CYRUSONE INC. Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
As previously disclosed, onNovember 14, 2021 ,CyrusOne Inc. , aMaryland corporation ("CyrusOne" or the "Company"), entered into an Agreement and Plan of Merger (the "Merger Agreement") withCavalry Parent L.P. , aDelaware limited partnership ("Parent"), andCavalry Merger Sub LLC , aDelaware limited liability company and a wholly owned subsidiary of Parent ("Merger Sub"), pursuant to which, subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Parent. OnDecember 30, 2021 , the Company filed with theSecurities and Exchange Commission ("SEC") a definitive proxy statement in connection with the Merger (as previously supplemented by the definitive additional proxy materials filed with theSEC onJanuary 21, 2022 , the "Proxy Statement"). Following the filing of the Proxy Statement, onJanuary 25, 2022 ,CyrusOne Management Services LLC ("CyrusOne LLC "), a subsidiary of the Company, andDavid H. Ferdman , the Company's President and Chief Executive Officer on an interim basis, entered into an amendment (the "Amendment") to that certain employment agreement, entered into byCyrusOne LLC andMr. Ferdman onAugust 15, 2021 (the "Employment Agreement"), which was set to expire onJanuary 29, 2022 (the "Amendment Effective Date"). The Amendment extends the term of the Employment Agreement through the earlier of (a) the date that is 90 days after the closing of the Merger and (b)January 29, 2023 (the "Extended Term End Date"), generally on the same terms and conditions as the Employment Agreement except as described below. Under the Amendment,Mr. Ferdman's target and maximum bonus amounts set forth in the Employment Agreement (the "Bonus") will each be multiplied by two (from$1,000,000 to$2,000,000 , and from$2,000,000 to$4,000,000 , respectively) to reflect the fact that the bonusMr. Ferdman will be eligible to receive will be for a period of up to one year (instead of six months under the Employment Agreement), provided that if the Extended Term End Date occurs prior toJanuary 29, 2023 , then the Bonus will be prorated.Mr. Ferdman will also receive a restricted stock award with respect to shares of the Company's common stock with an aggregate grant date value of$4,000,000 (the "Extension Award"), generally vesting one-third on each of the first three anniversaries of the Amendment Effective Date. IfMr. Ferdman's employment is terminated as a result of the expiration of the term, by the Company other than for cause or ifMr. Ferdman resigns for good reason, the Extension Award will immediately vest and, ifMr. Ferdman provides transition services through the Extended Term End Date,Mr. Ferdman will receive the Bonus, prorated to the date of termination.
The foregoing description of the terms of the Amendment is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.1 herewith and is incorporated by reference herein.
Item 8.01. Other Events
As a result of the entry into the Amendment, the Company has determined to voluntarily supplement the Proxy Statement as described in this Current Report on Form 8-K. These supplemental disclosures will not affect the merger consideration to be paid toCyrusOne stockholders in connection with the Merger or the timing of the special meeting of stockholders of the Company, which is scheduled to be held onFebruary 1, 2022 at9:30 a.m., Central Time (10:30 a.m., Eastern Time ), in a virtual-only meeting format, at https://meetnow.global/MTUZUCT (the "Special Meeting"). The Board of Directors ofCyrusOne continues to recommend that you vote "FOR" the proposal to approve the Merger in accordance with the terms of the Merger Agreement, the Merger Agreement and the other transactions contemplated by the Merger Agreement and "FOR" the other proposals being considered at the Special Meeting, including the proposal to approve, by advisory (non-binding) vote, the compensation that may be paid or become payable to the named executive officers of the Company in connection with the consummation of the Merger.
Supplemental Disclosures to the Proxy Statement in Connection with the Amendment
The following disclosures in this Current Report on Form 8-K supplement the disclosures contained in the Proxy Statement and should be read in conjunction with the disclosures contained in the Proxy Statement, which in turn should be read in its entirety. All page references are to the Proxy Statement and terms used below, unless otherwise defined, shall have the meanings ascribed to such terms in the Proxy Statement.
The disclosure in the section entitled "Treatment of Company Equity Awards" under the heading "The Merger", beginning on page 59 of the Proxy Statement, is hereby amended by:
Amending and restating the first full paragraph on page 60 as follows (with new text underlined):
The following table sets forth the value of the Company equity awards held by each of the Company's directors, executive officers and Former Executive Officers as ofDecember 23, 2021 , the latest practicable date to determine such amounts before the filing of this proxy statement, and the cash amounts payable (on a pre-tax basis) in respect thereof in connection with the merger. The values in the table below have been determined assuming that (i) all Company equity awards are valued based on the merger consideration of$90.50 per share, (ii) all Company equity awards subject to performance criteria have such criteria satisfied at the maximum levels, (iii) the merger closes onJune 30, 2022 , which is the assumed closing date only for purposes of this compensation-related disclosure and (iv) the individuals included in the table below do not receive any additional grants of Company equity awards or forfeit any Company equity awards prior toJune 30, 2022 ; however, such values do reflect the expected grant of the Extension Award (as defined below) toMr. Ferdman and the expected vesting of Company equity awards prior to such date. The values below also do not reflect any awards that were accelerated and vested in accordance with the 280G mitigation actions described below. No director or executive officer holds Company stock options or Company restricted shares.
Amending and restating the table on page 60 as follows:
Company
Restricted Company LTIP Units
Name (1) Shares (2)($) RSUs (2)($) (2)($) Total ($)
Executive Officers
David Ferdman 4,000,000 - - 4,000,000
Katherine Motlagh - - 2,994,374 2,994,374
John Hatem - - 3,293,476 3,293,476
Robert Jackson - 1,964,574 2,694,638 4,659,212
Former Executive Officers(3) - 7,056,014 2,555,901 9,611,915
Amending and restating footnote two to the table on page 60 as follows (with new text underlined):
(2) In the case of Company equity awards subject to performance criteria,
reflects achievement of such criteria at the maximum level. In the case of
or prior to February 8, 2022 .
Amending and restating the two paragraphs beginning on page 60 under the
sub-heading "-Employment Agreement with
Mr. Ferdman is currently subject to an employment agreement, as amended, with a term that ends on the earlier to occur of (a) the date that is 90 days following the consummation of the merger and (b)January 29, 2023 January 29, 2022 (the "Ferdman Term Date") and that provides that, if his employment terminates at the Ferdman Term Date or is terminated without "Cause" orMr. Ferdman resigns for "Good Reason" (each, as defined inMr. Ferdman's employment agreement) at any time, he will be eligible to receive, subject toMr. Ferdman's execution of a release of claims in favor of the Company, (i) full vesting of the equity award granted to him in connection with the extension of the term of his employment agreement, which award will be granted on or prior toFebruary 8, 2022 and have a grant date value of$4,000,000 (the "Extension Award") his Company restricted share award granted to him in his capacity as an employee and (ii) provided thatMr. Ferdman provides transition services to the Company through the Ferdman Term Date, an annual bonus, prorated to the date of termination the base salary and annual bonus thatMr. Ferdman would have otherwise earned through the Ferdman Term Date if his employment had not terminated. In addition, ifMr. Ferdman's employment is terminated for any other reason, other than for Cause, he will be entitled to a pro-rated portion of any annual bonus he would have otherwise earned through the Ferdman Term DateJanuary 29, 2023 if his employment had
not terminated.Mr. Ferdman's employment agreement does not provide for any enhanced payments or benefits in connection with a change in control of the Company such as the merger, but his previously granted Company restricted share award agreement provides that, in the event that any payment or benefit payable toMr. Ferdman would constitute a parachute payment within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), thenMr. Ferdman will either receive all such payments and benefits in full or such payments and benefits will be reduced to the greatest amount that does not trigger the excise tax pursuant to Section 4999 of the Code, whichever results in the greater after-tax amount forMr. Ferdman (a "280G best-net cutback").
Amending and restating the second full paragraph on page 63 under the sub-heading "-Quantification of Payments and Benefits" as follows (with new text underlined):
The potential payments in the tables below are quantified in accordance with Item 402(t) of Regulation S-K. The estimated values are based on (i) an assumption that the merger is consummated onJune 30, 2022 , (ii) the per share merger consideration of$90.50 , (iii) the named executive officers' salary and target bonus amounts as in effect as of the date of this proxy statement, (iv) the number of unvested Company equity awards held by the named executive officers as ofDecember 23, 2021 (in particular, the amounts below exclude awards that vested as a result of the 280G mitigation actions described above), the latest practicable date to determine such amounts before the filing of this proxy statement, less any awards expected to vest in the ordinary course prior toJune 30, 2022 , and assuming no additional grants or forfeitures of Company equity awards prior toJune 30, 2022 , other than the Extension Award, which will be granted toMr. Ferdman on or prior toFebruary 8, 2022 , and is included in the estimated values below, and (v) an assumption that each named executive officer experiences a termination of employment immediately following the consummation of the merger under circumstances that entitle such named executive officer to receive severance (i.e., a termination without "Cause" or resignation for "Good Reason"). As such, the amounts indicated below are estimates based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement, and do not reflect certain compensation actions that may occur before consummation of the merger. As a result, the actual amounts, if any, to be received by a named executive officer may materially differ from the amounts set forth below.
Amending and restating the table on page 63 as follows:
Perquisites /
Benefits
Name(1) Cash ($)(2 ) Equity ($)(3 ) ($)(4 ) Total ($)
David Ferdman 4,838,356 4,000,000 - 8,838,356
Katherine Motlagh 2,759,485 2,994,374 26,099 5,779,958
John Hatem 3,033,537 3,293,476 24,464 6,351,477
Robert Jackson 2,784,993 4,659,212 25,689 7,469,894
Deleting the second to last sentence in footnote two to the table on page 63.
Amending and restating the table in footnote two to the table on page 63 as
follows:
Pro-Rata Deal Retention
Name Severance ($) Bonus ($) Bonus ($) Total ($)
David Ferdman - 838,356 4,000,000 4,838,356
Katherine Motlagh 2,011,540 247,945 500,000 2,759,485
John Hatem 1,810,386 223,151 1,000,000 3,033,537
Robert Jackson 1,589,117 195,877 1,000,000 2,784,993
Amending and restating footnote three (including the table thereto) to the table on page 63 as follows (with new text underlined and deleted text marked with a strikethrough):
(3) The amounts shown in this column represent the estimated aggregate value of
the named executive officers' unvested Company equity awards. As described in
the sections entitled "The Merger-Interests of the Company's Directors and
Executive Officers in the Merger-Treatment of Company Equity Awards" and "The
Merger-Treatment of Company Equity Awards," at the effective time, each
Company equity award will be canceled in exchange for the right to receive
the merger consideration with respect to each share of common stock subject
to the Company equity award, less the exercise price in the case of Company
stock options, and with the number of shares of common stock subject to any
awards subject to performance-criteria determined based on achievement of
such criteria at the maximum level, with such amounts in respect of Company
equity awards granted prior to the date of the merger agreement payable at
the effective time. Such amounts in respect of Company equity awards granted
after the date of the merger agreement will remain subject to any
time-vesting criteria that applied to the applicable Company equity award,
including with respect to any accelerated vesting terms upon a qualifying
termination of employment. As of the date of this proxy statement, all All
Company equity awards held by named executive officers other than
were granted prior to the date of the merger agreement and no awards are
assumed to have been granted following the date of the merger agreement to
any such executive officer, and therefore the amounts shown in this column
for all executives other than
payments will be payable on the effective time regardless of whether or not
the executive's employment is terminated. In the case of
his Extension Award will be granted after the date of the merger agreement,
it will convert as of the effective time into a cash-based award subject to
the same vesting criteria, including accelerating upon a qualifying
termination of employment, and is therefore a "double-trigger" payment. No
values are shown for
of his currently outstanding Company equity awards will vest in full prior to
the date on which the effective time is assumed to occur. A breakdown of the
amounts shown above by award type is provided in the sections entitled "The . . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description 10.1 Amendment to Employment Agreement, dated as ofJanuary 25, 2022 , by and betweenDavid H. Ferdman andCyrusOne Management Services LLC . 104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
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