does not qualify for share-based compensation. All bridge awards fully vested in November 2020; Restructuring and related charges, which consist of project costs associated with the restructuring initiatives across the Company’s segments;
Transaction related charges that consist of (1) transaction costs from acquisitions or subsequent project costs directly associated with integration of an acquired business with the consolidated group; and (2) transaction costs from divestitures and subsequent project costs to facilitate separation of shared operations, including development of transferred shared service operations, platforms and personnel transferred, and exiting of transition service arrangements (TSAs) and reverse TSAs;
Unallocated shared costs associated with discontinued operations from certain shared andcenter-led
administrative functions supporting the Company’s business units excluded from income from discontinued operations as they are not a direct
cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations. Amounts attributable to unallocated shared costs would be mitigated through subsequent strategic or
indirect interest, other than: (i) our paymentrestructuring initiatives, TSAs, elimination of
compensation to a related person forextraneous costs orre-allocation
or absorption by existing continuing operations following the
related person’s service incompleted sale of the
capacity that give risediscontinued operations; Gains and losses attributable to the person’s status as a “related person”; (ii) transactions available to all of our employees or all of our stockholders on the same terms; and (iii) transactions which, when aggregated with the amount of all other transactions between us and the related person, involve in a fiscal year the lesser of (a) $100,000 or (b) 1% of the average of our total assets at year-end for the last two completed fiscal years. Pursuant to the Related Party Transaction Policy, the Related Party Transaction proposed to be entered into must be reported to our Board for review. In reviewing and determining whether to approve a proposed Related Party Transaction presented to our Board, the disinterested members of our Board will analyze such factors as they deem appropriate. We may only enter into a Related Party Transaction upon approval by our Board. Our Board may delegate its authority to review and approve Related Party Transactions to the Audit Committee, a special committee or other committee of our Board.
On March 18, 2014, HRG entered into the Letter Agreement with Leucadia (the “Letter Agreement”). The Letter Agreement was entered into in connection with the consummation of the transactions contemplated by that certain Preferred Securities Purchase Agreement, dated March 18, 2014 (the “PSPA”), by and among the Master Fund, Harbinger Capital Partners Special Situations Fund, L.P. and Global Opportunities Breakaway Ltd. (collectively, the “HCP Stockholders”) and Leucadia, pursuant to which Leucadia acquired, following receipt of regulatory approval, 23 million shares of Common Stock, at a price of $11.00 per share of Common Stock, for an aggregate purchase price of $253.0 million in cash. Pursuant to the Letter Agreement, Leucadia has designated two directors to HRG’s board. The Letter Agreement further provides, among other things, that without the prior approval of a majority of the directors on HRG’s Board (other than the Leucadia designees), Leucadia and its affiliates will not acquire additional shares or voting rights of HRG that would increase Leucadia’s beneficial ownership above 27.5% of the voting power of HRG’s outstanding securities. The Letter Agreement also restricts Leucadia’s and its affiliates’ ability to make certain proposals or solicit such proxies and limits their ability to sell Leucadia’sCompany’s investment in HRG to counterparties who hold, or after giving effect to a sale would hold, in excess of 4.9% of HRG’s voting stock (subject to certain exceptions). Leucadia also agreed to vote in favor ofEnergizer common stock. During the slate of directors nominated by a majority of HRG’s board (other thanyear ended September 30, 2021, the Leucadia designees). The Letter Agreement expired by its terms on March 18, 2016. In connection with the March 2014 transaction with Leucadia, under the terms of an existing registration rights agreement, the HCP Stockholders transferred a portion of their rights under the registration rights agreement with respect to the shares underlying Leucadia’s Preferred Stock and HRG entered into a Registration Rights Acknowledgment among it, the HCP Stockholders and Leucadia acknowledging such transfer.
In Fiscal 2016, Jefferies, a wholly owned subsidiary of Leucadia, which through subsidiaries beneficially owns more than 10% of HRG’s outstanding shares of Common Stock, acted as one of the initial purchasers of Spectrum Brands’ offering of €425.0 million of its 4.00% Notes due 2026, for which Jefferies received $0.3 million in discounts, commissions and reimbursements of expenses.
On October 7, 2015, FGL, entered into an engagement letter with Jefferies (the “Engagement Letter”) pursuant to which Jefferies agreed (on a non-exclusive basis) to provide financial advisory services to FGL in connection with a transaction involving a merger or other similar transaction with respect to at least a majority of the capital stock of FGL. HRG was also a party to the Engagement Letter. Under the Engagement Letter, Jefferies is entitled to receive a fee which represents a percentage of the value of the transaction, plus reimbursement for all reasonable out-of-pocket expenses incurred by Jefferies in connection with their engagement. FGL has also agreed to indemnify Jefferies for certain liabilities in connection with their engagement. HRG is required to reimburse FGL for compensation paid by FGL to Jefferies under certain circumstances. Specifically, if compensation to Jefferies becomes payable in respect of a transaction that involves a disposition of shares of FGL held by HRG (and not other stockholders of FGL), HRG will reimburse FGL for the full amount of such compensation. If compensation to Jefferies becomes payable in respect of a transaction that involves a disposition of shares of FGL held by HRG and a disposition of not more than 50% of the shares of FGL held by stockholders of FGL other than HRG, HRG will reimburse FGL for its pro rata portion of such compensation (based on its relative number of shares compared to those held by stockholders of FGL other than HRG).
On October 9, 2015, HGI Funding entered into a Stock Purchase Agreement, by and among HGI Funding, HC2 Holdings, Inc. (“HC2”) and the purchasers party thereto, whereby HGI FundingCompany sold its remaining equity interest in HC2 for an aggregate purchase price of $35.1 million. Jefferies agreed to purchase 1.2 million shares in Energizer common stock;
Non-cash
asset impairments or write-offs realized and recognized in earnings from continuing operations;Non-cash
purchase accounting inventory adjustments recognized in earnings from continuing operations after an acquisition;Incremental reserves fornon-recurring
litigation or environmental remediation activity including the
transactionproposed settlement on outstanding litigation matters at
our H&G division attributable to significant and unusual nonrecurring claims with no previous history or precedent recognized during the year ended September 30, 2021; Incremental costs realized under a purchase pricethree-year tolling agreement entered into with the buyer in consideration with the divestiture of $7.50 per share. In addition, Mr. Falconethe Coevorden Operations on March 29, 2020, for the continued production of dog and cat food products purchased throughto support GPC commercial operations and distribution in Europe;
Gain on extinguishment of the Salus CLO debt due to the discharge of the obligation during the year ended September 30, 2020;
Foreign currency gains and losses attributable to multicurrency loans for the year ended September 30, 2020, that were entered into with foreign subsidiaries in exchange for the receipt of divestiture proceeds by the parent company and the distribution of the respective foreign subsidiaries’ net assets as part of the GBL and GAC divestitures; and
Other adjustments primarily consisting of costs attributable to (1) incremental fines and penalties realized for delayed shipments following the transition of a Harbinger Capital entity 540,000 sharesthird-party logistics service provider in GPC during the transactionyear ended September 30, 2021; (2) costs associated with Salus operations during the years ended September 30, 2021 and 2020 as they are not considered a component of continuing commercial products company; (3) expenses and cost recovery for flood damage at the Company’s facilities in Middleton, Wisconsin recognized during the year ended September 30, 2020; and (4) incremental costs for separation of a purchase pricekey executives during the year ended September 30, 2020
The following is a reconciliation net income from continuing operations to Adjusted EBITDA for the fiscal years ended September 30, 2021 and 2020.
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SPECTRUM BRANDS HOLDINGS, INC. (in millions) | | Year Ended
September 30,
2021 | | | Year Ended
September 30,
2020 | |
Net income (loss) from continuing operations | | $ | 15.3 | | | $ | (52.4 | ) |
Income tax (benefit) expense | | | (26.4 | ) | | | 27.3 | |
| | | 116.5 | | | | 93.7 | |
Depreciation and amortization | | | 117.0 | | | | 114.7 | |
| | | | | | | | | |
| | | 222.4 | | | | 183.3 | |
Share and incentive based compensation | | | 29.4 | | | | 36.1 | |
Restructuring and related charges | | | 40.3 | | | | 71.6 | |
Transaction related charges | | | 56.3 | | | | 23.1 | |
| | | 26.9 | | | | 17.4 | |
(Gain) loss on Energizer investment | | | (6.9 | ) | | | 16.8 | |
Loss on sale of Coevorden operations | | | – | | | | 26.8 | |
Write-off from impairment of intangible assets | | | – | | | | 24.2 | |
| | | | | | | | | |
On October 23, 2015, Front Street Cayman sold bonds issued by Phoenix Life Insurance Company | | | | | | | | |
SPECTRUM BRANDS HOLDINGS, INC. (in millions) | | Year Ended
September 30,
2021 | | | Year Ended
September 30,
2020 | |
Foreign currency loss on multicurrency divestiture loans | | | – | | | | 3.8 | |
Salus CLO debt extinguishment | | | – | | | | (76.2 | ) |
Inventory acquisition step-up | | | 7.3 | | | | – | |
Legal and environmental remediation reserves | | | 6.0 | | | | – | |
Coevorden tolling related charges | | | 6.2 | | | | – | |
| | | 3.9 | | | | (3.0 | ) |
| | | | | | | | | |
| | $ | 391.8 | | | $ | 323.9 | |
| | | | | | | | | |
| | $ | 2,998.1 | | | $ | 2,622.1 | |
| | | | | | | | | |
| | | 13.1 | % | | | 12.4 | % |
| | | | | | | | | |
| | | | | | | | | |
Pro Forma Adjusted EBITDA.
and
received approximately $14.0 million in aggregate proceeds from the sale. Jefferies acted2020. Pro Forma Adjusted EBITDA is defined as the
principal inCompany’s Adjusted EBITDA, further adjusted to include the
transaction and received a customary fee.FGL has invested in collateralized loan obligations (“CLOs”) issued by Fortress Credit Opportunities III CLO LP (“FCO III”) and also invested in securities issued by Fortress Credit BSL Limited (“Fortress BSL”). The collateral managers of both FCO III
and Fortress BSL are affiliates of funds managed by affiliates of Fortress. The CLOs had an aggregate total carrying value of $203.2 million as of September 30, 2016.
Director Independence
The disclosure included in Item 10 of this Form 10-K/A under the heading “Corporate Governance - Director Independence” is incorporated by reference into this Item 13 of this Form 10-K/A.
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Item 14. | Principal Accounting Fees and Services |
In accordance with Sarbanes-Oxley, the Audit Committee Charter provides that the Audit Committee of our Board has the sole authority and responsibility to pre-approve all audit services, audit-related tax services and other permitted services to be performed for the Company by our independent registered public accounting firm and the related fees. Pursuant to its charter and in compliance with rulesresults of the SECCompany’s Hardware and Public Company Accounting Oversight BoardHome Improvement (“PCAOB”HHI”), the Audit Committee has established a pre-approval policy and procedures that require the pre-approval of all services to be performed by the independent registered public accounting firm. The independent registered public accounting firm may be considered for other services not specifically approved as audit services or audit-related services and tax services, so long as the services are not prohibited by SEC or PCAOB rules and would not otherwise impair the independence of the independent registered public accounting firm. The Audit Committee has also delegated pre-approval to the Audit Committee Chairman to pre-approve audit services of up to $200,000 and certain permitted non-audit services up to $50,000 per engagement; however, any services pre-approved by the Audit Committee Chairman must be reported to the full Audit Committee at its next meeting.
The table below sets forth the professional fees we paid to our independent registered public accounting firm for professional services rendered for the Company, FS Holdco II Ltd. (excluding FGL), HGI Energy and HGI Funding. Professional fees paid for such services by our other reporting affiliates, FGL and its subsidiaries, Spectrum Brands and its subsidiaries and NZCH, are disclosed in such affiliates’ Annual Reports on Form 10-K or amendments thereto. segment.
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Twelve Month Period Ended | | | | | | | | | |
| | $ | 15.3 | | | $ | 180.5 | | | $ | 195.8 | |
Income tax (benefit) expense | | | (26.4 | ) | | | 63.2 | | | | 36.8 | |
| | | 116.5 | | | | 47.9 | | | | 164.4 | |
Depreciation and amortization | | | 117.0 | | | | 31.1 | | | | 148.1 | |
| | | | | | | | | | | | | |
| | | 222.4 | | | | 322.7 | | | | 545.1 | |
Share and incentive based compensation | | | 29.4 | | | | 0.9 | | | | 30.3 | |
Restructuring and related charges | | | 40.3 | | | | 0.7 | | | | 41.0 | |
Transaction related charges | | | 56.3 | | | | – | | | | 56.3 | |
| | | 26.9 | | | | (26.9 | ) | | | – | |
Gain on Energizer investment | | | (6.9 | ) | | | – | | | | (6.9 | ) |
Inventory acquisition step-up | | | 7.3 | | | | – | | | | 7.3 | |
Legal and environmental remediation reserves | | | 6.0 | | | | – | | | | 6.0 | |
Coevorden tolling related charges | | | 6.2 | | | | – | | | | 6.2 | |
| | | 3.9 | | | | – | | | | 3.9 | |
| | | | | | | | | | | | | |
| | $ | 391.8 | | | $ | 297.4 | | | $ | 689.2 | |
| | | | | | | | | | | | | |
| | $ | 2,998.1 | | | $ | 1,615.8 | | | $ | 4,613.9 | |
| | | | | | | | | | | | | |
| | | 13.1 | % | | | 18.4 | % | | | 14.9 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
Twelve Month Period Ended | | | | | | | | | |
| | $ | (52.4 | ) | | $ | 136.9 | | | $ | 84.5 | |
| | | 27.3 | | | | 43.6 | | | | 70.9 | |
| | | 93.7 | | | | 50.8 | | | | 144.5 | |
Depreciation and amortization | | | 114.7 | | | | 33.9 | | | | 148.6 | |
| | | | | | | | | | | | | |
| | | 183.3 | | | | 265.2 | | | | 448.5 | |
Share and incentive based compensation | | | 36.1 | | | | 7.5 | | | | 43.6 | |
Restructuring and related charges | | | 71.6 | | | | 1.0 | | | | 72.6 | |
Transaction related charges | | | 23.1 | | | | – | | | | 23.1 | |
| | | 17.4 | | | | (17.4 | ) | | | – | |
| | | | | | | | | | | | | |
|
| | | | | | | | |
| | | Year Ended September 30, |
| | | 2016 | | 2015 |
| Audit Fees | | $ | 2,462,745 |
| | $ | 2,784,100 |
|
| Audit-Related Fees | | — |
| | — |
|
| Tax Fees | | 22,612 |
| | — |
|
| All Other Fees | | 22,000 |
| | 22,000 |
|
| Total Fees | | $ | 2,507,357 |
| | $ | 2,806,100 |
|
58
Audit Fees are fees for professional services for the audit
Loss on Energizer investment | | | 16.8 | | | | – | | | | 16.8 | |
Loss on sale of Coevorden operations | | | 26.8 | | | | – | | | | 26.8 | |
Write-off from impairment of intangible assets | | | 24.2 | | | | – | | | | 24.2 | |
Foreign currency loss on multicurrency divestiture loans | | | 3.8 | | | | – | | | | 3.8 | |
Salus CLO debt extinguishment | | | (76.2 | ) | | | – | | | | (76.2 | ) |
| | | (3.0 | ) | | $ | – | | | | (3.0 | ) |
| | | | | | | | | | | | | |
| | $ | 323.9 | | | $ | 256.3 | | | $ | 580.2 | |
| | | | | | | | | | | | | |
| | $ | 2,622.1 | | | $ | 1,342.1 | | | $ | 3,964.2 | |
| | | | | | | | | | | | | |
| | | 12.4 | % | | | 19.1 | % | | | 14.6 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Audit-Related Fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of the consolidated financial statements.
Tax Fees are fees for tax compliance, tax advice and tax planning.
All Other Fees are fees, if any, for any services not included in the first three categories.
PART IV
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Item 15. | Exhibits, Financial Statements SchedulesEXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES |
(a) List of Documents Filed
1) Financial Statements
All financial statements of the Registrant are included in the Original 10-K.
2) Financial Statement Schedules
All financial statement schedules have been omitted since they are either not applicable or not required, or the information is contained within the consolidated financial statements included in the Original 10-K.
(b) List of Exhibits. The following is a list of exhibits filed with this Form 10-K/A.
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Exhibit No. | | Description of Exhibits |
10.1* | |
| | TransitionAgreement and Plan of Merger, dated as of February 24, 2018, by and among Spectrum Brands Legacy, Inc. (f.k.a. Spectrum Brands Holdings, Inc.), Spectrum Brands Holdings, Inc. (f.k.a. HRG Group, Inc.), HRG SPV Sub I, Inc. and HRG SPV Sub II, LLC (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Holdings, Inc. (f.k.a. HRG Group, Inc.) on February 26, 2018 (File No. 001-4219)) (Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC a copy of any omitted schedule upon request.). |
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| | Amendment No. 1 to Agreement and Plan of Merger, dated as of June 8, 2018, by and among Spectrum Brands Holdings, Inc., HRG Group, Inc., HRG SPV Sub I, Inc. and HRG SPV Sub II, LLC (incorporated herein by reference to Exhibit 2.2 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Holdings, Inc. (f.k.a. HRG Group, Inc.) on July 13, 2018 (File No. 001-4219)). |
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| | Acquisition Agreement, dated as of November 17, 2016,15, 2018, by and between HRG Group,among Spectrum Brands Holdings, Inc. and Omar M. Asali.Energizer Holdings, Inc. (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Holdings, Inc. on November 19, 2018 (File No. 001-4219)) (Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC a copy of any omitted schedule upon request.). |
10.2* | |
| | Separation |
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| | Indenture governing Spectrum Brands, Inc.’s 6.125% Senior Notes due 2024, dated as of December 4, 2014, among Spectrum Brands, Inc., the guarantors named therein and US Bank National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Legacy, Inc. (f.k.a. Spectrum Brands Holdings, Inc.) on December 8, 2014 (File No. 001-34757)). |
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| | Indenture governing Spectrum Brands, Inc.’s 5.750% Senior Notes due 2025, dated as of May 20, 2015, among Spectrum Brands, Inc., the guarantors named therein and US Bank National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Legacy, Inc. (f.k.a. Spectrum Brands Holdings, Inc.) on May 20, 2015 (File No. 001-34757)). |
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| | Indenture governing Spectrum Brands, Inc.’s 4.000% Senior Notes due 2026, dated as of September 20, 2016, among Spectrum Brands, Inc., the guarantors named therein, U.S. Bank National Association, as trustee, Elavon Financial Services DAC, UK Branch, as paying agent and Elavon Financial Services DAC, as registrar and transfer agent (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Legacy, Inc. (f.k.a. Spectrum Brands Holdings, Inc.) on December 8, 2014 (File No. 001-34757)). |
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| | Indenture governing Spectrum Brands, Inc.’s 5.00% Senior Notes due 2029, dated as of September 24, 2019, among Spectrum Brands, Inc., the guarantors named therein and US Bank National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Holdings, Inc. (f.k.a. HRG Group, Inc.) on September 24, 2019 (File No. 001-4219)). |
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| | Indenture governing Spectrum Brands, Inc.’s 5.50% Senior Notes due 2030, dated as of June 30, 2020, among Spectrum Brands, Inc., the guarantors named therein and US Bank National Association, as trustee (filed by incorporation by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Holdings, Inc. (f.k.a. HRG Group, Inc.) on June 30, 2020 (File No. 001-4219)). |
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| | Indenture governing the 3.875% Senior Notes due 2031, dated as of March 3, 2021, among Spectrum Brands, Inc., the guarantors party thereto and US Bank National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Holdings, Inc. on March 3, 2021 (File No. 001-4219). |
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| | Rights Agreement, dated as of February 24, 2018, between Spectrum Brands Holdings, Inc. (f.k.a. HRG Group, Inc.) and American Stock Transfer & Trust Company, LLC, as Rights Agent, which includes the Form of Certificate of Designation of Series B Preferred Stock of Spectrum Brands Holdings, Inc. (f.k.a. HRG Group, Inc.) as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of Terms of the Rights Agreement as Exhibit C (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Holdings, Inc. (f.k.a. HRG Group, Inc.) on February 26, 2018 (File No. 001-4219)). |
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| | Security Agreement, dated as of June 23, 2015, by and among Spectrum Brands, Inc., SB/RH Holdings, LLC, the subsidiary guarantors party thereto from time to time and Deutsche Bank AG New York Branch, as collateral agent (filed by incorporation by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC by Spectrum Brands Legacy, Inc. (f.k.a. Spectrum Brands Holdings, Inc.) on June 23, 2015 (File No. 001-34757)). |
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10.3* | |
| | Form of Employee Nonqualified Option AwardEmployment Agreement, dated as of December 14, 2016,September 13, 2018, by and among Ehsan Zargar, Spectrum Brands Holdings, Inc. (f.k.a. HRG Group, Inc.) and Spectrum Brands, Inc. (incorporated herein by reference to Exhibit 10.41 to the Annual Report on Form 10-K filed with the SEC by Spectrum Brands Holdings, Inc. (f.k.a. HRG Group, Inc.) on November 23, 2018 (File No. 001-4219)). |
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31.1* | |
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| @ | Included as an exhibit to the Original Form 10-K. |
| + | Denotes a management contract or compensatory plan or arrangement. |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | | HRG Group, Inc.SPECTRUM BRANDS HOLDINGS, INC. (Registrant)
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Dated: | January 27, 2017 | | |
| | By: | | |
| Jeremy W. Smeltser | | |
| | | George C. Nicholson |
| | Name: | | Jeremy W. Smeltser | Senior
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| | | | Title: | | Executive Vice President Chief Accounting Officer | | |
| | | | | | and Chief Financial Officer (on behalf of the Registrant)
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EXHIBIT INDEX
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Exhibit No. | | Description of Exhibits |
10.1*By: | | Transition Agreement, dated as of November 17, 2016, by and between HRG Group,Spectrum Brands Holdings, Inc. and Omar M. Asali. |
10.2*, | | Separation and Release Agreement, dated as of November 28, 2016, by and between HRG Group, Inc. and David M. Maura. |
10.3* | | Form of Employee Nonqualified Option Award Agreement, dated as of December 14, 2016, by and between HRG Group, Inc. and David Maura. |
31.1* | | Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2*its sole member | | Certification of Principal |
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| | By: | | | | |
| | | | Name: | | Jeremy W. Smeltser | | |
| | | | Title: | | Executive Vice President | | |
| | | | | | and Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | |
