Summary
Costco Wholesale Corporation (COST) filed an 8-K on November 28, 2014, to report on the executive employment agreement entered into with its President and Chief Executive Officer, W. Craig Jelinek. The agreement, effective September 1, 2014, outlines the terms of Mr. Jelinek's employment for a one-year term, with provisions for renewal. Key aspects of the agreement include an annual base salary of $700,000 and a potential bonus of up to $200,000. Importantly for investors concerned with executive compensation and retention, the agreement details severance benefits in the event of involuntary termination (not for cause, death, or disability) or resignation for good reason. These benefits include 1.5 times the annual base salary and target bonus, along with accelerated vesting of certain equity awards, providing a degree of security and incentive for the CEO.
Key Highlights
- 1Costco entered into an executive employment agreement with President and CEO W. Craig Jelinek, effective September 1, 2014.
- 2The agreement establishes a one-year term for Mr. Jelinek's role, with options for renewal.
- 3Mr. Jelinek's annual base salary is set at $700,000.
- 4The CEO is eligible for an annual bonus of up to $200,000.
- 5The agreement includes severance provisions for involuntary termination (excluding cause, death, disability) or resignation for good reason.
- 6Severance is calculated as 1.5 times the annual base salary and target bonus.
- 7Accelerated vesting of certain equity awards is provided under specific termination conditions.