PSMT 8-K
Pricesmart Inc (PSMT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
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Registrant's telephone number, including area code: (
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 (see General Instruction A.2. below):
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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)) |
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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Title of each class | Trading Symbol | Name of each exchange on which registered | |
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. ☐
ITEM 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
(b) CEO Resignation
PriceSmart, Inc. (the “Company”) announced December 9, 2022 that Sherry Bahrambeygui will be resigning as Chief Executive Officer, effective February 3, 2023, the date of the Company’s annual stockholder meeting, in order to pursue new professional and philanthropic interests. As part of the PriceSmart leadership transition plan, Sherry will continue serving stockholders as a member of the Board of Directors of the Company. Prior to her tenure as CEO, she served on the Company’s Board as a director for eight years, including having served as Vice Chairman and Chair of the Compensation Committee. Between now and February 3, Ms. Bahrambeygui will continue her employment and will work towards the orderly transition of her responsibilities to other Company employees and agents. She has agreed to make herself available at the Company’s request for up to 100 hours of transition support during the twelve months following her resignation.
On December 9, 2022, the Company and Ms. Bahrambeygui entered into a Separation Agreement with Waiver and Release of Claims (the “Separation Agreement”) detailing the terms of her separation from the Company. Pursuant to the Separation Agreement, and in consideration of Ms. Bahrambeygui’s execution and non-revocation of a release of claims in favor of the Company and her agreement to provide transition support and abide by certain restrictive covenants, Ms. Bahrambeygui will receive severance equal to $1,500,000, payable upon her separation; an annual cash incentive without proration at the target level of $2,250,000, payable upon her separation; and contribution by the Company of the Company’s portion of the premium cost of Ms. Bahrambeygui’s participation and that of her eligible dependents in the Company’s group health plan for a period of 18 months following her last day of employment or until she has secured other employment, whichever occurs first. In addition, subject to Ms. Bahrambeygui’s execution and non-revocation of a release of claims in favor of the Company and her continuing to provide the transition support and abide by certain restrictive covenants, Ms. Bahrambeygui will retain restricted stock awards and performance stock units covering a total of 97,122 shares of the Company’s common stock, 82,474 of which will vest immediately upon her separation and 14,648 of which will vest in October 2023. Vesting of performance stock units tied to fiscal year 2023 performance will vest at target levels without regard to satisfaction of the applicable performance criteria. Ms. Bahrambeygui will not be eligible for any increases in the number of shares covered by performance stock awards based on corporate performance above target levels for fiscal year 2023. For a period of two years following the date of her separation agreement, Ms. Bahrambeygui will be subject to customary customer and supplier non-solicitation and employee non-solicitation restrictions.
The foregoing description is qualified in its entirety by the Separation Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
(c) Appointment of Interim CEO; Promotion to President
Upon Ms. Bahrambeygui’s resignation, Robert E. Price will become Interim Chief Executive Officer. Mr. Price has been Chairman of the Board of Directors of the Company since its spin-off from Price Enterprises, Inc. in 1997. He served as Executive Chairman from October 2018 to February 2020. Mr. Price also served as Chief Executive Officer and President of the Company at various times during the Company’s history, most recently as Chief Executive Officer from April 2006 until July 2010. Mr. Price was a founder of The Price Company, which operated the Price Club, and served as its Chief Executive Officer and a member of its board of directors from the time of The Price Company’s founding in 1976 until The Price Company’s merger with Costco Wholesale Corp. in 1993. Mr. Price was Chairman of the Board of Price/Costco, Inc. from October 1993 until December 1994 and Chairman of Price Enterprises from July 1994 until September 1997. Mr. Price currently serves as a Manager of The Price Group, LLC and as Chairman and President of Price Philanthropies Foundation and the Allison and Robert Price Family Foundation. Price Philanthropies is a private family foundation that supports charitable activities in the Company’s markets and San Diego, California. Mr. Price is also President of the Aaron Price Fellows Foundation, the sponsor of the Aaron Price Fellows Program. Mr. Price is 80 years old. Mr. Price is the father of David Price who currently serves as the Company’s Vice President – Environmental and Social Responsibility and as a member of the Board of Directors. Mr. David Price will be promoted to Executive Vice President and Chief of Staff to the Interim CEO upon Ms. Bahrambeygui’s resignation.
John Hildebrandt, the Company’s Executive Vice President and Chief Operating Officer, has been promoted to President and Chief Operating Officer effective immediately. He has been Executive Vice President and Chief Operating Officer of the Company since May 2022. He held the position of Executive Vice President and Acting Chief Operating Officer from March 2022 to May 2022. Mr. Hildebrandt previously served as Executive Vice President — Operations of the Company from February 2010 to February 2022. Mr. Hildebrandt served as Executive Vice President—Central America and Trinidad Operations from March 2009 through January 2010, as Executive Vice President—Central America Operations from August 2003 until February 2009, as Executive Vice President—Caribbean and Asia Operations from July 2001 until July 2003 and as Senior Vice President of the Company from September 2000 until July 2001. Mr. Hildebrandt previously served as Vice President of the Company from September 1998 until August 2000, overseeing operations in Central America. Mr. Hildebrandt served as the Company’s Country Manager in the Philippines and Panama from August 1997 until August 1998, and as Price Enterprises’ Country Manager in the Philippines and Panama from 1996 until the Company was spun off from Price Enterprises in August 1997. Prior to joining Price Enterprises as Country Manager in 1996, Mr. Hildebrandt was a Senior Operations Manager of Price/Costco from 1994 through 1996, and served in various management roles for The Price Company beginning in 1979. Mr. Hildebrandt is 64 years old.
Item 5.03. Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On December 8, 2022, the Board of Directors of PriceSmart, Inc. (the “Company”) approved an amendment to the Company’s Second Amended and Restated Bylaws (the “Bylaws”), which became effective immediately. The amendment amends and restates Section 5 of Article II of the Bylaws to change the standard for approval of matters subject to a vote of the stockholders such that “broker non-votes” will be excluded from shares considered to be present and voting on such matters.
The foregoing summary of the amendment to the Bylaws is qualified in its entirety by reference to the full text of the amendment, a copy of which is filed as Exhibit 3.2 to this report and is hereby incorporated into this item by reference.
Item 9.01. Exhibits.
(d) | The following exhibit is furnished herewith: | |
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Exhibit |
| Description |
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| Amendment to Second Amended and Restated Bylaws of PriceSmart, Inc. | |
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104 |
| The cover page from this Current report on Form 8-K, formatted in Inline XBRL. |
(1)Incorporated by reference to the Company’s Form 8-K Filed with the Commission on July 17, 2015
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.
Date: December 9, 2022 |
| /s/ FRANCISCO VELASCO |
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| Francisco Velasco |
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| Executive Vice President, General Counsel and Secretary |
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SECOND AMENDED AND RESTATED BYLAWS
OF
PRICESMART, INC.
This Amendment (this “Amendment”) to the Second Amended and Restated Bylaws (the “Bylaws”) of PriceSmart, Inc., a Delaware corporation (the “Corporation”), is effective as of December 8, 2022 and is made pursuant to Article X of the Bylaws.
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Section 5 of Article II of the Bylaws is hereby amended by deleting Section 5 of Article II of the Bylaws in its entirety and replacing it with the following: |
“SECTION 5. VOTING. When a quorum is present or represented at any meeting, the vote of the holders of a majority of the voting power of the shares of the Company present in person or represented by proxy and entitled to vote on the subject matter shall decide any question brought before such meeting, unless the question is one upon which, by express provision of applicable law, of the rules or regulations of any stock exchange applicable to the Company, of any regulation applicable to the Company or its securities, of the Certificate of Incorporation or of these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Notwithstanding anything to the contrary in these Bylaws and subject to the Certificate of Incorporation, all elections of directors shall be determined by a plurality of the votes cast in respect of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Each stockholder of the Corporation shall be entitled to one vote in person or by proxy for each share of stock of the Corporation held by such stockholder and registered in such stockholder’s name on the books of the Corporation on the date fixed as the record date for the determination of stockholders entitled to vote at such meeting. Such votes may be cast in person or by proxy but no proxy shall be voted on or after three years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot.”
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Except as set forth in this Amendment, no terms or conditions of the Bylaws have changed. In the event of any inconsistencies between the terms of this Amendment and the Bylaws, the terms of this Amendment shall prevail. |
By: /s/ Francisco Velasco
Name: Francisco Velasco
Title: Secretary
SEPARATION AGREEMENT WITH WAIVER AND RELEASE OF CLAIMS
This Separation Agreement with Waiver and Release of Claims (“Agreement”) is made as of December 9, 2022 by and between Sherry S. Bahrambeygui (“Executive”) and PriceSmart, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
WHEREAS, Executive is employed by the Company pursuant to an Employment Agreement dated March 4, 2019 (the “Employment Agreement”);
WHEREAS, Executive will resign effective February 3, 2023 (the “Separation Date”), subject to the terms and conditions set forth in this Agreement; and
WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that the Executive may have against the Company and any of the Releasees as defined in the Waiver and Release of Claims, including, but not limited to, any and all claims arising out of or in any way related to Executive’s employment with or separation from the Company;
NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Executive hereby agree as follows:
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1. Transition Period. During the period (the “Transition Period”) beginning on the date hereof (the “Transition Date”) and ending on the Separation Date, the Executive will continue her employment and will work towards the orderly transition of Executive’s responsibilities to other Company employees and agents. The Company will continue to pay Executive her current annual base salary during the Transition Period. Except for the Board of Directors of the Company, on which Executive shall continue to serve during the Transition Period and intends to continue to serve following the Separation Date, Executive agrees that she shall have resigned from all board and officer positions with the Company and its subsidiaries as of the Separation Date, and shall execute all documents or notices requested by the Company or any of its subsidiaries to effectuate such resignation. |
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a. Severance Payment. The Company agrees to pay Executive cash severance (the “Severance”) in an amount equal to $1,500,000, which is equivalent to Executive’s annual base salary as of the Execution Date, less applicable withholdings. The Severance will be paid to the Executive upon the Separation Date. |
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b. Annual Bonus. The Company agrees to pay Executive an annual cash incentive award for fiscal year 2023, without pro ration, of $2,250,000. Such payment shall be made to the Executive upon the Separation Date. Such payment shall not be subject to achievement of performance metrics previously established with respect to corporate or individual performance for
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fiscal year 2023. Executive shall not be eligible for any over-achievement payment associated with corporate performance above target. |
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c. Healthcare Premium Payment. Subject to Executive’s timely election of continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), within the time period prescribed pursuant to COBRA, the Company shall continue to contribute the Company’s portion of the monthly premium cost of Executive’s participation and that of her eligible dependents in the Company’s group health plan, which covers the Executive and her dependents for a period of eighteen (18) months after the Separation Date, or until Executive has secured other employment, whichever occurs first, provided that Executive continues to pay her share of the premium for her and her dependents’ participation. The Executive and the Company are each separately responsible to provide their respective portions of the monthly insurance premium as described above to the insurer. |
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3. Equity. Provided Executive signs this Agreement, signs and does not revoke the Waiver and Release of Claims attached as Exhibit A in the time provided for therein, complies with her obligations hereunder and satisfactorily performs the transition responsibilities pursuant to Section 1, Executive will retain the equity incentive awards specified in Schedule 1 which shall be deemed fully vested and free from any forfeiture restrictions in the amounts specified on such schedule as of the dates specified on such schedule. Any remaining balance of such awards shall be forfeited. Per detail set forth in Schedule 1, Executive shall vest in a total of 66,891 restricted stock awards and 30,231 performance stock units (“PSUs”) per the schedule attached. Vesting of PSUs shall not be subject to satisfaction of the applicable performance criteria. In the case of PSUs, the Company shall distribute to Executive shares of Common Stock equal to the vested number of PSUs upon the vesting of such PSUs. Executive shall not be eligible for any increases in the number of shares covered by PSUs listed on Schedule 1 based on corporate performance above target levels for fiscal year 2023. |
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4. Accrued Obligations and Benefits. Executive’s health insurance benefits shall cease on the Separation Date, subject to Executive’s right to continue her health insurance under COBRA. Except as otherwise provided for herein, Executive’s participation in all benefits and incidents of employment, including, but not limited to, vesting in equity-based awards, perquisites of employment, and the accrual of bonuses, vacation, and paid time off, shall cease as of the Separation Date. Executive will receive her earned but unpaid base salary, unpaid expense reimbursements (which must be submitted no later than 15 days following the Separation Date), accrued vacation/paid time off (subject to any limitations on accrual under company policies) and any vested benefits accrued through the Separation Date (as described in Section 1 above) on or before the time required by law, but in no event more than thirty (30) days following the Separation Date. |
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5. Payment of Salary and Receipt of All Benefits. Executive acknowledges and represents that, other than the consideration set forth in this Agreement, including payment of accrued vacation/paid time off (subject to any limitations on accrual under company policies) and unpaid expense reimbursements (which must be submitted no later than 15 days following the Separation Date) as contemplated by Section 4, the Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off, premiums, leaves, housing allowances, relocation costs, reimbursable expenses, commissions, stock, restricted stock, restricted stock units, performance stock units, stock options, vesting, and any and all other benefits and compensation due to Executive, up to the date of execution of this Agreement. |
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7. Breach. Executive acknowledges and agrees that any material breach of this Agreement including, without limitation, the provisions of the Employment Agreement that remain in effect, shall entitle the Company immediately to recover and/or cease providing the consideration provided to Executive under this Agreement and to obtain damages. |
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8. No Admission of Liability. Executive understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims by Executive, whether known or unknown. No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Executive or to any third party. |
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9. Costs. The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement. |
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a. All disputes between Executive (and Executive’s attorneys, successors, and assigns) and the Company (and its affiliates, subsidiaries, shareholders, directors, officers, employees, agents, successors, attorneys, and assigns) relating in any manner to Executive’s employment or the termination of Executive’s employment, including, without limitation, all disputes arising under the Employment Agreement and this Agreement (“Arbitrable Claims”), shall be resolved by final and binding arbitration to the fullest extent permitted by law. Arbitrable Claims shall include, but are not limited to, contract (express or implied) and tort claims of all kinds, as well as all claims based on any federal, state, or local law, statute, or regulation, excepting only claims under applicable workers’ compensation law and unemployment insurance claims. By way of example and not in limitation of the foregoing, Arbitrable Claims shall include any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Family Medical Leave Act, as well as all claims under any applicable state or federal statute, and any claims asserting wrongful termination, breach of contract, breach of the covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress, harassment, discrimination, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, fraud, defamation, invasion of privacy, all claims related to disability and all wage or benefit claims, including but not limited to claims for salary, bonuses, profit participation, commissions, stock, stock options, vacation pay, fringe benefits or any form of compensation. Arbitration shall be final and binding upon the Parties and shall be the exclusive
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remedy for all Arbitrable Claims, except that the Parties may seek interim injunctive relief and other provisional remedies in court as set forth in this Agreement. The Parties hereby waive any rights they may have to trial by jury or any other form of administrative hearing or procedure in regard to the Arbitrable Claims. |
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b. Claims shall be arbitrated in accordance with the then-existing National Rules for the Resolution of Employment Disputes of the American Arbitration Association (“AAA Employment Rules”), as augmented by this Agreement. Arbitration shall be initiated as provided by the AAA Employment Rules, although the written notice to the other Party initiating arbitration shall also include a statement of the claims asserted and all the facts upon which the claims are based. Either Party may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. Otherwise, neither Party shall initiate or prosecute any lawsuit or administrative action in any way related to any Arbitrable Claim. All arbitration hearings under this Agreement shall be conducted at the AAA office located nearest to San Diego, California. The Federal Arbitration Act shall govern the interpretation and enforcement of this Section. |
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c. All disputes involving Arbitrable Claims shall be decided by a single arbitrator. The arbitrator shall be selected by mutual agreement of the Parties within thirty (30) days of the effective date of the notice initiating the arbitration. If the Parties cannot agree on an arbitrator, then the complaining Party shall notify the AAA and request selection of an arbitrator in accordance with the AAA Employment Rules. The arbitrator shall have only such authority to award equitable relief, damages, costs, and fees as a court would have for the particular claims asserted and any action of the arbitrator in contravention of this limitation may be the subject of court appeal by the aggrieved Party. No other aspect of any ruling by the arbitrator shall be appealable, and all other aspects of the arbitrator’s ruling shall be final and non-appealable. The arbitrator shall have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law. The arbitrator shall be required to issue a written arbitration decision, including the arbitrator’s essential findings, conclusions and a statement of award. The Company shall pay all arbitration fees in excess of what the Executive would have to pay if the dispute were decided in a court of law. The arbitrator shall have exclusive authority to resolve all Arbitrable Claims, including, but not limited to, whether any particular claim is arbitrable and whether all or any part of this Agreement is void or unenforceable. |
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d. Notwithstanding the foregoing, in order to provide for interim relief pending the finalization of arbitration proceedings hereunder, nothing in this Section 10 shall prohibit the Parties from pursuing, a claim for interim injunctive relief, for other applicable provisional remedies, and/or for related attorneys’ fees in a court of competent jurisdiction in order to prevent irreparable harm pending the conclusion of the arbitration. In the event of any alleged breach or threatened breach of this Agreement, the Executive hereby consents and submits to jurisdiction in the State of California. |
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e. If for any reason all or part of this arbitration provision is held to be invalid, illegal, or unenforceable in any respect under any applicable law or regulation in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other part of this arbitration provision or any other jurisdiction, but this provision shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable part or parts of this arbitration provision had never been contained herein, consistent with the general intent of the Parties, as evidenced herein, insofar as possible. |
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11. Cooperation. For a period of one (1) year following the date hereof, Executive agrees to cooperate with the Company, at reasonable times and places, with respect to transition of responsibility and all matters arising during or related to Executive’s continuing or past employment, including but not limited to all formal or informal matters in connection with any government investigation, internal investigation, litigation, regulatory or other proceeding which may have arisen or which may arise; provided, however, the time Executive is required to spend providing such cooperation will not exceed 100 hours. The Company’s request for cooperation shall take into consideration Executive’s personal and business commitments and the amount of notice that the Company is able to provide to Executive. The Company will reimburse Executive for all reasonable out-of-pocket expenses (not including lost time or opportunity or attorneys’ fees) incurred by Executive fulfilling her obligations under this Section. |
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12. [Intentionally Omitted.] |
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13. Trade Secrets and Confidential Information/Company Property. Executive reaffirms and agrees to observe and abide by the terms of the Company’s Policy With Respect to Handling of Confidential Information, specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information. Executive’s signature below constitutes her certification under penalty of perjury that she has returned (or will have returned prior to the Separation Date) all documents and other items provided to Executive by the Company, developed or obtained by Executive in connection with her employment with the Company, or otherwise belonging to the Company. |
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14. Further Covenants. For a period of two (2) years following the date hereof, Executive shall not, directly or indirectly, take any of the following actions, and, to the extent Executive owns, manages, operates, controls, is employed by or participates in the ownership, management, operation or control of, or is connected in any manner with, any business, Executive will use her best efforts to ensure that such business does not take any of the following actions: |
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a. Persuade or attempt to persuade any customer of the Company to cease doing business with the Company, or to reduce the amount of business any customer does with the Company; |
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b. Take any action that interferes with the Company’s contracts or prospective contracts with its customers, to the extent any such action involves the use of a Company trade secret; or |
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c. Except for the individuals listed on Schedule 2, persuade or attempt to persuade any employee or independent contractor of the Company to leave the service of the Company, where such individual was an employee or independent contractor of the Company within one (1) year prior to the termination of this Agreement. |
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15. Enforcement. Executive acknowledges and agrees that any breach by her of any of the provisions of Sections 12, 13 and 14 (the “Restrictive Covenants”) would result in irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if Executive breaches any of the provisions of the Restrictive Covenants, the Company shall have the ability to seek the following rights and remedies, each of which rights and remedies shall be independent of the other and severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity (including, without limitation, the recovery of damages): (a) the right and remedy to have the Restrictive Covenants specifically enforced (without posting bond and without the need to prove
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damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants and (b) the right and remedy to require Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits (collectively, “Benefits”) derived or received by her as the result of any transactions constituting a breach of the Restrictive Covenants, and Executive shall account for and pay over such Benefits to the Company and, if applicable, its affected subsidiaries and/or affiliates. The breach of any of the Restrictive Covenants shall not affect the continuing validity or enforceability of this Agreement. Executive agrees that in any action seeking specific performance or other equitable relief, she will not assert or contend that any of the provisions of the Restrictive Covenants are unreasonable or otherwise unenforceable. |
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17. Section 409A Compliance. All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. Because the Executive is a “specified employee” (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder), any part of the Severance that constitutes non-qualified deferred compensation under Section 409A of the Code shall be delayed until the earlier of (A) the business day following the six-month anniversary of the date her separation from service becomes effective, and (B) the date of the Executive’s death, but only to the extent necessary to avoid such penalties under Section 409A of the Code. On the earlier of (A) the business day following the six-month anniversary of the date her separation from service becomes effective, and (B) the Executive’s death, the Company shall pay the Executive in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid the Executive prior to that date under this Agreement. It is intended that each installment of the Severance shall be treated as a separate “payment” for purposes of Section 409A of the Code. |
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18. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. Executive represents and warrants that she has the capacity to act on her own behalf and on behalf of all who might claim through her to bind them to the terms and conditions of this Agreement. Each Party warrants and represents that there are no liens
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or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein. |
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19. Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision. |
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20. Acknowledgement. The Executive acknowledges and agrees that she remains bound by and subject to the terms of the Employment Agreement that survive termination of her employment to the extent necessary to effectuate the terms contained therein including, without limitation, Executive’s covenants of confidentiality and non-solicitation, which covenants are reaffirmed herein. Such covenants include, without limitation, Executive’s agreement not to use or disclose Confidential Information (as such term is defined in the Employment Agreement). The Executive acknowledges and agrees she has returned (or will return on or prior to the Separation Date) all Company property and other tangible products and documents belonging to the Company pursuant to Section 8(c) of the Employment Agreement. |
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21. Indemnity. The Company acknowledges and agrees that Executive’s Indemnity Agreement with the Company remains in full force and effect. The foregoing shall not be interpreted to limit any rights of indemnification the Company may owe Executive under law. |
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22. Entire Agreement. This Agreement, together with the Waiver and Release of Claims attached as an exhibit hereto, and the terms of the Employment Agreement that survive the termination of the Executive’s employment, represent the entire Agreement and understanding between the Company and Executive concerning the subject matter of this Agreement and Executive’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Executive’s relationship with the Company. |
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23. Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and a duly authorized representative of the Company. |
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24. Governing Law. This Agreement shall be governed by the laws of the State of California, without regard for choice-of-law provisions. |
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25. Attorneys’ Fees. If any action or proceeding relating to this Agreement or the Employment Agreement or enforcement of any provision of this Agreement or the Employment Agreement is brought against any party to this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees, costs and disbursements (in addition to any other relief to which the prevailing party may be entitled). |
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26. Counterparts. This Agreement may be executed in counterparts and by facsimile or pdf, and each counterpart and facsimile or pdf shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. |
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.
Executive, an individual
Dated: 12/9/2022/s/ Sherry S. Bahrambeygui
Sherry S. Bahrambeygui
Dated: 12/9/2022By /s/ Robert E. Price
Name: Robert E. Price
Its: Chairman
Schedule 1
Vesting Schedule of Grants not Forfeited
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Grant # |
Grant Date |
Grant Type |
Number of Shares to Vest |
Vesting Date |
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002576 |
10/12/2020 |
RSA |
8,912 |
Separation Date |
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002895 |
9/29/2021 |
RSA |
17,468 |
Separation Date |
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002895 |
9/29/2021 |
RSA |
7,561 |
Separation Date |
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003348 |
9/30/2022 |
RSA |
22,996 |
Separation Date |
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003348 |
9/30/2022 |
RSA |
9,954 |
Separation Date |
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003348 |
9/30/2022 |
RSA |
0 |
N/A |
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002577 |
10/12/2020 |
PSU |
4,456 |
Separation Date |
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002909 |
9/29/2021 |
PSU |
8,734 |
Separation Date |
|
002909 |
9/29/2021 |
PSU |
2,393 |
Separation Date |
|
003363 |
9/30/2022 |
PSU |
11,498 |
Measurement Date(1) |
|
003363 |
9/30/2022 |
PSU |
3,150 |
Measurement Date(1) |
|
003363 |
9/30/2022 |
PSU |
0 |
N/A |
|
(1) The “Measurement Date” means the earlier of (i) the date on which the Compensation Committee of the Board of Directors determines the performance achievement level for performance stock units for executive officers for fiscal year 2023 and (ii) October 20, 2023. |
Schedule 2
Employees Exempt from Non-Solicitation Covenant
Jennifer Rivera
Exhibit A
WAIVER AND RELEASE OF CLAIMS
a.any and all claims relating to or arising from Executive’s employment relationship with the Company and the termination of that relationship;
b.any and all claims relating to, or arising from, Executive’s right to purchase, or actual purchase of shares of stock of the Company or ownership of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;
c.any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;
d.any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967 (the “ADEA”); the Older Workers Benefit Protection Act; the Executive Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the Sarbanes-Oxley Act of 2002; the Immigration Control and Reform Act; the California Family Rights Act; the California Labor Code; the California Workers’ Compensation Act; and the California Fair Employment and Housing Act;
f. any and all claims for violation of the federal or any state constitution;
g.any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;
h.any claim for any loss, cost, damage, or expense arising out of any dispute over the nonwithholding or other tax treatment of any of the proceeds received by Executive as a result of this Agreement; and
i.any and all claims for attorneys’ fees and costs.
The releases described herein shall not be applicable to any claim(s) to enforce, or for breach of, the Agreement. The releases described herein also shall not be applicable to future claims which do not yet exist. Executive agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not release claims that cannot be released as a matter of law.
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2. California Civil Code Section 1542; Unknown Claims. |
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a. California Civil Code Section 1542. Executive acknowledges that she has been advised to consult with legal counsel and is familiar with the provisions of California Civil Code Section 1542, a statute that otherwise prohibits the release of unknown claims, which provides as follows: |
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
Executive, being aware of said code section, agrees to expressly waive any rights she may have thereunder, as well as under any other statute or common law principles of similar effect.
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b. Unknown Claims. Executive acknowledges that she has been advised to consult with legal counsel and that she is familiar with the principle that a general release does not extend to claims that the releaser does not know or suspect to exist in her favor at the time of executing the release, which, if known by her, must have materially affected her settlement with the releasee. Executive, being aware of said principle, agrees to expressly waive any rights she may have to that effect, as well as under any other statute or common law principles of similar effect. |
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3. No Pending or Future Lawsuits. Executive represents that she has no lawsuits, claims, or actions pending in her name, or on behalf of any other person or entity, against the Company or any of the other Releasees. Executive also represents that she does not intend to bring any claims on her own behalf or on behalf of any other person or entity against the Company or any of the other Releasees. Executive represents and affirms that she is unaware of any injury or illness that may give rise to a workers’ compensation claim and that she has sustained no injury or illness at or as a result of her work with the Company. Executive represents that she has not filed a claim with any state Workers’ Compensation system. |
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4. Limitations. Nothing in the Agreement or this Waiver and Release of Claims prohibits Executive from reporting possible violations of federal law or regulation to any government agency or entity, including, but not limited to, the Securities and Exchange Commission, the Equal
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Employment Opportunity Commission (the “EEOC”), or any similar state agency, or making other disclosures that are protected under the whistleblower provisions of applicable law. Executive does not need prior authorization of the Company to make any such reports or disclosures and Executive is not required to notify the Company that Executive has made such reports or disclosures. Nothing in this Waiver and Release of Claims shall affect the EEOC’s rights and responsibilities to enforce the Civil Rights Act of 1964, as amended, the ADEA, the National Labor Relations Act or any other applicable law, nor shall anything in this Waiver and Release of Claims be construed as a basis for interfering with Executive’s protected right to file a timely charge with, or participate in an investigation or proceeding conducted by, the EEOC, the National Labor Relations Board (the “NLRB”), or any other state, federal or local government entity; provided, however, if the EEOC, the NLRB, or any other state, federal or local government entity commences an investigation on Executive’s behalf, Executive specifically waives and releases her right, if any, to recover any monetary or other benefits of any sort whatsoever arising from any such investigation or otherwise, nor will you seek or accept reinstatement to Executive’s former position with the Company. |
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5. Acknowledgements. Executive acknowledges that she has carefully read and fully understand this Waiver and Release of Claims. Executive acknowledges that she has not relied on any statement, written or oral, which is not set forth in the Agreement or this Waiver and Release of Claims. Executive further acknowledges that she is hereby advised in writing to consult with an attorney prior to executing this Waiver and Release of Claims; that she is not waiving or releasing any rights or claims that may arise after the date of execution of this Waiver and Release of Claims; that she is releasing claims under the ADEA; that she executes this Waiver and Release of Claims in exchange for monies in addition to those to which she is already entitled; that the Company gave Executive a period of at least twenty-one (21) days within which to consider this Waiver and Release of Claims and a period of seven (7) days following her execution of this Waiver and Release of Claims to revoke her ADEA waiver as provided below; that if Executive voluntarily executes this Waiver and Release of Claims prior to the expiration of the 21st day, she will voluntarily waive the remainder of the twenty-one (21) day consideration period; that any changes to this Waiver and Release of Claims by Executive once it has been presented to Executive will not restart the 21 day consideration period; and Executive enters into this Waiver and Release of Claims knowingly, willingly and voluntarily in exchange for the Separation Benefits. To receive the Separation Benefits provided in the Agreement, this Waiver and Release of Claims must be signed and returned to Francisco Velasco, Executive Vice President, General Counsel and Secretary, at 9740 Scranton Road Suite # 125, San Diego, California 92121 or at, if by email delivery, [email protected], on or before December 16, 2022. Nothing in this Waiver and Release of Claims constitutes a waiver any rights Executive has under the Agreement. Executive acknowledges and represents that, other than the consideration set forth in the Agreement, the Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off, premiums, leaves, housing allowances, relocation costs, reimbursable expenses, commissions, stock, restricted stock, restricted stock units, performance stock units, stock options, vesting, and any and all other benefits and compensation due to Executive, up to the date of Execution of this Agreement. |
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6. Revocation Right. Executive may revoke her release of her ADEA claims up to seven (7) days following her signing this Waiver and Release of Claims. Notice of revocation must be received in writing by Francisco Velasco, at the Company, at 9740 Scranton Road Suite # 125, San Diego, California 92121, or at, if by email delivery, [email protected], no later than the seventh day (excluding the date of execution) following the execution of this Waiver and Release of Claims. The ADEA release is not effective or enforceable until expiration of the seven day period. However, the ADEA release becomes fully effective, valid and irrevocable if it has not been revoked
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within the seven day period immediately following Executive’s execution of this Waiver and Release of Claims. The Parties agree that if Executive exercises her right to revoke this Waiver and Release of Claims, then she is not entitled to any of the Separation Benefits set forth in the Agreement. This Waiver and Release of Claims shall become effective eight (8) days after Executive’s execution if she has not revoked her signature as herein provided (such date, the “Release Effective Date”). |
{signature page follows}
I hereby provide this Waiver and Release of Claims as of the date indicated below and acknowledge that the execution of this Waiver and Release of Claims is in further consideration of the Separation Benefits set forth in the Agreement, to which I acknowledge I would not be entitled if I did not sign this Waiver and Release of Claims. I intend that this Waiver and Release of Claims become a binding agreement by and between me and the Company if I do not revoke my acceptance within seven (7) days.
Sherry S. Bahrambeygui
Dated:
Exhibit B
Statement Regarding Separation
AUTHORIZED STATEMENTS
Sherry Bahrambeygui will be resigning as Chief Executive Officer, effective February 3, 2023, the date of the Company’s annual stockholder meeting, in order to pursue new professional and philanthropic interests. As part of the PriceSmart leadership transition plan, Sherry will return to serving stockholders as a member of the Board of Directors of the Company. Prior to her tenure as CEO, she served on the Company’s board as an independent director for a period of 8 years, including having served as Vice Chairman and Chair of the Compensation Committee.
“Sherry’s performance as CEO during some of the most challenging years in the history of PriceSmart has been marked by record revenues and profits as well as membership growth, club growth and the launch of online shopping and delivery. The Company is poised to build on Sherry’s and her team’s accomplishments over the past 4 years. We appreciate all of her contributions and look forward to Sherry’s continued strategic and operational input to drive the future success of PriceSmart,” commented Chairman Robert Price.
“These past four years have been an incredibly challenging and professionally rewarding time. I have been so fortunate to work with an incredible team in the U.S. and in all of our markets that share my dedication to our employees and Members. While my day-to-day role is changing, I will remain connected to our incredible workforce by serving on the Board and helping build on the Company’s record performance,” said Ms. Bahrambeygui.
SSB Statement
“I am stepping down as CEO, effective February 3, 2023, to pursue new professional and philanthropic interests.
It has been over 4 intense years leading this company through a series of unprecedented challenges, including the COVID pandemic, global supply chain disruption, soaring inflation and significant foreign currency headwinds.
At the same time, it has been 4 incredible years of working shoulder-to-shoulder with an inspiring team of people who have dedicated themselves and risen to every single challenge.
In the last 4+ years, we have kept our people and our company safe, launched online shopping and membership, grown our clubs, increased membership benefits, and advanced our technology and analytics capabilities. The results are evident by how we’ve achieved continual annual record sales, record profits and record Membership growth!
I am proud of our team members and will always have a strong connection to each of them and the Company. I will continue to serve as a director of the Board, as I have been since 2011, and look forward to supporting the team and the Company to soar even higher,” said Ms. Bahrambeygui.
B-1
PriceSmart Announces Leadership Transition
Sherry Bahrambeygui to Resign as CEO Effective February 3, 2023
Robert Price to Become Interim CEO
San Diego, CA (December 9, 2022) – PriceSmart, Inc. (NASDAQ: PSMT) announced today that Sherry Bahrambeygui will be resigning as Chief Executive Officer, effective February 3, 2023, the date of the Company’s annual stockholder meeting, in order to pursue new professional and philanthropic interests. Robert Price, the Company’s founder and Chairman of the Board, will become Interim Chief Executive Officer. John Hildebrandt, the Company’s Executive Vice President and Chief Operating Officer, has been promoted to President and Chief Operating Officer. David Price, who currently serves as the Company’s Vice President – Environmental and Social Responsibility and as a member of the Board, will be promoted to Executive Vice President and Chief of Staff to the Interim CEO.
As part of the PriceSmart leadership transition plan, Ms. Bahrambeygui will continue serving stockholders as a member of the Board of Directors of the Company. Prior to her tenure as CEO, she served on the Company’s Board as a director for eight years, including having served as Vice Chairman and Chair of the Compensation Committee. Between now and February 3, Ms. Bahrambeygui will continue her employment and will work towards the orderly transition of her responsibilities. She has agreed to make herself available at the Company’s request for up to 100 hours of transition support during the twelve months following her resignation.
“Sherry’s performance as CEO during some of the most challenging years in the history of PriceSmart has been marked by record revenues and profits as well as membership growth, club growth and the launch of online shopping and delivery. The Company is poised to build on Sherry’s and her team’s accomplishments over the past four years. We appreciate all of her contributions and look forward to Sherry’s continued strategic and operational input to drive the future success of PriceSmart,” commented Chairman Robert Price.
“These past four years have been an incredibly challenging and professionally rewarding time. I have been so fortunate to work with an incredible team in the U.S. and in all of our markets that share my dedication to our employees and Members. While my day-to-day role is changing, I will remain connected to our incredible workforce by serving on the Board and helping build on the Company’s record performance,” said Ms. Bahrambeygui.
About PriceSmart
PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, selling high quality merchandise and services at low prices to PriceSmart Members. PriceSmart operates 50 warehouse clubs in 12 countries and one U.S. territory (nine in Colombia; eight in Costa Rica; seven in Panama; five in the Dominican Republic and Guatemala, four in Trinidad; three in Honduras; two each in El Salvador, Nicaragua, and Jamaica; and one each in Aruba, Barbados and the United States Virgin Islands). In addition, the Company plans to open a warehouse club in San Miguel, El Salvador in the spring of 2023 and a warehouse club in Medellín, Colombia in the summer of 2023. Once these two new clubs are open, the Company will operate 52 warehouse clubs.
This press release may contain forward-looking statements concerning PriceSmart, Inc.'s ("PriceSmart", the "Company" or "we") anticipated future revenues and earnings, adequacy of future cash flows, omni-channel initiatives, proposed warehouse club openings, the Company's performance relative to competitors and related matters. These forward-looking statements include, but are not limited to, statements containing the words “expect,” “believe,” “will,” “may,” “should,” “project,” “estimate,” “anticipated,” “scheduled,” “intend,” and like expressions, and the negative thereof. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, but not limited to: various political, economic and compliance risks associated with our international operations, adverse changes in economic conditions in our markets, natural disasters, volatility in currency exchange rates and illiquidity of certain local currencies in our markets, competition, consumer and small business spending patterns, political instability, increased costs associated with the integration of online commerce with our traditional business, whether the Company can successfully execute strategic initiatives, our reliance on third party service providers, including those who support transaction and payment processing, data security and other technology services, cybersecurity breaches that could cause disruptions in our systems or jeopardize the security of
Member or business information, cost increases from product and service providers, interruption of supply chains, novel coronavirus (COVID-19) related factors and challenges, exposure to product liability claims and product recalls, recoverability of moneys owed to PriceSmart from governments, and other important factors discussed in the Risk Factors section of the Company's most recent Annual Report on Form 10-K, and other factors discussed from time to time in other filings with the SEC, which are accessible on the SEC's website at www.sec.gov, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Forward-looking statements speak only as of the date that they are made, and the Company does not undertake to update them, except as required by law.
For further information, please contact Michael L. McCleary, EVP, Chief Financial Officer and Principal Accounting Officer (858) 404-8826 or send an email to [email protected].