Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
As previously disclosed, on June 22, 2022, Warner Music Group Corp. (the
"Company") announced that it had begun planning for the succession of the
Company's Chief Executive Officer ("CEO") and director, Stephen Cooper. On
September 21, 2022, the Company's Board of Directors (the "Board") announced
that Mr. Robert Kyncl has been appointed to succeed Mr. Cooper as CEO and a
director of the Company.
Mr. Cooper and Mr. Kyncl will serve as Co-CEOs of the Company from January 1,
2023 through January 31, 2023. On January 31, 2023, Mr. Cooper will retire from
the Company and resign from the Board. Following his retirement, Mr. Cooper will
provide consulting services to the Company through January 31, 2024. Effective
as of February 1, 2023, Mr. Kyncl will become the Company's sole CEO and will be
appointed to the Board.
Mr. Kyncl, age 52, currently serves as the Chief Business Officer of YouTube, a
division of Alphabet Inc., where he is responsible for YouTube's creative and
commercial partnerships, as well as its product operations and marketing.
Mr. Kyncl has driven the development of YouTube's creator ecosystem and original
content initiatives, while helping lead the launch of its paid subscription
services, YouTube Music and YouTube Premium. Prior to joining YouTube in 2010,
Mr. Kyncl spent seven years at Netflix, Inc. where he led the company's push
into film and television content, playing an instrumental role in the company's
evolution as a streaming giant. Mr. Kyncl, together with his wife Luz, run the
Kyncl Family Foundation, which provides financial assistance to students from
underrepresented communities pursuing STEM degrees. Mr. Kyncl holds an MBA from
Pepperdine University and a B.S. in International Relations from SUNY New Paltz.
The Company believes that all of these experiences give Mr. Kyncl the
qualifications and skills to serve as the Company's CEO and as a director of the
Company.
On September 20, 2022, the Company entered into an employment agreement (the
"Employment Agreement") with Mr. Kyncl. The Employment Agreement has an
indefinite term, subject to termination by either party on nine months' advance
written notice, and includes non-competition covenants during Mr. Kyncl's
employment and non-solicitation covenants applicable during and for 12 months
following Mr. Kyncl's employment.
The Employment Agreement provides for a base salary of $2,000,000, a target
annual cash bonus of $3,000,000 (with the actual award value to be determined by
the Compensation Committee of the Board (the "Committee") in its sole discretion
based on factors including the strength of Mr. Kyncl's performance and the
performance of the Company) and an annual grant of performance share units with
an aggregate pre-tax, grant date value of $10,000,000 (the "PSUs"), with the
first grant to be made in January 2023. Each annual grant of PSUs will be
prorated based on the length of Mr. Kyncl's employment with the Company during
such fiscal year, provided that the January 2023 grant will be prorated based on
10.5 out of 12 months of service. Each annual grant of PSUs will vest over a
three-fiscal-year performance period subject to Mr. Kyncl's continued employment
and the achievement of performance goals set by the Committee. In addition, in
January 2024, Mr. Kyncl will be eligible to receive a one-time award of options
to purchase the Company's stock with a target pre-tax, grant date value of
$10,000,000, with the actual award value determined by the Committee in its sole
discretion based on factors including the strength of Mr. Kyncl's performance
and the performance of the Company. The options will vest in annual installments
over four years from the grant date subject to Mr. Kyncl's continued employment
with the Company. The PSUs and options will be granted under the Company's 2020
Omnibus Incentive Plan (the "Plan"), and will be subject to the terms and
conditions of the Plan. The Employment Agreement also provides that Mr. Kyncl
will be employed in the greater New York metropolitan area and will receive
reimbursement of his relocation expenses up to $500,000 (excluding a tax
gross-up for any reimbursement which is taxable to him) as well as a one-time
payment of $60,000.
The Employment Agreement further provides that, if Mr. Kyncl's employment is
terminated by the Company without "cause" or by Mr. Kyncl for "good reason,"
subject to his execution of a release of claims in favor of the Company, he will
receive a severance payment of $15,000,000 (which corresponds to the value of
his total annual target cash and equity compensation), a pro rata annual bonus
for the year of termination, an amount equal to the Company's good faith
estimate of Mr. Kyncl's out-of-pocket cost for COBRA health plan continuation
coverage for 12 months including a tax gross-up, and pro rata vesting of his
outstanding PSUs and options, with any remaining unvested options to remain
outstanding and subject to vesting on their original vesting schedule provided,
for the
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options, that Mr. Kyncl continues to comply with the non-competition and
non-solicitation terms of the option award agreement. If Mr. Kyncl's employment
is terminated by the Company without "cause" or by Mr. Kyncl for "good reason"
within one year following a "change in control" of the Company, all of
Mr. Kyncl's outstanding, unvested equity awards will become fully vested. If
Mr. Kyncl resigns voluntarily and provides at least nine months' advance written
notice to the Company, he will receive a pro rata bonus for the year of
termination and pro rata vesting of his outstanding PSUs, but will not receive
additional severance payments.
In connection with Mr. Cooper's retirement and in recognition of his service to
the Company and the consulting services he has agreed to provide to the Company,
Mr. Cooper will receive the following consulting and transition payments and
benefits. Mr. Cooper will receive continued payment of his current base salary
of $3,000,000 through the end of the Company's 2023 fiscal year, and an amount
equal to the Company's good faith estimate of Mr. Cooper's out-of-pocket cost
for COBRA health plan continuation coverage for 18 months following his
resignation on January 31, 2023. In addition, Mr. Cooper will receive equity
awards under the Plan in respect of the Company's 2022 and 2023 fiscal years,
which will be granted in January 2023 and January 2024, respectively. Each of
these two awards will consist of restricted stock units having a grant date
value of $7,000,000, vesting in a single installment on the fourth anniversary
of the grant date subject to Mr. Cooper's continued compliance with the
non-competition and non-solicitation provisions of the award agreements. In
addition, Mr. Cooper will have a target annual bonus of $7,000,000 for each of
the Company's 2022 and 2023 fiscal years, which will be paid, to the extent
earned, in the form of fully vested shares of the Company's Class A Common Stock
granted under the Plan in January 2023 and January 2024, respectively. The
actual bonus amount earned will be determined by the Committee based on
corporate performance measures for the applicable fiscal year as established and
determined by the Committee. The Company and Mr. Cooper will enter into a
separation agreement memorializing these terms (the "Separation Agreement").
The foregoing descriptions of the Employment Agreement and Mr. Kyncl's equity
awards and the terms of the Separation Agreement do not purport to be complete
and are subject to, and are qualified in their entirety by, the complete text of
the Employment Agreement, the PSU and option award agreements and the Separation
Agreement. The Employment Agreement, the Separation Agreement and the forms of
PSU and option award agreements will be filed as exhibits to the Company's
Annual Report on Form 10-K for the year ending September 30, 2022.
A copy of the press release announcing the appointment of Mr. Kyncl and the
departure of Mr. Cooper is attached to this Current Report on Form 8-K as
Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
99.1 Press release, dated September 21, 2022, titled Robert Kyncl named
CEO of Warner Music Group starting January 1, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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