Diplomat Pharmacy,Inc. (NYSE:DPLO) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Named Executive Officer Annual Target Compensation
On March27, 2018, the Board of Directors (the “Board”) of Diplomat Pharmacy,Inc. (the “Company”) approved changes to the structure of the annual target compensation of certain of its named executive officers: Joel Saban, President, Atul Kavthekar, Chief Financial Officer and Gary Rice, Executive Vice President of Operations. Specifically, the allocation of the annual equity award for each of Messrs.Saban, Kavthekar and Rice was modified for 2018 to consist of 50% performance-based restricted stock units (“RSUs”), 25% time-based RSUs, and 25% time-based stock options. The terms of the awards are as described further below. In addition, the base salary, annual target bonus and annual target equity award for each named executive officer was modified as set forth herein.
Based on the experience, performance, responsibilities and anticipated annual growth, as well as retention, incentive and market factors and in consultation with an independent third-party compensation consultant, the Board approved the 2018 annual target compensation for each of the named executive officers, noted above, as follows. Mr.Saban’s base salary was increased from $450,000 to $500,000, his annual target bonus was increased from 60% to 75% of base salary, and his annual target equity award was increased from 50% to 360% of base salary. Mr.Kavthekar’s base salary was increased from $400,000 to $450,000, his annual target bonus was increased from 50% to 65% of base salary, and his annual target equity award was increased from 50% to 222% of base salary. Mr.Rice’s base salary was increased from $320,000 to $340,000, his annual target bonus was increased from 40% to 45% of base salary, and his annual target equity award was increased from 60% to 50% of base salary.
For 2018, the earned bonus of the named executive officers is based on the achievement of certain revenue, Adjusted EBITDA, and individual annual performance goals, which represent 30%, 60% and 10%, respectively, of the target bonus. In addition, a minimum Adjusted EBITDA target must be satisfied in order for there to be a payout of the revenue component. The above named executive officers can earn 50% to 200% of their respective target bonus based on the performance goal for each component.
Performance-Based Restricted Stock Unit Awards
On March27, 2018, the Board approved a form of Restricted Stock Unit Award Agreement (Performance-Based) (the “RSU Award Agreement”) for RSUs to be issued from time to time under the Company’s 2014 Omnibus Incentive Plan. Under the terms of the RSU Award Agreement, the Company may issue the right, which will be earned or forfeited based upon the Company’s performance relative to Adjusted EBITDA goals for the applicable year, to receive shares of common stock, no par value, of the Company (“Common Stock”) on the basis of one share of Common Stock for each RSU, provided that the grantee has remained continuously employed by the Company from the grant date to such vesting date. Grantees may earn 50% to 200% of their respective target equity awards based on the performance goal. The earned RSUs, if any, will vest in three annual installments, with the first installment vesting upon Audit Committee confirmation of the satisfaction of the performance goal, and the remaining installments vesting annually thereafter. The RSU Award Agreement also provides for the termination of the award upon termination of employment for any reason, except for double-trigger accelerated vesting for specified terminations upon a change in control. The Formof Restricted Stock Unit Award Agreement (Performance-Based) is attached hereto as Exhibit10.1 and is incorporated herein by reference.
On March27, 2018, the Board approved the issuance of performance-based RSUs to the Company’s named executive officers in the following target amounts: Mr.Saban, 40,000 performance-based RSUs; Mr.Kavthekar, 22,200 performance-based RSUs; and Mr.Rice, 7,556 performance-based RSUs.
Time-Based Restricted Stock Unit Awards
On March27, 2018, the Board approved the issuance of time-based RSU awards, to the Formof Restricted Stock Unit Award Agreement (Time-Based) as contained in Exhibit10.1 of the Company’s Current Report on Form8-K filed on April6, 2017, to certain employees, including certain of the Company’s named executive officers in the following amounts: Mr.Saban, 20,000 time-based RSUs; Mr.Kavthekar, 11,100 time-
