Business Context and Reporting Period
This Form 8-K filing by Iridium Communications Inc. is dated February 13, 2019. The report details the approval of new executive compensation programs by the Compensation Committee of the Board of Directors. The filing also notes recent leadership changes, including the retirement of S. Scott Smith and the appointment of Suzanne E. McBride as Chief Operations Officer.
Key Financial Metrics and Compensation Details
The filing does not report operational financial metrics such as revenue, profit, cash flow, or debt levels. Instead, it outlines specific compensation targets and structures for named executive officers:
- Performance Share Program (A&R Program): Approved for grants on March 1, 2019. Awards are based on a Target Award value converted to shares.
- 2019 Performance Bonus Plan: Approved for the 2019 calendar year, with bonuses calculated as a percentage of base salary.
| Officer | Title | Target Performance Share Award ($) | Maximum Performance Share Award ($) | Target Bonus Percentage |
|---|---|---|---|---|
| Matthew J. Desch | Chief Executive Officer | $850,000 | $1,275,000 | 90% |
| Thomas J. Fitzpatrick | Chief Financial Officer | $375,000 | $562,500 | 75% |
| Suzanne E. McBride | Chief Operations Officer | $300,000 | $450,000 | 60% |
| Bryan J. Hartin | Executive Vice President, Sales and Marketing | $250,000 | $375,000 | 60% |
| Thomas D. Hickey | Chief Legal Officer | $187,500 | $281,250 | 60% |
Material Changes and Program Updates
The company adopted an Amended and Restated Performance Share Program to remove references to "performance-based compensation" exceptions under Section 162(m) of the Internal Revenue Code, which were repealed by the Tax Cuts and Jobs Act of 2017. The new program replaces the prior version for new awards while leaving existing awards under the old terms intact. Additionally, S. Scott Smith is retiring effective March 15, 2019, and is ineligible for the 2019 awards.
Guidance, Outlook, and Performance Criteria
While no financial guidance is provided, the filing establishes specific performance metrics tied to executive compensation:
- Performance Share Goals: Actual awards depend on the growth of average service revenue for 2019 and 2020 compared to 2018. Awards are reduced to zero if a specified average OEBITDA margin is not achieved for 2019 and 2020.
- Bonus Plan Goals: Bonuses are determined by a corporate performance factor based on OEBITDA, strategic goals, and user satisfaction measures, subject to a personal performance factor.
- Definitions: OEBITDA is defined as earnings before interest, taxes, depreciation, amortization, loss from the Aireon LLC joint venture, share-based compensation, and purchase accounting impacts. It also excludes expensed construction costs related to the constellation upgrade.
- Vesting: Performance shares vest 50% in Q1 2021 and 50% on March 1, 2022. Bonus RSUs vest in March 2020.
Key Facts for Investor Verification
- Verify the actual achievement of the 2019 and 2020 average service revenue growth targets to determine final Performance Share payouts.
- Confirm the company's ability to meet the specified average OEBITDA margin, as failure to do so results in zero Performance Share awards.
- Monitor the transition of leadership following S. Scott Smith's retirement and the integration of Suzanne E. McBride as Chief Operations Officer.
- Review the upcoming Form 10-Q for the quarter ending March 31, 2019, which will contain the full text of the A&R Program and the Iridium Bonus Plan.