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Item
1.01.
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Entry
into a Material Definitive
Agreement.
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On December 11, 2009, The Children’s
Place Retail Stores, Inc. (the "Company") entered into an employment agreement
with Jane T. Elfers to secure her service as President and Chief Executive
Officer of the Company (the "Employment Agreement"). A description of
the Employment Agreement is contained in Item 5.02 below, which is incorporated
by reference into this Item 1.01.
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Item
5.02.
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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Jane
T. Elfers has been appointed as President and Chief Executive Officer of the
Company (and its subsidiaries) and as a director of the Company, effective as of
January 4, 2010. Ms. Elfers, age 48, served as President and Chief
Executive Officer of Lord & Taylor, LLC, a company that operates a specialty
department store, from May 2000 to September 2008. She earned her
Bachelor of Science degree in Business Administration from
Bucknell University where she currently serves as a member of the Board of
Trustees. A copy of the press release pursuant to which the Company
announced the appointment of Ms. Elfers as President and Chief Executive Officer
and as a director of the Company is filed as Exhibit 99.1 to this Current Report
on Form 8-K.
On
December 11, 2009, the Company and Ms. Elfers entered into the Employment
Agreement to secure her service as President and Chief Executive Officer of the
Company. The term of the Employment Agreement (the “Term”) expires on
January 31, 2013 and is automatically renewed for successive one-year terms
thereafter unless the Company or Ms. Elfers gives written notice to the other
party at least 90 days’ prior to the expiration of the then-current term of its
or her intent not to renew the term. Pursuant to the Employment
Agreement, during the Term, at each annual meeting of stockholders at which
directors are to be considered for election, the Company will nominate Ms.
Elfers for election as a director of the Company if her term as a director is
expiring.
Under
the Employment Agreement, Ms. Elfers is entitled to an annual base salary of
$1,000,000, payable in accordance with the Company’s normal payroll practices,
which salary is subject to annual increases at the discretion of the Board of
Directors of the Company (the “Board”). In addition, for each fiscal
year of the Company commencing during the Term, Ms. Elfers will be eligible to
receive an annual performance-based cash bonus award pursuant to the Company’s
annual bonus plan. The target amount and maximum amount of each
annual bonus are equal to 100% and 200%, respectively, of Ms. Elfers’ base
salary. The actual annual bonus will be paid based on the achievement
of performance measure(s) that will be established by the Compensation Committee
of the Board (the “Compensation Committee”); provided, that the target bonus for
the Company’s fiscal year ending January 31, 2011 (the “2010 Fiscal Year”) will
be earned if the Company’s operating income for such fiscal year reaches the
“Target Performance Goal” and the maximum bonus for the 2010 Fiscal Year will be
earned if the Company’s operating income for such fiscal year is 120% of the
Target Performance Goal; provided, however, that for the 2010 Fiscal Year, Ms.
Elfers will receive an annual bonus of no less than $1,000,000. The
“Target Performance Goal” will be achieved if the Company’s operating income for
the 2010 Fiscal Year is 110% of the Company’s operating income for
the fiscal year ending January 29, 2010 (the “2009 Fiscal
Year”).
In
accordance with the terms of the Employment Agreement, on January 4, 2010, Ms.
Elfers will be granted under the Company’s Amended and Restated 2005 Equity
Incentive Plan (the “2005 Equity Plan”) a deferred stock award (the “Deferred
Stock Award”) pursuant to which she will be entitled to be issued and receive a
number of shares of common stock, par value $.10 per share, of the Company
(“Common Stock”) having an aggregate value of $3,000,000 based on the closing
price,on such date of the Common Stock, as reported on the NASDAQ Global
Select Market (the “Grant Date Price”). Except as described below, the
Deferred Stock Award will vest as to one-third of the shares subject to the
Deferred Stock Award on each of the first, second and third anniversaries of the
date of grant, provided that Ms. Elfers is employed by the Company on the
respective vesting dates. Shares subject to the Deferred Stock Award will be
issued and delivered to Ms. Elfers as they vest. On January 4, 2010, Ms. Elfers
also will be granted a performance stock award (the “Performance Stock Award”)
under the 2005 Equity Plan pursuant to which she will be entitled to be
issued and to receive a number of shares of Common Stock (the “Initial
Performance Shares”) having an aggregate value of $2,000,000, based on the
Grant Date Price, if the Company’s operating income for the 2010 Fiscal
Year reaches the Target Performance Goal. Under the Performance Stock
Award, Ms. Elfers can earn an additional number of shares of Common Stock (the
“Additional Performance Shares”) having an aggregate value of $2,000,000, based
on the Grant Date Price, if the Company’s operating income for
the 2010 Fiscal Year equals or exceeds 120% of the Target Performance
Goal. Except as described below, shares subject to the Performance
Stock Award will be issued and delivered to Ms. Elfers once a determination is
made by the Board or an appropriate committee of the Board that the applicable
performance shares have been earned, provided that she is employed by the
Company on the last day of the 2010 Fiscal Year.
For
each fiscal year during the Term, Ms. Elfers will be eligible to receive awards
under the Company’s Long-Term Incentive Plan (or any successor(s) to such plan),
with the annual performance metrics thereunder to be established during the
first quarter of each fiscal year by the Compensation Committee. During the Term, Ms.
Elfers also will be eligible to receive equity interests in the Company pursuant
the Plan and any other equity plan of the Company, at the same time and on a
basis which is no less favorable to Ms. Elfers than the most favorable basis on
which such equity interests are granted to any other senior executive officer of
the Company, except for equity interests granted to any senior executive officer
in connection with an initial hire or promotion or other grants not in the
regular course.
During
the Term, Ms. Elfers will be entitled to participate in all employee benefit and
all perquisite plans, programs and arrangements offered by the Company as the
Company generally makes available to senior executives of the Company from time
to time. Ms. Elfers also will be provided financial planning and tax
preparation services (not to exceed $20,000 per year) and payment or
reimbursement for the premium cost (in the aggregate, not to exceed $35,000 per
year) of supplemental life insurance and long-term disability
insurance. In addition, during the Term, Ms. Elfers will be provided
with an automobile and driver.
The
Employment Agreement provides for certain severance benefits in the event of a
termination of Ms. Elfers’ employment by the Company other than for Cause (other
than in the case of disability), by Ms. Elfers for Good Reason (each as defined
below) or at the expiration of the Term due to the Company’s issuance of a
non-renewal notice. In the event of such termination and subject to a
release of claims against the Company by Ms. Elfers, Ms. Elfers will be entitled
to receive (i) earned, but unpaid, base salary and unpaid expense reimbursement
through the date of termination; (ii) a lump sum cash payment of any annual
bonus and other incentive compensation earned, but unpaid, for the most recent
fiscal year ended prior to the date of termination; (iii) an amount equal to the
sum of (a) two times her then current base salary and (b) the greater of two
times (x) her target bonus (which is 100% of her annual base salary) or (y) the
average of the immediately preceding two year’s annual bonuses earned by her
(the greater of clause (x) or (y), the “Bonus Amount”), payable in cash in equal
installments (the “Severance Payments”) over a period of 24 months following the
date of termination (the “Severance Period”); (iv) a lump sum cash payment of a
pro-rata portion of her target bonus for the fiscal year in which her employment
terminates; and (v) continued healthcare coverage under the Company’s group
health plan, at the Company’s expense, for a period not to exceed the expiration
of the Severance Period.
In the
event of a termination of Ms. Elfers’ employment by the Company other than for
Cause (other than in the case of disability), by Ms. Elfers for Good Reason or
at the expiration of the Term due to the Company’s issuance of a non-renewal
notice that occurs, in each case, within two years following the occurrence of a
Change in Control (as defined below), which constitutes a “change in control
event” within the meaning of Treas. Reg. §1.409A- 3(i)(5)(i), in addition to the
amounts and benefits described in (i), (ii) and (iv) of the immediately
preceding paragraph, but in lieu of the Severance Payments and the benefits
described in (v) of the immediately preceding sentence, Ms. Elfers will be
entitled to a lump sum cash severance payment in an amount equal to three times
the sum of her base salary and the Bonus Amount (the “Change in Control
Severance”) and continued healthcare coverage under the Company’s group health
plan, at the Company’s expense, for a period of up to 36 months. If
such a termination occurs within two years following the occurrence of a Change
in Control which does not constitute a “change in control event” within the
meaning of Treas. Reg. §1.409A- 3(i)(5)(i), Ms. Elfers will receive the same
benefits and amounts described above, but a portion of the Change in Control
Severance will be paid over the Severance Period rather than in a lump
sum.
Upon
any termination of Ms. Elfers’ employment under the Employment Agreement, Ms.
Elfers will be entitled to such rights in respect of any equity awards
(including, without limitation, awards of stock options, restricted shares,
performance shares and any other award under the 2005 Equity Plan or any future
equity incentive plan or program of the Company) theretofore made to her, and to
only such rights, as are provided by the plan or the award agreement pursuant to
which such equity awards have been granted to her or other written agreement or
arrangement between Ms. Elfers and the Company (in any case, in the event of any
conflict, the rights most favorable to her will apply).
With
respect to the Deferred Stock Award, if Ms. Elfers’ employment terminates due to
death or disability, she is terminated by the Company other than for Cause, or
she resigns for Good Reason, any shares subject to the Deferred Stock Award
which have not at that time been issued and delivered to her will be issued and
delivered to her within ten days after her date of termination. All
shares subject to the Deferred Stock Award will also be issued and delivered to
her immediately prior to a Change in Control that occurs while she is employed
by the Company.
With
respect to the Performance Stock Award, if Ms. Elfers’ employment terminates due
to death or disability, and the Target Performance Goal is achieved, she will
receive a pro rata number of Initial Performance Shares based on the number of
days she was employed by the Company. If Ms. Elfers’ employment is
terminated by the Company other than for Cause or if she resigns for Good Reason
during the 2010 Fiscal Year, and the Target Performance Goal is achieved, then
she will receive the Initial Performance Shares. The Initial
Performance Shares will also be issued and delivered to her immediately prior to
a Change in Control that occurs (i) while she is employed by the Company and
prior to a determination by the Board or an appropriate committee thereof as to
the achievement of the performance goals, or (ii) after her employment is
terminated by the Company other than for Cause or she resigns for Good Reason
but before a determination has been made by the Board or an appropriate
committee thereof with respect to the achievement of the performance
goals.
For
purposes of the Employment Agreement, the following terms have the following
meanings:
“Cause” means: (i) in
connection with Ms. Elfers’ employment by the Company, the commission by Ms.
Elfers of any act involving intentional dishonesty of a material nature or
fraud; (ii) a material breach by her of her fiduciary duties duties as determined by a
court of competent jurisdiction or pursuant to a binding arbitration; (iii) any
material breach of a material provision of the Employment Agreement by Ms.
Elfers that she fails to remedy to the reasonable satisfaction of the Company
within 30 days after notice to her of such breach setting forth with reasonable
detail the basis of the breach; (iv) any conduct, action or behavior by Ms.
Elfers involving moral turpitude, gross negligence or willful misconduct, that
has or may reasonably be expected to have a material adverse effect on the
reputation or interests of the Company; or (v) she shall have been barred by a
court order issued under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), from serving as a director or officer of a company registered
under Section 12 or filing reports under Section 15(d) of the Exchange Act or
she shall have been convicted of, or have entered a plea of nolo contendere or
the equivalent in respect of a charge of, any criminal act constituting a felony
under the laws of the United States or any state or political subdivision
thereof. Notwithstanding the foregoing, Ms. Elfers’ employment may
not be terminated for Cause, within the meaning of clauses (i) – (iv) above
unless written notice stating the basis for the termination is provided to Ms.
Elfers and she has an opportunity to be heard before the Board and, after such
hearing, a majority of the Board (excluding the Ms. Elfers) duly votes to
terminate her for Cause.
“Change
in Control” means and will be deemed to have occurred: (a) upon a transaction or
series of related transactions pursuant to which a person or entity (“Person”)
or Persons “acting as a group” (as defined in the regulations to Section 409A of
the Internal Revenue Code of 1986, as amended) (i) acquires all or substantially
all of the assets of the Company, (ii) acquires the beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of securities representing more
than 50% of the securities of the Company entitled to vote generally in the
election of directors of the Company (other than through merger, consolidation
or other business combination), or (iii) consummates a merger,
consolidation or other business combination with the Company the result of which
is that the shareholders of the Company prior to such merger, consolidation or
other business combination own less than 50% of the securities entitled to vote
generally in the election of directors of the surviving entity after the
consummation of such merger, consolidation or other business combination; (b) if
the individuals (1) who, as of January 4, 2010, constitute the Board (the
“Original Directors”) and (2) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was approved by a vote of a
majority of the Original Directors then still in office (such directors being
called “Additional Original Directors”) and (3) who thereafter are elected to
the Board and whose election or nomination for election to the Board was
approved by a vote of a majority of the Original Directors and Additional
Original Directors then still in office, cease for any reason to constitute a
majority of the members of the Board; or (iii) the Company adopts a plan of
liquidation providing for the distribution of all or substantially all of its
assets (unless such distribution is to a wholly-owned subsidiary of the
Company).
“Good
Reason” means the occurrence of any of the following without Ms. Elfers’ prior
written consent: (i) a material reduction in her then current base salary, the
target bonus, the maximum bonus, or the failure to pay any base salary, annual
bonus, or any other amount or award, including an equity award, when such
payment is due; (ii) the taking of any action by the Company that would diminish
the aggregate value of all employee benefits provided to her in a material
respect, or that results in the diminution or reduction of all perquisites
enjoyed by her in any material respect; (iii) a material diminution of her
duties or responsibilities as set forth in the Employment
Agreement; (iv) her failure to be a member of the Board after the
first meeting of the Board occurring after January 4, 2010 and prior to the
first meeting of shareholders after January 4, 2010 at which her class of
directors is to stand for election, the failure to nominate Ms. Elfers to be, or
to continue to be, a member of the Board, or the removal of Ms. Elfers from the
position of Chief Executive Officer or President of the Company or any of its
subsidiaries; (v) a material interference with Ms. Elfers’ carrying out of her
duties so that she is unable to carry out her material duties and
responsibilities; (vi) the assignment to Ms. Elfers of duties which
are materially inconsistent with her duties or which materially impair her
ability to function as the Chief Executive Officer and President of the Company
or of any of its subsidiaries; (vii) a change in the reporting structure so that
(A) Ms. Elfers does not report solely and directly to the Board or (B) any
employee of the Company or any of the Company’s subsidiaries does not report
directly or indirectly to Ms. Elfers; (viii) a relocation of the Company’s
headquarters office, or Ms. Elfers’ own principal office, to a location more
than 50 miles from midtown Manhattan, New York City; or (ix) any other material
breach by the Company of any material provision of the Employment
Agreement. Ms. Elfers’ employment may not terminate for
Good Reason unless she provides written notice to the Company of the event or
condition that is alleged to constitute Good Reason within 60 days after she
obtains knowledge of the event or condition, the Company fails to cure the
matter within 30 days after receipt of such notice, and Ms. Elfers actually
terminates her employment within two business days following such 30 day
period.
During
the term of the Employment Agreement and for a period of 12 months following the
date of termination, subject to applicable law, Ms. Elfers will be subject to
restrictions on competition with the Company. During the term of the
Employment Agreement and for a period of 18 months following the date of
termination, Ms. Elfers will be subject to restrictions on the solicitation of
the Company’s vendors, distributors, manufacturers, lessors, independent
contractors or agents for and on behalf of a competitive business, and of the
Company’s employees. For all periods during and after the Term, Ms. Elfers will
be subject to nondisclosure and confidentiality restrictions relating to the
Company’s confidential information and trade secrets. The Employment
Agreement also contains indemnification provisions for claims that may arise in
connection with Ms. Elfers’ service as President and Chief Executive Officer and
a director of the Company.
The
description of the Employment Agreement set forth herein is qualified in its
entirety by reference to the full text thereof, 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 January 29, 2010.
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Item
9.01
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Financial
Statements and Exhibits
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99.1 Press
Release, dated December 11, 2009.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: December
14, 2009
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THE
CHILDREN’S PLACE RETAIL STORES,
INC. |
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By:
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/s/
Charles K. Crovitz |
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Name: |
Charles K.
Crovitz |
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Title:
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Interim
Chief Executive Officer
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