Kessler’s termination without cause, termination due to disability, or resignation for good reason (each as defined in the Employment Agreement), theSign-On Options will vest in full, and remain exercisable until the earlier of 24 months following Mr. Kessler’s termination of employment and the end of theSign-On Option’s term. In addition, the Employment Agreement entitles Mr. Kessler to indemnification to the fullest extent permitted by applicable law and directors’ and officers’ insurance coverage, in each case, to the same extent as other officers and directors of Perrigo.
If Mr. Kessler’s employment were terminated involuntarily by the Company without cause or by Mr. Kessler for good reason, in either case, other than upon, or within 24 months following, a change in control, he will be entitled to a prorated annual bonus for the year of termination (determined based on actual performance), cash severance equal to 1.5 times the sum of his annual base salary and target annual bonus opportunity, and payment of the cost of health care continuation coverage for up to 18 months following termination. Mr. Kessler will also be entitled to the continued vesting of any then-outstanding equity incentive awards (other than theSign-On Options, which will vest in full, as described above) for 24 months following his termination(pro-rated for any vesting period that ends after the end of such 24 month period), with any performance-based awards vesting, if at all, based on actual performance.
If Mr. Kessler’s employment were terminated involuntarily by the Company without cause or by Mr. Kessler for good reason, in either case, upon, or within 24 months following, a change in control, he would be entitled to substantially the same benefits as described above, except that he will receive an additional lump sum cash payment in an amount equal to the cost of healthcare continuation coverage for six months following termination, and the cash severance payment would be equal to two times the sum of his annual base salary and target annual bonus opportunity. Mr. Kessler will also be entitled to the full vesting of any then-outstanding equity incentive awards (including, but not limited to, theSign-On Options), with any then-outstanding performance-based equity incentive awards vesting based on “target” levels of achievement of the applicable performance thresholds.
The foregoing severance benefits are subject to Mr. Kessler’s execution of a release of claims in favor of Perrigo. In addition, Mr. Kessler has agreed to comply with (i) a post-termination noncompete covenant and a post-termination nonsolicitation of customers and employees covenant, each of which will endure for 24 months following any termination of employment, (ii) a perpetual confidentiality covenant, and (iii) a perpetual mutual nondisparagement covenant.
The foregoing summary of the Employment Agreement is qualified in its entirety by the full text thereof, which is filed as Exhibit 10.1 to this Current Report on Form8-K, and is incorporated herein by reference.
There is no arrangement or understanding between Mr. Kessler and any other persons pursuant to which Mr. Kessler was selected as an officer. There are no family relationships between Mr. Kessler and any director or executive officer of the Company and no related-party transactions involving Mr. Kessler that would require disclosure under Item 404(a) of RegulationS-K.
Executive Severance Plan
On October 4, 2018, the Remuneration Committee of the Board approved an extension of the applicability of certain payments, benefits and treatment of outstanding equity awards upon certain termination events for certain executive officers of the Company under its executive severance plan.
