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SBH > SEC Filings for SBH > Form 8-K on 1-May-2014All Recent SEC Filings

Show all filings for SALLY BEAUTY HOLDINGS, INC.

Form 8-K for SALLY BEAUTY HOLDINGS, INC.


1-May-2014

Results of Operations and Financial Condition, Change in Directors or


ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 1, 2014, Sally Beauty Holdings, Inc. (the "Company") issued the news release attached hereto as Exhibit 99.1 reporting the financial results of the Company for the quarter ended March 31, 2014 (the "Earnings Release"). In the Earnings Release, the Company utilized the non-GAAP financial measures and other items discussed in the attached Appendix A, which is incorporated herein by this reference. Appendix A also contains statements of the Company's management regarding the use and purposes of the non-GAAP financial measures utilized in the Earnings Release. A reconciliation of the non-GAAP financial measures discussed in the Earnings Release to the most directly comparable GAAP financial measures is attached to the Earnings Release.



ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION
OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

On April 25, 2014, following the completion of its succession planning process, the Board of Directors (the "Board") of Sally Beauty Holdings, Inc. (the "Company") approved the appointment of Christian A. Brickman as the Company's new President and Chief Operating Officer ("COO"), effective June 2, 2014. Gary G. Winterhalter, the Company's current President, will continue in his current position as Chief Executive Officer and, if re-elected by the stockholders at the Company's 2015 annual meeting of stockholders, Chairman of the Board, through April 30, 2015 or such earlier date as the Board determines (the "Transition Date"). On the Transition Date, subject to Board approval, Mr. Brickman will assume the title of Chief Executive Officer and Mr. Winterhalter will transition into the role of Executive Chairman. Mr. Winterhalter has agreed to serve as Executive Chairman through January of 2018, subject to the discretion of the Board and his re-election by the Company's stockholders. Thereafter, Mr. Winterhalter has committed to serve (if desired by the Board) as the Company's non-Executive Chairman. Mr. Brickman will continue to serve as a member of the Board, subject to his re-election by the Company's stockholders. The Nominating and Corporate Governance Committee of the Board will, as always, re-evaluate the composition of the Board accordingly. A copy of the Company's news release announcing the CEO succession plan is attached hereto as Exhibit 99.2.

Mr. Brickman's Appointment as President and Chief Operating Officer

As stated above, the Board appointed Mr. Brickman President and Chief Operating Officer effective June 2, 2014, and, subject to Board approval, Mr. Brickman will assume the title of Chief Executive Officer of the Company on the Transition Date.

Mr. Brickman, 49, has been a member of the Company's Board of Directors since September 2012 and most recently served as the President of Kimberly-Clark International, which is the primary international division of Kimberly-Clark Corporation from May 2012 to February 2014. In this capacity, Mr. Brickman led the company's international consumer business in all operations outside of North America. Prior to


being appointed President of Kimberly-Clark International, he served as President of Kimberly-Clark Professional from August 2010 to May 2012. Mr. Brickman joined Kimberly-Clark in 2008 as Chief Strategy Officer. Prior to joining Kimberly-Clark, Mr. Brickman was a Principal in McKinsey & Company's Dallas, Texas office and a leader in the firm's consumer-packaged goods and operations practices. Before joining McKinsey, Mr. Brickman was President and CEO of Whitlock Packaging (1998-2001), the largest non-carbonated beverage co-packing company in the United States.

The Company has entered into a written offer letter with Mr. Brickman outlining the terms of his employment as President and COO. Pursuant to the terms of the offer letter, Mr. Brickman will receive an annual salary at the rate of $660,000. Mr. Brickman will participate in the Company's Management Incentive Plan ("MIP") and his target annual bonus will be 80% of his base salary. Any bonus for which Mr. Brickman will be eligible under the MIP will be based on the Company's and his performance; provided, however, that he will be guaranteed a bonus of no less than 50% of his target annual bonus for fiscal year 2015. In addition to participating in the MIP, Mr. Brickman also will be eligible to receive a long-term incentive (LTI) award with a grant date target value equal to 75% of the intrinsic value of the LTI award granted to Mr. Winterhalter in the ordinary course in his capacity as Chief Executive Officer. The Company and Mr. Brickman also will enter into a change-in-control severance agreement having terms consistent with those provided to the other executive officers, which severance agreements have been previously described by the Company in, and attached as Exhibit 10.3 to, the Current Report on Form 8-K filed by the Company on November 5, 2012.

In addition, in connection with his commencement of employment with the Company, Mr. Brickman will receive a special LTI award on June 2, 2014, consisting of restricted stock having a grant date target fair value of $2.1 million and stock options having a grant date target fair value of $1.1 million. The restricted shares and options will vest ratably over four years beginning on the first anniversary of the date of grant, subject to Mr. Brickman's continued employment with the Company on each applicable vesting date and subject to such other terms and conditions of the Company's Amended and Restated 2010 Omnibus Incentive Plan and the individual award agreements. The Company also will assist Mr. Brickman with his relocation to the Company's headquarters and will reimburse Mr. Brickman for relocation expenses.

The offer letter provides that if, prior to April 30, 2015, Mr. Brickman's employment is terminated by the Company without cause, or by Mr. Brickman upon the Board's failure to promote him to Chief Executive Officer by April 30, 2015, and provided he executes a separation and release of claims/covenant not to sue agreement, then he will be entitled to: (i) a prorated annual bonus for the year in which his date of termination occurs, based on actual performance under applicable financial metrics; (ii) a severance payment equal to two times the sum of his then-current base salary and target annual bonus, payable in approximately equal monthly installments over a 24-month period; and (iii) if Mr. Brickman elects to continue participation in any group medical,


dental, vision and/or prescription drug plan benefits to which he and his eligible dependents would be entitled under COBRA, then for eighteen months the Company will pay the COBRA cost of such coverage less the active employee rate for such coverage. Mr. Brickman will not be entitled to the severance and benefits described above if his employment is terminated (i) following April 30, 2015 for any reason, or (ii) at any time on account of his death or disability, or by the Company for cause or by Mr. Brickman except as described in the foregoing sentence.

The Compensation Committee of the Board will make such adjustments as it deems appropriate in its discretion to Mr. Brickman's compensation arrangement with the Company at the time he assumes the title of Chief Executive Officer.

The foregoing summary of Mr. Brickman's offer letter is qualified in its entirety by reference to the offer letter which is filed herewith as Exhibit 10.1 and incorporated herein by reference.

Mr. Winterhalter's Transition Agreement

The Company and Mr. Winterhalter entered into a transition agreement, dated April 25, 2014 (the "Transition Agreement") to provide for an orderly transition of duties, responsibilities and authority from Mr. Winterhalter to the new Chief Executive Officer of the Company and to set forth the compensation arrangement between the Company and Mr. Winterhalter during and as a result of this transition period. Under the Transition Agreement, Mr. Winterhalter will serve as Chief Executive Officer and, if re-elected as a director by the Company's stockholders at the 2015 annual meeting, Chairman of the Board until the Transition Date. During the transition period, Mr. Winterhalter will assist the Company with the transition of duties, responsibilities and authority to the next Chief Executive Officer of the Company. Effective on the Transition Date, Mr. Winterhalter will serve as Executive Chairman through January of 2018, subject to the discretion of the Board and his re-election by the Company's stockholders. As Executive Chairman, Mr. Winterhalter will perform such duties as are customary for that position, as well as any duties reasonably requested by the Chief Executive Officer or the Board.

Pursuant to the Transition Agreement, the Company has agreed to grant Mr. Winterhalter a restricted stock award with a grant date target fair market value of $3.5 million (the "Transition Award") in recognition of his retention and support through this transition process. In addition, the Transition Agreement provides that:

during fiscal year 2015 as compensation for his services as CEO through no later than April 30, 2015 and as Executive Chairman through September 30, 2015, Mr. Winterhalter will (i) receive base salary at his current rate of $1 million, (ii) have a target annual bonus consistent with his current target annual bonus of 100% of base salary, and (iii) be eligible to receive an LTI award with respect of the fiscal year 2014 performance period consistent with the LTI awards granted to other senior executives of the Company;

. . .



ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(d) See exhibit index.

All of the information contained in Items 2.02 and 7.01 of this report and in Appendix A and Exhibit 99.1 to this report is being "furnished" and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, unless expressly incorporated by reference therein.

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