Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 28, 2023, Boston Properties, Inc. (the “Company”) entered into a Second Amended and Restated Employment Agreement with Raymond A. Ritchey (the “Agreement”) pursuant to which Mr. Ritchey will continue to serve as Senior Executive Vice President through December 31, 2023.
The following is a summary of the material terms of the Agreement.
Term, Duties and Outside Activities
•The Agreement has a term from February 28, 2023 through December 31, 2023, with no automatic renewal provision, during which time Mr. Ritchey will devote approximately 50% of his business time to the Company’s business and affairs.
•During and following the term of the Agreement, Mr. Ritchey may engage or invest in other business activities, including those that might be the same or similar to the Company’s business, subject to certain limitations with respect to Corporate Opportunities (as discussed below).
Compensation and Benefits
•Annual base salary of $750,000.
•Target annual bonus for the year ending December 31, 2023 of $1,650,000, with the actual amount to be determined at the discretion of the Compensation Committee of the Company’s Board of Directors based on Company and individual performance measured against a pre-established set of goals, and taking into account any business generated by the Company pursuant to a Corporate Opportunity, subject to continued employment through December 31, 2023, except in the event of certain qualified terminations.
Termination and Severance
•Upon entering into the Agreement, Mr. Ritchey ceased to be entitled to any benefits (including, without limitation, any tax gross-ups) as a covered employee under the Company’s Senior Executive Severance Plan.
•If Mr. Ritchey’s employment is terminated by the Company without Cause or by Mr. Ritchey for Good Reason and he enters into a general release of claims and such release becomes effective, he will be entitled to the following payments or benefits: (i) salary continuation for the period from the date of termination through December 31, 2023, (ii) payment of the 2023 target annual bonus amount and (iii) continued participation in the Company’s health insurance plan for 12 months.
•The expiration of the Agreement will not constitute or result in a termination of employment by the Company without Cause.
•The Agreement also provides for certain payments and benefits if Mr. Ritchey’s employment is terminated due to death or disability.
•In connection with any termination of the Agreement, outstanding and unvested equity awards held by Mr. Ritchey will be governed by the terms of the award agreements evidencing such awards, provided that, for purposes of awards granted under the Company’s Multi-Year Long-Term Incentive Program (“MYLTIP”) for any year, any termination other than a termination by the Company for Cause shall be considered a “Qualified Retirement” as defined in the applicable MYLTIP award agreement.
Restrictive Covenants
•Subject to certain qualified terminations under the Agreement that may shorten the duration to the longer of the period until December 31, 2023 or three months from the date of termination, during the term of his employment and for a period of one year following the term, Mr. Ritchey may not:
◦pursue an actual or potential investment or business opportunity in which the Company could have an interest or expectancy that are within the Company’s geographic market areas and that involve property types that are within the scope of the Company’s business activities (i.e., a corporate opportunity), other than minority interest passive investments, unless he has first presented such Corporate Opportunity to the Company in accordance with the procedures set forth in the Agreement and the Company has elected not to exercise a right of first refusal with respect to such Corporate Opportunity;
◦intentionally interfere with the Company’s relationships with its tenants, suppliers, contractors, lenders or employees or with any governmental agency; or
◦compete for, solicit or divert the Company’s tenants or employees, either for himself or any other business, person or entity.
•Mr. Ritchey is also subject to confidentiality requirements and post-termination litigation and regulatory cooperation obligations.
The terms Corporate Opportunity, Cause and Good Reason, as used above, are specifically defined in the Agreement. The foregoing summary of the Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Agreement, which is included as Exhibit 10.1 hereto and incorporated herein by reference.