Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On September 7, 2022 (the "Effective Date"), the Board of Directors of
LifeStance Health Group, Inc. ("LifeStance" or the "Company") appointed Kenneth
Burdick as the Company's new Chief Executive Officer and Chairman of the Board
of Directors. Mr. Burdick succeeds Michael Lester, who has served as the
Company's President and Chief Executive Officer and Chairman since 2017 and who
is retiring from his officer and director roles effective upon Mr. Burdick's
appointment on the Effective Date. Alert5 Consulting LLC ("Alert5"), a company
owned by Mr. Lester, will continue to provide consulting services to the Company
through September 7, 2023. In conjunction with Mr. Burdick's appointment and
Mr. Lester's retirement, on the Effective Date, Danish Qureshi, the Company's
Chief Operating Officer, was appointed as the Company's President, in addition
to his role as Chief Operating Officer.
Prior to joining LifeStance, Mr. Burdick served as the Executive Vice President
of Markets and Products of Centene Corporation from January 2020 until February
2021. He served as the Chief Executive Officer of WellCare Health Plans, Inc.
from 2015 until January 2020 when the company was acquired by Centene.
Mr. Burdick joined WellCare in 2014, serving initially as President, National
Health Plans and then as President and Chief Operating Officer. He served as the
President and Chief Executive Officer of Blue Cross and Blue Shield of Minnesota
from February 2012 to July 2012. From August 2010 to February 2012, he served as
Chief Executive Officer of the Medicaid and Behavioral Health businesses of
Coventry Health Care, Inc. From October 1995 to May 2009, Mr. Burdick held a
variety of positions with UnitedHealth Group, Inc., including Chief Executive
Officer of UnitedHealthcare from 2006 to 2008 and Chief Executive Officer of
Secured Horizons (Medicare division of UnitedHealthcare) from 2008 to 2009.
Mr. Burdick currently serves on the Board of Directors of Centene Corporation
and First Horizon National Corporation. He also served on the Board of Directors
of Big Brothers Big Sisters of America from 2017 to 2022, including as National
Board Chair from July 2018 to June 2022.
In connection with Mr. Lester's termination of employment as President and Chief
Executive Officer, Mr. Lester, Alert5, the Company and certain affiliates of the
Company have entered into a Separation and General Release Agreement (the
"Separation Agreement"), an Amendment to Restricted Stock Unit Award Agreement
(the "RSU Amendment"), an Amendment to Stock Transfer Restriction Agreement (the
"Stock Transfer Amendment"), an Amendment to Time and Performance-Based
Restricted Stock Unit Award Agreement (Time-Based Award) (the "2022 RSU
Amendment"), an Amendment to Time and Performance-Based Restricted Stock Unit
Award Agreement (Performance-Based Award) (the "PSU Amendment"), and an
Amendment to Partnership Interest Award Agreement (the "RSA Amendment"), and
Mr. Lester, Alert5 and the Company have entered into a Consulting Agreement (the
"Consulting Agreement") (the Separation Agreement, the RSU Amendment, the Stock
Transfer Amendment, the 2022 RSU Amendment, the PSU Amendment, the RSA
Amendment, and the Consulting Agreement together referred to as the "Separation
Documents"). Pursuant to the Separation Documents, Alert5 will receive
$50,933.33 per month in respect of the consulting services it provides to the
Company until the end of the consulting period on September 7, 2023 (the "End
Date"). If the Company terminates the Consulting Agreement without cause (as
defined in the Consulting Agreement) prior to the End Date, the Company will pay
Alert5 the consulting fees that would otherwise have been payable through the
End Date. Upon his termination of employment as President and Chief Executive
Officer, Mr. Lester will be entitled to receive subsidized health, dental and
other insurance plan continuation coverage for 12 months following termination
and he will remain eligible to receive an annual bonus for 2022 based on actual
performance and pro-rated to reflect the portion of 2022 that he was employed as
President and Chief Executive Officer. Further, pursuant to the Separation
Documents, if there is a change in control (as defined in the Company's
Severance and Change in Control Policy (the "Change in Control Policy")) within
six months following the Effective Date, so long as Mr. Lester has not breached
any restrictive covenants and the Consulting Agreement has not been terminated
for cause, Mr. Lester will be entitled to receive payments and benefits pursuant
to the Change in Control Policy, reduced by any amounts paid or payable under
the Separation Documents.
Pursuant to the Separation Documents, the equity awards previously granted to
Mr. Lester will continue to be eligible to vest for the duration of the
consulting period under the Consulting Agreement, and (i) pursuant to the RSU
Amendment, (A) if Alert5's services are terminated by the Company for any reason
other than cause or terminate as a result of the end of the consulting period,
the restricted stock units granted to Mr. Lester in 2021 will vest in full, and
(B) if there is a change in control within six months following the Effective
Date, the restricted stock units will be treated as provided in the Change in
Control Policy; (ii) pursuant to the 2022 RSU Amendment, (A) if Alert5's
services are terminated by the Company for any reason other than cause or
terminate as a result of the end of the consulting period, the restricted stock
units granted to Mr. Lester in 2022 ordinarily scheduled to vest on or prior to
the one-year anniversary of the End Date will vest in full, (B) if such
termination occurs prior to the six-month anniversary of Effective Date, the
restricted stock units will remain outstanding and eligible to vest as provided
in the Change in Control Policy until such six-month anniversary, and (C) if
there is a change in control within six months after the Effective Date, the
restricted stock units will be treated as provided in the Change in Control
Policy; (iii) pursuant to the PSU Amendment, (A) if Alert5's services are
terminated by the Company for any reason other than cause or terminate as a
result of the end of the consulting period prior to the six-month anniversary of
Effective Date, the performance-based restricted stock units granted to
Mr. Lester in 2022 will remain outstanding and eligible to vest as provided in
the Change in Control Policy until such six-month anniversary and (B) if there
is a change in control within six months after the Effective Date, the
performance-based restricted stock units will be treated as provided in the
Change in Control Policy; and (iv) pursuant to the RSA Amendment, (A) the
restricted shares granted to Mr. Lester that were subject to time-based
--------------------------------------------------------------------------------
vesting conditions vested in full upon Mr. Lester's termination of employment,
and (B) upon the end of the consulting period or if the Company terminates
Alert5's services for any reason other than for cause, the performance-based
restricted shares will remain outstanding and eligible to vest based on
performance for six months following the End Date. In addition, pursuant to the
Stock Transfer Amendment, Mr. Lester has agreed that, until the two-year
anniversary of the Company's initial public offering, Company equity owned by
Mr. Lester will remain subject to certain transfer restrictions.
Under the Separation Documents, Mr. Lester and Alert5 agreed to a release of
claims in favor of the Company and its affiliates, and the Company and its
affiliates agreed to a release of claims in favor of Mr. Lester and Alert5. The
foregoing payments and benefits are conditioned on Mr. Lester's continued
compliance with the restrictive covenants by which he is bound.
The foregoing descriptions of the Separation Documents do not purport to be
complete and are qualified in their entirety by the full text of the agreements,
copies of which will be filed as exhibits to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2022.
In connection with his appointment as Chief Executive Officer, the Company and
Mr. Burdick entered into an employment agreement (the "Employment Agreement")
that provides for an entitlement to an annual base salary of $700,000 and an
annual bonus opportunity, pro-rated for 2022, with a target equal to 100% of his
base salary and with the actual amount of such bonus based upon achievement of
performance objectives determined by our Board of Directors or the compensation
committee thereof. Mr. Burdick will be entitled to participate in the employee
benefit plans maintained by the Company and to reimbursement for business
expenses (including annual access to a maximum of 50 flight hours of private
aircraft service for business travel) in accordance with the Company's
reimbursement policies.
Under the terms of the Employment Agreement, if Mr. Burdick's employment is
terminated by the Company without cause or if Mr. Burdick resigns for good
reason (as such terms are defined in the Employment Agreement), subject to his
execution of a release of claims in favor of the Company, he will be entitled to
receive the following severance payments and benefits: (i) continued payment of
his base salary for a period of 18 months following termination, (ii) an amount
equal to his annual bonus for the year of termination, based on actual
performance and pro-rated to reflect the portion of the calendar year during
. . .
Item 7.01 Regulation FD Disclosure.
A copy of the press release announcing Mr. Burdick's appointment, Mr. Lester's
retirement and Mr. Qureshi's new position is attached hereto as Exhibit 99.1.
The information furnished under Item 7.01 of this Current Report on
Form 8-K, including the exhibit, shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), nor
shall it be deemed incorporated by reference into the Company's filings with the
Securities and Exchange Commission under the Securities Act of 1933 or the
Exchange Act, except as expressly set forth by specific reference in such a
filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
99.1 Press Release dated September 8, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses