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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 January 6, 2021, MGM Resorts International (the “Company”) announced that the Board of Directors had appointed Jonathan Halkyard to serve as Chief Financial Officer and Treasurer of the Company, effective January 11, 2021, replacing Corey Sanders who had been appointed to the role of Chief Operating Officer on December 4, 2020.
Previously, Mr. Halkyard, age 56, served as President and Chief Executive Officer of Extended Stay America, Inc. (“Extended Stay”) and its paired-share REIT, ESH Hospitality, Inc., from January 2018 through November 2019, as Chief Financial Officer of Extended Stay from January 2015 through December 2017 and as Chief Operating Officer of Extended Stay from September 2013 through January 2015. Prior to joining Extended Stay, Mr. Halkyard served as Chief Financial Officer of NV Energy, Inc. from July 2012 through September 2013 and, prior to that, he served in various executive, finance and managerial roles at Caesars Entertainment Inc. since 1999, including as Chief Financial Officer from 2006 through 2012. Mr. Halkyard is also a director of Dave & Buster’s Entertainment (NASDAQ: PLAY), a director of Shift4 Payments, Inc. (NYSE: FOUR) and is a Trustee of the International Center for Responsible Gaming. Mr. Halkyard has no family relationships with any of our directors or executive officers and there are no transactions in which Mr. Halkyard has an interest in that would require disclosure under Item 404(a) of Regulation S-K.
In connection with his appointment, Mr. Halkyard entered into an employment agreement with the Company, effective as of January 11, 2021 (the “Employment Agreement”), which provides for a term until January 10, 2024 and a minimum base salary of $900,000 per year. In addition, the employment agreement provides for an annual target bonus equal to 150% of Mr. Halkyard’s base salary, and certain other benefits and perquisites, which are discussed in detail in the Employment Agreement. In the event of a termination of Mr. Halkyard’s employment as the result of his death or a termination by the Company due to disability, the Company will pay Halkyard one year of salary payable at regular payroll intervals (less any payments received from an employer-paid short term disability policy).
The Employment Agreement also provides that Mr. Halkyard will be eligible for annual equity grants from the Company. As part of the annual equity award for 2021, Mr. Halkyard will be granted an award of restricted stock units with an accounting value of $900,000 on the first business day of the month succeeding his employment with the Company, which will vest in four equal annual installments on the first four anniversaries following the grant date.
In the event of a termination by the Company for no cause or by Mr. Halkyard for good cause prior to the end of the term of the Employment Agreement, Mr. Halkyard will receive (i) an amount equal to his annual base salary plus his target bonus amount, payable in 12 monthly installments; (ii) any earned but unpaid discretionary bonus due to him; and (iii) a payment equal to 1.5 times the cost of COBRA for a coverage period of 12 months, payable in 12 monthly installments. If the Company terminates Mr. Halkyard for no cause after the end of the term of the Employment Agreement (at which time he would be treated as an at-will employee of the Company), Mr. Halkyard will receive a lump sum payment equal to one year of his base salary. Any such severance payments will be subject to applicable taxes and Mr. Halkyard’s execution and non-revocation of a general release of claims.
The Employment Agreement also contains a non-compete covenant generally prohibiting Mr. Halkyard from providing services to a competitor or soliciting employees or business contacts for 12 months following his termination of employment or for 12 months following the term of the Employment Agreement. In addition, the Employment Agreement mandates that Mr. Halkyard’s confidentiality obligations continue even after his termination of employment.
The Employment Agreement provides that, to the extent required by the CARES Act, in connection with the Company becoming eligible for or entering into a loan, loan guarantee or other form of financial assistance from a governmental entity, Mr. Halkyard will agree to such limitations or reductions with respect to compensation and severance pay as may be required to comply with the CARES Act.