SEARS HOMETOWN & OUTLET STORES, INC. (Form: 8-K, Received: 04/21/2015 17:07:38)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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): April 20, 2015

SEARS HOMETOWN AND OUTLET STORES, INC.

(Exact Name of Registrant as Specified in Charter)


Delaware	001-35641	80-0808358
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5500 Trillium Boulevard, Suite 501 Hoffman Estates, Illinois		60192
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (847) 286-7000

(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 ( 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))

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

By mutual agreement with the Company’s Board of Directors, W. Bruce Johnson, Chief Executive Officer and President, will leave the Company on August 1, 2015, the end of the Company’s second fiscal quarter. In that connection Mr. Johnson, a member of the Company’s Board of Directors, will not stand for re-election to the Board at the Company’s Annual Meeting of Stockholders to be held on May 27, 2015. He will continue to serve on the Board until that time. The Company will pay to Mr. Johnson all amounts payable in accordance with his Executive Severance/Non-Compete Agreement with respect to an employment termination by the Company without “Cause.” Mr. Johnson’s Executive Severance/Non-Compete Agreement is included as Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the 53 weeks ended February 1, 2014. A copy of the Company’s April 21, 2015 news release with respect to Mr. Johnson is attached as Exhibit 99.1 to this Form 8-K.

On April 20, 2015 the Compensation Committee of the Board of Directors approved cash retention awards for William A. Powell, the Company’s Senior Vice President and Chief Operating Officer, Ryan D. Robinson, the Company’s Senior Vice President and Chief Financial Officer, and John E. Ethridge II, the Company’s Vice President, Supply Chain and Technology. Each cash retention award will be governed by the terms and conditions of a Cash Retention Agreement, the form of which has been approved by the Compensation Committee and is filed as Exhibit 10.1 to this Form 8-K. The cash retention awards for Messrs. Powell and Robinson are in the amount of $100,000. Mr. Ethridge’s cash retention award is in the amount of $50,000. Messrs. Ethridge, Powell, and Robinson each is referred to as a “Grantee.” The Cash Retention Agreement provides that the cash retention award is payable only in cash and that the cash retention award will vest on the earliest of the following dates (the applicable date, the “Vesting Date”): (a) June 15, 2016; (b) the date on which the Company terminates the Grantee’s employment without Cause; and (c) the date on which the Grantee terminates his employment with the Company for Good Reason, but in each circumstance only if the Grantee has served as a full-time employee of the Company continuously during the period from April 20, 2015 to the Vesting Date and the Grantee has maintained continuously satisfactory job performance to the Vesting Date. The Cash Retention Agreement provides that “Good Reason” means that the Grantee’s annual base salary is reduced by ten percent or more or place of employment is relocated by the Company to a business location that is more than fifty miles from the Company’s offices. The Cash Retention Agreement provides that “Cause” means (i) a material breach by the Grantee (other than a breach resulting from disability) of the Grantee’s duties and responsibilities, which breach is demonstrably willful and deliberate on the Grantee’s part, is committed in bad faith or without reasonable belief that the breach is in the best interests of the Company, and is not remedied by the Grantee in a reasonable period of time after receipt of written notice from the Company specifying the breach, (ii) the commission of a felony involving moral turpitude, or (iii) dishonesty or willful misconduct in connection with employment with the Company.

Forward-Looking Statements

This Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based upon the current beliefs and expectations of the Company’s management. These forward-looking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the Company’s control. Additional information concerning other factors is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015 and subsequent filings with the SEC. The Company intends the forward-looking statements to speak only as of the time made and, except as required by law, does not undertake to update or revise the forward-looking statements as more information becomes available.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

The Exhibits listed in the accompanying “Exhibit Index” have been filed as part of this Form 8-K.

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.


SEARS HOMETOWN AND OUTLET STORES, INC.

By:		/s/ Charles J. Hansen
		Charles J. Hansen
		Vice President, General Counsel, and Secretary

Date: April 21, 2015

Exhibit Index


Exhibit Number		Exhibit Description

10.1*		Form of Cash Retention Agreement

99.1*		News Release dated April 21, 2015

*	Furnished herewith

Exhibit 10.1

, 20

RE:	Cash Retention Award

Dear

Cash Retention Agreement

We consider your continued service and dedication to Sears Hometown and Outlet Stores, Inc. (the “ Company ” or “ we ”) to be important to our business. We are pleased to offer you a cash retention award, as provided in this Cash Retention Agreement, to which we and you agree.

1. In recognition of your continued service with the Company from the date of this Cash Retention Agreement to and including , 20 , we are offering you a cash retention award in the amount of $ less all applicable withholdings and deductions required by law (the “ Retention Award ”), to be payable by the Company to you in cash as soon as administratively practicable following the Vesting Date. “ Vesting Date ” means the earliest of the following dates: (a) , 20 , (b) the date on which the Company terminates your employment without Cause, and (c) the date on which you terminate your employment with the Company for Good Reason. “Good Reason” means that, without your written consent, your annual base salary in effect on the date of this Cash Retention Agreement is reduced by ten percent or more or your place of employment is relocated by the Company to a business location that is more than fifty miles from the Company’s offices located at 5500 Trillium Boulevard, Hoffman Estates, Illinois. “Cause” means (i) a material breach by you (other than a breach resulting from your incapacity due to a disability as reasonably determined by the Company) of your duties and responsibilities, which breach is demonstrably willful and deliberate on your part, is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company, and is not remedied by you in a reasonable period of time after receipt of written notice from the Company specifying the breach, (ii) the commission by you of a felony involving moral turpitude, or (iii) your dishonesty or willful misconduct in connection with your employment with the Company.

2. You will receive the amount of your Retention Award specified in paragraph 1 if all of the following eligibility conditions are satisfied as of the Vesting Date: (a) you have executed this Cash Retention Agreement, delivered it to the Company, and not revoked it; (b) you have served as a full-time employee of the Company continuously until the Vesting Date; and (c) until the Vesting Date you have maintained continuously satisfactory job performance as determined by your direct supervisor in his or her reasonable discretion in accordance with the Company’s practices and procedures.

3. Your employment with the Company and its wholly owned subsidiaries remains at-will, meaning that you and the Company may terminate your employment at any time with or without Cause and with or without notice to you. Neither this Cash Retention Agreement nor the Retention Award has any effect on the at-will nature of your employment.

4. This Cash Retention Agreement contains all of the agreements, understandings, and representations between the Company and you relating to the subject matter of this Cash Retention Agreement. This Cash Retention Agreement supersedes all prior and contemporaneous written and oral understandings, discussions, agreements, representations, and warranties with respect to the subject matter.

5. This Cash Retention Agreement may not be amended or modified except in writing signed by the Company and you. This Cash Retention Agreement, for all purposes, will be construed in accordance with the laws of Illinois without regard to conflicts-of-law principles.

6. This Cash Retention Agreement is intended to comply with, or be exempt from, Section 409A of the Internal Revenue Code of 1986, as amended, and will be construed and administered in accordance with Section 409A.

You are a valuable member of the team and we look forward to your continued employment with the Company. If you have any questions regarding this Cash Retention Agreement, please do not hesitate to contact , at @shos.com or at ( ) - .


SEARS HOMETOWN AND OUTLET STORES, INC.

By:
		Becky Iliff
		Vice President, Human Resources

Agreed to and accepted:

Name of Grantee

Exhibit 99.1

INVESTOR RELATIONS CONTACT:

Ryan D. Robinson,

Senior Vice President and Chief Financial Officer

847-286-8700

FOR IMMEDIATE RELEASE:

April 21, 2015

SEARS HOMETOWN AND OUTLET STORES, INC. ANNOUNCES CEO TO STEP DOWN

HOFFMAN ESTATES, Ill. - Sears Hometown and Outlet Stores, Inc. (the “Company”) (NASDAQ: SHOS) today announced that, by mutual agreement with the Company’s Board of Directors, W. Bruce Johnson, Chief Executive Officer and President, will leave the Company on August 1, 2015, the end of the Company’s second fiscal quarter. In that connection Mr. Johnson, a member of the Company’s Board of Directors, will not stand for re-election to the Board of Directors at the Company’s Annual Meeting of Stockholders to be held on May 27, 2015. He will continue to serve on the Board of Directors until that time.

The Company also announced that the Board of Directors has commenced a search for a new Chief Executive Officer and has retained Heidrick & Struggles, a leading global executive search firm, to assist the Board in identifying and evaluating external and internal candidates.

William R. Harker, Chairman of the Board of Directors, said, “The Board and I are very grateful for Bruce’s many contributions and efforts since the Company was separated from Sears Holdings Corporation in October 2012. We will miss Bruce’s strong leadership and insights.”

Mr. Johnson said, “I am proud of the Company’s accomplishments since the separation. I will be leaving an excellent team in place that is dedicated to the Company’s success. I believe the Company has a bright future.”

Mr. Johnson has been a director and Chief Executive Officer and President of the Company since July 2012. He served in various capacities as Executive Vice President of Sears Holdings Corporation from February 2011 until July 2012. He served as Sears Holdings’ interim Chief Executive Officer and President from February 2008 to February 2011 and as a member of the Board of Directors of Sears Holdings from May 2010 to May 2011. He previously served as Sears Holdings’ Executive Vice President, Supply Chain and Operations since the merger of Sears, Roebuck and Co. and Kmart Holding Corporation in 2005. Since July 2010 he has served on the Board of Visitors of Duke Law School, and since January 2009 he has served on the Board of Directors of the Ann & Robert H. Lurie Children’s Hospital of Chicago, working on its finance committee.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about the Company’s plans regarding its search for a new Chief Executive Officer. The forward-looking statements are based upon the current beliefs and expectations of the Company’s management. These forward-looking statements are subject to risks, uncertainties, and assumptions, many of which are beyond the Company’s control. Additional information concerning other factors is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015 and subsequent filings with the Securities and Exchange Commission. The Company intends the forward-looking statements to speak only as of the time made and, except as required by law, does not undertake to update or revise the forward-looking statements as more information becomes available.

Exhibit 99.1

About Sears Hometown and Outlet Stores, Inc.

Sears Hometown and Outlet Stores, Inc. is a national retailer primarily focused on selling home appliances, hardware, tools, and lawn and garden equipment. Our Hometown stores are designed to provide our customers with in-store and online access to a wide selection of national brands of home appliances, tools, lawn and garden equipment, sporting goods, and household goods, depending on the particular format. Our Outlet stores are designed to provide our customers with in-store and online access to new, one-of-a-kind, out-of-carton, discontinued, obsolete, used, reconditioned, overstocked, and scratched and dented products across a broad assortment of merchandise categories, including home appliances, lawn and garden equipment, apparel, mattresses, sporting goods and tools at prices that are significantly lower than list prices. As of January 31, 2015 we or our independent dealers and franchisees operated a total of 1,260 stores across all 50 states as well as in Puerto Rico and Bermuda. Our principal executive offices are located at 5500 Trillium Boulevard, Suite 501, Hoffman Estates, Illinois 60192 and our telephone number is (847) 286-7000.