Business Context and Reporting Period
This Form 8-K Current Report was filed by Henry Schein, Inc. on August 8, 2019. The filing discloses an amendment and restatement of the employment agreement with Stanley M. Bergman, the Company's Chairman of the Board and Chief Executive Officer.
Key Financial Metrics
The filing does not report operational financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The only financial figures disclosed relate to executive compensation:
- RSU Award Value: $6.45 million aggregate value in Restricted Stock Units (RSUs).
- Performance-Based RSU: $3.225 million.
- Time-Based RSU: $3.225 million.
- Lump Sum Payment: $6.45 million payable in the event of the Executive's death or disability prior to the grant of the RSUs.
Material Changes Versus Prior Period
The Restated Agreement modifies the previous employment terms effective December 31, 2016, in the following ways:
- Term Extension: The agreement term now expires on December 31, 2022, with provisions for successive one-year extensions.
- Equity Vesting Trigger: Changed from a "single trigger" to a "double trigger" vesting provision for equity awards upon a change in control. Vesting now requires a qualifying termination (e.g., without Cause, for Good Reason, or Retirement) within two years following a change in control.
- Severance Calculation: The three-year average annual bonus component of cash severance will now be calculated based on the higher of actual performance or target level of performance for the most recently completed fiscal year if termination occurs prior to bonus payment.
- Release Requirement: Severance and post-termination benefits are now explicitly contingent on the execution and non-revocation of a release of claims.
- Trade Secrets: Added language enhancing the Company's rights under the Defend Trade Secrets Act.
Guidance, Outlook, and Risks
The filing contains no financial guidance, outlook, or management commentary regarding future business performance. The primary risks and contingencies disclosed relate to the executive compensation structure:
- Grant Timing Risk: The RSU awards are contingent on the Executive's continued employment through the grant date (first business day following the 20th trading day after August 8, 2019).
- Performance Goals: The Performance-Based RSU Award is subject to the achievement of performance goals to be set by March 31, 2020.
- Change in Control: The definition of "Change in Control" has been updated to conform with the Stock Incentive Plan.
Important Facts for Investor Verification
- Verify the specific performance goals for the Performance-Based RSU Award once set by March 31, 2020.
- Confirm the exact grant date and the 20-trading day volume weighted average price used to calculate the number of RSUs issued.
- Review the full text of the Amended and Restated Employment Agreement (Exhibit 10.1) for detailed definitions of "Cause," "Good Reason," and "Retirement."
- Note that the Executive's base salary remains unchanged by this agreement.