| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On March 18, 2019, Tivity Health, Inc. (the “Company”) entered into an amended and restated employment agreement with the Company’s Chief Executive Officer, Donato Tramuto (the “Agreement”). The Agreement amends and restates Mr. Tramuto’s existing employment agreement with the Company, dated August 3, 2015 (the “Prior Agreement”). Pursuant to the Agreement, Mr. Tramuto will be entitled to receive the following:
| | • | | Annual base salary of $950,000. |
| | • | | Annual cash bonus targeted to equal 100% of base salary. |
| | • | | Long-term incentive compensation in respect of fiscal year 2019 consisting of the following: |
| | • | | An award of restricted stock units (“RSUs”) with a fair value on the date of grant (the “Grant Date”) of $800,000 (the “2019 PRSU Award”), which will vest in three equal annual installments over three years from the Grant Date. The RSUs will be issued and settled in accordance with the RSU award agreement in the form approved by the Compensation Committee; and |
| | • | | An award of performance-based restricted stock units (“PRSUs”) with a target fair value on the Grant Date of $2,400,000 (the “2019 PRSU Award”). The number of PRSUs that will be eligible to vest and the applicable performance metrics will be determined in accordance with the PRSU award agreement in the form approved by the Compensation Committee. |
| | • | | Eligibility to participate in benefit plans that are maintained by the Company for senior executive officers generally. |
| | • | | Fringe benefits and perquisites at the same level as those benefits provided by the Company to senior executive officers generally. |
The term of the Agreement expires on December 31, 2020 and will automatically renew for successiveone-year periods thereafter, unless either party gives written notice to the other party of its intention not to renew the Agreement at least 90 days prior to the end of the then current term.
Consistent with the Prior Agreement, in the event that Mr. Tramuto’s employment is terminated by the Company without “cause” or by Mr. Tramuto for “good reason,” in addition to any accrued but unpaid benefits or obligations as of the date of termination, Mr. Tramuto will be entitled to (i) continued payment of base salary then in effect for 24 months, (ii) a pro rata portion of any annual bonus for the fiscal year in which such termination occurs, based on actual performance determined after the end of the fiscal year, and (iii) a lump sum payment equal to the Company’s estimated obligation for its share of premiums for group health continuation coverage for 24 months.
Consistent with the Prior Agreement, in the event that Mr. Tramuto’s employment is terminated by the Company without “cause” or by Mr. Tramuto for “good reason” within 12 months following a “change in control” (as defined in the Agreement), in addition to any accrued but unpaid benefits or obligations as of the date of termination and a pro rata portion of any annual bonus for the fiscal year in which such termination occurs, based on the greater of target or actual performance determined after the end of the fiscal year, Mr. Tramuto will be entitled to a lump sum payment equal to (i) the base salary then in effect for 30 months, (ii) the target bonus in respect of the greater of (x) the year prior to the occurrence of the change in control and (y) the year in which the termination occurs, and (iii) the Company’s estimated obligation for its share of premiums for group health continuation coverage for 24 months.
