OFIX Orthofix Medical Inc

Appointment of Jon Serbousek as President of Global Spine and as Successor President and Chief Executive Officer of the Company

On August 2, 2019, Orthofix Medical Inc. (the “Company”) appointed Jon Serbousek as President of Global Spine, effective August 5, 2019.  In addition, on August 5, 2019, the Company announced that Mr. Serbousek would be the successor to Brad Mason, the company’s retiring President and Chief Executive Officer (CEO), to be effective November 1, 2019.

Mr. Serbousek, age 58, has served since 2015 as an independent advisor to companies in the medical technology industry. During this period, Mr. Serbousek has also served as an independent board member of several privately-held companies in the medical technology industry.  From 2008 until 2015, Mr. Serbousek served as a Senior Vice President of, and held senior operational positions with, Biomet, Inc. (“Biomet”), a medical device company.  From 2013 to 2015, he served as Worldwide President of Biomet Biologics, and prior thereto served as Worldwide Group President of Biomet Orthopedics from 2011 to 2013 and as President of U.S. Orthopedics from 2008 to 2011. From 2000 until 2008, Mr. Serbousek held diverse general management roles of increasing responsibility with the Spine and Biologics Divisions of Medtronic, Inc. (“Medtronic”), a medical device company, including serving as Worldwide Division President, Spine and Vice President and General Manager, Worldwide Biologics.  Before joining Medtronic, Mr. Serbousek served in various roles of increasing responsibility in the areas of joint reconstruction, spine, sports medicine, and biologics, at DePuy Orthopedics, a medical device company and subsidiary of Johnson & Johnson, from 1987 to 2000, including as Vice President of Marketing and Product Development and Vice President of Spinal Operations.  Mr. Serbousek earned a bachelor’s of science degree in Engineering from Washington State University, a master’s of science degree in Bioengineering from the University of Utah and later completed several advanced management programs including a program at the IMD International School of Management in Lausanne, Switzerland.

As President of Global Spine, Mr. Serbousek will receive an annual base salary of $500,000 per year, a target bonus opportunity under the Company’s annual incentive plan of 80% of his then-current base salary and will be eligible to receive future, annual equity incentive awards (subject to approval of the Company’s Board of Directors or the Compensation Committee thereof).  Mr. Serbousek also is eligible to receive certain temporary transition living and relocation assistance for up to six months after his hire date and received the inducement grants described below under “Inducement Stock Option Agreement and Restricted Stock Unit Agreement with Mr. Serbousek.”  The foregoing terms are set forth in a letter agreement between the Company and Mr. Serbousek, which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.   

Change in Control and Severance Agreement and Indemnification Agreement with Mr. Serbousek

The Company and Mr. Serbousek entered into a Change in Control and Severance Agreement that is materially consistent with the agreement the Company has entered into with its other U.S.-based executives. Under the Change in Control and Severance Agreement, Mr. Serbousek will be eligible to receive the following severance payments and benefits upon termination of the his employment (i) for death or “disability” (as defined in the agreement), (ii) by the Company without “cause” (as defined in the agreement) or (iii) by Mr. Serbousek for “good reason” (as defined in the agreement):

The right to receive cash payments following a change in control remains subject to a “double trigger” provision, such th at payments by the Company are only owed if Mr. Serbousek separates from employment in specific circumstances in connection with or following a change in control.

The agreement contains restrictive covenants, including non-competition and non-solicitation covenants effective so long as Mr. Serbousek is an employee and for a period of 12 months after his employment is terminated.  The agreement also contains provisions that define certain vesting and exercise rights in connection with time-based stock options, time-based restricted stock and time-based restricted stock units granted (such as by defining the terms “cause,” “good reason,” and “qualified retirement” for purposes of all prior and subsequent time-based equity grants).  The agreement does not guarantee any minimum levels of cash or equity-based compensation levels during Mr. Serbousek’s employment with the Company.  The term of the agreement continues in effect until the earlier of (i) the parties’ satisfaction of their respective obligations or (ii) the execution of a written agreement between the Company and Mr. Serbousek terminating the agreement.  

Inducement Stock Option Agreement and Restricted Stock Unit Agreement with Mr. Serbousek

As an inducement to Mr. Serbousek’s employment, the Board of Directors and Compensation Committee thereof awarded grants to Mr. Serbousek of (i) stock options to acquire up to 50,711 shares of common stock of the Company (“ Common Stock ”) pursuant to the Employee Inducement Non-Qualified Stock Option Agreement and (ii) 14,743 restricted stock units pursuant to the Employee Inducement Restricted Stock Unit Agreement.

The exercise price of the stock options granted pursuant to the Employee Inducement Non-Qualified Stock Option Agreement is $50.87, which was the closing price of the Common Stock on the NASDAQ Stock Market on August 5, 2019, the date of grant. Subject to certain further requirements set forth in the Employee Inducement Non-Qualified Stock Option Agreement and Employee Inducement Restricted Stock Unit Agreement, the stock option award and restricted stock unit award will vest in 25% increments on each of the first four anniversaries of the grant date.  The stock option and restricted stock unit grants were made pursuant to NASDAQ Marketplace Rule 5635(c)(4).   The Employee Inducement Non-Qualified Stock Option Agreement and Employee Inducement Restricted Stock Unit Agreement each include provisions for forfeiture if Mr. Serbousek’s service to Orthofix terminates prior to vesting, as well as provisions for full vesting acceleration (i) upon a termination by Orthofix without “cause” or resignation by Mr. Serbousek for “good reason,” in either case, within 24 months following a “corporate transaction” (each, as defined in the award agreements) in which such awards are assumed, continued, or substituted; (ii) immediately prior to the consummation of a corporate transaction in which such awards are not assumed, continued, or substituted; or (iii) upon Mr. Serbousek’s termination due to death or “disability” (as defined in the award agreements).  The Employee Inducement Non-Qualified Stock Option Agreement also provides for vesting acceleration upon Mr. Serbousek’s “qualified retirement” (as defined in the award agreement), with the amount of acceleration depending upon the timing of his retirement, and the Employee Inducement Restricted Stock Unit Agreement also provides for full vesting acceleration upon any termination by Orthofix without cause.