Business Context and Reporting Period
This Form 8-K is a current report filed by Brown Shoe Company, Inc. (Note: The request metadata lists "Caleres Inc," but the filing text identifies the registrant as Brown Shoe Company, Inc.) on December 21, 2012. The report discloses events occurring on December 20, 2012, and effective as of December 1, 2012.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document is limited to the disclosure of a specific executive compensation arrangement.
Material Changes
The primary material change reported is the execution of a Severance Agreement with John W. Schmidt. The agreement outlines specific compensatory arrangements triggered by termination without cause or a change in control.
Management Commentary, Risks, and Unusual Items
Severance Terms:
- Standard Termination (Without Cause): If terminated without cause prior to a change in control or more than 24 months after a change in control, Mr. Schmidt is entitled to:
- A lump sum cash payment equal to 100% of his base salary (including targeted bonus) from the preceding 12 months.
- A prorated bonus for the year of termination.
- Medical/dental coverage for one year.
- Immediate vesting of restricted stock and stock options that would have vested over the subsequent two-year period.
- Outplacement services.
- Change in Control Termination: If terminated without cause within 24 months of a change in control, or if he terminates for "good reason" within 90 days of such an event, benefits increase to:
- A lump sum cash payment equal to 200% of his base annual salary (including targeted bonus).
- A prorated targeted bonus.
- Medical/dental coverage for 18 months, plus a cash payment for an additional 6 months.
- Immediate vesting of all restricted stock and outstanding stock options.
- Outplacement services.
- Two years added to credited service under the Supplemental Executive Retirement Plan (SERP).
Restrictions: Regardless of the termination reason, Mr. Schmidt is subject to post-termination restrictions, including prohibitions on providing executive or consulting services to footwear industry competitors and interfering with customer relationships.
Investor Verification Checklist
- Verify the exact base salary and targeted bonus figures for John W. Schmidt to calculate potential severance liabilities.
- Review the definition of "Change in Control" within the agreement to understand trigger events.
- Assess the impact of immediate vesting on the company's equity compensation expense.
- Confirm the current status of Mr. Schmidt's employment and whether any termination has occurred.
- Examine the Supplemental Executive Retirement Plan (SERP) terms to quantify the cost of the additional two years of credited service.