Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
In accordance with the terms of the Merger Agreement, on June 29, 2019 upon completion of the Merger, the Board of Directors (the “
Board
”) of L3 was reconstituted to consist of three
directors, comprised of Mr. William M. Brown, Mr. Christopher E. Kubasik and Mr. Scott T. Mikuen. The then-serving members of the Board of L3, other than Mr. Kubasik, namely Robert B. Millard, Claude R. Canizares, Thomas A. Corcoran, Ann E.
Dunwoody, Lewis Kramer, Rita S. Lane, Lloyd W. Newton, Vincent Pagano, Jr. and H. Hugh Shelton, voluntarily resigned as directors on June 29, 2019 upon completion of the Merger (not because of any disagreement on any matter relating to the
registrant’s operations, policies or practices).
Effective on July 1, 2019, Ms. Ann D. Davidson ceased being an employee of L3. Ms. Davidson previously served as Senior Vice President, General Counsel and
Corporate Secretary of L3. Ms. Davidson’s cessation of employment is amicable, and there is no disagreement between her and L3 on any matter relating to
operations, policies or practices
.
Effective on July 1, 2019, Mr. Jeffrey A. Miller ceased being an employee of L3. Mr. Miller previously served as Senior Vice President and
President of L3’s Intelligence, Surveillance & Reconnaissance Systems Segment. Mr. Miller’s cessation of employment is amicable, and there is no disagreement between him and L3 on any matter relating to
operations,
policies or practices
.
(e)
|
Compensatory Arrangements for Certain Executive Officers
|
In contemplation of the consummation of the Merger, on June 26, 2019 a duly constituted subcommittee of the Compensation Committee of L3’s Board of Directors (the “
Subcommittee
”)
approved the compensation actions set forth below with respect to L3’s named executive officers (the “
NEOs
”).
The Subcommittee approved the following annual incentive payouts for the first half of fiscal 2019 based on: (1) each NEO’s pro-rated target bonus (representing 50% of the total annual bonus
opportunity established for such NEO in early 2019), (2) L3’s operating income and free cash flow results as compared to pre-established targets for such financial measures and (3) each NEO’s individual performance: Christopher E. Kubasik,
$1,261,000; Ralph G. D’Ambrosio, $583,000; Ann D. Davidson, $426,000; Todd W. Gautier, $436,000; and Jeffrey A. Miller, $443,000. The Subcommittee also approved a lump sum payment of $450,000 to Mr. Miller, subject to his acceptance of an extension
of the duration of the non-competition and non-solicitation covenants applicable to him under L3’s Change in Control Severance Plan from a period of 12 months to 18 months following his separation from L3.
In addition, the Subcommittee determined that L3’s relative total shareholder return results under performance cash awards granted to the NEOs in 2017 and 2018 exceeded the maximum performance
goals for such awards as adjusted to account for the reduced period of actual performance. As a result, the NEOs earned 200% of the target dollar value under the performance cash awards originally granted to them. A portion of the cash earned
became payable upon the Effective Time, with the remainder subject to continued vesting through December 31, 2020 or 2021, as applicable, with partial or full acceleration in the event of a qualified separation due to death, disability, retirement,
termination without cause or termination for good reason as defined under the applicable award agreements.
The Subcommittee further determined that L3’s earnings per share results under performance unit awards granted to the NEOs in 2017 and 2018 exceeded the maximum performance goals for such
awards as adjusted to account for the reduced period of actual performance. As a result, the NEOs earned 200% of the target number of performance units originally granted to them. Upon the Effective Time, a portion of the earned units became
payable in shares of stock (and cash in respect of accrued dividend equivalents thereon), with the remainder subject to continued vesting through December 31, 2020 or 2021, as applicable, with partial or full acceleration in the event of a qualified
separation due to death, disability, retirement, termination without cause or termination for good reason as defined under the applicable award agreements.
Finally, the Subcommittee approved the termination of L3’s Executive Severance Plan effective upon the 30
th
day following the filing of this Current Report on Form 8-K.