Item 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Director and Officer Transition
On October 19, 2023, Bio-Techne Corporation (the “Company”) announced its succession plan for the Chief Executive Officer position in connection with the previously announced retirement of Chuck Kummeth.
Effective November 1, 2023, Kim Kelderman will be appointed as Chief Operating Officer of the Company. Mr. Kelderman, age 56, has served as President – Diagnostics and Genomics since he joined the Company in April 2018. Prior to joining the Company, Mr. Kelderman was an executive at Thermo Fisher Scientific and a Senior Segment Leader at Becton Dickinson.
Effective February 1, 2024, Mr. Kummeth will transition from Chief Executive Officer to Senior Advisor until the date of his retirement on July 1, 2024. Mr. Kummeth will also retire from the Board of Directors on such date.
Also effective February 1, 2024, Mr. Kelderman will be appointed Chief Executive Officer and Director. The size of the Board of Directors will be increased to 10 members in connection with his appointment.
Employment Terms
On October 17, 2023, Mr. Kelderman entered into an executive employment agreement (the “Employment Agreement”) with the Company, which provides the terms of his service as Chief Operating Officer and Chief Executive Officer. The Employment Agreement has an initial term of three years. The Employment Agreement provides for an annual base salary of $750,000 for the period during which Mr. Kelderman serves as Chief Operating Officer and an annual base salary of $900,000 for the period he serves as Chief Executive Officer, in each case annualized for the portion of the year he actually serves in each such role. For future fiscal years, Mr. Kelderman’s base salary will be subject to annual review by the Compensation Committee of the Company’s Board of Directors.
In addition, the Employment Agreement provides for an annual cash incentive bonus at a target amount of 100% of Mr. Kelderman’s base salary during the period he serves as Chief Operating Officer and 110% of base salary for the period he serves as Chief Executive Officer, in each case annualized based on the portion of the year he actually serves in such role. The amount of annual cash incentive earned will be determined based on performance standards established by the Compensation Committee pursuant to the terms of the Company’s Management Incentive Plan. Mr. Kelderman will also be eligible for paid time off, participation in any other employee benefit plans generally available to the Company’s employees, and certain other benefits as set forth in the Employment Agreement.
The Employment Agreement further provides for the grant on the commencement of Mr. Kelderman’s appointment as Chief Operating Officer of time-vested stock option with a grant date value of $750,000 and a restricted stock grant with a grant date value of $750,000, in each case pursuant to the Company’s 2020 Equity Incentive Plan, as amended to date (the “Plan”). Such options will each have an exercise price equal to the closing price of the Company’s common stock on the date of grant. The time-vested option will vest in equal installments on the first four anniversaries of the grant date. The restricted stock grant will vest in equal installments on the first three anniversaries of the grant date. All of Mr. Kelderman’s performance based incentive targets will be amended (where necessary) on a pro rata basis to replace segment-specific goals with consolidated, full company performance goals.
The Employment Agreement additionally provides for the grant on the commencement of Mr. Kelderman’s appointment as Chief Executive Officer of (i) time-vested stock options with a grant date value of approximately $1,290,000, (ii) a performance-vested stock option with a grant date value of approximately $650,000, and (iii) performance-based restricted stock units with a grant date value of $650,000 in each pursuant to the terms of the Plan. The amount of such awards reflects the annualization of target aggregate equity compensation of $6.2 million. The stock options will have an exercise price equal to the closing price of the Company’s common stock on the date of grant. The time-vested option will vest in equal installments on the first four anniversaries of the grant date. The performance-vested option and performance-vesting restricted stock units will vest if, and only if, the Company achieves certain performance goals established by the Compensation Committee.
