Item 5.02
|
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
|
(b), (c), (d) and (e) On October 23, 2017, Patterson Companies, Inc. (the Company) announced that its Board of Directors
(Board) has appointed Mark S. Walchirk as the Companys President and Chief Executive Officer, effective November 20, 2017 (the Effective Date), and that James W. Wiltz, who has been serving as the Companys
Interim President and Chief Executive Officer since June 1, 2017, will step down from such positions at that time. Mr. Walchirk will become a member of the Board as of the Effective Date. Mr. Wiltz will continue to serve on the Board.
Mr. Walchirk, age 51, served as President of U.S. Pharmaceutical at McKesson Corporation since October 2012, where he held responsibility for
McKessons U.S. Pharmaceutical sales, distribution and customer service operations. Mr. Walchirk joined McKesson in April 2001 and held various leadership positions including President of McKesson Specialty Care Solutions and Chief
Operating Officer of McKesson U.S. Pharmaceutical. Before joining McKesson, he spend 13 years in medical-surgical distribution and manufacturing with Baxter Healthcare, Allegiance Healthcare and Encompass Group, holding various leadership positions
in sales, marketing, operations and business development. There are no familial relationships between Mr. Walchirk and any other director or executive officer of the Company. There are no transactions in which Mr. Walchirk has an interest
requiring disclosure under Item 404(a) of Regulation
S-K.
In connection with his employment, Mr. Walchirk
and the Company entered into an Employment Agreement, dated October 23, 2017, which is filed as Exhibit 10.1 to this Current Report on Form
8-K
and is incorporated by reference herein.
Under the terms of the agreement, Mr. Walchirks employment will continue until the third anniversary of the Effective Date, at which time, unless
notice to the contrary has been provided, the term will renew for successive
12-month
periods.
The agreement
provides for an annual base salary of $850,000 as well as participation in the Companys other employee benefit plans and reimbursement for business expenses. Mr. Walchirk also is eligible to earn annual cash incentive compensation, which
is payable if a threshold level of performance is achieved, pursuant to the Companys Management Incentive Compensation Plan (MICP). If performance at target under the MICP is achieved, Mr. Walchirks annual cash incentive
compensation would be $437,500 for fiscal year 2018 (representing a
pro-rata
share) and $1,050,000 for any full year of employment thereafter. In addition, Mr. Walchirk is eligible to receive annual
long-term equity-based incentive compensation pursuant to the Companys 2015 Omnibus Incentive Plan (Omnibus Plan), or any successor plan thereto, which awards currently consist of 50% performance stock units, 25% stock options, and
25% restricted stock units, with an aggregate target value of $1,291,666 for fiscal year 2018 (representing a
pro-rata
share) and $3,100,000 for any full year of employment thereafter. The equity awards for
fiscal year 2018 will be granted on December 1, 2017. Mr. Walchirks base salary, annual cash incentive compensation, and annual long-term equity-based incentive compensation will be reviewed on an annual basis and may be increased by
the Board.
The agreement also provides for an inducement award. On December 1, 2017, Mr. Walchirk will be granted a restricted stock unit award
outside the Omnibus Plan covering a number of shares of the Companys common stock with a value of $2,000,000 based on the
per-share
closing price of the Companys common stock on the date of grant.
Such award will vest, assuming continued employment, to the extent of 50% of the award on the first anniversary of the date of grant and the remaining 50% of the award on the second anniversary of the date of grant. The other terms and conditions of
the inducement award are set forth in the Inducement RSU Award Agreement, to be dated December 1, 2017, the form of which is filed as Exhibit 10.2 to this Current Report on Form
8-K
and is incorporated by
reference herein. In addition, within ten business days of the Effective Date, Mr. Walchirk will receive a
lump-sum
cash bonus of $100,000.
If, during the term, the Company terminates Mr. Walchirk without cause, Mr. Walchirk would be entitled to severance benefits including 24 months of
base salary, cash incentive compensation equal to an average of the last three years of actual MICP incentives, proration of the current year MICP incentive based on actual performance, and 18 months of COBRA. With a change in control, such
severance benefits would include 36 months of base salary, cash incentive compensation equal to his then current target MICP incentive, proration of the current year MICP incentive based on target performance, and 18 months of COBRA.
Mr. Walchirk has also agreed to certain nondisclosure and
non-disparagement
provisions during the term and any time thereafter, and certain
non-competition
and non-solicitation provisions during the term and for three years
thereafter.