Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
On December 13, 2020, William F. Doyle, Scott Ferguson and Paul Herendeen were
appointed to the Board of Directors (the "Board") of Elanco Animal Health
Incorporated (the "Company"). Mr. Doyle joined the class with a term expiring in
2021. Mr. Ferguson joined the class with a term expiring in 2022. Mr. Herendeen
joined the class with a term expiring in 2023, with the understanding that Mr.
Herendeen will ultimately be a member of, and be appointed to, the 2022 class in
connection with the classes being rebalanced by the Board re-allocating an
existing member of the 2022 class to the 2023 class. In connection with the
appointments of Mr. Doyle, Mr. Ferguson and Mr. Herendeen, the size of the Board
was increased from ten to thirteen members.
These new nominees will join the Finance and Oversight Committee pursuant to the
Cooperation Agreement and Mr. Doyle and Mr. Ferguson will also join the
Innovation, Science and Technology Committee. Other committee appointments are
being determined by the Board.
Mr. Ferguson and Mr. Herendeen were appointed to the Board pursuant to
understandings with Sachem Head Capital Management LP ("Sachem Head"), a major
shareholder of the Company. The disclosures set forth in Item 8.01 below are
incorporated herein by reference.
Except for the Letter Agreement described in Item 8.01 below, there were no
arrangements or understandings pursuant to which Mr. Doyle, Mr. Ferguson or Mr.
Herendeen were appointed to the Board, and since the beginning of the last
fiscal year, there have been no related party transactions between the Company
and Mr. Doyle, Mr. Ferguson or Mr. Herendeen that would be reportable under Item
404(a) of Regulation S-K.
Mr. Doyle, Mr. Ferguson and Mr. Herendeen will participate in the same
compensation program as each of Elanco's other non-employee directors, as
described under "Governance - Director Compensation" in Elanco's proxy statement
for its 2020 annual meeting of shareholders filed with the Securities and
Exchange Commission on April 8, 2020.
Item 8.01 Other Events
On December 13, 2020, the Company and Sachem Head entered into a Letter
Agreement. The Letter Agreement addressed the matters referred to in Item 5.02
above. In accordance with the Letter Agreement, and as described in Item 5.02 to
this current report, the Board appointed Mr. Ferguson and Mr. Herendeen to the
Board. The Letter Agreement contemplates that the Company will also nominate Mr.
Ferguson and Mr. Herendeen to stand for election to the Board at the 2022 annual
meeting of shareholders.
Under the Letter Agreement, Sachem Head is subject to certain standstill
restrictions until the later of (a) the date that is five calendar days after
the date on which neither Scott Ferguson nor any Sachem Head insider or
affiliate continues to serve on the Board and (b) the date that is forty-five
days before the closing of the non-proxy access shareholder director nomination
window for the 2023 annual meeting of shareholders. Sachem Head also agreed
that, during the standstill period, Sachem Head will vote its shares of the
Company's common stock in favor of all directors nominated by the Board, in
favor of any advisory vote on executive compensation, against any directors that
are not nominated by the Board and against any proposals to remove any director.
The Letter Agreement also addresses certain other matters.
The foregoing description of the Letter Agreement is qualified in its entirety
by reference to the full text of the Letter Agreement, which is attached hereto
as Exhibit 99.1 and is incorporated by reference herein.
Concurrent with the execution of the Letter Agreement, the Company and Sachem
Head entered into a confidentiality agreement, pursuant to which, among other
things, Sachem Head and Scott Ferguson agreed to certain confidentiality
obligations regarding information they may receive.
On December 14, 2020, the Company issued a press release announcing the
appointment of the new directors to the Board of Directors and related matters.
The press release is attached hereto as Exhibit 99.2 and is incorporated by
reference herein.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit
No. Description
99.1 Letter Agreement, dated as of December 13, 2020, by and among the
Company and Sachem Head Capital Management LP and certain affiliates
thereof.
99.2 Press Release issued by Elanco Animal Health Incorporated, dated as
of December 14, 2020.
104.1 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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