Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment
of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 27, 2023, Leidos Holdings. Inc. (the "Company") announced that, as
part of a planned succession process, its Board of Directors (the "Board")
appointed Thomas A. Bell as the Company's new Chief Executive Officer, expected
to become effective May 3, 2023 (the "Effective Date"). Mr. Bell will succeed
Roger A. Krone, who will retire as Chairman at the time of the Company's 2023
annual meeting of stockholders ("2023 Annual Meeting"), and Chief Executive
Officer as of the Effective Date. The Board expects to appoint Robert S. Shapard
as independent, non-executive chair after the 2023 Annual Meeting and will also
nominate Mr. Bell to the Board. To facilitate a seamless leadership transition,
Mr. Krone will continue to work as a full time employee through July 31, 2023.
He will then become a part-time advisor to the Company through March 29, 2024.
The compensation terms relating to Mr. Krone's transition have not yet been
finalized and will be disclosed at that time.
Mr. Bell, age 62, has served since February 2018 as President - Defense
Rolls-Royce plc; Chairman and CEO - Rolls-Royce North America ("Rolls-Royce"),
one of the world's preeminent manufacturers of highly-efficient integrated power
and propulsion solutions. Mr. Bell was responsible for overseeing Rolls-Royce's
full range of business in North America, with responsibility for all U.S. based
employees, facilities and customers. He also led Rolls-Royce's U.S. government,
state, and local stakeholder management for employees and presence in 26 states
and Canada. Prior to his current role, Mr. Bell was senior vice president of
global sales and marketing for defense, space and security at The Boeing Company
("Boeing"). Before joining Boeing in 2015, Mr. Bell was President of Rolls-Royce
Defense Aerospace, having joined as President, Customer Business, North America
in mid-2012. Previously, he spent over two decades with Boeing in a variety of
leadership positions within the defense, space and security business and began
his aerospace career with Lockheed Martin in human space flight.
The Board has approved the terms of Mr. Bell's employment as Chief Executive
Officer as set forth in an Executive Employment Agreement. Mr. Bell will receive
a base salary of $1.25 million per year and participate in the Company's annual
incentive plans for executive officers as further described in the Company's
most recent annual proxy statement, with a target bonus of 150% of his annual
base salary. He will receive an annual equity award for fiscal year 2023 as part
of the Company's annual equity award program with a grant date fair value of
$4.5 million, which is expected to consist of 50% performance share awards, 30%
performance restricted stock units and 20% stock options, in each case subject
to the applicable vesting terms (including performance vesting terms) further
described in the Company's most recent annual proxy statement. All equity grants
will be made under the Amended and Restated 2017 Omnibus Incentive Plan (the
"2017 Plan"). He will also be eligible to receive an additional one-time sign-on
cash bonus of up to $1.9 million, depending on exit conditions from Rolls-Royce,
upon which the value of this additional bonus was based, with a prorated portion
of such additional bonuses to be subject to repayment if Mr. Bell's employment
terminates under certain conditions prior to the second anniversary of the
Effective Date. Mr. Bell will also be eligible to participate in other benefit
plans consistent with the Company's other executives.
Mr. Bell's employment agreement provides severance benefits to him if his
employment is terminated by the Company for reasons other than for cause, or by
Mr. Bell for good reason (as each term is defined in the employment agreement).
However, if such termination is within three months prior to or within 24 months
immediately after a change in control of the company (the "change in control
period"), Mr. Bell would receive a higher level of benefits. In addition, Mr.
Bell would be entitled to receive certain benefits and outplacement services in
the event of a qualifying termination under his employment agreement. Severance
benefits under this agreement in connection with a change in control are "double
trigger" and any payments under this agreement are subject to the recipient's
execution of a general release in favor of the company and its affiliates, as
well as compliance with a perpetual confidentiality obligation, a
nondisparagement obligation, a covenant not to compete and a covenant not to
solicit our customers or employees during employment and for 24 months following
any termination of employment. Finally, pursuant to the terms of the equity
awards Mr. Bell receives under the Leidos 2017 Plan, if Mr. Bell is terminated
by the Company for reasons other than for cause, by him for good reason, or by
reason of his death or disability, he would be entitled to accelerated vesting,
or pro-rated vesting, of his long-term incentive awards, depending on whether
the termination is during a change in control period.
The foregoing summary of Mr. Bell's Executive Employment Agreement is not
complete and is qualified in its entirety by the Executive Employment Agreement,
a copy of which is filed herewith as Exhibit 10.1.
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A copy of the press release related to these announcements is furnished as
Exhibit 99.1 hereto.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit 10.1 Executive Employment Agreement, dated February 23, 2023.
Exhibit 99.1 Press Release dated February 27, 2023, issued by Leidos Holdings, Inc.
Exhibit 104 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL
and contained in Exhibit 101.
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