Exhibit 10.2
EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE
EMPLOYMENT AGREEMENT (the “Agreement”), made as of
August 6, 2007 (the “Effective Date”), between Guess?,
Inc., a Delaware corporation (the “Company”), and
Carlos Alberini (the “Executive”).
W I T N
E S S E T H :
WHEREAS , the Executive has served as
the Company’s President and Chief Operating Officer since
December 2000.
WHEREAS, the
Executive has heretofore been employed by the Company pursuant to
an employment agreement made effective as of November 8, 2000 and
amended as of June 16, 2003 (the “Prior
Agreement”).
WHEREAS, the
Company recognizes that the Executive’s talents and abilities
are unique and have been integral to the success of the
Company.
WHEREAS, the
Company wishes to retain the services of the Executive and
anticipates that the Executive’s contribution to the growth
and success of the Company will continue to be
substantial.
WHEREAS, the
Company and the Executive wish to amend and restate the Prior
Agreement as evidenced by this Agreement, effective as of the date
hereof.
NOW
THEREFORE , in consideration of the foregoing, of the mutual
promises contained herein and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as
follows:
1.
POSITION/DUTIES .
(a)
During the Employment Term (as defined in Section 2 below), the
Executive shall serve as the Company’s President and Chief
Operating Officer. In this capacity the Executive
shall have such duties, authorities and responsibilities
commensurate with the duties, authorities and responsibilities of
persons in similar capacities in similarly sized companies and such
other duties and responsibilities as the Board of Directors of the
Company (the “Board”) shall designate that are
consistent with the Executive’s position as President and
Chief Operating Officer. The Executive shall report to the
Chairman of the Board and to the Chief Executive Officer of the
Company. The Executive shall have authority as is appropriate
to carry out his duties and responsibilities as set forth in this
Agreement.
(b)
During the Employment Term (as defined below), the Executive shall
use the Executive’s best reasonable efforts to perform
faithfully and efficiently the duties and responsibilities assigned
to the Executive hereunder and shall devote substantially all of
the Executive’s business time (excluding periods of vacation
and other approved leaves of absence) to such performance of the
Executive’s duties with the Company. Executive may
serve on the board of directors or advisory boards of other
non-profit companies or, subject to Board
approval, of other
for-profit companies, provided that any such service does not
create a potential business conflict or the appearance
thereof.
(c)
The Company shall not relocate the Executive’s principal
place of business outside of the Los Angeles metropolitan area
without the Executive’s written consent.
(d)
The Executive shall be provided with appropriate office facilities
and support services in the Company’s corporate headquarters
in Los Angeles, California in order for the Executive to perform
his duties to the Company.
2.
EMPLOYMENT TERM . The Executive’s term of
employment under this Agreement (such term of employment, as it may
be extended or terminated, is herein referred to as the
“Employment Term”) shall be for a term commencing on
the Effective Date and, unless terminated earlier as provided in
Section 7 hereof, ending on the last day of the fourth whole Fiscal
Year of the Company commencing on or after the Effective Date (the
“Original Employment Term”), provided that the
Employment Term shall be automatically extended, subject to earlier
termination as provided in Section 7 hereof, for successive
additional one (1) Fiscal Year periods (the “Additional
Terms”), unless, on or before 90 days prior to the expiration
of the Original Employment Term or of any Additional Term, the
Company or the Executive has notified the other in writing that the
Employment Term shall terminate at the end of the then-current term
(a “Non-Renewal”).
3.
BASE SALARY . The Company agrees to pay the Executive
a base salary (the “Base Salary”) at an annual rate of
not less than Eight Hundred Thousand Dollars ($800,000), payable in
accordance with the regular payroll practices of the Company, but
not less frequently than monthly. The Executive’s Base
Salary shall be subject to annual review by the Board (or a
committee thereof) and may be increased, but not decreased, from
time to time by the Board. No increase to Base Salary shall
be used to offset or otherwise reduce any obligations of the
Company to the Executive hereunder or otherwise. The base
salary as determined herein from time to time shall constitute
“Base Salary” for purposes of this Agreement.
4.
ANNUAL INCENTIVE BONUS AND OTHER BONUSES . During the
Employment Term, the Executive shall be eligible to participate in
the Company’s annual bonus and other incentive compensation
plans and programs for the Company’s senior executives at a
level commensurate with the Executive’s position. For
each fiscal year of the Company (“Fiscal Year”) that
begins on or after February 4, 2007 and ends not later than the
expiration of the Employment Term, the Executive shall be eligible
to earn an annual cash bonus (the “Bonus”) under the
Company’s Annual Incentive Bonus Plan, as amended from time
to time (the “Bonus Plan”), and, if appropriate, the
Company’s 2004 Equity Incentive Plan, as amended from time to
time (the “Equity Plan”), based upon the achievement by
the Company and its subsidiaries of performance goals under the
Bonus Plan and under the Equity Plan for each such Fiscal Year
established by the Compensation Committee of the Board of Directors
(the “Compensation Committee”). The Compensation
Committee shall establish objective criteria to be used to
determine the extent to which such performance goals have been
satisfied. The range of the Bonus opportunity for each Fiscal
Year will be as determined by the Compensation Committee based upon
the extent to which such performance goals are achieved, provided
that the annual target Bonus opportunity shall be at least 80% of
the Executive’s Base Salary (for each such
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year, the “Target
Bonus”), the threshold Bonus for a Fiscal Year shall be
one-half the Target Bonus for such year and the maximum Bonus
payable pursuant to this Section 4 for any Fiscal Year shall not
exceed the amount that is 120% of the Executive’s Base Salary
for such year. The Bonus, if any, payable to the Executive in
respect of any Fiscal Year will be paid at the same time that
bonuses are paid to other executives of the Company, but in any
event within seventy-five days after the conclusion of such Fiscal
Year. After the expiration of the Bonus Plan and the Equity
Plan, Executive’s right to receive future Bonus opportunities
under such plan is subject to approval by the stockholders of the
Company of a similar successor plan under which such opportunity
may be granted. The Compensation Committee may, in its sole
discretion, award additional bonuses to Executive.
5.
EQUITY BASED INCENTIVE AWARDS .
(a)
EMPLOYMENT INDUCEMENT AWARD. The Company shall grant the
Executive under the Equity Plan as of the Effective Date a
Restricted Stock Award (“Restricted Stock”) equal to
150,000 shares of the Company’s common stock subject to the
following terms and conditions:
(i)
If, for the third and fourth fiscal quarters of the Company’s
2008 Fiscal Year, considered together as one period (the
“Second Half of Fiscal 2008”), or for any one of the
four whole Fiscal Years commencing on or after February 3, 2008
during the Original Employment Term, the Company shall record
earnings per share (“Earnings per Share”) growth of
greater than the Applicable Annual Target as compared to the same
fiscal period from the immediately preceding Fiscal Year, then 20%
of the Restricted Stock shall become vested as of the first
business day following the issuance of the Company’s
financial statement for such period, provided the Executive is then
employed by the Company. If the Earnings per Share growth
requirement is not met for any such period, all of the shares of
the Restricted Stock eligible for vesting for that period shall
vest on the first business day following the issuance of the
Company’s financial statement for any subsequent Fiscal Year
during the Original Employment Term if the cumulative compounded
average Earnings per Share growth from the Second Half of Fiscal
2008 through such subsequent Fiscal Year is more than the
Applicable Cumulative Target for such subsequent Fiscal Year.
The “Applicable Annual Target” for each of the Second
Half of Fiscal 2008 and the first and second whole Fiscal Years
that commences on or after February 3, 2008 is a growth in Earnings
per Share of 15% or more as compared to the same fiscal period from
the immediately preceding Fiscal Year. The “Applicable
Cumulative Target” for each of the Second Half of Fiscal 2008
and the first and second whole Fiscal Years that commences on or
after February 3, 2008 is a 15% rate of cumulative compounded
average Earnings per Share growth. For the avoidance of
doubt, the Applicable Cumulative Target for the first whole fiscal
year commencing on February 3, 2008 shall be calculated by
multiplying the sum of (A) the Company’s actual Earnings per
Share for the first and second fiscal quarters of the
Company’s 2008 Fiscal Year and (B) the Applicable Annual
Target of Earnings per Share for the Second Half of Fiscal 2008, by
1.15. The “Applicable Annual Target” and the
“Applicable Cumulative Target” for each of the third
and fourth whole Fiscal Years that commences on or after February
3, 2008 will be a rate of Earnings per Share growth and cumulative
compounded average Earnings per Share growth, respectively,
determined by the
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Compensation Committee
of the Board in its sole discretion not later than the end of the
first quarter of such Fiscal Year.
(ii)
For purposes of this Agreement, Earnings per Share shall be equal
to the basic earnings per share calculated in accordance with
accounting principles generally accepted in the United States and
as reported in the Company’s financial statements as filed
with the Securities and Exchange Commission, except that certain
adjustments may be made for certain non-recurring or unusual
non-cash items recognized in accordance with accounting principles
generally accepted in the United States including, but not limited
to, any write-offs of unamortized deferred financing costs and any
asset impairment write-downs, which the Committee determines in its
sole discretion to exclude for purposes of this Agreement.
(iii)
The Executive shall have the right to vote the shares of the
Restricted Stock, and shall have dividend rights as to such shares,
before any forfeiture of the shares of the Restricted Stock and
while such shares are restricted. The number of shares
credited to the Executive shall be subject to adjustment in
accordance with the provisions of the Equity Plan (for example, in
connection with the payment of a stock dividend by the
Company).
(iv)
The shares of the Restricted Stock not yet vested or forfeited
shall become 100% vested in the event that there is a Change in
Control while the Executive is employed by the Company or an
affiliate during the Employment Term. For this purpose, the
term “Change in Control” is used as defined in the
Equity Plan except that in no event shall a “Change in
Control” be triggered pursuant to clause (A) of such term as
so defined unless the Acquiring Person becomes the Beneficial Owner
of twenty percent (20%) or more of the then outstanding shares of
Common Stock or the Combined Voting Power of the Company (except
pursuant to an offer for all outstanding shares of Common Stock at
a price and upon such terms and conditions as a majority of the
Continuing Directors determine to be in the best interests of the
Company and its shareholders (other than an Acquiring Person on
whose behalf the offer is being made)) in one or more bona fide
transactions and such level of ownership of such Common Stock or
Combined Voting Power, as applicable, exceeds the aggregate level
of ownership of the Marcianos of such Common Stock or Combined
Voting Power, respectively. For purposes of the preceding
sentence, “Marcianos” means Maurice Marciano, Paul
Marciano, and any trust established in whole or in part for the
benefit of one or more of them or their family members, or any
other entity controlled by one or more of them, and any other
capitalized term used in such sentence is used as defined in the
Equity Plan if not otherwise defined in this Agreement. If
the Executive terminates his employment with the Company for
“Good Reason” (as defined in Section 7(e) of this
Agreement), or is terminated by the Company without
“Cause” (as defined in Section 7(c) of this Agreement),
the shares of the Restricted Stock not yet vested or forfeited
shall become 100% vested.
(v)
In all events other than those previously addressed in Section
5(a)(iv), if the Executive ceases to be an employee of the Company
or an affiliate, the Executive shall be vested only as to that
percentage of shares of the Restricted Stock
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which are vested at the
time of the termination of his employment and the Executive shall
forfeit the right to the shares of the Restricted Stock which are
not yet vested on the termination date. Further, any
Restricted Stock which is unvested at the conclusion of the
Original Employment Term (after the final vesting determination is
made as described in Section 5(a)(i) herein) shall be forfeited and
terminate. Unvested shares of the Restricted Stock that are
forfeited shall be immediately transferred to the Company without
any payment by the Company, and the Company shall have the full
right to cancel any evidence of the Executive’s ownership of
such forfeited shares.
(vi)
The Restricted Stock Award shall be granted pursuant to and, to the
extent not contrary to the terms of this Agreement, shall be
subject to all of the terms and conditions imposed upon such awards
granted under the Equity Plan.
(b)
PERFORMANCE SHARE AWARDS . The Company shall grant the
Executive under the Equity Plan at the completion of each whole
Fiscal Year commencing on and after February 4, 2007 and during the
Employment Term shares of the Company’s common stock
(“Performance Shares”) based upon the achievement by
the Company and its subsidiaries of performance goals under the
Equity Plan for each such Fiscal Year established by the
Compensation Committee. The Compensation Committee shall
establish objective criteria to be used to determine the extent to
which such performance goals have been satisfied. Performance
Shares will be granted for each whole Fiscal Year during the
Employment Term at “target” and “stretch”
levels of 90% (i.e., $720,000 for fiscal 2008) and 135% (i.e.,
$1,080,000 for fiscal 2008) of the Executive’s Base Salary
for such Fiscal Year. Performance Shares granted in any
particular Fiscal Year will be subject to the standard vesting
schedule established by the Compensation Committee for Performance
Share grants in that year (the current vesting schedule is a 4-year
vesting schedule). After the expiration of the Equity Plan,
Executive’s right to receive future grants of Performance
Shares is subject to approval by the stockholders of the Company of
a similar successor plan under which such awards may be
granted.
(c)
STOCK OPTION AWARDS . The Company shall grant the
Executive under the Equity Plan at the completion of each whole
Fiscal Year commencing on or after February 4, 2007 and during the
Employment Term stock options to purchase the Company’s
common stock at an exercise price of not less than the fair market
value of such stock on the grant date (“Stock Options”)
based upon the achievement by the Company and its subsidiaries of
performance goals under the Equity Plan for each such Fiscal Year
established by the Compensation Committee. The Compensation
Committee shall establish objective criteria to be used to
determine the extent to which such performance goals have been
satisfied. Stock Options for each whole Fiscal Year during
the Employment Term will be granted at a grant-date Black-Scholes
value of 50% of the Executive’s Base Salary for such Fiscal
Year (i.e., $400,000 for fiscal 2008). Stock Options granted
in any particular Fiscal Year will be subject to the standard
vesting schedule established by the Compensation Committee for
Stock Option grants in that year (the current vesting schedule is a
4-year vesting schedule). After the expiration of the Equity
Plan, Executive’s right to receive future grants of Stock
Options is subject to approval by the stockholders of the Company
of a similar successor plan under which such awards may be
granted.
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(d)
DISCRETIONARY GRANTS . In addition to the employment
inducement Restricted Stock, Performance Share and Stock Option
Awards under Section 5(a), (b) and (c) above, at the sole
discretion of the Board or the Committee, the Executive shall be
eligible to participate throughout the Employment Term in such
long-term incentive plans and programs as may be in effect from
time to time in accordance with the Company’s compensation
practices and the terms and provisions of any such plans or
programs.
6.
EMPLOYEE BENEFITS .
(a)
BENEFIT PLANS . The Executive shall be entitled to
participate in all employee benefit plans of the Company including,
but not limited to, equity, pension, thrift, Section 401(k), profit
sharing, medical coverage, education, or other retirement
(including without limitation supplemental executive retirement
plans) or welfare benefits that the Company has adopted or may
adopt, maintain or contribute to for the benefit of its senior
executives at a level commensurate with the Executive’s
positions subject to satisfying the applicable eligibility
requirements. The Executive shall at all times during the
Employment Term be entitled to participate in the Guess?, Inc.
Supplemental Executive Retirement Plan, as in effect on
January 1, 2006, and any deferred compensation plan which may
be maintained by the Company from time to time.
(b)
VACATION . The Executive shall be entitled to accrue
annual paid vacation in accordance with the Company’s policy
applicable to senior executives, but in no event less than twenty
business days per calendar year (as prorated for partial years),
which vacation may be taken at such times as the Executive elects
with due regard to the needs of the Company. Executive shall
not be permitted to accrue more than a total of twenty five (25)
vacation days at any time. Once Executive reaches the maximum
accrual, Executive shall not accrue any additional vacation days
until a portion of Executive’s accrued vacation time is
used.
(c)
AUTOMOBILE . The Company shall continue to provide the
Executive with an automobile or an automobile allowance during the
Employment Term in a manner consistent with its past practice.
(d)
PERQUISITES . The Company shall provide to the
Executive, at the Company’s cost, all perquisites which other
senior executives of the Company are generally entitled to receive
in accordance with Company policy as set by the Board from time to
time.
(e)
BUSINESS AND ENTERTAINMENT EXPENSES . Upon
presentation of appropriate documentation, the Executive shall be
reimbursed in accordance with the Company’s expense
reimbursement policy for all reasonable and necessary business and
entertainment expenses incurred in connection with the performance
of the Executive’s duties hereunder.
7.
TERMINATION . The Executive’s employment and the
Employment Term shall terminate on the first of the following to
occur:
(a)
DISABILITY . Upon written notice by the Company to the
Executive of termination due to Disability, while the Executive
remains Disabled. For purposes of this Agreement,
“Disabled” and “Disability” shall (i) have
the meaning defined under the Company’s
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then-current long-term
disability insurance plan, policy, program or contract as entitles
the Executive to payment of disability benefits thereunder, or (ii)
if there shall be no such plan, policy, program or contract, mean
permanent and total disability as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended (the
“Code”).
(b)
DEATH . Automatically on the date of death of the
Executive.
(c)
CAUSE . Immediately upon written notice by the Company
to the Executive of a termination for Cause.
“Cause” shall mean (i) Executive’s conviction or
plea of nolo contendere to a felony or any crime involving moral
turpitude; (ii) a willful act of theft, embezzlement or
misappropriation from the Company; or (iii) a determination by a
two-thirds majority of the members of the Board (excluding the
Executive from such vote and the denominator) that Executive has
willfully and continuously failed to perform substantially the
Executive’s duties (other than any such failure resulting
from the Executive’s Disability or incapacity due to bodily
injury or physical or mental illness), after (A) a written demand
for substantial performance is delivered to the Executive by the
Board which specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the
Executive’s duties and provides the Executive with the
opportunity to correct such failure if, and only if, such failure
is capable of cure; and (B) the Executive’s failure to
correct such failure which is capable of cure within 30 days of
receipt of the demand for performance. For the avoidance of
doubt, the parties expressly agree that only Cause pursuant to
Section 7(c)(iii) shall be deemed capable of cure.
Notwithstanding the foregoing, “Cause” shall not
include any act or omission that the Executive b
