Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 9, 2021, the Compensation Committee (the “Committee”) of the Board of Directors of Emergent BioSolutions Inc. (the “Company”) approved certain actions with respect to the compensation of the current named executive officers of the Company (the “Named Executive Officers”), as listed in the Definitive Proxy Statement related to its 2020 Annual Meeting of Stockholders.
2020 Cash Bonuses and 2021 Base Salaries and Target Bonuses.
The Committee awarded cash bonuses to the following Named Executive Officers for their performance in 2020 in the following amounts:
•Fuad El-Hibri, Executive Chairman: not bonus eligible;
•Robert G. Kramer, President and Chief Executive Officer: $1,225,020;
•Richard S. Lindahl, Executive Vice President, Chief Financial Officer and Treasurer: $462,012;
•Adam R. Havey, Executive Vice President, Business Operations: $445,204; and
•Atul Saran, Executive Vice President, Corporate Development, General Counsel and Corporate Secretary:
$445,204.
The Committee also approved base salaries and target bonus percentages for the Named Executive Officers for 2021. The annualized base salaries and target bonus percentages, respectively, effective as of January 1, 2021, are as follows:
•Fuad El-Hibri, $1,135,000 and N/A;
•Robert G. Kramer, $1,000,000 and 120%;
•Richard S. Lindahl, $575,000 and 60%;
•Adam R. Havey, $555,000 and 60%; and
•Atul Saran: $555,000 and 60%.
Equity Awards.
The Committee approved grants of stock options, time-based restricted stock units (“RSUs,” each an “RSU”) and performance-based stock units (“PSUs,” each a “PSU”) in accordance with the terms and provisions of the Company’s stock option and RSU award agreements, the 2021-2023 Performance-Based Stock Unit Award Agreement (the “PSU Award Agreement”) and the Emergent BioSolutions Inc. Stock Incentive Plan (the “Stock Incentive Plan”) to be made on February 24, 2021 to the Named Executive Officers based on the following cash values:
•Fuad El-Hibri, based on a value of $2,600,000;
•Robert G. Kramer, based on a value of $5,600,000;
•Richard S. Lindahl, based on a value of $1,500,000;
•Adam R. Havey, based on a value of $1,400,000; and
•Atul Saran, based on a value of $1,400,000.
For the Named Executive Officers, other than the Executive Chairman, 50% of the value was made in the form of stock options, 25% of the value was made in the form of RSUs that vest solely based on the passage of time and 25% of the value was made in the form of PSUs that vest based on the achievement of the performance objective noted above. For the Executive Chairman, 50% of the value was made in the form of stock options and 50% of the value was made in the form of RSUs that vest solely based on the passage of time.
2021-23 Performance Stock Unit Recommendation.
The Committee also approved the PSU Unit Award Agreement, a form of which is attached hereto as Exhibit 10, for the PSU awards. PSU awards will result in the issuance of a number of shares based on the level of achievement with respect to Adjusted EBITDA Margin (as defined below) calculated on a cumulative basis over the three-year period beginning January 1, 2021 and ending December 31, 2023 (the “Performance Period”). Adjusted EBITDA Margin on a cumulative basis is equal the sum of Adjusted EBITDA for each year in the Performance Period divided by the sum of GAAP revenue for each year in the Performance Period. Adjusted EBITDA (as defined below) is defined as adjusted earnings before interest, taxes, depreciation and amortization, as reported by the Company. The minimum performance objective, target performance objective and maximum performance objective will result in a share payout of 50%, 100% and 150% of the target number of shares,
respectively. The PSU awards approved by the Committee will vest based on the achievement of the performance objective, as certified by the Committee following the end of the Performance Period.