Pursuant to his agreement, Mr. Appio receives a base salary of $650,000, and a target annual incentive opportunity equal to 80% of his base salary, with a maximum annual incentive opportunity equal to 200% of his annual target incentive. Mr. Appio also received a retention equity award in the form of Restricted Stock Units, with an approximate grant date fair value of $680,000, on March 28, 2017 which vested on August 17, 2017 and the remaining 2/3rds will vest equally on August 17, 2018 and August 17, 2019, respectively. Ongoing equity grants are at the sole discretion of the Talent and Compensation Committee.
Mr. Appio is on an expatriate assignment from New Jersey to China. As a result, Mr. Appio receives (i) Company-paid housing in China, (ii) tax equalization, with Mr. Appio responsible for actual taxes due in the United States and the Company responsible for any taxes due in non-United States jurisdictions in which Mr. Appio earns taxable income, and (iii) tax preparation services. These benefits are reported in the All Other Compensation column of the Summary Compensation Table, including reimbursement related to the taxes on imputed income for these expatriate assignment benefits, starting on page
50
.
The consequences of Mr. Appio’s termination of employment, whether or not in connection with a change in control, are described below in Potential Payments Upon Termination or Change in Control, starting on page
55
.
Mr. Appio is subject to customary restrictive covenants, including non-competition and non-solicitation covenants during his employment and for one year following termination of employment for any reason.
Mr. Humphries Employment Agreement
In December 2016, we entered into an employment agreement with Mr. Humphries. The initial term of Mr. Humphries agreement commenced on January 1, 2017 and continues until the third anniversary of the commencement date. Beginning at the expiration of the initial term, the term will automatically renew for successive one year periods unless either party gives notice of non-renewal.
Pursuant to his agreement, Mr. Humphries receives a base salary of $750,000, and a target annual incentive opportunity equal to 80% of his base salary, with a maximum annual incentive opportunity equal to 200% of his annual target incentive. Mr. Humphries received a new hire grant, with a grant date fair value of $3,000,000, comprised 40% in Performance Share Units, 30% in Restricted Stock Units, and 30% in Stock Options. It is not intended that Mr. Humphries will receive additional equity grants in 2018, and ongoing equity grants after 2018 are at the sole discretion of the Talent and Compensation Committee.
To compensate for compensation forfeited by leaving his prior employer, Mr. Humphries received (i) a cash payment of $3,000,000, of which Mr. Humphries must repay a pro-rata portion in the event he leaves the Company within 2 years of his hire date, and (ii) a Restricted Stock Unit grant, with a grant date fair value of $1,000,000, on January 2, 2017, which vests in three equal installments on the first, second and third anniversaries of the grant date.
The consequences of Mr. Humphries termination of employment, whether or not in connection with a change in control, are described below in Potential Payments Upon Termination or Change in Control, starting on page
55
.
Mr. Humphries is subject to customary restrictive covenants, including non-competition and non-solicitation covenants during his employment and for one year following termination of employment for any reason.
Other Compensation Governance Practices
Share Ownership Guidelines
The Talent and Compensation Committee believes that purchasing and holding Common Shares with ones own money should create an incentive to manage the Company prudently. When our CEO was hired in 2016, he was required to purchase at least $5,000,000 worth of Common Shares by no later than the first anniversary of his commencement date, which he did on June 10, 2016.
The Talent and Compensation Committee also established minimum share ownership requirements for our NEOs, which were updated in 2018 to better align with our peers and market practice. Our CEO is required to hold 6 times base salary, and our other NEOs are required to hold 3 times base salary. Common shares and unvested Restricted Share Units are included in the calculation of share ownership. NEOs have five years to achieve these guidelines, and must retain 50% of their net shares vesting until this requirement is met. Mr. Papa has satisfied this requirement based on the Common Shares he currently owns, and our other NEOs are on track to achieve these guidelines within five years.