Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
On November 21, 2022, our subsidiary, Sirius XM Radio Inc., entered into a new
employment agreement (the "Employment Agreement") with Patrick L. Donnelly to
continue to serve as our Executive Vice President, General Counsel and Secretary
through January 2, 2025. The Employment Agreement is substantially similar to
Mr. Donnelly's existing employment agreement, other than with respect to certain
economic changes described below.
The Employment Agreement provides, in the case of certain qualifying
terminations, for continuation of his health insurance benefits for eighteen
months and his life insurance benefits for twelve months and for a lump sum
severance payment in an amount equal to the sum of: (i) Mr. Donnelly's annual
base salary plus (ii) the greater of $1,537,500 or the last annual bonus paid
(or due and payable) to him. In addition, we are obligated to pay Mr. Donnelly a
pro-rated bonus for the year in which the termination occurs (based on actual
achievement of applicable performance criteria). Our obligation to provide these
severance benefits to Mr. Donnelly is subject to the execution of an effective
release of claims against us. The Employment Agreement also contains other
provisions contained in the existing employment agreements with our other
executive officers, including confidentiality and non-competition restrictions,
as well as a compensation clawback to the extent required by applicable law,
regulations or stock exchange listing requirement, or any company policy adopted
pursuant thereto.
In connection with the execution of the Employment Agreement, we granted Mr.
Donnelly:
? an option to purchase shares of our common stock having a value, calculated
based upon the Black-Scholes-Merton option pricing model using the financial
inputs consistent with those we use for financial reporting purposes, of
$2,340,000 at an exercise price of $6.43 per share, the closing sale price of
our common stock on the Nasdaq Global Select Market on November 21, 2022. This
option award will vest in two installments on November 21, 2023 and January 2,
2025.
? 191,433 time-based restricted stock units ("RSUs"). This time-based RSU award
will vest in two installments on November 21, 2023 and January 2, 2025.
? 196,219 performance-based RSUs. This performance-based RSU award will cliff
vest on January 2, 2025 after a two-year performance period beginning on January
1, 2023 and ending on December 31, 2024 if a cumulative free cash flow target
established by the Compensation Committee is achieved. This award is subject to
the Compensation Committee's later certification of our performance during that
period and his continued employment through January 2, 2025.
? 196,219 performance-based RSUs. This performance-based RSU award will cliff
vest on January 2, 2025 following a two-year performance period commencing on
January 1, 2023 and ending on December 31, 2024 based on the performance of our
common stock relative to the companies in the S&P 500 Index. This
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award is subject to the Compensation Committee's later certification of our
performance during that period and his continued employment through January 2,
2025.
Each of these awards will be subject to acceleration or termination under
certain circumstances.
There is no arrangement or understanding between Mr. Donnelly and any other
person pursuant to which Mr. Donnelly was selected as an officer, and Mr.
Donnelly does not have a direct or indirect material interest in any transaction
required to be disclosed pursuant to Item 404(a) of Regulation S-K. There is no
family relationship between Mr. Donnelly and any director or executive officer
of the registrant.
Additional information about the benefit plans and programs generally available
to our executive officers is included in the Proxy Statement for our 2022 annual
meeting of stockholders filed with the Securities and Exchange Commission on
April 18, 2022.
The foregoing description of the Employment Agreement with Mr. Donnelly is
qualified in its entirety by the Employment Agreement attached as Exhibit 10.1
to this Current Report on Form 8-K.
Item 9.01 Statements and Exhibits
(d) Exhibits.
Exhibit Number Description of Exhibit
10.1 Employment Agreement, dated as of November 21, 2022, between
Sirius XM Radio Inc. and Patrick L. Donnelly
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