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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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On November 5, 2020, IAC/InterActiveCorp
(“IAC” or the “Company”) entered into a new, long-term Employment Agreement (the “Employment Agreement”)
and a Restricted Stock Agreement (“RSA Agreement”) with Joseph Levin, IAC’s Chief Executive Officer. The
material terms of the Employment Agreement and the RSA Agreement are described below.
Employment Agreement
The Employment Agreement has a ten-year
term. It provides that Mr. Levin will serve as the Chief Executive Officer and as a member of the IAC Board of Directors (the “Board”),
reporting to Barry Diller, or, if Mr. Diller does not serve as Chairman and Senior Executive, the Board. The Employment Agreement
provides for an annual base salary of $1,000,000 and a discretionary annual bonus, as determined by the Compensation Committee
of the Board. Upon a termination of employment without Cause or for Good Reason (each as defined in the Employment Agreement),
Mr. Levin is entitled to base salary continuation for twelve months, and accelerated vesting of equity awards that would vest during
the twelve months following his termination of employment, excluding the award under the RSA Agreement, which is addressed below.
The Employment Agreement includes customary restrictive covenants, including a non-compete and an employee and customer non-solicitation,
each of which applies during the employment term and the twenty-four months following the termination of Mr. Levin’s employment
for any reason.
RSA Agreement
The RSA Agreement provides
for a grant of 3,000,000 shares of IAC restricted common stock (“IAC Restricted Shares”), that cliff vest on the ten-year
anniversary of the grant date based on satisfaction of the stock price targets set forth below and Mr. Levin’s continued
employment through the vesting date.
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IAC Stock Price
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Number of Shares Vesting
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less than $157.99
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0
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$157.99
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500,000
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$201.04
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2,000,000
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$254.37
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2,750,000
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$320.12 or greater
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3,000,000
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Executive may request an extension of the
measurement period from 10 to 12 years and IAC will consider the request in light of the circumstances.
Mr. Levin may elect to accelerate vesting
of the IAC Restricted Shares, effective on the 6th, 7th, 8th or 9th anniversary of
the grant date, in which case performance will be measured through such date, and Mr. Levin will receive a pro-rated portion of
the award (based on the years elapsed from the grant date) and any remaining shares will be forfeited. The applicable stock price
goals are proportionately lower on the earlier vesting dates. Mr. Levin is not permitted to transfer any shares that vest pursuant
to an early vesting election until the tenth anniversary of the grant date.
Upon a termination without Cause or for
Good Reason (each as defined in the Employment Agreement) on prior to the fourth anniversary of the grant date, 1,500,000 of the
IAC Restricted Shares will vest. Upon a termination without Cause or for Good Reason after the fourth anniversary of the grant
date, a pro-rata portion of the IAC Restricted Shares will vest based on the product obtained by multiplying (1) 3,000,000 by (2)
a fraction, (a) the numerator of which equals the sum (not to exceed 120) of (i) the number of full and partial months from the
grant date through the employment termination date and (ii) twenty-four, and (b) the denominator of which equals 120.
In the event of Mr. Levin’s death
or disability, the IAC Restricted Shares will vest based on stock price performance through the date of employment termination
(taking into account the shortened performance period), subject to pro-ration based on the portion of the ten-year term that has
elapsed through the termination date. In addition, the IAC Restricted Shares will vest in full upon a Change in Control (as defined
in the RSA Agreement).
Mr. Levin has the right to vote the IAC
Restricted Shares prior to vesting and will be entitled to receive ordinary course cash dividends (on a current, unrestricted basis)
on the number of shares that would vest on the dividend record date based on stock price performance through the record date. Under
the terms of the RSA Agreement, Mr. Levin will share (by forfeiting shares otherwise earned) with IAC employees a portion of the
value that he realizes if and to the extent that the award vests, with Mr. Levin sharing a greater proportion of the value increase
at higher levels of stock price achievement. The RSA Agreement also provides for the adjustment of the IAC Restricted Shares in
the event that IAC spins off Vimeo, Inc.
The above summaries of the Employment Agreement
and the RSA Agreement are not complete and are qualified in their entirety by reference to the full text of the agreements, which
are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.