Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
As previously reported, on August 9, 2021, Tenet Healthcare Corporation (the
"Company") announced that, in furtherance of the Company's long-term succession
plan, Ronald A. Rittenmeyer will transition from Chief Executive Officer of the
Company and continue as the Executive Chairman of the Company and the Company's
board of directors (the "Board") through 2022 and Saumya Sutaria, M.D., will be
promoted from President and Chief Operating Officer of the Company to Chief
Executive Officer of the Company, in each case effective as of September 1, 2021
(the "Effective Date"). Dr. Sutaria will continue to report to Mr. Rittenmeyer.
Ronald A. Rittenmeyer
In connection with the transition, on August 31, 2021, the Company entered into
an amended and restated employment agreement with Mr. Rittenmeyer
(the "Rittenmeyer Agreement") which provides that Mr. Rittenmeyer will serve
(i) as the Executive Chairman of the Company and the Board from the Effective
Date through December 31, 2022 (the "Initial Term") and (ii) as an advisor to
the Board and the Company's Chief Executive Officer from January 1, 2023 through
December 31, 2024 (the "Subsequent Term" and together with the Initial Term,
the "Rittenmeyer Term"), subject to earlier termination in accordance with the
terms of the Rittenmeyer Agreement. During the Initial Term, Mr. Rittenmeyer
will receive an annualized base salary of $1,500,000 and will be eligible to
earn an annual incentive bonus under the Company's Annual Incentive Plan
(the "AIP"), with an annual target amount equal to no less than 150% of his base
salary. During the Subsequent Term, Mr. Rittenmeyer will receive an annual
retainer of $750,000. In addition, Mr. Rittenmeyer will be eligible to receive a
$5 million retention bonus (the "Retention Bonus") on December 31, 2024, subject
to his continued employment through such date.
In the event that Mr. Rittenmeyer's employment is terminated during the
Rittenmeyer Term by the Company without "cause," by Mr. Rittenmeyer for "good
reason," or as a result of Mr. Rittenmeyer's death or "disability" (each as
defined in the Rittenmeyer Agreement), Mr. Rittenmeyer will (in addition to any
accrued compensation, benefits and expense reimbursements through the applicable
termination date) be eligible to receive: (1) payment of any unpaid AIP bonus
for any prior fiscal year during the Initial Term, (2) a lump sum payment equal
to the amount of base salary that remains payable through the conclusion of the
Rittenmeyer Term, (3) if such termination occurs during the Initial Term, a
pro-rata AIP bonus for the year in which the termination of employment occurs
based on actual performance, (4) if such termination occurs during the Initial
Term, a lump sum payment equal to a pro rata portion of the AIP bonus
Mr. Rittenmeyer would have had the opportunity to earn for the year of
termination based on the higher of actual and target performance and for the
remainder of the Initial Term thereafter based on target performance,
(5) accelerated vesting and settlement of the Retention Bonus, (6) accelerated
vesting of all equity and other long-term incentive awards held by
Mr. Rittenmeyer, and (7) continued coverage under the Company's health and
welfare plans and other benefits and perquisites through the expiration of the
Rittenmeyer Term. Mr. Rittenmeyer's entitlement to such benefits is contingent
upon his compliance with his post-termination restrictive covenants (as
described below) and, in the case of a termination without cause or resignation
for good reason, his execution of a general release of claims in favor of the
Company and its affiliates. Pursuant to the Rittenmeyer Agreement,
Mr. Rittenmeyer is bound by perpetual confidentiality and non-disparagement
covenants and also non-compete and non-solicit covenants that apply during his
employment and for two years thereafter.
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The summary of the Rittenmeyer Agreement contained herein is qualified in its
entirety by reference to the full text of the Rittenmeyer Agreement, which is
attached hereto as Exhibit 10.1 and incorporated by reference herein in its
entirety.
Saumya Sutaria
In connection with Dr. Sutaria's promotion, on August 31, 2021, Dr. Sutaria
entered into an amended and restated employment agreement (the "Sutaria
Agreement") with the Company. The Sutaria Agreement provides that Dr. Sutaria
will serve as the Chief Executive Officer of the Company for an initial term
commencing on the Effective Date and concluding December 31, 2025, and the same
will be automatically extended for successive one-year terms upon the expiration
of the then-current term unless either party provides not less than 180 days'
notice of his or their intention not to renew (the "Sutaria Term"), subject to
earlier termination in accordance with the terms of the Sutaria Agreement.
Dr. Sutaria will continue to serve as a member of the Board during the Sutaria
Term. The Sutaria Agreement provides that Dr. Sutaria will initially receive an
annualized base salary of $1,200,000 and will be eligible to earn an annual
incentive bonus with a target amount equal to no less than 125% of his base
salary under the AIP. Commencing with the 2022 fiscal year, Dr. Sutaria will
also receive annual awards of equity and other long-term incentive awards, which
will vest on the same basis as equity and other long-term incentive awards
granted to similarly-situated executives of the Company.
If Dr. Sutaria's employment is terminated without "cause" (including as a result
of the Company's election not to renew the Sutaria Agreement) or Dr. Sutaria
voluntarily resigns with "good reason" (each as defined in the Sutaria
Agreement) more than six months prior to, or more than two years following, a
"change of control" (as defined in the Company's Executive Severance Plan),
Dr. Sutaria will (in addition to any accrued compensation, benefits and expense
reimbursements through the applicable termination date) be eligible to receive,
subject to his execution of a release of claims in favor of the Company:
(1) payment of any earned but unpaid AIP bonus for the year prior to the year in
which the termination of employment occurs, (2) a pro-rata AIP bonus for the
year in which the termination of employment occurs based on actual performance,
(3) two and one-half times the sum of base salary plus target AIP bonus paid
over two and one-half year period following the termination date,
(4) accelerated vesting of all outstanding unvested equity and other long-term
incentive awards, and (5) continued coverage under the Company's health and
welfare plans during the two and one-half year period following the termination
date.
If Dr. Sutaria's employment is terminated without cause (including as a result
of the Company's election not to renew the Sutaria Agreement) or Dr. Sutaria
voluntarily resigns with good reason within six months prior to, or within two
years following, a change of control, Dr. Sutaria will (in addition to any
accrued compensation, benefits and expense reimbursements through the applicable
termination date) be eligible to receive, subject to his execution of a release
of claims in favor of the Company: (1) payment of any earned but unpaid AIP
bonus for the year prior to the year in which the termination of employment
occurs, (2) a pro-rata AIP bonus for the year in which the termination of
employment occurs based on actual performance, (3) three times the sum of base
salary plus target AIP bonus paid in single lump-sum, (4) accelerated vesting of
all outstanding unvested equity and other long-term incentive awards, and
(5) continued coverage under the Company's health and welfare plans during the
three year period following the termination date.
If Dr. Sutaria's employment is terminated as a result of Dr. Sutaria's death or
"disability" (as defined in the Sutaria Agreement), Dr. Sutaria will (in
addition to any accrued compensation, benefits and expense reimbursements
through the applicable termination date) be eligible to receive: (1) payment of
any earned but unpaid AIP bonus for the year prior to the year in which the
termination of employment occurs, (2) a pro-rata AIP bonus for the year in which
the termination of employment occurs based on actual performance, and
(3) accelerated vesting of all outstanding unvested equity and other long-term
incentive awards.
In the event Dr. Sutaria elects not to renew the Sutaria Agreement upon the
expiration of the Term, Dr. Sutaria will (in addition to any accrued
compensation, benefits and expense reimbursements through the applicable
termination date) be entitled to continued vesting of all equity-based awards
granted during the Term during the two and one-half year period following the
Term as if Dr. Sutaria had remained employed by Company, subject to his
execution of a release of claims in favor of the Company and continued
compliance with the restrictive covenants set forth in the Sutaria Agreement (as
summarized below).
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Dr. Sutaria is bound by perpetual confidentiality and non-disparagement
covenants. Additionally, Dr. Sutaria is subject to an employee non-solicitation
covenant that applies for the duration of Dr. Sutaria's employment with the
Company and for two years thereafter, and a noncompetition covenant that applies
with respect to four of the Company's primary competitors for the duration of
Dr. Sutaria's employment with the Company and for one year thereafter.
The summary of the Sutaria Agreement contained herein is qualified in its
entirety by reference to the full text of the Sutaria Agreement, which is
attached hereto as Exhibit 10.2 and incorporated by reference herein in its
entirety.
Additionally, in connection with his promotion, the Board determined to award
Dr. Sutaria restricted stock units pursuant to the Company's 2019 Stock
Incentive Plan and award agreements thereunder with a September 1, 2021 grant
date fair value equal to $8,000,000, with 50% time vesting on August 31, 2025
and 50% vesting on August 31, 2025 subject to the achievement of performance
conditions over the period commencing on January 1, 2021 and ending on June 30,
2025 in accordance with the Company's existing long-term performance incentive
framework.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
10.1 Amended and Restated Employment Agreement between the Company and
Ronald A. Rittenmeyer, effective as of September 1, 2021.
10.2 Amended and Restated Employment Agreement between the Company and
Saumya Sutaria, effective as of September 1, 2021.
104 Cover Page Interactive Data File (embedded within the inline XBRL
document)
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