Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 1, 2022, Live Nation Entertainment, Inc. (the “Company”), and Michael Rapino entered into an employment agreement (the “Employment Agreement”), pursuant to which Mr. Rapino will continue to serve as President and Chief Executive Officer and as a member of the Board of Directors (the “Board”) of the Company. The term of the Employment Agreement is effective as of July 1, 2022 (the “Effective Date”), and ends on December 31, 2027. The Employment Agreement supersedes Mr. Rapino’s existing employment agreement. The terms of the Employment Agreement were unanimously approved by the Board, with Mr. Rapino abstaining.
Under the Employment Agreement, Mr. Rapino’s target annual compensation consists 90% of performance-based compensation and 10% of guaranteed salary. Mr. Rapino will receive an annual base salary of $3,000,000, and commencing in 2023 will be eligible to receive an annual cash performance bonus based on the achievement of a Company adjusted operating income performance target established annually by the Compensation Committee of the Board (the “Compensation Committee”), with a target amount equal to $17,000,000 (subject to increase or decrease based on actual performance). Beginning in 2023, Mr. Rapino will be entitled to receive an annual performance-based grant of restricted shares of Company common stock with an annual target value of not less than $10,000,000, based on the attainment of qualitative performance targets to be established by the Compensation Committee (the “Annual Performance Shares”). Upon determination of attainment of the performance goals for a particular calendar year, Mr. Rapino will be issued the restricted shares of Company common stock, which shall vest 50% on the date of issuance and 50% on the first anniversary of the date of issuance.
Pursuant to the Employment Agreement, Mr. Rapino (a) on the Effective Date received a grant of 333,751 restricted shares of Company common stock, with (i) 95,357 of the restricted shares to vest on January 1, 2024, and (ii) the remaining shares to vest in equal installments on each of January 1, 2025, 2026 and 2027, and December 31, 2027; (b) on the Effective Date received a grant of 1,117,037 performance shares, which will vest and be settled in restricted shares of Company common stock from time to time during a performance period running from the Effective Date through December 31, 2027 upon attainment of various stock price targets for a period of 60 days (which do not have to be consecutive), with the actual number of restricted shares earned ranging from 0% to 100% of the award amount; and (c) will receive a lump sum cash signing bonus of $6,000,000, payable on December 30, 2022. Both grants and the cash signing bonus are subject to Mr. Rapino’s continued employment with the Company. The performance share award was made pursuant to a performance share award agreement, a copy of which is attached as Exhibit 10.2 and is incorporated herein by reference.
If Mr. Rapino is terminated by the Company without “cause” or Mr. Rapino terminates his employment for “good reason,” subject to Mr. Rapino’s execution of a general release of claims, he will receive (i) a lump-sum cash payment equal to the sum of his base salary, his most recent performance bonus and the value of his most recently earned Annual Performance Shares, multiplied by two, and (ii) the immediate acceleration of all unvested equity. If Mr. Rapino dies or becomes disabled, he will receive (A) a lump-sum cash payment equal to the sum of his base salary and his most recent performance bonus, and (B) the immediate acceleration of all unvested equity that would have vested based upon continued service through the date that is three years following the date of termination of employment. Upon the occurrence of a change in control of the Company, all unvested Company equity awards then held by Mr. Rapino will vest in full.
The description of the Employment Agreement set forth above is qualified in its entirety by the Employment Agreement attached as Exhibit 10.1 and incorporated herein by reference.