QUALITY CARE PROPERTIES,INC. (NYSE:QCP) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
Arrangements with Our Chief Executive Officer
On December2, 2016, Quality Care Properties,Inc. (QCP or we)
entered into a letter agreement (the Ordan Letter) with Mark
Ordan, our Chief Executive Officer, memorializing actions under,
and changes to, his employment agreement, dated as of August3,
2016 and amended on October3, 2016 (the Ordan Employment
Agreement), which was originally entered into prior to the
spin-off of QCP from HCP,Inc.
Completion Bonus and Related Clawback. The Ordan
Employment Agreement authorized the Compensation Committee (the
Committee) of QCPs Board of Directors to determine the amount of
Mr.Ordans spin-related completion bonus. The Committee set the
amount of the completion bonus at $3,000,000, which is a level
that had been previously contemplated under the original Ordan
Employment Agreement. The Committee added a clawback of Mr.Ordans
completion bonus (based on the number of full months worked) if
Mr.Ordan terminates his employment with QCP other than for good
reason or we terminate Mr.Ordans employment for cause during the
three-year period following consummation of our spin-off from
HCP,Inc. (the Effective Date).
Initial RSU Grant. The Committee determined to grant
Mr.Ordan initial restricted stock units with a grant date fair
value of $3,000,000 (the Ordan Initial RSUs). The Ordan Letter
provides that Ordan Initial RSUs are in full satisfaction of QCPs
obligation under the Ordan Employment Agreement to grant an
initial award of restricted stock units to Mr.Ordan and that the
Ordan Initial RSUs will vest in full on the third anniversary of
the grant date, subject to Mr.Ordans continued employment with
QCP through such date, provided that if Mr.Ordans
employment is terminated by QCP without cause or if he resigns
his employment for good reason, in each case, on or within two
years after a change in control of QCP, the Ordan Initial RSUs
will vest in full as of such termination date.
Initial and Adjustment Option Grant. To give effect to
the change in capital structure of QCP from that contemplated by
the Ordan Employment Agreement, the Ordan Letter provides that
the initial options contemplated under the Ordan Employment
Agreement will be in respect of 1,600,000 shares of QCP common
stock (the Ordan Initial Options). In addition, in light of the
limits placed on the Ordan Initial RSUs, Mr.Ordan will be granted
additional options for QCP common stock with a grant date fair
value of approximately $1,750,000 (the Ordan Adjustment Options
and together with the Ordan Initial Options, the Ordan Options).
The Ordan Adjustment Options will be granted at the same time and
have the same exercise price as the Ordan Initial Options. The
Pricing Committee (as defined in the Ordan Employment Agreement)
for the Ordan Options will consist of three independent members
of the QCP Board of Directors, and will no longer consist of any
HCP,Inc. directors.
The Ordan Initial Options will vest and become exercisable as
provided in the Ordan Employment Agreement, and the Committee
clarified that if Mr.Ordans employment terminates during the
first two years following the grant date, QCP may clawback the
Ordan Initial Options. The Ordan Adjustment Options will vest in
full on the third anniversary of the grant date, subject to
Mr.Ordans continued employment with QCP through such date,
provided that, upon Mr.Ordans termination of employment
without cause or resignation for good reason, in each case, on or
within two years after a change in control of QCP, the Ordan
Adjustment Options will vest in full and become immediately
exercisable as of such termination date.
The foregoing summary of the Ordan Amendment is qualified in its
entirety by reference to the amendment itself, which is attached
to this Current Report as Exhibit10.1 and which is incorporated
by reference in its entirety into this Item 5.02.
Employment Agreements with President and Chief Investment
Officer and with Chief Financial Officer
On December2, 2016, we also entered into employment agreements
with D. Gregory Neeb, our President and Chief Investment
Officer (the Neeb Employment Agreement), and with C. Marc
Richards, our Chief Financial Officer (the Richards Employment
Agreement and together with the Neeb Employment Agreement, the
Executive Employment Agreements).
Term. The Executive Employment Agreements are both
effective immediately and will expire on the fourth anniversary
of the Effective Date or an earlier termination of the
executives employment.
Compensation. The Neeb Employment Agreement provides
for Mr.Neeb to receive an annual base salary of $575,000 and be
eligible to receive a target annual cash performance bonus
equal to 200% of his base salary and annual equity award grant
that has a target value equal to 200% of his annual base
salary. The Richards Employment Agreement provides for
Mr.Richards to receive an annual base salary of $400,000 and be
eligible to receive a target annual cash performance bonus
equal to 150% of his base salary and annual equity award grant
that has a target value equal to 150% of his annual base
salary.
Completion Bonus and Related Clawback. The Executive
Employment Agreements provide for Mr.Neeb to receive a
completion bonus of $2,000,000 and Mr.Richards to receive a
completion bonus of $1,000,000. The completion bonuses will be
subject to clawback on the same basis as Mr.Ordans completion
bonus.
Initial RSU Grant. The Executive Employment Agreements
provide for Mr.Neeb to receive a grant of restricted stock
units with a grant date fair value of $2,000,000 and
Mr.Richards to receive a grant of restricted stock units with a
grant date fair value of $1,000,000. Mr.Neebs and Mr.Richardss
restricted stock units will vest on the same terms as the Ordan
Initial RSUs.
Initial Option Grant. The Executive Employment
Agreements provide that Mr.Neebs initial options will be in
respect of 1,120,000 shares of Common Stock, together with
additional stock options with a grant date fair value of
approximately $1,225,000, and that Mr.Richards initial options
will be in respect of 640,000 shares of common stock, together
with additional stock options with a grant date fair value of
approximately $900,000. Mr.Neebs and Mr.Richards options will
be granted at the same time, have the same exercise price and
the same terms as the Ordan Options.
Severance Payments. If Mr.Neebs or Mr.Richardss
employment with QCP terminates prior to the fourth anniversary
of the Effective Date due to a termination without cause or
resignation for good reason and the executive executes a
general release of claims in favor of QCP, Mr.Neeb or
Mr.Richards, as the case may be, will receive salary
continuation in an amount equal to one times the sum of his
annual base salary and a target annual cash bonus paid in equal
installments over a 12-month period. If such a termination
occurs within two years following a change in control of QCP,
the executive will instead receive a lump sum cash payment
equal to two times the sum of his annual base salary and target
annual cash bonus. In the event of any potential exposure to
excise taxes under Section280G or 4999 of the Code, the
Executive Employment Agreements provide that such payments and
benefits either will be paid in full or reduced to a level such
that the excise taxes are not imposed, whichever provides a
better after-tax result for the executive.
Restrictive Covenants. The Executive Employment
Agreements provide that for one year following the termination
of employment with QCP for any reason, the executive will not
compete with QCP and for two years following the termination of
his employment with QCP for any reason, the executive will not
solicit QCP employees, consultants, other service providers,
clients or customers. The Executive Employment Agreements also
contain standard perpetual provisions relating to
confidentiality, non-disparagement and cooperation with
litigation and financial audits.
The foregoing summary of the Executive Employment Agreements is
qualified in its entirety by reference to the agreements
themselves, which are attached to this Current Report as
Exhibits 10.2 and 10.3 and which are incorporated by reference
in their entirety into this Item 5.02.
Item 9.01.Financial Statements and Exhibits.
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Exhibits. |
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ExhibitNo. |
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Description |
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10.1 |
Letter Agreement, dated December2, 2016, between QCP and |
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10.2 |
Employment Agreement, dated December2, 2016, between QCP |
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10.3 |
Employment Agreement, dated December2, 2016, between QCP |
About QUALITY CARE PROPERTIES, INC. (NYSE:QCP)
Quality Care Properties, Inc. is a self-managed and self-administered real estate investment trust. The Company is focused on post-acute/skilled nursing and memory care/assisted living properties. As of June 30, 2016, the Company’s portfolio included 274 post-acute/skilled nursing properties, 62 memory care/assisted living properties, a surgical hospital and a medical office building (MOB) across 30 states of the United States. The Company’s primary tenant is HCR ManorCare, Inc. (HCRMC), a provider of post-acute, memory care and hospice services. As of June 30, 2016, 249 of the Company’s post-acute/skilled nursing properties and 61 of its memory care/assisted living properties were leased to HCR III Healthcare, LLC (HCR III), a subsidiary of HCRMC. As of June 30, 2016, its hospital had a capacity of 37 beds. As of June 30, 2016, its medical office covered 88,000 square feet. As of June 30, 2016, its post-acute/skilled nursing properties had a capacity of 33,490 beds. QUALITY CARE PROPERTIES, INC. (NYSE:QCP) Recent Trading Information
QUALITY CARE PROPERTIES, INC. (NYSE:QCP) closed its last trading session up +0.39 at 16.39 with 903,803 shares trading hands.
