Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The COVID-19 pandemic has significantly affected the global economy and caused a
material decrease in consumer spending and an unprecedented decline in travel
and restaurant activities and consumer demand for related services for most of
2020. As a result,
At the outset of the pandemic in early
As part of the 2020 and 2021 compensation planning process and as a result of the significant impact of the pandemic on the Company's business and compensation programs, the Compensation Committee, management and the Committee's compensation consultant, Mercer, re-evaluated the Company's Executive Officer compensation programs and considered numerous alternatives with respect to 2020 and 2021 Executive Officer compensation, as well as whether to make any adjustments to the 2018 PSUs and 2019 PSUs. As part of these efforts, management spoke with many of its largest stockholders to understand their views with respect to executive compensation under such unusual and difficult circumstances, and the Board of Directors and the Compensation Committee took into account this feedback in making the compensation decisions described below.
For many reasons, including the strong leadership of the Executive Officers, the
strong financial and operating performance of the Company prior to the pandemic,
the Company's performance during 2020 amid and in response to the pandemic, the
pay program disruptions resulting from the pandemic and the other factors
discussed in this Form 8-K, on
•Adjusted the terms of the Executive Officers' 2018 PSU awards to set their payout at 1.33x the number of "target" shares underlying the grants and •Adjusted the terms of the Executive Officers' 2019 PSU awards to set their payout at 0.33x the number of "target" shares underlying the grants.
In making the determination to fix the payout of the 2018 PSUs, the Board considered that there had been two years and two months of strong performance during the three-year performance period applicable to the 2018 PSUs, which had resulted in a projected payout of 2x the "target" number of shares prior to the pandemic. The Board believed that setting the 2018 PSUs payout at 1.33x was fair and appropriate under the circumstances because it represented two-thirds of the pre-COVID-19 projected payout (2 years of performance at 2x and 1 year at 0x). Similarly, in fixing the payout of the 2019 PSUs, the Board considered that there had been one year and two months of solid performance during the three-year performance period applicable to the 2019 PSUs, which had resulted in a projected payout of 1x the "target" number of shares prior to the pandemic. The Board believed that setting the 2019 PSUs payout at 0.33x was fair and appropriate under the circumstances because it represented one-third of the pre-COVID-19 projected payout (1 year of performance at 1x and 2 years at 0x). In addition to the other reasons discussed in this Form 8-K and among other things, in making the decision to adjust the 2018 and 2019 PSUs, the Board and the Compensation Committee considered: the Company's compensation philosophy of tying
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most of executive pay to performance; the fact that the Executive Officers elected not to receive 2019 bonuses to provide additional funding for bonuses for other employees; executive retention risk and the expected length of the recovery of the Company's business following the pandemic; the impact of COVID-19 on the Company's employees, including the resulting reductions in force and other restructuring activities carried out by the Company; the Company's stock price performance and the desire to maintain alignment between management and stockholder interests; and the advice of Mercer, including information provided by Mercer on compensation decisions at other companies negatively impacted by COVID-19.
The vesting dates of the 2018 PSUs and the 2019 PSUs remain unchanged at
The above summary of the amendments to the 2018 PSUs and the 2019 PSUs is qualified in its entirety by reference to the individual letter amendments, which are attached to this Current Report as Exhibits 99.1, 99.2, and 99.3 and which are incorporated by reference into this Item 5.02.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
99.1 Letter Amendment to 2018 PSU Award and 2019 PSU Award Agreements with
99.2 Letter Amendment to 2018 PSU Award and 2019 PSU Award Agreements with
99.3 Letter Amendment to 2018 PSU Award and 2019 PSU Award Agreements with
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