10-K/A
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K/A
Amendment No. 1
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                            
For the Fiscal Year Ended September 30, 2021
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                
For the transition period from
                    
to
                     _
 
 
Commission File No.
 
    
  
Name of Registrant, State of Incorporation,
Address of Principal Offices and Telephone No.
 
    
  
IRS Employer Identification No.
1-4219
      
Spectrum Brands Holdings, Inc.
(a Delaware corporation)
3001 Deming Way, Middleton, WI 53562
(608)
275-3340
www.spectrumbrands.com
      
74-1339132
         
        
SB/RH Holdings, LLC
        
333-192634-03
      
(a Delaware limited liability company)
3001 Deming Way, Middleton, WI 53562
(608)
275-3340
      
27-2812840
Securities registered pursuant to Section 12(b) of the Act:
 
Registrant
 
    
  
Title of each class
 
    
  
Name of each exchange on which registered
Spectrum Brands Holdings, Inc.        Common Stock, Par Value $0.01        New York Stock Exchange
         
SB/RH Holdings, LLC        None        None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.
 
Spectrum Brands Holdings, Inc.    Yes  ☒      No  ☐     
SB/RH Holdings, LLC    Yes  ☐      No  ☒     
Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
 
Spectrum Brands Holdings, Inc.    Yes  ☐      No  ☒     
SB/RH Holdings, LLC    Yes  ☐      No  ☒     
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
 
Spectrum Brands Holdings, Inc.    Yes  ☒      No  ☐     
SB/RH Holdings, LLC    Yes  ☒      No  ☐     
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
 
Spectrum Brands Holdings, Inc.    Yes  ☒      No  ☐     
SB/RH Holdings, LLC    Yes  ☒      No  ☐     
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company in Rule
12b-2
of the Exchange Act.:
 
Registrant
  
Large Accelerated
Filer
    
Accelerated Filer
    
Non-accelerated Filer
    
Smaller Reporting
Company
    
Emerging Growth
Company
 
Spectrum Brands Holdings, Inc.
     X                                      
SB/RH Holdings, LLC
                       X                    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Spectrum Brands Holdings, Inc.        
SB/RH Holdings, LLC        
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2
of the Exchange Act).
 
Spectrum Brands Holdings, Inc.    Yes  ☐      No       
SB/RH Holdings, LLC    Yes  ☐      No       
The aggregate market value of the voting stock held by
non-affiliates
of Spectrum Brands Holdings, Inc. was approximately $3,592 million based upon the closing price on the last business day of the registrant’s most recently completed second fiscal quarter (April 4, 2021). For the sole purposes of making this calculation, term
“non-affiliate”
has been interpreted to exclude directors and executive officers and other affiliates of the registrant. Exclusion of shares held by any person should not be construed as a conclusion by the registrant or an admission by any such person or that such person is an “affiliate” of the Company, as defined by applicable securities law.
As of January 2, 2022, there were outstanding 41,023,773 shares of Spectrum Brands Holdings, Inc.’s common stock, par value $0.01 per share.
SB/RH Holdings, LLC meets the conditions set forth in General Instruction I(1)(a) and (b) of Form
10-K
and has therefore omitted the information otherwise called for by Items 10 to 13 of Form
10-K
as allowed under General Instruction I(2)(c).
DOCUMENTS INCORPORATED BY REFERENCE
None.

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EXPLANATORY NOTE
Spectrum Brands Holdings, Inc. and SB/RH Holdings, LLC are filing this Amendment No. 1 (this “Form 10-K/A”) to their Annual Report on Form 10-K for the fiscal year ended September 30, 2021 (“Fiscal 2021”) that was filed with the Securities and Exchange Commission (“SEC”) on November 23, 2021 (the “Original Form 10-K”) for the sole purpose of including certain of the information required by Part III of Form 10-K. As required by Rule
12b-15,
in connection with this Form 10-K/A, the Company’s Principal Executive Officer and Principal Financial Officer are providing Rule
13a-14(a)
certifications included herein.
Except as explicitly set forth herein, this Form 10-K/A does not purport to modify or update the disclosures in, or exhibits to, the Original Form 10-K or to update the Original Form 10-K to reflect events occurring after the date of such filing.
 
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TABLE OF CONTENTS
 
        
Page
 
     2  
   
     4  
     
ITEM 10.
  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE      4  
     
ITEM 11.
       22  
     
ITEM 12.
       53  
     
ITEM 13.
       55  
   
     60  
     
ITEM 15.
       60  
   
     60  
   
     63  
 
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PART III
Except as otherwise specified, all references herein to the “Company,” “Spectrum Brands,” “we,” “us” or “our” refer to Spectrum Brands Holdings, Inc. and “Fiscal” refers to the fiscal year ended September 30 of each applicable year.
 
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our Board of Directors
Our Nominating and Corporate Governance Committee (“NCG Committee”) considers and chooses nominees for our Board with the primary goal of presenting a well-qualified slate of candidates who will serve the interests of our Company and our shareholders, taking into account the attributes of each candidate’s professional skillset and credentials, as well as gender, age, ethnicity and personal background. In evaluating nominees, our NCG Committee reviews each candidate’s background and assesses each candidate’s independence, skills, experience and expertise based upon a number of factors. We seek directors with the highest professional and personal ethics, integrity and character that have experience at the governance and policy-making level in their respective fields. Our NCG Committee reviews the professional background of each candidate to determine whether each candidate has the appropriate experience and ability to effectively make important decisions as a member on our Board. Our NCG Committee also determines whether a candidate’s skills and experience complement and enhance the collective skills and experience of our existing Board members.
We are committed to ensuring that female and minority candidates are among the pool of individuals from which new Board nominees are selected. We have steadily advanced this objective by appointing to our Board a number of candidates, all of whom are from a diverse background. As of the date of this report, we are proud to have the benefit of a Board, the majority of which is composed of female and diverse background members.
Our directors collectively represent a robust and diverse set of skills and experience, which we believe positions our Board and its committees well to effectively oversee the execution of our business strategy and to advance the interests of the Company and its stakeholders. The following table summarizes some of the key categories of skills and experience of our current directors:
 
Director Skills and Experiences
 
✓100%: International Business Experience
   ✓100%: Business Operations
   
✓86%: Consumer Products
   ✓86%: Corporate Governance
   
✓100%: Corporate Strategy & Business Development
   ✓100%: Ethics/Corporate Social Responsibility
   
✓86%: Executive Leadership & Management
   ✓71%: Finance/Capital Management & Allocation
   
✓100%: Mergers & Acquisitions
   ✓71%: Public Company Executive Experience
   
✓71%: Marketing/Sales or Brand Management
   ✓71%: Human Resources & Compensation
   
✓86%: Accounting/Auditing
   ✓100%: Public Company Board Experience
In accordance with our Third Restated
By-laws
(our
“By-Laws”),
our Board currently consists of seven members. In accordance with our Amended and Restated Certificate of Incorporation (our “Charter”), our Board is currently divided into three classes (designated as Class I, Class II and Class III, respectively). At our last annual stockholders meeting in August of 2021, our stockholders approved an amendment to our Charter to
de-classify
our Board. Pursuant to such charter amendment (i) our current Class I directors would stand for election at our 2022 annual meeting and would stand for election for
one-year
terms thereafter, (ii) our current Class II directors would stand for election at our 2023 annual meeting and would stand for election for
one-year
terms thereafter, (iii) our current Class III directors would stand for election at our 2024 annual meeting and would stand for election for
one-year
terms thereafter, and (iv) beginning in 2024, all directors would stand for election for
one-year
terms at the 2024 annual meeting. In 2024, our Board would be fully declassified. The names of our seven current directors and their respective classes, ages, Board tenures and committee memberships are each set forth in the following table:
 
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Committee Membership***
    
    Name
  
Class*
  
Age
  
Tenure**
  
A
  
C
  
NCG
    
Sherianne James
Independent Director
   I    52    2018       o     
 
   
Leslie L. Campbell
Independent Director
   I    61    2021    o        
 
   
Joan Chow
Independent Director
   I    61    2021    o        
 
   
Hugh R. Rovit
Independent Director
   II    61    2018    o       o  
 
   
Gautam Patel
Independent Director
   II    49    2020       o     
 
   
David M. Maura
Executive Chairman
   III    49    2018           
 
   
Terry L. Polistina
Lead Independent Director
   III    58    2018   
 
      o  
 
 
*
The term of our Class I directors expires at our 2022 annual stockholders meeting, our Class II directors expires at our 2023 annual stockholders meeting, and our Class III directors expires at our 2024 annual stockholders meeting.
 
**
Tenure represents service on the Board of the Company following the
merger on July 13, 2018 of HRG Group, Inc. (now known as Spectrum Brands Holdings, Inc.) with its majority owned subsidiary, Spectrum Brands Legacy, Inc. (formerly known as Spectrum Brands Holdings, Inc.) (“SPB Legacy”).
 
***
Committee membership: A = Audit Committee, C = Compensation Committee, NCG = NCG Committee; • indicates committee Chair, o indicates committee member.
Director Biographies
Set forth below are biographies for each of our directors, accompanied by descriptions of some of their key skills and experiences. The absence of any given category of key skills or experiences from the list preceding a director’s biography does not necessarily signify a lack of qualification in any such category.
Class I Directors
 
Sherianne James
 Independent Director since October 2018
Age: 52
Race/Ethnicity: African American
Gender: Female
  
 
   
Independence & Committees:
 
●   Independent Director
 
●   Chair of our NCG Committee
 
●   Compensation Committee
  
Key Skills/Experience:
 
●   Business Operations
 
●   Consumer Products
 
●   Corporate Governance
 
●   Corporate Strategy & Business Development
 
●   Ethics/Corporate Social Responsibility
 
●   Executive Leadership & Management
 
●   International Business Experience
 
●   Marketing/Sales or Brand Management
 
●   Mergers & Acquisitions
 
●   Public Company Executive Experience
 
●   Public Company Board Experience
 
  
 
Sherianne James was appointed to our Board in October 2018. Ms. James has served as Chief Marketing Officer of Essilor of America since August 2017 and SVP of Customer Engagement since March 2020, and previously was Vice President, Consumer Marketing for the company since July 2016. From February 2011 to July 2016, she held positions of increasing responsibility in marketing and operations for Transitions Optical, a division of Essilor of America, culminating in her role as Vice President of Transitions Optical from April 2014 to July 2016. From July 2005 through December 2010, Ms. James was Senior Marketing Manager for Russell Hobbs/Applica. She previously held a number of key project manager, research manager and brand manager positions with Kraft Foods, Inc. and, later, Kraft/Nabisco Foods from June 1995 to June 2005. Ms. James earned a B.S. degree in chemical engineering from the University of Florida in 1994 and an MBA from Northwestern University’s Kellogg Graduate School of Management in 2002. Ms. James currently serves as Chair of our NCG Committee and is a member of our Compensation Committee.
  
 
 
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Leslie L. Campbell
Independent Director since April 2021
Age: 61
Race/Ethnicity: African American
Gender: Male
 
Independence & Committees:
 
●    Independent Director
 
●    Audit Committee
  
Key Skills/Experience:
 
●    Accounting/Auditing
 
●    Business Operations
 
●    Consumer Products
 
●    Corporate Strategy & Business Development
 
●    Ethics/Corporate Social Responsibility
 
●    Executive Leadership & Management
 
●    Finance/Capital Management & Allocation
 
●    International Business Experience
 
●    Marketing/Sales or Brand Management
 
●    Mergers & Acquisitions
 
●    Public Company Board Experience
 
●    Supply Chain/Logistics
 
●    Technology/Cyber-Security
 
Leslie L. Campbell was appointed to our Board in April 2021. Since 2015, Mr. Campbell has been the owner and Chief Executive Officer of Campbell & Associates LLC, a product development and engineering company. From 2013 to 2015, he served as Executive Vice President at AAMP Global, a vehicle technology company where he was responsible for engineering, research and development, new product development and operations. From 2002 to 2013, Mr. Campbell served in various senior roles of increasing responsibility in the engineering department for Applica Consumer Products, including serving the last six years of his tenure as Vice President of Engineering Quality and Regulatory where he was responsible for the design and development of new products and the maintenance of existing core product lines. From 1999 to 2002, Mr. Campbell served as Chief Engineer for B/E Aerospace where he was responsible for the design and development of galley products for commercial airlines. From 1995 to 1999, Mr. Campbell served as a Senior Research Engineer for Baker Hughes. From 1990 to 1995, he served as Senior Engineer at the Johnson Space Center (NASA) and from 1989 to 1990 he was a Senior Engineer at General Electric – Aerospace Division. Mr. Campbell has extensive experience in product development and product design and product quality and safety standards. Mr. Campbell received an undergraduate degree in engineering from the University of Florida. Mr. Campbell currently serves as a member of our Audit Committee.
 
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Joan Chow
Independent Director since April 2021
Age: 61
Race/Ethnicity: Asian
Gender: Female
 
Independence & Committees:
 
●    Independent Director
 
●    Audit Committee
  
Key Skills/Experience:
 
●    Accounting/Auditing
 
●    Business Operations
 
●    Consumer Products
 
●    Corporate Governance
 
●    Corporate Strategy & Business Development
 
●    Ethics/Corporate Social Responsibility
 
●    Executive Leadership & Management
 
●    Human Resources & Compensation
 
●    International Business Experience
 
●    Marketing/Sales or Brand Management
 
●    Mergers & Acquisitions
 
●    Public Company Board Experience
 
●    Public Company Executive Experience
 
Joan Chow was appointed to our Board in April 2021. From February 2016 until October 2021, Ms. Chow served as Chief Marketing Officer of the Greater Chicago Food Depository. From 2007 to August 2015, Ms. Chow was the Executive Vice President and Chief Marketing Officer at ConAgra Foods, Inc. ConAgra Foods, now known as Conagra Brands, is one of North America’s leading packaged food companies. Prior to joining ConAgra in 2007, Ms. Chow was employed for nine years with Sears Holdings Corporation in various marketing positions of increasing responsibility, having served as Senior Vice President/Chief Marketing Officer of Sears Retail immediately prior to taking the position with ConAgra. Prior to that, she served in executive positions with Information Resources Inc. and Johnson & Johnson Consumer Products, Inc. Ms. Chow currently serves as Chair of the Compensation Committee and a member of the Governance Committee at Welbilt Inc. and is also a director at Energy Recovery, Inc. as well as High Liner Foods, where she is on the Human Resources Committee. She has previously served as a director of The Manitowoc Company, RC2 Corporation, and Feeding America. Ms. Chow has extensive leadership experience in retail and consumer packaged goods marketing, advertising, branding, consumer insights, and digital/social marketing and human resources matters. Ms. Chow has an M.B.A. from the Wharton School of the University of Pennsylvania and a B.A. with distinction from Cornell University. Ms. Chow currently serves as a member of our Audit Committee.
 
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Class II Directors
 
Hugh R. Rovit
Independent Director since July 2018
Age: 61
Race/Ethnicity: Caucasian
Gender: Male
 
Independence & Committees:
 
●    Independent Director
 
●    Audit Committee
 
●    NCG Committee
  
Key Skills/Experience:
 
●    Accounting/Auditing
 
●    Business Operations
 
●    Consumer Products
 
●    Corporate Governance
 
●    Corporate Strategy & Business Development
 
●    Ethics/Corporate Social Responsibility
 
●    Executive Leadership & Management
 
●    Finance/Capital Management & Allocation
 
●    Human Resources & Compensation
 
●    International Business Experience
 
●    Marketing/Sales or Brand Management
 
●    Mergers & Acquisitions
 
●    Public Company Board Experience
 
●    Public Company Executive Experience
 
●    Supply Chain/Logistics
 
Hugh R. Rovit was appointed to our Board in July 2018. From June 2010 until July 2018, Mr. Rovit served as one of the directors of Spectrum Legacy. Prior to that time, he served as a director of SBI from August 2009 to June 2010. Mr. Rovit is currently Chief Executive Officer of S’well, Inc., a global manufacturer and marketer of reusable stainless-steel bottles and accessories. He previously served as Chief Executive Officer of Ellery Homestyles, a leading supplier of branded and private label home fashion products to major retailers, offering curtains, bedding, throws and specialty products, from May 2013 until its sale in September 2018 to a strategic competitor. Previously, Mr. Rovit served as Chief Executive Officer of Sure Fit Inc., a marketer and distributor of home furnishing products from 2006 through 2012 and was a Principal at turnaround management firm Masson & Company from 2001 through 2005. Previously, Mr. Rovit held the positions of Chief Financial Officer of Best Manufacturing, Inc., a manufacturer and distributor of institutional service apparel and textiles, from 1998 through 2001 and Chief Financial Officer of Royce Hosiery Mills, Inc., a manufacturer and distributor of men’s and women’s hosiery, from 1991 through 1998. Mr. Rovit is also a director of GSC Technologies, Inc. and previously served as a director of PlayPower, Inc., Nellson Nutraceuticals, Inc., Kid Brands Inc., Atkins Nutritional, Inc., Oneida, Ltd., Cosmetic Essence, Inc., Xpress Retail and Twin Star International. Mr. Rovit received his B.A. degree from Dartmouth College and has an MBA from Harvard Business School. Mr. Rovit is a member of our Audit Committee and NCG Committee.
 
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Gautam Patel
 
Independent Director since October 2020
Age: 49
Race/Ethnicity: Asian
Gender: Male
Independence & Committees:
 
●    Independent Director
 
●    Chair of our Audit Committee
 
●    Compensation Committee
  
Key Skills/Experience:
 
●    Accounting/Auditing
 
●    Business Operations
 
●    Corporate Governance
 
●    Corporate Strategy & Business Development
 
●    Ethics/Corporate Social Responsibility
 
●    Finance/Capital Management & Allocation
 
●    Human Resources & Compensation
 
●    International Business Experience
 
●    Mergers & Acquisitions
●    Public Company Board Experience
 
Gautam Patel was appointed to our Board in October 2020. Mr. Patel has served as Managing Director of Tarsadia Investments, a private investment firm based in Newport Beach, California, since 2012. In that role, Mr. Patel has led a team of investment professionals to identify, evaluate and execute principal control equity investments across sectors including life sciences, financial services and technology. Prior to joining Tarsadia, Mr. Patel served as Managing Director at Lazard from 2008 to 2012, where he led financial and strategic advisory efforts in sectors including transportation and logistics, private equity and healthcare. Prior to that, Mr. Patel served in a variety of advisory roles at Lazard from 1999 to 2008, including restructuring, bankruptcy and corporate reorganization assignments in 2001 and 2008. From 1994 to 1997, Mr. Patel was an Analyst at Donaldson, Lufkin & Jenrette, where he worked on mergers and acquisitions as well as high-yield and equity financings. Mr. Patel is currently a Board Member of Amneal Pharmaceuticals (NYSE: AMRX). Mr. Patel also serves on the board of Casita Maria Center for Arts and Education, a New York-based nonprofit organization which aims to empower children through arts-based education. Mr. Patel received a B.A. from Claremont McKenna College, a B.S. from Harvey Mudd College, an MSc from the London School of Economics and an MBA from the University of Chicago. Mr. Patel currently serves as Chair of our Audit Committee and as a member of our Compensation Committee.
 
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Class III Directors
 
 
David M. Maura
 
Director since July 2018
Age: 49
Race/Ethnicity: Caucasian
Gender: Male
 
Independence & Committees:
●    None
  
Key Skills/Experience:
 
●    Accounting/Auditing
 
●    Business Operations
 
●    Consumer Products
 
●    Corporate Governance
 
●    Corporate Strategy & Business Development
 
●    Ethics/Corporate Social Responsibility
 
●    Executive Leadership & Management
 
●    Finance/Capital Management & Allocation
 
●    Human Resources & Compensation
 
●    International Business Experience
 
●    Mergers & Acquisitions
 
●    Public Company Board Experience
 
●    Public Company Executive Experience
 
●    Risk Management & Oversight
 
David M. Maura was appointed our Executive Chairman and our Chief Executive Officer in July 2018. Previously, he had served as the Executive Chairman, effective as of January 2016, and as Chief Executive Officer, effective as of April 2018, of SPB Legacy. Prior to such appointment, Mr. Maura served as
non-executive
Chairman of the board of directors of SPB Legacy since July 2011 and served as interim Chairman and as one of the directors of SPB Legacy since June 2010. Mr. Maura was a Managing Director and the Executive Vice President of Investments at HRG Group, Inc. (now known as Spectrum Brands Holdings, Inc.) (“HRG Group”) from October 2011 until November 2016 and had been a member of HRG Group’s board of directors from May 2011 until December 2017. Mr. Maura previously served as a Vice President and Director of Investments of Harbinger Capital Partners LLC (“Harbinger Capital”) from 2006 until 2012. Prior to joining Harbinger Capital in 2006, Mr. Maura was a Managing Director and Senior Research Analyst at First Albany Capital, Inc., where he focused on distressed debt and special situations, primarily in the consumer products and retail sectors. Prior to First Albany, Mr. Maura was a Director and Senior High Yield Research Analyst in Global High Yield Research at Merrill Lynch & Co. Previously, Mr. Maura was a Vice President and Senior Analyst in the High Yield Group at Wachovia Securities, where he covered various consumer product, service, and retail companies. Mr. Maura began his career at ZPR Investment Management as a Financial Analyst.
 
Mr. Maura served as Chairman, President and Chief Executive Officer of Mosaic Acquisition Corp., a special purpose acquisition company, from October 2017 to January 2020, when the company merged with Vivint Smart Home, Inc. (“Vivint”). Mr. Maura served as an outside director on Vivint’s board until March 2020 when he resigned from the board of Vivint. He previously served on the boards of directors of Ferrous Resources, Ltd., Russell Hobbs, and Applica. Mr. Maura received a B.S. degree in business administration from Stetson University and is a CFA charterholder.
 
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Terry L. Polistina
 
Lead Independent Director since July 2018
Age: 58
Race/Ethnicity: Caucasian
Gender: Male
 
Independence & Committees:
 
●    Independent Director
 
●    Chair of our Compensation Committee
 
●    NCG Committee
  
Key Skills/Experience:
 
●    Accounting/Auditing
 
●    Business Operations
 
●    Consumer Products
 
●    Corporate Governance
 
●    Corporate Strategy & Business Development
 
●    Ethics/Corporate Social Responsibility
 
●    Executive Leadership & Management
 
●    Finance/Capital Management & Allocation
 
●    Government Relations / Public Policy
 
●    Human Resources & Compensation
 
●    International Business Experience
 
●    Marketing/Sales or Brand Management
 
●    Mergers & Acquisitions
 
●    Public Company Board Experience
 
●    Public Company Executive Experience
 
●    Risk Management & Oversight
●    Supply Chain/Logistics
 
Terry L. Polistina was appointed to our Board in July 2018. From June 2010 until July 2018, Mr. Polistina served as one of the directors of SPB Legacy. Since July 2018, Mr. Polistina has also served as the Lead Independent Director of the Board. Prior to that, he served as a director of SBI from August 2009 to June 2010. Mr. Polistina served as the President, Small Appliances of SPB Legacy beginning in June 2010 and became President - Global Appliances of SPB Legacy in October 2010 until September 2013. Prior to that, Mr. Polistina served as the Chief Executive Officer and President of Russell Hobbs from 2007 until 2010. Mr. Polistina served as Chief Operating Officer at Applica from 2006 to 2007 and Chief Financial Officer from 2001 to 2007, at which time Applica combined with Russell Hobbs. Mr. Polistina previously served as a director of privately held Entic, Inc. Mr. Polistina received an undergraduate degree in finance from the University of Florida and holds an MBA from the University of Miami. Mr. Polistina is the Chair of our Compensation Committee, is a member of our NCG Committee, and serves as the Lead Independent Director of the Board.
Our Executive Officers
Our executive officers serve at the discretion of our Board. Our Board selected each of our executive officers because his or her background provides each executive with the experience and skillset geared toward helping us succeed in our business strategy. Our management team is composed of seasoned executives who focus on the performance of our Company to drive long-term outcomes for us. We are committed to ensuring that female and minority candidates are among the pool of individuals from which new executive officers are selected. We are proud to have the benefit of a woman and a candidate from a diverse background on our executive team.
Included in the discussion below is information regarding our executive officers who do not serve as directors of our Company. See “
Our Board of Directors
” above for certain information regarding David Maura, our only director-employee.
 
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Randal D. Lewis
 
Executive Vice President, Chief Operating Officer since October 2018
Age: 55
Race/Ethnicity: Caucasian
Gender: Male
 
 
Randal D. Lewis was appointed our Chief Operating Officer in October 2018 and Executive Vice President in September 2019. He has direct responsibility for all operating divisions. Mr. Lewis was previously the President of our Global Consumer Division from March 2018, which included our Global Auto Care, Global Pet Care and Home & Garden business unit. Prior to that, he was President of our Pet, Home & Garden business unit since November 2014. Previous to that, he was Senior Vice President and General Manager of our Home & Garden business since January 2011. From April 2005 to January 2011, Mr. Lewis served as our Home & Garden business’s Vice President, Manufacturing and Vice President, Operations. Prior to that, Mr. Lewis held various leadership roles from October 1997 to April 2005 with the former owners of United Industries Corporation, which is now owned by the Company and from January 1989 to October 1997 Mr. Lewis worked at Unilever. Mr. Lewis earned a B.S. degree in mechanical engineering from the University of Illinois, Urbana-Champaign.
 
 
Rebeckah Long
 
Senior Vice President and Chief Human Resources Officer since November 2021
Age: 47
Race/Ethnicity: Caucasian
Gender: Female
 
 
Rebeckah Long was appointed our Senior Vice President, Global Human Resources in September 2019 and was promoted to Senior Vice President and Chief Human Resources Officer in November 2021 and has direct responsibility for consistent delivery and execution of the Human Resources function globally. Ms. Long previously served as Vice President of Global Human Resources of Spectrum Brands since April 2019. Prior to that, she was Human Resource Business Partner for several business divisions within Spectrum Brands since March 2008, with a focus on talent strategy and organizational effectiveness. Prior to joining Spectrum Brands, she was the Regional Human Resources Manager for United Rentals, Inc. from June 2000 to February 2008 and was responsible for the integration of over 25 businesses into the United Rentals portfolio. Ms. Long earned a B.S. degree in economics from Illinois State University.
 
 
  Jeremy W. Smeltser
 
  Executive Vice President, Chief Financial Officer since November 2019
  Age: 47
  Race/Ethnicity: Caucasian
  Gender: Male
 
 
Jeremy W. Smeltser was appointed our Executive Vice President on October 1, 2019 and was appointed our Chief Financial Officer on November 17, 2019. He previously served as Vice President and Chief Financial Officer of SPX Flow, Inc. (“SPX Flow”). Prior to his role at SPX Flow, he served as Vice President and Chief Financial Officer of SPX Corporation, where he served in various roles, including as Vice President and Chief Financial Officer, Flow Technology and became an officer of SPX Corporation in April 2009. Mr. Smeltser joined SPX Corporation in 2002 from Ernst & Young LLP, where he was an audit manager in Tampa, Florida. Prior to that, he held various positions with Arthur Andersen LLP in Tampa, Florida and Chicago, Illinois, focused primarily on assurance services for global manufacturing clients. Mr. Smeltser earned a B.S. degree in accounting from Northern Illinois University.
 
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Ehsan Zargar
 
Executive Vice President, General Counsel and Corporate Secretary since October 2018
Age: 44
Race/Ethnicity: Asian (Middle Eastern)
Gender: Male
 
 
Ehsan Zargar was appointed our Executive Vice President, General Counsel and Corporate Secretary on October 1, 2018. Mr. Zargar is responsible for the Company’s legal, environmental, social and governance (“ESG”), health and safety, insurance, and real estate functions. In addition, Mr. Zargar takes a leading role in setting, negotiating and implementing the Company’s M&A, capital markets and other strategic activities. Previously, Mr. Zargar also led the Company’s executive compensation program. From June 2011 until July 2018, Mr. Zargar held a number of increasingly senior positions with HRG Group, a publicly-listed acquisition company, including serving as its Executive Vice President and Chief Operating Officer from January 2017 until July 2018, as its General Counsel since April 2015 and as Corporate Secretary since February 2012. During his time at HRG Group, Mr. Zargar took a leading role in setting, negotiating and implementing HRG Group’s M&A, capital markets and other strategic activities. Mr. Zargar has extensive experience serving on private and public boards and committees of portfolio companies, including setting and overseeing senior management compensation programs. From August 2017 until July 2018, Mr. Zargar served as a director of SPB Legacy. From November 2006 to June 2011, Mr. Zargar worked in the New York office of Paul, Weiss, Rifkind, Wharton & Garrison LLP. Previously, Mr. Zargar practiced law at another major law firm focusing on general corporate matters. Mr. Zargar received a law degree from Faculty of Law at the University of Toronto and a B.A. from the University of Toronto.
Corporate Governance
The following table provides an overview of our corporate governance practices.
 
 
Our Practices
 
✓  Diverse Board and executive team
 
✓  Majority voting and a director resignation policy
 
✓  Stock ownership guidelines
 
✓  Anti-hedging policy
 
✓  Board Diversity Policy
 
✓  Global Environmental, Social and Governance Policy
 
✓  Global Energy and Greenhouse Gas Policy
 
✓  Environmental Policy
 
✓  Human Rights Policy
 
    
 
  
✓  Independent lead director
 
✓  Majority of the Board composed of independent directors
 
✓  All committees composed entirely of independent directors
 
✓  Board declassifying process underway
 
✓  Related person transactions policy
 
✓  Anti-pledging policy
 
✓  Robust clawback policy
 
✓  All members of our Audit Committee are financial experts
 
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Board Structure
Lead Independent Director
Mr. Polistina was appointed to our Board, and as our Lead Independent Director in July 2018. In his capacity as our Lead Independent Director, Mr. Polistina:
 
   
presides at all meetings of the Board at which the Chairman of the Board is not present;
 
   
presides at all executive sessions of the independent members of the Board and has the authority to call meetings of the independent members of the Board;
 
   
serves as liaison between the management and the independent members of the Board and provides our Chief Executive Officer (“CEO”) and other members of management with feedback from executive sessions of the independent members of the Board;
 
   
reviews and approves the information to be provided to the Board;
 
   
reviews and approves meeting agendas and coordinates with management to develop such agendas;
 
   
approves meeting schedules to assure there is sufficient time for discussion of all agenda items;
 
   
if requested by major shareholders, ensures that he is available for consultation and direct communication;
 
   
interviews, along with the Chair of our NGC Committee, Board and senior management candidates and makes recommendations with respect to Board candidates and hiring of senior management;
 
   
consults with other members of our Compensation Committee with respect to the performance review of our CEO and other member of our senior management team; and
 
   
performs such other functions and responsibilities as requested by the Board from time to time.
Mr. Maura serves as our Executive Chairman and our CEO. Given Mr. Maura’s broad experience in mergers and acquisitions, the consumer products and retail sectors and finance and investments, as well as his role in SPB Legacy’s strategy and growth since 2010, our Board believes that it is in the best interest of the Company for Mr. Maura to concurrently serve as our Executive Chairman and CEO.
Director Independence
In accordance with the New York Stock Exchange Listed Company Manual (the “NYSE Rules”) and our Corporate Governance Guidelines, a majority of our Board is required to be composed of independent directors. All of our directors, except for David Maura (our Chairman and CEO), qualify as independent directors. More specifically, our Board has affirmatively determined that none of the following directors has a material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company): Leslie L. Campbell, Joan Chow, Sherianne James, Terry L. Polistina, Hugh R. Rovit and Gautam Patel. Our Board has adopted the definition of “independent director” set forth under Section 303A.02 of the NYSE Rules to assist it in making determinations of independence. Our Board has determined that the directors referred to above currently meet these standards and qualify as independent.
Meetings of Independent Directors
The Company generally holds executive sessions at each Board and committee meeting. In his capacity as our Lead Independent Director, Mr. Polistina presides over executive sessions of the entire Board and the Chair of each committee presides over the executive sessions of that committee.
 
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Committees Established by Our Board of Directors
Our Board has designated three principal standing committees: our Audit Committee, our Compensation Committee, and our NCG Committee, each of which has a written charter addressing each such committee’s purpose and responsibilities and include such duties that the Board may designate, from time to time. Our Board, directly or through one or more of its committees, provides oversight on our management’s efforts to promote corporate social responsibility and sustainability, including efforts to advance initiatives regarding the environment, diversity, equity and inclusion, human rights, labor, health and safety and other matters. Each such committee is composed entirely of independent directors.
Audit Committee
Our Audit Committee has been established in accordance with Section 303A.06 of the NYSE Rules and Rule
10A-3
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for the purpose of overseeing the Company’s accounting and financial reporting processes and audits of our financial statements. Our Audit Committee is responsible for monitoring (i) the integrity of our financial statements, (ii) our independent registered public accounting firm’s qualifications and independence, (iii) the performance of our internal audit function and independent auditors and (iv) our compliance with legal and regulatory requirements. The responsibilities and authority of our Audit Committee are described in further detail in the Charter of the Audit Committee, as adopted by our Board in July 2018, a copy of which is available at our website www.spectrumbrands.com under “
Investor Relations—Corporate Governance Documents
.”
The current members of our Audit Committee are Gautam Patel (Chair), Joan Chow, Leslie L. Campbell, and Hugh R. Rovit. Our Board has determined that all members of our Audit Committee qualify as an “audit committee financial experts” as defined in the rules promulgated by the SEC in furtherance of Section 407 of the Sarbanes-Oxley Act of 2002. Our Board has determined that all members of our Audit Committee qualify as independent, as such term is defined in Section 303A.02 of the NYSE Rules, Section 10A(m)(3)(B) of the Exchange Act and Exchange Act Rule
10A-3(b).
Compensation Committee
Our Compensation Committee is responsible for (i) overseeing our compensation and employee benefits plans and practices, including our executive compensation plans and our incentive compensation and equity-based plans, (ii) evaluating and approving the performance of our Executive Chairman and CEO and other executive officers in light of those goals and objectives and (iii) reviewing and discussing with management our compensation discussion and analysis disclosure and compensation committee reports in order to comply with our public reporting requirements. The responsibilities and authority of our Compensation Committee are described in further detail in the Charter of the Compensation Committee, as adopted by our Board in November 2020, a copy of which is available at our website www.spectrumbrands.com under “
Investor Relations—Corporate Governance Documents
.”
The current members of our Compensation Committee are Terry L. Polistina (Chair), Sherianne James, and Gautam Patel. Our Board has determined that all members of our Compensation Committee qualify as independent, as such term is defined in Section 303A.02 of the NYSE Rules.
NCG Committee
Our NCG Committee is responsible for (i) identifying and recommending to our Board individuals qualified to serve as our directors and on our committees of our Board, (ii) advising our Board with respect to board composition, procedures and committees, (iii) developing and recommending to our Board a set of corporate governance principles applicable to the Company and (iv) overseeing the evaluation process of our Board, the committees of the Board, the individual directors and our Executive Chairman and CEO. The responsibilities and authority of our NCG Committee are described in further detail in the Charter of the NCG Committee, as adopted by our Board in July 2018, a copy of which is available at our website www.spectrumbrands.com under “
Investor Relations—Corporate Governance Documents.
The current members of our NCG Committee are Sherianne James (Chair), Terry L. Polistina, and Hugh R. Rovit. Our Board has determined that all members of our NCG Committee qualify as independent, as such term is defined in Section 303A.02 of the NYSE Rules.
Board and Committee Activities
During Fiscal 2021, our Board held a total of twelve meetings and acted by unanimous written consent on a total of three occasions. Our Audit Committee held a total of six meetings during Fiscal 2021. Our Compensation Committee held six meetings and acted by unanimous written consent on two occasions during Fiscal 2021. Our NCG Committee held six meetings and acted by unanimous written consent on two occasions during Fiscal 2021.
 
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During Fiscal 2021, all of our directors attended 100% of the meetings of the Board and committees on which they served.
Our Practices and Policies
Corporate Governance Guidelines and Code of Ethics and Business Conduct
Our Board has adopted our Corporate Governance Guidelines to assist it in the exercise of its responsibilities. These guidelines reflect our Board’s commitment to monitor the effectiveness of policy and decision-making, both at our Board and management level, with a view to enhancing stockholder value over the long term. Our Corporate Governance Guidelines address, among other things, our Board and Board committee composition and responsibilities, director qualifications standards and selection and evaluation of our CEO. In addition, pursuant to these guidelines, our Board has formalized a process by which our directors are assessed annually by our NCG Committee. The assessment includes a peer review process and evaluates the Board as a whole, the committees of the Board and the individual directors. In carrying out this assessment, we may retain an external evaluator to assist our Board and NCG Committee at least every three years. Our Board has adopted a Code of Business Conduct and Ethics Policy for directors, officers and employees and a Code of Ethics for the Principal Executive and Senior Financial Officers to provide guidance to our CEO, Chief Financial Officer (“CFO”), principal accounting officer or controller and our business segment chief financial officers or persons performing similar functions.
Majority Voting and Director Resignation Policy
During Fiscal 2019, our Board adopted a majority voting policy for the election of directors. Pursuant to this policy, which applies in the case of uncontested director elections, a director must be elected by a majority of the votes cast with respect to the election of such director. For purposes of this policy, a “majority of the votes cast” means that the number of shares voted “for” a director must exceed the number of shares voted “against” that director and abstentions and broker
non-votes
are not counted as “votes cast.”
The policy also provides that in the event that an incumbent director nominee receives a greater number of votes “against” than votes “for” his or her election, he or she must (within five business days following the final certification of the related election results) offer to tender his or her written resignation from the Board to the NCG Committee. The NCG Committee will review such offer of resignation and will consider such factors and circumstances as it may deem relevant, and, within 90 days following the final certification of the election results, will make a recommendation to the Board concerning the acceptance or rejection of such tendered offer of resignation. The policy requires the decision of the Board to be promptly publicly disclosed.
Board Diversity Policy
In October 2020, our Board adopted a Board Diversity Policy. The purpose of this policy is to set out the basic principles to be followed to ensure that the Board has the appropriate balance of skills, experience, and diversity of perspectives necessary to enhance the effectiveness of the Board and to maintain the highest standards of corporate governance. Pursuant to this policy, selection of Board candidates will be based on a range of perspectives with reference to the Company’s business model and specific needs, including, but not limited to, talents, skills and expertise, industry experience, professional experience, gender, age, race, language, cultural background, educational background, and other similar characteristics.
Anti-Hedging Policy
The Company believes it is improper and inappropriate for our directors, officers, and employees and certain of their family members (each, a “Subject Person”) to engage in hedging, short-term or speculative transactions involving the Company’s securities. Our anti-hedging policy, which we further strengthened during Fiscal 2019, applies to all Subject Persons. The Company prohibits Subject Persons from engaging in (i) derivative, speculative, hedging or monetization transactions in Company securities (including, but not limited to, any trading on derivatives (such as swaps, forwards, and/or futures) of Company securities that allow a stockholder to lock in the value of Company securities in exchange for all or part of the potential upside appreciation in the value of such stock), (ii) short sales (i.e., selling stock the Subject Person does not own and borrowing shares to make delivery) or (iii) buying or selling puts, calls, options or other derivatives in respect of Company securities.
 
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Anti-Pledging Policy
In addition, the Company believes it is improper and inappropriate for any Subject Person to engage in pledging transactions involving the Company’s securities. During Fiscal 2019, we adopted a robust anti-pledging policy, which prohibits Subject Persons from pledging or encumbering Company securities as collateral for a loan or other indebtedness. This prohibition includes, but is not limited to, holding such shares in a margin account as collateral for a margin loan or borrowing against Company securities on margin. Any pledges (and any modifications or replacements of such pledges) that existed prior to the adoption of our policy are grandfathered unless otherwise prohibited by applicable law or Company policy and so long as any modification or replacement of any
pre-existing
pledge does not result in additional shares being pledged.
Securities Trading Policy
Our Company believes that it is appropriate to monitor and prohibit certain trading in the securities of our Company. Accordingly, trading of the Company’s securities by directors, executive officers and certain other employees who are so designated by the office of the Company’s General Counsel is subject to trading period limitations or must be conducted in accordance with a previously established trading plan that meets SEC requirements. At all times, including during approved trading periods, directors, executive officers and certain other employees notified by the office of the Company’s General Counsel are required to obtain preclearance from the Company’s General Counsel or his designee prior to entering into any transactions in Company securities, unless those transactions occur in accordance with a previously established trading plan that meets SEC requirements.
Transactions subject to our securities trading policy include, among others, purchases and sales of Company stock, bonds, options, puts and calls, derivative securities based on securities of the Company, gifts of Company securities, contributions of Company securities to a trust, sales of Company stock acquired upon the exercise of stock options, broker-assisted cashless exercises of stock options, market sales to raise cash to fund the exercise of stock options and trades in Company’s stock made under an employee benefit plan.
Stock Ownership Guidelines
Our Board believes that our directors, named executive officers (“NEOs”) and certain of the Company’s other officers and employees should own and hold Company common stock to further align their interests with the interests of stockholders and to further promote the Company’s commitment to sound corporate governance.
To memorialize this commitment, effective January 29, 2013, our Board, upon the recommendation of our Compensation Committee, established stock ownership and retention guidelines (the “SOG”) applicable to the Company’s directors, NEOs and all other officers of the Company and its subsidiaries with a level of Vice President or above (such officers and our NEOs, our “Covered Officers”). Effective January 1, 2020, the Company improved and enhanced the SOG to further align it with best practices by: (i) increasing our directors’ and Covered Officers’ retention requirement from 25% to 50% of their net
after-tax
shares received under awards granted until they reach their required stock ownership under the SOG; and (ii) extending the applicable time period for our directors and Covered Officers to achieve the minimum ownership requirements to five years from the date of eligibility or promotion. Even when the required stock ownership is obtained, all employee incentive plan participants, including NEOs, are subject to an additional stock retention requirement requiring them to retain at least 50% of their net
after-tax
shares of Company stock received under awards for one year after the date of vesting.
Under the updated SOG, our directors are expected to achieve stock ownership with a value of at least five times their annual cash retainer. In addition, our Covered Officers are expected to achieve the levels of stock ownership indicated below (which equal a dollar value of stock based on a multiple of the Covered Officer’s base salary).
 
  
Position                                                                                                                                                                                
  
$ Value of Stock to be

    Retained (Multiple of Base    

Salary or Cash Retainer)
  
  Years to  
   Achieve   
  Board Members
   5x Cash Retainer    5 years
  Executive Chairman and CEO
   5x Base Salary    5 years
  Chief Operating Officer, CFO, General Counsel and Presidents of our Business Units
   3x Base Salary    5 years
  Senior Vice Presidents
   2x Base Salary    5 years
  Vice Presidents
   1x Base Salary    5 years
 
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The stock ownership levels attained by a director or a Covered Officer are based on shares directly owned by the director or Covered Officer, whether through earned and vested restricted stock units (“RSU”) or performance stock units (“PSU”) or restricted stock grants or open market purchases. Unvested restricted shares, unvested RSUs and PSUs and stock options do not count toward the ownership goals; provided, that, effective January 1, 2020, unvested time-based restricted stock and unvested time-based RSUs count toward the ownership goals. On a quarterly basis, our Compensation Committee reviews the progress of our directors and Covered Officers in meeting these guidelines. In some circumstances, failure to meet the guidelines by a director or a Covered Officer could result in additional retention requirements or other actions by our Compensation Committee.
Compensation Clawback Policy
We have adopted a Compensation Clawback Policy setting forth the conditions under which applicable incentive compensation provided to our executive officers may be subject to forfeiture, disgorgement, recoupment or diminution (“clawback”). This policy provides that our Board or our Compensation Committee shall require the clawback or adjustment of incentive-based compensation to the Company in the following circumstances:
 
   
As required by Section 304 of the Sarbanes Oxley Act of 2002, which generally provides that if the Company is required to prepare an accounting restatement due to material noncompliance as a result of misconduct with financial reporting requirements under the securities laws, then the CEO and CFO must reimburse the Company for any incentive-based compensation or equity compensation and profits from the sale of the Company’s securities during the
12-month
period following initial publication of the financial statements that had been restated;
 
   
As required by Section 954 of the Dodd-Frank Act and Rule
10D-1of
the Exchange Act, which generally require that, in the event the Company is required to prepare an accounting restatement due to its material noncompliance with financial reporting requirements under the securities laws, the Company may recover from any of its current or former executive officers who received incentive compensation, including stock options, during the three-year period preceding the date on which the Company is required to prepare a restatement based on the erroneous financial reporting, any amount that exceeds what would have been paid to the executive officer after giving effect to the restatement; and
 
   
As required by any other applicable law, regulation or regulatory requirement.
Additionally, our Board or Compensation Committee in their discretion may require that any executive officer who has been awarded incentive-based compensation shall forfeit, disgorge, return or adjust such compensation in the following circumstances:
 
   
If the Company suffers significant financial loss, reputational damage or similar adverse impact as a result of actions taken or decisions made by the executive officer in circumstances constituting illegal or intentionally wrongful conduct or gross negligence; or
 
   
If the executive officer is awarded or is paid out under any incentive compensation plan of the Company on the basis of a material misstatement of financial calculations or information or if events coming to light after the award disclose a material misstatement which would have significantly reduced the amount of the award or payout if known at the time of the award or payout.
The awards and incentive compensation subject to clawback under this policy include vested and unvested equity awards, shares acquired upon vesting or lapse of restrictions, short- and long-term incentive bonuses and similar compensation, discretionary bonuses, any other awards or compensation under the Company’s equity plans and any other incentive compensation plan of the Company. Any clawback under this policy may, in the discretion of our Board or Compensation Committee, be effectuated through the reduction, forfeiture or cancellation of awards, the return of
paid-out
cash or exercised or released shares, adjustments to future incentive compensation opportunities or in such other manner as our Board and Compensation Committee determine to be appropriate, except as otherwise required by law.
 
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In addition, under the Company’s equity plans, any equity award granted may be cancelled by our Compensation Committee in its sole discretion, except as prohibited by applicable law, if the participant, without the consent of the Company, while employed by or providing services to the Company or any affiliate or after termination of such employment or service, violates a
non-competition,
non-solicitation
or
non-disclosure
covenant or agreement or otherwise engages in activity that is in conflict with or is adverse to the interests of the Company or any affiliate, including fraud or conduct contributing to any financial restatements or irregularities engaged in, as determined by our Compensation Committee in its sole discretion. Our Compensation Committee may also provide in any award agreement that the participant will forfeit any gain realized on the vesting or exercise of such award and must repay the gain to the Company, in each case except as prohibited by applicable law, if (i) the participant engages in any activity referred to in the preceding sentence or (ii) the amount of any such gain is in excess of what the participant should have received under the terms of the award for any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error). Additionally, awards are subject to clawback, forfeiture or similar requirements to the extent required by applicable law (including without limitation Section 304 of the Sarbanes-Oxley Act and Section 954 of the Dodd-Frank Act). Equity awards issued have included these provisions.
Risk Oversight
The Company’s risk assessment and management function is led by the Company’s senior management, which is responsible for
day-to-day
management of the Company’s risk profile, with oversight from our Board and its committees. Central to our Board’s oversight function is our Audit Committee. In accordance with our Audit Committee Charter, our Audit Committee is responsible for the oversight of the financial reporting process and internal controls. In this capacity, our Audit Committee is responsible for reviewing and evaluating guidelines and policies governing the process by which senior management of the Company and the relevant departments of the Company, including the internal audit department, assess and manage the Company’s exposure to risk, as well as the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures.
The Company has implemented an annual formalized risk assessment process. In accordance with this process, a governance risk and compliance committee of certain members of senior management has the responsibility to identify, assess and oversee the management of risk for the Company. This committee obtains input from other members of management and subject matter experts as needed. Management uses the collective input received to measure the potential likelihood and impact of key risks and to determine the adequacy of the Company’s risk management strategy. Periodically, representatives of this committee report to our Audit Committee on its activities and the Company’s risk exposure. In addition, the Company maintains an information security program that supports the security, confidentiality, integrity, and availability of our information technology systems. In connection with such program, the Board is briefed by management on information security matters and employees receive information security awareness training. In the past three years, we have not experienced an information security breach and we maintain an appropriate information security risk insurance policy.
In Fiscal 2021, our management and our Audit Committee reviewed our reporting processes and took a number of actions to further enhance such processes. In connection with such efforts, we made changes to our internal control over financial reporting in order to remediate the material weakness that we disclosed in our Form
10-K
for the fiscal year ended September 30, 2020. Remediation of this material weakness was completed during Fiscal 2021. See Item 9A of our Original Form
10-K
for a detailed discussion of this remediation process.
Environmental, Social and Governance Matters
We are committed to sustainability and recognize the impact our business has on the world. We believe in making a positive difference in the communities in which we live and work and strive to discharge our corporate social responsibilities from a global perspective and throughout every aspect of our operations. Our Board recognizes the negative effect poor environmental practices and human capital management may have on us and our returns. Our Board carefully considers and balances the impact on the environment, people and the communities of which we are a part in deciding how to operate our business. Our Board receives periodic reports regarding our risk exposure and risk mitigation efforts in these areas.
While our corporate social responsibility commitments address many areas, we focus on four key priorities: product and content safety, environmental sustainability, human rights and ethical sourcing and diversity and inclusion.
 
   
Product
 & Content Safety
– Product safety is essential to upholding our consumers’ trust and expectations and we embed quality and safety processes into every product we deliver. This includes embracing our responsibility to create safe, high-quality products and marketing them responsibly. It is an important part of how we uphold our commitments to all our consumers.
 
   
Environmental Sustainability
We are passionate about protecting our planet and conserving natural resources for future generations, including pursuing innovative ways to reduce our environmental impacts across our businesses. We drive our strategic environmental blueprint across our organization with the intention of reducing the environmental impacts of our products, minimizing the environmental footprint of our operations and processes and encouraging our employees and partners to embrace and promote environmental responsibility.
 
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Human Rights
 & Ethical Sourcing
– Treating people with fairness, dignity and respect and operating ethically in our supply chain are our core values. We demonstrate these deep beliefs in the way we treat our employees and in the expectations and requirements we have of those with whom we do business. We work with our third-party factories and licensees to ensure all products are manufactured in safe and healthy environments and the human rights of workers in our supply chain are being upheld.
 
   
Diversity
 & Inclusion
We believe that supporting equality and promoting inclusion across our business and society makes the world a better place for all. We know that the more inclusive we are as a company, the stronger our business will be. We support the personal and professional growth of our diverse worker base, with a goal of positively impacting their lives and well-being.
To further these priorities, the Board has adopted, among other things, (i) an Environmental Policy, which sets forth our commitment to the health and safety of our employees and protection of the environment across our global operations; (ii) a Human Rights Policy, which sets forth our commitment to respect and promote human rights, including the protection of minority groups’ rights and women’s rights, in furtherance of the guidance set forth in, among others, the Universal Declaration of Human Rights, UN Guiding Principles on Business and Human Rights, the International Labor Organizations Declaration on Fundamental Principles and Rights at Work, and the Organization for Economic Cooperation and Development for Multinational Enterprises; (iii) a Global Energy and Greenhouse Gas (GHG) Policy, which sets forth our commitment to the protection of the environment, preservation of natural resources, and the effective management and reduction of energy and GHGs by, among other things, identifying opportunities for purchasing direct, renewable energy in key markets and requiring energy considerations when making investments for major renovations and new capital equipment and major construction; and (iv) a Global Environmental, Social and Governance Policy, which sets forth our commitment to ESG.
Related-Person Transactions Policy
Our Board has adopted a written policy for the review, approval and ratification of transactions that involve related persons and potential conflicts of interest. See “
Certain Relationships and Related Transactions
” for discussion of this policy and disclosure of our related-person transactions.
Transfer of Our Shares of Common Stock
Our Company has substantial deferred tax assets related to net operating losses and tax credits (together, “Tax Attributes”) for U.S. federal and state income tax purposes. These Tax Attributes are an important asset of the Company because we expect to use these Tax Attributes to offset future taxable income. The Company’s ability to utilize or realize the carrying value of such Tax Attributes may be impacted if the Company experiences an “ownership change” or certain other events under applicable tax rules. If an “ownership change” were to occur, we could lose the ability to use a significant portion of our Tax Attributes, which could have a material adverse effect on the Company’s results of operations and financial condition.
Accordingly, we have adopted certain transfer restrictions designed to limit an “ownership change.” These transfer restrictions are subject to certain exceptions, including, among others, prior approval of a Prohibited Transfer by our Board. As previously disclosed, our Board has granted
pre-approvals
to certain large institutional investors and their affiliates. The foregoing description of the transfer restrictions contained within our Charter is not complete and is qualified in its entirety by reference to the full text of the Charter, which is incorporated by reference into this report.
Governance Documents Availability
We have posted our Corporate Governance Guidelines, Code of Business Conduct and Ethics for directors, officers and employees, Code of Ethics for the Principal Executive and Senior Financial Officers, Director Resignation Policy, Board Diversity Policy, Global ESG Governance Policy, Global Energy and Greenhouse Gas Policy, Human Rights Policy, Environmental Policy, Charter,
By-laws,
Audit Committee Charter, Compensation Committee Charter and NCG Committee Charter on our website www.spectrumbrands.com under “
Investor Relations—Corporate Governance Documents
.” We intend to disclose any amendments to, and, if applicable, any waivers of, these governance documents on that section of our website. These governance documents are also available in print without charge to any stockholder of record that makes a written request to the Company. Inquiries must be directed to the Investor Relations Department at Spectrum Brands Holdings, Inc., 3001 Deming Way, Middleton, WI 53562.
 
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Director Compensation
Our Compensation Committee is responsible for approving, subject to review by our Board as a whole, compensation programs for our
non-employee
directors. In that function, our Compensation Committee considers market and peer company data regarding director compensation and annually evaluates the Company’s director compensation practices in light of that data and the characteristics of the Company as a whole, with the assistance of its independent compensation advisors. Our director compensation program for each
non-employee
director is described in the table and discussion below. Mr. Maura, our only director who is an employee of the Company, does not receive compensation for his service as a director.
Director Compensation Table for Fiscal 2021
Under our director compensation program, during each fiscal year, each
non-employee
director receives an annual grant of RSUs equal to that number of shares of the Company’s common stock with a value on the date of grant of $125,000. Additionally, each director is eligible to receive an annual cash retainer of $105,000 which is paid quarterly. The Lead Independent Director (Mr. Polistina) receives an additional annual cash retainer of $40,000 and an additional annual equity retainer amount of $20,000. Directors are permitted to make an annual election to receive all of their director compensation (including for service on committees of our Board) in the form of Company stock in lieu of cash. For Fiscal 2021, the grants of RSUs were made on December 22, 2020 or, for
pro-rated
grants following initial appointment to the Board after such date, on May 12, 2021. All such RSUs vested on October 1, 2021. For Fiscal 2021, compensation for service on the standing committees of our Board, was paid in an annual amount as follows below.
 
Committee                                                                                                                                                                            
  
Chair Annual
Retainer
    
Member
Annual
Retainer
Audit    $ 20,000      None
Compensation    $ 15,000      None
NCG    $ 15,000      None
The table set forth below, together with its footnotes, provides information regarding compensation paid to our directors in Fiscal 2021.
 
Name
(1)
                                                                                                                    
  
Fees Earned or
Paid in Cash
(2)
  
Stock Awards
(3)(4)
    
All Other
Compensation
(5)
  
Total
 
Leslie L. Campbell    $36,894    $ 70,825      $644    $ 108,363  
Joan Chow    $49,192    $ 58,544      $533    $ 108,268  
Sherianne James    $ -      $ 279,666      $4,741    $ 284,408  
Norman S. Matthews    $ -      $ 262,573      $4,452    $ 267,024  
Gautam Patel    $ -      $ 262,573      $4,452    $ 267,024  
Terry L. Polistina    $180,000    $ 165,511      $2,806    $ 348,317  
Hugh R. Rovit    $ -      $ 262,573      $4,452    $ 267,024  
Anne Ward
(6)
   $ -      $ 262,573      $4,452    $ 267,024  
 
(1)
This table includes only directors who received compensation during Fiscal 2021.
(2)
Amounts reflected in this column include the annual retainer fees and committee Chair fees paid in cash to the applicable director during Fiscal 2021. Mses. James and Ward and Messrs. Matthews, Patel and Rovit elected to take all of their retainer in stock in lieu of cash.
(3)
Amounts in this column represent the aggregate grant date fair value of each award computed in accordance with FASB ASC Topic 718. The value was computed by multiplying the number of shares underlying the stock award by the closing price per share of the Company’s common stock on each grant date (or, as applicable, the last trading date immediately prior to the grant date if the grant date fell on a date when the New York Stock Exchange was closed), which was $74.32 for grants made on December 22, 2020 and $92.34 for grants made on May 11, 2021. The directors received the following number of RSUs, which vested on October 1, 2021: Mr. Campbell, 767; Ms. Chow, 634; Ms. James, 3,763; Mr. Mathews, 3,533; Mr. Patel, 3,533; Mr. Polistina, 2,227; Mr. Rovit, 3,533; and Ms. Ward, 3,533.
(4)
As of September 30, 2021, Mses. Chow, James and Ward held 634, 3,763 and 3,533 outstanding unvested RSUs, respectively, and Messrs. Campbell, Matthews, Patel, Polistina and Rovit held 767, 3,533, 3,533, 2,227 and 3,533 outstanding unvested RSUs, respectively.
(5)
Reflects dividend equivalents paid on RSUs which vested during Fiscal 2021 and which were not factored into the grant date fair value of the RSUs.
(6)
As of August 2021, Ms. Ward ceased to serve as a director of the Company.
Compensation Committee Interlocks and Insider Participation
The current members of our Compensation Committee are Terry L. Polistina (Chair), Sherianne James, and Gautam Patel. During Fiscal 2021, none of the members of our Compensation Committee were an officer or employee of the Company. In addition, during Fiscal 2021, none of our executive officers served as a member of the compensation committee of any other entity that has one or more executive officers serving on our Board or our Compensation Committee.
 
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ITEM 11.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (the “CD&A”) section summarizes our general philosophy with respect to the compensation of our CEO, CFO, and our three most highly paid executive officers in Fiscal 2021 (collectively, our “named executive officers” or “NEOs”). This CD&A provides an overview and analysis of the compensation programs and policies for our NEOs, the material compensation decisions made by our Compensation Committee under such programs and policies and the material factors considered by the Compensation Committee in making those decisions. The discussion below is intended to help you understand the detailed information provided in our executive compensation tables and put that information into context within our overall compensation philosophy.
Fiscal 2021 Named Executive Officers
Our NEOs for Fiscal 2021 were:
 
David M. Maura
  
Chief Executive Officer and Executive Chairman
   
Jeremy W. Smeltser
  
Executive Vice President and Chief Financial Officer
   
Randal D. Lewis
  
Executive Vice President and Chief Operating Officer
   
Ehsan Zargar
  
Executive Vice President, General Counsel and Corporate Secretary
   
Rebeckah Long
  
Senior Vice President and Chief Human Resources Officer
Highlights/Executive Summary
Our executive compensation program is designed to link pay for performance, encourage prudent decision-making and create a balanced focus on short-term and long-term performance and value creation. Our executive compensation is heavily weighted toward variable compensation, as described in more detail below, which is central to our philosophy that a significant portion of compensation align with the achievement of performance goals. The three primary components of our executive compensation are base salary, our Management Incentive Program (“MIP”) and our equity based, long-term incentive program (“LTIP”). Our MIP and LTIP include goals tied directly to the performance of the Company.
During fiscal 2021:
 
   
In a year marked by significant headwinds, including supply chain disruptions and inflationary pressures, we delivered impressive financial results, stock price performance and returns to shareholders, as described below.
 
   
We continued to focus on long-term strategy and growth in support of our strategic shift to a consumer staples business, including through the planned $4.3 billion sale of our Hardware and Home Improvement (“HHI”) division, the closing of which is subject to receipt of regulatory approvals which are expected in 2022.
 
   
We continued our transformational changes in corporate governance practices, as shown through increased Board diversity representation on our Board, our implementation of a diversity, equity, and inclusion program for employees, and our continued advancement of ESG initiatives.
We are proud of the success we had in Fiscal 2021 and the returns to our investors during this period. From the last day of Fiscal 2020 on September 30, 2020 to the end of Fiscal 2021 on September 30, 2021, our stock price rose 67.4% from $57.16 to $95.67, and our stock price has continued to rise to close at $101.72 as of December 31, 2021 for a 78% stock price increase since the beginning of Fiscal 2021.
Our Fiscal 2021 Accomplishments
Over the past several years, we commenced or completed substantial and transformative changes at our Company and delivered on a number of important accomplishments. These changes positioned the Company well to not only survive but thrive during Fiscal 2021, notwithstanding the challenges posed by the
COVID-19
pandemic, supply chain disruptions and inflation on both our supply chain and customer base. Some of these transformative changes and important accomplishments are summarized below under five broad categories: (i) management team and Board member composition, (ii) corporate governance, (iii) strategic and long-term growth and (iv) our Fiscal 2021 results. Our transformative changes and initiatives were designed to provide significant and positive outcomes for the Company and our shareholders.
 
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Management and Board Member Composition
We are very proud of our management team, which includes a top notch, talented, and stable leadership team to deliver financial performance and execute our growth strategy.
Our Board believes that the Company and its stakeholders are benefited by a highly skilled board with a significant variety of expertise and experiences and diversity across race, gender, and ethnicity. On April 12, 2021, we appointed Joan Chow and Leslie Campbell, each an independent, highly qualified, and diverse background candidate, to our Board. These appointments were made in response to shareholder feedback and in furtherance of the Board’s commitment to advancing our Board’s knowledge base and skill set and advancing diversity and gender inclusion. As part of the Company’s shareholder engagement program and its commitment to improved corporate governance, the Board previously adopted a Board Diversity Policy, which is further described on
page 16 of
this Form 10-K/A.
We believe that our senior management team and Board provide a skillset that aligns with our going forward operating model and business strategy and has contributed to the success we had in Fiscal 2021 and that we envision in upcoming years.
We have also advanced our aim of promoting diversity and are proud that at least
two-thirds
of our board members come from diverse backgrounds,
one-third
of our Board is composed of female members and our five NEOs include a woman and an executive from a diverse background.
Corporate Governance Best Practices
We are proud that our corporate governance practices are regularly updated to reflect best practices such as appointing a lead independent director, increasing diversity among our Board and executive team, declassifying our Board (which is underway and will be fully completed by our 2024 annual stockholders meeting), appointing independent directors as a majority of the Board, having fully independent Audit, Compensation and NCG committees of the Board, and having an independent compensation consultant. We have also adopted or strengthened a number of our corporate governance policies, including our corporate governance and code of ethics policies, our majority voting and director resignation policy, our related person transaction policy, our anti-hedging policy, our anti-pledging policy and our stock ownership policy.
We have also continued our efforts to promote our ESG initiatives by adopting a number of new policies and procedures, including adopting a new global environmental, social and governance policy, a new global energy and greenhouse gas policy and further strengthening our environmental policy and human rights policy. See “
Directors, Executive Officers and Corporate Governance-Corporate
Governance-Our
Practices and Policies”.
Strategy and Long-Term Growth
The focus of our strategic goals are:
 
   
Investing internally for organic growth, which generates our highest return on investment
 
   
Strengthening our brands through consumer insights, research and development, innovation and advertising and marketing to drive vitality and profitable organic growth
 
   
Returning capital to our shareholders via dividends and opportunistic share repurchases
 
   
Disciplined M&A activity as we pursue accretive strategic acquisitions that are synergistic and/or help drive additional value creation
While the impacts of
COVID-19
over the past year are creating extreme volatility in the year-over-year and
quarter-to-quarter
comparisons of our businesses, overall we believe that consumer demand remains positive in our categories and the strong performance of our brands continues to drive growth.
 
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Our Fiscal 2021 Results
The following graphs show our significantly improved financial strength.
Full Year 2021 - Continuing Operations Only
 

Full Year 2021 – Proforma Including HHI Discontinued Operations

Our efforts to reinvest in and reignite growth across our business units are driving tangible and impressive results. We believe that our transformational activities described above positioned us to meet the challenges and succeed in Fiscal 2021.
 
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Below is a summary of our Fiscal 2021 highlights.
 
   
We completed a number of strategic transactions, including the acquisitions of Armitage Pet Care in our Global Pet Care segment and Rejuvenate cleaning products in our Home & Garden segment.
 
   
We entered into a purchase agreement to sell our HHI segment for $4.3 billion to ASSA ABLOY, the closing of which is subject to receipt of regulatory approvals which are expected in 2022, with the anticipated transaction to close in Fiscal 2022. With the planned divestiture, our HHI business has been classified as discontinued operations. This transaction is expected to give us $3.5 billion in
after-tax
proceeds, which we intend to use to reduce our debt, return capital to shareholders via share repurchases, and invest strategically for organic growth and acquisitions.
 
   
We continue to make incremental and meaningful investments in consumer insights, new product innovation and marketing in our brands to raise awareness and drive future organic growth across each of the businesses.
 
   
We remain focused on our ongoing Global Productivity Improvement Program as we complete our global operating model transformation to create a better, faster, and stronger company.
 
   
We achieved and exceeded our Fiscal 2021 operating plan and delivering on commitments while navigating a challenging supply chain environment with continued supply interruptions and inflationary pressures growing during the year across all business units.
 
   
Our net sales from continuing operations increased $376.0 million or 14.3% and our organic net sales increased 7.8%. Including our HHI business, net sales growth was $650 million or 16.4%.
 
   
Our net income from continuing operations increased to $15.3 million with diluted earnings per share of $0.35, with combined net income including discontinued operations of $189.6 million and diluted earnings per share of $4.39.
 
   
We achieved Adjusted EBITDA of $391.8 million, representing an increase of 21.0% from Fiscal 2020, with combined Adjusted EBITDA of $689.2 million, including HHI discontinued operations, representing an increase of 18.8%.
 
   
We had full year cash flow from operations of $288.4 million, including HHI discontinued operations.
 
   
We continue to maintain a strong balance sheet with over $760 million of total liquidity at year end, including a $187.9 million cash balance and approximately $575 million available on our cash flow revolver as of September 30, 2021, and a net debt to Adjusted EBITDA leverage ratio of 3.5 times for the combined Company, including HHI discontinued operations.
 
   
We returned $197.3 million to shareholders by repurchasing 1.6 million shares of common stock for $125.8 million and paying $71.5 million in dividends.
 
   
We advanced our ESG efforts by promoting diversity, inclusion and equity at our Board and with our employees, enhanced our corporate structure in line with best practices and adopted a number of policies and practices to further enhance our environmental and sustainability efforts.
Detailed information regarding the
non-GAAP
financial measures described above is provided below in Appendix A.
Fiscal 2021 Executive Compensation Overview
Our Fiscal 2021 executive compensation program includes base salary, annual bonus or MIP and the LTIP program. This program was designed after taking into account feedback from shareholders, based on our robust outreach efforts. Highlights of our executive compensation program in Fiscal 2021 included the following:
 
✓  Our NEOs’ base salaries and annual bonus targets remained the same as in Fiscal 2020.
 
✓  Our NEOs’ compensation is in line with market.
 
✓  Our 2021 LTIP equity grants, consistent with our 2020 LTIP equity grants, provided for three performance metrics weighted equally (Adjusted Return on Equity, Adjusted EBITDA and Adjusted Free Cash Flow).
 
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Our Compensation Governance Best Practices
We have adopted significant policies with respect to our executive compensation programs, which help to further align our executives’ interests with those of our shareholders.
 
 
 
What We Do
  ✓    We maintain an independent Compensation Committee with an ongoing review of our compensation philosophy and practices.   
  ✓  
   We provide reasonable post-employment provisions and have post-employment restrictive and executive cooperation covenants.
       
  ✓    We consider the voting results of our annual advisory vote on executive compensation, and in the most recent annual advisory vote, approximately 97% voted in favor.   
  ✓  
   We strongly align pay and performance by placing 87.9% of our CEO’s ongoing compensation opportunity and 78.7% (on average) of our other current NEOs’ ongoing compensation opportunities at risk and earned on the basis of Company performance.
       
  ✓    We continue to engage in robust shareholder outreach to understand shareholder feedback and input on a variety of matters, including business strategy, compensation programs and corporate governance.   
  ✓  
   We have a robust clawback policy that requires forfeiture or recoupment upon an accounting or financial restatement or certain other acts resulting in financial loss, reputation damage or other similar adverse impacts to the Company, a described in greater detail under the section titled “
Compensation Clawback Policy
.”
       
  ✓    We annually assess our compensation program and have determined that the risks associated with our compensation policies are not reasonably likely to result in a material adverse effect on the Company and its subsidiaries taken as a whole.   
  ✓  
   For new employment agreements entered into during Fiscal 2019 and thereafter, we have provided that upon termination of employment any performance-based awards are forfeited.
       
  ✓    We maintained our robust compensation alignment policies through our (i) stock ownership guidelines that require 50% of the net
after-tax
portion of our directors’, NEOs’ and other Covered Officers’ shares must be retained to satisfy our stock ownership requirements; (ii) robust anti-pledging policy; and (iii) robust anti-pledging policy.
  
  ✓  
   70% of our equity-based awards and 74% to 80% of our regular incentive compensation are based on achievement of performance. The remainder is time-based equity that is still subject to market risk.
 
 
  
What We Don’t Do
  X 
   We do not provide any
gross-ups
for golden parachutes.
  
  X  
   We do not provide for accelerated vesting of equity upon retirement for our NEOs.
       
  X 
   We do not make loans to executive officers or directors.   
  X  
   We do not provide for single-trigger vesting of equity.
       
  X 
   We do not allow our NEOs to purchase stock of the Company on margin, enter into short sales or buy or sell derivatives in respect of securities of the Company.   
  X  
   We do not provide excessive perquisites and our NEOs do not participate in defined benefit pension plans or nonqualified deferred compensation plans.
       
  X 
   We do not provide immediate vesting on equity based awards and have committed to
one-year
minimum vesting requirement for all awards granted under the Spectrum Brands Holdings, Inc. 2020 Omnibus Equity Plan (the “2020 Equity Plan”), subject to limited exceptions.
  
  X  
   We do not guarantee minimum bonuses to our NEOs.
       
  X 
   We do not grant discounted options and we do not reprice stock options without shareholder approval.   
  X  
   We do not pay any dividends on unearned and unvested equity awards, unless and until earned and vested. Our 2020 Equity Plan further enhanced this practice by explicitly prohibiting the payment of dividends on unvested equity awards.
Shareholder Engagement
Our Board takes its management oversight responsibilities seriously. Our key values are predicated on strong and effective governance, independent thought and decision-making and a commitment to driving shareholder value. We received strong support from our shareholders with a vote of approximately 97% with respect to our executive compensation at our 2021
 
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Annual Meeting. This followed a vote of 84% from our shareholders with respect to our executive compensation in the prior year. As discussed below, we highly value the input of our shareholders and took this into account as we designed our programs.
What we learn through our ongoing engagements is regularly shared with our Board and incorporated into our disclosures, plans and practices, as deemed appropriate.
We maintain a consistent and proactive approach to communicating with our shareholders, including our quarterly earnings calls,
non-deal
road shows and participating in both equity and debt conferences on a regular basis. In addition, each year during proxy season we take the following actions:
 
   
We engage the proxy solicitation firm, Okapi Partners, to (i) assist in a robust shareholder outreach process to discuss our
go-forward
strategies and (ii) facilitate the opportunity for shareholders to individually and directly engage with certain members of management.
 
   
We engage in discussions with a major proxy advisory firm as necessary to understand its perspective on our compensation programs and best practices generally in executive compensation programs.
 
   
We reach out to our top 20 shareholders to discuss and engage in dialogue with our shareholders with respect to our Company, including our corporate governance and compensation practices.
Partially in response to such feedback below and input from a proxy advisory firm, we made the following changes over the past two years:
 
What We Heard
       
How We Responded
     
●   Shareholders raised concern on our use of Adjusted EBITDA and Adjusted Cash Flow on both MIP and LTIP.
      
✓  We introduced a third performance metric (Adjusted Return on Equity), which is weighted equally with Adjusted EBITDA and Adjusted Free Cash Flow for our LTIP equity performance program.
 
✓  Additionally, for the Fiscal 2021 annual MIP, we added a Net Sales measure (weighted at 20% for Fiscal 2021) to our existing measures of Adjusted Free Cash Flow and Adjusted EBITDA (each weighted at 40% for Fiscal 2021).
 
✓  For Fiscal 2022, our Compensation Committee modified the weighting of the three performance metrics under the annual MIP, such that Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales will all be equally weighted.
 
●   Shareholders told us that the size of our NEO salaries and annual bonus targets were appropriate.
      
✓  Our NEOs’ base salaries and annual bonus targets remained the same in Fiscal 2021 as in Fiscal 2020.
 
●   Shareholders asked us to enhance our stock ownership guidelines.
      
✓  We strengthened our stock ownership guidelines by increasing, as of January 1, 2020, to 50% the net
after-tax
portion of our directors’, NEOs’ and other Covered Officers’ shares that they must retain to satisfy our stock ownership requirements.
 
●   Shareholders did not express concern with our perquisites program and other compensation practices
      
✓  Nonetheless, at his own initiative, our CEO voluntarily eliminated his tax planning, financial assistance benefit and his executive automobile allowance.
 
●   A proxy advisory firm raised concerns regarding our anti-hedging policy
      
✓  We further strengthened our anti-hedging policy. In addition, on our initiative, we adopted a robust policy prohibiting the pledging of our stock.
 
●   Shareholders expressed interest in the declassification of our Board
      
✓  We began to declassify the Board, a process which will be completed by 2024.
 
●   Shareholders supported our commitments to diversity
 
 
  
✓  We continued our efforts to promote diversity and inclusion through implementing a diversity, equity, and inclusion program for employees and enhancing diversity at our Board and executive team.
 
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During our dialogue with shareholders in Fiscal 2021, we received the following feedback:
 
   
Shareholders were generally supportive of our compensation structure and our compensation consultant, Willis Towers Watson (“WTW”).
 
   
Shareholders commended us on deleveraging our balance sheet and noted that they would prefer we continue to operate with less leverage.
 
   
Shareholders noted that they focus on our ESG efforts and that they would welcome continued advancement of our ESG efforts.
 
   
As described
on page 20 herein, in
order to promote our ESG efforts, we have also adopted a number of new policies and procedures and intend to continue to review and enhance our ESG processes, procedures and disclosures.
 
   
Shareholders told us they appreciate the declassification of the Board.
 
   
Shareholders told us they appreciate the diversity of our Board, both in terms of gender diversity and racial/ethnic diversity, and the advancement of our Company’s diversity, equity and inclusion initiative.
 
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We continue to engage in rigorous shareholder outreach and are doing so in Fiscal 2022 to understand shareholder views and input on a variety of matters.
Compensation Overview and Philosophy
Our compensation programs are administered by our Compensation Committee. In Fiscal 2021, these programs were based on our
“pay-for-performance”
philosophy in which variable compensation represents a majority of an executive’s potential compensation. The variable incentive compensation programs continued our focus on the Company-wide goals of increasing growth and earnings, maximizing free cash flow generation and building for superior long-term shareholder returns. Each year, the Compensation Committee and the Company, along with the assistance of an independent compensation consultant, go through a thoughtful process to review risks and opportunities applicable to the Company.
In establishing our compensation programs for Fiscal 2021, our Compensation Committee continued to partner with WTW as independent compensation consultants and evaluated the compensation programs with reference to a peer group of 14 companies, as outlined in the section below, “Role of Committee-Retained Consultants.”
Background on Compensation Considerations
Our Compensation Committee pursued several objectives in determining our executive compensation programs for Fiscal 2021:
 
   
To attract and retain highly qualified executives for the Company and in each of our business segments.
 
   
To align the compensation paid to our executives with our overall corporate business strategies while leaving the flexibility necessary to respond to changing business priorities and circumstances.
 
   
To align the interests of our executives with those of our shareholders and to reward our executives when they perform in a manner that creates value for our shareholders.
In order to pursue these objectives, our Compensation Committee:
 
   
Considered the advice of WTW on executive compensation issues and program design, including advice on the corporate compensation program as it compared to our peer group companies.
 
   
Conducted an annual review of total compensation for each NEO, including the compensation and benefit values offered to each executive and other compensation factors.
 
   
Consulted with our CEO and other members of senior management with regard to compensation matters and met in executive session without management to evaluate management’s input.
 
   
Solicited comments and concurrence from other Board members regarding its recommendations and actions.
 
   
Considered the feedback of our shareholders and the Say on Pay vote results.
Philosophy on Performance-Based Compensation
Our Fiscal 2021 executive compensation programs were designed so that, at target levels of performance, a significant portion of the value of each NEO’s annual compensation (which varies by individual) would be based on the achievement of Company-wide Fiscal 2021 performance objectives. In approving these programs, our Compensation Committee concluded that a combination of annual fixed base pay and incentive-based pay provided our NEOs with an appropriate mix of cash compensation and equity-based compensation.
For Fiscal 2021, the percentage of ongoing target annual compensation that was
at-risk
(that is, variable cash compensation and equity awards) for our CEO was 87.9% and for the other current NEOs was 78.7% as a group. The chart below sets forth the percentage of target compensation that was fixed compared to
at-risk
for the CEO and the other current NEOs as a group.
 
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To highlight the alignment of the incentive plans with shareholder interests, our ongoing annual and long-term incentive programs (whether equity or cash-based) in Fiscal 2021 were predominantly performance-based with (i) our MIP being 100% performance-based and (ii) the three-year LTIP being 70% performance-based.
The remainder of each executive’s compensation was made up of amounts that did not vary based on performance. For each of our NEOs, these
non-performance-based
amounts are set forth in agreements with the executives as described in “—
Executive Compensation Tables
Termination and Change in Control
Provisions
Executive-Specific Provisions regarding Employment, Termination and Change in Control
Agreements with NEOs
,” and are subject to annual review and potential increase by our Compensation Committee. These amounts are determined by our Compensation Committee considering the executive’s performance, current market conditions, the Company’s financial condition at the time such compensation levels are determined, compensation levels for similarly situated executives with other companies, experience level and the duties and responsibilities of such executive’s position.
Our Compensation Decision Making Process
Our Compensation Committee engages in a robust process in making compensation decisions. In Fiscal 2021, our Compensation Committee retained WTW as its independent consultants to assist in formulating and evaluating executive and director compensation programs.
In addition, our Compensation Committee consulted with our CEO regarding the Company’s compensation plans and performance targets, however, our CEO did not participate in any discussions with respect to his own compensation. From time to time, our Compensation Committee also consulted with other senior executives of our Company and outside counsel.
WTW provided advice on the executive compensation implications of changes to our business (including our Global Productivity Improvement Plan, demand, and supply interruptions), our corporate governance and compensation structure and the philosophy of our executive compensation plans. During Fiscal 2021, our Compensation Committee periodically requested WTW to:
 
   
Provide comparative market data for our peer group and other groups on request, with respect to compensation matters.
 
   
Analyze our compensation and benefit programs relative to our peer group, including our mix of performance-based compensation,
non-variable
compensation and the retentive features of our compensation plans in light of the Company’s strategies and prospects.
 
   
Review the plan designs, including the performance metrics selected, for our various incentive plans and make recommendations to our Compensation Committee on appropriate plan designs to support the overall corporate strategic objectives.
 
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Advise our Compensation Committee on compensation matters and management proposals with respect to compensation matters.
 
   
Assist in the preparation of our Compensation Discussion and Analysis disclosure and related matters.
 
   
On request, participate in meetings of our Compensation Committee.
In order to encourage an independent viewpoint, our Compensation Committee and its members (i) had access to WTW at any time without management present and (ii) consulted from time to time with each other, other
non-management
members of our Board and WTW without management present.
WTW, with input from management and our Compensation Committee, developed a peer group of companies based on a variety of criteria, including type of business, revenue, assets and market capitalization. The composition of this peer group is reviewed annually and, if appropriate, revised, based on changes in business orientation of peer group companies, changes in financial size or performance of the Company and the peer group companies and any mergers, acquisitions, spin-offs or bankruptcies of the companies in the peer group or changes at our Company. WTW reviewed this peer group, and confirmed that there were no changes for Fiscal 2021. The peer group utilized consisted of the following 14 companies:
 
✓  Central Garden and Pet Company
 
  
✓  Fortune Brands Home & Security, Inc.
 
  
✓  Newell Brands, Inc.
 
✓  Church & Dwight Co., Inc.
 
  
✓  Hanesbrands, Inc.
 
  
✓  Nu Skin Enterprises, Inc.
 
✓  The Clorox Company
 
  
✓  Hasbro, Inc.
 
  
✓  The Scotts
Miracle-Gro
Company
 
✓  Edgewell Personal Care Company
 
  
✓  Helen of Troy Limited
 
  
✓  Tupperware Brands Corporation
 
✓  Energizer Holdings, Inc.
  
✓  Mattel, Inc.
  
 
Our Compensation Committee reviews market data as part of assessing the appropriateness and reasonableness of our compensation levels and mix of pay. Although our Compensation Committee does not target a particular range for total compensation as compared to our peer group, it does take this information into account when establishing our compensation programs.
In accordance with SEC rules, our Compensation Committee considered the independence of WTW including an assessment of the following factors: (i) other services provided to the Company by each consultant, (ii) fees paid by the Company as a percentage of the consulting firm’s total revenue, (iii) policies or procedures maintained by WTW that are designed to prevent conflicts of interest, (iv) any business or personal relationships between the individual consultants involved in the engagement and any member of our Compensation Committee, (v) any Company stock owned by individual consultants involved in the engagement and (vi) any business or personal relationships between our executive officers and the consultants or the individual consultants involved in the engagement. Our Compensation Committee has concluded that no conflicts of interest prevented WTW from independently advising our Compensation Committee during Fiscal 2021. WTW received $158,329 for executive and director compensation consulting in fiscal 2021. WTW also provided consulting services relating to our health and benefit plans during Fiscal 2021, for which it received approximately $180,000. The Compensation Committee reviewed these additional consulting services, while considering the potential effects on WTW’s independence.
 
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Compensation Elements
In Fiscal 2021, our ongoing annual compensation for our NEOs included the following elements:
 
Element
  
Purpose
  
Operation
  
Performance Measures
Base Salary
  
●   Forms basis for competitive compensation package
  
●   Base salary reflects competitive market conditions, individual performance and internal parity
  
●   Performance of the individual is considered by the Compensation Committee, which is advised by its independent compensation consultant, when setting and reviewing base salary levels and continued employment
   
MIP Bonus
  
●   Motivate achievement of strategic priorities relating to key annual financial metrics
  
●   Target bonus opportunities are determined by competitive market practices and internal parity
 
●   Actual bonus payouts, which can range from
0-250%
of target for the CEO and
0-200%
of target for our other NEOs are determined based on achievement of financial metrics established at the beginning of the performance period
  
●   For Fiscal 2021, 80% is equally weighted between Adjusted EBITDA and Adjusted Free Cash Flow and the remaining 20% is based on Net Sales. For Fiscal 2022, Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales will all be equally weighted
   
LTIP: Restricted Stock Units (majority is performance-based and remainder is time-based)
  
●   Align compensation with key drivers of the business
 
●   Encourage focus on long-term shareholder value creation
  
●   Size of award determined by competitive market practices, corporate and individual performance and internal parity and retention considerations
  
●   Long-term incentive awards focusing on cumulative performance over three-year period ending Fiscal 2023, based on equally weighted Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted Return on Equity
 
●   The majority of each of the new long-term incentive awards (70%) are performance-based
Base Salaries
The annual base salaries for our NEOs were initially set forth in each executive’s employment agreement or separate letter agreement and such salaries may be increased from time to time by our Compensation Committee.
In determining the initial annual base salary for each NEO or in making any subsequent increases, our Compensation Committee considered the market conditions at the time such compensation levels were determined, the Company’s financial condition at the time such compensation levels were determined, compensation levels for similarly situated executives at other companies, experience level and the duties and responsibilities of such executive’s position.
 
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Base salary levels are subject to evaluation from time to time by our Compensation Committee to determine whether increases are appropriate. Our NEOs’ base salaries remained the same in Fiscal 2021 as in Fiscal 2020.
Annual Bonus
Our management personnel, including our NEOs, participate in our annual cash bonus MIP, which is designed to compensate executives and other managers based on achievement of annual corporate, business segment, and/or divisional financial goals. Under the MIP bonus plan, 100% of the annual bonus is performance-based and no bonus is paid if the relevant performance metrics are not achieved.
Under the MIP, each participant has the opportunity to earn a bonus amount that is 100% contingent upon achieving the annual performance goals set by our Compensation Committee and reviewed by our Board. Particular performance goals are established during the first quarter of the relevant fiscal year and reflect our Compensation Committee’s views of the critical indicators of corporate success in light of primary business priorities. The specific financial targets with respect to performance goals are then set by our Compensation Committee based on our annual operating plan, as approved by our Board, during the first quarter of the relevant fiscal year. The annual operating plan includes performance targets for the Company as a whole, as well as for each business segment.
The Fiscal 2021 MIP design included a minimum financial threshold level for each of Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales, below which no payout would be earned with respect to that objective. The achievement of the goals of Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales is determined and earned independently of one another.
For the purposes of our MIP and LTIP, Adjusted EBITDA and Adjusted Free Cash Flow have the following meanings:
“Adjusted EBITDA”
means net earnings before interest, taxes, depreciation and amortization, but excluding restructuring, acquisition and integration charges and other
one-time
charges. The result of the formula in the preceding sentence is then adjusted by the Compensation Committee in good faith so as to negate the effects of any dispositions; provided, however, that Adjusted EBITDA resulting from businesses or products lines acquired (in Board approved transactions) during the applicable fiscal year will, to the extent reasonably and in good faith determined by the Compensation Committee to be appropriate, be included in the calculation from the date of acquisition.
“Adjusted Free Cash Flow”
means Adjusted EBITDA, plus or minus changes in current and long-term assets and liabilities, less cash payments for taxes, restructuring and interest. Any reductions in Adjusted Free Cash Flow resulting from transaction costs or financing fees incurred in connection with any Board approved acquisition or refinancing (in each case during the applicable fiscal year) are added back to Adjusted Free Cash Flow, subject to the approval of the Compensation Committee, reasonably and in good faith. The result of the formula in the preceding sentences is then adjusted by the Compensation Committee reasonably and in good faith so as to negate the effects of any dispositions; provided, however, that Adjusted Free Cash Flow resulting from businesses or products lines acquired (in Board approved transactions) during the fiscal year will, to the extent reasonably and in good faith determined by the Compensation Committee to be appropriate, be included in the calculation from the date of acquisition.
For purposes of our MIP, “
Net Sales
” means the amount of revenue generated less returns, cash discounts, trade rebates, and other spend or consumer offers that result in a reduction of revenue in accordance with generally accepted accounting principles in the U.S. GAAP. Net Sales achievement will be net of FX currency translation impact (e.g. achievement will exclude positive or negative impact(s) as a result of converting local currency sales into U.S. dollars), will include amounts in the annual operating plan relating to acquisitions completed in the prior year and will exclude amounts from acquisitions completed in the current year.
Long-Term Equity Program
Since our LTIP measures performance over three years, we are able to effectively focus on the achievement of significant and sustained improvements in performance and strategic initiatives over the long term. For Fiscal 2021, we provided our LTIP grants in the form of time-based RSUs and performance-based PSUs that will be eligible to vest after the three-year period ending September 30, 2023. These awards have the features described below.
 
   
70% of the award vests based on three-year cumulative performance against the following three equally weighted measures: Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted Return on Equity. The relatively large performance component of these awards is believed to serve as a valuable incentive to drive long-term outcomes for our Company and shareholders. There is an opportunity to earn up to 125% of target PSUs if superior performance is achieved.
 
 
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30% will vest at the end of the three-year service period. The relatively small time-based component of these awards as part of our overall compensation mix is believed to serve as an important long-term retention and risk mitigation feature.
For purposes of our LTIP, “
Adjusted Return on Average Equity
means three-year cumulative Adjusted Net Income (Adjusted EBITDA less interest, taxes, depreciation and amortization) divided by the sum of fiscal 2021, 2022 and 2023 year average total equity, excluding gain or loss on sale of one or more segments.
See “
-Fiscal 2021 Compensation Component
Pay-Outs-LTIP
” for a further description of these awards.
Fiscal 2021 Compensation Component
Pay-Outs
Base Salary
The annual base salaries at the end of Fiscal 2021 for our NEOs are set forth below:
 
Named Executive                    
    
Annual Base Salary

at the end of Fiscal 2021
David M. Maura
             $        900,000
   
Jeremy W. Smeltser
             $        500,000
   
Randal D. Lewis
             $        550,000
   
Ehsan Zargar
             $        400,000
   
Rebeckah Long
             $        300,000
Management Incentive Plan
For Fiscal 2021, our MIP award levels achievable at target for each participating NEO were as follows:
 
Named Executive                    
    
        MIP Target as % of        

Annual Base Salary
David M. Maura
     125%
   
Jeremy W. Smeltser
       80%
   
Randal D. Lewis
       90%
   
Ehsan Zargar
       60%
   
Rebeckah Long
       60%
In response to shareholder feedback, we added Net Sales as an additional metric to our Fiscal 2021 MIP. Our Compensation Committee established the following weightings for Fiscal 2021:
 
   
40% Adjusted EBITDA
 
   
40% Adjusted Free Cash Flow
 
   
20% Net Sales
For Fiscal 2022, our Compensation Committee approved modifying the weighting of the three performance metrics, such that Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales will all be equally weighted.
The table below shows the applicable levels of performance required to achieve threshold, target and maximum payouts for each of the three performance metrics in Fiscal 2021. The performance metrics for each of our NEOs were equal to those established for the Company as a whole. The maximum MIP bonus payable is 250% of target for Mr. Maura and 200% for our other NEOs. As described in the table below, Mr. Maura achieved payouts of 206.4% based on Adjusted EBITDA achievement, 100% based on Adjusted Free Cash Flow and 250% based on Net Sales. All other NEOs achieved payouts of 200% based on Adjusted EBITDA achievement, 100% based on Adjusted Free Cash Flow and 200% based on Net Sales.
 
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                                                                        Performance Required to Achieve Bonus % as Indicated ($ in millions)                                                                            
  Performance Metric                                                        
  
    Weight (% of    

Target

Bonus)
 
  Threshold  

(0%)
  
    Target  

(100%)
  
Maximum

  (200%) 
(1)
  
  
    Actual    
  
Calculated

2021 Payout

  Factor (% of  

Target

      Bonus)      
  Adjusted EBITDA
   40%   $560.71    $623.01    $685.31    $689.30              200%
  Adjusted Free Cash Flow
   40%   $234.00    $260.00    $286.00    $260.00              100%
  Net Sales
   20%   $3,991.42    $4,201.49    $4,411.56    $4,614.00              200%
 
 
(1)
Mr. Maura is eligible to receive a maximum MIP equal to 250% of target if we achieve Adjusted EBITDA, Adjusted Free Cash Flow and Net Sales of $716.462 million, $299.000 million and $4,516.691 million, respectively, and achieved Fiscal 2021 Payout Factors of 206.40%, 100.00% and 250.00%, respectively with respect to the target amount.
Long Term Incentive Plan
Our Fiscal 2021 LTIP grants cover service and cumulative performance over the three-year period commencing October 1, 2020 and ending September 30, 2023. Of the total grant, 70% is in the form of PSUs and will vest based on the achievement of cumulative Adjusted EBITDA, cumulative Adjusted Free Cash Flow and Adjusted Return on Equity over the three-year period. The remaining 30% is in the form of RSUs, which will vest based on continued service, with cliff vesting at the end of such three-year period. In addition, with respect to the PSU component of the LTIP, there is an opportunity to earn additional PSUs if superior performance is achieved (subject to a cap of 125% of the target PSUs).
The chart below sets forth the number of PSUs and RSUs each NEO was granted in Fiscal 2021 pursuant to the LTIP.
 
  Name
  
70% Performance-

Based (at Target)
    
30%

      Time Based      
    
    Potential Upside    

Performance -Based
 
  David M. Maura
 
    
 
58,064        
 
 
 
    
 
24,885        
 
 
 
    
 
14,516        
 
 
 
  Jeremy W. Smeltser
 
    
 
10,753        
 
 
 
    
 
4,608        
 
 
 
    
 
2,688        
 
 
 
  Randal D. Lewis
 
    
 
23,656        
 
 
 
    
 
10,138        
 
 
 
    
 
5,914        
 
 
 
  Ehsan Zargar
 
    
 
17,205        
 
 
 
    
 
7,373        
 
 
 
    
 
4,301        
 
 
 
  Rebeckah Long
 
    
 
3,763        
 
 
 
    
 
1,613        
 
 
 
    
 
941        
 
 
 
The table below shows the three performance metrics for our NEOs and the applicable levels of performance required to achieve threshold, target and maximum vesting of PSUs.
 
  Performance Measure (in $ millions)                                        
  
Threshold

(0% of PSUs

vest)
    
Target (100%

  of PSUs vest)  
    
Maximum

(125% of

PSUs vest)
 
  Adjusted EBITDA
 
   $
 
1,869.0    
 
 
 
   $
 
1,953.0    
 
 
 
   $
 
1,974.5    
 
 
 
  Adjusted Free Cash Flow
 
   $
 
780.0    
 
 
 
   $
 
874.1    
 
 
 
   $
 
898.7    
 
 
 
  Adjusted Return on Equity
 
    
 
13.50%    
 
 
 
    
 
14.80%    
 
 
 
    
 
15.20%    
 
 
 
Under the LTIP, the three performance goals may be earned independently of one another. The achievement of the performance goals for each of our NEOs will be measured on a consolidated Company-wide basis. Acquisitions by the Company are included in the Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted Return on Equity calculations, subject to the negative discretion of our Compensation Committee. Awards for performance between threshold and target levels and between target and maximum levels, will be determined based on linear interpolation. If threshold performance level is not achieved for any of the three performance goals, then no PSUs will be earned.
Our Compensation Committee also provided in the award agreements for our NEOs that such officers are required to hold at least 50% of the net shares they receive (after any shares withheld by the Company for tax purposes) until such NEO achieves the required stock ownership. Thereafter they are required to hold 50% of the net
after-tax
shares they receive for at least one year following vesting. In addition, our NEOs and all other officers at the Vice President level or higher, are subject to the share ownership and retention guidelines discussed above (see “
Directors, Executive Officers and Corporate Governance-Corporate
Governance-Our
Practices and Policies-Stock Ownership Guidelines
”).
 
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Deferral and Post-Termination Benefits
Retirement Benefits
. Our Company maintains a 401(k) plan for our employees, including our NEOs.
Supplemental Executive Life Insurance Program
.
During Fiscal 2021, each of Messrs. Maura, Smeltser, Lewis and Zargar participated in a program pursuant to which the Company, on behalf of each participant, made an annual contribution on October 1 equal to 15% of such participant’s base salary as of that date into a Company-owned executive life insurance policy for such participant. The investment options for each such policy are selected by the insurance provider.
Post-Termination Benefits
. As described below, the Company had entered into agreements with our NEOs which govern, among other things, post-termination benefits payable to each such NEO should his or her employment with the Company terminate. In each case, the receipt of post-termination benefits are subject to the NEO’s execution of a waiver and release agreement in favor of the Company and continued compliance with post-employment restrictive covenants and other executive cooperation.
Perquisites and Benefits
The Company provides certain limited perquisites and other benefits to certain executives, including our NEOs. Among these benefits are financial and tax planning services, car allowances or leased car programs, executive medical exams and executive life and disability insurance. Mr. Maura has voluntarily agreed to cease receiving any benefits for financial or tax planning services and his automobile allowance. Similarly, we do not provide
gross-ups
for our other NEOs.
Important Compensation Policies and Guidelines
Timing and Pricing of Stock-Based Grants
The Company provides stock, restricted stock, RSUs and PSUs as part of the compensation program made available to directors, NEOs and other employees. With respect to annual or special grants of stock or restricted stock, these are generally made on the date or as soon as practicable following the date on which such grants are approved by our Compensation Committee or our Board, or, if the award dictated a subsequent date or the achievement of a particular event prior to grant, as soon as practicable after such subsequent date or achievement of such event. The granting of stock, to the extent granted by the Company, will generally be granted the day after the second business day following the public dissemination of the Company’s financial results or such other date as determined by the Company’s General Counsel, using that day’s NYSE adjusted market close price to convert to a round number of shares. For purposes of valuing awards made under our equity plans, the grant price is generally the closing sale price of the Company’s common stock on the exchange on which the Company’s shares are listed on the day of the grant date.
The Company did not grant stock options to its employees during Fiscal 2021 and does not anticipate that it will use options as part of its compensation program going forward.
Impact of Tax and Accounting Considerations
The overriding consideration when evaluating the pay level or design component of any portion of our executives’ compensation is the effectiveness of the pay component and the shareholder value that management and the Compensation Committee believe the pay component reinforces. In structuring the compensation for our NEOs, our Compensation Committee will review a variety of factors which may include the deductibility of such compensation under Section 162(m) of the Internal Revenue Code, to the extent applicable. However, this is not the driving or most influential factor and the Compensation Committee has approved in the past and specifically reserves the right to pay or approve nondeductible compensation currently and in the future.
Executive Compensation Tables
The following tables and footnotes show the compensation earned for service in all capacities during Fiscal 2021, Fiscal 2020, and Fiscal 2019 by our NEOs. We refer you to the
“Compensation Discussion and Analysis”
and the
“Termination and Change in Control Provisions”
sections of this report as well as the corresponding footnotes to the tables for material factors necessary for an understanding of the compensation detailed in the tables entitled
“Summary Compensation Table,” “All Other Compensation Table for Fiscal 2021”
and
“Grants of Plan-Based Awards Table for Fiscal 2021.”
 
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Summary Compensation Table
 
  Name and Principal Position
  
Year
    
Salary
    
Bonus
    
Stock

Awards
(1)
    
Non-Equity

Incentive

Plan

Compensation
(2)
    
All Other

Compensation
(3)
    
Total
 
David M. Maura
     2021      $  900,000      $  –      $ 5,399,980      $  1,941,300      $  365,045      $ 8,606,325  
Executive Chairman and
     2020      $ 900,000      $      $ 8,411,326      $ 1,442,813      $ 194,219      $  10,948,358  
Chief Executive Officer
     2019      $ 900,000      $      $  13,588,411      $ 5,000,000      $ 199,711      $ 19,688,122  
Jeremy W. Smeltser
     2021      $ 500,000      $      $ 1,000,001      $ 640,000      $ 203,184      $ 2,343,185  
Executive Vice President and
     2020      $ 500,000      $      $ 1,000,030      $ 513,000      $ 136,699      $ 2,149,729  
Chief Financial Officer
  
 
 
 
  
 
 
 
         
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Randal D. Lewis
     2021      $ 550,000      $      $ 2,199,989      $ 792,000      $ 231,422      $ 3,773,411  
Executive Vice President and
     2020      $ 550,000      $      $ 3,161,022      $ 634,838      $ 173,120      $ 4,518,980  
Chief Operating Officer
     2019      $ 447,788      $      $ 4,075,662      $ 500,000      $ 145,954      $ 5,169,404  
Ehsan Zargar
     2021      $ 400,000      $      $ 1,600,028      $ 384,000      $ 229,191      $ 2,613,219  
Executive Vice President, General Counsel, and
     2020      $ 400,000      $      $ 2,881,385      $ 307,800      $ 156,598      $ 3,745,783  
Corporate Secretary
     2019      $ 400,000      $      $ 4,691,949      $ 500,000      $ 114,538      $ 5,706,487  
Rebeckah Long
     2021      $ 300,000      $      $ 349,978      $ 458,000      $ 22,998      $ 1,130,976  
Senior Vice President and
     2020      $ 300,000      $      $ 382,050      $ 230,850      $ 21,326      $ 934,226  
Chief Human Resources Officer
     2019      $ 231,607      $      $ 626,206      $ 53,750      $ 18,602      $ 930,165  
 
(1)
This column reflects the aggregate grant date fair value of the awards computed in accordance with ASC Topic 718. For a discussion of the relevant ASC 718 valuation assumptions, see Note 2, Significant Accounting Policies and Practices, of the Notes to Consolidated Financial Statements, included in our Annual Report on Form
10-K
for Fiscal 2021. For Fiscal 2021, this column reflects grants under the LTIP. If the maximum performance under the LTIP was achieved then the value of the awards in Fiscal 2021 would have been as follows: Mr. Maura ($6,344,972); Mr. Smeltser ($1,174,990); Mr. Lewis ($2,584,991); Mr. Zargar ($1,880,023); and Ms. Long ($411,237) in each case based on the stock price on the date of grant. At the lowest level of performance, the performance-based restricted stock unit awards are forfeited. The amounts shown in this column do not reflect the actual payout.
(2)
For Fiscal 2021, this column represents cash amounts earned under the Company’s 2021 MIP. For additional detail on the 2021 MIP and the determination of the awards thereunder, please refer to the discussion under the heading “Compensation Discussion and Analysis-Fiscal 2021 Compensation Component
Pay-Outs-Management
Incentive Plan” and the table entitled “Grants of Plan-Based Awards Table for Fiscal 2021” and its accompanying footnotes. The incentive awards payable under the 2019 MIP to our NEOs were settled in shares of common stock in lieu of cash and so are reported under Stock Awards. For Ms. Long, this amount also includes a cash bonus payment of $170,000 made in Fiscal 2021 pursuant to an election Ms. Long made prior to becoming an executive officer to receive a portion of an earlier incentive award opportunity in the form of a future fixed cash payment. Ms. Long is not entitled to any remaining payments in respect of such award.
(3)
Please see the following table for the details of the amounts that comprise the All Other Compensation column.
 
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All Other Compensation Table for Fiscal 2021
 
Name
 
Financial

Planning

Services

Provided to

Executive 
(2)
   
Life

Insurance

Premiums

Paid on

Executives

Behalf
(3)
   
Car

Allowance/

Personal Use

of Company

Car
(4)
   
Company

Contributions

to

Executive’s

Qualified

Retirement

Plan
(5)
   
Company

Contributions

to Executive’s

Supplemental

Life

Insurance

Policy
(6)
   
Dividends 
(7)
   
Other
 (8)
   
Total
 
David M. Maura (1)
  $     $ 9,659     $     $ 9,750     $  75,606     $  270,030     $     $  365,045  
Jeremy W. Smeltser
  $  20,000     $ 4,564     $ 23,066     $ 4,712     $ 75,000     $     $  75,842     $ 203,184  
Randal D. Lewis
  $ 20,000     $  11,158     $ 19,746     $  11,837     $ 82,500     $ 86,181     $     $ 231,422  
Ehsan Zargar
  $ 20,000     $ 3,057     $  21,479     $ 9,750     $ 60,000     $ 114,905     $     $ 229,191  
Rebeckah Long
  $     $ 1,826     $ 12,000     $ 6,300     $     $ 2,873     $     $ 22,998  
 
(1)
Mr. Maura voluntarily eliminated his financial planning and car allowance payments beginning in Fiscal 2020.
(2)
The Company provides an allowance for expenses related to financial planning and tax preparation services, up to $20,000 annually, to Messrs. Smeltser, Lewis and Zargar. For Fiscal 2021, these allowances were paid out to Messrs. Smeltser, Lewis and Zargar in April 2021.
(3)
The amount represents the life insurance premium paid for Fiscal 2021. The Company provides life insurance coverage equal to three times (two times, for Ms. Long) base salary for each executive officer.
(4)
The Company sponsors a leased car or car allowance program. Under the leased car program, costs associated with using a vehicle are provided, which also include maintenance, insurance and license and registration. Under the car allowance program, the executive receives a fixed monthly allowance. As noted above, beginning with Fiscal 2020, Mr. Maura has given up his car allowance.
(5)
Represents amounts contributed under the Company-sponsored 401(k) retirement plan.
(6)
This amount reflects the premium paid by the Company equal to 15% of base salary toward individual supplemental life insurance policies.
(7)
This amount reflects dividend equivalents paid in respect of RSUs held by NEOs which vested during Fiscal 2021 and were not factored into the grant date fair value of the RSUs.
(8)
This amount reflects the relocation expenses paid by the Company to Mr. Smeltser in Fiscal 2021.
Grants of Plan-Based Awards Table for Fiscal 2021
The following table and footnotes provide information with respect to equity grants made to our NEOs during Fiscal 2021 as well as the range of future payouts under
non-equity
incentive plans for our NEOs indicated.
 
Name
  
Grant Date
 
Threshold

$
    
Target

$
    
Maximum

$
    
Threshold

#
    
Target

#
    
Maximum

#
    
All Other

Stock

Awards:

Number

of Shares

of Stock

or Units #
    
Grant

Date Fair

Value of

Stock

Awards

$
(3)
 
David M. Maura
   11/10/2020
(1)
  $ 0      $ 1,125,000      $ 2,812,500                 
 
 
   12/16/2020
(2)
  $ 0      $ 0      $ 0               58,064        72,580        24,885      $ 5,399,980  
Jeremy W. Smeltser
   11/10/2020
(1)
  $ 0      $ 400,000      $ 800,000                 
 
 
   12/16/2020
(2)
  $ 0      $ 0      $ 0               10,753        13,441        4,608      $ 1,000,001  
Randal D. Lewis
   11/10/2020
(1)
  $ 0      $ 495,000      $ 990,000                 
 
 
   12/16/2020
(2)
  $ 0      $ 0      $ 0               23,656        29,570        10,138      $ 2,199,989  
Ehsan Zargar
   11/10/2020
(1)
  $ 0      $ 240,000      $ 480,000                 
 
 
   12/16/2020
(2)
  $ 0      $ 0      $ 0               17,205        21,506        7,373      $ 1,600,028  
Rebeckah Long
   11/10/2020
(1)
  $ 0      $ 180,000      $ 360,000                 
 
 
   12/16/2020
(2)
  $ 0      $ 0      $ 0               3,763        4,704        1,613      $ 349,978  
 
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(1)
Represents the threshold, target and maximum payouts under the Fiscal 2021 MIP. The actual amounts earned under the plan for Fiscal 2021 are disclosed in the Summary Compensation Table above as part of the column entitled “
Non-Equity
Incentive Plan Awards
.” For Mr. Maura, the maximum payout for the disclosed awards is equal to 250% of target. For our other NEOs, the maximum payouts for the disclosed awards are equal to 200% of target. See “
Compensation Discussion and Analysis-Fiscal 2021 Compensation Component
Pay-Outs-Management
Incentive Plan
” for a discussion of the terms of the Fiscal 2021 MIP.
(2)
Represents the number of RSUs and PSUs awarded under the Fiscal 2021 LTIP grants and shows (a) the threshold, target and maximum payouts, denominated in the number of shares of stock, in respect of PSUs and (b) the number of shares of stock underlying the RSUs. See “
Compensation Discussion and Analysis-Fiscal 2021 Compensation Components
Pay-Outs-LTIP
” for a discussion of the terms of these awards.
(3)
Except as otherwise noted, reflects the value at the grant date value based upon the probable outcome of the relevant performance conditions. This amount is consistent with the estimate of aggregate compensation costs to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of any estimated forfeitures.
 
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Outstanding Equity Awards at the End of Fiscal 2021
The following table and footnotes set forth information regarding outstanding options and restricted stock unit awards as of September 30, 2021 for our NEOs. The market value of shares that have not vested was determined by multiplying $95.67, the closing market price of the Company’s stock on September 30, 2021, the last trading day of Fiscal 2021, by the number of shares.
 
        Name            
  
Number of

Securities

Underlying

Unexercised

Options

Exercisable
    
    Option Exercise    

Price
    
Option

Expiration

Date
    
Number of

    Shares or Units    

of Stock That

Have Not

Vested(1)
   
Market Value of

Shares or Units of

    Stock That Have Not    

Vested(2)
    
Equity

    Incentive Plan    

Awards:

Number of

Unearned

Shares, Units,

or Other

Rights That

Have Not

Vested(3)
   
Equity Incentive Plan

Awards: Market or

Payout Value of

Unearned Shares,

    Units or Other Rights    

That Have Not

Vested(2)
 
David M. Maura
     64,142      $ 72.92        11/29/2023        –       $ –          –       $ –    
 
     26,743      $ 82.85        11/25/2024        –       $ –          –       $ –    
 
     1,164      $ 86.38        11/24/2025        –       $ –          –       $ –    
 
     51,309      $ 95.43        11/28/2026        –       $ –          –       $ –    
 
              35,817
(4)
 
  $ 3,426,612        104,466
(5)
 
  $ 9,994,262  
 
              26,012
(6)
 
  $ 2,488,568        60,693
(7)
 
  $ 5,806,499  
 
  
 
 
 
  
 
 
 
  
 
 
 
     24,885
(8)
 
  $ 2,380,748        58,064
(9)
 
  $ 5,554,983  
Jeremy W. Smeltser
     –          –          –          4,817
(6)
 
  $ 460,842        11,240
(7)
 
  $ 1,075,331  
 
  
 
 
 
  
 
 
 
  
 
 
 
     4,608
(8)
 
  $ 440,847        10,753
(9)
 
  $ 1,028,740  
Randal D. Lewis
     –          –          –          9,949
(4)
 
  $ 951,821        29,019
(5)
 
  $ 2,776,248  
 
     –          –          –          10,597
(6)
 
  $ 1,013,815        24,727
(7)
 
  $ 2,365,632  
 
     –          –          –          10,138
(8)
 
  $ 969,902        23,656
(9)
 
  $ 2,263,170  
Ehsan Zargar
     3,958      $ 72.92        11/29/2023        –         –          –         –    
 
     5,009      $ 82.86        11/25/2024        –         –          –         –    
 
     –          –          –          10,613
(4)
 
  $ 1,015,346        30,953
(5)
 
  $ 2,961,274  
 
     –          –          –          7,707
(6)
 
  $ 737,329        17,983
(7)
 
  $ 1,720,434  
 
     –          –          –          7,373
(8)
 
  $ 705,375        17,205
(9)
 
  $ 1,646,002  
Rebeckah Long
     –          –          –          1,658
(4)
 
  $ 158,621        4,836
(5)
 
  $ 462,660  
 
     –          –          –          1,686
(6)
 
  $ 161,300        3,934
(7)
 
  $ 376,366  
 
     –          –          –          1,613
(8)
 
  $ 154,316        3,763
(9)
 
  $ 360,006  
 
(1)
This column shows the number of outstanding RSUs subject to time-based vesting.
 
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(2)
The market value is based on the per share closing price of our common stock on September 30, 2021 ($95.67).
(3)
This column shows the number of Fiscal 2019, 2020 and 2021 LTIP PSUs subject to performance-based vesting. For the FY19 PSU grants, we have shown the actual shares that become vested based on performance through fiscal 2021
year-end.
For the FY20 and FY21 PSU grants, because the performance metrics have not been satisfied as of the date of this report, we have shown the number of PSUs that would be payable upon the target level of performance.
(4)
These Fiscal 2019 LTIP RSUs cliff vested on December 3, 2021.
(5)
These Fiscal 2019 LTIP PSUs cliff vested on December 3, 2021.
(6)
These Fiscal 2020 LTIP RSUs cliff vest on December 2, 2022, subject to continued employment.
(7)
These Fiscal 2020 LTIP PSUs cliff vest on December 2, 2022, subject to continued employment and achievement of the applicable performance metrics.
(8)
These Fiscal 2021 LTIP RSUs cliff vest on December 4, 2023, subject to continued employment.
(9)
These Fiscal 2021 LTIP PSUs cliff vest on December 4, 2023, subject to continued employment and achievement of the applicable performance metrics.
 
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Option Exercises and Stock Vested During Fiscal 2021
The following table and footnotes provide information regarding option exercises and stock awards vesting during Fiscal 2021 for our NEOs.
 
     
Stock Awards
   
Option Awards
 
        Name        
  
Number of Shares
Acquired on
Vesting
    
Value Realized on
Vesting
   
Number of Shares
Acquired on
Exercise
    
Value Realized on
Exercise
 
David M. Maura
     80,366      $ 5,231,827
(1)
 
    60,294      $ 2,381,613
(2)
 
Jeremy W. Smeltser
     –        $ –         –          –    
Randal D. Lewis
     25,649      $ 1,669,750
(3)
 
    –          –    
Ehsan Zargar
     34,198      $ 2,226,290
(4)
 
    –          –    
Rebeckah Long
     855      $ 55,661
(5)
 
    –          –    
 
(1)
The amount for Mr. Maura in this column represents the value realized upon the vesting of 80,366 RSUs on November 21, 2020. The value was computed by multiplying the number of shares vested by the closing price per share of the Company’s common stock on such vesting date, which was $65.10 on November 21, 2020.
(2)
The amount for Mr. Maura in this column represents the value realized upon exercising 60,294 options on September 10, 2021. The value was computed by multiplying the number of shares exercised by the closing price per share of the Company’s common stock on such exercise date of $92.33 minus the per share exercise price of $52.83.
(3)
The amount for Mr. Lewis in this column represents the value realized upon the vesting of 25,649 RSUs on November 21, 2020. The value was computed by multiplying the number of shares vested by the closing price per share of the Company’s common stock on such vesting date, which was $65.10 on November 21, 2020.
(4)
The amount for Mr. Zargar in this column represents the value realized upon the vesting of 34,198 RSUs on November 21, 2020. The value was computed by multiplying the number of shares vested by the closing price per share of the Company’s common stock on such vesting date, which was $65.10 on November 21, 2020.
(5)
The amount for Ms. Long in this column represents the value realized upon the vesting of 855 RSUs on November 21, 2020. The value was computed by multiplying the number of shares vested by the closing price per share of the Company’s common stock on such vesting date, which was $65.10 on November 21, 2020.
Pension Benefits
None of our NEOs participated in any pension plans during, or as of the end of, Fiscal 2021.
Non-Qualified
Deferred Compensation
None of our NEOs participated in any Company
non-qualified
deferred compensation programs during, or as of the end of, Fiscal 2021.
Termination and Change in Control Provisions
Awards under the Company Equity Plan
For purposes of these incentive plans, “change in control” generally means the occurrence of any of the events listed below and “Applicable Company” means the Company or SPB Legacy with respect to the former equity plan of SPB Legacy which was assumed by the Company:
 
  (i)
the acquisition, by any individual, entity or group of beneficial ownership of more than 50% of the combined voting power of the Applicable Company’s then outstanding securities;
 
  (ii)
individuals who constituted our Board at the effective time of the plan and directors who are nominated and elected as their successors from time to time cease for any reason to constitute at least a majority of our Board;
 
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  (iii)
consummation of a merger or consolidation of the Applicable Company or any direct or indirect subsidiary of the Applicable Company with any other entity, other than (A) a merger or consolidation which results in the voting securities of the Applicable Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) more than 50% of the combined voting power of the voting securities of the Applicable Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, (B) a merger or consolidation effected to implement a recapitalization of the Applicable Company (or similar transaction) in which no individual, entity or group is or becomes the beneficial owner, directly or indirectly, of voting securities of the Applicable Company (not including in the securities beneficially owned by such individual, entity or group any securities acquired directly from the Applicable Company or any of its direct or indirect subsidiaries) representing 50% or more of the combined voting power of the Applicable Company’s then outstanding voting securities or (C) a merger or consolidation affecting the Applicable Company as a result of which a Designated Holder (as defined below) owns after such transaction more than 50% of the combined voting power of the voting securities of the Applicable Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or
 
  (iv)
approval by the shareholders of the Applicable Company of either a complete liquidation or dissolution of the Applicable Company or the sale or other disposition of all or substantially all of the assets of the Applicable Company, other than a sale or disposition by the Applicable Company of all or substantially all of the assets of the Applicable Company to an entity, more than 50% of the combined voting power of the voting securities of which are owned by shareholders of the Applicable Company in substantially the same proportions as their ownership of the Applicable Company immediately prior to such sale; provided that, in each case, it shall not be a change in control if, immediately following the occurrence of the event described above (i) the record holders of the common stock of the Applicable Company immediately prior to the event continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following the event or (ii) the Harbinger Master Fund, the Harbinger Special Situations Fund, HRG and their respective affiliates and subsidiaries (the “Designated Holders”) beneficially own, directly or indirectly, more than 50% of the combined voting power of the Applicable Company or any successor.
Executive-Specific Provisions Regarding Employment, Termination and Change in Control
Agreements with NEOs
Our Compensation Committee periodically evaluates the appropriateness of entering into employment agreements, severance agreements or other written agreements with the Company’s NEOs to govern compensation and other aspects of the employment relationship. During Fiscal 2021, the Company and/or its wholly owned subsidiary, SBI, had written employment agreements with its NEOs as follows: (i) an Employment Agreement, dated January 20, 2016, as amended and restated on dated April 25, 2018, with Mr. Maura (the “Maura Employment Agreement”); (ii) an employment agreement, dated September 9, 2019, with Mr. Smeltser (the “Smeltser Employment Agreement”); (iii) an employment agreement dated September 9, 2019, with Mr. Lewis (the “Lewis Employment Agreement”); (iv) an employment Agreement, dated October 1, 2018, with Mr. Zargar (the “Zargar Employment Agreement”); and (v) a letter agreement, dated September 9, 2019, with Ms. Long (the “Long Letter Agreement”), which was supplemented by a severance agreement with Ms. Long dated September 9, 2019 (the “Long Severance Agreement”).
Agreement with Mr. Maura
Pursuant to the Maura Employment Agreement, the initial term was until April 24, 2021, subject to earlier termination, with automatic
one-year
renewals thereafter. The Maura Employment Agreement provides Mr. Maura with an annual base salary as Executive Chairman of $700,000 and an annual base salary of $200,000 for the duration of his services as CEO and he will be eligible to receive a performance-based MIP bonus for each fiscal year, based on a target of 125% of his total base salary, as may be applicable at the time (the “Target Amount”), paid during the applicable fiscal year during the term of the Maura Employment Agreement, provided the Company achieves certain annual performance goals as established by our Board and/or our Compensation Committee. If such performance goals are met, the MIP bonus will be payable in cash. If Mr. Maura exceeds the performance targets, the bonus will be increased in accordance with the formula approved by the Compensation Committee no later than the close of the first quarter of the year following the applicable fiscal year; provided that the bonus will not exceed 250% of the Target Amount.
 
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Under the terms of the Maura Employment Agreement, Mr. Maura was entitled to receive a performance-based EIP grant with a target value of $3.2 million for his service as Executive Chairman and CEO and a performance-based S3B grant with a target value of $3 million, each in accordance with those programs grant cycles. In Fiscal 2019, our Compensation Committee eliminated the EIP and S3B bonus programs and replaced them with our performance based LTIP bonus program. Based on the review of peer groups, Mr. Maura received an LTIP grant with target value of $5.4 million for Fiscal 2021. In addition, at the discretion of the Compensation Committee and/or the Board, Mr. Maura is also eligible to receive future grants and/or participate in future multi-year incentive programs.
The Maura Employment Agreement also provides Mr. Maura with, among other things: (i) four weeks of paid vacation for each full year; (ii) eligibility for Mr. Maura to participate in the Company’s executive auto lease program which Mr. Maura has waived beginning in Fiscal 2020; (iii) a stipend for income tax filings and returns preparation and advice and estate planning advice which Mr. Maura has waived; and (iv) eligibility for Mr. Maura to participate in any of the Company’s insurance plans and other benefits, if any, as the benefits are made available to other executive officers of the Company.
Under the Maura Employment Agreement, Mr. Maura is entitled to receive severance benefits if his employment is terminated under certain circumstances. In general, termination as Executive Chairman and as CEO is determined separately, so that termination from either position will generally provide for payments in respect only of that position and a termination from both positions will provide for payments in respect of both positions.
In the event that Mr. Maura is terminated with “cause” or terminates his employment voluntarily, other than for “good reason,” from his role as Executive Chairman or as CEO or all his roles, Mr. Maura’s compensation (with respect to such roles) and other benefits (in the case where he is terminated from all his roles) provided under his employment agreement cease at the time of such termination and Mr. Maura is entitled to no further compensation under his employment agreement with respect to such role. Notwithstanding this, the Company would pay to Mr. Maura accrued compensation and benefits and continuation of Company medical benefits to the extent required by law.
If Mr. Maura’s role as CEO is terminated (without terminating his role as Executive Chairman), without “cause,” by the Company, by Mr. Maura for “good reason,” due to Mr. Maura’s death or disability or upon a Company-initiated
non-renewal
or upon a change in control, Mr. Maura will be entitled to receive the following severance benefits: (i) the vesting of $250,000 of his outstanding time-based equity awards, based on grant-date value, as determined by the Compensation Committee; (ii) a cash payment of $500,000 ratably monthly in arrears over the
12-month
period following such termination; and (iii) a
pro rata
portion, in cash, of the annual MIP bonus related to the base salary that Mr. Maura would have earned for the fiscal year in which termination occurs. Notwithstanding the foregoing, if Mr. Maura’s employment is terminated in a CIC Termination (as defined below) during the initial term of the Maura Employment Agreement, then instead of the payment in clause (ii) above, he will receive a cash payment equal to the greater of (x) a cash amount equal to $500,000 or (y) a cash amount equal to his then-current base salary times the number of months remaining in the initial term, with a
pro rata
amount being calculated for any partial month in that time period.
In addition to the payments above, if Mr. Maura’s employment (as Executive Chairman) is terminated by the Company without “cause,” by Mr. Maura for “good reason,” upon Mr. Maura’s death or disability or upon a Company-initiated
non-renewal
of his employment agreement, the Company shall pay or provide for Mr. Maura: (i) (a) a cash payment equal to 1.5 times the base salary in effect immediately prior to his termination, plus (b) a cash payment equal to 1.0 times his target annual MIP bonus of 125% of his then-current base salary, each payable ratably on a monthly basis over the
18-month
period immediately following his termination; (ii) the
pro rata
portion, in cash, of the annual MIP bonus (if any) he would have earned for the fiscal year in which such termination occurs if his employment had not ceased, to be paid at the same time such bonus would have been paid to Mr. Maura for such fiscal year if his employment had not terminated; (iii) for the
18-month
period immediately following such termination, provide Mr. Maura and his dependents with medical insurance coverage and other employee benefits on a basis substantially similar to those provided to Mr. Maura and his dependents by the Company immediately prior to the date of termination at no greater cost to Mr. Maura or the Company than the cost to Mr. Maura and the Company immediately prior to such date; and (iv) payment of accrued vacation time pursuant to Company policy. In addition, all unvested outstanding time-based equity awards will promptly vest as provided in the applicable equity award agreements. Notwithstanding the foregoing, if Mr. Maura’s employment is terminated in a CIC Termination during the initial term of the Maura Employment Agreement, then instead of the payment in clause (i)(a) above, he will receive a cash payment equal to the greater of (x) a cash amount equal to 1.5 times his then-current base salary or (y) a cash amount equal to his then-current base salary times the number of months remaining in the initial term, with a
pro rata
amount being calculated for any partial month in that time period.
 
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If Mr. Maura’s employment is terminated by the Company without “cause” (and not due to death or disability) or by Mr. Maura for “good reason” during the period that begins 60 days prior to the occurrence of a change in control (or, in limited cases, earlier) and ends upon the first anniversary of the change in control (a “CIC Termination”), then Mr. Maura will receive all severance benefits available to him as if he terminated his employment for “good reason” and all of his outstanding and unvested performance-based equity awards will vest in full (at the target level).
The payment of the severance payments and vesting of equity awards described above with respect to a termination of Mr. Maura’s employment are conditioned upon Mr. Maura’s execution of a release of claims in favor of the Company and its controlled affiliates and Mr. Maura’s compliance with the
non-competition,
non-solicitation,
non-disparagement
and confidentiality restrictions set forth in his employment agreement. The
non-competition
and
non-solicitation
provisions extend for 18 months following Mr. Maura’s termination and confidentiality provisions extend for seven years following Mr. Maura’s termination.
Under the Maura Employment Agreement, (a) “good reason” is defined as the occurrence of any of the following events without Mr. Maura’s consent: (i) any reduction in Mr. Maura’s annual base salary or target MIP bonus opportunity then in effect; (ii) the required relocation of Mr. Maura’s office at which he is principally employed as of April 25, 2018 to a location more than 50 miles from such office or the requirement by the Company that Mr. Maura be based at a location other than such office on an extended basis, except for required business travel; (iii) a substantial diminution or other substantive adverse change in the nature or scope of Mr. Maura’s responsibilities, authorities, powers, functions or duties; (iv) a breach by the Company of any of its other material obligations under the Maura Employment Agreement; or (v) the failure of the Company to obtain the agreement of any successor to the Company to assume and agree to perform the Maura Employment Agreement; and (b) “cause” is defined, in general, as the occurrence of any of the following events: (i) the commission by Mr. Maura of any deliberate and premeditated act taken by Mr. Maura in bad faith against the interests of the Company that causes or is reasonably anticipated to cause material harm to the Company; (ii) Mr. Maura has been convicted of or pleads nolo contendere with respect to, any felony or of any lesser crime or offense having as its predicate element fraud, dishonesty or misappropriation of the property of the Company that causes or is reasonably anticipated to cause material harm to the Company; (iii) the habitual drug addiction or intoxication of Mr. Maura which negatively impacts his job performance or Mr. Maura’s failure of a company-required drug test; (iv) the willful failure or refusal of Mr. Maura to perform his duties as set forth in the employment agreement or the willful failure or refusal to follow the direction of our Board, which is not cured after 30 calendar days’ notice; or (v) Mr. Maura materially breaches any of the terms of the Maura Employment Agreement or any other agreement between himself and the Company and the breach is not cured within 30 calendar days after written notice from the Company.
Agreement with Mr. Smeltser
On September 9, 2019, the Company entered into an employment agreement with Jeremy W. Smeltser. Pursuant to the Smeltser Employment Agreement, the initial term was until September 30, 2020 and thereafter is subject to automatic
one-year
renewals, subject to earlier termination. Pursuant to the Smeltser Employment Agreement, Mr. Smeltser will receive an annual base salary of $500,000, subject to periodic review and increase by the Compensation Committee, in its discretion. Beginning in Fiscal 2022, Mr. Smeltser’s annual base salary was increased by 10% to $550,000. In addition, Mr. Smeltser will receive a performance-based cash bonus under the MIP for each fiscal year (commencing with Fiscal 2020) during the term of the agreement. The MIP bonus will be based on a target of 80% (and a maximum of 160%) of Mr. Smeltser’s base salary paid during the applicable fiscal year, provided that the Company achieves certain annual performance goals as established by the Board and/or Compensation Committee. If such performance goals are met, the MIP bonus will be payable in cash, provided that Mr. Smeltser remains employed with the corporation on the date the bonus is paid.
The Smeltser Employment Agreement provides that on or prior to December 31, 2019, Mr. Smeltser will receive an equity or equity based award with a grant date value of $1,000,000 and that for each subsequent fiscal year ending during the term (commencing with Fiscal 2021), he shall be eligible to receive an equity or equity based award with a target value of 200% of his base salary. Beginning in Fiscal 2022, Mr. Smeltser’s annual equity award grant date target value was increased by 18% to $1,180,000.
The Smeltser Employment Agreement also provides Mr. Smeltser with certain other compensation and benefits, including: (i) relocation reimbursement of up to $75,000 as well as the use of a Company-funded apartment for up to 12 months; (ii) four weeks of paid vacation for each full year; (iii) eligibility to participate in any of the Company’s insurance plans and other benefits, if any, as are made available to other executive officers of the Company; and (iv) eligibility for Mr. Smeltser to participate in the Company’s executive auto lease program during the term of the employment agreement.
The Smeltser Employment Agreement contains the following provisions applicable upon the termination of Mr. Smeltser’s employment with the Company and/or in the event of a change in control of the Company.
 
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In the event that Mr. Smeltser is terminated with “cause” or terminates his employment voluntarily, other than for “good reason,” Mr. Smeltser’s salary and other benefits provided under his employment agreement cease at the time of such termination and Mr. Smeltser is entitled to no further compensation under his employment agreement. Notwithstanding this, Mr. Smeltser would be entitled to continue to participate in the Company’s medical benefit plans to the extent required by law. Further, upon any such termination of employment, the Company would pay to Mr. Smeltser accrued pay and benefits.
If the employment of Mr. Smeltser with the Company is terminated by the Company without “cause,” by Mr. Smeltser for “good reason,” or is terminated due to Mr. Smeltser’s death or disability, Mr. Smeltser is entitled to receive certain post-termination benefits, detailed below, contingent upon execution of a separation agreement with a release of claims agreeable to the Company and Mr. Smeltser’s compliance with the
non-competition,
non-solicitation,
non-disparagement
and confidentiality restrictions set forth in his employment agreement. In such event the Company will: (i) pay Mr. Smeltser (a) 1.5 times his base salary in effect immediately prior to his termination, plus (b) 1.0 times his target annual bonus award for the fiscal year in which such termination occurs, ratably over the
18-month
period immediately following his termination; (ii) pay Mr. Smeltser the
pro rata
portion of the annual bonus (if any) he would have earned pursuant to any annual bonus or incentive plan maintained by the Company with respect to the fiscal year in which such termination occurs if his employment had not ceased, to be paid at the same time such bonus would have been paid to Mr. Smeltser for such fiscal year if his employment had not terminated; (iii) for the
18-month
period immediately following such termination, arrange to provide Mr. Smeltser and his dependents with medical and dental benefits on a basis substantially similar to those provided to Mr. Smeltser and his dependents by the Company immediately prior to the date of termination, subject to his electing COBRA coverage; and (iv) pay Mr. Smeltser his accrued vacation time pursuant to Company policy. In addition, all unvested outstanding time-based equity awards will vest on a
pro rata
basis and all performance-based awards will be forfeited.
The
non-competition
and
non-solicitation
provisions extend for 18 months following Mr. Smeltser’s termination and confidentiality provisions extend for up to seven years following Mr. Smeltser’s termination. Mr. Smeltser is also subject to a cooperation provision that extends for six years following Mr. Smeltser’s termination.
The definitions of “good reason” and “cause” under the Smeltser Employment Agreement are similar to the definitions of such terms in the Maura Employment Agreement.
Agreements with Mr. Lewis
On September 9, 2019, Mr. Lewis was promoted to the office of Executive Vice President and entered into the Lewis Employment Agreement, which superseded a prior severance agreement. Pursuant to the Lewis Employment Agreement, the initial term was until September 30, 2020 and thereafter is subject to automatic
one-year
renewals, subject to earlier termination. Pursuant to the Lewis Employment Agreement, Mr. Lewis will receive an annual base salary of $550,000, subject to periodic review and increase by the Compensation Committee, in its discretion. In addition, Mr. Lewis will receive a performance-based cash bonus under the MIP for each fiscal year (commencing with Fiscal 2020) during the term of the agreement. The MIP bonus will be based on a target of 90% (and a maximum of 180%) of Mr. Lewis’s base salary paid during the applicable fiscal year, provided that the Company achieves certain annual performance goals as established by the Board and/or Compensation Committee. If such performance goals are met, the MIP bonus will be payable in cash, provided that Mr. Lewis remains employed with the corporation on the date the bonus is paid.
The Lewis Employment Agreement provides that on or prior to December 31, 2019, Mr. Lewis shall receive an equity or equity based award with a grant date value of $2,200,000 and that for each subsequent fiscal year ending during the term (commencing with Fiscal 2021), he shall be eligible to receive an equity or equity based award with a target value of 400% of his base salary.
The Lewis Employment Agreement also provides Mr. Lewis with certain other compensation and benefits, including: (i) four weeks of paid vacation for each full year; (ii) eligibility to participate in any of the Company’s insurance plans and other benefits, if any, as are made available to other executive officers of the Company; and (iii) eligibility for Mr. Lewis to participate in the Company’s executive auto lease program during the term of the employment agreement.
The Lewis Employment Agreement contains the following provisions applicable upon the termination of Mr. Lewis’s employment with the Company and/or in the event of a change in control of the Company.
In the event that Mr. Lewis is terminated with “cause” or terminates his employment voluntarily, other than for “good reason,” Mr. Lewis’s salary and other benefits provided under his employment agreement cease at the time of such termination and Mr. Lewis is entitled to no further compensation under his employment agreement. Notwithstanding this, Mr. Lewis would be entitled to continue to participate in the Company’s medical benefit plans to the extent required by law. Further, upon any such termination of employment, the Company would pay to Mr. Lewis accrued pay and benefits.
 
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If the employment of Mr. Lewis with the Company is terminated by the Company without “cause,” by Mr. Lewis for “good reason,” or is terminated due to Mr. Lewis’s death or disability, Mr. Lewis is entitled to receive certain post-termination benefits, detailed below, contingent upon execution of a separation agreement with a release of claims agreeable to the Company and Mr. Lewis’s compliance with the
non-competition,
non-solicitation,
non-disparagement
and confidentiality restrictions set forth in his employment agreement. In such event the Company will: (i) pay Mr. Lewis (a) 1.5 times his base salary in effect immediately prior to his termination, plus (b) 1.0 times his target annual bonus award for the fiscal year in which such termination occurs, ratably over the
18-month
period immediately following his termination; (ii) pay Mr. Lewis the
pro rata
portion of the annual bonus (if any) he would have earned pursuant to any annual bonus or incentive plan maintained by the Company with respect to the fiscal year in which such termination occurs if his employment had not ceased, to be paid at the same time such bonus would have been paid to Mr. Lewis for such fiscal year if his employment had not terminated; (iii) for the
18-month
period immediately following such termination, arrange to provide Mr. Lewis and his dependents with medical and dental benefits on a basis substantially similar to those provided to Mr. Lewis and his dependents by the Company immediately prior to the date of termination, subject to his electing COBRA coverage; and (iv) pay Mr. Lewis his accrued vacation time pursuant to Company policy. In addition, all unvested outstanding time-based equity awards will vest on a
pro rata
basis and all performance-based awards will be forfeited.
The
non-competition
and
non-solicitation
provisions extend for 18 months following Mr. Lewis’s termination and confidentiality provisions extend for up to seven years following Mr. Lewis’s termination. Mr. Lewis is also subject to a cooperation provision that extends for six years following Mr. Lewis’s termination.
The definitions of “good reason” and “cause” under the Lewis Employment Agreement were similar to the definitions of such terms in the Maura Employment Agreement.
Agreement with Mr. Zargar
On September 13, 2018, the Company and SBI and Mr. Zargar entered into an employment agreement which became effective as of October 1, 2018. The initial term of the Zargar Employment Agreement was until September 30, 2021, subject to earlier termination, with automatic
one-year
renewals thereafter. The Zargar Employment Agreement provides Mr. Zargar with an annual base salary of $400,000 and he will be eligible to receive a performance-based management incentive plan bonus for each fiscal year starting in Fiscal 2019, based on a target of at least 60% of the then-current base salary (the “Target Amount”) paid during the applicable fiscal year during the term, provided the Company achieves certain annual performance goals as established by the Board and/or the Compensation Committee. If such performance goals are met, the bonus will be payable in cash. If Mr. Zargar exceeds the performance targets, the bonus will be increased in accordance with the formula approved by the Compensation Committee provided that the bonus will not exceed 200% of the Target Amount.
Mr. Zargar will also be eligible for future equity awards under the Company’s equity plan at the discretion of the Compensation Committee and/or Board and will be eligible to participate in future multi-year incentive programs as may be adopted from time to time. The Zargar Employment Agreement also provides Mr. Zargar with certain other compensation and benefits, including the following: (i) four weeks of paid vacation for each full year; (ii) eligibility for Mr. Zargar to participate in the Company’s executive auto lease program; (iii) a stipend for corporate apartment and income tax filings and returns preparation and advice and estate planning advice; and (iv) eligibility for Mr. Zargar to participate in any of the Company’s insurance plans and other benefits, if any, as the benefits are made available to other executive officers of the Company.
Under the Zargar Employment Agreement, Mr. Zargar is entitled to receive severance benefits if his employment is terminated under certain circumstances. In the event that Mr. Zargar is terminated with “cause” or terminates his employment voluntarily, other than for “good reason,” Mr. Zargar’s compensation and other benefits provided under his employment agreement cease at the time of such termination and Mr. Zargar is entitled to no further compensation under his employment agreement with respect to such role. Notwithstanding this, the Company would pay to Mr. Zargar accrued compensation and benefits and continuation of Company medical benefits to the extent required by law.
If Mr. Zargar’s employment is terminated by the Company without “cause,” by Mr. Zargar for “good reason” (as defined below) or by reason of death or by the Company for disability or upon a Company-initiated
non-renewal,
he will be entitled to the following severance benefits: (i) a cash payment equal to 2.99 times his then-current base salary, (ii) a cash payment equal to 1.5 times his then-current target annual MIP bonus, each payable ratably on a monthly basis over the
18-month
period following termination; (iii) a
pro rata
portion, in cash, of the annual bonus Mr. Zargar would have earned for the fiscal year in which termination occurs if his employment had not ceased; (iv) for the
18-month
period following termination provide
 
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Table of Contents
Mr. Zargar and his dependents with medical insurance coverage and other employee benefits on a basis substantially similar to those provided to Mr. Zargar and his dependents by the Company immediately prior to the date of termination at no greater cost to Mr. Zargar or the Company than the cost to Mr. Zargar or the Company immediately prior to such date; and (v) payment of accrued vacation time pursuant to Company policy. In addition, all unvested outstanding performance-based and time-based equity awards will immediately vest in full (at target) as provided in the applicable equity award agreements.
In the case of termination, severance payments and vesting are conditioned upon Mr. Zargar’s execution of a release of claims in favor of the Company and its affiliates and Mr. Zargar’s compliance with the
non-solicitation,
non-disparagement
and confidentiality restrictions set forth in his employment agreement. The
non-solicitation
provisions extend for 18 months following Mr. Zargar’s termination and the confidentiality provisions extend for seven years following Mr. Zargar’s termination. Mr. Zargar is also subject to a
two-year
cooperation provision.
The definitions of “good reason” and “cause” under the Zargar Employment Agreement are similar to the definitions of such terms in the Maura Employment Agreement.
Agreements with Ms. Long
On September 9, 2019, the Company entered into the Long Letter Agreement and the Long Severance Agreement with Ms. Long. Pursuant to the Long Letter Agreement, effective as of September 9, 2019, Ms. Long was promoted to Senior Vice President, Global Human Resources Officer for the Company and was promoted to Senior Vice President and Chief Human Resources Officer effective November 2021. Effective as of September 9, 2019, Ms. Long’s base salary was increased from $250,000 to $300,000
(pro-rated
for Fiscal 2019). Beginning in Fiscal 2020, Ms. Long’s target bonus was increased from 40% to 60% and her long-term incentive award for Fiscal 2021 is $350,000. Beginning in Fiscal 2022, Ms. Long’s base salary was increased by 20% to $360,000 and equity award grant date target value was increased by 40% to $490,000.
Pursuant to the Long Severance Agreement, if Ms. Long’s employment is terminated by the Company without cause, she will receive as severance 52 weeks of base pay and (subject to her timely election of COBRA) 52 weeks of continued medical coverage. The receipt of severance benefits is conditioned upon her execution of an effective and irrevocable release of claims as well as continued compliance with her post employment restrictive covenants, including
12-month
non-compete
and
non-solicit,
a
5-year
confidentiality provision, a
6-year
cooperation provision and perpetual
non-disparagement
provisions. “Cause” for purposes of the Long Severance Agreement generally means: (i) the commission by Ms. Long of any theft, fraud, embezzlement or other material act of disloyalty or dishonesty with respect to the Company (including the unauthorized disclosure of confidential or proprietary information of the Company); (ii) Ms. Long’s conviction of or plea of guilty or nolo contendere to, a felony or other crime of moral turpitude, disloyalty or dishonesty; (iii) Ms. Long’s willful misconduct or gross neglect in the performance of Ms. Long’s job duties and responsibilities to the Company; (iv) the willful or intentional failure or refusal by Ms. Long to follow the written and specific, reasonable and lawful directives of Ms. Long’s supervisor or the Company’s senior management team, which failure or refusal to perform (to the extent curable) is not completely cured to the Company’s reasonable satisfaction within 15 days after receipt of a written notice from the Company detailing such failure or refusal to perform, provided that in no event shall the Company be required to provide more than one such notice or cure period (to the extent a cure period is applicable) within any
12-month
period; (v) the failure or refusal by Ms. Long to perform her duties and responsibilities to the Company or any of its affiliates, which failure or refusal to perform (to the extent curable) is not completely cured to the Company’s reasonable satisfaction within 15 days after receipt of a written notice from the Company detailing such failure or refusal to perform, provided that in no event shall the Company be required to provide more than one such notice or cure period (to the extent a cure period is applicable) within any
12-month
period; (vi) Ms. Long’s breach of any of the terms of this Agreement, any other agreement between Ms. Long and the Company or any Company policy, which breach (to the extent curable) is not cured to the Company’s reasonable satisfaction within 15 days after receipt of a written notice from the Company to Ms. Long of such breach, provided that in no event shall the Company be required to provide more than one such notice or cure period (to the extent a cure period is applicable) within any
12-month
period; (vii) Ms. Long engages in conduct that discriminates against or harasses any employee or other person providing services to the Company on the basis of any protected class such that it would harm the reputation of the Company or its affiliates if Ms. Long was retained as an employee, as determined by the Company in good faith after a reasonable inquiry; or (viii) Ms. Long engages in intentional, reckless or negligent conduct that has or is reasonably likely to have an adverse effect on the Company’s business or reputation, as determined by the Company in good faith.
Amounts Payable upon Termination or Change in Control
The following tables set forth the amounts that would have been payable at September 30, 2021 to each of our NEOs who were employed by the Company as NEOs on the last day of Fiscal 2021 under the various scenarios for termination of employment or a change in control of the Company had such scenarios occurred on September 30, 2021.
 
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Table of Contents
  
David Maura
  
Termination Scenarios (Assumes Termination on 9/30/2021)
 
  
Component
  
Without Good

Reason

or For Cause
    
With Good

Reason

or Without

Cause
   
Upon Death

or Disability
   
Change in

Control

& Termination
 
  Cash Severance
(1)
   $ –        $ 2,425,000     $ 2,425,000     $ 2,425,000  
  Annual Bonus
(2)
   $ –        $ 1,941,300     $ 1,941,300     $ 1,941,300  
  Equity Awards (Intrinsic Value)
(3)
   $ –        $       $ –       $ –    
  Unvested Restricted Stock
   $ –        $ 8,295,928
(4)
 
  $ 8,295,928
(4)
 
  $ 27,652,839
(5)
 
  Other Benefits
   $ –        $ –       $ –       $ –    
  Health and Welfare
(6)
   $ –        $ 10,589     $ 10,589     $ 10,589  
  Car allowance
(7)
   $ –        $ 24,000     $ 24,000     $ 24,000  
  Accrued, Unused Vacation
(8)
   $ –        $ 18,639     $ 18,639     $ 18,639  
    
 
 
    
 
 
   
 
 
   
 
 
 
  Total
  
$
–  
 
  
$
12,715,456
 
 
$
12,715,456
 
 
$
32,072,367