Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On September 26, 2019, FTS International, Inc. (the Company) entered into severance agreements (each, a Severance Agreement) with each of the Companys executive officers (each, an Executive), to update and align each Executives severance benefits to current market practice, as recommended by the Companys compensation consultant, and to replace severance agreements with executive officers that have expired.
The form of Severance Agreement provides that if an Executives employment is terminated by the Company without cause (as defined in the Severance Agreement) or the Executive voluntarily resigns for good reason (as defined in the Severance Agreement), then, subject to the Executives signing and not revoking a separation agreement and release of claims, the Executive is entitled to: (1) any earned but unpaid base salary and bonus, earned but unused vacation time and incurred but unreimbursed expenses (the Accrued Benefits); (2) a lump sum payment equal to one times (or two times for the Companys Chief Executive Officer (the CEO)) the Executives annual base salary, at the highest rate in effect during the 12 months preceding termination (the Look-Back Period); (3) a lump sum payment equal to one times (or two times for the CEO) the higher of the greatest annual bonus target for which the Executive was eligible during the Look-Back Period or the average of the Executives annual bonus payouts for the three years preceding termination; (4) a lump sum payment equal to 12 times the amount the Executive would pay on a monthly basis for COBRA continuation premiums (less required co-pay) (the COBRA Continuation Payment); and (5) if more favorable to the Executive than the provisions of any applicable award agreements, the immediate vesting of all awards previously granted to the Executive under the FTS International, Inc. 2018 Equity and Incentive Compensation Plan as amended from time to time and if such awards are performance-based, the awards will vest at the higher of target level of performance or actual performance through termination, and with any stock options or stock appreciation rights to remain outstanding and exercisable for a period of one year following termination (up to their original expiration date) (Accelerated Vesting).
The form of Severance Agreement further provides that upon an Executives termination on account of death or becoming disabled (as defined in the Severance Agreement), the Executive or, with respect to (1) below, the Executives estate, as applicable, is entitled to: (1) any Accrued Benefits; (2) Accelerated Vesting; and (3) a COBRA Continuation Payment.
The Severance Agreements will terminate upon the earlier of (1) an Executives termination and the Companys satisfaction of all of its obligations under the Severance Agreement, if any; and (2) the execution of a written agreement between the Company and the Executive terminating the Severance Agreement.
A copy of the form of Severance Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K, is incorporated herein by reference. The foregoing description of the Severance Agreements is qualified in its entirety by reference to the full text of the form of Severance Agreement filed herewith.