SEARS HOMETOWN AND OUTLET STORES, INC. (NASDAQ:SHOS) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On May 24, 2017 the Board of Directors of Sears Hometown and
Outlet Stores, Inc. (the Company) elected E. J. Bird as the
Companys Interim Chief Financial Officer, effective June 1, 2017.
Mr. Bird has served as a member of the Companys Board of
Directors since the Companys separation from Sears Holdings
Corporation in October 2012, and he provided financial consulting
services to the Company during May 2017. From March 2013 until
June 2016 he served as Executive Vice President and Chief
Financial Officer of Sears Canada Inc., a retailer, and served as
a director of Sears Canada Inc. from May 2006 until September
2013. Prior to his Sears Canada Inc. employment he was a private
investor.

The Company and Mr. Bird have entered into a Temporary Employment
Agreement dated May 24, 2017. The Temporary Employment Agreement
has been approved by the Board of Directors and its Audit and
Compensation Committees and is filed as Exhibit 10.1 to this Form
8-K. The following summary of the Temporary Employment Agreement
is qualified by, and is subject to, the terms and conditions of
Exhibit 10.1, which are incorporated into this Item 5.02 by
reference. The Temporary Employment Agreement provides that Mr.
Bird will be an employee of the Company with the title Interim
Chief Financial Officer for the six-month period beginning June
1, 2017 and ending November 30, 2017 (the Term). Mr. Bird will
report to the Companys Chief Executive Officer and President. At
the end of the Term Mr. Birds employment by the Company will end.
As Interim Chief Financial Officer Mr. Bird will be accountable
for the administrative, financial, and risk management operations
of the Company. He will, among other things, execute and cause to
be filed, as the Companys principal financial officer and
principal accounting officer, all reports that include financial
information about the Company that it files with the Securities
and Exchange Commission and will execute and cause to be filed
all certifications related to these reports required by law. Mr.
Bird will receive a total salary of $365,000 for the Term. If the
Company terminates Mr. Birds employment without cause the Company
will pay to him all unpaid salary installments. If Mr. Bird is
elected as the Companys Chief Financial Officer he will not
receive any unpaid salary installment. Mr. Bird will be eligible
to participate in all retirement, health, and welfare programs
made available or sponsored by the Company on a basis no less
favorable than the Companys other executive officers but will not
be eligible to participate in the Companys annual or long-term
incentive plans or in any severance plan. The Company will
reimburse Mr. Bird for local housing arrangements and airfare and
commuting costs.

The Company has entered into a Cash Incentive Agreement dated May
24, 2017 with Michael A. Gray, the Companys Senior Vice
President, Store Operations. The Cash Incentive Agreement has
been approved by the Compensation Committee of the Companys Board
of Directors and is filed as Exhibit 10.2 to this Form 8-K. The
following summary of the Cash Incentive Agreement is qualified
by, and is subject to, the terms and conditions of Exhibit 10.2,
which are incorporated into this Item 5.02 by reference. The Cash
Incentive Agreement provides that if the Company determines in
its reasonable discretion that specified actions have been
completed with respect to the migration of the Companys current
information technology systems and processes provided by Sears
Holdings Corporation to the Companys new business and technology
infrastructure and systems (the Performance Measure) by October
28, 2017 the Company will pay to Mr. Gray $75,000 in cash less
applicable withholdings (the October Incentive). If the Company
determines in its reasonable discretion that the Performance
Measure has not been achieved by October 28, 2017 the Company
will have no obligation to pay the October Incentive to Mr. Gray.
If the Company determines in its reasonable discretion that the
Performance Measure has not been achieved by October 28, 2017 but
thereafter the Company determines in its reasonable discretion
that the Performance Measure has been achieved by January 27,
2018 the Company will pay Mr. Gray $50,000 in cash less
applicable withholdings (the January Incentive). If the Company
determines in its reasonable discretion that the Performance
Measure has not been achieved by January 27, 2018 the Company
will have no obligation to pay the January Incentive to Mr. Gray.
Whichever of the October Incentive or the January Incentive is
payable (and only one, if either, will be payable) in accordance
with, and subject to, the Cash Incentive Agreement is the
Incentive. Whichever of the payment dates for the Incentive is
applicable, if either, is referred to as the Payment Date.

The Cash Incentive Agreement also provides that if prior to the
Payment Date either Mr. Gray voluntarily terminates his
employment with the Company other than for Good Reason or the
Company terminates his employment for Cause, he will forfeit the
Incentive. If the Company pays to Mr. Gray the Incentive and
within one year after the Payment Date the Company terminates his
employment for Cause, he will repay the Incentive to the Company.
>Good Reason means that, without Mr. Grays written consent,
his annual base salary in effect on the date of the Cash
Incentive Agreement is reduced by ten percent or more or his
place of employment is relocated by the Company to a business
location that is more than fifty miles from the Companys offices
located at 5500 Trillium Boulevard, Hoffman Estates, Illinois.
Cause means (i) a material breach by Mr. Gray (other than a
breach resulting from his>incapacity due to a disability as
reasonably determined by the Company) of his>duties and
responsibilities, which breach is demonstrably willful and
deliberate on his part, is committed in bad faith or without
reasonable belief that such breach is in the best interests of
the Company, and is not remedied by Mr. Gray in a

reasonable period of time after receipt of written notice from
the Company specifying the breach, (ii) the commission by Mr.
Gray of a felony involving moral turpitude, or (iii) Mr. Grays
dishonesty or willful misconduct in connection with his
employment with the Company.

Item 5.07. Submission of Matters to a Vote of Security Holders.

On May 24, 2017 the Company held its Annual Meeting of
Stockholders at 3333 Beverly Road, Hoffman Estates, Illinois
60179. The meeting was held to vote on the matters described
below:

1. Election of Directors.>>E.J. Bird, James F. Gooch,
Josephine Linden, Kevin Longino, William K. Phelan, Will Powell,
and David Robbins were elected to the Board of Directors of the
Company for one-year terms expiring at the 2018 Annual Meeting of
Stockholders or until their successors are elected and qualified.
The votes on this matter were as follows:

2. Advisory Vote to Approve the Compensation of the Company’s
Named Executive Officers.>>The stockholders approved, on an
advisory basis, the compensation of the Companys named executive
officers. The votes on this matter were as follows:

3. Ratification of the Appointment of BDO USA, LLP as the
Company’s Independent Registered Public Accounting Firm for the
2017 Fiscal Year.

Item 8.01. Other Events.

On May 24, 2017 the Companys Board of Directors elected William
K. Phelan, a member of the Board of Directors, as the Companys
Chairman of the Board in accordance with Section 2.7 of the
Companys Amended and Restated Bylaws, effective June 1, 2017. Mr.
Phelan will succeed E. J. Bird who resigned as the Chairman of
the Board effective June 1, 2017. Mr. Bird is continuing to serve
as a member of the Board of Directors.

Forward-Looking Statements

This Form 8-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
The forward-looking statements are based upon the current beliefs
and expectations of the Companys management. The forward-looking
statements are subject to risks, uncertainties, and assumptions,
many of which are beyond the Companys control. Additional
information concerning other factors is contained in the Companys
Annual Report on Form 10-K for the fiscal year ended January 28,
2017 and subsequent filings with the SEC. The Company intends the
forward-looking statements to speak only as of when made and,
except as required by law, the Company will not update or revise
the forward-looking statements as more information becomes
available.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The Exhibits listed in the accompanying Exhibit Index have been
filed as part of this Form 8-K.