Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
PSU Awards
On November 7, 2020 (the "Grant Date"), the Compensation Committee (the
"Compensation Committee") of the Board of Directors of Park Hotels & Resorts
Inc. (the "Company") approved grants of special one-time performance-based
restricted stock units (the "PSU Awards") to the Company's executive officers
and certain other employees, including to each of the following named executive
officers: Thomas J. Baltimore, Jr., President and Chief Executive Officer, Sean
M. Dell'Orto, Executive Vice President and Chief Financial Officer, Carl A.
Mayfield, Executive Vice President, Design and Construction, and Thomas C.
Morey, Executive Vice President and Chief Investment Officer.
The purpose of the PSU Awards, which were granted under the Company's existing
2017 Omnibus Incentive Plan (the "Omnibus Plan"), is to retain the award
recipients and incentivize the award recipients to continue efforts to improve
the Company's performance to pre-COVID-19 levels. The Committee believed that
conditioning vesting of the PSU Awards on increasing the Company's stock price
over a four-year period, as described in more detail below, properly aligns
management with the long-term objectives of stockholders.
The target values of the PSU Awards granted to Messrs. Baltimore, Dell'Orto,
Mayfield and Morey are as follows: (i) $11,224,000 for Mr. Baltimore; (ii)
$2,750,000 for Mr. Dell'Orto; (iii) $1,662,500 for Mr. Mayfield; and (iv)
$2,200,000 for Mr. Morey. The target number of performance-based restricted
stock units ("PSUs") granted to each such executive (the "Target PSU Award") is
as follows: (x) 490,291 PSUs for Mr. Baltimore; (ii) 110,000 PSUs for Mr.
Dell'Orto; (iii) 66,500 PSUs for Mr. Mayfield; and (iv) 88,000 PSUs for Mr.
Morey. The target number of PSUs granted to Mr. Baltimore was determined based
on the sum of (i)(A) 2.0x his aggregate target amount for fiscal year 2020 under
the Company's Executive Long-Term Incentive Plan ("LTIP") divided by (B) $25.00,
and (ii)(A) the amount of base salary that he voluntarily waived for calendar
year 2020 divided by (B) the closing sales price of the Company's common stock
reported on the New York Stock Exchange (the "NYSE") on November 6, 2020 (which
was the last trading day preceding the Grant Date), in each case rounded down to
the nearest whole unit. The target number of PSUs granted to each of Messrs.
Dell'Orto, Mayfield and Morey was determined based on (x) 2.0x the executive's
aggregate target amount for fiscal year 2020 under the LTIP divided by (y)
$25.00, rounded down to the nearest whole unit.
Each PSU Award will vest based on the Company's achievement of eight stock price
targets during the period commencing on the Grant Date and ending on the fourth
anniversary of the Grant Date (the "Performance Period"). Specifically, a number
of PSUs equal to one-eighth of the Target PSU Award, rounded up to the nearest
whole unit, will vest on each date on which the average closing sales price of a
share of the Company's common stock as reported on the NYSE over a consecutive
20 trading day period is equal to or greater than one of the following eight
share price targets, subject to the executive's continued employment with the
Company through the applicable vesting date (except as described below): $11.00,
$13.00, $15.00, $17.00, $19.00, $21.00, $23.00 and $25.00. No more than one
vesting event may occur with respect to each share price target and no more than
100% of the Target PSU Award may vest. Any portion of the Target PSU Award that
vests will be paid out in shares of the Company's common stock as soon as
practicable following the applicable vesting date. Any portion of the Target PSU
Award that remains unvested as of the fourth anniversary of the Grant Date will
be forfeited. The executives will receive accrued dividend equivalents, if and
to the extent dividends on the Company's common stock are declared and paid,
with respect to the number of PSUs that vest, which will be paid to the
executive in cash only if and when the PSUs vest.
With respect to Mr. Baltimore's PSU Award, in the event of his termination of
employment prior to the end of the Performance Period, the vesting of any
outstanding PSUs upon such termination will be as set forth in that certain
Executive Employment Agreement between him and the Company, dated April 26,
2016. With respect to Messrs. Dell'Orto, Mayfield and Morey's PSU Awards, in the
event of such executive's termination of employment prior to the end of the
Performance Period without cause or due to death or disability, the outstanding
PSUs held by the executive, if any, will remain outstanding and eligible to vest
as described in the previous paragraph until the 20th trading day following the
date of the executive's termination of employment. Any PSUs that do not vest on
or prior to the 20th trading day following such executive's termination of
employment will be forfeited by the executive as of such date.
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Upon a "change in control" (as defined in the Omnibus Plan), any portion of an
executive's Target PSU Award that remains unvested will be eligible to vest on
the date of the change in control, with the number of PSUs that vests, if any,
determined based on the greater of (i) the per-share transaction price payable
to the Company's shareholders in such change in control transaction, including
the value of any contingent consideration payable to the Company's shareholders
in the transaction (e.g., milestone or earn-out payments, or amounts subject to
an escrow), as reasonably determined by the Compensation Committee, and (ii) the
closing sales price of the Company's common stock reported on the NYSE on the
trading day immediately preceding the date of the change in control, in each
case, irrespective of whether either such price constitutes the average closing
price over a consecutive 20 day trading period. Any outstanding PSUs that do not
vest as of the date of the change in control will be forfeited as of such date.
Copies of the form of CEO PSU Agreement and the form of Executive PSU Agreement
are being filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K,
and each is incorporated herein by this reference. The foregoing description of
the terms of the PSU Awards is qualified in its entirety by reference to the
full text of such award agreements.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
10.1 Form of CEO PSU Agreement
10.2 Form of Executive PSU Agreement
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
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