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): August 27, 2018
 
CSS Industries, Inc.
 
 
(Exact name of registrant as specified in its charter)
 
Delaware
 
1-2661
 
13-1920657
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
450 Plymouth Road, Suite 300, Plymouth Meeting, PA
 
19462
(Address of principal executive offices)
 
(Zip Code)
 
 
Registrant’s telephone number, including area code:
(610) 729-3959
 
Not Applicable
 
 
(Former name or former address, if changed since 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:
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))
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
o
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.

On August 27, 2018, John M. Roselli, our Executive Vice President–Finance and Chief Financial Officer, notified us of his resignation. Effective August 31, 2018, he ceased serving as our Chief Financial Officer. He will provide transition services through September 7, 2018.

On August 29, 2018, we approved the appointment of Keith W. Pfeil as our Executive Vice President–Finance and Chief Financial Officer effective on August 31, 2018. In such capacity, Mr. Pfeil will serve as the Company’s principal financial officer.
 
Mr. Pfeil, age 40, has served as our Senior Vice President–Financial Planning and Analysis and Investor Relations since July 2017. From August 2016 to July 2017, he served as our Vice President–Financial Planning and Analysis. Prior to that, he served as Vice President–Financial Planning and Analysis for Paper Magic Group, Inc. (“Paper Magic”), a subsidiary of the Company, from June 2013 to July 2017. Since originally joining the Company in 2003 as a manager of financial analysis for Paper Magic, Mr. Pfeil has steadily increased his financial leadership position in the Company, including prior service in capacities such as Director of Internal Audit and Director of Financial Analysis. Mr. Pfeil also previously worked in the transaction advisory practice of Ernst & Young LLP and in the assurance practices of KPMG LLP and Arthur Andersen LLP, respectively. Mr. Pfeil holds an Executive Masters of Business Administration from Saint Joseph’s University and a Bachelor of Science in accounting from Elizabethtown College.
In connection with our appointment of Mr. Pfeil as Chief Financial Officer, we have entered into an employment agreement with Mr. Pfeil providing for the following effective from and after August 31, 2018: (i) a base salary of $330,000 per annum; (ii) participation in our management incentive program with a target incentive compensation opportunity amount equal to 60% of Mr. Pfeil’s then-current annual base salary; (iii) a future management recommendation to the Human Resources Committee of our Board of Directors for a grant to Mr. Pfeil of stock options to acquire 10,000 shares of Company common stock and 10,000 restricted stock units, all subject to the provisions of our 2013 Equity Compensation Plan and the terms of the grant instruments to be provided at the time of the grants; (iv) a company-leased automobile to be made available for Mr. Pfeil’s use, and (v) an allowance of up to $150,000 for reimbursement of relocation expenses. The foregoing description of the employment agreement is qualified in its entirety by the terms of such agreement, a copy of which is filed herewith as Exhibit 99.2.

Item 7.01 Regulation FD Disclosure.
On August 31, 2018, we issued a press release announcing the resignation of John M. Roselli as our Chief Financial Officer and the appointment of Keith W. Pfeil as our new Chief Financial Officer. A copy of such press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. This press release is being furnished pursuant to General Instruction B.2 of Form 8-K and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), nor is it subject to the liabilities of that section or deemed incorporated by reference into any filing made by us under the Exchange Act and/or the Securities Act of 1933.

2



Item 9.01 Financial Statements and Exhibits

(d) The following Exhibits are furnished, in the case of Exhibit 99.1, and filed, in the case of Exhibit 99.2, herewith:
EXHIBIT INDEX
 
 
 
 
 
Exhibit No.
 
Description
 
 
 
 


3



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.
                                
 
 
 
 
CSS Industries, Inc.
 
 
 
 
(Registrant)
 
 
 
 
 
 
 
 
 
 
 
 
Date:
 
August 31, 2018
 
By:
/s/ William G. Kiesling
 
 
 
 
 
 
William G. Kiesling
 
 
 
 
 
Vice President–Legal and Licensing and General Counsel
 
 
 
 
 
 
 
 
 
 
 
 
 
 


4


Exhibit 99.1
FINALLOGO2CEMAILSIGNATURE.JPG
NEWS RELEASE
For Immediate Release
Contact: Christopher J. Munyan
President and Chief Executive Officer
(610) 729-3740
CSS INDUSTRIES, INC. ANNOUNCES RESIGNATION OF CHIEF FINANCIAL OFFICER AND APPOINTMENT OF NEW CHIEF FINANCIAL OFFICER

PLYMOUTH MEETING, PA, August 31, 2018 – CSS Industries, Inc. (NYSE:CSS) announced today the resignation of John M. Roselli as Chief Financial Officer of the Company, and the appointment of Keith W. Pfeil as the Company’s new Chief Financial Officer, both effective today. Mr. Roselli is leaving the Company to pursue other business interests, and he will remain employed by CSS until September 7, 2018 to assist with transition-related matters.

Since joining CSS in 2003, Mr. Pfeil has served in various CSS financial, audit and business leadership positions, most recently serving as Senior Vice President – Financial Planning and Analysis and Investor Relations. Starting in June 2003 as a manager of financial analysis with our Paper Magic subsidiary, Mr. Pfeil steadily increased his leadership position within the Company, serving in capacities such as Director of Internal Audit, Director of Financial Analysis, and Vice President of Financial Planning and Analysis. Prior to his employment with CSS, Mr. Pfeil worked for Arthur Andersen LLP/KMPG LLP in their assurance practice and for Ernst & Young in their transaction advisory practice. Mr. Pfeil holds a Bachelor of Science in accounting from Elizabethtown College and an Executive Masters of Business Administration from Saint Joseph’s University.

“We thank John for his accomplishments as our CFO, including his work with Keith to improve our investor relations processes, and we wish him well in his future endeavors,” commented Christopher J. Munyan, CSS’ President and Chief Executive Officer. “We are excited about Keith’s promotion to become our new Chief Financial Officer. Keith’s extensive knowledge of our financial, audit and business operations, processes and systems (gained through his approximately 15 years of service to our Company) makes him well qualified to serve as our new CFO. Additionally, Keith helped us to develop CSS’ five strategic pillars for achievement of our objective to grow profitable sales and earnings, while improving return on invested capital. We look forward to Keith’s continued contributions to our Company.”






About CSS Industries, Inc.

CSS is a creative consumer products company, focused on the craft, gift and seasonal categories.  For these design-driven categories, we engage in the creative development, manufacture, procurement, distribution and sale of our products with an omni-channel approach focused primarily on mass market retailers.  In the seasonal category, we focus on gift packaging items such as ribbon, bows, greeting cards, wrapping paper, bags, boxes, tags and gift card holders, in addition to specific holiday-themed decorations, accessories, and activities, such as Easter egg dyes and novelties and Valentine’s Day classroom exchange cards.   For the gift category, our core products include items designed to celebrate certain life events or special occasions, such as weddings, birthdays, anniversaries, graduations, or the birth of a child, as well as stickers, memory books and stationery.  Our core products within the craft category include ribbons, trims, buttons, sewing patterns, knitting needles, needle arts and kids crafts. In keeping with our corporate mission, all of our products are designed to help make life memorable.





Exhibit 99.2
FINALLOGO2CEMAILSIGNATUREA01.JPG
August 30, 2018

Personal and Confidential

Mr. Keith Pfeil
[        ]
[        ]

Dear Keith:

Subject to and conditioned upon approval by the Human Resources Committee (the “Committee”) of the Board of Directors of CSS Industries, Inc. (“CSS”), we are pleased to extend an offer of promotion to you as CSS’ Executive Vice President and Chief Financial Officer.

1.     Commencement Date – Your promotion will be effective on August 31, 2018. Your employment status with CSS will continue to be that of an employee at-will, subject to termination by either you or CSS at any time.

2.     Compensation - The compensation package for this position will be as follows:

A.     Base Salary – A base salary in the gross amount of Three Hundred Thirty Thousand Dollars ($330,000) per annum payable at such times as CSS pays its executives. There will be an annual performance review thereafter and you will then be considered for an increase in base salary, commencing April 1, 2019, consistent with the then current CSS policy.

        B.     Incentive Compensation – For CSS’ fiscal year ending March 31, 2019, you will be eligible to participate in the Management Incentive Plan (“MIP”). For purposes of calculating your potential 2019 fiscal year incentive compensation, and depending on the extent of achievement of certain individual and CSS objectives, you will have the potential of earning incentive compensation based upon based upon (i) 50% of your base salary in effect immediately prior to your promotion hereunder, prorated for the portion of the 2019 fiscal year prior to the effective date of your promotion, and depending on the extent of achievement of certain individual and CSS objectives, and (ii) 60% of your base salary specified in Section 2.A. above, prorated for the remaining portion of the 2019 fiscal year, and depending on the extent of achievement of certain individual and CSS objectives.

For CSS’ fiscal year ending March 31, 2020, depending on the extent of achievement of certain individual and CSS objectives, you will have the potential of earning for a full fiscal year period incentive compensation with a target opportunity of 60% of your then base salary. The financial target objectives of your potential 2020 fiscal year incentive compensation will be determined based upon the actual full 2020 fiscal year financial results of CSS.

CSS Industries, Inc. | 450 Plymouth Road, Suite 300 | Plymouth Meeting, PA 19462


Mr. Keith Pfeil
August 30, 2018
Page 2



C.     Equity Grants – We will recommend that you be granted a stock option to acquire 10,000 shares of CSS common stock and a time-vested stock bonus award of 10,000 restricted stock units of CSS common stock, which recommendation will be provided to the Committee for consideration at the next available date upon which the Committee considers equity grant recommendations after the date upon which you commence employment with CSS. These grants will in all respects be subject to and in accordance with the provisions of the CSS 2013 Equity Compensation Plan, and the terms of the grant letters to be provided to you at the time of the grants.
Thereafter, you will be eligible to be recommended to the Committee to receive annual equity grants, the specifics of which shall be determined at the Committee’s sole discretion.
D.     Company Automobile – You will continue to be provided use of a CSS- leased automobile comparable to the owned or leased automobiles then made available by CSS to its Vice President-level officers.

E.     Relocation – You will be eligible to be reimbursed for permitted expenses associated with the relocation of your primary residence to a reasonable commuting distance of the Plymouth Meeting, PA office in accordance with the applicable terms of the CSS relocation policy. The aggregate amount of relocation expenses under this Section 2.E. shall not exceed $150,000 (including any “gross up” amounts paid to you to compensate you for any federal, state or local income taxes attributable to such relocation expenses). You will have a period of 12 months from the effective date of your promotion to complete your relocation. It is your responsibility to consult with your tax advisor, accountant or the Internal Revenue Service with regard to tax treatment of items reimbursable under the relocation policy.

F.     Vacation - You will continue to be eligible to accrue four (4) weeks vacation each calendar year, in accordance with the applicable terms of CSS’ then current vacation policy.

3.     Benefits Coverage – You will continue to be entitled to participate in those CSS benefit programs available to its officer level personnel in accordance with the applicable terms of these programs.

4.     Confidential Information .

A.     Confidentiality Agreement . You recognize and acknowledge that by reason of employment by and service to CSS, you have had and will continue to have access to confidential information of CSS and its affiliates, including, without limitation, information and knowledge pertaining to products and services offered, inventions, innovations, designs, ideas, plans, trade secrets, proprietary information, computer systems and software, packaging, advertising, distribution and sales methods and systems, sales and profit figures, customer and client lists, and relationships between or among CSS and its affiliates and dealers, distributors, wholesalers, customers, clients, suppliers and others who have business dealings with CSS and such affiliates (“Confidential Information”). You acknowledge that such Confidential Information is a valuable and unique asset of CSS and/or its affiliates, and covenant that you will not, either during or at any time after your employment with CSS, disclose any such Confidential Information to any person for any reason whatsoever (except as your



Mr. Keith Pfeil
August 30, 2018
Page 3


duties described herein may require or except as provided in the Reports to Government Entities clause below) without the prior written consent of the Committee, unless such information is in the public domain through no fault of you or except as may be required by law.

                 B.        Reports to Government Entities .  Nothing in this letter, including the Confidentiality Agreement clause above, restricts or prohibits you from initiating communications directly with, responding to any inquiries from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or from filing a claim or assisting with an investigation directly with a self-regulatory authority or a government agency or entity, including the U.S. Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General (collectively, the “Regulators”), or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation.  You do not need the prior authorization of CSS to engage in conduct protected by this paragraph, and you do not need to notify CSS that you have engaged in such conduct .

                Please take notice that federal law provides criminal and civil immunity to federal and state claims for trade secret misappropriation to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances that are set forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a suspected violation of the law, or in connection with a lawsuit for retaliation for reporting a suspected violation of the law.

5.     Non-Competition . During your employment with CSS, and for a period of one year thereafter, you will not, without the prior written consent of the Committee, directly or indirectly, own, manage, operate, join, control, finance or participate in the ownership, management, operation, control or financing of, or be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise with or use or permit your name to be used in connection with, any business or enterprise engaged within any portion of the United States, Canada, the United Kingdom or Australia (collectively, the “Territory”) (whether or not such business is physically located within the Territory) that is engaged in the creation, design, manufacture, distribution or sale of any products or services that are the same or of a similar type then manufactured or otherwise provided by CSS or by any of its affiliates during your employment with CSS (the “Business”). You recognize that you will be involved in the activity of the Business throughout the Territory, and that more limited geographical limitations on this non-competition covenant (and the non-solicitation covenant set forth in Section 6 of this letter agreement) are therefore not appropriate. The foregoing restriction shall not be construed to prohibit your ownership of not more than five percent (5%) of any class of securities of any corporation which is engaged in any of the foregoing businesses having a class of securities registered pursuant to the Securities Act of 1933, provided that such ownership represents a passive investment and that neither you nor any group of persons including you in any way, either directly or indirectly, manages or exercises control of any such corporation, guarantees any of its financial obligations, otherwise takes any part in business, other than exercising his rights as a shareholder, or seeks to do any of the foregoing. We acknowledge and agree that if CSS fails to satisfy its material obligations to you under this letter agreement after you have provided CSS with at least thirty (30) days written notice of such failure, then your obligation to comply with the non-competition covenant set forth in this Section 5 shall be waived.




Mr. Keith Pfeil
August 30, 2018
Page 4



6.     No Solicitation . During your employment with CSS, and for a period of one year thereafter, you agree not to, either directly or indirectly, (i) call on or solicit with respect to the Business any person, firm, corporation or other entity who or which at the time of termination of your employment with CSS was, or within two years prior thereto had been, a customer of CSS or any of its affiliates, or (ii) solicit the employment of any person who was employed by CSS or by any of its affiliates on a full or part-time basis at any time during the course of your employment with CSS, unless prior to such solicitation of employment, such person’s employment with CSS or any of its affiliates was terminated. We acknowledge and agree that if CSS fails to satisfy its material obligations to you under this letter agreement after you have provided CSS with at least thirty (30) days written notice of such failure, then your obligation to comply with the non-solicitation covenant set forth in this Section 6 shall be waived.

7.     Equitable Relief .

A.     You acknowledge that the restrictions contained in Sections 4, 5, and 6 of this letter agreement are reasonable and necessary to protect the legitimate interests of CSS and its affiliates, that CSS would not have entered into this letter agreement in the absence of such restrictions, and that any violation of any provision of those Sections will result in irreparable injury to CSS and its affiliates. You represent that your experience and capabilities are such that the restrictions contained in Sections 4 and 5 hereof will not prevent you from obtaining employment or otherwise earning a living at the same general level of economic benefit as is anticipated by this letter agreement. YOU FURTHER REPRESENT AND ACKNOWLEDGE THAT (i) YOU HAVE BEEN ADVISED BY CSS TO CONSULT YOUR OWN LEGAL COUNSEL IN RESPECT OF THIS LETTER AGREEMENT, (ii) THAT YOU HAVE HAD FULL OPPORTUNITY, PRIOR TO EXECUTION OF THIS LETTER AGREEMENT, TO REVIEW THOROUGHLY THIS LETTER AGREEMENT WITH YOUR COUNSEL, AND (iii) YOU HAVE READ AND FULLY UNDERSTAND THE TERMS AND PROVISIONS OF THIS LETTER AGREEMENT.

B.     You agree that CSS shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as any other remedies provided by law arising from any violation of Sections 4, 5, and 6 of this letter agreement, which rights shall be cumulative and in addition to any other rights or remedies to which CSS may be entitled. In the event that any of the provisions of Sections 4, 5, and 6 hereof should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable law.

C.     You and CSS irrevocably and unconditionally (i) agree that any suit, action or other legal proceeding arising out of Sections 4, 5, and 6 of this letter agreement, including without limitation, any action commenced by CSS for preliminary or permanent injunctive relief or other equitable relief, may be brought in the United States District Court for the Eastern District of Pennsylvania, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in Philadelphia County, Pennsylvania, (ii) consent to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waive any objection to the laying of venue of any such suit, action or proceeding in any such court.



Mr. Keith Pfeil
August 30, 2018
Page 5



D.     You agree that CSS may provide a copy of Sections 4, 5, and 6 of this letter agreement to any business or enterprise (i) which you may directly or indirectly own, manage, operate, finance, join, participate in the ownership, management, operation, financing, control or control of, or (ii) with which you may be connected with as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise, or in connection with which you may use or permit your name to be used.

8.      Governing Law . This letter agreement shall be governed by and interpreted under the laws of the Commonwealth of Pennsylvania without giving effect to any conflict of laws provisions.

9.     Section 409A of the Code .

A.        Interpretation .  Notwithstanding the other provisions hereof, this letter agreement is intended to comply with the requirements of Section 409A of the Code, to the extent applicable, and this letter agreement shall be interpreted to avoid any penalty sanctions under Section 409A of the Code.  Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with Section 409A of the Code and, if necessary, any such provision shall be deemed amended to comply with Section 409A of the Code and regulations thereunder.  If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under Section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed.  All payments to be made upon a termination of employment under this letter agreement that are deferred compensation may only be made upon a “separation from service” under Section 409A of the Code.  For purposes of Section 409A of the Code, each payment made under this letter agreement shall be treated as a separate payment.  In no event may you, directly or indirectly, designate the calendar year of payment While this letter agreement is intended to comply with the requirements of Section 409A of the Code, to the extent applicable, neither CSS nor any of its affiliates makes or has made any representation, warranty or guarantee of any federal, state or local tax consequences of your receipt of any benefit or payment hereunder, including but not limited to, under Section 409A of the Code, and you are solely responsible for all taxes that may result from your receipt of the amounts payable to you under this letter agreement.
B. Payment Delay .  To the maximum extent permitted under Section 409A of the Code, the severance benefits payable under this letter agreement are intended to comply with the “short-term deferral exception” under Treas. Reg. §1.409A-1(b)(4), and any remaining amount is intended to comply with the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, any amount payable to you during the six (6) month period following your separation date that does not qualify within either of the foregoing exceptions and constitutes deferred compensation subject to the requirements of Section 409A of the Code, then such amount shall hereinafter be referred to as the “Excess Amount.”  If at the time of your separation from service, CSS's (or any entity required to be aggregated with CSS under Section 409A of the Code) stock is publicly-traded on an established securities market or otherwise and you are a “specified employee” (as defined in Section 409A of the Code and determined in the sole discretion of CSS (or any successor thereto) in accordance with the CSS’s (or any successor thereto) “specified employee” determination policy), then CSS shall postpone the commencement of the payment of the portion of the Excess Amount that is payable within the six (6) month period following Executive’s Date of Termination with CSS (or any successor thereto) for six (6)



Mr. Keith Pfeil
August 30, 2018
Page 6


months following your separation date with CSS (or any successor thereto).  The delayed Excess Amount shall be paid in a lump sum to you within thirty (30) days following the date that is six (6) months following your separation date with CSS (or any successor thereto).  If you die during such six (6) month period and prior to the payment of the portion of the Excess Amount that is required to be delayed on account of Section 409A of the Code, such Excess Amount shall be paid to the personal representative of your estate within sixty (60) days after your death.
C. Reimbursements .  All reimbursements provided under this letter agreement shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during your lifetime (or during a shorter period of time specified in this letter agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.
Please confirm your understanding of the foregoing provisions by executing the enclosed counterpart of this letter and returning this executed counterpart to me.

Sincerely yours,



/s/ Christopher J. Munyan            
Christopher J. Munyan
President and Chief Executive Officer
CSS Industries, Inc.


The aforementioned is confirmed as of this 30th day of August, 2018:



/s/ Keith Pfeil                
Keith Pfeil

cc:    Denise Andahazy
William G. Kiesling