Item 2.02. Results of Operations and Financial Condition.
On March 13, 2024, Petco Health and Wellness Company, Inc. (the “Company”) issued a press release disclosing its financial results for the quarter and year ended February 3, 2024. The full text of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1.
The information being furnished pursuant to Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liability of that section, and shall not be incorporated by reference into any other document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Interim Chief Executive Officer Appointment
On March 12, 2024, the Board of Directors (the “Board”) of the Company appointed R. Michael Mohan as the Company’s interim Chief Executive Officer (“interim CEO”), effective as of March 13, 2024. Mr. Mohan succeeds Ronald V. Coughlin, Jr., whose role as the Company’s Chief Executive Officer, Chairman and member of the Board ended effective March 12, 2024. As further described below, Mr. Coughlin will provide transition services as an employee through May 1, 2024 and will serve in a consultant capacity as an advisor to the Board for a 12-month period thereafter to support a smooth leadership transition.
Mr. Coughlin’s departure from the Board is not due to any disagreement with the Company or on any matter related to the Company’s operations, policies or practices. In connection with his departure from the Board, the size of the Board was reduced from 11 to 10 directors.
Mr. Mohan, 56, has served on the Board since March 2021 and as the Company’s Lead Independent Director since July 2021. In light of his appointment, Mr. Mohan will no longer serve as Lead Independent Director or as a member of the Audit Committee of the Board, but will continue to serve as a member of the Board. Previously, Mr. Mohan served as President and Chief Operating Officer of Best Buy Co., Inc., a multinational consumer retailer, from June 2019 to July 2021, where he was responsible for the operations of the company’s U.S. and International businesses. From 2004 to June 2019, he served in various leadership roles at Best Buy, overseeing services, customer experience, category management, merchandising, marketing, and supply chain functions. Prior to joining Best Buy, Mr. Mohan was Vice President and General Merchandising Manager for Good Guys. Mr. Mohan also previously worked at Future Shop in Canada from 1988 to 1997, prior to Best Buy’s acquisition of the company, where he served in various merchandising roles. Mr. Mohan also serves on the board of directors of VIZIO Holding Corp., Bloomin’ Brands, Inc., and Jackson Family Wines.
In connection with his appointment, the Company entered into an employment letter with Mr. Mohan that provides for (i) an initial base salary of $1,100,000, (ii) a target bonus for fiscal 2024 equal to 125% of his base salary, pro-rated for the portion of the fiscal year that Mr. Mohan is employed as interim CEO, (iii) equity awards having an aggregate grant date value of $8 million, one-third of which will be in the form of restricted stock units and two-thirds of which will be in the form of stock options with an exercise price of $5.00 per share, in each case, vesting ratably in monthly installments for one year, and (iv) participation in the Company’s standard employee benefits. In the event Mr. Mohan’s employment ends prior to July 13, 2024, Mr. Mohan will be guaranteed base salary, a pro-rated bonus, and equity vesting as if he were employed through such date, unless his employment ends as a result of his resignation or a termination for cause. The foregoing summary of the employment letter does not purport to be a complete description of such letter and is qualified in its entirety by reference to the full text of such letter, a copy of which is attached hereto as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Mr. Mohan was not selected pursuant to any arrangement or understanding between him and any other person. Mr. Mohan does not have any family relationships with any director or executive officer of the Company, and there are no transactions in which Mr. Mohan has an interest requiring disclosure under Item 404(a) of Regulation S-K.
Separation and Consulting Agreement
Mr. Coughlin entered into a separation and consulting agreement and general release of claims with Petco Animal Supplies Stores, Inc., the Company and Scooby LP on March 12, 2024 (the “Separation Agreement”). Under the Separation Agreement, Mr. Coughlin will provide transition services to the Company as an employee through May 1, 2024 (the “Separation Date”). In consideration for a fulsome release of claims in favor of the Company and its affiliates, the Separation Agreement provides for the separation payments and benefits set forth under Mr. Coughlin’s employment agreement and the terms of his outstanding equity award agreements. In addition, the Separation Agreement provides that Mr. Coughlin may utilize his fiscal 2024 executive physical benefit if previously
