Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(e)
Employment Agreement with CEO
As previously reported, Ernie Garateix was promoted to Chief Executive Officer
("CEO") of Heritage Insurance Holdings, Inc. (the "Company"), effective as of
December 1, 2020. In connection with his appointment as CEO, Mr. Garateix and
the Company entered into an employment agreement (the "Employment Agreement"),
dated January 5, 2021, replacing and terminating the prior employment agreement
between Mr. Garateix and the Company. The term of Mr. Garateix's employment
under the Employment Agreement shall continue until December 31, 2023, subject
to automatic renewals for successive twelve-month periods, unless otherwise
terminated.
Pursuant to the Employment Agreement, Mr. Garateix will receive (i) an annual
base salary of $1,000,000, (ii) an annual cash incentive with a minimum
opportunity of $500,000, a target opportunity of $1.0 million, and a maximum
opportunity of $1.5 million based on performance criteria included in the
Company's executive incentive compensation program, (iii) an annual time-based
restricted stock award with a value of $500,000, which shares will vest in three
equal annual installments, and (iv) an annual performance based restricted stock
award with a minimum opportunity of $250,000, a target opportunity of $500,000,
and a maximum opportunity of $1.0 million, which shares will vest based on
performance criteria included in the Company's executive incentive compensation
program. Additionally, under the terms of the Employment Agreement, the Company
will provide Mr. Garateix with medical and disability insurance.
In the event that Mr. Garateix is terminated by the Company without cause or if
Mr. Garateix terminates his employment for good reason, Mr. Garateix will
receive (i) a lump-sum cash severance payment equal to two times his annual base
salary in effect immediately preceding the termination, but not less than
$2.0 million, and (ii) a prorated annual cash incentive for the year of
termination, subject to the applicable performance criteria. In addition, all
previously granted and unvested time-based and performance-based stock awards
will immediately vest upon such termination.
In the event that Mr. Garateix is terminated by the Company without cause or if
Mr. Garateix terminates his employment for good reason after a change of
control, Mr. Garateix shall receive the severance payments described in the
paragraph above, except that his lump-sum cash severance payment will equal
three times his base salary in effect immediately preceding the termination.
Upon a termination of employment for any reason, Mr. Garateix would be subject
to a one-year post-employment non-solicitation restrictive covenant. Upon a
termination of employment for any reason other than an involuntary termination
or his voluntary termination for good reason, Mr. Garateix would be subject to
a one-year post-employment non-competition restrictive covenant.
The foregoing summary of the Employment Agreement is qualified in its entirety
by the full text of the Employment Agreement itself, a copy of which is filed as
Exhibit 10.1 hereto and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibit is being furnished as part of this Current
Report on Form 8-K.
No. Exhibit
10.1 Employment Agreement dated January 5, 2021 between Heritage Insurance
Holdings, Inc. and Mr. Garateix.
104 Cover Page Interactive File (the cover page tags are embedded within the
Inline XBRL document).
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