Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
CEO Employment Agreement
Liberty Media Corporation ("Liberty Media") has executed a new employment
agreement with Gregory B. Maffei, the President and Chief Executive Officer of
Liberty Media, effective December 13, 2019 (the "Employment Agreement"). The
Employment Agreement provides for a five-year employment term commencing on
January 1, 2020 and ending on December 31, 2024, with an annual base salary,
annual cash performance bonus, initial cash commitment bonus, annual equity
awards, Upfront Awards (as defined below), perquisites and other benefits
described below. Also, effective December 13, 2019, each of Qurate Retail, Inc.
("Qurate"), Liberty Broadband Corporation ("LBC"), GCI Liberty, Inc. ("GCIL")
and Liberty TripAdvisor Holdings, Inc. ("TripCo," and together with Qurate, LBC
and GCIL, the "Service Companies" and each, a "Service Company") has executed a
First Amendment to Services Agreement with Liberty Media applicable to each such
Service Company (collectively, the "Services Amendments") pursuant to which
components of the compensation described below will either be paid directly to
Mr. Maffei by each Service Company or reimbursed to Liberty Media, in each case,
based on allocations among Liberty Media and each of the Service Companies as
set forth in the Services Amendments. The following descriptions of the
Employment Agreement and the Services Amendments are qualified in their entirety
by reference to the Employment Agreement and form of Services Amendments, which
are attached hereto as Exhibits 10.1 and 10.5, respectively, and incorporated by
reference into this Item 5.02.
Base Salary. Mr. Maffei's initial annual base salary will be $3 million, with no
contracted increase.
Initial Cash Commitment Bonus. Mr. Maffei received a one-time cash commitment
bonus of $5 million in connection with his entry into the Employment Agreement.
Annual Cash Performance Bonus. The aggregate target value for Mr. Maffei's
annual cash performance bonus will be $17 million for each year during the term
of the Employment Agreement and will be payable by Liberty Media and each
Service Company based on each company's allocable share of such obligation (as
determined pursuant to the relevant services agreement). Payment of the annual
cash performance bonus will be subject to the achievement of one or more
performance metrics to be approved by the Compensation Committee of Liberty
Media (the "LMC Committee") and the Compensation Committee of each Service
Company (each a "Service Company Committee") with respect to its respective
allocable portion of the annual cash performance bonus.
Perquisites and Other Benefits. Mr. Maffei will be eligible to participate in
all employee benefit plans and perquisites that are generally available to other
senior executive officers of Liberty Media. In addition, Mr. Maffei's
perquisites include 120 hours of annual aircraft usage, subject to payment by
Mr. Maffei of tax on the standard industry fare level value, plus 50 additional
hours, subject to Mr. Maffei's payment for the cost of such usage.
Annual Equity Awards. The aggregate grant date fair value of Mr. Maffei's annual
equity awards will be $17.5 million for each year during the term of the
Employment Agreement and will be comprised of awards of time-vested stock
options (the "Annual Option Awards"), performance-based restricted stock units
("Performance RSUs") or a combination of award types, at Mr. Maffei's election,
allocable across Liberty Media and the Service Companies (collectively, the
"annual equity awards"). Vesting of any Performance RSUs will be subject to the
achievement of one or more performance metrics to be approved by the LMC
Committee and each Service Company Committee with respect to its respective
allocable portion of the Performance RSUs. At Liberty Media, Mr. Maffei's annual
equity awards will be issued with respect to Liberty Media's Series C Liberty
SiriusXM common stock, par value $0.01 per share ("LSXMK"), Series C Liberty
Braves common stock, par value $0.01 per share ("BATRK"), and Series C Liberty
Formula One common stock, par value $0.01 per share ("FWONK," and together with
LSXMK and BATRK, the "LMC Series C stock").
The description of the annual equity awards set forth herein is qualified in its
entirety by reference to the forms of Liberty Media's award agreements for the
Annual Option Awards and the Performance RSUs, which are attached hereto as
Exhibits 10.2 and 10.3, respectively, and incorporated by reference into this
Item 5.02.
Upfront Awards. In connection with the execution of the Employment Agreement,
Mr. Maffei is entitled to receive term equity awards with an aggregate grant
date fair value of $90 million (the "Upfront Awards") to be granted in two equal
tranches. The first tranche consists of time-vested stock options from each of
Liberty Media, Qurate, LBC and GCIL and time-vested restricted stock units from
TripCo (collectively, the "2019 term awards") that vest, in each case, on
December 31, 2023 (except TripCo's award of time-vested restricted stock units,
which vests on the fourth anniversary of its grant date), subject to Mr.
Maffei's continued employment, except as described below. Liberty Media's
portion of the 2019 term awards has an aggregate grant date fair value of
$19,800,000 and consists of stock options to purchase 927,334 LSXMK shares,
313,342 BATRK shares and 588,954 FWONK shares, with exercise prices of $47.11,
$29.10 and $43.85, respectively.
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The second tranche of the Upfront Awards will be granted on or before December
15, 2020, subject to Mr. Maffei's continued employment on such date or the
earlier occurrence of a termination of employment due to death, disability, by
the issuing company without cause or by Mr. Maffei for good reason, and will
consist of time-vested stock options from each of Liberty Media, Qurate, LBC and
GCIL and time-vested restricted stock units from TripCo (collectively, the "2020
term awards"). The 2020 term awards will vest, in each case, on December 31,
2024, subject to Mr. Maffei's continued employment (except TripCo's award of
time-vested restricted stock units, which vests on the fourth anniversary of its
grant date), except as described below. The portion of the 2020 term awards to
be granted by Liberty Media is expected to consist of stock options to purchase
shares of LMC Series C stock.
The description of the Upfront Awards set forth herein is qualified in its
entirety by reference to the form of Liberty Media's award agreement for Upfront
Awards, which is attached hereto as Exhibit 10.4 and incorporated by reference
into this Item 5.02.
Termination Payments and Benefits. Mr. Maffei will be entitled to payments and
benefits if his employment is terminated under the circumstances described
below, subject to the execution of releases by Liberty Media and Mr. Maffei in a
form to be mutually agreed.
Termination without Cause or by Mr. Maffei for Good Reason. If Mr. Maffei's
employment is terminated by Liberty Media without cause (as defined in the
Employment Agreement) or if Mr. Maffei terminates his employment for good reason
(as defined in the Employment Agreement) on or after January 1, 2020, he is
entitled to the following: (i) his accrued base salary, any accrued but unpaid
bonus for a prior completed year, any unpaid expense reimbursements and any
amounts due under applicable law (the "Standard Entitlements"); (ii) a severance
payment of two times his base salary during the year of his termination to be
paid in equal installments over 24 months; (iii) fully vested shares with an
aggregate grant date fair value of $35 million consisting of shares of the
applicable series of common stock from Liberty Media, Qurate, GCIL, TripCo and
LBC; (iv) full vesting of his Upfront Awards (including the grant and full
vesting of the 2020 term awards if the termination occurs before they have been
granted) and full vesting of the annual equity awards for the year in which the
termination occurs (including the grant and full vesting of such annual equity
awards if the termination occurs before they have been granted); (v) lump sum
cash payment of two times the average annual cash performance bonus paid for the
two calendar years ending prior to the termination, but in no event less than
two times his target annual cash performance bonus of $17 million, with (subject
to certain exceptions) up to 25% of such amount payable in shares of the
applicable series of common stock from Liberty Media, Qurate, GCIL, TripCo and
LBC; (vi) a lump sum cash payment equal to the greater of (x) $17 million and
(y) the annual cash performance bonus otherwise payable for the year of
termination, in each case, prorated based on the number of days that have
elapsed within the year of termination (including the date of termination), with
(subject to certain exceptions) up to 25% of such amount payable in shares of
the applicable series of common stock from Liberty Media, Qurate, GCIL, TripCo
and LBC; and (vii) continued use for 12 months after such termination of certain
services and perquisites provided by Liberty, including continued use of
Liberty's aircraft (the "Services") (clauses (i) through (vii) are collectively
referred to as the "Severance Benefits").
Mr. Maffei will not be entitled to any Severance Benefits from Liberty Media,
including the vesting of Liberty Media equity awards, if his service is
terminated at any Service Company and he remains employed by Liberty Media at or
following the date of termination of such services. See "Amendment to Services
Agreements" below for additional information about a separation event from a
Service Company only.
Termination by Reason of Death or Disability. In the event of Mr. Maffei's death
or disability, he will be entitled to the Severance Benefits.
For Cause Termination. In the event Mr. Maffei's employment is terminated by
Liberty Media for cause, he will be entitled to his accrued base salary, any
unpaid expense reimbursements and any amounts due under applicable law, and he
will forfeit any unvested portion of his Upfront Awards. If the termination for
cause occurs before December 31 of the relevant grant year, Mr. Maffei will
forfeit all of his annual equity awards for that grant year. If Mr. Maffei
remains employed by Liberty Media after December 31 of the relevant grant year
but his employment is terminated by Liberty Media, including for cause, prior to
the date on which the LMC Committee certifies achievement of the performance
metric for the Performance RSUs for the grant year (the "Certification Date"),
the award will remain outstanding until the Certification Date and will vest to
the extent determined by the LMC Committee.
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Voluntary Termination without Good Reason. If Mr. Maffei voluntarily terminates
his employment with Liberty Media without good reason on or after January 1,
2020, he will be entitled to the Standard Entitlements, pro rata vesting of the
Upfront Awards (based on the number of days that have elapsed during the vesting
period), pro rata vesting of his annual equity awards for the year of
termination (based on the elapsed number of days in the calendar year of
termination) and a pro rata portion of $17 million (based upon the elapsed
number of days in the calendar year of termination), with (subject to certain
exceptions) up to 25% of such amount payable in shares of LMC Series C stock
and/or the common stock of other Service Companies. Any Performance RSUs for the
year of termination that are unvested on the date of termination will remain
outstanding until the performance criteria is determined and will vest pro rata
(based upon the elapsed number of days in the calendar year of termination) to
the extent determined by the LMC Committee (at a level not less than 100% of the
target award).
Amendment to Services Agreements
In connection with prior spin-off or split-off transactions involving Liberty
Media and/or Qurate, Liberty Media entered into services agreements with each of
the Service Companies. Pursuant to these arrangements, Liberty Media's
employees, including Mr. Maffei, provide the Service Companies with general and
administrative services, including legal, tax, accounting, treasury and investor
relations support services, and Liberty Media is compensated for the time spent
providing services to these companies. As discussed above, effective December
13, 2019, each of the Service Companies executed Services Amendments with
Liberty Media pursuant to which components of Mr. Maffei's compensation will
either be paid directly to Mr. Maffei by each Service Company or reimbursed to
Liberty Media, in each case, based on allocations among Liberty Media and each
of the Service Companies as set forth in the Services Amendments.
The Services Amendments provide that Liberty Media is responsible for paying or
providing annual base salary, the initial commitment bonus, perquisites and
other employee benefits, Severance Benefits and certain reimbursements directly
to Mr. Maffei, and a portion of these expenses will be allocated to, and
reimbursed by, each of the Service Companies based on such Service Company's
Executive Percentage. For Mr. Maffei's 2020 compensation, the "Executive
Percentage" will be:
Liberty Media Qurate GCIL LBC TripCo
FWONK LSXMK BATRK QRTEA GLIBA LBRDK LTRPB
By ticker 16.0% 23.0% 5.0% 19.0% 14.0% 18.0% 5.0%
By company 44.0% 19.0% 14.0% 18.0% 5.0%
Beginning with Mr. Maffei's 2021 compensation, the "Executive Percentage" will
be determined based on a combination of (1) relative market capitalizations,
weighted 50%, and (2) a blended average of historical time allocation on a
Liberty Media-wide and CEO basis, weighted 50%, in each case, absent agreement
to the contrary by Liberty Media and the Service Companies in consultation with
Mr. Maffei. The Executive Percentage will be adjusted annually thereafter and
upon the occurrence of certain events as set forth in the Services Amendments,
including the discontinuation of Mr. Maffei's services to a Service Company, the
combination of one or more Service Companies or the addition of a new service
company.
Each Service Company has agreed to pay directly to Mr. Maffei the portions of
the annual cash performance bonus, the Upfront Awards and the annual equity
. . .
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
10.1 Executive Employment Agreement, dated effective as of December 13,
2019, between Liberty Media and Gregory B. Maffei.
10.2 Form of Annual Option Award Agreement between Liberty Media and
Gregory B. Maffei under the Liberty Media Corporation 2017 Omnibus
Incentive Plan.
10.3 Form of Annual Performance-based Restricted Stock Unit Award
Agreement between Liberty Media and Gregory B. Maffei under the Liberty
Media Corporation 2017 Omnibus Incentive Plan.
10.4 Form of Upfront Award Agreement between Liberty Media and Gregory B.
Maffei under the Liberty Media Corporation 2017 Omnibus Incentive Plan.
10.5 Form of First Amendment to Services Agreement, effective as of
December 13, 2019, between Liberty Media and the Services Companies.
101.INS Inline XBRL Instance Document - the instance document does not appear
in Interactive Data File because its XBRL tags are embedded within the
Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and
contained in Exhibit 101)
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