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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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Performance Incentive Plan and 2020 Recovery Performance Plan
Effective August 11, 2020, the Compensation Committee (“Compensation Committee”) of the Board of Directors of Henry Schein, Inc. (“Company”) suspended the Henry Schein, Inc. Performance Incentive Plan (“PIP”) for the Company’s 2020 fiscal year (“2020 Year”) with respect to all U.S. participants and certain non-U.S. participants and canceled any corresponding PIP awards relating to the 2020 Year in their entirety. Effective as of July 1, 2020, the Compensation Committee also adopted the Henry Schein, Inc. 2020 Recovery Performance Plan (the “RPP”) to replace and supersede the PIP with respect to the 2020 Year for such participants. The business disruption caused by the global COVID-19 pandemic impacted the Company’s business units and operations in ways that could not be anticipated at the time that the performance goals and metrics were established under the PIP with respect to the 2020 Year, and accordingly, the Compensation Committee determined that replacing the PIP with the RPP would better align the interests of the Company’s stockholders and the key employees who will be driving the Company’s recovery going forward. No amounts will be paid out to such participants under the PIP with respect to the 2020 Year.
The RPP provides pay for performance incentive compensation to the Company’s employees, including the Company’s named executive officers, and is designed to reward them for their contributions to the Company consistent with the Company’s business recovery strategy and enable the Company to continue to attract and retain highly qualified employees. Under the RPP, the Compensation Committee will designate participants in the RPP and will establish Company-wide, functional area/business unit-level, and individual performance measures and goals for the earning of bonuses based on a performance period commencing on July 1, 2020, and ending on December 26, 2020, provided that the outcome at the time that the goals are set is substantially uncertain to be achieved. The Compensation Committee may subsequently adjust the performance goals to take into account such unanticipated circumstances or significant events as the Compensation Committee determines in its sole discretion.
Each named executive officer’s incentive award opportunity is determined by the Compensation Committee. It is expected that the individual bonus target amount for each named executive officer will be materially less than the individual bonus target amount set under the PIP for the 2020 Year. The incentive awards may be paid only in cash. Incentive awards, if any, are expected to be paid as soon as administratively practicable after the end of the performance period. Generally, the Company’s named executive officers will need to be actively employed on the date awards are paid to receive an award, provided that the Compensation Committee may, in its discretion, provide for a prorated payout of an award in the event of termination due to death, “disability”, retirement at normal Social Security retirement age, or in other special circumstances.
The Compensation Committee is responsible for administering the RPP and has full discretionary authority under the RPP and the authority to take any actions it deems necessary or advisable in carrying out its duties thereunder, including delegating their authority under the RPP.
The foregoing description of the RPP is qualified in its entirety by reference to the full text of the RPP, which is filed as Exhibit 10.1 and is incorporated herein by reference.