8-K
Coty Inc. (COTY)
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): May 5, 2023 (May 4, 2023)
Coty Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-35964 | 13-3823358 | ||||
|---|---|---|---|---|---|---|
| (State or other Jurisdiction<br><br>of Incorporation) | (Commission File Number) | (I.R.S. Employer<br><br>Identification No.) | 350 Fifth Avenue | |||
| --- | --- | --- | ||||
| New York, | NY | 10118 | ||||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 389-7300
(Former name or former address, if changed from 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)) | |
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Class A Common Stock, $0.01 par value | COTY | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
New Compensatory Arrangements for Chief Executive Officer
On May 5, 2023, the Board of Directors (the “Board”) of Coty Inc. (the “Company”) announced its intention to explore a dual listing of the Company on the Paris Stock Exchange (Euronext Paris) and the entry into a new compensatory program for the Company’s Chief Executive Officer, Sue Y. Nabi. On May 4, 2023 the Board and Ms. Nabi entered into an amendment (the “Amendment”) to that certain employment agreement dated as of October 13, 2020, by and between Ms. Nabi and the Company (the “Original Agreement” and, as amended by the Amendment, the “Agreement”) to set forth these new terms. Ms. Nabi has served as the Company’s Chief Executive Officer since September 2020.
Under the terms of the new arrangement, the Board has designed a long-term equity program for Ms. Nabi (the “Nabi Equity Program”) with equity awards vesting through 2030 which further solidify Ms. Nabi’s position as one of the Company’s largest stockholders and enhance her focus on building long-term stockholder value. Half of the equity to be granted under the Nabi Equity Program will be subject to the achievement of Company performance objectives. If fully realized, the Nabi Equity Program will result in Ms. Nabi acquiring an additional 20,833,334 shares of Common Stock over the seven-year vesting horizon. Ms. Nabi will also become eligible to participate in the Company’s performance-based annual cash bonus plan under the new arrangement.
As part of the Company’s efforts to reduce dilution, the Company entered into forward repurchase contracts in June and December 2022 for $200 million and $196 million of share buybacks in calendar year 2024 and calendar year 2025, respectively (the “2022 Forward Repurchase Contracts”) with several bank counterparties. Under the 2022 Forward Repurchase Contracts, the bank counterparties effectively locked in an average weighted share price of $7.99 for this future share buyback program. The 2022 Forward Repurchase Contracts give the Company the ability to repurchase up to approximately 49.5 million shares of Common Stock at these attractive average prices over 2024 and 2025, which the Company can use a portion of to offset the potential impact from the maximum 21 million shares of Common Stock which may be issuable by the Company to Ms. Nabi over the next seven years under the Nabi Equity Program.
Annual Bonus Plan
Under the terms of the new arrangement, in addition to her annual base salary in the amount of €3,000,000 (the “Base Salary”), which remains unchanged, effective July 1, 2023 Ms. Nabi will be eligible to participate in the Company’s performance-based annual cash bonus plan (the “Annual Bonus Plan”). Ms. Nabi will participate under the Annual Bonus Plan with a target of 100% of her Base Salary, a maximum of 200%, and a minimum of 0% if certain threshold conditions are not achieved. The performance objectives for the Annual Bonus Plan will be determined annually by the Board.
Nabi Equity Program
The Nabi Equity Program is comprised of a one-time award of restricted stock units (“RSUs”) and an annual award of performance restricted stock units (“PRSUs”) with three-year Company performance objectives.
Pursuant to the terms of the Amendment, on May 4, 2023 the Company granted Ms. Nabi 10,416,667 RSUs (the “RSU Award”), which will vest and settle in shares of the Company’s Class A Common Stock, par value $0.01 per share (the “Common Stock”) over five years on the following vesting schedule: (i) 15% of the RSU Award on September 1, 2024 (“Tranche 1 RSUs”), (ii) 15% of the RSU Award on September 1, 2025 (“Tranche 2 RSUs”), (iii) 20% of the RSU Award on September 1, 2026 (“Tranche 3 RSUs”), (iv) 20% of the RSU Award on September 1, 2027 (“Tranche 4 RSUs”); and (v) 30% of the RSU Award on September 1, 2028 (“Tranche 5 RSUs”), in each case subject to Ms. Nabi’s continued employment through the applicable vesting date. If Ms. Nabi is involuntarily terminated by the Company without cause or due to death or disability on or prior to September 1, 2026, to the extent not already vested, all of the Tranche 1 RSUs, Tranche 2 RSUs, and Tranche 3 RSUs shall become fully vested on the date of such termination. If Ms. Nabi is involuntarily terminated by the Company without cause or due to death or disability on or following September 1, 2026 but before September 1, 2027, a pro-rata portion of the Tranche 4 RSUs shall vest on the date of such termination equal to the number of Tranche 4 RSUs multiplied by a fraction, the numerator of which is the number of days elapsed from September 1, 2026 to the date of Ms. Nabi’s termination and the denominator of which is 365. If Ms. Nabi is involuntarily terminated by the Company without cause or due to death or disability on or following September 1, 2027 but before September 1, 2028, a pro-rata portion of the Tranche 5 RSUs shall vest on the date of such termination equal to the number of Tranche 5 RSUs multiplied by a fraction, the numerator of which is the number of days elapsed from September 1, 2027 to the date of Ms. Nabi’s termination and the denominator of which is 365. If Ms. Nabi leaves voluntarily or is terminated for cause, any portion of the RSU Award not vested as of the date of termination will be forfeited.
On May 4, 2023, pursuant to the terms of the new arrangement the Company also granted Ms. Nabi an award of 2,083,333 PRSUs which shall fully vest on September 1, 2026 subject to the achievement of three-year performance objectives to be determined by the Board and subject to Ms. Nabi’s continued employment. The new arrangement also provides that on or around each of September 1, 2024, September 1, 2025, September 1, 2026, and September 1, 2027, the Company shall grant to
Ms. Nabi an additional award of 2,083,333 PRSUs on each such respective date, which shall vest on the third-year anniversary of the respective grant date, subject in each case to the achievement of three-year performance objectives to be determined by the Board and Ms. Nabi’s continued employment through the applicable vesting date.
Reload Options
In the event that Ms. Nabi enters into a “tag along” agreement with the Company’s largest stockholder, JAB Beauty B.V. (formerly known as Cottage Holdco B.V.) (“JAB”), and Ms. Nabi participates in a “tag along” sale with JAB whereby JAB and Ms. Nabi sell shares of Common Stock for cash in a privately negotiated transaction (i.e., not a public offering), subject to Board approval the Company will grant Ms. Nabi new options to acquires shares of Common Stock (the “Reload Options”) in an amount equal to the number of shares sold by Ms. Nabi in such transaction. The Reload Options will have a strike price equal to the greater of the volume weighted average price for shares at the time of the relevant transaction and the fair market value on the date of grant.
The foregoing description of the new compensatory arrangement is qualified in its entirety by reference to the full text of the Amendment, a copy of which will be attached to the Company’s Annual Report on Form 10-K for the period ended June 30, 2023.
| Item 8.01 | Other Events. |
|---|
On May 5, 2023, the Company issued a press release announcing its intention to explore a dual listing on the Paris Stock Exchange (Euronext Paris) and the new compensatory arrangement with Ms. Nabi (the “Press Release”). A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits
(d)Exhibits:
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release announcing dual listing intention and new compensatory arrangements dated May 5, 2023. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
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.
| Coty Inc. | ||
|---|---|---|
| (Registrant) | ||
| Date: May 5, 2023 | By: | /s/ Kristin Blazewicz |
| Kristin Blazewicz | ||
| Chief Legal Officer, General Counsel and Secretary |
Document
Exhibit 99.1
COTY TO EXPLORE DUAL LISTING ON PARIS STOCK EXCHANGE
•Coty to explore a dual listing on the Paris Stock Exchange
•Coty CEO, Sue Y. Nabi, enters new long-term equity program and employment agreement through 2030
•Coty will report its fiscal 2023 Q3 earnings on Tuesday 9th May
New York, May 5, 2023 – Coty Inc. (NYSE: COTY) one of the world’s largest beauty companies with a portfolio of iconic brands across fragrance, color cosmetics, skin and body care, today announces that its board of directors (“Board”) has authorized the Company’s management to explore a listing on the Paris Stock Exchange (PAR). If the Company initiates a listing process, Coty Inc. would become a dual listed company on the New York Stock Exchange (NYSE) and on the Paris Stock Exchange (PAR), further strengthening Coty’s presence in Europe and providing an additional vehicle to reach untapped investors in the market. The structure aligns with Coty’s 100+year heritage in France and its substantial business footprint in Europe.
Under the leadership of Sue Y. Nabi, Coty has made significant progress against its strategic objectives since they were announced in November 2021, reclaiming the company’s status as a global beauty powerhouse. This progress is evidenced by 10 consecutive quarters of strong growth and results in line with or ahead of expectations; returning Coty’s heritage consumer beauty brands CoverGirl, Bourjois, Max Factor, and Rimmel, to growth; the highly successful launches of fragrances for Burberry, Hugo Boss, Marc Jacobs, Gucci, and Chloé; solidifying Coty’s position across the three core beauty categories by dramatically accelerating in skin care; and building momentum in China through the success of Gucci beauty, Burberry beauty and Lancaster. As a result of the effective implementation of this strategy, Coty is now financially stronger, with projected Free Cash Flow of over $400M in FY23 and on track to achieve leverage towards 3x exiting CY23. Recognition of this progress has been reflected in the quadrupling of Coty’s market capitalization since Sue Y. Nabi’s appointment in September 2020.
The Board is also pleased to announce the extension of its long-term partnership with Sue Y. Nabi, Coty’s Chief Executive Officer. Ms. Nabi’s renewed compensation agreement is anchored on a long-term equity program which runs through 2030. The agreement includes a significant portion of performance related shares alongside a performance related bonus, further aligning all stakeholders’ interests.
“Paris is the historic home of beauty, and the industry still holds a special attraction for investors there. The Board’s interest in exploring a potential listing on the Paris Stock Exchange has been made possible thanks to the progress Coty has made under Sue’s leadership”, said Peter Harf, Coty’s Chairman. “We have seen consistent growth over the last 10 quarters, in line with or ahead of market expectations, underpinned by targeted investment, disciplined cost controls and a clear debt reduction program. The strength of this performance is testament to Sue’s reputation as one of the beauty industry’s most innovative and talented figures, and the leadership team she has built at Coty.”
Sue Y. Nabi added, “As a long-term shareholder in the company, I am grateful to the Board for their continued support and trust, and delighted to have the opportunity of leading Coty through this next chapter of growth and value creation. We are committed to driving sustainable innovation across fragrance, color cosmetics and skincare as we rise to meet the consumer needs of the future, while simultaneously campaigning to change outdated definitions of beauty through the #undefinebeauty campaign.”
Coty will report its fiscal 2023 Q3 earnings on Tuesday 9th May. Participants can register for the management’s presentation at https://investors.coty.com/ which will be followed by Q&A.
About Coty Inc.
Founded in Paris in 1904, Coty is one of the world’s largest beauty companies with a portfolio of iconic brands across fragrance, color cosmetics, and skin and body care. Coty serves consumers around the world, selling prestige and mass market products in more than 130 countries and territories. Coty and our brands empower people to express themselves freely, creating their own visions of beauty; and we are committed to making a positive impact on the planet. Learn more at coty.com or on LinkedIn and Instagram.
Cautionary Note Regarding Forward-looking Statements
The statements contained in this press release include certain “forward-looking statements” within the meaning of the securities laws. These forward-looking statements reflect Coty’s current views with respect to, among other things, its outlook, expected guidance, trends and strategic information. These forward-looking statements are generally identified by words or phrases, such as “anticipate,” “are going to,” “estimate,” “plan,” “project,” “expect,” “believe,” “intend,” “foresee,” “forecast,” “will,” “may,” “should,” “outlook,” “continue,” “target,” “aim,” “potential” and similar words or phrases. These statements are based on certain assumptions and estimates that Coty considers reasonable and are not guarantees of Coty’s future performance, but are subject to a number of risks and uncertainties, many of which are beyond Coty’s control, which could cause actual events or results to differ materially from such statements, including the factors identified in “Risk Factors” included in Coty’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022 and its subsequent quarterly reports on Form 10-Q. All forward-looking statements made in this press release are qualified by these cautionary statements. These forward-looking statements are made only as of the date of this press release, and Coty does not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.
Coty provides guidance only on a non-GAAP basis and does not provide reconciliations of such forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for restructuring, integration and acquisition-related expenses, amortization expenses, adjustments to inventory, and other charges reflected in our reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.
For more information contact:
•Investor Relations
Olga Levinzon +1 212 389-7733
olga_levinzon@cotyinc.com
•Media
Antonia Werther +31 621 394495
Antonia_Werther@cotyinc.com