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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): April 1, 2008
HERBALIFE LTD.
(Exact name of registrant as specified in its charter)
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Cayman Islands
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1-32381
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98-0377871 |
(State or other jurisdiction
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(Commission File Number)
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(I.R.S. Employer |
of incorporation)
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Identification Number) |
PO Box 309 GT, Ugland House
South Church Street, Grand Cayman
Cayman Islands
(Address of principal executive offices)
Registrants telephone number, including area code: c/o (310) 410-9600
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
TABLE OF CONTENTS
Item 5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)
Employment Agreement of Michael O. Johnson
On April 1, 2008, Herbalife International of America, Inc. (the Company), a subsidiary of
Herbalife, Ltd. (Parent), entered into an amended and restated employment agreement (the
Agreement) with Michael O. Johnson, dated as of March 27, 2008, pursuant to which Mr. Johnson
will continue to serve as the Chairman and Chief Executive Officer of both the Company and Parent.
Under the Agreement, Mr. Johnson will receive an annual base salary of $1,200,000, as well as an
annual target bonus of up to 200% of his base salary for the year in question, with a maximum bonus
of up to 300% of his base salary, based on Parents achievement of certain targets established by
the Compensation Committee of the Board of Directors on a yearly basis. In addition, Mr. Johnson
will continue to be entitled to participate in the Companys employee benefit plans and
arrangements generally made available to the Companys most senior executives. In consideration
for entering into the Agreement, Mr. Johnson received a sign-on bonus of $1,500,000 along with
grants on March 27, 2008 of performance-based stock appreciation rights (the 2008 SARs) and
time-based restricted stock units (the 2008 RSUs) (see below for a more detailed description of
these equity awards). In addition, if Mr. Johnson remains employed by the Company for at least
four years following the effective date of the Agreement, following his subsequent termination of
employment for any reason other than for Cause, as defined in the Agreement, Mr. Johnson and his
spouse will be entitled to continued medical benefits under a Company-provided medical plan until
they reach age 65.
The Agreement provides that if Mr. Johnsons employment is terminated by the Company for Cause or
if Mr. Johnson resigns for any reason other than Good Reason, as defined in the Agreement, he will
only be entitled to payment of his then current accrued and unpaid base salary through the date of
termination along with any accrued and unpaid bonus for any years preceding the year of termination
and any other benefits and payments to which he is then entitled under the Companys employee
benefit plans.
If Mr. Johnson dies or if his employment is terminated as a result of his Disability, as defined in
the Agreement, he will be entitled to payment of his then current accrued and unpaid base salary
through the date of termination along with any accrued and unpaid bonus for any years preceding the
year of termination and any other benefits and payments to which he is then entitled under the
Companys employee benefit plans. Upon such a termination of employment Mr. Johnson will be
entitled to receive a pro rata bonus payment for the year of termination based on the Companys
actual results for the entire year and accelerated vesting of his 2008 SARs (depending on the
Companys achievement with respect to the performance-based vesting criteria prior to such
termination) and his 2008 RSUs. In addition, following a termination of employment by reason of
Mr. Johnsons death or Disability, Mr. Johnson and/or his spouse will be eligible to receive
retiree medical benefits until the age of 65 without regard as to whether Mr. Johnson was employed
by the Company for at least four years following the effective date of the Agreement.
Under the Agreement, upon a termination of Mr. Johnsons employment either by the Company without
Cause or by Mr. Johnson for Good Reason, Mr. Johnson and his spouse shall be entitled to all of the
payments and benefits described above as payable following a termination of employment by reason of
his death or Disability. Upon such a termination of employment, Mr. Johnson will also be entitled
to receive a lump-sum cash in an amount equal to two times the sum of his then-current base salary
plus the bonus level (which bonus level is defined to equal two times his then-current base
salary), payable on the sixtieth day following termination. In addition, if such a termination of
employment occurs during a trading blackout or quiet period, as a result of which he may not
trade in the Companys common shares for at least twenty days following the date of termination,
Mr. Johnson will be entitled to an additional lump-sum cash payment in an amount equal to $250,000.
Mr. Johnson will also be eligible to receive outplacement services for up to six months paid for
by the Company in an amount not to exceed $20,000.
The Agreement provides for a two-year post-termination non-solicitation covenant, as well as
standard confidentiality and non-disparagement covenants.
The foregoing summary is qualified in its entirety by reference to the complete text of the
Agreement, which is incorporated herein by reference and a copy of which is attached hereto as
Exhibit 10.1.
Equity Awards to Michael O. Johnson
In accordance with the terms of the Herbalife Ltd. 2005 Stock Incentive Plan (the Plan), in
connection with the execution of his amended and restated employment agreement, on March 27, 2008,
Mr. Johnson received an award of 130,480 restricted stock units (RSUs) and two separate stock
appreciation right awards (SARs) covering a total of 759,790 of Parents common shares.
Each RSU represents the right to receive one share of Parents common shares, subject to the
vesting and other conditions of a Stock Unit Award Agreement entered into between Parent and Mr.
Johnson. Under the Stock Unit Award Agreement, thirty percent of Mr. Johnsons RSUs will vest on
each of March 27, 2009, 2010 and 2011. The remaining ten percent of the RSUs will vest on March
27, 2012. All such vesting is subject to Mr. Johnsons continuing employment with the Company
through each vesting date. To the extent unvested, these RSUs are also subject to full vesting
acceleration upon the occurrence of a Change of Control (as defined in the Plan) or upon Mr.
Johnsons death or Disability. Unvested RSUs are also subject to partial vesting acceleration (on
the terms set forth in the Stock Unit Award Agreement) in the event that Mr. Johnsons employment
is terminated by the Company without Cause or by Mr. Johnson for Good Reason.
Each SAR represents the right to receive upon exercise a payment from Parent in common shares equal
to the difference between the value of Parents common shares on the date of exercise over the base
price of the SARs, subject to the conditions set forth in Stock Appreciation Right Award Agreements
entered into between Parent and Mr. Johnson. The base price for Mr. Johnsons SARs is $48.64, the
closing price of Parents common shares on the New York Stock Exchange on March 27, 2008, the date
the SARs were granted.
Mr. Johnsons SARs are scheduled to vest and become exercisable on March 27, 2012, subject to his
continued employment through that date and the achievement by Parent of certain performance-based
vesting criteria related to Parents common shares. Of Mr. Johnsons SARs, 363,670 will only vest
and become exercisable on March 27, 2012 if, prior to that date, the closing price of Parents
common shares on the New York Stock Exchange exceeds $67.33 for a period of 30 consecutive trading
days. The remaining 396,120 of Mr. Johnsons SARs will only vest and become exercisable on March
27, 2012 if, prior to that date, the closing price of Parents common shares on the New York Stock
Exchange exceeds $80.43 for a period of 30 consecutive trading days. These SARs are subject to
full vesting acceleration upon the occurrence prior to March 27, 2012 of a Change of Control or a
termination of Mr. Johnsons employment by the Company without Cause, by Mr. Johnson for Good
Reason or as a result of Mr. Johnsons death or Disability, in each case, subject to the
achievement by the Company prior to such event (or, with respect to a Change of Control, as a
result of such event) of an alternate price performance target. For 363,670 of Mr. Johnsons SARs,
this alternate price performance target will be achieved if the closing price of Parents common
shares on the New York Stock Exchange exceeds $55.64 for a period of 30 consecutive trading days.
For 396,120 of Mr. Johnsons SARs, this alternate price performance target will be achieve if the
closing price of Parents common shares on the New York Stock Exchange exceeds $60.82 for a period
of 30 consecutive trading days.
In general, Mr. Johnsons SARs will terminate on March 27, 2015, subject to earlier termination on
the terms and conditions set forth in the Stock Appreciation Right Award Agreements following a
termination of Mr. Johnsons employment with the Company.
The foregoing summary is qualified in its entirety by reference to the complete text of the Stock
Unit and Stock Appreciation Right Award Agreements, which are incorporated herein by reference and
copies of which are attached hereto as Exhibits 10.2, 10.3 and 10.4.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
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Exhibit |
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Description of Exhibit |
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10.1
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Employment Agreement by and between Herbalife International of America, Inc. and Michael O.
Johnson, dated as of March 27, 2008. |
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10.2
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Stock Unit Award Agreement by and between Herbalife Ltd. and Michael O. Johnson, dated March
27, 2008. |
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10.3
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Stock Appreciation Right Award Agreement by and between Herbalife Ltd. and Michael O.
Johnson, dated March 27, 2008. |
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10.4
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Stock Appreciation Right Award Agreement by and between Herbalife Ltd. and Michael O.
Johnson, dated March 27, 2008. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: April 7, 2008
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HERBALIFE LTD.
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By: |
/s/ Brett R. Chapman |
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Brett R. Chapman |
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General Counsel |
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