| Item 5.02 | Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers |
On February 27, 2019, the compensation committee (the “Compensation Committee”) of the board of directors (the “Board”) of Covetrus, Inc. (the “Company”), approved a form of (i) restricted stock unit agreement, (ii) incentive stock option agreement, (iii) nonqualified stock option agreement, (iv) restricted stock unit agreement fornon-U.S. participants, and (v) restricted stock agreement (collectively, the“Non-Director Award Agreements”), copies of which are filed herewith as Exhibits 10.1, 10.2, 10.3, 10.4, and 10.5, respectively, and incorporated by reference herein. On February 28, 2019, the Board, following recommendation from the Compensation Committee, approved a form of restricted stock unit agreement fornon-employee directors (the “Director Award Agreement”, and together with the Non-Director Award Agreements, the “Award Agreements”), a copy of which is filed herewith as Exhibit 10.6 and incorporated by reference herein. The Award Agreements will be used for new awards of restricted stock units, restricted stock, and stock options (both incentive stock options andnon-qualified stock options), as applicable. Such awards may be granted to directors, officers, employees, and advisors to the Company pursuant to the Covetrus, Inc. 2019 Omnibus Incentive Compensation Plan (the “Plan”) and the applicable Award Agreement.
Non-Employee Director Compensation Policy
On February 28, 2019, the Board, following recommendation from the Compensation Committee, approved theNon-Employee Director Compensation Policy (the “Director Compensation Policy”), a copy of which is filed herewith at Exhibit 10.7 and incorporated by reference herein.
Equity Compensation – Initial Award
For calendar year 2019, each currentnon-employee director on the Board will be granted an initial equity award of restricted stock units (“RSUs”) to be settled in shares of common stock of the Company under the Plan with an aggregate grant date value of $225,000, which award will be issued in the form of the Restricted Stock Unit Agreement forNon-Employee Directors, a copy of which is filed herewith as Exhibit 10.6 (the “Initial Award”).
The Initial Awards were granted on February 28, 2019. The number of RSUs granted subject to the Initial Award to eachnon-employee director was calculated by dividing $225,000 by the closing price of the Company’s common stock on the date of grant. All of the RSUs subject to the Initial Award shall vest on theone-year anniversary of the Initial Award date of grant. If anon-employee director’s service ends on the date of vesting, then the vesting shall be deemed to have occurred.
Equity Compensation – Annual Equity Grant
On the date of each annual meeting of the Company’s stockholders (an “Annual Meeting”), eachnon-employee director who will serve on the Board following such Annual Meeting will be granted RSUs to be settled in shares of the Company’s common stock under the Plan with an aggregate grant date value of $225,000, which award will be issued in the form of the Restricted Stock Unit Agreement forNon-Employee Directors, a copy of which is filed herewith as Exhibit 10.6 (the “Annual Award”).Non-employee directors who received an Initial Award are not eligible to receive an Annual Award during calendar year 2019.
The number of RSUs granted subject to the Annual Award will be calculated by dividing $225,000 by the closing price of the Company’s common stock on the date of grant. All of the RSUs subject to the Annual Award shall vest on theone-year anniversary of the Annual Award grant date. If anon-employee director’s service ends on the date of vesting, then the vesting shall be deemed to have occurred.
If anon-employee director is appointed or elected at any time other than an Annual Meeting, thenon-employee director will be eligible to receive a prorated Annual Award, as of the date of his or her appointment or election, for the period prior to the first Annual Meeting following his or her appointment or election, determined by (i) multiplying the dollar amount of the Annual Award by a fraction, the numerator of which is the number of days from the date of the appointment or election to the first anniversary of the most recent Annual Meeting and the denominator of which is 365, and (ii) dividing such amount by the closing price of the Company’s common stock on the date of grant, rounded up to the nearest whole share.
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