Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 15, 2020 (the “Effective Date”), the Board of Directors (the “Board”) of Virgin Galactic Holdings, Inc. (the “Registrant”) approved the appointment of Enrico Palermo as the Chief Operating Officer of Virgin Galactic Holdings, LLC (“OpCo”). Mr. Palermo, age 40, remains President of The Spaceship Company, LLC (“TSC” and, together with PubCo and OpCo, the “Company”), a wholly owned subsidiary of the Registrant focused on the development and manufacture of the Company’s spaceflight systems, a position he has held since February 2018. In connection with his appointment as the Chief Operating Officer of OpCo, Mr. Palermo and the Company entered into an amended and restated employment agreement (the “Amended Agreement”), which supersedes and replaces his prior employment agreement.
Under the Amended Agreement, Mr. Palermo’s annual base salary increased from $350,000 to $425,000 (effective as of December 9, 2019). In addition, he will be entitled to receive a $60,000 bonus in connection with certain events related to entering into the Amended Agreement.
Additionally, under the Amended Agreement, Mr. Palermo is entitled to receive stock options to purchase an aggregate of 291,656 shares of the Registrant’s common stock and a restricted stock unit award covering 55,000 shares of the Registrant’s common stock. The restricted stock unit award and half of the stock options were granted on the Effective Date; the other half of the stock options will be granted on the first anniversary of the Effective Date. Awards granted on the Effective Date will vest as to 25% of the shares subject to the award on the one year anniversary of the Effective Date and as to the remaining 75% in substantially equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. The stock option that will be granted on the first anniversary of the Effective Date will vest on a similar four-year vesting schedule from and after the grant date.
As President of TSC, Mr. Palermo has been responsible for the development, manufacturing and testing of the Company’s fleet of spaceships, carrier aircraft and rocket motors. Mr. Palermo previously served as TSC’s Executive Vice President and General Manager from August 2016 to February 2018 and as Vice President of Operations from July 2011 to July 2016. Mr. Palermo joined the Company in November 2006 and was instrumental in implementing and developing TSC’s spaceship manufacturing operations and capabilities. Upon receipt of a scholarship from the European Space Agency, Mr. Palermo studied at the International Space University in Strasbourg, France, completing the university’s intensive Space Studies Program in September 2006. Mr. Palermo graduated from the University of Western Australia with a Bachelor of Engineering in Mechanical Engineering and Bachelor of Science in Physics and Applied Mathematics.
There is no arrangement or understanding between Mr. Palermo and any other person pursuant to which Mr. Palermo was appointed as an officer of the Company. There are no family relationships between Mr. Palermo and any of the Company’s directors or executive officers. There are no related person transactions in which Mr. Palermo had or will have a direct or indirect material interest required to be disclosed under Item 404(a) of RegulationS-K.
The foregoing description of the Amended Agreement is not complete and is qualified in its entirety by the terms of the agreement, a copy of which will be filed as an exhibit to the Company’s Annual Report on Form10-K for the year ended December 31, 2019.
