Item 5.02 Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On April 30, 2020, Bed
Bath & Beyond Inc. (the “Company”) announced that in furtherance of the Company’s intention to reconstitute
its senior leadership team, Gustavo Arnal has been appointed as Executive Vice President, Chief Financial Officer and Treasurer
of the Company, effective as of May 4, 2020 (the “Effective Date”). Mr. Arnal, 50, has served as Executive Vice President
and Chief Financial Officer of Avon Products, Inc. since May 2019. Prior to Avon Products, Inc., Mr. Arnal served as Senior Vice
President and Chief Financial Officer of international divisions of Walgreens Boots Alliance (WBA). Prior to joining WBA, Mr. Arnal spent over 20 years working for Procter & Gamble (P&G), most recently in the capacity
of Vice President and Chief Financial Officer of the India, Middle East and Africa region, and as CFO Global Fabric and Home
Care and CFO Global Personal Beauty. The Company issued a press release
on April 30, 2020 announcing Mr. Arnal’s appointment, a copy of which is attached as Exhibit 99.1 hereto.
On April 24, 2020, Robyn
D’Elia, the Company’s current Chief Financial Officer, was notified that she will cease to serve as the Company’s
Chief Financial Officer as of the Effective Date. Ms. D’Elia will continue to serve in a transitional capacity until May
8, 2020. In connection with her separation from the Company, Ms. D’Elia will be entitled to those separation payments and
benefits as are provided upon a termination of employment without “cause” pursuant to her employment agreement and
outstanding restricted stock and performance stock unit award agreements. Following her separation, Ms. D’Elia will continue
to be subject to certain restrictive covenants, including post-termination, non-competition and non-solicitation covenants.
In connection with Mr.
Arnal’s appointment as the Executive Vice President and Chief Financial Officer of the Company, the Company entered into
an employment agreement (the “Employment Agreement”) with Mr. Arnal, effective as of the Effective Date, with the following
key terms:
·
Term. The Employment Agreement has an initial term of three years commencing on the Effective Date (the “Initial
Term”). After the expiration of the Initial Term, the Employment Agreement automatically renews on an annual basis unless
either party provides 60 days’ notice of intent not to renew.
·
Cash Compensation. Mr. Arnal’s annual base salary will be $775,000, and, beginning in fiscal year 2020, he
will be eligible to receive a target annual bonus of 85% of his base salary, to be earned based upon the achievement of performance
objectives to be determined by the Compensation Committee of the Board of Directors of the Company (the “Committee”).
·
Long-Term Equity Incentives. In fiscal year 2020, Mr. Arnal will be eligible to receive a long-term equity incentive
award with a target value at grant of $1,937,500 (the “LTI Awards”), under the Company’s 2012 Incentive Compensation
Plan (“2012 Plan”) or the Company’s 2018 Incentive Compensation Plan (“2018 Plan”). This target award
value will be reviewed annually for adjustment by the Committee in its sole discretion for performance-based equity incentive awards
to be granted after fiscal year 2020. The performance criteria for LTI Awards will be determined by the Committee in its sole discretion,
and the LTI Awards will be subject to the terms and conditions of the 2012 Plan or the 2018 Plan and any applicable award agreements.
·
Benefits. Mr. Arnal will be eligible to participate in the Company’s employee benefit plans, policies and arrangements
applicable to other executive officers generally, and will be eligible for certain benefits specified in the Employment Agreement,
including home buyout and relocation assistance in connection with his relocation to the New York metropolitan area, financial
planning and an automobile allowance.
·
Equity-Based Inducement Awards. As an inducement material to his entering into the Employment Agreement and commencing
employment with the Company, on the Effective Date, Mr. Arnal will receive an inducement award in the form of time-vesting restricted
stock units (“RSUs”) equal in value to $775,000 on the Effective Date (the “Sign-On RSU Award”). The Sign-On
RSU Award will vest in three substantially equal installments on each of the first, second and third anniversaries of the Effective
Date, subject, in general, to Mr. Arnal remaining in the Company’s employ through each applicable vesting date.
The number of RSUs subject to the Sign-On
RSU Award on the Effective Date will be calculated based on the volume-weighted average closing per-share trading price of Company
common stock over the twenty trading day period ending immediately prior to the Effective Date. The equity-based inducement award
discussed above will be issued outside of the 2012 Plan and the 2018 Plan, in accordance with Nasdaq Listing Rule 5635(c)(4), but
will be subject to substantially the same terms as awards made under such plans.
·
Death or Disability. In the event of a termination of Mr. Arnal’s employment due to his death or disability,
the Sign-On RSU Award, to the extent not previously vested, will immediately vest in full (the “Inducement Award Acceleration”).
Mr. Arnal (or his estate or legal representative) is required to deliver a formal release of all claims prior to, and as a condition
of, his receipt of the accelerated vesting described in the Employment Agreement following a termination of his employment due
to death or disability.
·
Termination without Cause or for Good Reason. The Employment Agreement provides that if the Company terminates Mr.
Arnal’s employment other than for “cause,” or in the event Mr. Arnal terminates with “good reason,”
then in addition to the Inducement Award Acceleration, Mr. Arnal will receive (i) severance pay equal to one times the sum of Mr.
Arnal’s base salary and his target annual bonus, (ii) any earned but unpaid annual bonus for the performance year prior to
the year of termination, (iii) full vesting of time-based LTI Awards granted to Mr. Arnal in fiscal 2020, (iv) vesting of performance-based
LTI Awards granted to Mr. Arnal in fiscal 2020 based on actual performance, prorated based on the number of days that Mr. Arnal
was employed during the applicable performance period, and (v) up to 12 months of COBRA benefits at active employee rates.
Severance pay will be paid in accordance with normal payroll practices. The definitions of “cause” and “good
reason” are set forth in the Employment Agreement. Mr. Arnal is required to deliver a formal release of all claims prior
to, and as a condition of, his receipt of any of the severance payments, accelerated vesting, and other post-employment benefits
described in the Employment Agreement.
·
Restrictive Covenants. The Employment Agreement also provides for non-competition, non-solicitation and non-interference
obligations applicable during the term of employment and for twelve months thereafter, and non-disparagement and confidentiality
obligations applicable during the term of employment and surviving indefinitely following the end of the term of employment.
The foregoing description of the Employment
Agreement in this Current Report on Form 8-K is a summary of, and is qualified in its entirety by, the terms of the Employment
Agreement. A copy of the Employment Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference.