UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 28, 2020
Iridium Communications Inc.
(Exact name of registrant as specified in its charter)
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Delaware | | 001-33963 | | 26-1344998 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
1750 Tysons Boulevard
Suite 1400
McLean, VA 22102
(Address of principal executive offices)
703-287-7400
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock, $0.001 par value | | IRDM | | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
| (e) | Awards under Performance Share Program |
The Compensation Committee of the Board of Directors (the “Committee”) of Iridium Communications Inc. (the “Company”) previously established an Amended and Restated Performance Share Program (the “Program”), which provides for the grant of restricted stock units (“Awards”) under the terms of the Company’s 2015 Equity Incentive Plan, as amended and restated (the “Plan”). The Committee established the Program to (i) focus key employees on achieving specific performance targets, (ii) reinforce a team-oriented approach, (iii) provide significant award potential for achieving outstanding performance, and (iv) enhance the ability of the Company to attract and retain highly talented and competent individuals. The Program provides that the Committee may grant Awards (referred to as “Maximum Awards”) to designated key employees, with each such Maximum Award representing a specified maximum number of shares of common stock that may ultimately be earned by each such employee under the Award. The Maximum Award is calculated by reference to the target award value (the “Target Award”). The Program contemplates that the Committee may establish criteria for determining the number of shares ultimately awarded (the “Actual Awards”), including (a) one or more performance goals of the type enumerated in the Plan (“Performance Goals”), the satisfaction of which is a condition to some or all of the Maximum Award being earned, (b) other performance goals that may or may not be of the type specifically enumerated in the Plan which may form the basis for a determination by the Committee to reduce the award to the participant (“Other Performance Goals”), and (c) the performance period over which attainment of the Performance Goals and Other Performance Goals is determined (the “Performance Period”). The Program also contemplates that the Committee may establish a vesting period over which the respective key employee must remain employed by the Company following the Performance Period in order to earn the shares underlying his or her Actual Award.
Effective February 28, 2020, the Committee granted Awards under the Program to the Company’s principal executive officer, principal financial officer and other named executive officers, designated a Performance Goal, an Other Performance Goal and a Performance Period related to such Awards and specified a vesting schedule for the Awards. These Awards specified a Target Award (and the related Maximum Award) for each of these executives as set forth in the table below. The Awards were approved with a specified dollar value and were converted to an equivalent number of shares of common stock based on the closing price of the common stock on the grant date, rounded down to the nearest whole share.
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Officer | | Title | | Target Award ($) | | | Maximum Award ($) | |
Matthew J. Desch | | Chief Executive Officer | | $ | 1,250,000 | | | $ | 1,875,000 | |
Thomas J. Fitzpatrick | | Chief Financial Officer and Chief Administrative Officer | | $ | 700,000 | | | $ | 1,050,000 | |
Suzanne E. McBride | | Chief Operations Officer | | $ | 700,000 | | | $ | 1,050,000 | |
Bryan J. Hartin | | Executive Vice President, Sales and Marketing | | $ | 450,000 | | | $ | 675,000 | |
Scott T. Scheimreif | | Executive Vice President, Government Programs | | $ | 450,000 | | | $ | 675,000 | |
The Actual Awards for each executive will be based on the level of achievement of the Performance Goal, which is the growth of the Company’s average service revenue for 2020 and 2021, calculated in accordance with generally accepted accounting principles (“GAAP”), over the service revenue that was reported by the Company for 2019. The Actual Awards will be reduced to zero if the Company fails to achieve the Other Performance Goal specified by the Committee, which is the achievement of a specified average OEBITDA margin for 2020 and 2021. “OEBITDA margin” is OEBITDA expressed as a percentage of revenue. “OEBITDA” is defined as earnings before interest, income taxes, depreciation and amortization, and share-based compensation expenses. The Company considers the loss on early extinguishment of debt to be financing-related costs associated with interest expense or amortization of financing fees, which by definition are excluded from OEBITDA. In addition, GAAP requires that certain of the expenses associated with the approximately $3 billion construction cost of Iridium NEXT (the “Construction Costs”) be expensed. These Construction Costs, which beginning in 2018 principally consisted of in-orbit insurance, will continue to be excluded from OEBITDA through the first quarter of 2020.
The Actual Award will vest as to 50% of the underlying shares when the Committee determines the Company’s level of achievement of the Performance Goal and the Other Performance Goal, which would occur in the first quarter of 2022, and as to the remaining 50% on March 1, 2023, subject to continuous employment of the participant through such dates. If a change in control of the Company occurs before the date the Committee determines the Company’s level of achievement of the Performance Goal and Other Performance Goal, each participant will be credited with an Actual Award equal to the participant’s Target Award, and the
Actual Award will remain subject to the same time-based vesting schedule with the first vesting date being March 1, 2022. Actual Awards and any shares issued thereunder are subject to recoupment from participants in accordance with the Company’s Policy for Recoupment of Incentive Compensation.
The description of the Program contained herein is a summary of its material terms, does not purport to be complete and is qualified in its entirety by reference to the Program and the Plan. The Program and forms of Performance Share Award Grant Notice and Performance Share Award Agreement for use in connection with grants under the Program were filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.
Iridium 2020 Performance Bonus Plan
Effective February 28, 2020, the Committee approved the terms of the Company’s 2020 Performance Bonus Plan (the “Iridium Bonus Plan”). Employees of the Company who are employed during the 2020 calendar year, including the Company’s principal executive officer, principal financial officer and other named executive officers are eligible to participate in the Iridium Bonus Plan, provided that a participant must be employed through the date bonuses are paid in order to be eligible to receive a bonus, except as provided in an applicable severance plan or individual agreement. Pursuant to the Iridium Bonus Plan, each participant is eligible to receive an incentive bonus (the “Bonus Award”) calculated in part by reference to a “Target Bonus Award” determined for such participant by the Committee. The Target Bonus Award is calculated by multiplying the participant’s base salary earned during the 2020 calendar year by a Committee-approved Target Bonus Percentage.
The Committee also established the Target Bonus Percentage (expressed as a percentage of earned base salary) under the Iridium Bonus Plan for each of the Company’s principal executive officer, principal financial officer and other named executive officers, as set forth in the table below.
| | | | | | |
Officer | | Title | | Target Bonus
Percentage | |
Matthew J. Desch | | Chief Executive Officer | | | 90 | % |
Thomas J. Fitzpatrick | | Chief Financial Officer and Chief Administrative Officer | | | 75 | % |
Suzanne E. McBride | | Chief Operations Officer | | | 60 | % |
Bryan J. Hartin | | Executive Vice President, Sales and Marketing | | | 60 | % |
Scott T. Scheimreif | | Executive Vice President, Government Programs | | | 60 | % |
The actual Bonus Award will be calculated by multiplying the Target Bonus Award by a corporate performance factor determined by the Committee based on the achievement of the following corporate performance goals: (i) OEBITDA (as defined under “Awards under Performance Share Program” above); (ii) specified strategic goals; and (iii) specified measures of user satisfaction. The resulting amount may then be reduced but not increased by the Committee based on a personal performance factor ranging from 0% to 100%. Any actual Bonus Award earned by any participant may not exceed 195% of the participant’s Target Bonus Award.
Bonus Awards up to the Target Bonus Award will be paid in a combination of common stock of the Company in the form of restricted stock units granted under the Plan and cash. Restricted stock units equal in value to 20% of each executive’s Target Bonus Award were granted on March 1, 2020 and will vest, if at all, in March 2021 upon the determination by the Committee as to the achievement of the specified performance goals, the executive’s personal performance factor and the executive’s continued service through the applicable vesting date. The first 20% of the Target Bonus Award, if earned, will be paid via the vesting of these restricted stock units, with any excess actual bonus award to be paid in cash no later than March 15, 2021.
Any amounts paid under the Iridium Bonus Plan are subject to recoupment from participants in accordance with the Company’s Policy for Recoupment of Incentive Compensation.
The description of the Iridium Bonus Plan contained herein is a summary of the material terms of the Iridium Bonus Plan, does not purport to be complete, and is qualified in its entirety by reference to the Iridium Bonus Plan, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2020.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | IRIDIUM COMMUNICATIONS INC. |
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Date: March 5, 2020 | | | | By: | | /s/ Matthew J. Desch |
| | | | Name: | | Matthew J. Desch |
| | | | Title: | | Chief Executive Officer |
