Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of New Chief Executive Officer and Director
On February 23, 2022, WW International, Inc. (the “Company”) appointed Sima Sistani as Chief Executive Officer and elected her as a Class III director of the Company, effective March 21, 2022 (the “Commencement Date”). Ms. Sistani will fill the vacancy on the Company’s board of directors (the “Board”) following Mindy Grossman’s resignation from the Board, effective as of the Commencement Date.
Since June 2019, Ms. Sistani, age 42, has worked at Epic Games, Inc., a video game and software developer and publisher, where she served as Chief Executive Officer of Houseparty, a face-to-face synchronous social network, and has also been the senior executive leading social gameplay and feature development for Epic’s gaming products, including Fortnite. Prior to Epic’s acquisition, Ms. Sistani was the Chief Executive Officer at Houseparty and served on its Board of Directors, having been one of its original co-founders prior to its February 2016 launch. She previously led mobile growth operations at Yahoo! Inc., a technology company, from November 2011 to May 2015, and from the time Yahoo! acquired Tumblr she served as Tumblr’s first Head of Media. Prior to that time, Ms. Sistani held positions at Goldman Sachs and Creative Artists Agency. Ms. Sistani received a B.A. from Duke University and an M.B.A. from the Kellogg School of Management at Northwestern University.
Employment Agreement and Continuity Agreement
On February 23, 2022, the Company entered into an employment agreement with Ms. Sistani (the “Employment Agreement”). The material terms of the Employment Agreement are as follows: (i) a base salary of $1,236,000 per year; (ii) eligibility for an annual, performance-based cash bonus with a target bonus percentage of at least 150% of her base salary and a maximum payout of 300% of her base salary; (iii) reimbursement for temporary housing and travel expenses incurred by Ms. Sistani during the one-year period following the Commencement Date in the aggregate amount of up to $250,000; (iv) commencing in 2023, eligibility to participate in the Company’s annual incentive equity award program with an annual grant value of at least 400% of base salary, with the terms of such grants to be consistent with the terms of grants made to other executives, provided that Ms. Sistani’s equity grants may, but need not, provide for accelerated vesting upon a change in control of the Company; and (v) payment or reimbursement of up to $25,000 of legal fees incurred in connection with the negotiation of the Employment Agreement and Continuity Agreement (discussed below). For 2022, Ms. Sistani will receive an annual cash bonus of $1,854,000, prorated based on the number of days she is employed during the 2022 fiscal year.
The Employment Agreement also provides for the grant of initial equity awards as follows: (i) 325,000 restricted stock units, (ii) 450,000 nonqualified stock options with an exercise price per share equal to the closing price of the Company’s common stock on the grant date, (iii) 500,000 nonqualified stock options with an exercise price per share equal to $30 and (iv) 500,000 nonqualified stock options with an exercise price per share equal to $50. The grant dates of the initial equity awards will be the Commencement Date, or as soon as practicable following the Commencement Date, and such awards shall proportionately vest annually over a four-year period beginning with the first anniversary of the Commencement Date. The initial equity awards that are stock options will be subject to a seven-year term. The 500,000 nonqualified stock options with an exercise price per share equal to $30 and the 500,000 nonqualified stock options with an exercise price per share equal to $50 will be granted outside of the Company’s stock incentive plan and in reliance on the employment inducement exemption provided under the Nasdaq Listing Rule 5635(c)(4) and, in accordance with such exemption, the Company will issue a press release re-disclosing the material terms of such awards. The other initial equity awards are intended to be granted under the Company’s stock incentive plan.
In the event of a termination of Ms. Sistani’s employment by the Company without “cause” or by Ms. Sistani for “good reason”, subject to the execution of a release of claims and continued compliance with her restricted covenants, Ms. Sistani shall be entitled to receive: (i) any accrued obligations, (ii) any unpaid annual bonus for a fiscal year completed prior to such qualifying termination, (iii) a pro-rata annual bonus, based on actual performance, pro-rated through her termination date for the year of such qualifying termination, payable when such bonuses are paid to other executives, (iv) continued payment of base salary for two years, (v) Company payment for the employer portion of her continued medical insurance coverage under the Company-sponsored health plans for two years following the termination (or such shorter period of time if she obtains alternative health coverage from another employer), and (vi) accelerated vesting of the greater of 50% of the unvested initial equity grants (as described above) or the amount that would vest on the next vesting date and any and all vested initial options shall remain exercisable for the full seven year term of such award agreements. In the event of a termination of Ms. Sistani’s employment due to death or “disability”, Ms. Sistani shall be entitled to receive (i) any accrued obligations, (ii) any unpaid annual bonus for a fiscal year completed prior to such qualifying termination, and (iii) a pro-rata portion of her target annual bonus, pro-rated through her termination date.
