ARMSTRONG FLOORING, INC. (NYSE:AFI) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Appointment of New President and Chief Executive Officer and Director
(c) On September 10, 2019, Armstrong Flooring, Inc. (the Company) announced the appointment of Michel Vermette, age 52, to the position of President and Chief Executive Officer and as a director of the Company, effective as of September 11, 2019.
In connection with Mr. Vermettes appointment to the Board of Directors (the Board), the Board increased the size of the Board from seven (7) to eight (8) directors, effective September 11, 2019. Mr. Vermette has not been appointed to any standing committee of the Board. Mr. Vermette will not receive compensation for his services as a member of the Board.
Mr. Vermette has served as President of Residential Carpeting for Mohawk Industries, Inc. (an international designer, manufacturer, distributor and marketer of flooring in residential and commercial spaces) since February 2019 and, before such position, as President of Mohawk Group (a marketer and distributer under Mohawk Industries, Inc.s floor covering products line) since 2011. From 2004 to 2011, Mr. Vermette served in various positions of increasing responsibility at Mohawk Industries, Inc. including Corporate Controller, Chief Accounting Officer, Chief Financial Officer of Mohawk Flooring and Senior Vice President of International Sales and Business Development. Prior to joining Mohawk Industries, Inc., Mr. Vermette served in various capacities for Dal-Tile International Inc. (a manufacturer, distributor and marketer of ceramic tile), including Operations Controller and Divisions Controller from 1996 until the company was acquired by Mohawk Industries, Inc. in 2004. Mr. Vermette does not serve on the board of any other public companies.
Mr. Vermettes financial expertise and extensive knowledge of, and background in, the Companys industry and business are among the key characteristics that led to his appointment as President and Chief Executive Officer and as a director of the Company.
There are no other arrangements or understandings between Mr. Vermette and any other person to which Mr. Vermette was appointed as President and Chief Executive Officer and as a director of the Company, and there are no familial relationships between Mr. Vermette and any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer of the Company. Additionally, there have been no transactions involving the Company since the beginning of the Companys fiscal year in which Mr. Vermette, or his immediate family members, had or will have a direct or indirect material interest.
Entry into Employment Agreement in Connection with Appointment
In connection with Mr. Vermettes appointment as its President and Chief Executive Officer, the Company has entered into an employment agreement with Mr. Vermette (the Employment Agreement). The Employment Agreement has an initial term of three years commencing September 11, 2019 (the commencement date) and thereafter will automatically renew for successive one-year terms unless either he or the Company gives ninety days prior written notice of nonrenewal. to the Employment Agreement, Mr. Vermette will be paid an annual base salary of $650,000 and, beginning in the Companys 2020 fiscal year, he will be eligible to earn a target annual cash bonus equal to 50% of his base salary and annual target long-term incentive awards equal to 200% of his base salary, generally consistent with the award issuances to other senior executives of the Company.
The Employment Agreement further provides that on the commencement date, the Company will grant Mr. Vermette (i) an initial grant of 143,062 shares of restricted common stock (replacing forfeited compensation from his prior employer), which will vest in equal annual installments on each of the five successive anniversaries of the grant date, subject to continued employment with the Company (the Initial Restricted Stock Award); (ii) an initial grant of 371,430 performance-based restricted stock units, which will be earned upon the Companys common stock achieving the per share price targets set forth in the award agreement at any time during the five-year period following the grant date, measured on each of the first five anniversaries of the grant date, subject to his continued employment through the applicable measurement date (the Initial PBRSU Award); and (iii) a cash sign-on bonus equal to $500,000 (which Mr. Vermette will be required to repay in the event his employment is terminated by the Company for cause or by him without good reason (as each term is defined in the Employment Agreement) prior to the first anniversary of Mr. Vermettes commencement date).