Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The amendment and restatement of the Company’s Flexible Stock Plan (the “Plan”) was approved by shareholders at the Annual Meeting of Shareholders held May 8, 2024. The Plan provides for the award of stock-based and other benefits (including stock options, stock appreciation rights, restricted stock, stock units, cash and equity performance awards, and other stock-based awards) to attract and retain valuable employees, directors and other key individuals, align the interests of participants with the interests of shareholders, and reward outstanding performance. The Plan has a term of 10 years expiring in 2034.
Our named executive officers, J. Mitchell Dolloff (President & CEO), Benjamin M. Burns (Executive Vice President & CFO), and J. Tyson Hagale (Executive Vice President, President – Bedding Products), along with our non-employee directors and other key employees, are eligible to receive awards under the Plan. Jeffrey L. Tate (former EVP & CFO), Steven K. Henderson (former EVP, President – Specialized Products and Furniture, Flooring & Textile Products) and Scott S. Douglas (former SVP & General Counsel) are no longer employed by the Company and, therefore, are no longer eligible for future awards under the Plan. The material terms and conditions of the Plan and the amendments adopted by the shareholders at the Annual Meeting have been previously reported under “Proposal Four: Approval of the Amendment and Restatement of the Flexible Stock Plan” in the Company’s Proxy Statement (beginning on page 22), filed March 28, 2024 (the “Proxy Statement”), and in the Plan document attached as an Appendix to the Proxy Statement. The amendments to the Plan included:
(a) the elimination of the “fungible share feature” that provided that each option or stock appreciation right under the Plan counted as one share against the shares available under the Plan, but each share granted for any other award, such as restricted stock, stock units and performance awards, counted as three shares against the Plan. Because the Company has largely discontinued granting options (although options remain available through our Deferred Compensation Program), this feature was eliminated, and, after the amendment, each share granted under any type of award will count as one share against the shares available under the Plan;
(b) an increase in the number of shares available for future grant under the Plan by 3.7 million. After the amendment, as of March 4, 2024, there was a total of approximately 5.3 million shares available for future grant under the Plan (excluding forfeitures of existing awards that again become available for issuance under the Plan);
(c) the clarification that, unless an acquirer requires that the outstanding awards be terminated as a result of a change in control, the awards will not immediately vest following the change in control of the Company unless the participant’s employment is also terminated under certain circumstances. If an acquirer requires that the outstanding awards be terminated as a result of the change in control, the awards will immediately vest, regardless of termination of employment. In both cases, if the vesting of a performance award is accelerated, the award will be deemed earned at the maximum payout level;
(d) the establishment of a mandatory minimum vesting period of at least one year for all awards issued after May 8, 2024 (subject to a 5% carve-out for vesting due to disability, death or in certain circumstances following a change in control);
(e) the elimination of references to Section 162(m) of the Internal Revenue Code; and
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