Document:

Exhibit 10.30

 

SALLY BEAUTY HOLDINGS, INC.

THIRD AMENDED AND RESTATED

INDEPENDENT DIRECTOR COMPENSATION POLICY

 

The Board of Directors (the “Board”) of Sally Beauty Holdings, Inc. (the “Company”) has adopted the following compensation policy, effective as of September 15, 2016 (the “Effective Date”), for independent directors of the Company.  The compensation policy has been developed to compensate certain independent directors of the Company for their time, commitment and contributions to the Board.  This policy shall apply to directors of the Company who are not Company employees (each an “Independent Director”).

 

CASH COMPENSATION

 

Retainers for Serving on the Board

 

Independent Directors shall be paid an annual cash retainer of $55,000, payable in advance in quarterly installments, for each calendar year of service on the Board.  Cash retainers for partial years of service shall be pro-rated to reflect the number of days served by an Independent Director during any such quarter.

 

Retainers for Serving as Chairpersons

 

An additional annual cash retainer shall be paid to an Independent Director who serves as the Non-Executive Chairman of the Board (the “Non-Executive Chairman”) or chairperson of the Audit Committee, Compensation Committee, or Nominating and Corporate Governance Committee. Such additional retainer shall be payable in advance in quarterly installments, in the following annualized amounts:

 

	
Non-Executive   Chairman
    	
 
    	
$
    	
150,000
    	
 
    
	
Audit Committee
    	
 
    	
$
    	
25,000
    	
 
    
	
Compensation   Committee
    	
 
    	
$
    	
20,000
    	
 
    
	
Nominating &   Corporate Governance Committee
    	
 
    	
$
    	
18,000
    	
 
    

 

Additional retainers paid to the Non-Executive Chairman or committee chairpersons for partial years of service shall be pro-rated to reflect the number of days served by an Independent Director during any such quarter.

 

Meeting Fees

 

For in-person Board or committee meetings, each Independent Director in attendance shall receive $2,000.  For telephonic Board or committee meetings for which minutes are kept, each independent director in attendance shall receive $1,000.

 

 

EQUITY-BASED COMPENSATION

 

Annual Grants

 

Each Independent Director shall be granted an annual equity-based retainer award with a value at the time of issuance of approximately $125,000. Such award shall normally be made at the first Board meeting each Company fiscal year in the form of grants of restricted stock units (“RSUs”), in accordance with the Company’s Omnibus Incentive Plan then in effect (“Omnibus Plan”), and shall vest on the last day of such fiscal year.  Independent Directors whose Board service begins after the start of a Company fiscal year shall receive a grant pro-rated to reflect the number of days remaining in such fiscal year.

 

RSUs Granted Prior to October 1, 2012

 

Upon vesting of RSUs granted prior to October 1, 2012, Independent Director RSUs shall be deferred into deferred stock units that shall be distributed six months after such Independent Director’s Board service terminates.

 

In the event an Independent Director’s Board service terminates because of death, disability or involuntary termination without Cause (as defined in the Omnibus Plan), a pro rata portion of such Independent Director’s unvested RSUs shall vest upon such termination. If an Independent Director’s Board service is terminated for any other reason than the foregoing RSUs shall be canceled upon such termination.

 

RSUs Granted Following October 1, 2012

 

With respect to RSUs granted following October 1, 2012, Independent Directors may elect, by the deadline imposed by the Compensation Committee of the Board in compliance with Section 409A of the Code, to defer delivery of the shares of common stock of the Company (“Common Stock”) that would otherwise be due on the vesting date until a later date as specified in such Independent Director’s deferral election form.  The Company shall establish the rules and procedures for such payment deferrals in compliance with Section 409A of the Code and Treasury regulations and guidance with respect to such law.  If an Independent Director does not make such election, he or she will receive shares of Common Stock in settlement of the RSU on the vesting date.

 

In the event an Independent Director’s Board service terminates because of death or disability, a pro rata portion of such Independent Director’s unvested RSUs shall vest upon such termination. If an Independent Director’s Board service is terminated for any other reason than the foregoing RSUs shall be canceled upon such termination.

 

 

TRAVEL EXPENSE REIMBURSEMENT

 

Each of the Independent Directors shall be entitled to receive reimbursement for reasonable travel expenses which they properly incur in connection with their functions and duties as a director.  With respect to air travel, reimbursements shall be limited to the cost of first-class commercial airline tickets for the trip and date in question.

 

MINIMUM STOCK OWNERSHIP GUIDELINES

 

Each Independent Director must own shares of Common Stock in an amount equal to 5x his or her base annual cash retainer (excluding additional annual cash retainers for the Non-Executive Chairman and committee chairpersons and meeting fees). Independent Directors are required to achieve the applicable level of ownership within five years of becoming subject to the requirements. Until such time as the Independent Director reaches his or her equity ownership guideline, the Independent Director will be required to retain 100% of the shares of Common Stock received upon settlement of his or her restricted stock units.

 

Equity that Counts Toward Meeting the Guidelines:

 

·                  Shares owned directly (e.g., shares purchased in the open market, etc.)

·                  Shares owned indirectly (e.g., by a spouse, trust or limited partnership or any other entity)

·                  Shares underlying vested restricted stock units

·                  Shares the receipt of which have been deferred

 

Equity that Does Not Count Toward Meeting the Guidelines:

 

·                  Unexercised options (whether vested or unvested)

·                  Unvested restricted stock units

 

Compliance with the Guidelines:

 

Equity ownership guidelines for Independent Directors are determined as a multiple of his or her base annual cash retainer and then converted to a fixed number of shares based on an average of the prior fiscal year’s quarter-end closing stock prices.  Independent Directors serving on the Board as of October 1, 2012 first became subject to the guidelines as of such date, which was the initial date of determination for such Independent Directors. Independent Directors becoming subject to the guidelines following October 1, 2012 will have their individual guidelines established based upon the base annual cash retainer at the time they become subject to the guidelines, which shall be the date of determination for such Independent Director.

 

 

The guideline establishing the required ownership level based on a multiple of the base annual cash retainer will be re-determined each  December 1st thereafter based on the then-current annual cash retainer and an average of the prior fiscal year’s quarter-end closing stock prices. Once established each year, an Independent Director’s guideline does not change as a result of fluctuations in the market price of the Common Stock.  Once achieved, ownership of the guideline amount must be maintained for as long as the Independent Director is subject to the guidelines.

 

The Nominating and Corporate Governance Committee of the Board will be responsible for monitoring compliance with these stock ownership guidelines.

 

EFFECTIVE DATE, AMENDMENT, REVISION AND TERMINATION

 

This policy may be amended, revised or terminated by the Compensation Committee of the Board at any time and from time-to-time.Exhibit 10.31

 

SEPARATION AGREEMENT

 

This Separation Agreement (“Agreement”) is entered into by and between Mark Flaherty (“Employee”) and Sally Beauty Supply LLC (“Employer”).

 

1.                                      Separation of Employment.  Employee will separate from employment with Employer on September 30, 2016 (the “Separation Date”).

 

2.                                      Consideration.  In consideration of the release of all claims by Employee as provided for in this Agreement, and for the other agreements by Employee herein, Employer will provide Employee with the following consideration (the “Release Consideration”):

 

a.              Payment of the gross amount of $642,250.00 (less any withholdings required by law or deductions authorized by the parties’ previous agreement or as otherwise agreed to in this Agreement) (the “Severance Payment”), which amount represents fifteen (15) months of Employee’s base salary.

 

b.              Payment of the net amount of $37,036.00 (with the gross amount paid being subject to withholdings required by law or deductions authorized by the parties’ previous agreement or as otherwise agreed to in this Agreement), with the after-tax amount representing the cost to Employee for health insurance continuation under the Consolidated Omnibus Budget Reconciliation Act (COBRA) (the “COBRA Payment”) for fifteen (15) months.

 

c.               Payment of an amount equal to the annual bonus for fiscal year 2016 that would have been earned by Employee for fiscal year 2016 if he had remained employed on the normal payment date for such bonus under Employer’s Management Incentive Plan, based on actual performance under applicable financial metrics (the “Bonus Payment”).

 

Employee agrees that this Release Consideration is in addition to anything of value to which Employee already is entitled.  The Severance Payment is payable in approximately equal installments, consistent with Employer’s normal payroll practices, over a fifteen (15) month period starting on the first regular payroll date that occurs after the sixtieth (60th) day following the Separation Date.  The COBRA Payment is payable in a lump sum on the first regular payroll date that occurs after the sixtieth (60th) day following the Separation Date.  The Fiscal Year 2016 Bonus Payment will be paid at the same time that the fiscal year 2016 annual bonuses are paid under Employer’s Annual Incentive Plan to active participants.

 

3.                                      Release.  In consideration of the Release Consideration, Employee hereby fully, finally, and completely releases Employer and its predecessors, successors, parents, subsidiaries, affiliates, shareholders, partners, current and former officers, directors, employees, agents, attorneys and representatives (collectively, the “Released Parties”), from any and all claims, actions, demands, and/or causes of action, of whatever kind or character, whether now known or unknown, arising from, relating to, or in any way connected with, facts or events occurring on or before the date on which Employee executes this Agreement.  Employee agrees that this Agreement includes a release of any and all negligence claims, contractual claims, wrongful discharge claims, and claims of discrimination or retaliation of every possible kind, including but not limited to, claims on the basis of race, color, sex, sexual orientation, national origin, religion, disability, age, whistleblower status under state or federal law, including, but not limited to the Americans with Disabilities Act, the Age Discrimination in Employment Act (ADEA), the National Labor Relations Act (NLRA), Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, claims under Chapters 21 and 451 of the Texas Labor Code, and other federal, state or local laws relating to employment or termination of employment,  any personal injury claims, and any related attorneys’ fees and costs claims, if any, that Employee may have against Employer or any of the Released Parties.

 

	
Employee Initial
    	
/s/ MF
    	
 
    

 

1

 

Employee waives and releases Employer and the Released Parties from any claims that this Agreement was procured by fraud or signed under duress or coercion so as to make any of the terms or provisions of this Agreement not binding.  Employee further releases Employer and the Released Parties from any and all claims, allegations, assertions or defenses that the restrictions contained within Section 5 of this Agreement are overly broad, unreasonable, unenforceable, or supported by insufficient consideration.

 

Employee understands that nothing in this Agreement is intended to interfere with or deter Employee’s right to challenge the waiver of an ADEA claim or state law age discrimination claim or the filing of an ADEA charge or ADEA complaint or state law age discrimination complaint or charge with the Equal Employment Opportunity Commission or any state discrimination agency or commission or to participate in any investigation or proceeding conducted by those agencies.  Further, Employee understands that nothing in this Agreement would require Employee to tender back the money received under this Agreement if Employee seeks to challenge the validity of the ADEA or state law age discrimination waiver, nor does the Employee agree to ratify any ADEA or state law age discrimination waiver that fails to comply with the Older Workers’ Benefit Protection Act by retaining the money received under the Agreement.  Further, nothing in this Agreement is intended to require the payment of damages, attorneys’ fees or costs to Employer should Employee challenge the waiver of an ADEA or state law age discrimination claim or file an ADEA or state law age discrimination suit except as authorized by federal or state law.

 

Notwithstanding the above paragraph, Employee agrees to waive any right to recover monetary damages in any charge, complaint, or lawsuit against Employer filed by Employee or by anyone else on Employee’s behalf, with the exception of complaints or claims made to/with the United States Securities and Exchange Commission (“SEC”).  Nothing in this Agreement shall prevent Employee from filing a complaint or claim or communicating in any way with the SEC and obtaining any and all SEC monetary benefits/award.

 

Employee also acknowledges (i) receipt of all compensation and benefits due through the date Employee signs this Agreement as a result of services performed for Employer with the receipt of a final paycheck except as provided in this Agreement; (ii) Employee has reported to Employer any and all work-related injuries incurred during employment; and (iii) Employer properly provided any leave of absence because of Employee’s or a family member’s health condition and Employee has not been subjected to any improper treatment, conduct or actions due to a request for or taking such leave.

 

4.                                      Equity Awards.  As of the Separation Date, Employee holds (A) vested options to purchase 138,001 shares of Employer’s common stock (the “Vested Options”) and unvested options to purchase 144,054 shares of Employer’s common stock (the “Unvested Options”), and (B) 27,314 restricted shares of Employer’s common stock (the “Restricted Shares”), 3,925 of which Restricted Shares vested upon the Separation Date and are the property of Employee.  The parties agree that (i) the Unvested Options lapsed and terminated immediately as of the Separation Date, and Employee ceased to have any rights with respect to such terminated Unvested Options as of the Separation Date, and (ii) other than the 3,925 Restricted Shares that vested upon the Separation Date, the Restricted Shares were forfeited automatically as of the Separation Date, and Employee ceased to have any rights with respect to such forfeited Restricted Shares as of the Separation Date.   The Vested Options are not forfeited, and other provisions of this Agreement notwithstanding, Employee retains all rights to exercise said Vested Options pursuant to the terms of the respective option plans.

 

	
Employee Initial
    	
/s/ MF
    	
 
    

 

2

 

5.                                      Agreement Not to Solicit or Hire Employees.  For a period of 15 months after the Effective Date of this Agreement, Employee shall not, nor will Employee assist any third party to, directly or indirectly:  (i) recruit, raid or solicit, any employee of Company or any person who is a current employee of Employer, for employment purposes; (ii) intentionally interfere with the performance by any such persons of their duties for Employer while such employee of Company or any person who is a current employee of Employer remains in such a capacity ; or (iii) communicate with any such persons for the purposes described in items (i) and (ii) in this paragraph.  Provided, however, should any employee of Company or any person who is a current employee of Employer, unsolicited by Employee, approach Employee for employment purposes, the provisions of Paragraph 5(i) through (iii) shall not apply.

 

6.                                      Confidentiality and Non-disparagement.  Employee agrees to keep the terms and conditions of this Agreement confidential to the extent allowed by law, except Employee may supply a copy to Employee’s accountant or other financial advisor solely in connection with preparing Employee’s income tax return, and Employee may disclose this Agreement to members of Employee’s immediate family and to Employee’s attorneys on a confidential basis.  Employee also agrees to keep confidential any and all discussions, communications and documents relating to the issues and negotiations that led to this Agreement, Employee further agrees not to talk about or otherwise communicate to any third parties in a malicious, disparaging, or defamatory manner regarding Employer or any of the Released Parties.  Employee also agrees that Employee shall not make or authorize to be made any written or oral statement that may disparage or damage the reputation of Employer.

 

Nothing in this section or Agreement is to be construed to preclude Employee, or any individual from communicating with any government agency, including the Equal Employment Opportunity Commission, National Labor Relations Board and/or Securities and Exchange Commission, or otherwise participating in any investigation or proceeding that may be conducted by any government agencies in connection with any charge or complaint, whether filed by Employee, on Employee’s behalf, or by any other individual, or participating in, and truthfully testifying in, any judicial, administrative or arbitral proceeding where Employee’s testimony is legally required, and communicating with his attorneys and third parties in the course of preparation for such testimony

 

7.                                      Confidential Information and Trade Secrets.  Employee acknowledges Employee’s ongoing legal and fiduciary obligations to maintain the confidentiality of Employer’s confidential business-related information and trade secrets, including, but not limited to, Employer’s strategy, future plans, merchandising, marketing and sales initiatives, proprietary business methods and processes.

 

8.                                      Tax Indemnification.  Employee acknowledges and agrees that Employer has not made any representations to Employee regarding the tax consequences of any amounts received by Employee pursuant to this Agreement.  The parties further agree that if any local, state or federal authority determines that the tax treatment for payments made under this Agreement is improper or impermissible, Employee shall be solely responsible for payment of all such taxes due, including interest and penalties, and Employee shall indemnify Employer for all such tax payments, including interest and penalties.  To the extent Employer is penalized for any failure to withhold or pay taxes, Employee agrees that Employee will indemnify Employer for its costs, expenses, fees (including reasonable and necessary attorneys’ fees) and/or penalties with respect to taxes or the failure to withhold.

 

9.                                      Employee’s Attorneys’ Fees and Costs.  Employee acknowledges and represents that all claims for attorneys’ fees, costs, or other recoverable expenses that Employee’s attorneys may hold against Employer as Employee’s attorneys will be satisfied solely by Employee.

 

	
Employee Initial
    	
/s/ MF
    	
 
    

 

3

 

10.                               Employment Reference and Verification.  Employee agrees that for employment verification or reference purposes, Employee will only refer prospective employers to the third party service entitled “The Work Number” 1-800-367-5690 or www.theworknumber.com.  This online employment verification service can provide confirmation of employment and dates of employment.  The relevant employer code to use is 11140.  Should this service change, Employee agrees to use the third party service then used by Employer.  Employee agrees not to contact, or direct others to contact, any active employee or representative of Employer for a reference or information relating to Employee’s employment with Employer.

 

Employer agrees to keep confidential any and all discussions, communications and documents relating to the issues and negotiations that led to this Agreement.  Employer, on behalf of itself, its parent and subsidiaries and affiliated companies further agree that its Named Executive Officers and the Directors serving on the Board of Sally Beauty Holdings, Inc. shall not to talk about or otherwise communicate to any third parties in a malicious, disparaging, or defamatory manner regarding Employee.  Employer also agrees that its Named Executive Officers and the Directors serving on the Board of Sally Beauty Holdings, Inc. shall not make or authorize to be made any written or oral statement that may disparage or damage the reputation of Employee, and if any of its officers or directors, or if the officers or directors of any parent or subsidiary are queried, shall state only that Employee has resigned to pursue other interests, and may include the statement that Employee’s departure was not the result of any improper dealings or activities on Employee’s part.  “Named Executive Officers and the Directors serving on the Board of Sally Beauty Holdings, Inc.” for purposes of this Agreement shall mean:  Christian Brickman, Matthew Haltom, Sharon Leite, Mark Spinks, Janna Minton, Robert McMaster, Katherine Button Bell, Marshall Eisenberg, John Miller, Edward Rabin, Susan Mulder, David Gibbs, and Erin Nealy Cox.

 

11.                               Advice of Counsel, Consideration and Revocation Periods, Other Information.  Employer advises Employee to consult with an attorney prior to signing this Agreement.  Employee has 21 days to consider whether to sign this Agreement from the date Employee receives this Agreement (Consideration Period).  Employee must return this signed Agreement to Employer’s representative set forth below within the Consideration Period.  If Employee signs and returns this Agreement before the end of the Consideration Period, it is because Employee freely chose to do so after carefully considering its terms.  Additionally, Employee shall have seven days from the date of the Employee signs this Agreement to revoke this Agreement by delivering a written notice of revocation within the seven-day revocation period to the same person as Employee returned this Agreement.  If the revocation period expires on a weekend or holiday, Employee will have until the end of the next business day to revoke. Employee agrees with Employer that changes, whether material or immaterial, do not restart the running of the Consideration Period.

 

12.                               Exceptions.  Nothing in this Agreement is intended to waive claims (i) for unemployment or workers’ compensation benefits, or rights for continued medical coverage under COBRA or any successor medical plan continuation law, (ii) for rights under ERISA-covered employee benefit plans as applicable on the date Employee signs this Agreement, (iii) that may arise after Employee signs this Agreement, or (iv) which cannot be released by private agreement.  In addition, nothing in this Agreement including but not limited to the acknowledgements, release, confidentiality, non-disparagement, tax indemnification, employee’s attorneys’ fees and costs, eligibility for re-employment, and employment verification provisions, prevent Employee from filing a charge or complaint with or from participating in an investigation or proceeding conducted by the EEOC, NLRB, SEC or any other any federal, state or local agency charged with the enforcement of any laws, or from exercising rights under Section 7 of the NLRA to engage in joint activity with other employees, although by signing this release Employee is waiving rights to individual relief based on claims asserted in such a charge or complaint, or asserted by any third-party on Employee’s behalf, except where such a waiver of individual relief is prohibited.

 

	
Employee Initial
    	
/s/ MF
    	
 
    

 

4

 

In addition, nothing in the Agreement is intended to affect or diminish any rights Employee may have for indemnification or other protections under any insurance policy issued and which may cover Employer, its parents or subsidiaries (including but not limited to rights under Directors and Officers liability insurance policies and commercial general liability policies), to the same extent as if this Agreement did not exist and he remained an employee.  Further, Employee shall continue to retain his rights to indemnification and other protections under any corporate by-laws or other corporate documents or applicable individual contracts, to the same extent as if this Agreement did not exist and he remained an employee.

 

13.                               Miscellaneous.

 

a.                                      The “Effective Date” of this Agreement is the eighth (8th) day after Employee signs this Agreement, provided Employee does not revoke the Agreement.

 

b.                                      Entire Agreement/No Assignment.  This instrument sets forth the entire agreement between the parties and no representation, promise, or condition not contained herein will modify these terms except any prior agreements related to inventions, business ideas, confidentiality of corporate information, and non-competition remain intact.  The rights under this Agreement may not be assigned by Employee, unless Employer consents in writing to said assignment.  Employee represents that Employee has not assigned any of the claims related to the matters set forth herein.

 

c.                                       No Admission of Liability. Nothing in this Agreement constitutes the admission of any liability by Employer, the Released Parties or Employee.

 

d.                                      Read Agreement/Advice of Attorney.  Employee acknowledges that Employee has read and understood this Agreement, has been advised to and has had the opportunity to discuss it with an attorney of Employee’s own choice, agrees to its terms, acknowledges receipt of a copy of same and the sufficiency of the payment recited herein, and signs this Agreement voluntarily.

 

e.                                       Applicable Law and Severability.  The parties agree that the terms of this Agreement are contractual in nature and not merely recitals and will be governed and construed in accordance with the laws of the State of Texas.  The parties further agree that should any part of this Agreement be declared or determined by a court of competent jurisdiction to be illegal, invalid, or unenforceable, the parties intend the legality, validity and enforceability of the remaining parts will not be affected thereby, and said illegal, invalid, or unenforceable part will be deemed not to be a part of the Agreement.

 

f.                                        Notice.  Any notice to be given to Employer hereunder will be deemed sufficient if addressed to Employer in writing and hand-delivered or mailed by certified mail to General Counsel, Sally Beauty Holdings, Inc., 3001 Colorado Boulevard, Denton, Texas 76210.  Any notice to be given to Employee hereunder will be deemed sufficient when received by Employee.  Either party may designate a different address or addresses by giving notice according to this Section.

 

14.                               Code Section 409A.  This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder.  Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed to Employee, who is responsible for all taxes assessed on any payments made pursuant to this Agreement, whether under Section 409A of the Code or otherwise.  Neither Employer nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Employee as a result of the application of Section 409A of the Code.  Each installment payment under Section 2 of this Agreement shall be deemed to be a separate payment, as described in Treas. Reg. Section 1.409A-2(b)(2), for purposes of Section 409A of the Code.

 

	
Employee Initial
    	
/s/ MF
    	
 
    

 

5

 

The parties have signed this Agreement on the dates written by the signatures below.  Notwithstanding any other provision in this Agreement, if Employee does not sign and deliver this Agreement to Employer at the address shown in the subsection under “Miscellaneous” entitled “Notice” prior to the end of the Consideration Period or if Employee revokes this Agreement, then this Agreement will be null and void and Employee will not be entitled to the Consideration described above.

 

 

	
EMPLOYEE:
    	
 
    	
EMPLOYER:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Mark Flaherty
    	
 
    	
/s/ Christian Brickman
    
	
MARK FLAHERTY
    	
 
    	
 
    
	
 
    	
 
    	
TITLE:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
SALLY BEAUTY SUPPLY LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:  September 28, 2016
    	
 
    	
Date:  September 28, 2016
    

 

	
Employee Initial
    	
/s/ MF
    	
 
    

 

6

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