Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 5, 2021, the Board of Directors (the “Board”) of Premier, Inc. (the “Company”) approved a recommendation of the Nominating and Governance Committee of the Board (the “Nominating and Governance Committee”) to undertake a fair, orderly and thoughtful process to reduce the size of the Board from 15 to 11 directors to better align with current governance best practices. In order to accomplish this transition, the Board established a Special Nominating Committee (the “Special Committee”) charged with evaluating and making recommendations regarding (i) the directors, not to exceed 11 individuals including the Company’s Chief Executive Officer, who will continue to serve on the Board, (ii) the allocation of such continuing directors to each of the three classes of directorship required under the Company’s governing documents, (iii) the composition of the standing Board committees and (iv) the effective date of such changes in Board and committee composition. The decision to form the Special Committee was approved by the Board based on the recommendation of the Nominating and Governance Committee, which received input from the then existing directors, as well as research and advice provided by legal counsel and independent consultants regarding board size, composition and governance policies appropriate to bring the Board in alignment with current best practices. At the time the Special Committee was established, the existing directors agreed to abide by the recommendations of the Special Committee. The Special Committee was comprised of Terry Shaw (as Board Chair), Richard J. Statuto (as Chair of the Nominating and Governance Committee) and Jody R. Davids (an independent director).
Based on the recommendation of the Special Committee, the Board took the following actions on August 31, 2021, effective immediately:
Director Resignations
The Board accepted the resignations tendered by of each of Barclay E. Berdan, Stephen R. D’Arcy, David H. Langstaff, William E. Mayer and Scott Reiner (the “Resigning Directors”) from the Board and their respective Board committees, effective immediately. The agreement by each of the Resigning Directors to resign was not the result of any disagreement with the Board or Company’s management.
In consideration of the Resigning Directors’ agreement to resign based on the recommendation of the Special Committee process, the Board determined to accelerate the vesting of each of their unvested equity awards for the current year (or provide a cash equivalent payment, as applicable). Accordingly, with respect to each Resigning Director, all of the restricted stock units granted on December 7, 2020 will vest as of August 31, 2021.
Decrease in Board Size
The Board approved a decrease in the size of the Board from 15 directors to 11 directors. As a result of the director resignations and the change in the size of the Board, the Board now has one vacancy. The Board directed the Nominating and Governance Committee to recruit an additional female or other diverse director, with appropriate competencies and experiences that support the Company’s strategic plan, to fill the vacancy.
Item 8.01. Other Events.
Determination of Director Independence
The Company’s August 2020 restructuring resulted in the termination of the Voting Trust pursuant to which all Class B Common Stock held by member owners was voted as a single block by the trustee, the elimination of member owners as limited partners under the Limited Partnership Agreement of Premier Healthcare Alliance, L.P. and the exchange of all Class B Common Stock held by member owners into publicly traded Class A Common Stock. In light of those events, and the fact that the Company has not qualified as a “controlled company” under NASDAQ Stock Market LLC (“NASDAQ”) rules since July 2019, as part of its annual director independence review, the Board reevaluated the historical treatment of member-directors as non-independent directors under the NASDAQ requirements.
On August 5, 2021, the Board, under advisement by legal counsel and the Nominating and Governance Committee, undertook an analysis regarding director independence and determined that each of Barclay E. Berdan, John T. Bigalke, Helen M. Boudreau, Stephen R. D’Arcy, Jody R. Davids, Peter S. Fine, David H. Langstaff, William E. Mayer, Marc D. Miller, Marvin R. O’Quinn, Scott Reiner, Terry Shaw, Richard J. Statuto and Ellen C. Wolf are independent directors.
