Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)
Joseph Flanagan Employment Agreement
On March 23, 2021, R1 RCM Inc. (the "Company") entered into an amended and
restated offer letter agreement (the "Employment Agreement") with Joseph
Flanagan, which amended, restated, and superseded Mr. Flanagan's previous offer
letter agreement with the Company dated April 27, 2013, as amended on April 29,
2014 and March 6, 2019. Mr. Flanagan will continue to serve as the Chief
Executive Officer and as a member of the Board of Directors of the Company and
will report directly to the Board of Directors. The Employment Agreement
provides for at-will employment for an indefinite term, an annualized base
salary of $1,000,000 (retroactive to January 1, 2021), an annual discretionary
target bonus opportunity of 100% of base salary, and eligibility to participate
in the employee benefit programs of the Company generally available to senior
executives of the Company. Mr. Flanagan will also be reimbursed for all
reasonable legal fees incurred in connection with the negotiation of the
Employment Agreement.
Pursuant to the Employment Agreement, Mr. Flanagan received a one-time grant of
273,701 performance-based restricted stock units ("PBRSUs"). The PBRSUs are
subject to the achievement of performance targets established by the Human
Capital Committee of the Company's Board of Directors and an award agreement
entered into with the Company, in each case, consistent with the PBRSUs granted
to executive officers of the Company in 2020. Additionally, beginning in 2021,
Mr. Flanagan will be entitled to participate in the Company's long-term
incentive program and the target amount of his annual equity grants will be 500%
of his base salary.
In the event that Mr. Flanagan's employment with the Company is terminated by
the Company without Cause or by Mr. Flanagan for Good Reason (each as defined in
the Employment Agreement), Mr. Flanagan will be entitled to any earned but
unpaid salary, earned but unpaid annual bonus for the prior fiscal year, and
accrued and vested benefits under the employee benefit programs of the Company.
In addition, subject to Mr. Flanagan's execution and non-revocation of a release
of claims in favor of the Company, Mr. Flanagan will also be entitled to the
following: (i) two times the sum of Mr. Flanagan's base salary and target annual
bonus, payable in substantially equal monthly installments for a period of 24
months following Mr. Flanagan's termination date (the "Severance Payment");
provided that if Mr. Flanagan's termination occurs within 24 months following a
Change in Control (as defined in the Employment Agreement), the Severance
Payment will be paid in a lump sum within 60 days following Mr. Flanagan's
termination date, (ii) an annual bonus for the calendar year in which the
termination occurs, with the amount of such bonus being based on the greater of
(A) target performance and (B) actual performance, pro-rated based on the number
of days Mr. Flanagan was employed by the Company in the year of termination and
payable at the same time bonuses are paid to other senior executives of the
Company, and (iii) subsidized continuation coverage under the Company's group
health plans for a period of up to 18 months following Mr. Flanagan's
termination date. In the event Mr. Flanagan is not eligible for coverage under
another employer's group health plan as of the date that is 18 months after Mr.
Flanagan's termination date, he will also receive a lump sum cash payment equal
to six times the monthly premium paid by Mr. Flanagan immediately prior to such
date.
Mr. Flanagan will continue to be subject to non-competition and non-solicitation
covenants that prohibit him from engaging in certain restricted activities
(including competition and solicitation of employees and customers of the
Company) during his employment and for 12 months (in the case of the
non-competition covenant) and 18 months (in the case of the non-solicitation
covenant) following the termination of his service with the Company. Mr.
Flanagan also remains subject to confidentiality restrictions and inventions
assignment obligations applicable during and after the period of his service
with the Company that protect the Company's proprietary information.
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In addition, the Company has entered into an indemnification agreement with Mr.
Flanagan in the form that the Company has entered into with its directors and
other executive officers. The indemnification agreement provides that the
Company will indemnify Mr. Flanagan to the fullest extent permitted by law for
claims arising in his capacity as an executive officer of the Company, provided
that he acted in good faith and in a manner that he reasonably believed to be
in, or not opposed to, the Company's best interests and, with respect to any
criminal proceeding, had no reasonable cause to believe that his conduct was
unlawful. In the event that the Company does not assume the defense of a claim
against Mr. Flanagan, the Company will be required to advance his expenses in
connection with his defense, provided that he undertakes to repay all amounts
advanced if it is ultimately determined that he is not entitled to be
indemnified by the Company.
Rachel Wilson Compensation Increase
On March 23, 2021, the Human Capital Committee of the Company's Board of
Directors approved an increase in the compensation of Rachel Wilson, the
Company's Chief Financial Officer and Treasurer. Ms. Wilson's base salary will
be increased from $465,000 to $500,000 per annum, effective as of April 1, 2021,
and her annual discretionary target bonus opportunity will be increased from 80%
to 100% of her base salary, effective for the 2021 performance year.
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R1 RCM INC. 
