ITEM 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers
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(c)
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Election of Ajay Sabherwal as Chief Financial Officer
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On July 14, 2016, the Board
of Directors (the Board) of FTI Consulting, Inc. (the Company) elected Ajay Sabherwal, age 50, as Chief Financial Officer of the Company effective upon commencement of his employment, which is expected on or about August 15,
2016 (the CFO Effective Date). Mr. Sabherwal will be responsible for worldwide oversight and management of the financial function of the Company and its affiliates, including the public reporting obligations of the Company under the
rules and regulations of the Securities and Exchange Commission.
Prior to joining the Company and since July 2010, Mr. Sabherwal was
an Executive Vice President and Chief Financial Officer of FairPoint Communications, Inc., a leading telecommunications service provider with operations primarily in Maine, New Hampshire and Vermont. Previously, Mr. Sabherwal served as Chief
Financial Officer for Mendel Biotechnology, Inc. from 2009 to 2010, Chief Financial Officer for Aventine Renewable Energy, Inc. from 2005 to 2009 and Executive Vice President and Chief Financial Officer for Choice One Communications, Inc. from 1999
to 2005. Mr. Sabherwal serves as a director and Chair of the Audit Committee for Lone Pine Resources Canada Ltd., an oil and gas exploration and production company based in Calgary, Canada, and has been an adjunct faculty member of the McColl School
of Business at Queens University of Charlotte, North Carolina.
There were no understandings or arrangements between Mr. Sabherwal and any
other person pursuant to which he was elected as an executive officer of the Company. There are no family relationships between Mr. Sabherwal and any other officer or director of the Company. Mr. Sabherwal, his family members and affiliates
have had no direct or indirect pecuniary interests in any transactions to which the Company or any affiliate is or was a party. The Company and its affiliates have provided and expect to continue to provide services, directly or indirectly, to
former employers of Mr. Sabherwal, including FairPoint Communications, Inc., including consulting and other services in the ordinary course of business on substantially the same basis as similar services are provided to other clients of the Company.
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(e)
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Compensatory Arrangements with Ajay Sabherwal
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Mr. Sabherwal and the Company have
entered into a written Offer of Employment dated as of July 5, 2016 (the CFO Employment Letter), pursuant to which Mr. Sabherwal will commence employment as Chief Financial Officer of the Company on the CFO Effective Date. Mr. Sabherwal
will be an at-will employee of the Company. Pursuant to the CFO Employment Letter, Mr. Sabherwal will earn an annual base salary of $500,000 pro-rated for 2016.
For calendar year 2016, Mr. Sabherwal will be eligible to receive a cash bonus of up to $1.0 million (the 2016 CFO Bonus Award),
prorated for the portion of 2016 during
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which Mr. Sabherwal is employed by the Company. The 2016 CFO Bonus Award, subject to claw back if Mr. Sabherwal resigns or is terminated by the Company for cause (as defined in the
CFO Employment Letter), as follows:
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Termination Date
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% of 2016 CFO Bonus Award Repayable
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On or prior to the first anniversary of the CFO
Effective Date
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100%
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After the first anniversary of the CFO Effective Date but prior
to the second anniversary of the CFO Effective Date
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66 2/3%
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After the second anniversary of the CFO Effective Date but prior
to the third anniversary of the CFO Effective Date
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33.1/3%
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Mr. Sabherwal will receive a sign-on bonus with an aggregate value of $1.0 million as of the CFO Effective
Date, consisting of (i) $500,000 in cash (the Cash Sign-on Bonus) and (ii) a number of shares of restricted stock of the Company valued at $500,000 as of the CFO Effective Date based upon the closing price per share of Company common
stock reported on the New York Stock Exchange for the CFO Effective Date, subject to pro rata vesting on the first, second and third anniversary dates of the date of grant and forfeiture and accelerated vesting conditions set forth in the CFO
Employment Letter. The Cash Sign-on Bonus will be subject to claw back, as follows:
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Termination Event
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Termination Date
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$ Value of 2016 Cash
Sign-on Bonus
Repayable
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Any reason other than termination by Mr. Sabherwal for good
reason (as defined in the CFO Employment Letter) or by the Company without cause
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On or prior to the first anniversary of the CFO Effective Date
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$500,000
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Resignation by Mr. Sabherwal or termination by the Company for
cause
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After the first anniversary of the CFO Effective Date but prior to the second anniversary of the CFO Effective Date
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$333,333
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Resignation by Mr. Sabherwal or termination by the Company for
cause
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After the second anniversary of the CFO Effective Date but prior to the third anniversary of the CFO Effective Date
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$166,667
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Beginning in 2017, the Companys executive Mr. Sabherwal will be eligible to participate in the (i) FTI
Consulting, Inc. Incentive Compensation Plan with an expected target bonus opportunity of 100% of annual base salary and maximum bonus opportunity of 150% of annual base salary for the calendar year ending December 31, 2017 and (ii) the
Companys executive long-term incentive program at an expected target opportunity of $500,000 for the calendar year ending December 31, 2017.
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Upon termination by the Company without cause or termination by Mr. Sabherwal for
good reason, in exchange for the execution and non-revocation of a release, Mr. Sabherwal will be entitled to receive continued payment of his annual base salary for the 12-month period following his termination, which amount will be
increased to one times the sum of his (i) annual base salary plus (ii) target annual bonus for the year of termination, if such termination event occurs during the 18-month period after a change in control (as defined in the CFO
Employment Letter) of the Company.
The CFO Employment Letter contains non-competition and non-solicitation (with respect to Company
employees, customers and clients) restrictions that will continue during the term of Mr. Sabherwals employment and for 12 months from the last day of his employment for any reason.
The foregoing summary of the CFO Employment Letter does not purport to be complete and is subject to and is qualified in its entirety by
reference to the full text of the CFO Employment Letter, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and which is hereby incorporated by reference herein.