AFFINION GROUP, INC. FILES (8-K) Disclosing Change in Directors or Principal Officers
(Edgar Glimpses Via Acquire Media NewsEdge) Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
On and effective as of March 26 and 27, 2014, Messrs. Jonathan Ellenthal,
Zachary Kaplan and Stan Parker notified Affinion Group, Inc. ("Affinion") and
Affinion Group Holdings, Inc. ("Holdings," and together with Affinion, the
"Company") of their resignations from both Affinion's Board of Directors and
Holdings' Board of Directors (collectively, the joint "Board"). Messrs.
Ellenthal, Kaplan and Parker did not resign as the result of any disagreement
with the Company.
On April 1, 2014, the Compensation Committee (the "Committee") of the Board,
approved the terms of (i) the Affinion Group Holdings, Inc. 2014 Performance
Incentive Award Program (the "Performance Program"), an equity and cash
incentive award program intended to foster retention of key employees of
Holdings and its subsidiaries, and (ii) the awards (the "Awards") to each such
key employee consisting of performance incentive units ("PIUs") and a cash
incentive award ("CIA," and the aggregate cash value of an Award's PIUs and CIA,
the "Award Value") to be made by Holdings under the Performance Program. The
terms of the Performance Program and Awards are summarized below.
The Awards will be granted to certain employees (the "Participants") of the
Company, including the following officers of the Company: Messrs. Todd H. Siegel
and Gregory Miller and Ms. Sloane Levy. The Awards are expected to be granted on
or about April 1, 2014, and will be evidenced by a written agreement between
Holdings and each Participant (each, an "Award Agreement"). The Awards will be
made under Holdings' 2007 Stock Award Plan (the "2007 Plan") and will entitle
each Participant to one share of Holdings' Class A Common Stock, par value $0.01
per share ("Common Stock"), for each PIU and a cash payment in respect of the
CIA, in each case, subject to applicable withholding taxes, when the applicable
vesting conditions for the Awards are met.
The number of PIUs to be granted to a Participant will be equal to the quotient
of (i) 50% of the Award Value divided by (ii) the fair market value per share of
Common Stock as of the grant date of the Award, which was determined to be $1.14
in accordance with the 2007 Plan. The amount of the CIA to be granted to a
Participant will be equal to 50% of the Award Value. Each of the two components
of a Participant's Award will be subject to adjustment based on the achievement
of performance goals as further described below. The aggregate Award Value to be
granted to Participants under the Performance Program will be approximately
$9,560,000, subject to adjustment as individual Awards may be adjusted as
The Awards will be subject to certain performance factors and time-based vesting
conditions. First, the maximum number of PIUs and the maximum amount of the CIA
into which a Participant will be eligible to vest will be determined based on
the achievement of certain overall corporate and business unit performance
goals, as applicable, during the 2014 calendar year (the maximum number of a
Participant's PIUs referred to as that Participant's "Adjusted PIUs" and the
maximum amount of a Participant's CIA referred to as that Participant's
"Adjusted CIA"). Second, the Participant will become vested in his or her
Adjusted PIUs and Adjusted CIA based on that Participant's continued service
with the Company. A Participant's Adjusted PIUs and Adjusted CIA will vest in
three (3) substantially equal installments on each of March 15, 2015, March 15,
2016 and March 15, 2017 (each, a "Vesting Date"), subject to that Participant's
continued service with the Company on each applicable Vesting Date.
A Participant's Adjusted PIUs and the portion of his or her Adjusted CIA that
become vested as of a given Vesting Date in accordance with the above vesting
criteria will be settled as follows: (i) for each Adjusted PIU that vests on
such Vesting Date, Holdings will deliver to the Participant on the Settlement
Date one share of Common Stock and (ii) for the portion of the Adjusted CIA that
vests on such Vesting Date, Holdings will pay to the Participant on the
Settlement Date an amount in cash equal to such vested portion of the Adjusted
CIA, in each case, subject to applicable tax withholding. A Participant's
Adjusted PIUs and the portion of his or her Adjusted CIA that become vested on a
given Vesting Date will be settled as soon as practicable following such Vesting
Date but in no event later than the sixtieth (60th) day following such Vesting
Date (the "Settlement Date"). Upon termination of employment for any reason, a
Participant will forfeit the entire unvested portion of his or her Award.
Holders of vested PIUs will be required to become a party to the Management
Investor Rights Agreement, dated as of October 17, 2005, among Holdings,
Affinion Holdings, LLC and certain investors and management holders, to the
extent such Holders are not already a party thereto.
The Awards to be granted to each of Messrs. Siegel and Miller and Ms. Levy will
have Award Values of $1,900,000, $500,000 and $500,000, respectively, in each
case subject to adjustment as described above.
On April 1, 2014, the Committee approved grants of stock options under the 2007
Plan to purchase 200,000 shares of Common Stock at an exercise price equal to
$1.14 per share to each of Todd Siegel and Gregory Miller.
On April 1, 2014, the Committee approved the re-pricing ("Re-pricing") of
certain stock options (the "Underwater Options") previously issued under the
2007 Plan, Holdings' 2005 Stock Incentive Plan (the "2005 Plan") and the
Webloyalty Holdings, Inc. 2005 Equity Award Plan (the "Webloyalty Plan" and
together with the 2007 Plan and the 2005 Plan, the "Plans"). All of the
Underwater Options had a per share exercise price in excess of the current fair
market value per share of Common Stock and as such the Board determined that the
Underwater Options no longer served as adequate incentive or retention tools for
the recipients. Pursuant to the Re-pricing, the per share exercise price of the
Underwater Options will be re-priced to equal the fair market value per share of
Common Stock as of the date of the Re-pricing, which was determined to be $1.14.
In addition to Re-pricing the Underwater Options, on April 1, 2014, the
Committee approved the extension of the expiration dates of the Underwater
Options to a date that is ten (10) years from April 1, 2014 (the "Term
Vesting of the Underwater Options will not be affected by the Re-Pricing or the
Term Extension. The Underwater Options will continue to vest in accordance with
their existing vesting schedules, to the extent not already vested. All other
material terms and conditions of the Underwater Options will remain the same.
Underwater Options held by the following named executive officers were subject
to the Re-pricing and Term Extension: Mr. Nathaniel Lipman (31,500 stock options
issued under the 2007 Plan and 1,213,800 stock options issued under the 2005
Plan), Mr. Siegel (368,900 stock options issued under the 2007 Plan and 261,324
stock options issued under the 2005 Plan) and Ms. Levy (200,000 stock options
issued under the 2007 Plan and 92,610 stock options issued under the Webloyalty
In connection with the Re-pricing and Term Extension, the Board approved
amendments to the 2007 Plan and the Webloyalty Plan to remove the ten year
limitation on the term of stock options issued under those Plans.
On April 1, 2014, the Committee approved the 2013 cash bonuses in the following
amounts for certain named executive officers of the Company: Mr. Siegel in the
amount of $810,000 which results in total compensation for Mr. Siegel for 2013
of $1,437,472 and Ms. Levy in the amount of $360,000 which results in total
compensation for Ms. Levy for 2013 of $777,472.
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