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EXHIBIT 10.37
Xx. Xxxxx X. Xxxxxx
April 18, 1997
Page 1
DECKERS OUTDOOR CORPORATION
000-X Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
April 18, 1997
Personal and Confidential
Xx. Xxxxx X. Xxxxxx
Deckers Outdoor Corporation
0000 Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Dear Xxxxx:
On behalf of Deckers Outdoor Corporation ("Deckers"), I am confirming
the extension and restatement of your employment agreement through December 31,
1999 effective as of January 1, 1997. The terms and conditions, as approved by
the Compensation Committee and the Board of Directors, of this offer are as
follows:
1. Positions and Titles:
- Chief Operating Officer, Vice President and a member
of the Board of Directors.
- You will be promoted to President when the minimum
performance criteria for Level Three is achieved to
raise your base salary to Level Three.
- You will report to the Chief Executive Officer ("CEO").
- You will be responsible for implementing the plan to
meet corporate objectives by managing operations,
which includes production planning, manufacturing,
sales, marketing, distribution, accounting, finance,
logistics, inventory control, MIS, human resources,
sales service, product development, the coordination
of departments and other areas as directed by the
CEO.
2. Compensation and Bonus:
- You will receive a Level One base salary of Two
Hundred Forty Thousand Dollars ($240,000) per annum.
The raise to this level will commence as of January
1, 1997.
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April 18, 1997
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- You will receive a Level Two base salary of Two
Hundred Ninety Thousand Dollars ($290,000) when
certain minimum performance criteria have been
achieved. The raise to this level will commence as of
January 1 of the year following the year in which
these events have occurred:
(a) The Teva License has been extended
for a minimum of 5 years to 2006.
(b) Earnings per share are at least $.60.
(c) The end-of-the-year backlog is at
least 15% greater than that of
December 31, 1996.
(d) Deckers' stock performance is at
least in the fifty percentile of its
peer group.
- You will receive a Level Three base salary of Three
Hundred Fifty Thousand Dollars ($350,000) when
certain minimum performance criteria have been
achieved. The raise to this level will commence as of
January 1 of the year following the year in which
these events have occurred:
(a) The Teva License has been extended
for a minimum of 5 years to 2006.
(b) Earnings per share are at least $.90.
(c) The end-of-the-year backlog is at
least 30% greater than that of
December 31, 1996.
(d) Deckers' stock performance is at
least in the fifty percentile of its
peer group.
- Your annual bonuses will be based on the following,
with excellent being the budgeted plan:
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April 18, 1997
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1997 1998 1999
---- ---- ----
Very good (60%): $144,000 $174,000 $210,000
Excellent (80%): $192,000 $232,000 $280,000
Outstanding (100%): $240,000 $290,000 $350,000
- Your individual bonus goals will be established prior
to the start of each year and will be based on goals
and milestones that measure performance in the
following areas, each being weighted at the
percentages below:
Earnings Per Share 25%
Stock Performance vs. Peer Group 25%
Discretionary 20%
Sales 10%
Positioning for the Future 10%
Team Bonus and Other 10%
---
100%
The goals for 1997 are as follows:
60% 80% 100%
--- --- ----
EPS: .55 .60 .65
Sales 112 114 116
Stock if Peer Group
is 10 companies: #5 performer #4 performer #1, 2, 3 performer
Stock if Peer Group
is 12 companies: #6 performer #4, 5 performer #1, 2, 3 performer
The "Discretionary," "Position for the Future," "Team Bonus" and others
will be established subsequently.
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April 18, 1997
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3. Loan to Purchase Stock:
- Deckers will provide you with a loan to purchase up
to 100,000 shares of Deckers' Common Stock under the
following terms:
- The amount of the loan will be for the
amount paid for the stock, which will be
purchased from Deckers at the fair market
value at April 18, 1997.
- The promissory note will bear interest at
the applicable federal rate and will be
secured by the stock so acquired and by any
severance pay, including any unpaid bonuses.
- This sale will be effective as of April 18,
1997.
4. Termination and Change of Control:
- In the event that termination occurs for reasons
other than: (1) cause, or (2) your voluntary
termination, six (6) months' severance will be
provided, plus committed incentives.
- For purposes of this letter agreement, "cause" will
be defined as contemplated by Section 2924 of the
California Labor Code (a copy of which is in effect
as of the date hereof is attached to this letter
agreement as Exhibit A and made a part of this letter
agreement).
- In the event that there is a change of control and
termination or constructive termination occurs, there
will be twelve (12) months' of severance, including
minimum guarantees, plus the acceleration of vesting
of all stock options.
- A "change of control" shall be deemed to have taken
place if (1) there is a merger, consolidation, sale
of all or a major portion of the assets of Deckers
(or a successor organization) or similar transaction
or circumstance where any person or group (other than
Xxxxxxx X. Xxxx) acquires or obtains the right to
acquire, in one or more transactions, beneficial
ownership of more than fifty percent (50%) of the
outstanding shares of any class of voting stock of
Deckers (or a successor organization); and (2) as a
result of or in connection with such event, your
position is affected (in terms of compensation,
benefits, title,
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April 18, 1997
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authority, duties, reporting relationships, reports
etc.) and no equivalent or better position is
available at Deckers or a successor organization.
5. Other Benefits:
- You are to receive insurance, medical and health
benefits currently available pursuant to existing
policies.
- You will receive all other benefits currently
available to members of Deckers' senior management
and you will be subject to the policies and terms
outlined in Deckers' human resources policy manual.
- You will be covered by Deckers' standard Directors
and Officers insurance policy and indemnification
agreements. You will also be subject to Deckers'
confidentiality and trade secret agreements.
- Your annual fees for YPO International and the Santa
Xxxxxxx Chapter will be paid by Deckers.
- One YPO University, seminar, or conference per year,
including travel but not user-pay off-sites or
academies, will be paid by Deckers up to $15,000 per
year.
6. Effective Date:
- The Effective Date of this letter agreement is
January 1, 1997 and shall continue through
December 31, 1999 unless terminated earlier.
7. Arbitration Agreement:
- Any claim or controversy arising out of or related to
this letter agreement, the employment relationship or
the subject matter hereof, shall be settled by
binding arbitration before one arbitrator in Santa
Barbara, California in accordance with the Commercial
Arbitration Rules of the American Arbitration
Association; and judgment upon any award rendered by
the arbitrator may be entered as a judgment in any
court having competent jurisdiction. The parties
shall have rights to discovery as provided in Section
1283.05 of the California Code of Civil Procedure,
which is incorporated herein by this reference. The
prevailing party in any such dispute shall be awarded
all of its costs and expenses, including reasonable
attorneys' fees.
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April 18, 1997
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Very truly yours,
DECKERS OUTDOOR CORPORATION
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx,
Chairman of the Board and
Chief Executive Officer
Please acknowledge your acceptance of the terms and conditions of this
letter agreement by signing and returning one copy of this letter agreement.
Date: April 18, 1997
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
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Exhibit A
Section 2924 of the California Labor Code
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EXHIBIT A
Section 2924
California Labor Code
Section 2924. Employment for specified term; Grounds for termination by employer
An employment for a specified term may be terminated at any time by the
employer in case of any willful breach of duty by the employee in the course of
his employment, or in case of his habitual neglect of his duty or continued
incapacity to perform it.
