Business Context and Reporting Period
This Form 8-K filing by National Vision Holdings, Inc. reports on events occurring on December 11, 2018. The primary disclosure concerns the adoption of a new executive compensation arrangement by the Compensation Committee of the Board of Directors.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on the terms of a new severance plan.
Material Changes
The Company adopted the National Vision Holdings, Inc. Executive Severance Plan, which replaces the previously adopted National Vision, Inc. Severance Plan and its executive supplement. This change affects executives at the level of Senior Vice President and above, specifically:
- L. Reade Fahs (Chief Executive Officer)
- Patrick R. Moore (Senior Vice President, Chief Financial Officer)
- Jeff McAllister (Chief Operating Officer)
- Mitchell Goodman (Senior Vice President, General Counsel and Secretary)
- John Vaught (Senior Vice President, Chief Information Officer)
Guidance, Outlook, and Plan Details
The new plan outlines specific severance benefits for "covered terminations" (termination without cause or for good reason), contingent upon the execution of a general release of claims and compliance with confidentiality obligations.
Standard Covered Termination Benefits
- Pro-rata Bonus: Lump-sum payment based on actual performance.
- Cash Severance: Calculated as (Annual Base Salary + Target Bonus) multiplied by a specific factor, payable over a set period:
- Mr. Fahs: 2.0x multiplier, payable over 24 months.
- Messrs. Moore, McAllister, and Goodman: 1.5x multiplier, payable over 18 months.
- Mr. Vaught: 1.0x multiplier, payable over 12 months.
- Health Insurance: Continued coverage at the same cost as active employees for 24 months (Fahs), 18 months (Moore, McAllister, Goodman), or 12 months (Vaught).
Change in Control Termination Benefits
If a covered termination occurs within two years of a change in control, benefits are enhanced:
- Pro-rata Bonus: Based on target performance.
- Cash Severance: Multipliers increase to 2.5x (Fahs), 2.0x (Moore, McAllister, Goodman), and 1.5x (Vaught), payable in a lump sum within 60 days.
- Health Insurance: Extended to 30 months (Fahs), 24 months (Moore, McAllister, Goodman), or 18 months (Vaught).
- Outplacement: Up to $20,000 reimbursement for outplacement services.
Outstanding equity awards will be treated according to the Company's 2017 Omnibus Incentive Plan.
Investor Verification Checklist
- Review Exhibit 10.1 for the full text of the Executive Severance Plan to understand specific definitions of "cause," "good reason," and "change in control."
- Verify the impact of the new plan on the Company's future compensation expense and potential cash outflows in the event of executive turnover.
- Confirm the treatment of existing equity awards under the 2017 Omnibus Incentive Plan as referenced in the filing.