Document:

Form10k2014_fiveexhibit1023employment

Exhibit 10.23

December 10, 2014

Michael Romanko

Re:  Your Employment Offer

Dear Michael:

On behalf of Five Below Merchandising, Inc. (the “Company”), I am proud to extend you an offer to join our Company as a Executive Vice President, Merchandising.  In that position, you will lead the Merchandising  team. You will report directly to Joel Anderson, President.  You will be working in the Company’s Corporate Headquarters in Philadelphia, PA and your anticipated start date is TBD.  Your offer of employment is expressly conditioned on Company’s Board approval and your signing and returning this letter and the attached Non-Disclosure Agreement.

Your annual base salary will initially be $450,000 which will be paid every other week, less payroll deductions and all required withholdings.  The first day of the calendar month that is sixty days or more after your start date, you will be eligible to participate in the health benefit plans that the Company sponsors for the benefit of its employees. 
   
Upon execution of this offer letter, the Non-Disclosure Agreement attached hereto and the commencement of your employment with the Company, you will be eligible for the following additional items of compensation:

Incentive Bonus:  

You will be eligible to participate in the company’s Incentive Bonus plan commencing in the Company’s 2015 fiscal year, to be paid in 2016, currently targeted at 50% of your annual salary.  The amount of the bonus will depend on a combination of various measures including achieving Company profitability as well as your achievement of individual performance goals. To be eligible to receive the bonus you must be actively employed on the date the bonus is paid.  

Long-Term Incentive Plan (“LTIP”):

Commencing with the Company’s 2016 fiscal year, you will be eligible for an annual equity grant pursuant to the Company’s long-term incentive program, with a targeted annual grant value equal to $300,000.  Such equity grant shall be delivered and vested, subject to the same terms and conditions as equity grants made to the Company’s other senior executive officers.

Initial Equity Grant:

On or as soon as administratively feasible following the Effective Date (which shall be defined as the date your employment commences), you will receive an equity grant equivalent to $800,000.  The equity grant will be delivered $400,000 in restricted stock units (“RSUs”) and $400,000 in a stock option grant, determined as follows:

		
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	The actual number of RSUs in the initial equity grant shall be determined by dividing $400,000 by the closing price of the Company’s common stock on the Effective Date.  

		
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	The actual number of shares underlying the stock options in the grant shall be determined by dividing $400,000 by the Company’s most recent Black-Scholes value attributable to Company options, as of the Effective Date.  

		
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	Subject to your continued employment on the applicable vesting date, the options and RSUs in the grant will vest 50% on the second anniversary of the date of the grant; and 25% on each of the third and fourth anniversaries of the date of the grant.

COBRA Coverage:  

Five Below will pay for your COBRA coverage during your 60-day waiting period for the company’s Benefit Plan.  Please forward the appropriate paperwork to Kelly Ann McGrath in Human Resources.  If within the first twelve months of employment your position is terminated with “cause” by the Company or you choose to terminate voluntarily your position, you will be required to repay the COBRA amounts in full to the Company upon leaving.

Relocation:  

Certain relocation expenses may be subject to payroll taxes and included in wages on your W-2.  The Company agrees to pay for the relocation expenses listed below.  If within the first twelve months of employment your position is terminated with “cause” by the Company or you choose to terminate voluntarily your position, you will be required to repay the relocation amounts in full to the Company upon leaving.

		
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	Packing, moving, and unpacking costs to move your belongings from North Haledon, NJ to Philadelphia, PA not to exceed $25,000.   All packing, moving and unpacking expenses will be paid directly to vendor when possible.

		
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	Miscellaneous expenses such as mileage, lodging and meals while en route from North Haledon, NJ to Philadelphia, PA.

		
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	Temporary housing for you will be provided for a maximum of 6 months not to exceed $25,000.   The housing will be a direct bill from the landlord and you will be required to utilize the housing provided by the company.

		
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	Two trips will be provided for your spouse or partner to visit the market.  Flights/train will be scheduled by way of the Five Below travel site, World Travel and billed directly to the company.

		
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	Travel to and from New Jersey every other weekend for you during the first 90 days of employment will be included in the relocation package.  Travel will be scheduled by way of the Five Below travel site, World Travel and billed directly to the company.

For purposes of the above, the term “cause” shall be defined as (i) alcohol abuse or use of controlled drugs (other than in accordance with a physician’s prescription); (ii) gross negligence or willful misconduct in the course of employment (failure to meet performance standards or objectives, by itself, does not constitute cause); (iii) any breach of any obligation or duty to the Company or any of its affiliates (whether arising by statute, common law, contract or otherwise) relating to confidentiality, noncompetition, non-solicitation or property rights; (iv) other conduct involving any type of disloyalty to the Company or any of its affiliates, including, without limitation, fraud, embezzlement, theft or proven dishonesty; and (v) conviction of (or the entry of a plea of guilty or nolo contendere to) a misdemeanor involving moral turpitude or any felony.  

You will be an “at-will” employee who can resign or terminate your employment with the Company at any time.  Likewise, the Company may terminate your employment at any time and for any reason whatsoever, with or without “Cause” or advance notice.  This at-will employment relationship cannot be changed except as approved in writing by a duly authorized Company officer.

As a Company employee, you will be expected to abide by the Company rules and regulations, and sign and comply with the Non-Disclosure Agreement attached hereto as Exhibit A.  By executing this letter, you represent that (1) you will not be prevented from performing any of your duties for the Company as a result of any agreement with or other contractual or statutory obligation to (including, without limitation, any non-competition, proprietary information or confidentiality agreement) any prior employer and (2) the information from the consumer report obtained in the screening and selection process does not result in an adverse decision with regard to your employment.  The employment terms in this letter supersede any other agreements or promises made to you by anyone, whether oral or written.  As required by law, this offer is subject to satisfactory proof of your right to work in the United States.

We are excited about working with you and having you as part of our team.  If you have any questions regarding this offer, please call me.

If acceptable, please countersign and date this letter in the space provided below and return the original of this letter and Exhibit A to me.

Sincerely,    
/s/ Bill Clark                                               
Bill Clark
Senior Vice President, Human Resources

Attachment

I have read and understand the terms of this employment offer and I accept this offer as presented:

/s/ Michael Romanko        December 14, 2014    
Michael Romanko                        DateExhibit 10.3.1 Form of Restricted Stock Unit

EXHIBIT 10.3.1
DSW INC. 
RESTRICTED STOCK UNITS AGREEMENT
This Agreement is entered into in Franklin County, Ohio.  On the Grant Date, DSW Inc., an Ohio corporation (the “Company”), has awarded to the Participant Restricted Stock Units (the “Restricted Stock Units” or “Award”), representing an unfunded unsecured promise of the Company to deliver common shares, without par value, of the Company (the “Shares”) to the Participant as set forth herein.  The Restricted Stock Units have been granted pursuant to the DSW Inc. 2014 Long-Term Incentive Plan, as amended (the “Plan”), and shall be subject to all provisions of the Plan, which are incorporated herein by reference, and shall be subject to the provisions of this Restricted Stock Units Agreement (this “Agreement”).  Capitalized terms used in this Agreement which are not specifically defined shall have the meanings ascribed to such terms in the Plan.
1.    Vesting.  The Restricted Stock Units shall vest on the third anniversary of the Grant Date (the “Vesting Date”), subject to the provisions of this Agreement, including those relating to the Participant’s continued employment with the Company or any Subsidiary.  Notwithstanding the foregoing, in the event of a Change in Control prior to the Participant’s Employment Termination, the Restricted Stock Units shall vest in full.
2.    Transferability.  The Restricted Stock Units shall not be transferable, except as otherwise provided under this Agreement and the Plan.
3.    Termination of Employment.
(a)     General.  Except as set forth below or as otherwise provided for in another agreement, if an Employment Termination occurs prior to the vesting of a Restricted Stock Units, such Restricted Stock Units shall be forfeited by the Participant.
(b)    Death and Disability.  If an Employment Termination occurs prior to the vesting in full of the Restricted Stock Units by reason of the Participant’s death or Disability, then any unvested Restricted Stock Units shall immediately vest in full and shall not be forfeited.
(c)     Retirement.  If an Employment Termination occurs prior to the vesting in full of the Restricted Stock Units by reason of the Participant’s Retirement, then any unvested Restricted Stock Units shall immediately vest in full and shall not be forfeited.
4.     Payment.  The Participant shall be entitled to receive from the Company (without any payment on behalf of the Participant other than as described in Paragraph 8) the Shares represented by such Restricted Stock Units; provided, however, that in the event that such Restricted Stock Units vest prior to the applicable Vesting Date as a result of the death, Disability or Retirement of the Participant or as a result of a Change in Control, the Participant shall be entitled to receive the corresponding Shares from the Company on the date of such vesting.  In the event of the Participant’s death, payment shall be made to the Participant’s designated beneficiary, or absent such designation, in accordance with the laws of descent and distribution.  Notwithstanding the foregoing, if the Participant is a “specified employee” for purposes of Code Section 409A, then if necessary to avoid the imposition of additional taxes or interest under Code Section 409A, the Company shall not deliver the corresponding shares otherwise payable upon the Participant’s termination of service until the first business day after the date that is 6 months after the Participant’s termination of service. 
5.     Dividend Equivalents.  The Participant’s Restricted Stock Units will be credited with dividend equivalents at the same rate and at the same time dividends are paid on Shares.
6.     Right of Set-Off.  By accepting these Restricted Stock Units, the Participant consents to a deduction from, and set-off against, any amounts owed to the Participant by the Company or a Subsidiary from time to time (including, but not limited to, amounts owed to the Participant as wages, severance payments or other fringe benefits) to the extent of the amounts owed to the Company or a Subsidiary by the Participant under this Agreement.
7.    No Shareholder Rights.  The Participant shall have no rights of a shareholder with respect to the Restricted Stock Units, including, without limitation, the Participant shall not have the right to vote the Shares represented by the Restricted Stock Units. 
8.     Withholding Tax.
(a)     Generally.  The Participant is liable and responsible for all taxes owed in connection with the Restricted Stock Units regardless of any action the Company takes with respect to any tax withholding obligations that arise in 

connection with the Restricted Stock Units.  The Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant or vesting of the Restricted Stock Units or the subsequent sale of Shares issuable pursuant to the Restricted Stock Units.  The Company does not commit and is under no obligation to structure the Restricted Stock Units to reduce or eliminate the Participant’s tax liability.  
(b)     Payment of Withholding Taxes.  Prior to any event in connection with the Restricted Stock Units (e.g., vesting or settlement) that the Company determines may result in any domestic or foreign tax withholding obligation, whether national, federal, state or local, including any employment tax obligation (the “Tax Withholding Obligation”), the Participant is required to arrange for the satisfaction of the minimum amount of such Tax Withholding Obligation in a manner acceptable to the Company.  Unless the Participant elects to satisfy the Tax Withholding Obligation by an alternative means that is then permitted by the Company, the Participant’s acceptance of this Agreement constitutes the Participant’s instruction and authorization to the Company to withhold on the Participant’s behalf the number of shares from those Shares issuable to the Participant at the time when the Restricted Stock Units become vested and payable as the Company determines to be sufficient to satisfy the Tax Withholding Obligation.  In the case of any amounts withheld for taxes pursuant to this provision in the form of shares, the amount withheld shall not exceed the minimum required by applicable law and regulations.
9.     Governing Law/Venue for Dispute Resolution.  This Agreement shall be governed by the laws of the State of Ohio, without regard to principles of conflicts of law, except to the extent superceded by the laws of the United States of America.  The parties agree and acknowledge that the laws of the State of Ohio bear a substantial relationship to the parties and/or this Agreement and that the Restricted Stock Units and benefits granted herein would not be granted without the governance of this Agreement by the laws of the State of Ohio.  In addition, all legal actions or proceedings relating to this Agreement shall be brought exclusively in state or federal courts located in Franklin County, Ohio and the parties executing this Agreement hereby consent to the personal jurisdiction of such courts.  Any provision of this Agreement which is determined by a court of competent jurisdiction to be invalid or unenforceable should be construed or limited in a manner that is valid and enforceable and that comes closest to the business objectives intended by such provision, without invalidating or rendering unenforceable the remaining provisions of this Agreement. 
10.     Action by the Committee.  The parties agree that the interpretation of this Agreement shall rest exclusively and completely within the sole discretion of the Committee.  The parties agree to be bound by the decisions of the Committee with regard to the interpretation of this Agreement and with regard to any and all matters set forth in this Agreement.  The Committee may delegate its functions under this Agreement to an officer of the Company designated by the Committee (hereinafter the “Designee”).  In fulfilling its responsibilities hereunder, the Committee or its Designee may rely upon documents, written statements of the parties or such other material as the Committee or its Designee deems appropriate.  The parties agree that there is no right to be heard or to appear before the Committee or its Designee and that any decision of the Committee or its Designee relating to this Agreement shall be final and binding unless such decision is arbitrary and capricious. 
11.     Prompt Acceptance of Agreement.  The Restricted Stock Units grant evidenced by this Agreement shall, at the discretion of the Committee, be forfeited if this Agreement is not manually executed and returned to the Company, or electronically executed by the Participant by indicating the Participant’s acceptance of this Agreement in accordance with the acceptance procedures set forth on the Company’s third-party equity plan administrator’s web site, within 90 days of the Grant Date.
12.     Electronic Delivery and Consent to Electronic Participation.  The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock Units grant under and participation in the Plan or future Restricted Stock Units that may be granted under the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means.  The Participant hereby consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of restricted stock unit grants and the execution of restricted stock unit agreements through electronic signature. 
13.     Notices.  All notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Participant to the Company will be in writing and will be deemed sufficient if delivered by hand, facsimile, nationally recognized overnight courier, or certified or 
registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the Company at the address set forth below: 

DSW Inc. 
810 DSW Drive 
Columbus, Ohio 43219 
Attention: EVP & Chief Administrative Officer 

Facsimile: (614) 872-1475
All notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Company to the Participant may be delivered by e-mail or in writing and will be deemed sufficient if delivered by e-mail, hand, facsimile, nationally recognized overnight courier, or certified or registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the Participant. 
14.     Employment Agreement, Offer Letter or Other Arrangement.  To the extent a written employment agreement, offer letter or other arrangement (“Employment Arrangement”) that was approved by the Committee or the Board of Directors or that was approved in writing by an officer of the Company pursuant to delegated authority of the Committee provides for greater benefits to the Participant with respect to vesting of the Award on Employment Termination, than provided in this Agreement or in the Plan, then the terms of such Employment Arrangement with respect to vesting of the Award on Employment Termination by reason of such specified events shall supersede the terms hereof to the extent permitted by the terms of the Plan under which the Award was made.
15.     Code Section 409A.  This Agreement shall be interpreted in accordance with Code Section 409A so as to comply with an exception to Code Section 409A, or to the extent that this Agreement provides deferred compensation, to be in compliance with Code Section 409A.  Accordingly, references to Retirement, termination of service, and similar terms shall be interpreted in a manner consistent with the definition of “separation from service” under Code Section 409A.  This Agreement shall be deemed to be modified to the maximum extent necessary to be in compliance with Code Section 409A’s rules.  If the Participant is unexpectedly required to include in the Participant’s current year’s income any amount of compensation relating to this Award because of a failure to meet the requirements of Code Section 409A, then to the extent permitted by Code Section 409A, the Participant may receive a distribution of cash or Shares in an amount not to exceed the amount required to be included in income as a result of the failure to comply with Code Section 409A.

DSW INC.

	
		
	By:
	 

	Name:
	 

	Its:
	 

ACCEPTANCE OF AGREEMENT 
The Participant hereby: (a) acknowledges that he or she has received a copy of the Plan, a copy of the Company’s most recent annual report to shareholders and other communications routinely distributed to the Company’s shareholders, and a copy of the Plan description (Prospectus) pertaining to the Plan; (b) accepts this Agreement and the Restricted Stock Units granted to him or her under this Agreement subject to all provisions of the Plan and this Agreement; (c) represents that he or she understands that the acceptance of this Agreement through an on-line or electronic system, if applicable, carries the same legal significance as if he or she manually signed the Agreement; and (d) agrees that no transfer of the Shares delivered in respect of the Restricted Stock Units shall be made unless the Shares have been duly registered under all applicable Federal and state securities laws pursuant to a then-effective registration which contemplates the proposed transfer or unless the Company has received a written opinion of, or satisfactory to, its legal counsel that the proposed transfer is exempt from such registration.

	
	
	 

	 

	 

	 

	 

	  

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