Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 22, 2020, the Board of Directors (the "Board") of Penn National
Gaming, Inc. (the "Company") appointed David Williams as Executive Vice
President and Chief Financial Officer effective as of March 3, 2020, subject to
regulatory approvals.
Mr. Williams, who is 53 years old, will join the Company on January 27, 2020 as
an Executive Advisor until he assumes the role of Executive Vice President and
Chief Financial Officer on March 3, 2020. Prior to joining the Company, Mr.
Williams served as the Chief Financial Officer and Controller of Apple Inc.'s
Claris International, Inc. software division ("Claris") from 2012 until October
2019. Claris is Apple's SaaS-focused business, which provides productivity and
CRM software platforms to more than 50,000 businesses worldwide. As Chief
Financial Officer of Claris, Mr. Williams was responsible for all aspects of the
division's finance and strategic planning, which helped Claris achieve
consistent growth and profitability. In addition, Mr. Williams managed Claris'
information systems, legal and operation functions and played a key role in
transitioning Claris from a packaged Macintosh software company to a
cross-platform, multi-channel, subscription-based cloud business model. Prior to
his position as Chief Financial Officer of Claris, Mr. Williams served as Vice
President of Finance for Claris from 2000 to 2012.
There are no family relationships between Mr. Williams and any director or
executive officer of the Company, and he has no direct or indirect material
interest in any transaction required to be disclosed pursuant to Item 404(a) of
Regulation S-K.
The Company entered into an Executive Agreement with Mr. Williams on January 22,
2020, in connection with his appointment as Executive Vice President and Chief
Financial Officer. The Executive Agreement is effective as of January 27, 2020,
and will expire on January 27, 2023 (the "Term") unless terminated earlier by
either party. The Executive Agreement provides that, effective January 27, 2020,
Mr. Williams's annual base salary will be $650,000 and his target annual bonus
will be 100% of his base salary. In addition, Mr. Williams will be eligible for
an annual equity grant targeted at 240% of his base salary, one-third of which
will consist of an award of stock options on February 11, 2020 having a grant
date value of $520,000, which will vest annually in equal installments over four
years. The stock option award will be subject to the terms and conditions of the
Company's 2018 Long Term Incentive Compensation Plan and applicable award
agreement.
In the event Mr. Williams' employment is terminated without cause (as defined in
the Executive Agreement) or the Executive Agreement is not renewed at the end of
the Term, Mr. Williams will be entitled to (i) severance payments equal to 24
months of his base salary in effect on the termination date (such period, the
"Severance Period"), paid in accordance with the Company's regular payroll
procedures and (ii) 1.5 times the average of the last two full years' bonuses
paid to Mr. Williams, paid at the time such next bonus is paid to similarly
situated executives after the termination date.
If, within 12 months after a change of control (as defined in the Executive
Agreement), Mr. Williams is terminated without cause or resigns for good reason
(as defined in the Executive Agreement), he will be entitled to receive a lump
sum cash payment equal to two times the sum of (i) his annual base salary and
(ii) the amount of his targeted bonus compensation, each at the rate in effect
at the time of the change of control or the termination date, whichever is
greater. To the extent that Mr. Williams receives a change of control payment,
he will not be eligible to receive any additional cash severance in the event of
a termination of employment during the Term. Prior to receipt of any severance
payments, Mr. Williams must execute a general release in favor of the Company
and its affiliates.
The Executive Agreement also contains customary confidentiality, non-competition
and non-solicitation provisions. Mr. Williams has agreed not to disclose or use
the Company's confidential information for a period of two years following
termination. In addition, Mr. Williams has agreed not to compete with the
Company within 150 miles of any facility in which the Company or its affiliates
owns or operates or is actively seeking to own or operate a facility and to not
compete with its interactive business for a period of (i) twelve months if he is
terminated in a manner in which no severance is paid or (ii) the Severance
Period if he receives severance upon termination. Mr. Williams has agreed not to
solicit or hire an executive or management level employee of the Company or its
affiliates for a period of 18 months following termination.
The summary of the material terms of the Executive Agreement described above is
qualified in its entirety by reference to the Executive Agreement, a copy of
which is attached hereto as Exhibit 10.1 and is incorporated herein by
reference.
On January 22, 2020, William J. Fair submitted his resignation as Executive Vice
President and Chief Financial Officer effective as of March 3, 2020. Mr. Fair
will remain employed as an Executive Advisor of the Company until March 31,
2020. The Company entered into a First Amendment to Executive Agreement with Mr.
Fair on January 23, 2020 (the "Amendment") to reflect his resignation as
Executive Vice President and Chief Financial Officer effective March 3, 2020.
Pursuant to his Executive Agreement, as amended, Mr. Fair will continue to be
entitled to the severance and compensation in accordance with the terms of Mr.
Fair's Executive Agreement dated September 24, 2019 as previously described in
the Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 26, 2019. The summary of the terms of the Amendment is
qualified in its entirety by reference to the Amendment, a copy of which is
attached hereto as Exhibit 10.2 and is incorporated herein by reference.
A copy of the press release announcing Mr. Williams' appointment and Mr. Fair's
resignation is filed as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description of Exhibit
10.1 Executive Agreement, dated January 22, 2020, between Penn National
Gaming, Inc. and David Williams
10.2 First Amendment to Executive Agreement, dated January 23, 2020,
between Penn National Gaming, Inc. and William J. Fair
99.1 Press Release, dated January 23, 2020, of Penn National Gaming, Inc.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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