Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 8, 2023, the Compensation & Talent Committee (the “Committee”) of The ODP Corporation (“ODP”, or the “Company”) recommended for approval in ODP’s capacity as the parent entity of Varis, Inc. (“Varis”), a subsidiary of the Company, Varis’ 2023 Equity Incentive Plan (the “Varis Equity Plan”). On April 13, the Board of Directors of ODP approved the Varis Equity Plan. On April 14, the Varis board of directors adopted the Varis Equity Plan, under which up to 250,000 shares of Varis (“Varis common stock”) may be granted as equity awards to employees of Varis and its affiliates. The Varis board of directors has broad authority to grant awards and otherwise administer the Varis Equity Plan.
On April 14, 2023, in connection with the adoption of the Varis Equity Plan, the Varis board of directors approved a form of stock option award agreement under the plan for purposes of granting options to purchase Varis common stock (“Varis options”) to participants in the plan and approved a grant of 14,000 Varis options to ODP’s former Executive Vice President and Chief Technology Officer, Terry Leeper, who transitioned into his new role as Chief Technology Officer of Varis effective January 1, 2023. The Varis options have an exercise price equal to the fair market value of a share of Varis common stock as approved by the Committee. The Varis options will generally vest over five years based on Mr. Leeper’s continued service with Varis and its affiliates, with 20% vesting on each of the first, second, third, fourth and fifth anniversaries of either of the date of grant, and any outstanding unvested options would become fully vested upon the 12-month anniversary of the consummation of a change in control of Varis or, if earlier, upon a termination initiated by Varis without Cause (as defined in the award agreement) or a termination by the participant for Good Reason (as defined in the award agreement) in connection with a change in control. Any vested Varis options will become exercisable upon the occurrence of the following prior to their expiration date (the 10th anniversary of the grant date): (i) the consummation of a qualified initial public offering of Varis and (ii) the consummation of a change in control of Varis.
In addition, for his annual incentive opportunity in 2023, Mr. Leeper will participate in Varis’ annual incentive plan and will be eligible to receive a target bonus annual incentive cash compensation (at target) equal to 90% of base salary ($600,000), which will be determined based on the achievement of the following performance goals (and weightings): 50% Varis annual operating plan revenue and 50% Varis annual operating plan gross transaction volume. Under the Varis annual incentive plan, the maximum payout is capped at 175% of target.
