Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Key Employee Severance Plan
On March 22, 2023, the Compensation Committee of the Board of Directors (the “Board”) of Overstock.com, Inc. (the “Company”), as part of its ongoing review of our executive compensation and retention programs, together with the Board approved and adopted the Overstock.com, Inc. Key Employee Severance Plan (the “Severance Plan”). The Severance Plan provides for severance payments and benefits to certain eligible employees, including our named executive officers (“NEOs”), and effective March 22, 2023, supersedes and replaces the Executive Retention Agreements previously entered into between the Company and each of its NEOs.
Under the terms of the Severance Plan, in the event that a participant experiences a Termination Without Cause (as defined in the Severance Plan) that is not a Change in Control Termination (as defined below), the participant will receive, subject to certain conditions set forth in the Severance Plan:
(i) a lump sum severance payment equal to a number of months of his or her annual base salary, which varies based on the participant’s designated employment tier (up to 12 months for “Tier 3” participants, 12 months for “Tier 2” participants, and to up to 24 months for “Tier 1” participants),
(ii) payment of the premiums for the participant’s continued post-termination health insurance coverage, which varies based on the participant’s designated employment tier (up to 12 months for “Tier 3” participants, up to 12 months for “Tier 2” participants, and up to 18 months for “Tier 1” participants), and
(iii) additional vesting acceleration for the participant’s then outstanding and unvested equity awards that are subject to service-based vesting, which varies based on the participant’s designated employment tier (up to 12 months for “Tier 3” participants, 12 months for “Tier 2” participants, and 18 months for “Tier 1” participants).
In addition, in the event that a participant experiences a Termination Without Cause or resigns for Good Reason (as defined in the Severance Plan) within twelve (12) months after a Change in Control (as defined in the Severance Plan) (a “Change in Control Termination”), the participant will receive, subject to his or her satisfaction of the conditions to severance described below,
(i) a lump sum severance amount equal to a number of months of his or her base salary, plus his or her target annual bonus opportunity, which number of months varies based on the participant’s designated employment tier (12 months for “Tier 3”, 12 months for “Tier 2” participants, and 24 months for “Tier 1” participants),
(ii) payment of the premiums for the participant’s continued post-termination health insurance coverage, which varies based on the participant’s designated employment tier (up to 12 months for “Tier 3” participants, 12 months for “Tier 2” participants, and 18 months for “Tier 1” participants), and
(iii) vesting acceleration of each of the participant’s then outstanding and unvested equity awards as may be provided for under the Company’s Amended and Restated 2005 Equity Incentive Plan (“2005 Plan”) or any future equity incentive plan of the Company, provided that any definition of “change in control” or “change of control” under such equity incentive plan will mean a Change in Control as defined under the Severance Plan.
In addition, an Addendum to the Severance Plan provides that if any non-employee director’s service on the Board is Terminated Without Cause within 12 months following a Change in Control, the vesting of such director’s then outstanding and unvested equity awards that are subject to service-based vesting will be accelerated as may be provided for under the Company’s 2005 Plan or any future equity incentive plan of the Company, provided that any definition of “change in control” or “change of control” under such equity incentive plan will mean a Change in Control as defined under the Severance Plan.
The foregoing summary of the Severance Plan does not purport to be complete and is qualified in its entirety by reference to the complete text of the Severance Plan, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 5.02.
