Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. OnMarch 1, 2021 , the Board of Directors ("Board") ofKAR Auction Services, Inc. (the "Company") appointedJames P. Hallett , the Company's Chief Executive Officer, as the Executive Chairman of the Company, and appointedPeter J. Kelly , the Company's President, as the Chief Executive Officer of the Company, each effectiveApril 1, 2021 . In connection with his appointment as Chief Executive Officer,Mr. Kelly will assume the role of the Company's principal executive officer.Mr. Hallett will remain Chairman of the Board. In addition, the Board authorized the increase of the size of the Board to eleven (11) directors and appointedMr. Kelly to the Board, effectiveApril 1, 2021 .Mr. Kelly will serve for a term expiring at the 2021 annual meeting of the Company's stockholders and until his successor is duly elected and qualified.Mr. Kelly , age 52, has been President of the Company sinceJanuary 2019 . Previously,Mr. Kelly served as the President of Digital Services fromDecember 2014 toJanuary 2019 and the Chief Technology Officer fromJune 2013 toJanuary 2019 .Mr. Kelly was the President and Chief Executive Officer ofOpenlane fromFebruary 2011 toJune 2013 . Prior to that,Mr. Kelly was President and Chief Financial Officer ofOpenlane fromFebruary 2010 toFebruary 2011 .Mr. Kelly was a co-founder ofOpenlane in 1999 and served in a number of executive roles atOpenlane from 1999 to 2010. In connection withMr. Kelly's appointment as Chief Executive Officer, the Company andMr. Kelly entered into an amendment toMr. Kelly's employment agreement with the Company (the "Amendment"). Pursuant to the Amendment,Mr. Kelly will receive an increase in his annual base salary and annual automobile allowance to$750,000 and$25,000 , respectively. The Amendment also provides that in the eventMr. Kelly is terminated by the Company without "cause" orMr. Kelly resigns for "good reason" (each as defined in his employment agreement),Mr. Kelly would be entitled to receive, subject to his execution and non-revocation of a release of claims, a lump sum cash payment equal to two times the sum of his annual base salary plus target annual bonus for the year in which such termination of employment occurs. The Amendment provides forMr. Kelly to be nominated to serve as a member of the Board. In connection withMr. Hallett's appointment as Executive Chairman, the Company has entered into a new employment agreement withMr. Hallett (the "Employment Agreement"), superseding his prior employment agreement with the Company. The Employment Agreement has a stated term commencingApril 1, 2021 and ending onMarch 31, 2023 . Under the Employment Agreement,Mr. Hallett is generally eligible to (i) earn a base salary, (ii) earn an annual cash bonus, (iii) receive equity-based awards consistent with other executive-level employees of the Company, (iv) participate in the Company's standard health and welfare benefit programs and (v) receive an annual automobile allowance. The Employment Agreement provides forMr. Hallett to be nominated to serve as a member of the Board. In the eventMr. Hallett is terminated by the Company without "cause" orMr. Hallett resigns for "good reason" (each as defined in the Employment Agreement),Mr. Hallett would be entitled to receive, subject to his execution and non-revocation of a release of claims, (i) a lump sum cash payment equal to two and a half times the sum of his annual base salary plus target annual bonus for the year in which such termination of employment occurs; (ii) ifMr. Hallett is participating in the Company's health plans on the date of such termination of employment, COBRA premium payments for 18 months or untilMr. Hallett becomes eligible for coverage under another employer's health plan (the "Continued Benefits"); (iii) payment of a pro-rata portion of any annual bonus thatMr. Hallett would have received for the year of termination based on actual performance (the "Pro Rata Bonus"); and (iv) a payment equal to the amount of any annual bonus which has been earned in a prior year but which has not yet been paid toMr. Hallett (the "Earned but Unpaid Bonus"). In the eventMr. Hallett terminated due to death or "disability" (as defined in the Employment Agreement),Mr. Hallett or his estate/beneficiaries would be entitled to receive (i) Continued Benefits; (ii) the Pro Rata Bonus; and (iii) the Earned but Unpaid Bonus. Upon a termination of employment for any reason,Mr. Hallett will be subject to the following one year post-termination restrictive covenants: (i) non-competition restrictions and (ii) non-solicitation of Company employees and customers. The foregoing summary of the Amendment and Employment Agreement is qualified in its entirety by reference to the full texts of the agreements, which are attached as Exhibits 10.1 and 10.2 hereto and incorporated herein by reference. Other than with respect to the compensation matters described above, there are no arrangements or understandings between Messrs. Hallett or Kelly and any other persons pursuant to whichMr. Hallett was appointed the Company's Executive --------------------------------------------------------------------------------
Chairman and
On
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
10.1 Employment Agreement, dated
10.2 Amendment No. 1 to Employ ment Agreement, dated March 1, 2021 , between KAR Auction Services, Inc. and Peter J. Kelly 99.1 Press Release dated March 2, 2021 99.2 S tockholder Letter dated March 2, 2021
104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
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