Item 5.02
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Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
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Hanger, Inc. (the “Company”)
today announced that, effective November 2, 2020, Peter A. Stoy, has been appointed Executive Vice President and Chief Operating
Officer of the Company and will lead the Patient Care segment, along with the supply chain and mergers & acquisitions functions.
The new position of Chief Operating Officer aligns the Company’s Patient Care segment to reflect the increasing complexity,
growth opportunities, and interdependencies of clinic operations, sales, marketing, supply chain management, as well as strategic
oversight of the Company’s corporate and business development programs.
Mr. Stoy, 46, was
most recently East Region President of Sodexo, a food services and facilities management company, since 2018, where he was
responsible for all operations, including thousands of provider and hospital-based support service employees. Prior to that, he served in leadership positions at McKesson Corporation from 2014 to 2018, where he
oversaw the multi-billion dollar McKesson U.S. Pharmaceutical Health System segment. Mr. Stoy also held senior positions in
hospital sales and pharmaceutical distribution during his 13-year employment at Cardinal Health. Mr. Stoy serves on the Board
of Directors of TransSouth Logistics. He earned his Master of Business Administration from Franklin University and his
undergraduate degree from Ohio University, and has been designated as a Fellow of the American College of Healthcare
Executives (FACHE).
In connection with
Mr. Stoy’s appointment as Executive Vice President and Chief Operating Officer of the Company, Mr. Stoy entered into an employment
and non-compete agreement with the Company, effective as of November 2, 2020 (the “Agreement”), which provides for
a commencement date of November 2, 2020 and the continued employment of Mr. Stoy unless the Agreement is terminated by either party
pursuant to the terms therein. The Agreement provides that Mr. Stoy will receive a base salary of $425,000 and is eligible to receive
annual bonus compensation, commencing with the 2021 calendar year, with a target amount equal to fifty-five percent (55%) of Mr.
Stoy’s base salary. The Agreement provides that Mr. Stoy will receive a special, one-time signing bonus in the gross amount
of $90,000 payable in January 2021. Additionally, in lieu of the Company’s standard relocation package, the Company will
provide Mr. Stoy with a gross payment of $100,000 payable in equal monthly installments over six months, as well as reimbursement
of certain moving expenses. The Agreement also provides that Mr. Stoy will receive a special, one-time grant of restricted shares
of the Company’s stock with a grant date value equal to $200,000 (the “Sign-On Grant) and a four year ratable vesting
period, provided that the vesting of the restricted shares will be subject to Mr. Stoy’s relocation to the Austin, Texas
area. The Agreement also entitles Mr. Stoy to certain perquisites that were offered to him to complete his overall annual compensation
package that are commensurate with perquisites provided to similarly situated executives of the Company.
The Agreement contains
a severance benefit under which, upon the termination of Mr. Stoy’s employment without cause, he will receive, in addition
to accrued but unpaid salary and bonus, a severance payment equal to one and one-half times the sum of his base salary and target
bonus, as well as reimbursement for the continuation of certain welfare and perquisite benefits for a period of 18 months. The
Agreement also provides that if Mr. Stoy’s employment is terminated within two years after a change in control of the Company
either (i) involuntarily and not as a result of death, disability or cause, or (ii) by Mr. Stoy for “good reason” after
the occurrence of a material diminution of his responsibilities, an intended relocation of his principal site of employment more
than 50 miles from his then current location or certain breaches of the Agreement by the Company or the acquiring company, then
Mr. Stoy would receive reimbursement for the continuation of certain welfare and perquisite benefits for a period of 24 months
and a severance payment equal to two times the sum of his base salary and target bonus. In the event of his death or disability,
Mr. Stoy or his estate would receive a payment equal to his base salary at the annual rate in effect and a pro rata portion of
his bonus.
All equity-based awards
granted to Mr. Stoy, including the Sign-On Grant, will immediately vest on the date of his termination, if such termination is
by reason of his death or disability, termination without cause, retirement upon or after age 65 or for good reason following a
change in control.
Additionally, the Agreement
contains non-compete and non-solicitation covenants consistent with those provided to other executive officers of the Company.
There is no arrangement
or understanding between Mr. Stoy and any other person pursuant to which Mr. Stoy was appointed as an officer of the Company, and
there are no transactions in which Mr. Stoy has an interest requiring disclosure under Item 404(a) of Regulation S-K. No director
or executive officer of the Company has any family relationship with Mr. Stoy.
The Company issued
on October 14, 2020 a press release announcing Mr. Stoy’s appointment as Executive Vice President and Chief Operating Officer
of the Company, which press release is filed herewith as Exhibit 99.1.