Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On November 21, 2022,
our subsidiary, Sirius XM Radio Inc., entered into a new employment agreement (the “Employment Agreement”) with Patrick
L. Donnelly to continue to serve as our Executive Vice President, General Counsel and Secretary through January 2, 2025. The Employment
Agreement is substantially similar to Mr. Donnelly’s existing employment agreement, other than with respect to certain economic
changes described below.
The Employment Agreement
provides, in the case of certain qualifying terminations, for continuation of his health insurance benefits for eighteen months
and his life insurance benefits for twelve months and for a lump sum severance payment in an amount equal to the sum of: (i) Mr.
Donnelly’s annual base salary plus (ii) the greater of $1,537,500 or the last annual bonus paid (or due and payable) to him.
In addition, we are obligated to pay Mr. Donnelly a pro-rated bonus for the year in which the termination occurs (based on actual
achievement of applicable performance criteria). Our obligation to provide these severance benefits to Mr. Donnelly is subject
to the execution of an effective release of claims against us. The Employment Agreement also contains other provisions contained
in the existing employment agreements with our other executive officers, including confidentiality and non-competition restrictions,
as well as a compensation clawback to the extent required by applicable law, regulations or stock exchange listing requirement,
or any company policy adopted pursuant thereto.
In connection with
the execution of the Employment Agreement, we granted Mr. Donnelly:
● an
option to purchase shares of our common stock having a value, calculated based upon the Black-Scholes-Merton option pricing
model using the financial inputs consistent with those we use for financial reporting purposes, of $2,340,000 at an exercise price
of $6.43 per share, the closing sale price of our common stock on the Nasdaq Global Select Market on November 21, 2022. This option
award will vest in two installments on November 21, 2023 and January 2, 2025.
● 191,433
time-based restricted stock units (“RSUs”). This time-based RSU award will vest in two installments on November 21,
2023 and January 2, 2025.
● 196,219
performance-based RSUs. This performance-based RSU award will cliff vest on January 2, 2025 after a two-year performance period
beginning on January 1, 2023 and ending on December 31, 2024 if a cumulative free cash flow target established by the Compensation
Committee is achieved. This award is subject to the Compensation Committee’s later
certification of our performance during that period and his continued employment through January 2, 2025.
● 196,219
performance-based RSUs. This performance-based RSU award will cliff vest on January 2, 2025 following a two-year performance
period commencing on January 1, 2023 and ending on December 31, 2024 based on the performance of our common stock relative to the
companies in the S&P 500 Index. This
award is subject to the Compensation Committee’s
later certification of our performance during that period and his continued employment through January 2, 2025.
Each of these awards will be subject to
acceleration or termination under certain circumstances.
There is no arrangement
or understanding between Mr. Donnelly and any other person pursuant to which Mr. Donnelly was selected as an officer, and Mr. Donnelly
does not have a direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation
S-K. There is no family relationship between Mr. Donnelly and any director or executive officer of the registrant.
Additional information
about the benefit plans and programs generally available to our executive officers is included in the Proxy Statement for our 2022
annual meeting of stockholders filed with the Securities and Exchange Commission on April 18, 2022.
The foregoing description
of the Employment Agreement with Mr. Donnelly is qualified in its entirety by the Employment Agreement attached as Exhibit 10.1
to this Current Report on Form 8-K.