ARTICLE 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY PROVISIONS OF CERTAIN OFFICERS.
Departure of a leader
At March 7, 2022, Capri Holdings Limited (the “Company”) announced that Joshua Schulmangeneral manager of Michael Korswill leave the Company as of this same date (the “Separation Date”).
Separation and Release Agreement
In connection with by Mr Schulman separation of functions with the Company, the Company and Mr Schulman has entered into a separation and release agreement (the “Separation Agreement”) which provides for the following payments and benefits and is consistent with the severance pay provisions of by Mr Schulman
employment contract, dated August 24, 2021:
• Continuation of the payment of by Mr Schulman base salary (at the rate of $1,300,000) for a period of two (2) years from the Date of Separation, totaling $2,600,000; • Payment equivalent to two (2) years of his target annual cash bonus (using a base salary of $1,300,000), totaling $5,200,000; •Payment of $700,000 in the form of a guaranteed bonus for fiscal year 2022 (the “FY Guaranteed Bonus”) plus an additional payout, based on actual performance for fiscal year 2022, to the extent that actual performance results in a higher bonus payout to the FY 22 Guaranteed Bonus, and pro rata for the part of the 2022 financial year which Mr Schulman was actually employed by the Company; and • Pursuing the acquisition of by Mr Schulman unvested restricted stock units with a vesting date within twelve (12) months of the separation date.
All payments under the separation agreement will be made less applicable withholding taxes and payroll deductions.
The separation agreement contains mutual non-disparagement provisions and requires that Mr Schulman comply with restrictive confidentiality and non-solicitation clauses. The Company is committed to reducing by Mr Schulman
non-competition obligations for a period of six months expiring on September 2, 2022.
The parties have each agreed to a release of claims against the other.
The above summary of the Separation Agreement is a summary only and is qualified in its entirety by reference to the Separation Agreement, a copy of which will be filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ending April 2, 2022.
Fifth amended and restated Idol employment contract
At March 7, 2022the company and Michael Kors (USA), Inc. (“United States“, and together with the Company, the “Company Parties”) have entered into a fifth amended and restated employment agreement with John D. Idol, Chairman and Chief Executive Officer of the Company. The following is a description of the material terms of the employment contract with Mr. Idol (the “Idol Employment Agreement”). This description is qualified in its entirety by the terms of the Idol Employment Agreement which the Company intends to file with the US Securities and Exchange Commission as an attachment to its annual report on Form 10-K for the fiscal year ending April 2, 2022. Since Idol’s employment agreement is a restatement of its prior agreement, many of the provisions described below are continuations of the terms of the prior agreement and were previously disclosed.
The Company Parties agree to continue to employ Mr. Idoland Mr. Idol agrees to continue to be employed by the Company Parties as President and Chief Executive Officer on the terms and subject to the conditions contained in the Idol Employment Agreement and until the Idol Employment Agreement is terminated in accordance to the Idol employment contract.
For the remainder of the fiscal year ending April 2, 2022, Mr Idol the base salary remains at the annual salary reduced by $1,215,000 (due to the impact of COVID-19 on the Company’s business). As of fiscal year 2023, Mr Idol the annual base salary is restored to $1,350,000 (reflecting his pre-COVID-19 base salary).
Mr. Idol will continue to be eligible to participate in Capri Holdings Limited’s second amended and restated Omnibus Incentive Plan (the “Incentive Plan”). Per Idol’s employment agreement, annual cash incentives will be based on a fixed percentage of Mr Idol base salary with incentive levels set at 0% for performance below established thresholds and (i) for fiscal year 2022, target of 300% – 400% maximum, and (ii) for fiscal year 2023 and beyond, 200% target – 400% maximum. Mr Idol the actual annual cash incentive will be interpolated based on the actual level of achievement of the performance elements, measures and targets established by the board (or an appropriate committee thereof).
All annual cash incentive payments are subject to the terms and conditions of the incentive plan, including that Mr. Idol be employed by the Company on the date the annual cash incentive is actually paid to similarly situated executives. Consequently, if Mr. Idol resigns other than for “good cause” (as defined in Idol’s Employment Agreement) or is terminated for “cause” (as defined in Idol’s Employment Agreement) prior to the date on which the annual cash incentive is actually paid to executives in a similar situation, he is not entitled to receive the annual cash incentive payment. If the Board (or an appropriate committee thereof) determines that Mr. Idol has been overpaid as a result of certain restatements of the Company’s reported financial or operating results due to material non-compliance with financial reporting requirements, then it may reduce the amount of the incentive in cash or require Mr. Idol repay the overpaid portion of the cash incentive, so long as the determination that a cash incentive has been overpaid is made before the end of the third fiscal year following the year for which the performance evaluation of the cash incentive was incorrect, provided that if any action has been taken during such period to restate the Company’s financial or operating results, such three-year period shall be extended until such restatement be finished.
In addition, in accordance with the Company’s annual performance review cycle (which generally takes place in June of each year), on an annual basis Mr. Idol will continue to be eligible to receive a discretionary long-term incentive award under the Incentive Plan in a form and amount, if any, to be determined at the Company’s sole discretion in accordance with the terms and conditions of such Incentive Plan and subject to reserve these.
Mr. Idol shall not accrue vacation during the term of the Idol Agreement, but shall be entitled to take unlimited vacation so long as the vacation period does not interfere with its ability to perform its obligations under the Idol Agreement. Besides, Mr. Idol remains eligible to participate in all benefit plans and programs, including but not limited to medical, dental, vision, life, disability, deferred compensation program and 401(k) insurance, which United States usually provides to senior executives. Mr. Idol is also entitled to reimbursement of reasonable and necessary business expenses incurred by him in the performance of his duties (including the cost of first class airfare) in accordance with Company policies and procedures. The Company will continue to pay the premiums, up to a maximum of $50,000 per year, for $5.0 million whole life insurance policy currently maintained by Mr. Idol. Idol’s employment contract further provides that the company will continue to provide Mr. Idol with an automobile and driver for transportation to and from Company offices and for other business purposes. Mr. Idol also retains the right to use the corporate aircraft in accordance with the airline timeshare agreement, dated November 24, 2014between him and the Company.
Mr Idol the employment contract will end at Mr Idol death or “total disability” (as defined in the Idol Employment Agreement) upon six months’ notice or with “good cause” (as defined in the Idol Employment Agreement), subject to certain notice rights and of healing. The Company may terminate
Mr Idol employment for a “cause” (as defined in Idol’s Employment Agreement) upon ten (10) days written notice, subject to Mr. Idol having certain rights to meet with the Board, and a majority of the Board approving his dismissal.
Idol’s employment agreement spells out Mr Idol right to compensation in the event of termination of employment. Pursuant to his prior consent, if his employment is terminated by the Company without “cause” or by him for “good cause”, he shall be entitled to receive a prorated portion of his annual cash bonus which would have been payable at in respect of the fiscal year, or part of the fiscal year, from the date of termination of employment plus severance pay equal to two (2) times (i) the sum of his base salary then in effect ( which will be calculated using a base salary of $1.35 million during the period that Mr. Idol has voluntarily elected to reduce his base salary due to COVID-19) and (ii) the annual cash incentive paid or payable to him in respect of the last complete financial year of the Company, payable in one payment within 30 days of termination also as payment for all accrued benefits, including earned but unpaid base salary, cash incentives, and reimbursement of all reimbursable expenses incurred prior to the termination date use. Yes Mr. Idol dies or suffers a “total disability”, in addition to the accrued benefits mentioned above, Mr. Idol (or his estate, as the case may be) is entitled to a prorated portion of his cash incentive which would have been . . .
Item 8.01. OTHER EVENTS.
At March 7, 2022, the Company has issued a press release announcing the foregoing. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 FINANCIAL STATEMENTS AND RECORDS.
99.1 Capri Holdings Limited Press Release, dated March 7, 2022
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