Commitments and Contingencies
|12 Months Ended|
Jan. 29, 2022
|Commitments and Contingencies|
|Commitments and Contingencies||
(16) Commitments and Contingencies
Cable and Satellite Distribution Agreements
The Company has entered into distribution agreements with cable operators, direct-to-home satellite providers, telecommunications companies and broadcast television stations to distribute the Company’s television network over their systems. The terms of the distribution agreements typically range fromto five years. During any fiscal year, certain agreements with cable, satellite or other distributors may or have expired. Under certain circumstances, the television operators or the Company may cancel the agreements prior to their expiration. Additionally, the Company may elect not to renew distribution agreements whose terms result in sub-standard or negative contribution margins. The distribution agreements generally provide that the Company will pay each operator a monthly access fee and in some cases a marketing support payment based on the number of homes receiving the Company’s programming. For fiscal 2021, fiscal 2020 and fiscal 2019 the Company expensed approximately $59,771, $56,681 and $82,330 under these distribution agreements as a component of distribution and selling expense in the Company’s consolidated statement of operations. Additionally, during fiscal 2020, the Company acquired television broadcast rights, which are recorded as an asset and a liability on the consolidated balance sheets. Amortization expense for television broadcast rights is included as a component of depreciation and amortization in the Company’s consolidated statement of operations. See Note 4 – “Television Broadcast Rights” for additional information.
Over the past years, the Company has maintained its distribution footprint with the Company’s material cable and satellite distribution carriers. Failure to maintain the cable agreements covering a material portion of the Company’s existing cable households on acceptable financial and other terms could adversely affect future growth, revenues and earnings unless the Company is able to arrange for alternative means of broadly distributing its television programming. Cable operators serving a large majority of cable households offer cable programming on a digital basis. The use of digital compression technology provides cable companies with greater channel capacity. While greater channel capacity increases the opportunity for distribution and, in some cases, reduces access fees paid by us, it also may adversely impact the Company’s ability to compete for television viewers to the extent it results in less desirable channel positioning for us, placement of the Company’s programming in separate programming tiers, the broadcast of additional competitive channels or viewer fragmentation due to a greater number of programming alternatives.
The Company has entered into, and will continue to enter into, distribution agreements with other television operators providing for full- or part-time carriage of the Company’s television shopping programming.
Future cable and satellite distribution cash commitments at January 29, 2022 are as follows:
On May 2, 2019, the Company entered into an executive employment agreement with Mr. Peterman, the Company’s Chief Executive Officer. Among other things, the employment agreement provides for a two-year initial term, followed by automatic one-year renewals, an initial base salary of $650, annual bonus stipulations, a temporary living expense allowance and participation in the Company’s executive relocation program. The aggregate commitment for future base compensation related to the agreement at January 30, 2021 was approximately $163. In conjunction with the employment agreement, the Company granted Mr. Peterman an award of 68,000 restricted stock units with an aggregate fair value of $220. The chief executive officer’s employment agreement also provides for severance in the event of employment termination in accordance with the Company’s established guidelines regarding severance as described below.
The Company has established guidelines regarding severance for its senior executive officers, whereby if a senior executive officer’s employment terminates for reasons other than change of control, up to 15 months of the executive’s highest annual rate of base salary for those serving as Chief Executive Officer or Executive Vice President and up to 12 months of the executive’s highest annual rate of base salary for those serving as Senior Vice President may become payable. If a Chief Executive Officer or Executive Vice President’s employment terminates within a one-year period commencing on the date of a change in control or within six months preceding the date of a change in control, up to 18 months of the executive’s highest annual rate of base salary, plus 1.5 times the target annual incentive bonus determined from such base salary, may become payable. If a Senior Vice President’s employment terminates within a one-year period commencing on the date of a change in control or within six months preceding the date of a change in control, up to 15 months of the executive’s highest annual rate of base salary, plus 1.25 times the target annual incentive bonus determined from such base salary, may become payable.
Retirement Savings Plan
The Company maintains a qualified 401(k) retirement savings plan covering substantially all employees. The plan allows the Company’s employees to make voluntary contributions to the plan. In the fourth quarter of fiscal 2021 and in fiscal 2019, the Company made a contribution match of $0.50 for every $1.00 contributed by eligible participants up to a maximum of 6% of eligible compensation. From 2020 through the third quarter of fiscal 2021, the Company made a contribution match of $0.50 for every $1.00 contributed by eligible participants up to a maximum of 3% of eligible contribution. Matching
contributions were contributed to the plan on a per pay period basis. Company plan contributions expense totaled $513, $58 and $1,135 for fiscal 2021, fiscal 2020 and fiscal 2019, of which $0 was accrued and outstanding as of January 29, 2022 and January 30, 2021.
The entire disclosure for commitments and contingencies.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef