Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
Following extensive consultation with the legal and compensation advisors of
Intelsat S.A. (the "Company"), the compensation committee of the Company's board
of directors (the "Compensation Committee") determined that continued reliance
on the Company's typical performance metrics would be ineffective at driving
performance and retaining executives and employees and took a number of actions
in order to ensure stability and continuity, at all levels, during a critical
time for the Company.
For the executive officers, the Compensation Committee eliminated the existing
short- and long-term incentive arrangements for 2020 and, effective as of
April 30, 2020, entered into new retention and performance-based incentive
arrangements. Under the retention bonus arrangement, on or about May 6, 2020,
each of our named executive officers will be paid a retention bonus in an amount
equal to the sum of (i) 100% of his or her base salary (at the rates of
$1,050,000, $650,000, $530,000, $440,000 and $425,250 for Mr. Spengler,
Mr. Tolley, Ms. Bryan, Mr. Halawi and Mr. DeMarco, respectively), (ii) 18% of
the sum of his or her target annual incentive amount (equal to 140% of base
salary for Mr. Spengler, 100% of base salary for Mr. Tolley, 95% of base salary
for Ms. Bryan and 80% of base salary for each other named executive officer) and
target long-term incentive amount (equal to 400% of base salary for
Mr. Spengler, 300% of base salary for Mr. Tolley, 295% of base salary for
Ms. Bryan and 250% of base salary for each other named executive officer) for
calendar year 2020, and (iii) in the case of each of Mr. Tolley and Ms. Bryan,
who are subject to an extended-length clawback (described below), $500,000,
which amount accounts for the consolidation of their existing retention
agreements with those newly implemented by the Company and is intended to
compensate them for their enhanced duties and responsibilities in connection
with the Company's significant restructuring efforts to recapitalize its balance
sheet. These retention bonuses are in lieu of all existing retention bonuses
payable to the Company's named executive officers. Importantly, each named
executive officer's retention bonus is subject to a clawback, whereby he or she
would have to repay the after-tax value of the unvested portion of the retention
bonus if he or she resigns without "good reason" or is terminated by the Company
for "cause" (each as defined and described his or her employment agreement)
prior to the last vesting date. Each named executive officer (other than
Mr. Tolley and Ms. Bryan) will vest in 50% of the retention bonus on October 31,
2020 and the remaining 50% of the retention bonus on April 30, 2021. Each of
Mr. Tolley and Ms. Bryan will vest in 331/3% of the retention bonus on each of
October 31, 2020, April 30, 2021, and October 31, 2021. The performance-based
incentive arrangement, which represents the majority of each named executive
officer's target annual compensation, consistent with our pay-for-performance
philosophy, provides the opportunity to receive a quarterly cash incentive
payment for each of the second, third and fourth quarters of calendar year 2020
(with each named executive officer's target aggregate opportunity for all three
quarters equal to 82% of the sum of his or her target annual incentive amount
and target long-term incentive amount, as such targets are described above),
based upon achievement of objective performance criteria to be established by
the Compensation Committee. The Compensation Committee will establish
meaningful, objective performance criteria as soon as possible given the
unprecedented economic environment caused by the ongoing COVID-19 pandemic.
In making changes to the existing compensation structure for the broader
employee population, the Compensation Committee acknowledged that the
significant uncertainty as to whether existing incentive targets could be
achieved was posing a significant distraction for employees and pivoting to a
retention-based structure was essential to keep employees engaged and focused on
the tasks necessary to move the Company forward in achieving both immediate and
long-term goals. For the Company's non-sales employees, the Compensation
Committee replaced the existing short- and long-term incentive arrangements for
2020 with a quarterly cash retention plan, the "Valued Employee Retention Plan,"
which provides for quarterly cash retention payments, subject to continuous
employment with the Company. For the Company's sales employees, the Compensation
Committee maintained the existing Sales Incentive Program but modified the terms
to provide for a minimum guaranteed payout, thereby providing an element of
stability for our sales employees who are tasked with dealing with an
increasingly challenging sales landscape. We believe all of the foregoing
changes will be instrumental in preserving our workforce.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
Exhibit
No. Description
10.1 2020 Key Employee Incentive Plan
10.2 Form of Retention Agreement
104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document.
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