Item 2.02 Results of Operations and Financial Condition.
On January 11, 2023, Broadstone Net Lease, Inc. (the "Company") issued a press
release that included a business update on fiscal year 2022. A copy of the press
release is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 6, 2023, Christopher J. Czarnecki, notified the Board of Directors
(the "Board") of the Company of his decision to resign from his roles as the
President and Chief Executive Officer ("CEO") of the Company, effective February
28, 2023 (the "Transition Effective Date"). Mr. Czarnecki's resignation was not
the result of any disagreement with the Company.
On January 11, 2023, the Company announced that the Board elected the Company's
Executive Vice President and Chief Operating Officer ("COO"), John Moragne, age
40, to succeed Mr. Czarnecki as CEO of the Company, effective on the Transition
Effective Date. Mr. Czarnecki intends to continue to serve as a member of the
Board until the Transition Effective Date, at which point he has agreed to
resign from the Board. The Board intends to appoint Mr. Moragne as a director to
replace Mr. Czarnecki upon his departure.
In addition, on January 11, 2023, the Company also announced that the Board
approved a series of management team promotions in light of the CEO transition,
including: (1) the Company's Executive Vice President and Chief Financial
Officer ("CFO"), Ryan Albano, age 41, being elected as President and COO of the
Company; and (2) the Company's Senior Vice President, Capital Markets & Credit
Risk, Kevin M. Fennell, age 37, being elected to succeed Mr. Albano as the
Executive Vice President and CFO of the Company, each promotion to be effective
on the Transition Effective Date.
Each of Mr. Moragne's, Mr. Albano's and Mr. Fennell's biographical information
is set forth on pages 29-30 of the Company's Proxy Statement for its 2022
Annual Meeting of Stockholders , filed with the Securities and Exchange
Commission on March 25, 2022, in the section entitled "Executive Officers of the
Company" which information is incorporated herein by reference.
In connection with the management team changes described above, the Company
entered into an agreement with each of Mr. Czarnecki, Mr. Moragne, Mr. Albano,
and Mr. Fennell, as follows:
•
Mr. Czarnecki and the Company, together with Broadstone Net Lease, LLC and
Broadstone Employee Sub, LLC (collectively, the "Company Group") entered into a
Chief Executive Officer Transition Agreement (the "CEO Transition Agreement"),
pursuant to which Mr. Czarnecki has agreed to assist in the transition of his
role and provide advisory services to the Company through January 31, 2024,
unless earlier terminated in the event of Mr. Czarnecki's death, disability,
resignation or by the Company Group for Cause (as defined in the CEO Transition
Agreement). The terms of the CEO Transition Agreement provide for Mr. Czarnecki
to receive payment for his consulting services of $50,000 per month, subsidized
COBRA benefits for 18 months, an annual bonus in respect of 2022 and he will be
eligible to receive a pro-rata bonus in respect of 2023, each based on actual
Company performance and paid in the ordinary course. Outstanding time-based
restricted stock held by Mr. Czarnecki as of the Transition Effective Date will
vest in full at the end of the term of the CEO Transition Agreement, unless Mr.
Czarnecki resigns or his services are terminated by the Company Group for Cause
prior to January 31, 2024. Mr. Czarnecki will remain eligible to vest in a
pro-rata portion of the performance-based restricted stock units
("Performance-Based RSUs") granted to him in 2021 and 2022 that are determined
to have vested by the Compensation Committee of the Board in the ordinary course
at the end of the award's applicable three-year performance period. In the case
of Performance-Based RSUs granted in 2021, Mr. Czarnecki will retain the right
to two-thirds of the number of Performance-Based RSUs, and one-third of the
number of Performance-Based RSUs granted in 2022, otherwise determined to have
vested in accordance with the respective terms of each award. In addition, under
the terms of his current employment agreement and confirmed in the CEO
Transition Agreement, Mr. Czarnecki remains subject to confidentiality,
non-competition, non-solicitation, non-recruitment and non-disparagement
covenants for a period of one year following the Transition Effective Date.
•
Mr. Moragne and the Company Group entered into an amendment to his current
employment agreement to reflect his promotion to the role of CEO of the Company
and extend the term of the employment agreement to December 31, 2026. The
amendment also reflects updates to his compensation, including an annual salary
of $600,000, a target annual bonus of at least 120% of base salary, and a 2023
target long-term incentive plan award value of $2,000,000, which is divided into
awards of time-based restricted stock (for 40% of the total award value) and
Performance-Based RSUs (for 60% of the total award value). In addition, the
multiple applicable to the cash salary and target bonus portion of the severance
benefits to which Mr. Moragne becomes eligible to receive in the event of a
termination of Mr. Moragne's employment by the Company Group without Cause or by
Mr. Moragne for Good Reason (as those terms are defined in his employment
agreement) was updated to be two years (or three years if the qualifying
termination occurs during a Change in Control Window (as defined in his
employment agreement)).
•
Mr. Albano and the Company Group entered into an amendment to his current
employment agreement to reflect his promotion to the role of President and COO
of the Company and extend the term of the agreement to December 31, 2026. The
amendment also reflects updates to his compensation, including an annual salary
of $500,000 and a 2023 target
--------------------------------------------------------------------------------
long-term incentive plan award value of $1,500,000, which is divided into awards
of time-based restricted stock (for 40% of the total award value) and
Performance-Based RSUs (for 60% of the total award value).
•
Mr. Fennell and the Company Group entered into a severance protection agreement
(the "Severance Protection Agreement"), providing Mr. Fennell with severance
benefits in connection with certain termination of employment events. In the
event of Mr. Fennell's termination of employment by the Company Group without
Cause, or by Mr. Fennell for Good Reason (as such terms are defined in the
Severance Protection Agreement), or in the event of Mr. Fennell's death or
disability, Mr. Fennell will be entitled to the same severance payments and
benefits as provided to Mr. Albano under the same circumstances. These severance
payments and benefits are described on page 48 of the Company's Proxy
Statement for its 2022 Annual Meeting of Stockholders , filed with the
Securities and Exchange Commission on March 25, 2022, in the section entitled
"Executive Compensation -- Employment Agreements with our Named Executive
Officers," which information is incorporated herein by reference.
There are no family relationships, as defined in Item 401 of Regulation S-K,
between any of Mr. Moragne, Mr. Albano, or Mr. Fennell and any of the Company's
directors or executive officers or persons nominated or chosen to become a
director or executive officer. None of Mr. Moragne, Mr. Albano, or Mr. Fennell
has engaged in any transaction with the Company during the last fiscal year, and
none of them proposes to engage in any transaction, that would be reportable
under Item 404(a) of Regulation S-K.
Item 7.01 Regulation FD Disclosure.
A press release related to the matters described in Items 2.02 and 5.02 of this
Current Report on Form 8-K is furnished herewith as Exhibit 99.1 and hereby
incorporated in this Item 7.01 by reference.
The information in Exhibit 99.1 of this Current Report on Form 8-K is being
"furnished" and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934 (as amended, the "Exchange Act") or otherwise
subject to the liabilities of that Section, and shall not be or be deemed to be
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, regardless of any general incorporation language
in such filing.
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