Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(e) | Compensatory Arrangements of Certain Officers. |
On March 21, 2024, Lions Gate Entertainment Corp. (the “Company”) entered into a new employment agreement with James W. Barge, the Company’s Chief Financial Officer. The new agreement has a term commencing August 1, 2023 and ending July 31, 2026.
Under the agreement, Mr. Barge will receive an annual base salary of $1,250,000. Mr. Barge will also be eligible for an annual incentive bonus, such bonus to be determined at the discretion of the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors, in consultation with the Company’s Chief Executive Officer (the “CEO”), with the target amount of his annual bonus of two hundred forty percent (240%) of his base salary. The agreement also provides for Mr. Barge to participate in the Company’s benefit programs and perquisites for executives at his level, as those arrangements are in place from time to time.
The agreement provides for Mr. Barge to receive, subject in each case to approval by the Compensation Committee and Mr. Barge’s continued employment through the applicable date of grant, the following equity-based awards each year over the term of the agreement, commencing with 2024 (the “Annual Grants”): (i) a time-vesting award of restricted share units (“RSUs”) with respect to the Company’s Class B non-voting common shares (the “Class B Shares”); (ii) a performance-vesting award of RSUs with respect to the Class B Shares; and (iii) a time-vesting stock option with respect to the Class B Shares. The aggregate grant date value of each of the Annual Grants will be $3,750,000. The number of shares subject to each of the three awards comprising each Annual Grant will be determined, in the case of each of the two RSU awards, by dividing $1,237,500 by the closing price of a Class B Share on the date of that Annual Grant and, in the case of the option award, by dividing $1,270,000 by the per-share value of the award as of the grant date based on the methodology then used by the Company to value options and similar awards for financial statement purposes. The Annual Grants will be scheduled to vest in equal installments on the first three anniversaries of the applicable grant date. The Annual Grants will be granted under the Company’s 2023 Performance Incentive Plan or a successor equity compensation plan of the Company, and the vesting of each installment of these awards is subject to Mr. Barge’s continued service through the applicable vesting date. In addition, the vesting of each of the performance-vesting Annual Grants is contingent on achievement of performance metrics to be determined by the Compensation Committee in consultation with the CEO for the 12-month period ending on the applicable vesting date. The agreement provides that the Annual Grants of RSUs described above may be settled in cash, the Class B Shares, the Company’s Class A voting common shares, or a combination thereof, as determined by the Compensation Committee, with the amount of the payment in each case determined based on the value of the Class B Shares at the time of payment.
The agreement also provides that, if Mr. Barge’s employment is terminated by the Company without cause (as defined in the agreement), he would be entitled to a severance payment equal to the greater of 50% of his base salary for the remainder of the term of the agreement and 18 months of his base salary, a prorated discretionary bonus for the fiscal year in which his termination occurs, and payment of his COBRA premiums for up to 18 months. However, if such a termination of Mr. Barge’s employment by the Company without cause occurs within 12 months after a change in control or a change in management (as such terms are defined in the agreement), or if Mr. Barge terminates his employment for good reason (as defined in the agreement) during such period, he would be entitled to a severance payment equal to the greater of 100% of his base salary for the remainder of the term and 18 months of his base salary, in addition to the pro-rated discretionary bonus and payment of COBRA premiums noted above. If Mr. Barge’s employment terminates due to his death or disability, the Company would pay a prorated discretionary bonus for the fiscal year in which his termination occurs.
In addition, if Mr. Barge’s employment is terminated by the Company without cause (or if he resigns for good reason within 12 months following a change in control or a change in management), (1) any portion of his Annual Grants (to the extent such awards have been granted prior to his termination and are then outstanding) that is scheduled to vest within 12 months following his termination date will accelerate and be fully vested on his termination date, and (2) fifty percent of any portion of his Annual Grants (to the extent such awards have been