Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Compensation Committee Reduces 2020 Base Salaries for Executive Officers by 50%
The Company is considering a variety of cost-cutting measures in response to the
economic downturn and uncertainty caused by the COVID-19 pandemic, including
reductions to certain senior executive compensation. On April 9, 2020, on the
recommendation of the Company's senior management team, the Compensation
Committee of the Board of Directors (the "Committee") reduced the 2020 base
salaries for all of our executive officers, including the named executive
officers listed below. Effective April 12, 2020, the bi-weekly rate of their
base salaries was reduced by 50% for an indefinite time period.
Initial Reduced
2020 2020
Base Base
Named Executive Officers Salary Salary
Karl G. Glassman, Chairman & CEO $ 1,225,000 $ 612,500
J. Mitchell Dolloff, President & COO, President -
Bedding Products $ 700,000 $ 350,000
Jeffrey L. Tate, EVP & CFO $ 570,000 $ 285,000
Scott S. Douglas, SVP - General Counsel & Secretary $ 450,000 $ 225,000
Perry E. Davis, Former EVP, President - Residential
Products & Industrial Products (SVP - Operations,
1/1/2020 through 2/7/2020)1
$ 530,000 N/A
Matthew C. Flanigan, Former EVP & CFO2 N/A N/A
1 Mr. Davis retired February 7, 2020.
2 Mr. Flanigan retired December 31, 2019.
Attached and incorporated herein by reference as Exhibit 10.1 is the Company's
updated Summary Sheet of Executive Cash Compensation .
Jeffrey L. Tate Waives Termination Rights under Separation Agreement
Concurrent with the Committee's action to reduce the executive officers' 2020
base salaries, Jeffery L. Tate and the Company, on April 9, 2020, entered into a
Limited Waiver - Separation Agreement (the "Waiver Agreement") whereby Mr. Tate
waived his rights under the Separation Agreement, dated August 6, 2019 (the
"Separation Agreement") to terminate his employment for "Good Reason" and to
receive termination benefits under the Separation Agreement in connection with a
base salary reduction not to exceed 50% for a duration not to exceed
December 31, 2020. Under the Waiver Agreement, Mr. Tate's continuing waiver is
additionally conditioned upon (i) the reduction of his base salary being
approved by the Committee, (ii) the reduction of his base salary not exceeding
(on a percentage basis) the reduction made to the Chief Operating Officer's
compensation, and (iii) the duration of his base salary reduction not extending
beyond the duration of the reduction made to the Chief Operating Officer's
compensation.
Among other things, the Separation Agreement provides that if Mr. Tate is
terminated by the Company for any reason other than for cause, death or
disability, or he terminates his employment for Good Reason (which includes the
reduction of Mr. Tate's base salary as in effect on his start date of
September 3, 2019, but for his waiver under the Waiver Agreement), and either of
which is within 24 months from that start date, the Company must pay Mr. Tate
the following termination benefits:
(a) 12 months of his base salary (in effect at the time the notice of
termination is given) for a termination that occurs within 12 months from
the start date;
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(b) 6 months of his base salary (in effect at the time the notice of
termination is given) for a termination that occurs between 12 and 24
months from the start date;
(c) Pro rata cash incentive award under the Key Officers Incentive Plan for
the year of termination based upon the results achieved under the KOIP for
the year;
(d) Lump sum payment equal to 18 months of COBRA medical coverage; and
(e) Reasonable and customary outplacement services for the shorter of (i) 12
months following the date of termination and (ii) the date Mr. Tate
accepts an offer of employment.
Mr. Tate is not required to mitigate the amount of any of the termination
benefits under the Separation Agreement by seeking other employment or
otherwise; provided, however, any health, welfare and fringe benefits that
Mr. Tate would receive from full time employment by a third person shall reduce
any such benefits under (d) above, and the outplacement services under (e) above
would cease. The Company's obligation to make payment under the Separation
Agreement is subject to Mr. Tate's execution and delivery to the Company of a
release and covenant not to sue agreement.
The disclosure above is only a brief description of the Waiver Agreement and
the relevant parts of the Separation Agreement and is qualified in its
entirety by each such agreement with Mr. Tate, which are incorporated herein by
reference as Exhibit 10.2 and Exhibit 10.3, respectively.
Compensation Committee Provides that Reduction in 2020 Base Salaries Will Not Be
Effective For Purpose of Calculating Benefits Under Severance Benefit Agreements
On April 9, 2020, concurrent with the Committee's action to temporarily reduce
the executive officers' 2020 base salaries, the Committee provided that the
temporary reduction in 2020 base salaries is not effective for the purpose of
calculating any benefit under the severance benefit agreements currently in
place with executive officers.
Reference is made to the (i) Severance Benefit Agreement between the Company
and Karl G. Glassman, dated May 9, 2017, filed May 11, 2017 as Exhibit 10.1 to
the Company's Form 8-K; (ii) Severance Benefit Agreement between the Company
and J. Mitchell Dolloff, dated May 9, 2017, filed May 11, 2017 as Exhibit 10.4
to the Company's Form 8-K; (iii) Severance Benefit Agreement between the
Company and Jeffrey L. Tate, dated August 6, 2019, filed August 6, 2019 as
Exhibit 10.11 to the Company's Form 8-K; and (iv) Amended and Restated
Severance Benefit Agreement between the Company and Scott S. Douglas, dated
December 30, 2008, filed February 22, 2018 as Exhibit 10.7 to the Company's Form
10-K.
Item 8.01 Other Events.
Also, on April 9, 2020, the Board of Directors of the Company reduced director
cash compensation by 50% in response to the economic downturn and uncertainty
caused by the COVID-19 pandemic. The reduction applies to annual Board cash
retainers, committee chair cash retainers and committee member cash retainers,
all of which are paid on a quarterly basis. The reduction in compensation went
into effect immediately and is applicable to the second quarter 2020 director
fees. The Board will evaluate the cash payment rates on a quarterly basis.
Attached and incorporated herein by reference as Exhibit 10.4 is the Company's
updated Summary Sheet of Director Compensation .
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