Item 5.02(e) Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers
On January 16, 2017, Citizens, Inc. (Citizens or the
Company) entered into employment agreements (individually, an Employment Agreement, and together, the Employment Agreements) with three of its executive officers Geoffrey M. Kolander, Chief Executive
Officer, Kay E. Osbourn, President and David S. Jorgenson, Vice President, Chief Financial Officer and Treasurer (individually, an Executive and together, the Executives). The Company entered into the Employment Agreements
following a review of the Companys executive compensation program by the Compensation Committee of the Board of Directors, which was assisted in its review by an independent compensation consultant. The Employment Agreements generally have
similar terms, except for certain differences described herein. Below is a summary of certain key terms of the Employment Agreements. The summary does not purport to be complete and is qualified in its entirety by reference to the text of the
Employment Agreements, copies of which are filed as Exhibits 10.1, 10.2 and 10.3 hereto, and are incorporated herein by reference. Capitalized terms used by not defined below have the meanings set forth in the Employment Agreements.
Term.
Each Employment Agreement has an initial term of four (4) years and will automatically renew on each anniversary of the effective date
unless either Citizens or the Executive provides at least 90 days notice not to renew.
Base Salary.
The Employment Agreements establish a
base annual salary of $600,000 for Mr. Kolander, $450,000 for Ms. Osbourn, and $350,000 for Mr. Jorgenson.
Target Bonus Opportunity and
Retention Awards.
Each Executive will be eligible to receive an annual cash bonus based on a target bonus opportunity of 70% of base salary for Mr. Kolander, 60% of base salary for Ms. Osbourn and 40% of base salary for
Mr. Jorgenson. The amount of the actual cash bonus awarded each year will be based on the achievement of annual performance objectives to be established by Citizens Board of Directors and Compensation Committee. The amount of the actual
bonus that the Executive may receive could be below, at or above each Executives target amount. In addition, each Executive is eligible to receive a cash retention bonus. The retention bonuses ($600,000 for Mr. Kolander and
Ms. Osbourn and $400,000 for Mr. Jorgenson) are payable in two equal installments on or within 15 days of December 15, 2018 and December 15, 2019, subject to the Executives continued employment on the applicable payment
date.
Benefits.
Each Executive is eligible to participate in all employee benefit plans and programs available generally to other
similarly-situated
executives of Citizens, and Citizens will maintain customary liability insurance for the Executives.
Death or Disability.
If an Executives employment is terminated due to the Executives death or disability, the Executive will be entitled to
receive the following payments in equal installments over the twelve (12) month period following the date of termination, referred to as the Severance Period: accrued but unpaid salary, accrued but unused paid time out, any earned but unpaid
annual bonus for the prior fiscal year, a
pro-rated
annual bonus for the year of termination based on the degree to which performance metrics for the fiscal year are attained, and the unpaid portion of any
retention award.
Payments upon a Termination without Cause or for Good Reason No Change in Control.
Upon a termination by Citizens without
Cause or the Executives voluntary termination with Good Reason, in each case, other than within the ninety (90) day period prior to the consummation of a Change in Control or within one (1) year following a Change in Control, each
Executive is entitled to the death and disability benefits described above, an amount equal to a certain number of months of base salary (twenty-four (24) months base salary for Mr. Kolander and eighteen (18) months for
Ms. Osbourn and Mr. Jorgensen) payable over twelve (12) months and an amount intended to approximate the value of the Companys subsidy of the cost of the Executives participation in the Companys group health care
plan.
Payments upon a Termination without Cause or for Good Reason Change in Control.
Upon a termination by Citizens without Cause or the
Executives voluntary termination with Good Reason, in each case, within the ninety (90) day period prior to the consummation of a Change in Control or within one (1) year following a Change in Control, each Executive is entitled to
the payments and benefits described above for a termination not in connection
with a Change in Control, but the severance multiple will be two and
one-half
(2.5) times the sum of the base salary and annual bonus for Mr. Kolander
and Mrs. Osbourn, and two (2) times the sum of base salary and annual bonus for Mr. Jorgenson, payable in equal installments over the Severance Period.
Restrictive Covenants.
The Employment Agreements also include restrictive covenants with respect to confidentiality, intellectual property,
non-disparagement,
non-competition
and
non-solicitation.