Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): October 19, 2010
MSC
Industrial Direct Co., Inc.
(Exact
Name of Registrant as Specified in Its Charter)
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New
York
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1-14130
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11-3289165
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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75
Maxess Road, Melville, New York
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11747
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (516)
812-2000
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Not
Applicable
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(Former
name or former address, if changed since last
report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Item
5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
(d) and
(e) On October 21, 2010, MSC Industrial Direct Co., Inc. (the
"Company") announced a management succession plan pursuant to which Mr. David
Sandler, the Company's President and Chief Executive Officer, will continue in
his current role through December 31, 2012, or no later than December 31, 2013
as determined by the Company's Board of Directors, and then serve as Vice
Chairman of the Board for four years. Mr. Erik Gershwind, Executive
Vice President and Chief Operating Officer, has been identified by the Board as
the successor to Mr. Sandler as the Company's Chief Executive
Officer. The Company also announced that Mr. Gershwind has been
elected to the Board. The election was made on October 19, 2010 with
the size of the Board being increased from 8 to 9 members.
In fiscal
year 2010, Mr. Gershwind was compensated with a base salary of
$294,356. In addition, on October 13, 2009, as part of the Company's
annual equity award grants for fiscal 2009, Mr. Gershwind received a stock award
of 3,192 restricted shares of the Company’s Class A common stock, with an
aggregate fair market value of $140,991 on the date of grant, and a grant of
18,928 options to purchase shares of the Company’s Class A common stock at an
exercise price of $44.17 per share, and a Black-Scholes value of $12.49 per
share. No incentive bonus was awarded for fiscal 2009. Mr.
Gershwind also received $4,928 as part of a special payment in the amount of one
week’s base salary, which was made to all Company employees, in recognition of
the collective efforts of the Company’s employees on behalf of the Company in
the difficult economic environment during fiscal 2009. Mr.
Gershwind's current annual base salary is $307,000 per annum. On
October 19, 2010, as part of the Company's annual equity award grants for fiscal
2010, Mr. Gershwind received a stock award of 4,768 restricted shares of the
Company’s Class A common stock, with an aggregate fair market value of $260,000
on the date of grant, and a grant of 32,743 options to purchase shares of the
Company’s Class A common stock at an exercise price of $54.52 per share, and an
estimated Black-Scholes value of $14.44 per share. Mr. Gershwind also
received $300,000 as compensation for fiscal year 2010 under the Company’s
annual incentive bonus program and an additional bonus of $25,000 for fiscal
2010 (which was generally paid to participants under the annual incentive bonus
program in recognition that the maximum payout levels under the 2010 plan did
not appropriately account for a range of EPS performance in excess of the target
performance level). In addition, Mr. Gershwind will participate in
the Company’s annual cash incentive bonus program for fiscal year 2011 and is
entitled to participate in all of the employee benefit plans available to
executives.
Mr.
Gershwind is the nephew of Mitchell Jacobson, the Company’s Chairman of the
Board, and the son of Marjorie Gershwind, Mr. Jacobson's sister. Mr.
Jacobson and Ms. Gershwind are also principal shareholders of the
Company.
Grant
of Restricted Stock Units to David Sandler, Chief Executive Officer
On
October 19, 2010, the Compensation Committee of the Board of Directors of the
Company approved the grant of a Restricted Stock Unit Agreement (the “RSU
Agreement”) to Mr. David Sandler, the Company’s Chief Executive
Officer. The RSU Agreement covers 183,418 shares and provides for
vesting in two installments, contingent on the Company having at least $125
million of net income during either fiscal 2011 or fiscal 2012 and Mr. Sandler
satisfying the service conditions of the RSU Agreement. Assuming
satisfaction of the performance condition, two-thirds of the award will vest if
Mr. Sandler continues to serve as Chief Executive Officer through December 31,
2012, as such date may be accelerated or extended by the Board of Directors,
provided that such date may not be extended beyond December 31, 2013 (such date,
as accelerated or extended, the “Succession Date”). In addition,
vesting is conditioned on Mr. Sandler serving as Vice Chairman of the Board for
a period of two years commencing on the Succession Date and serving as interim
Chief Executive Officer at the request of the Board at any time during the
two-year period commencing on the Succession Date in the event that Mr.
Sandler’s successor is no longer serving as Chief Executive Officer for any
reason. Assuming satisfaction of the performance condition, the
remaining one-third of the award will vest if Mr. Sandler satisfies the
aforementioned service conditions and continues to serve as Vice Chairman of the
Board for an additional period of two years. In the event of a change
in control of the Company, the performance condition shall be waived and the
award will settle in cash and vest upon the earlier of the satisfaction of the
service conditions or the termination of Mr. Sandler without cause (as defined
in the Second Amended CIC discussed below) or the termination by Mr. Sandler of
his employment due to a change in the circumstances of employment (as defined in
the Second Amended CIC discussed below).
The value
of each restricted stock unit is equal to the fair market value of one share of
the Company’s Class A Common Stock on the date of the grant and will change as
the value of the Company’s shares change. All restricted stock units
that vest, including dividend equivalents on the vested portion of the grant,
will be settled in shares of the Company.
The
Committee approved the RSU Agreement as part of the Company’s long-term
succession planning, as well as to retain and incentivize Mr. Sandler to provide
succession services. In determining the amount and form of the RSU
Agreement, the Committee also determined that Mr. Sandler would not receive
annual equity incentive awards that Mr. Sandler otherwise would have been
eligible to receive in October 2010 and October 2011, and structured the RSU
Agreement, in part, to replace these annual equity incentive
awards. The RSU Agreement is subject to the clawback provisions of
the Company’s Executive Incentive Compensation Recoupment Policy, which is
described in the Company’s definitive proxy statement filed on December 4,
2009.
The
description of the RSU Agreement herein is subject to and qualified by reference
to the terms of the RSU Agreement, which is filed as exhibit to this Form 8-K
and incorporated by reference herein.
Amendment
to Mr. Sandler’s Change in Control Agreement
Also on
October 19, 2010 and in connection with the RSU Agreement, the Company entered
into a Second Amended and Restated Agreement (the “Second Amended CIC”) with Mr.
Sandler, which amends and restates Mr. Sandler’s change in control severance
agreement. The Second Amended CIC effects a number of changes in Mr.
Sandler’s change in control severance agreement. Among the changes
made are: (i) the lump sum payment of $1.2 million previously payable in the
event of a change in control is eliminated; (ii) the severance payment due
following a termination without cause or a termination by Mr. Sandler due to a
change in the circumstances of employment is reduced from five times to three
times base salary and annual bonus; (iii) the period following a change in
control within which a termination of employment must occur in order to entitle
Mr. Sandler to a severance payment is reduced from five years to two years; (iv)
any severance benefits will no longer be grossed up, but rather will be subject
to reduction to the extent that the after-tax payments to Mr. Sandler would be
increased; and (v) the Second Amended CIC will terminate upon the Succession
Date.
The
description of the Second Amended CIC herein is subject to and qualified by
reference to the terms of the Second Amended CIC, which is filed as exhibit to
this Form 8-K and incorporated by reference herein.
On
October 21, 2010, the Company issued a press release announcing its management
succession plan and the election of Mr. Gershwind to the Board. The
entire text of the press release is attached as Exhibit 99.1 and is incorporated
by reference herein.
Item 9.01
Financial Statements and
Exhibits.
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Exhibit
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10.01
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Restricted Stock Unit Agreement
awarded to David Sandler, dated October 19,
2010
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10.02
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Second Amended and Restated
Agreement dated October 19, 2010 between the Company and David
Sandler
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99.1
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Press Release announcing
management succession plan, dated October 21, 2010, issued by MSC
Industrial Direct Co., Inc.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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MSC
INDUSTRIAL DIRECT CO., INC.
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Date:
October 21, 2010
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By:
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/s/
Shelley M. Boxer
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Name:
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Shelley
M. Boxer
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Title:
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Vice
President, Finance
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EXHIBIT
INDEX
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Exhibit
Number
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Description
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10.01
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Restricted Stock Unit Agreement
awarded to David Sandler, dated October 19,
2010
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10.02
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Second Amended and Restated
Agreement dated October 19, 2010 between the Company and David
Sandler
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99.1
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Press Release announcing
management succession plan, dated October 21, 2010, issued by MSC
Industrial Direct Co., Inc.
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