Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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(b), (c) and (e) On May 23, 2018, Patterson Companies, Inc. (the Company) announced that its Board of Directors (Board) has
appointed Donald J. Zurbay as the Companys Chief Financial Officer, effective June 29, 2018 (the Effective Date), and that Dennis W. Goedken, who has been serving as the Companys Interim Chief Financial Officer since
March 1, 2018, will step down from such position at that time. Mr. Goedken will continue to serve as the Companys Controller.
Mr. Zurbay, age 50, most recently served as Vice President and Chief Financial Officer at global medical device manufacturer St. Jude Medical, Inc. from
August 2012 through the January 2017 acquisition of St. Jude Medical by Abbott Laboratories. At St. Jude Medical, Mr. Zurbay was responsible for all accounting, financial and business development activities. He joined St. Jude Medical in 2003
and held various leadership positions, including Director of Finance and Vice President and Corporate Controller. Prior to joining St. Jude Medical, Mr. Zurbay worked at PricewaterhouseCoopers for five years as an Assurance and Business
Advisory Services Senior Manager. Before joining PricewaterhouseCoopers, he was a General Accounting Manager at The Valspar Corporation. Mr. Zurbay started his career at Deloitte & Touche as an auditor in 1989. There are no familial
relationships between Mr. Zurbay and any other director or executive officer of the Company. There are no transactions in which Mr. Zurbay has an interest requiring disclosure under Item 404(a) of Regulation
S-K.
In connection with his employment, Mr. Zurbay and the Company entered into an Offer Letter effective
May 17, 2018 (the Offer Letter), which is filed as Exhibit 10.1 to this Current Report on Form
8-K
and is incorporated by reference herein. Mr. Zurbay and the Company are expected to
enter into an Inducement, Severance & Change in Control Agreement (the Agreement), the form of which is filed as Exhibit 10.2 to this Current Report on Form
8-K
and is incorporated by
reference herein.
Pursuant to the Offer Letter, Mr. Zurbays employment will be on an
at-will
basis.
The Offer Letter provides for an annual base salary of $525,000 as well as participation in the Companys other employee benefit plans and reimbursement for business expenses. Mr. Zurbay also will be eligible to earn annual cash incentive
compensation, which is payable if a threshold level of performance is achieved, pursuant to the Companys Management Incentive Compensation Plan (MICP). If performance at target under the MICP is achieved, Mr. Zurbays
annual cash incentive compensation would be 85% of his base salary. In addition, Mr. Zurbay will be eligible to receive annual long-term equity-based incentive compensation pursuant to the Companys 2015 Omnibus Incentive Plan
(Omnibus Plan), or any successor plan thereto, which awards currently consist of restricted stock units, performance stock units, and stock options, with an aggregate target value of $1,000,000. The equity awards for fiscal year 2019
will be granted on July 1, 2018. Mr. Zurbays base salary, annual cash incentive compensation, and annual long-term equity-based incentive compensation will be reviewed on an annual basis and may be adjusted by the Board.
The Agreement provides for an inducement award consisting of a combination of stock options and restricted stock units. Subject to execution of the Agreement,
Mr. Zurbay will be granted a
non-statutory
stock option and a restricted stock unit award, both outside the Omnibus Plan, on the Effective Date. The stock option will have an approximate value of
$750,000, a
per-share
exercise price equal to the
per-share
closing price of the Companys common stock on the date of grant, and a term of ten years. Such award
will vest, subject to continued employment, to the extent of
one-third
of the award on the first anniversary of the date of grant,
one-third
of the award on the second
anniversary of the date of grant, and the remaining
one-third
of the award on the third anniversary of the date of grant. The restricted stock unit award will cover a number of shares of the Companys
common stock with a value of $700,000 based on the
per-share
closing price of the Companys common stock on the date of grant. Such award will vest,
1
assuming continued employment, to the extent of 50% of the award on the first anniversary of the date of grant and the remaining 50% of the award on the second anniversary of the date of grant.
The other terms and conditions of the inducement award are set forth in the Inducement Non Statutory Stock Option Agreement and the Inducement RSU Agreement, the forms of which are filed as Exhibits 10.3 and 10.4 to this Current Report on Form
8-K
and are incorporated by reference herein.
Under the Agreement, if the Company terminates Mr. Zurbay without
cause, Mr. Zurbay would be entitled to severance benefits including
(a) one-and-one-half
(1.5) times his then current
base salary, (b) cash incentive compensation equal to an average of the last three years of actual MICP incentives, (c) proration of the current year MICP incentive based on actual performance, and (d) 18 months of COBRA. With a change in
control and a termination without cause or a resignation for good reason, such severance benefits would include (a) two (2) times his then current base salary, (b) cash incentive compensation equal to his then current target MICP
incentive, (c) proration of the current year MICP incentive based on target performance, and (d) 18 months of COBRA.
As set forth in the Agreement,
Mr. Zurbay also will agree to certain nondisclosure and
non-disparagement
provisions during his employment and any time thereafter, and certain
non-competition
and
non-solicitation provisions during his employment and for 24 months thereafter.