Executive Agreements
Employment Agreements
In May 2022, we entered into executive employment agreements with each of Brent C. Bruun, Roger A. Kuebel, Robert J. Balog and Felise B. Feingold in order to retain their services and provide them with certain benefits in the event that we terminate the executive’s employment without cause (as defined in the agreement) or the executive terminates his or her employment for good reason (as defined in the agreement) (either such termination, a “Qualifying Termination”), including following a change of control. The terms of the agreements are substantially identical except as to title, salary, target bonus and reporting responsibilities.
The agreements generally confirmed the executives’ then-current compensation arrangements with respect to base salary, target bonus opportunity for 2022, expense reimbursement and participation in employee benefit plans. The agreements contain customary provisions regarding the performance of duties, assignment of inventions, confidentiality and use of information, return of company property, and cooperation in litigation and regulatory matters. The agreements include customary non-competition and non-solicitation covenants. These covenants have a term of twelve months or, if the executive becomes entitled to receive the change in control severance payments and benefits described below, eighteen months.
The agreements provided that, if the executive continued to serve as an employee through December 31, 2022 (the “Retention Date”), we would pay the executive a retention bonus equal to 75% of the executive’s current base salary, and we would accelerate the vesting of the executive’s equity awards that would otherwise have vested in the twelve months after the Retention Date. The agreements further provided that, if a Qualifying Termination were to occur before December 31, 2022, the executive would receive a pro rata portion of the retention bonus. The agreements further provided that, if in connection with such a termination the executive were to become entitled to receive the change in control severance payments and benefits described below, the executive would also become entitled to receive the full retention bonus, and the Retention Date would be the later of the date of such change in control or such termination of employment. In October 2022, Mr. Bruun agreed to extend his retention date to December 31, 2023, and as a result, he will not receive a retention payment unless he remains employed by us through December 31, 2023. Each of the executives continued to serve as an employee through December 31, 2022, and no change of control occurred before that date. Accordingly, each executive other than Mr. Bruun received the full amount of his or her retention bonus, and each executive, including Mr. Bruun, received acceleration of vesting of equity awards that would otherwise have vested in 2023.
Upon any termination of employment, the executive will be entitled to receive any salary earned through the date of termination, any cash-based annual incentive award earned but unpaid for a fiscal year ended before the date of termination, reimbursement of unpaid business expenses in accordance with our policies, and any other vested employee benefits.
In addition, in the event of a Qualifying Termination, upon execution and effectiveness of a separation agreement and release of claims within a stated period, (a) the executive will also be entitled to receive twelve months of base salary and a pro rata portion of his or her target bonus opportunity (based upon his or her period of employment during the relevant year), (b) we will accelerate the vesting of the executive’s equity awards that would otherwise have vested in the twelve months after the later of the date of termination or the effective date of the separation agreement and release and (c) we will pay up to twelve months of the monthly employer portion of the executive’s health insurance or the cash equivalent thereof, subject to certain conditions and limitations.
If a Qualifying Termination occurs within the six months before, or within the twelve months after, a change in control (as defined in our then-most recently adopted equity incentive plan), then, in lieu of the severance described in the preceding paragraph, upon execution and effectiveness of a separation agreement and release of claims within a stated period (and, if the date of termination occurs before the change in control, subject to the consummation of the change of control), (a) the executive will be entitled to receive one and one-half times the sum of the executive’s base salary and the executive’s target bonus for the then-current year, (b) the executive will be entitled to receive a pro rata portion of his or her target bonus opportunity (based upon his or her period of employment during the relevant year), (c) we will accelerate the vesting of the executive’s equity awards in full and (d) we will pay up to eighteen months of the monthly employer portion of the executive’s health insurance or the cash equivalent thereof, subject to certain conditions and limitations.
The compensation payable under the agreements is subject to possible reduction to the extent that the reduction would result in a higher after-tax payment to the executive. The agreement also includes additional provisions intended to ensure compliance with Section 409A of the Code.