Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
As previously disclosed, on August 20, 2019, certain employees of Change
Healthcare Inc. (the "Company"), including Neil de Crescenzo, the Company's
President and Chief Executive Officer, Fredrik Eliasson, the Company's Executive
Vice President and Chief Financial Officer, Kriten Joshi, the Company's
Executive Vice President & President, Network Solutions and President,
Software & Analytics, and Roderick O'Reilly, the Company's former Executive Vice
President and President, Software and Analytics, were granted Performance Stock
Units ("PSUs") that were to be earned based upon the Company's achievement of
certain Revenue and Adjusted EBITDA compounded annual growth rate ("CAGR")
targets over a three-year performance period ending March 31, 2022, with a
weighting of 60% for the Revenue targets and 40% for the Adjusted EBITDA
targets. The total number of PSUs earned at the end of the performance period
was to range from a payout of 0% to a maximum of 200% as determined by measuring
actual performance over the performance period for Adjusted EBITDA and Revenue
against the performance goals based on the pre-established scale set forth
below, with payout for achievement between performance levels to be determined
based on a straight-line interpolation of the applicable payout range. Any
earned PSUs would then vest on July 2, 2023, subject to the executive's
continued employment through the vesting date.
Threshold Target Moderate Maximum
Measure Weighting (25%) (100%) (150%) (200%)
Revenue CAGR 60 % 0.4 % 2.7 % 3.6 % 4.7 %
Adjusted EBITDA CAGR 40 % 4.5 % 5.6 % 7.3 % 8.8 %
Applying the performance targets set forth above, 57.6% of the PSUs would have
been earned based on the Company's performance during the performance period.
The compensation committee of the board of directors (the "Committee")
determined that Company-wide financial performance during the performance period
was unusual due to various factors and unforeseen circumstances that were not
contemplated at the outset of the performance period, including the challenges
due to COVID-19, the announcement of the transaction with UnitedHealth Group in
Q4 of fiscal year 2021 and the subsequent commencement of litigation by the U.S.
Department of Justice to block that transaction, and efforts during this time to
retain executives in a strong market for executive talent. Accordingly, on
June 1, 2022, in recognition of these challenges, the Committee exercised its
discretion to certify performance at target, resulting in 100% of the PSUs being
earned. In addition, the Committee changed the service-based vesting date from
July 2, 2023 to July 2, 2022. As a result, each of Messrs. de Crescenzo,
Eliasson, Joshi and O'Reilly was deemed to earn 199,099, 69,252, 34,626 and
39,819 PSUs, respectively, which PSUs will vest on July 2, 2022 subject to
continued employment with the Company (or, in the case of Mr. O'Reilly, subject
to his continued service as a Senior Advisor to the Company) on the vesting
date.
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