See accompanying Notes to Consolidated Financial Statements.

 

 

See accompanying Notes to Consolidated Financial Statements.

See accompanying Notes to Consolidated Financial Statements.

See accompanying Notes to Consolidated Financial Statements.

BED BATH & BEYOND INC. AND SUBSIDIARIES

 

The accompanying consolidated financial statements have been prepared without audit. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals and elimination of intercompany balances and transactions) necessary to present fairly the financial position of Bed Bath & Beyond Inc. and subsidiaries (the "Company") as of November 30, 2019August 29, 2020 and March 2, 2019February 29, 2020 and the results of its operations, shareholders' equity, and comprehensive (loss) income for the three and ninesix months ended November 30,August 29, 2020 and August 31, 2019, and December 1, 2018, respectively, and its cash flows for the ninesix months ended November 30,August 29, 2020 and August 31, 2019, and December 1, 2018, respectively.

 

The accompanying unaudited consolidated financial statements are presented in accordance with the requirements for Form 10-Q and consequently do not include all the disclosures normally required by U.S. generally accepted accounting principles ("GAAP"). Reference should be made to the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended March 2, 2019February 29, 2020 for additional disclosures, including a summary of the Company'sCompany’s significant accounting policies, and to subsequently filed Form 8-Ks.

 

The Company accounts for its operations as 2 operating segments: North American Retail and Institutional Sales. The Institutional Sales operating segment, which is comprised of Linen Holdings, does not meet the quantitative thresholds under GAAP and therefore is not a reportable segment. Net sales outside of the U.S. for the Company were not material for the three and ninesix months ended November 30, 2019August 29, 2020 and December 1, 2018.August 31, 2019. As the Company operates in the retail industry, its results of operations are affected by general economic conditions and consumer spending habits.

  

The consequences of the pandemic and impact to the economy continue to evolve and the full extent of the impact is uncertain as of the date of this filing. To date, the pandemic has materially disrupted the operations of the Company adoptedand has resulted in the recording of additional non-cash impairment charges. The Company has proactively taken steps to strengthen its financial position and liquidity, including, among other things: (i) renegotiating payment terms for goods, services and rent, managing to lower inventory levels, and reducing discretionary spending such as business travel, advertising and expenses associated with the maintenance of stores that were temporarily closed; (ii) deferring other previously planned capital expenditures; (iii) postponing its plans for share repurchases and suspending dividends; and (iv) prioritizing spending on essential capital expenditures to drive strategic growth plans, including investments in digital, BOPIS and contactless Curbside Pickup services.

In some instances, the renegotiations of lease terms have led to agreements with landlords for rent abatements or rental deferrals. Total payments withheld and/or delayed or deferred as of August 29, 2020 were approximately $50.6 million and are included in current lease liabilities. Additional negotiations of payment terms are still in process, and there can be no assurance that the Company will be able to successfully renegotiate payment terms with its business partners, and the ultimate outcomes of these activities, including the responses of certain business partners, are not yet known. The COVID-19 pandemic has materially adversely impacted the Company’s results of operations and cash flows for its first half of fiscal 2020, and it could continue to impact results of operations and cash flows, as well as the Company’s financial condition. Given the uncertainty regarding the spread of this accounting standardvirus and the timing of the economic recovery, the ultimate financial impact cannot be reasonably predicted or estimated at this time.

Sales are recognized upon purchase by customers at the Company’s retail stores or upon delivery for products purchased from its websites. The value of point-of-sale coupons and point-of-sale rebates that result in a reduction of the price paid by the customer are recorded as a reduction of sales. Shipping and handling fees that are billed to a customer in a sale transaction are recorded in sales. Taxes, such as sales tax, use tax and value added tax, are not included in sales.

Sales returns are provided for in the period that the related sales are recorded based on historical experience. Although the estimate for sales returns has not varied materially from historical provisions, actual experience could vary from historical experience in the future if the level of sales return activity changes materially. In the future, if the Company concludes that an adjustment is required due to material changes in the returns activity, the liability for estimated returns and the corresponding right of return asset will be adjusted accordingly. As of November 30, 2019,August 29, 2020 and February 29, 2020, the Company recorded a liability for estimated returns of $89.0$57.5 million is included inand $71.6 million, respectively, within accrued expenses and other current liabilities, and the corresponding right of return asset for merchandise of $55.0$34.3 million is included inand $42.5 million, respectively, within prepaid expenses and other current assets.

The Company sells a wide assortment of domestics merchandise and home furnishings. Domestics merchandise includes categories such as bed linens and related items, bath items and kitchen textiles. Home furnishings include categories such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings (including furniture and wall décor), consumables and certain juvenile products. Sales of domestics merchandise and home furnishings accounted for approximately 35.0%37.5% and 65.0%62.5% of net sales, respectively, for the three months ended November 30, 2019,August 29, 2020, and approximately 34.6%38.7% and 65.4%61.3% of net sales, respectively, for the three months ended December 1, 2018.August 31, 2019. Sales of domestics merchandise and home furnishings accounted for approximately 36.4%35.2% and 63.6%64.8% of net sales, respectively, for both the ninesix months ended November 30, 2019August 29, 2020 and December 1, 2018.37.2% and 62.8% of net sales, respectively, for the six months ended August 31, 2019.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., "the exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The hierarchy for inputs used in measuring fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company'scompany’s judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability must be classified in its entirety based on the lowest level of input that is significant to the measurement of fair value. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

The Company did not have any financial assets utilizing Level 2 inputs. Financial assets utilizing Level 3 inputs included long term investments in auction rate securities consisting of preferred shares of closed end municipal bond funds (See "Investment Securities," Note 6). 

The Company'sCompany’s financial instruments include cash and cash equivalents, investment securities, accounts payable, long term debt and certain other liabilities. The book value of the Company's financial instruments, excluding long term debt, is representative of their fair values. The Company’s investment securities consist primarily of U.S. Treasury securities, which are stated at amortized cost and auction rate securities, which are stated at their fair value. The book valueis based on quoted prices in active markets for identical instruments (Level 1 valuation). As of August 29, 2020 and February 29, 2020, the financial instruments, excluding the Company's long term debt, is representative of their fair values. The fair value of the Company'sCompany’s long term debt iswas approximately $1.158$895.0 million and $1.126 billion, as of November 30, 2019,respectively, which is based on quoted prices in active markets for identical instruments (i.e., Level 1 valuation), compared to the carrying value of approximately $1.195 billion and $1.495 billion.

 

 

Included in cash and cash equivalents are credit and debit card receivables from banks, which typically settle within five business days, of $221.0$87.4 million and $92.9$79.7 million as of November 30, 2019August 29, 2020 and March 2, 2019,February 29, 2020, respectively.

 

The Company'sCompany’s investment securities as of November 30, 2019August 29, 2020 and March 2, 2019February 29, 2020 are as follows:

Auction Rate Securities

 

As of November 30, 2019August 29, 2020 and March 2, 2019,February 29, 2020, the Company'sCompany’s long term available-for-sale investment securities represented approximately $20.3 million par value of auction rate securities consisting of preferred shares of closed end municipal bond funds, less temporary valuation adjustments of approximately $0.3 million$482,000 and $0.4 million,$5,000, respectively. Since these valuation adjustments are deemed to be temporary, they are recorded in accumulated other comprehensive loss, net of a related tax benefit, and did not affect the Company'sCompany’s net earnings.

 

U.S. Treasury Securities

As of November 30, 2019,February 29, 2020, the Company did not hold anyCompany’s short term held-to maturity securities. As of March 2, 2019, the Company’s short term held-to-maturity securities included approximately $485.8$385.6 million of U.S. Treasury Bills with remaining maturities of less than one year. There were 0 short term held-to maturity securities as of August 29, 2020. These securities are stated at their amortized cost, which approximates fair value, which is based on quoted prices in active markets for identical instruments (i.e., Level 1 valuation).value.

 

 

The Company reviews long-lived assets for impairment when events or changes in circumstances indicate the carrying value of these assets may exceed their current fair values. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. In the three and ninesix months ended November 30, 2019,August 29, 2020, the Company recorded $11.8$2.0 million and $40.1$82.4 million, respectively, forof non-cash pre-tax impairment charges within goodwill and other impairments in the consolidated statement of operations for certain store-level assets, including leasehold improvements and operating lease assets. There were 0 impairments to long-lived assets inIn the three and ninesix months ended December 1, 2018.August 31, 2019, the Company recorded a $28.4 million non-cash pre-tax impairment charge within goodwill and other impairments for certain store level assets, including leasehold improvements and operating lease assets. In the future, if events or market conditions affect the estimated fair value to the extent that a long-lived asset is impaired, the Company will adjust the carrying value of these long-lived assets in the period in which the impairment occurs.

 

 

The components of total lease cost for the three and ninesix months ended November 30,August 29, 2020 and August 31, 2019, were as follows:

As of November 30, 2019,August 29, 2020 and February 29, 2020, assets and liabilities related to the Company'sCompany’s operating and finance leases were as follows:

As of November 30, 2019,August 29, 2020, the Company'sCompany’s lease liabilities mature as follows:

The Company'sCompany’s lease terms and discount rates were as follows:

Other information with respect to the Company'sCompany’s leases is as follows:

 

Senior Unsecured Notes

 

On July 17, 2014, the Company issued $300 million aggregate principal amount of 3.749% senior unsecured notes due August 1, 2024, $300 million aggregate principal amount of 4.915% senior unsecured notes due August 1, 2034 and $900 million aggregate principal amount of 5.165% senior unsecured notes due August 1, 2044 (collectively, the "Notes"). Interest on the Notes is payable semi-annually on February 1 and August 1 of each year. In fiscal 2018, the Company purchased and retired approximately $4.6 million of senior unsecured notes due August 1, 2024.

 

The Notes were issued under an indenture (the "Base Indenture"), as supplemented by a first supplemental indenture (together, with the Base Indenture, the "Indenture"), which contains various restrictive covenants, which are subject to important limitations

Asset-Based Credit Agreement

On November 14, 2017,June 19, 2020, the Company entered into a secured asset-based credit agreement (the “Credit Agreement”) among the Company, certain of the Company’s U.S. and Canadian subsidiaries party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (in such capacity, the “Agent”), and the lenders party thereto, which replaced its existingthe Company’s previous $250 million five year senior unsecured revolving credit facility agreement with various lenders withmaturing November 14, 2022 ("Revolver"), as well as the Company's 2 prior $100 million uncommitted lines of credit.

The Credit Agreement provides for a new $250 million five year senior unsecuredsecured asset-based revolving credit facility agreement ("Revolver"(the “ABL Facility”) with various lenders maturing November 14, 2022.aggregate revolving commitments established at closing of $850 million, including a swingline subfacility and a letter of credit subfacility. The new RevolverCredit Agreement has essentially the same terms and requirements as the prior revolving credit facility agreement. During the nine months ended November 30, 2019,an uncommitted expansion feature which allows the Company did not haveto request, at any time following the delivery of an initial field exam and appraisal, an increase in aggregate revolving commitments under the ABL Facility or elect to enter into a first-in-last-out loan facility, collectively, in an aggregate amount of up to $375 million, subject to certain customary conditions. The Credit Agreement matures on June 19, 2023. A portion of the proceeds advanced under the Credit Agreement were used to refinance $236.4 million in borrowings outstanding under the Revolver. These borrowings were fully repaid in August 2020. As of August 29, 2020, the Company had 0 loans outstanding under the ABL Facility, but had outstanding letters of credit of $119.0 million.

The Company amortizes deferred financing costs for the Notes and the Revolver are being amortizedABL Facility over the term of each of the Notes and the term of the Revolvertheir respective terms and such amortization is included in interest expense, net in the consolidated statements of operations. Interest expense related to the Notes and the revolving credit facilities, including the commitment fee and the amortization of deferred financing costs, was approximately $21.6 million and $18.2 million, respectively for both the three months ended November 30, 2019 and December 1, 2018 and $54.6 million and $54.7 million for the nine months ended November 30, 2019 and December 1, 2018, respectively.

 

Cash dividends, if any, are accrued as a liability on the Company'sCompany’s consolidated balance sheets and recorded as a decrease to retained earnings when declared.

 

 

The Company measures all stock-based compensation awards for employees and non-employee directors using a fair value method and records such expense, net of estimated forfeitures, in its consolidated financial statements. Currently, the Company's stock-

 

Stock-based compensation expense for the three and ninesix months ended November 30, 2019August 29, 2020 was approximately $4.7$8.2 million ($3.85.5 million after tax or $0.03$0.04 per diluted share) and approximately $36.1$15.9 million ($29.68.7 million after tax or $0.24$0.07 per diluted share), respectively. Stock-based compensation expense for the three and ninesix months ended December 1, 2018August 31, 2019 was approximately $12.3$12.1 million ($11.18.4 million after tax or $0.08$0.07 per diluted share) and approximately $49.3$31.4 million ($36.925.8 million after tax or $0.27$0.20 per diluted share), respectively. In addition, the amount of stock-based compensation cost capitalized for the ninesix months ended November 30,August 29, 2020 and August 31, 2019 and December 1, 2018 was approximately $0.7$0.3 million and $1.6$0.5 million, respectively.

 

Incentive Compensation Plans

 

The Company grantsmay grant awards under the Bed Bath & Beyond 2018 Incentive Compensation Plan (the “2018 Plan”) and the Bed Bath & Beyond 2012 Incentive Compensation Plan (the "2012 Plan"), although plan-based grants to date have been made solely under the 2012 Plan. The 2018 Plan includes an aggregate of 4.6 million shares of common stock authorized for issuance of awards permitted under the 2018 Plan, including stock options, stock appreciation rights, restricted stock awards, performance awards and other stock based awards. The 2018 Plan supplements the 2012 Plan, which amended and restated the Bed Bath & Beyond 20182004 Incentive Compensation Plan (the "2018 Plan"“2004 Plan”). The 2012 Plan includes an aggregate of 43.2 million common shares authorized for issuance andof awards permitted under the 2012 Plan (similar to the 2018 Plan). Outstanding awards that were covered by the 2004 Plan includes an aggregate share reserve of 4.6 million shares of common stock, resultingcontinue to be in a total of 47.8 million shares authorized for issuanceeffect under both plans.the 2012 Plan.

 

The terms of the 2012 Plan and the 2018 Plan are substantially similar and enable the Company to offer incentive compensation through stock options (whether nonqualified stock options or incentive stock options), restricted stock awards, stock appreciation rights, performance awards and other stock-basedstock based awards, and cash-based awards. Grants are determined by the Compensation Committee of the Board of Directors of the Company for those awards granted to executive officers, and by the Board of Directors of the Company for awards granted to non-employee directors and by an appropriate committee for all other awards granted.directors. Stock option grants generally become exercisable in either 3 or 5 equal annual installments beginning one year from the date of grant, subject, in general, to the recipient remaining in the Company'sCompany’s service on specified vesting dates. Restricted stock awards generally become vested in 5 to 7 equal annual installments beginning one to three years from the date of grant, subject, in general, to the recipient remaining in the Company'sCompany’s service on specified vesting dates. Performance stock units generally vest over a period of three to four years from the date of grant dependent on the Company'sCompany’s achievement of performance-based tests and subject, in general, to the executive remaining in the Company'sCompany’s service on specified vesting dates.

The Company generally issues new shares for stock option exercises, restricted stock awards and vesting of restricted stock units and performance stock units. NaN grants have been made to date under the 2018 Plan, which expires in May 2028. The 2012 Plan expires in May 2022.

As described in further detail below, in fiscal 2020 and 2019, the Company granted stock-based awards to certain of the Company'sCompany’s new President and Chief Executive Officerexecutive officers as an inducementinducements material to histheir commencement of employment and entry into an employment agreement with the Company. The inducement awards were made in accordance with Nasdaq Listing Rule 5635(c)(4)and were not made under the 2012 Plan or the 2018 Plan.

Stock Options

 

Stock option grants arewere issued at fair market value on the date of grant and generally becomebecame exercisable in either 3 or 5 equal annual installments beginning one year from the date of grant, subject, in general, to the recipient remaining in the Company'sCompany’s service on specified vesting dates. Option grants expireexpired eight years after the date of grant. All option grants are nonqualified. As of November 30, 2019, unrecognized compensation expense related toDuring the unvested portion of the Company's stock options was $3.3 million, which is expected to be recognized over a weighted average period of 2.9 years.

Restricted Stock

 

Restricted stock awards are issued and measured at fair market value on the date of grant and generally become vested in five5 to seven7 equal annual installments beginning one to three years from the date of grant, subject, in general, to the recipient remaining in the Company'sCompany’s service on specified vesting dates. Vesting of restricted stock is based solely on time vesting. As of November 30, 2019,August 29, 2020, unrecognized compensation expense related to the unvested portion of the Company'sCompany’s restricted stock awards was $78.3$37.1 million, which is expected to be recognized over a weighted average period of 3.83.2 years.

 

Changes in the Company'sCompany’s restricted stock for the ninesix months ended November 30, 2019August 29, 2020 were as follows:

 

Performance Stock Units ("PSUs")

 

Performance stock units ("PSUs")PSUs are issued and measured at fair market value on the date of grant. Vesting of PSUs awarded to certain of the Company'sCompany’s executives is dependent on the Company'sCompany’s achievement of a performance-based test during a one-year period from the date of grant and during a three-year period from the date of grant and, assuming achievement of the performance-based test, time vesting over periods of up to four years, subject, in general, to the executive remaining in the Company'sCompany’s service on specified vesting dates. For awardsPSUs granted in fiscal 2019, performance during athe one-year period is based on a one-year Company Earnings Before Interest and Taxes ("EBIT") goalrelative to a target amount and performance during the three-year period is based on a three-year cumulative Company EBIT goal and a relative three-year Total Shareholder Return ("TSR") goalcombination of total shareholder return relative to a peer group.group of the Company and cumulative EBIT relative to a target amount. The achievement of PSU awards rangeranges from a floor of 0 to a cap of 150% of target achievement. For awards granted in fiscal 2018 and prior, performance during the three-year period were based on Return on Invested Capital ("ROIC") or a combination of EBIT margin and ROIC relative to a peer group. PSUs are converted into shares of common stock upon payment following vesting. Upon grant of the PSUs, the Company recognizes compensation expense related to these awards based on the Company'sCompany’s estimate of the percentage of the

The fair value of the PSUs granted in fiscal 2019, excluding the stock-based inducement awards discussed below,2020 for which performance during the three-year period will be based on a relative three-year Total Shareholder Return ("TSR") goal relative to a peer group was estimated on the date of the grant using a Monte Carlo simulation that uses the assumptions noted in the following table.

Changes in the Company'sCompany’s PSUs excluding the stock-based inducement awards discussed below, for the ninesix months ended November 30, 2019August 29, 2020 were as follows:

Inducement Awards

On November 4,In fiscal 2020 and 2019, in connection with the appointment of the Company's new President and Chief Executive Officer, the Company granted stock-based awards to certain of the Company’s new executive officers as an inducementinducements material to histheir commencement of employment and entry into an employment agreement with the Company. These inducement awards were approved by the Compensation Committee of the Board of Directors of the Company and did not require shareholder approval in accordance with Nasdaq Listing Rule 5635(c)(4). The following

RSUs granted as inducement awards are issued and measured at fair market value on the date of grant and generally become vested in 1 to 3 equal annual installments beginning one year from the date of grant, subject, in general, to the recipient remaining in the Company’s service on specified vesting dates. Changes in the RSUs granted as inducement awards for the six months ended August 29, 2020 were granted:as follows:

Time-vesting restricted stock units ("RSUs")On November 4, 2019, in connection with the appointment of the Company’s new President and Chief Executive Officer, the Company granted inducement awards consisting of 578,753 RSUs, which are included in the following:

Other than with respect to the vesting schedule described above, these inducement awards are generally subject to substantially the same terms and conditions as awards that are made under the 2018 Plan. RSUs are converted into shares of common stock upon payment following vesting. The weighted average fair value of these stock-based inducement awards was $13.65. As of November 30, 2019,August 29, 2020, unrecognized compensation expense related to the unvested portion of the RSU and PSU inducement awards comprised of RSUs was $6.7$6.9 million and $2.2 million, respectively, which is expected to be recognized over a weighted average period of 1.32.0 years and unrecognized compensation expense related to the unvested portion of the1.2 years, respectively. Each inducement awards comprised of PSUs was $3.4 million, which is expected to be recognized over a weighted average period of 1.9 years. Pursuant to the terms of his employment agreement, the President and CEOaward recipient must hold at least fortyfifty percent (40%(50%) of the after-tax shares of common stock he receivesreceived pursuant to the inducement awards until he hasthey have satisfied the terms of the Company’s stock ownership guidelines.

 

The Company presents earnings per share on a basic and diluted basis. Basic earnings per share has been computed by dividing net earnings by the weighted average number of shares outstanding. Diluted earnings per share has been computed by dividing net earnings by the weighted average number of shares outstanding, including the dilutive effect of stock-based awards as calculated under the treasury stock method.

 

The Company paid income taxes of $40.2$4.6 million and $57.8$39.6 million in the first ninesix months of fiscal 20192020 and 2018,2019, respectively. In addition, the Company hadmade interest payments of approximately $42.8$42.1 million and $42.9$40.6 million in the first ninesix months of fiscal 2020 and 2019, and 2018, respectively.

 

 

The District Attorney's office for the County of Ventura, together with District Attorneys for other counties in California (together, the “District Attorneys"), recently concluded an investigation regarding the management and disposal at the Company'sCompany’s stores in California of certain materials that may be deemed hazardous or universal waste under California law. On March 19, 2019, the District Attorneys provided the Company with a settlement demand that included a proposed civil penalty, reimbursement of investigation costs, and certain injunctive relief, including modifications to the Company'sCompany’s existing compliance program, which already includes associate training, on-going review of disposal rules applicable to various product categories, and specialized third-party disposal.The During the six months ended August 29, 2020, the Company is working withand the District Attorneys towardsagreed to final terms on a resolutionsettlement payment of approximately $1.5 million to resolve the matter. The Company has also agreed to spend $171,000 over the next 36 months on refinements to its compliance program.  The Company and District Attorneys executed a Stipulated Judgment to this mattereffect, which was recently filed with the court. As of August 29, 2020 and hasFebruary 29, 2020, the Company had recorded an accrual for the estimated probable loss for this matter as of November 30, 2019 and March 2, 2019. While no assurance can be given as to its ultimate outcome, the Company does not believe that the final resolution of this matter will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.matter.

On April 21, 2019, Warren Eisenberg and Leonard Feinstein transitioned to the role of Co-Founders and Co-Chairmen Emeriti of the Board of Directors of the Company.  As a result of this transition, Mr. Eisenberg and Mr. Feinstein ceased to be officers of the Company effective as of April 21, 2019, and became entitled to the payments and benefits provided under their employment agreements that apply in the case of a termination without cause, which generally include continued senior status payments until May 2027 and continued participation for the Co-Founders (and their spouses, if applicable) at the Company'sCompany’s expense in employee plans and programs. In addition, the Co-Founders areremain entitled to supplemental pension payments specified in their employment agreements of $200,000 per year (as adjusted for a cost of living increase), until the death of the survivor of the applicable Co-Founder and his spouse, reduced by the continued senior status payments referenced in the foregoing sentence.above.

Pursuant to their respective restricted stock and performance stock unit agreements, shares of restricted stock and performance-based stock units granted to Messrs. Eisenberg and Feinstein vested upon their resignation as members of the Board of Directors effective May 1, 2019, subject, however, to attainment of any applicable performance goals and the certification of the applicable performance-based tests by the Compensation Committee, as provided under their award agreements.

The Company'sCompany’s former Chief Executive Officer ("Former CEO") departed the Company effective as of May 12, 2019. In accordance with the terms of the Former CEO's employment and equity award agreements, the Former CEO was entitled to three times his then-current salary, payable over three years in normal payroll installments, except that any amount due prior to the six months after his departure, was paid in a lump sum after such six-month period. Such amounts will be reduced by any compensation earned with any subsequent employer or otherwise and will be subject to the Former CEO's compliance with a one-year non-competition and non-solicitation covenant. On October 21, 2019, the Former CEO entered into an agreement (the “Former CEO PSU settlement agreement”) with the Company to reduce the PSUs held by him by an excess amount of outstanding PSUs granted to the Former CEO in the Company’s 2018 fiscal year as a result of the use of the fiscal 2017 peer group in lieu of the fiscal 2018 peer group. Further, as a result of this departure, the time-vesting component of the Former CEO's stock-based awards accelerated, including (i) stock options (which currently arewere “underwater”) and expired without having been exercised by the Former CEO), (ii) PSU awards which had previously met the related performance-based test, had been certified by the Compensation Committee, and remained subject solely to time-vesting, and (iii) PSU awards (assuming target level of performance) which remain subject to attainment of any performance goals and the certification of the applicable performance-based tests by the Compensation Committee, as provided under his award agreements.agreements and subject to the terms of the Former CEO PSU settlement agreement.

The Formerformer CEO was also party to a supplemental executive retirement benefit agreement (“SERP”) and a related escrow agreement, pursuant to which the Former CEO was entitled to receive a supplemental retirement benefit as a result of the separation from service from the Company. Pursuant to the SERP, as a result of the separation from service with the Company as of May 12, 2019 being treated as a termination without cause, the Former CEO iswas entitled to a lump sum payment equal to the present value of an annual amount equal to 50% of the Former CEO's annual base salary on the date of termination of employment if such annual amount were paid for a period of 10 years in accordance with the Company’s normal payroll practices, subject to the Former CEO's timely execution and non-revocation of a release of claims in favor of the Company which(which occurred). This amount was paid on November 13, 2019, the first business day following the six-month anniversary of the Former CEO's termination of service. Although the SERP provides thatThe Company has no further obligations to the Former CEO will be protected from any impact resulting fromunder the possible application of Section 409A of the Code to the terms of the SERP due to the complexities surrounding Section 409A, the Company believes that no such payment will be required.SERP.

TheDuring fiscal 2019, the Company has expensed pre-tax charges related to both the transition of Messrs. Eisenberg and Feinstein to the role of Co-Founders and Co-Chairmen Emeriti of the Board of Directors of the Company and the departure of the Former CEO of approximately $35.2$36.8 million.