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EX-10.1 - AMENDED AND RESTATED EMPLOYMENT AGREEMENT DATED JUNE 30, 2013 - KRISPY KREME DOUGHNUTS INC | exhibit10-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 2013
Krispy Kreme Doughnuts,
Inc.
(Exact name of registrant as
specified in its charter)
North Carolina | 001-16485 | 56-2169715 | ||
(State or other jurisdiction of | (Commission File Number) | (IRS Employer Identification No.) | ||
incorporation) |
370 Knollwood Street |
Winston-Salem, North Carolina 27103 |
(Address of principal executive offices) (zip code) |
(336) 725-2981 |
(Registrants telephone number, including area code) |
Not Applicable |
(Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
* Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
* Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
* Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
* Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)
Amendment and Restatement of Employment Agreement
Krispy Kreme Doughnuts, Inc. (the Company) previously entered into an Amended and Restated Employment Agreement dated as of March 11, 2011 (the Agreement) with James H. Morgan, pursuant to which he has served as the Companys Chief Executive Officer and President and as Chairman of the Board of Directors (the Board) of the Company. The Agreement expires by its terms on July 1, 2013. Effective June 30, 2013, following consultation with the non-management members of the Board, the Compensation Committee of the Board approved entering into an Amended and Restated Employment Agreement (the Amended Agreement) with Mr. Morgan. Under the Amended Agreement, Mr. Morgan will continue to serve as the Chief Executive Officer and President of the Company and of its wholly-owned subsidiary, Krispy Kreme Doughnut Corporation (KKDC). He will also continue to serve as Chairman of the Board of the Company and of the board of KKDC at the discretion of the respective board.
As explained in more detail below, the Amended Agreement amended and restated the Agreement to (i) extend Mr. Morgans employment term, (ii) reflect Mr. Morgans current salary and increase his annual bonus target, (iii) provide for the grant of an equity award to Mr. Morgan, (iv) modify the amount of payment that Mr. Morgan is entitled to receive following termination for good reason or without cause, (v) remove the requirement that the Company pay Mr. Morgan certain amounts following his termination in order to enforce the noncompetition covenant, (vi) amend the definition of good reason, and (vii) implement certain conforming and other changes deemed appropriate by the Compensation Committee.
The material changes to Mr. Morgans Agreement, as reflected in his Amended Agreement, are as follows:
- The term of the Amended Agreement will end on June
30, 2016, unless sooner terminated as provided in the Amended
Agreement.
- Mr. Morgans compensation has been updated to
reflect his current base salary of $742,630 per year and to provide for an
annual target bonus amount equal to 100% (rather than 70%, as applied under
the Agreement) of his base salary, to be determined in accordance with the
Companys incentive plans. The Amended Agreement also increases his monthly
executive allowance to $2,500 (from $2,000). In addition, if Mr. Morgans
employment is terminated without cause or due to death, disability, good
reason, or a change in control, the Amended Agreement provides that Mr. Morgan
and his dependents will receive medical insurance coverage benefits for the
lesser of 18 months (rather than 12 months, as under the Agreement) or until
Mr. Morgan is provided comparable benefits by another employer.
- The Amended Agreement provides that the Company will grant to Mr. Morgan an equity award with an aggregate fair value of $1,000,000 on or prior to April 30, 2014, subject to Mr. Morgans continued employment through the grant date. Although the Compensation Committee has in recent years granted annual equity awards to the Companys executive officers, including the Chief Executive Officer, it has no general obligation to do so; however, the Amended Agreement obligates the Company to grant the equity award to Mr. Morgan as described herein and in the Amended Agreement. Such equity award will be subject to such vesting or other criteria as may be established by the Compensation Committee and to the terms of the Companys 2012 Stock Incentive Plan or other applicable stock plan and applicable award agreement(s). The Compensation Committee will have the discretion to determine the type(s) of such equity award, which may include a combination of awards. The fair value of the award will be charged to earnings over the requisite service period. Until such time as the Compensation Committee determines the performance and/or service vesting requirements (performance, market, service, or any combination) related to the award, the requisite service period cannot be determined, a service inception date has not occurred and, accordingly, no cost of the award will be reflected in earnings. It is not anticipated that any such conditions will be known until the award is granted.
- The payment arising upon termination by the
Executive for good reason or by the Company and KKDC without cause was amended
to include, among other elements of compensation, (i) an amount equal to the
lesser of (A) two times the sum of Mr. Morgans base salary and an average
annual bonus amount (rather than target bonus amount, as applied under the
previous Agreement) or (B) the Remaining Contract Value, which is defined as
the aggregate amount of Mr. Morgans unpaid
base salary and bonus for the remainder of the Amended Agreements term; and
(ii) a pro rata bonus based on actual bonus earned (rather than target bonus).
In the event of a qualifying termination on or within two years following a
change in control, any such amount payable as referenced in (i) above will be
two times the sum of Mr. Morgans base salary and average annual bonus and
will not be determined by reference to the Remaining Contract Value.
- The requirement to pay Mr. Morgan certain
post-termination amounts in order to enforce his noncompetition covenant
following termination of employment has been removed.
- The definition of good reason was modified to clarify that (in addition to other existing good reason triggers), good reason will exist if the Executive no longer serves as (i) the most senior executive officer or (ii) both the most senior executive officer and the executive chairman of the Board (or other applicable board) of both the Company and KKDC or the successor to the Company in the event of certain business combinations (provided, however, that it will not constitute good reason if Mr. Morgan no longer serves as the senior executive officer but he serves as executive chairman of the Board or other applicable board).
The foregoing summary of the terms of the Amended Agreement does not purport to be complete, and is qualified in its entirety by reference to the Amended Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d)
The following exhibits are filed as part of this report:
Exhibit Number | Description | |
10.1 | Amended and Restated Employment Agreement dated June 30, 2013 among Krispy Kreme Doughnut Corporation, Krispy Kreme Doughnuts, Inc., and James H. Morgan |
SIGNATURES
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.
Krispy Kreme Doughnuts, Inc. | ||||
By: | /s/ Douglas R. Muir | |||
Dated: July 1, 2013 | Name: | Douglas R. Muir | ||
Its: | Chief Financial Officer |
EXHIBIT INDEX
Exhibit Number | Description | |
10.1 | Amended and Restated Employment Agreement dated June 30, 2013 among Krispy Kreme Doughnut Corporation, Krispy Kreme Doughnuts, Inc., and James H. Morgan |