UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 4, 2004
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CIRCUIT CITY STORES, INC.
(Exact name of registrant as specified in its charter)
Virginia
(State or other jurisdiction of
incorporation or organization)
001-05767 54-0493875
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(Commission (I.R.S. Employer
File No.) Identification No.)
9950 Mayland Drive, Richmond, Virginia 23233
(Address of principal executive offices) (Zip Code)
(804) 527-4000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
Item 1.01. Entry into a Material Definitive Agreement.
See Item 5.02 for a discussion of the Employment Agreement, entered into
effective October 4, 2004, between Circuit City Stores, Inc. (the "Company") and
Philip J. Schoonover, the Company's newly appointed Executive Vice President,
Chief Merchandising Officer. The Employment Agreement is Exhibit 10.1 to this
report.
SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
On October 4, 2004, Circuit City Stores, Inc. announced that its Board of
Directors had appointed Philip J. Schoonover to the position of Executive Vice
President, Chief Merchandising Officer. The press release is Exhibit 99.1 to
this report.
Mr. Schoonover, 44, was executive vice president - customer segments at Best Buy
Co., Inc. from April 2004 until September 2004. He joined Best Buy in 1995, and
previously served as executive vice president - new business development from
February 2002 until April 2004 and executive vice president - digital technology
solutions from February 2001 until February 2002. Before that he served for five
years as senior vice president - merchandising. Before joining Best Buy, he was
an executive vice president at TOPS Appliance City.
Mr. Schoonover's Employment Agreement is for an initial term of two years, and
provides for an annual base salary of $600,000. Mr. Schoonover will also receive
a $750,000 signing bonus. Upon conclusion of fiscal year 2005, Mr. Schoonover
will receive an annual bonus in the amount of $480,000. In subsequent fiscal
years, at the discretion of the Company's Compensation Committee, Mr. Schoonover
will be eligible for an annual bonus that is not less than 80% of his base
salary.
Mr. Schoonover's Employment Agreement provides for continuation of base salary
and target bonus for one year and participation in employee benefit plans for
two years following termination by the Company without cause, termination by Mr.
Schoonover for good reason or a decision by the Company not to renew the
agreement at the end of the initial term or renewal period. In those
circumstances, the agreement also generally provides that Mr. Schoonover will be
entitled to outplacement services of up to $50,000 and full vesting of any
unvested stock options or any outstanding restricted stock, excluding restricted
stock grants issued under a performance-based plan, that would become vested
through the initial term or the then current term of the Agreement. After a
change in control, the agreement also provides benefits upon Mr. Schoonover's
termination of employment either by the Company for any reason other than death,
disability or cause, or by Mr. Schoonover voluntarily in the thirteenth month or
for good reason within one year following a change of control. These benefits
are a payment of a severance amount equal to two times his salary and target
bonus, health care continuation for two years, outplacement services up to
$50,000 and a payment equal to two times the annual cost of perquisites. The
agreement indemnifies Mr. Schoonover for potential excise taxes under the
Internal Revenue Code in such circumstances. The agreement also contains
provisions confirming Mr. Schoonover's obligation to maintain the
confidentiality of proprietary information and not to compete with the Company
for one year after termination of employment or solicit its employees for two
years after termination of employment.
Mr. Schoonover was granted a non-qualified stock option grant of 350,000 shares
vesting in three equal annual installments from the grant date; a grant of
25,000 shares of restricted stock vesting in equal amounts on October 4, 2006
and October 4, 2007; and a grant of 50,000 shares of performance restricted
stock that will vest on October 4, 2006 if Circuit City's fiscal year 2006
operating profit margin is 4%. Achievement of a 5% operating profit margin in
fiscal year 2006 will result in vesting of an additional 25,000 shares of
restricted stock on October 4, 2006; achievement of a 6% operating profit margin
in fiscal year 2006 will result in vesting of an additional 50,000 shares of
restricted stock on October 4, 2006.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description of Exhibit
10.1 Employment Agreement between the company and Philip
J. Schoonover effective October 4, 2004.
10.2 Form of Non-Qualified Stock Option Grant letter
10.3 Form of Restricted Stock Grant letter
10.4 Form of Performance Restricted Stock Grant letter
99.1 Press Release Issued October 4, 2004
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CIRCUIT CITY STORES, INC.
By: /s/ W. Alan McCollough
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W. Alan McCollough
Chairman, President and Chief Executive Officer
Date: October 4, 2004
EXHIBIT INDEX
Exhibit No. Description of Exhibit
10.1 Employment Agreement between the company and
Philip J. Schoonover effective October 4,
2004.
10.2 Form of Non-Qualified Stock Option Grant
letter
10.3 Form of Restricted Stock Grant letter
10.4 Form of Performance Restricted Stock Grant
letter
99.1 Press Release Issued October 4, 2004