UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant to
Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
report (Date of earliest event reported):
December
6, 2007
THE
CHILDREN’S PLACE RETAIL STORES, INC.
(Exact
Name of Registrants as Specified in Their Charters)
Delaware
(State
or
Other Jurisdiction of
Incorporation)
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0-23071
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31-1241495
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(Commission
File Number)
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(IRS
Employer Identification
No.)
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915
Secaucus Road, Secaucus, New
Jersey
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07094
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(Address
of Principal Executive
Offices)
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(Zip
Code)
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(201)
558-2400
(Registrant’s
Telephone Number, Including Area Code)
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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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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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
(c)
As
previously reported in the Company’s Form 8-K filed with the Securities and
Exchange Commission (the “Commission”)
on
November 21, 2007, Richard Paradise, 45 (previously the Company’s Senior Vice
President, Finance) became the Company’s Chief Financial Officer and principal
accounting officer effective December 6, 2007. Mr. Paradise’s annual base salary
is $360,000 and based on the Company’s performance to profit goals his targeted
bonus is 40% of his base salary. In addition to benefits that are generally
available to all of the Company’s employees, Mr. Paradise’s offer letter
provides that in the event he terminates his employment for good reason, his
employment is terminated without cause, or he terminates his employment within
one year after the occurrence of a change in control, the Company will pay
him
an amount equal to six months of his base salary, less applicable taxes.
In
addition on December 10, 2007, Mr. Paradise was granted a deferred stock award
of 20,000 shares of the Company’s common stock under the Company’s amended and
restated 2005 Equity Incentive Plan (the “2005
Plan”).
Twenty five percent of the shares will vest on each of the first four
anniversaries of date of grant, subject
to accelerated vesting upon his termination of employment.
Mr.
Paradise is also participating in the Company’s new long-term equity incentive
program and has executed a change in control agreement both of which are
described in more detail below.
Mr.
Paradise joins the Company with more than 20 years of finance experience. He
most recently served at American Standard Companies, Inc. as Vice President
and
Chief Financial Officer of the Bath & Kitchen division from 2005 to 2007,
and prior to that as Corporate Vice President & Controller from 2002 to
2005. Previously, Mr. Paradise held a number of senior financial positions
with
AlliedSignal Inc. (currently Honeywell International Inc.) including Director
of
Six Sigma and Credit & Collections; Manager of Financial Business Services;
and Manager of Internal Reporting for EMS, a division of AlliedSignal. He began
his career as an auditor with Price Waterhouse. Mr. Paradise earned his Bachelor
of Arts from Rutgers College, holds an MBA from Rutgers Graduate School of
Management, and is a Certified Public Accountant.
A
copy of
Mr. Paradise’s offer letter, dated October 19, 2007, is attached hereto as
Exhibit 99.1
(e)
As
discussed in the Company’s annual report on Form 10-K for the year ended
February 3, 2007, because the Company has not been current in its SEC filings
since September 2006, its ability to effectively address compensation matters
impacting its executive officers and other key employees has been adversely
affected. In particular, the Company has not made its customary annual equity
compensation grants since the spring of 2005. In addition, over the past year
the Company has faced several additional challenges that have impacted its
ability to retain and motivate its employees.
Accordingly,
the Board has recently approved a comprehensive strategy to address the
retention and appropriate compensation of the Company’s executive officers and
other key employees, other than the Company’s interim Chief Executive Officer.
Based on recommendations from Frederick W. Cook & Co., Inc., a
nationally recognized compensation consulting firm, and management,
the Board’s compensation committee (the “Compensation
Committee”)
recommended certain compensation arrangements designed to retain the Company’s
executive officers and other key employees, as well as to address our objective
of maintaining competitive compensation programs. As part of this comprehensive
strategy, the Board recently adopted several new compensation arrangements
for
the Company’s executive officers and other key employees. Those arrangements in
which our executive officers are participating are described below.
Cash
Retention
The
Board
has adopted a cash retention incentive award for the Company’s named executive
officers, other than its interim Chief Executive Officer (the “Cash
Retention Incentive Award”).
The
award is contingent upon the executive’s continued employment through June 30,
2008, unless such executive’s employment is terminated in connection with a
change in control. Pursuant to the Cash Retention Incentive Award, Neal Goldberg
shall receive $357,500, Tara Poseley shall receive $322,500, Susan Riley shall
receive $262,500, Richard Flaks shall receive $245,250 and Mark Rose shall
receive $218,000.
Long-Term
Equity Incentive Program
The
Company’s current long-term equity incentive program expires at the end fiscal
2007 and the Company currently expects that the minimum earnings per share
level
in fiscal 2007 will not be met and that no performance shares will be issued
in
connection with previous awards under the performance share program. The Board
has adopted a new long term equity incentive program for the Company’s executive
officers and certain other key employees (the “2008
LTIP”).
Pursuant to the 2008 LTIP, on December 10, 2007, the executive officers received
an equal number of deferred stock awards and performance share awards to be
issued pursuant to the terms of the 2005 Plan.
Deferred
Stock Award
The
deferred stock awards shall vest one-third on December 10, 2008, December 10,
2009 and December 10, 2010, respectively. So long as the executive officer
continues to be employed, the vested shares will be delivered to the executive
officer on each vesting date, subject to income tax withholding. In addition,
in
the event the awards are not assumed in connection with a change in control,
50%
of the outstanding awards will vest if the change in control occurs by December
10, 2008, 75% would vest if the change in control occurs between December 10,
2008 and June 10, 2009 and 100% would vest if the change in control occurs
after
June 10, 2009. The deferred stock award shall be evidenced by an agreement
executed by the Company and by each of the executive officers. A form of such
agreement is attached hereto as Exhibit 99.2.
Performance
Share Award
Pursuant
to Section 16 of the 2005 Plan, the Compensation Committee shall determine
the
performance criteria for the performance share awards no later than 90 days
after the beginning of the Company’s 2008 fiscal year. Performance criteria will
be set for each of fiscal years 2008, 2009 and 2010, and for the three-year
cycle as a whole.
At
the
end of each fiscal year, the Compensation Committee will measure actual results
against the stated criteria for that fiscal year (at the end of FY 2008, year
one performance would be evaluated; at the end of FY 2009, year two performance
would be evaluated, etc.). For each fiscal year, up to one-third of the target
award may be deemed earned and “banked” for payment at the end of the three-year
cycle. If actual performance in any fiscal year would generate a payment in
excess of one-third of the target awards, the excess number of shares will
be
set aside and only paid at the end of the three-year cycle if the threshold
performance for the entire three-year cycle is achieved. In addition, if the
award does not continue after a change in control, a pro rata portion of the
awards that have not previously vested will vest upon such change of
control.
The
maximum number of shares that any individual shall receive is 200% of such
individual’s target award. The performance share awards shall be evidenced by an
agreement executed by the Company and by each of the executive officers. A
form
of such agreement is attached hereto as Exhibit 99.3.
Pursuant
to the 2008 LTIP the Company’s following executive officers shall receive the
number of deferred stock awards and performance share awards listed in the
following table.
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Name
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Number
of
Shares
of
Deferred
Stock
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Target
Number of
Performance
Shares
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Neal
Goldberg
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35,709
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35,708
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Tara
Poseley
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32,213
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32,212
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Susan
Riley
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26,220
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26,219
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Richard
Flaks
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16,331
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16,331
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Mark
Rose
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14,517
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14,516
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Richard
Paradise
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11,986
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11,986
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Change
in Control Arrangements
The
Board
approved that the Company enter into change the Company’s in control agreements with the
Company’s executive officers and other key employees, other than the Company’s
interim Chief Executive Officer and President. Pursuant to these change in
control agreements, the executive officers shall receive severance benefits
upon
a termination without cause or by the executive for good reason within two
years
following a change in control (the separation after a change in control a
“Triggering
Event”).
The
agreements are for two years and then automatically renews for one year terms
thereafter, unless the Company provides 90 days’ notice of its intent to
terminate the agreement. Upon a Triggering Event, Ms. Poseley and Ms. Riley
are
entitled to receive a lump sum severance payment equal to two times the sum
of
their respective base salary and target bonus, and Mr. Flaks, Mr. Rose and
Mr.
Paradise are entitled to receive a lump sum severance payment equal to one
and
one-half times the sum of their respective base salary and target bonus. In
addition, in the event severance benefits are payable, and the equity awards
held by an individual are not otherwise accelerated, then 50% of all outstanding
equity awards would vest, if the change in control occurs by December 10, 2008,
75% would vest if the change in control occurs between December 10, 2008 and
June 10, 2009 and 100% would vest if the change in control occurs after June
10,
2009. The Company agreements also provide for a "modified gross-up" of the
"golden parachute" excise tax imposed by Section 4999 of the Internal Revenue
Code, pursuant to which the executive's benefits will be "cut back' to $1 below
the golden parachute threshold if payments contingent upon the change in control
are not at least 15% higher than the threshold that triggers the excise tax,
and
otherwise the excise tax (if any) will be grossed-up such that the executive's
after-tax position will be the same as if the excise tax did not
apply.
As
partial consideration of entering into the change in control agreement, Ms.
Poseley agreed to amend her employment agreement to remove the provision that
states that Ezra Dabah ceasing to hold the position of Chief Executive Officer
(“CEO”) of the Company constitutes “good reason” for her to terminate her
employment and that such provision was not triggered when Mr. Dabah resigned
as
CEO in September. In addition, Ms. Poseley and Ms. Riley each agreed to amend
their employment agreements to remove the change in control provision in each
of
their employment agreements. A form of the change in control agreement is
attached hereto as Exhibit 99.4.
Equity
Award Commitments
The
Compensation Committee granted equity awards that the Company previously
promised to certain key employees in connection with their hiring or promotion,
including 33,294 shares of restricted stock promised to Charles Crovitz in
connection with his being appointed interim Chief Executive Officer, 15,000
shares of restricted stock promised to Ms. Riley in connection with her
promotion to Executive Vice President in the spring of 2007 and a deferred
stock
award of 20,000 shares to Mr. Paradise in connection with his hiring. All of
these grants of equity shall be evidenced by an agreement executed by the
Company and by each of the executive officers.
Item
7.01 Regulation
FD Disclosure
On
December 5, 2007, the Company issued a press release containing its sales
results for
the
four-week period ended December 1, 2007.
A
copy of
this press release is included as Exhibit 99.5 hereto.
Item
9.01 Financial
Statement and Exhibits.
(d) Exhibits.
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Offer
Letter, dated October 19, 2007, with Richard Paradise
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Exhibit
99.2
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Form
of Deferred Stock Award Agreement
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Exhibit
99.3
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Form
of Performance Share Award Agreement
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Form
of Change in Control Agreement
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Exhibit
99.5
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Press
Release dated December 5, 2007 (regarding sales
results).
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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.
Date:
December 12, 2007
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THE
CHILDREN’S
PLACE RETAIL STORES, INC. |
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By: |
/s/
Susan Riley |
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Name: Susan
Riley |
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Title: Executive
Vice President,
Finance and Administration
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