Sprouts Farmers Market, Inc. (Form: 8-K, Received: 08/31/2021 16:40:14)

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 26, 2021

Sprouts Farmers Market, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-36029

32-0331600

(State or other jurisdiction

of incorporation or organization)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

5455 E. High Street, Suite 111

Phoenix, Arizona 85054

(Address of principal executive offices and zip code)

(480) 814-8016

(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):


☐	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 Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.001 par value

SFM

NASDAQ Global Select Market

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 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On August 26, 2021, Denise Paulonis, Chief Financial Officer of Sprouts Farmers Market, Inc. (the “Company”), informed the Company that she would be departing the Company on September 24, 2021 to assume the role of Chief Executive Officer of a publicly traded retailer.

The Company’s Board of Directors has appointed Lawrence “Chip” Molloy as Chief Financial Officer to serve as the Company’s principal financial officer subsequent to Ms. Paulonis’s departure, effective on September 25, 2021. Mr. Molloy will resign from the Company’s Board of Directors when he becomes Chief Financial Officer.

Mr. Molloy, age 60, has served as a member of the Company’s Board of Directors since January 2013 and as the Company’s Interim Chief Financial Officer from June 2019 to February 2020. Mr. Molloy has most recently served as Chief Financial Officer of Pathway Vet Alliance from May 2021 to August 2021, as Interim Chief Executive Officer of Torrid LLC from January to August 2018 and as a board member of Torrid from August 2018 to May 2021. Mr. Molloy served as the Chief Financial Officer of Under Armour, Inc. (NYSE: UA) from January 2016 to February 2017. Mr. Molloy also served as a director of Party City Holdco Inc. (NYSE: PRTY) from December 2013 to June 2016 and Wingstop Inc. (NASDAQ: WING) from February 2015 to March 2016. Mr. Molloy served as Senior Advisor to Roark Capital Group, a private equity firm, from October 2014 to December 2015. Prior to that, Mr. Molloy served as Special Advisor to PetSmart, Inc., the largest specialty pet retailer, from June 2013 until April 2014, and had served as Chief Financial Officer of PetSmart from September 2007 until June 2013. Mr. Molloy served ten years in the U.S. Navy as a fighter pilot, retiring from the Navy Reserve with a rank of Commander.

The Company entered into an offer letter with Mr. Molloy providing for the terms of his employment with the Company. The offer letter provides for an annualized base salary of $875,000, a short-term incentive bonus potential targeted at 100% of Mr. Molloy’s base salary (guaranteed at target for 2022), participation in the Company’s annual long-term equity incentive plan valued at 1.25 times Mr. Molloy’s base salary, and a one-time equity award grant of $4,000,000 comprised 100% of RSUs vesting on the second anniversary of the grant date. Mr. Molloy will also receive a sign-on cash award of $500,000, will be given a severance agreement entitling him to certain benefits upon a change of control or involuntary termination and is eligible to participate in the Company’s health, welfare and 401(k) plans.

The foregoing description of the offer letter does not purport to be complete and is qualified in its entirety by reference to the complete text of the letter, filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

There is no arrangement or understanding pursuant to which Mr. Molloy was appointed as chief financial officer. There are no related party transactions between the Company and Mr. Molloy that are reportable under Item 404(a) of Regulation S-K.

On August 31, 2021, the Company issued a press release announcing this leadership transition. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits


Exhibit Number		Description

10.1		Offer Letter from Sprouts Farmers Market, Inc., to Lawrence “Chip” Molloy, dated August 31, 2021

99.1		Press release of Sprouts Farmers Market, Inc., dated August 31, 2021, entitled “Sprouts Farmers Market, Inc. Announces Chief Financial Officer Transition”

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

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.


	SPROUTS FARMERS MARKET, INC.

Date: August 31, 2021	By:	/s/ Brandon F. Lombardi
	Name:	Brandon F. Lombardi
	Title:	Chief Legal Officer and Corporate Secretary

Exhibit 10.1

August 31, 2021

Chip:

Sprouts Farmers Market, Inc. is pleased to make you the following employment offer for the position of Chief Financial Officer.


Position and Duties:	Chief Financial Officer of Sprouts Farmers Market, Inc. (the “Company”) commencing September 25, 2021.
Base Salary:	Your base salary will be $875,000 per annum, pro-rated for any partial year based on actual days of employment.
STIP:	You will be eligible for an annual cash bonus opportunity at a target of 100% of your base salary and a maximum of 300% of base salary, subject to the Company satisfying performance goals in accordance with the Company’s short-term incentive plan established by the Board of Directors. You will be guaranteed payout of your 2022 bonus at the target level. Should you leave Sprouts in 2023, any bonus for which you are eligible will be prorated for your time in service during that year. You will not be eligible for a payout of bonus for 2021.
LTIP:	Commencing in 2022, you will be eligible for annual equity grants pursuant to the Company’s long-term incentive program, with an annual grant value equal to 125% of your base salary, comprised of 50% performance share awards (“PSAs”) vesting on the third anniversary of the grant date based on achievement of performance goals to be established by the Board of Directors and 25% restricted stock units (“RSUs”) and 25% stock options, each vesting ratably over three years beginning on the first anniversary of the grant date. You will be eligible to earn up to 200% of the PSAs awarded depending on performance against such performance goals. The actual number of RSUs and PSAs granted will be determined using the 20-day trailing average share price of the Company’s common stock on the respective grant dates. The actual number of stock options granted will be calculated using a Black-Scholes valuation for the Company’s common stock and shall have an exercise price equal to the market value on the grant date. The form of PSA, RSU and stock option agreements will be the most recent forms filed with the SEC. Your RSU awards earned as a member of the Company’s Board of Directors will continue to vest during the period of your continued service to the Company.
Sign-On Awards:	On your start date, you will receive a sign-on equity grant equal to $4,000,000 of RSUs, cliff vesting on the two-year anniversary of the grant date. In addition, you will receive a sign-on cash award equal to $500,000.
Severance:	You will be given a separate severance agreement entitling you to two years base salary and two years bonus in the event of a change in control or in the event of involuntary termination (without cause). In addition, in the event of involuntary termination (without cause), any unvested RSUs from your $4M sign-on award will accelerate.
Restrictive Covenants:	Your employment is subject to your signing and complying with the terms of the Company’s Confidentiality, Non-Competition, and Non-Solicitation Agreement in the form filed with the SEC as Exhibit 10.6 to the Company’s 2020 Form 10-K.
Benefits:	You will be eligible to participate in the Company’s 401(k) and other benefit plans for salaried employees, subject to the terms of those plans. Your paid time off will be subject to the Company’s flexible time off policy (i.e., the Company does not accrue vacation time for salaried employees who can take as much as needed and approved by his/her supervisor).

On behalf of Jack Sinclair, and all of us at store support, welcome to the Sprouts team!

Sincerely,

/s/ Brandon Lombardi

Brandon Lombardi

Chief Legal Officer

/s/ Lawrence “Chip” Molloy

Lawrence “Chip” Molloy

Your employment is contingent upon successful completion of a background check. You understand that your employment with Sprouts is at-will and that either party can terminate the relationship at any time with or without cause and with or without notice. You further acknowledge that this offer letter does not represent an employment contract, express or implied, guaranteeing employment for any specific duration, nor does it guarantee any fixed terms and/or conditions of employment.

Exhibit 99.1



Investor Contact:	Media Contact:
Susannah Livingston	Diego Romero
(602) 682-1584	(602) 682-3173
susannahlivingston@sprouts.com	media@sprouts.com

Sprouts Farmers Market, Inc. Announces Chief Financial Officer Transition

PHOENIX, Ariz. – (Globe Newswire) – August 31, 2021 – Sprouts Farmers Market, Inc. (Nasdaq: SFM) today announced that Lawrence “Chip” Molloy, currently a member of its board of directors, has been appointed as chief financial officer of the company, effective September 25, 2021. Molloy will succeed Denise Paulonis, who is departing the company to join a publicly traded retailer as its chief executive officer.

“There is no better successor to oversee our financial function than Chip,” said Jack Sinclair, chief executive officer of Sprouts Farmers Market. “Chip’s extensive knowledge of all aspects of our business and strategy and long-tenured executive experience makes him ideally suited to lead our finance team as we execute on our strategy.”

“I am thrilled to be joining Jack and the Sprouts leadership team,” said Molloy. “I have proudly served Sprouts for the past eight years, and I couldn’t be more excited about our current growth trajectory as we continue to implement our strategic priorities to deliver value to our stockholders.”

Molloy has served on Sprouts’ board of directors since 2013 and was its interim chief financial officer from June 2019 to February 2020. In addition to his tenure at Sprouts, Molloy’s 30-plus year career includes executive leadership service as chief financial officer of PetSmart, Inc. and Under Armour, Inc. as well as interim chief executive officer of Torrid LLC. Molloy will step down from the Sprouts board of directors when he becomes chief financial officer.

“On behalf of the Sprouts board of directors and entire Sprouts team, I want to sincerely thank Denise for her service to Sprouts,” continued Sinclair. “Denise was integral in the formation of our long-term growth strategy and has set the company up for continued and sustained success. I wish her the best as she assumes an exciting new leadership role.”

“It has been a privilege to work alongside Jack and the Sprouts team,” said Paulonis. “While I look forward to ascending to a chief executive officer role, I am confident that Sprouts is well-positioned for long-term profitable health.”

Forward-Looking Statements

Certain statements in this press release are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not statements of historical fact (including, but not limited to, statements to the effect that Sprouts Farmers Market or its management "anticipates," "plans," "estimates," "expects," or "believes," or the negative of these terms and other similar expressions) should be considered forward-looking statements, including, without limitation, statements regarding the company’s outlook, growth, opportunities and long-term strategy. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this release. These risks and uncertainties include, without limitation, risks associated with the impact of the COVID-19 pandemic; the company’s ability to execute on its long-term strategy; the company’s ability to successfully compete in its competitive industry; the company’s ability to successfully open new stores; the company’s ability to manage its growth; the company’s ability to maintain or improve its operating margins; the company’s ability to identify and react to trends in consumer preferences; product supply disruptions; general economic conditions; accounting standard changes; and other factors as set forth from time to time in the company’s Securities and Exchange Commission filings, including, without limitation, the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The company intends these forward-looking statements to speak only as of the time of this release and does not undertake to update or revise them as more information becomes available, except as required by law.

Corporate Profile

Sprouts is the place where goodness grows. True to its farm-stand heritage, Sprouts offers a unique grocery experience featuring an open layout with fresh produce at the heart of the store. Sprouts inspires wellness naturally with a carefully curated assortment of better-for-you products paired with purpose-driven people. The healthy grocer continues to bring the latest in wholesome, innovative products made with lifestyle-friendly ingredients such as organic, plant-based and gluten-free. Headquartered in Phoenix, and one of the fastest growing retailers in the country, Sprouts employs approximately 35,000 team members and operates more than 360 stores in 23 states nationwide. To learn more about Sprouts, and the good it brings communities, visit about.sprouts.com.