Business Context and Reporting Period
This Form 8-K is a current report filed by Dex Media, Inc. (the "Company") on September 5, 2013. The filing details the adoption of the Dex Media, Inc. Amended and Restated Long-Term Incentive Plan ("LTIP") and the establishment of the 2013-2015 Cash Long-Term Incentive Plan. These actions follow the April 30, 2013 merger between Dex One Corporation and SuperMedia Inc., under which the Company assumed obligations from both predecessor entities.
Key Financial Metrics and Compensation Details
The filing does not report operational financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity. Instead, it focuses on equity and cash compensation structures:
- Equity Pool: The LTIP authorizes the issuance of up to 381,417 shares of common stock.
- Executive Equity Awards (Sept 5, 2013):
- Peter J. McDonald (CEO): 50,000 restricted shares (vesting Dec 31, 2015) and 125,000 stock options (vesting over 4 years).
- Samuel D. Jones (CFO): 33,300 restricted shares (vesting Dec 31, 2015) and 83,300 stock options (vesting over 4 years).
- Cash Incentive Targets (2013-2015):
- Peter J. McDonald: $750,000 (2013), $1,125,000 (2014), $1,125,000 (2015).
- Samuel D. Jones: $500,000 (2013), $750,000 (2014), $750,000 (2015).
Material Changes and Plan Mechanics
The primary material change is the formalization of post-merger compensation plans. The 2013-2015 Cash LTIP ties 50% of the award opportunity to pro-forma adjusted free cash flow and 50% to digital ad sales. The 2013 performance period is measured on a pro-rata basis from the merger effective date through December 2013. The LTIP includes specific annual limits for individual participants, such as a maximum of 328,950 shares for options and a $7.5 million maximum value for cash-settled performance units.
Outlook, Risks, and Contingencies
Change in Control Provisions:
- Restricted Stock & Options: If an employee terminates without cause or for good reason within six months prior to or two years following a change in control, all unvested awards immediately vest.
- Cash LTIP: Following a change in control, awards for the current performance period are deemed earned at the target amount. Potential future awards for periods not yet started are forfeited.
Performance Risk: Cash awards are contingent on meeting specific metrics for free cash flow and digital ad sales. If performance goals are not met, no payment is made.
Key Facts for Investor Verification
- Verify the total number of shares authorized under the LTIP (381,417) against the company's total outstanding share count to assess dilution impact.
- Confirm the specific definitions of "pro-forma adjusted free cash flow" and "digital ad sales" in the full plan text to understand the difficulty of achieving cash targets.
- Review the vesting schedules for the 2013-2015 Cash LTIP, noting that 2013 targets are pro-rated based on the April 30 merger date.
- Monitor future filings for the determination of performance objectives for the 2014 and 2015 periods, which are set to be determined in Q4 of the preceding year.