The chief executive officer of Performance Sports Group Ltd. is swapping his initial grant of stock units and options for cash at a time when the sporting goods company's financial status is uncertain and its accounting practices are under review.
Harlen Kent, who became CEO of PSG on June 20, has had his annual base salary doubled to $1.5-million (U.S.) from $750,000 instead of receiving the stock-based compensation that was originally agreed upon, according to a regulatory filing PSG made on Thursday with the U.S. Securities and Exchange Commission.
Mr. Kent's initial employment agreement stated that he would receive a base salary of $750,000, an initial grant of 307,692 restricted stock units and a stock option to purchase 615,385 common shares. PSG's board approved Mr. Kent's salary increase on Sept. 16, per the SEC filing. It is effective as of Aug. 1.
The company didn't offer any explanation as to why Mr. Kent's compensation structure was revised. A spokesman for PSG didn't elaborate on the filing via e-mail.
The CEO's new compensation arrangement comes at a precarious time for the Exeter, N.H.-based company, which makes Bauer and Easton gear for hockey and baseball players. PSG is heavily in debt and, in recent weeks, has reduced the size of its staff. After posting strong sales growth last year, the company's revenue has declined during the past three quarters compared to the previous year.
PSG disclosed last month that it is under investigation by the SEC, and has hired investigators to probe its accounting practices. It delayed filing its audited financial statements for the fiscal year ended May 31. The forms were originally due on Aug. 15. It has since come to new terms with its lenders to file before Oct. 28.
Since Mr. Kent joined PSG on June 20, the company's shares have increased 32 per cent. However, the stock has fallen close to 60 per cent year to date and closer to 70 per cent over the past 12 months.
But PSG's battered stock has been attractive to some large investors.
Brookfield Asset Management Inc.'s private equity arm has amassed a 11.1-per-cent stake in the company since Aug. 26. It has added another 499,142 shares to its position for $1,767,897 to do so, according to a Sept. 22 filing with the SEC.
Likewise, U.S. hedge fund Coliseum Capital Management LLC bought shares between Aug. 15 and Aug. 24 to bring its ownership stake to 9.8 per cent.
The two institutions join PSG's largest shareholder, Sagard Capital Partners LP, a U.S. investment firm controlled by the wealthy Desmarais family of Canada. Sagard owns about 16.9 per cent of PSG.