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) On June 11, 2018, Les C. Vinney, who has been a member of the Board of Directors (the Board) of Patterson Companies, Inc. (the
Company) since December 2008, provided notice that he will continue to serve as a director until the 2018 annual meeting of shareholders, but he does not plan to stand for
re-election.
(d) On June 11, 2018, the Board, acting upon the recommendation of its Governance and Nominating Committee, elected Francis (Fran) J. Malecha as the
newest member of the Board, effective immediately. Mr. Malecha will serve on the Boards Compensation Committee and Finance and Corporate Development Committee.
Mr. Malecha will receive compensation payable to
non-employee
directors serving on the Board as summarized under
the caption
Non-Employee
Director Compensation in the Companys annual proxy statements. There are no familial relationships between Mr. Malecha and any other director or executive
officer of the Company. There are no transactions in which Mr. Malecha has an interest requiring disclosure under Item 404(a) of Regulation
S-K.
Each of our directors is elected to serve until his or her
successor is elected or he or she is removed or resigns from office.
The press release announcing the election of Mr. Malecha is furnished as
Exhibit 99 to this Current Report on Form
8-K
and is incorporated by reference herein.
(e) On June 11, 2018,
the Company entered into a Restrictive Covenants, Severance and Change in Control Agreement with each of the following members of its executive leadership team: Kevin M. Pohlman, President of Patterson Animal Health, and Les B. Korsh, the
Companys Vice President, General Counsel and Secretary. Such agreements are filed as Exhibits 10.1 and 10.2 to this Current Report on Form
8-K
and are incorporated by reference herein.
The agreements provide the executives with certain severance benefits. In connection with a termination of the executives employment with the Company
without cause (as defined), the executive will receive (A) cash in an amount equal to the sum of
(i) one-and-one-half
(1.5) times the executives then current base salary and (ii) the average of the executives annual cash incentive compensation paid under the Companys Management Incentive Compensation Plan (MICP) for each of the
last three full fiscal years prior to the year in which the executives employment is terminated, (B) cash in an amount equal to his prorated annual cash incentive compensation under the MICP for the fiscal year in which termination occurs
based on actual performance through the date of termination, and (C) if timely elected, up to 18 months of Company-paid COBRA benefits. In the event that (x) the executives employment with the Company is terminated by the Company
without cause (as defined) or (y) the executive resigns his employment for good reason (as defined), in either case within two year immediately following a change in control (as defined), the executive will, in lieu of the above-described
severance benefits, receive (A) cash in an amount equal to the sum of (i) two (2) times the executives then current base salary and (ii) the executives target annual cash incentive compensation under the MICP for the
fiscal year in which the executives employment is terminated, (B) cash in an amount equal to his prorated annual cash incentive compensation under the MICP for the fiscal year in which termination occurs based on the executives
target award through the date of termination, and (C) if timely elected, up to 18 months of Company-paid COBRA benefits. In exchange for the severance benefits, the executive must sign and not revoke a waiver and release agreement.
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In consideration of the severance benefits and the below-described restricted stock unit award (RSU),
each executive also has agreed with the Company to certain restrictive covenants including but not limited to post-employment
non-compete
and
non-solicitation
provisions
for a restricted period (as defined). The restricted period is eighteen (18) months following the voluntary or involuntary termination of executives employment for whatever reason; provided, however, that it shall be twenty-four
(24) months following (i) the involuntary termination of executives employment without cause (as defined) within two (2) years immediately following a change in control (as defined) or (ii) executives resignation for
good reason (as defined) within two (2) years immediately following a change in control (as defined). Each executive further agreed that the Company may terminate the executives right to the unvested RSU, and may require reimbursement to
the Company by the executive of any incentive compensation previously paid or vested within the prior
12-month
period, in certain circumstances.
Under the terms of the agreements, on June 11, 2018, each executive received a
one-time
RSU with the value set
forth below under the Companys 2015 Omnibus Incentive Plan that will vest, assuming continued employment, to the extent of 25% of the award on June 11, 2019, 25% of the award on June 11, 2020, and the remaining 50% of the award on
June 11, 2021: Mr. Pohlman ($1,250,000) and Mr. Korsh ($1,500,000).