ESSENDANT INC. (NASDAQ:ESND) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 5.02Departureof Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 11, 2017, the Human Resources Committee (the “Committee”) of the Board of Directors (the “Board”) of Essendant Inc. (the “Company”) took the following actions:
•Approved annual restricted stock awards for the Company’s executive officers, including Mr. Phillips and Janet H. Zelenka, who was elected Senior Vice President and Chief Financial Officer effective May 26, 2017; and
•Approved a retention program for the Company’s executive officers, including Mr. Phillips and Ms. Zelenka.
The Offer Letter and the compensation actions for Mr. Phillips were also approved by the Board on July 11, 2017.
The Offer Letter contains terms for Mr. Philips’ service as Interim CEO, a position he assumed on June 13, 2017, as announced previously. to the Offer Letter, Mr. Phillips will be entitled to a supplemental base salary amount while he serves as Interim CEO, which brings his annual base salary during this period to $700,000. Mr. Phillips is entitled to an annual incentive payment with a target amount equal to his base salary during the period he serves as Interim CEO; 30% of the payout on this incentive will be based on achievement of performance goals and 70% will be based on achievement of previously set Company financial performance goals for fiscal 2017. Mr. Phillips also received a grant of restricted stock valued at $200,000 on June 13, 2017. He will receive an additional restricted stock award valued at $200,000 on September 1, 2017, if he is serving as Interim CEO on that date, and thereafter he will receive a restricted stock award valued at $200,000 every three months while he serves as Interim CEO. These restricted awards will vest in three annual installments and generally will have the same terms as the Company’s standard restricted stock awards, except that they will provide for vesting of unvested restricted stock if he terminates his employment with the consent of the Board or the Company terminates his employment without cause.
The Offer Letter also amends the Amended and Restated Executive Employment Agreement between Mr. Phillips and the Company, dated as of January 1, 2017, to provide enhanced severance benefits in the event of certain terminations while he serves as Interim CEO. In the event of a qualifying termination under his employment agreement during his service as Interim CEO, his severance benefits will be increased to two times his base salary, plus two times his target annual incentive, and 24 months’ continued medical and/or dental insurance coverage; these amounts increase to three times base salary, three times target annual incentive and 36 months’ insurance coverage if the termination occurs on or within two years following a change of control.
Annual Restricted Stock Awards
Consistent with the Company’s historic practice, on July 11, 2017, the Committee approved restricted stock awards for the Company’s executive officers. These awards will be granted on September 1, 2017, will vest in three equal annual installments, and generally will have the same terms as the Company’s standard restricted stock awards. The Committee and the Board approved an award with a value of $320,625 to Mr. Phillips. The Committee approved an award of $480,000 to Ms. Zelenka.
On July 11, 2017, the Committee also approved certain compensation items for Mr. Phillips, Ms. Zelenka, and the Company’s other senior leaders as additional incentives to retain their services as the Company executes its transformation plan. For Mr. Phillips, the Committee and the Board approved a $320,625 cash award, to be granted on September 1, 2017, which will vest in three equal installments on December 31, 2017, December 31, 2018, and December 31, 2019, and a $1,000,000 cash award, to be to be granted on September 1, 2017, which will vest on January 1, 2020. For Ms. Zelenka, the Committee approved an increase to her annual base salary to $480,000 in recognition of her service and leadership as Senior Vice President and Chief Financial Officer and also approved a $480,000 cash award, to be granted on September 1, 2017,which will vest in three equal installments on December 31, 2017, December 31, 2018, and December 31, 2019, and a $500,000 cash award, to be granted on September 1, 2017,which will vest on January 1, 2020.Thesecash awards will vest upon termination of the executive’s employment by the Company without cause or by the executive for good reason. The awards will vest pro rata in the event of the executive’s death or disability.
About ESSENDANT INC. (NASDAQ:ESND)
Essendant Inc. (Essendant), formerly United Stationers Inc., is a wholesale distributor of workplace items. The Company stocks an assortment of over 180,000 products in categories, including janitorial and breakroom supplies, technology products, traditional office products, industrial supplies, office furniture, and automotive aftermarket tools and equipment. The Company has four operating segments: Business and Facility Essentials, ORS Industrial, CPO Commerce, Inc. (CPO) and Automotive. Business and Facility Essentials also included operations in Mexico conducted through a subsidiary, Azerty de Mexico. It offers private brand products within each of its product categories, which include Innovera technology products, Universal office products, Windsoft paper products, Boardwalk and UniSan janitorial and sanitation products, Alera office furniture and Anchor Brand and Best Welds welding, industrial, safety and oil field pipeline products.