Date of Report (Date of Earliest Event Reported):
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August 29, 2019
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K12 Inc.
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(Exact name of registrant as specified in its charter)
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Delaware
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001-33883
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95-4774688
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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2300 Corporate Park Drive, Herndon,
Virginia
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20171
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
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(703) 483-7000
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Not Applicable
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Former name or former address, if changed since last report
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Stock, $0.0001 par value
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LRN
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New York Stock Exchange (NYSE)
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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Item 9.01.
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Financial Statements and Exhibits
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Exhibit No.
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Description
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K12 Inc.
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Date: September 3, 2019
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By: /s/ Vincent W. Mathis
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Name: Vincent W. Mathis
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Title: Executive Vice President, General Counsel and Secretary
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1.
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Effective as of July 1, 2019, your annual Base Salary is increased to $935,000. Any portion of your Base Salary attributable to this increase that has not
yet been paid will be paid to you during the next payroll period occurring after the date of this Letter.
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2.
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On August 15, 2019 you were granted a one-time award of performance-based restricted K12 stock having a value equal to $10,000,000 (based on K12’s closing
stock price on the date of grant) (the “Stock Award”). The Stock Award will vest as follows, subject, except as provided in Section 3 below, to your
continued employment through vesting:
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a.
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One-third of the shares subject to the Stock Award (the “First Tranche”)
will vest on the two-year anniversary of the date of grant of the Stock Award if K12’s Free Cash Flow for fiscal year 2020 equals or exceeds $60,000,000.
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b.
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One-third of the shares subject to the Stock Award (the “Second Tranche”)
will vest on the two-year anniversary of the date of grant of the Stock Award if K12’s Free Cash Flow for fiscal year 2021 equals or exceeds $65,000,000.
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c.
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One-third of the shares subject to the Stock Award (the “Third Tranche”)
will vest on the three year anniversary of the date of grant of the Stock Award if either (i) K12’s Free Cash Flow for fiscal year 2022 equals or exceeds $70,000,000, or (ii) K12’s cumulative aggregate Free Cash Flow for fiscal years 2020,
2021 and 2022 equals or exceeds $195,000,000.
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d.
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If the First Tranche or Second Tranche shares do not vest pursuant to Section 2.a or 2.b above, as applicable, and K12’s cumulative aggregate Free Cash
Flow for fiscal years 2020, 2021 and 2022 equals or exceeds $195,000,000, then such shares will vest on the three-year anniversary of the date of grant of the Stock Award.
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e.
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Any portion of the Stock Award that does not vest pursuant to Sections 2.a, 2.b, 2.c or 2.d above will be forfeited automatically following the three-year
anniversary of the date of grant of the Stock Award.
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3.
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In the event you cease employment as K12’s Chief Executive Officer, but continue service with K12 as a member of its Board of Directors, the Stock Award
will, for so long as you continue to serve as a member of the Board of Directors, remain eligible to vest in accordance with Sections 2.a, 2.b, 2.c and 2.d above, subject to attainment of the Free Cash Flow targets set forth therein.
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4.
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For purposes of the Stock Award, “Free Cash Flow” means K12’s cash flow
from operations, minus capital expenditures, as reported to and accepted by K12’s Board of Directors or its Compensation Committee.
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5.
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The Stock Award will be granted pursuant to K12’s standard form of restricted stock award agreement, provided that the terms of this letter shall control
over any conflicting term therein.
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6.
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The Term of the Agreement is extended to September 30, 2022. From and after the date of this Letter, the provisions of Section 1 and Section 7 of the
First Amendment shall no longer have any effect, such that your rights in the event you are discharged by K12 without Cause or you resign for Good Reason in either case prior to the expiration of the Term (as extended hereby) shall be as
set forth in Sections 4.5 of the Agreement.
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7.
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If prior to the expiration of the Term of the Agreement (as extended hereby), you cease to serve as the Chief Executive Officer of the Company but
continue in service with K12 as its Executive Chairman, you and the Board will negotiate in good faith revised compensation terms, including a reduced Base Salary.
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8.
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Notwithstanding any provision of the Agreement to the contrary, in the event you are discharged by K12 without Cause or you resign for Good Reason or in
the event K12 elects not to renew the Agreement upon expiration of the Term, the special vesting provisions under Section 3.7(d) of the Agreement shall not apply, provided, however, that (i) all of your outstanding equity incentive awards
in K12 will continue to vest for so long as you continue to serve as a member of the Board, and (ii) if, upon such a termination of employment or at any time thereafter, you are asked to leave the Board and you execute within 30 days
following your departure from the Board, and do not revoke, a Release, then (A) all of your outstanding equity incentive awards in K12 shall immediately and automatically vest, provided that, unless a provision more favorable to you is
included in an applicable award agreement, any such awards that are subject to performance-based vesting conditions shall only be payable subject to attainment of the performance measures for the applicable performance period as provided
under the terms of the applicable award agreement, and (B) your vested options will remain exercisable for 365 days following your departure from the Board (subject to the regular expiration date(s) of the options and the EIA Plan).
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9.
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K12 will reimburse you for your documented legal expenses incurred in calendar year 2019 in connection with entering into this letter, up to a maximum of
$10,000.
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Sincerely,
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/s/ Robert E. Knowling, Jr.
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Name: Robert E. Knowling, Jr.
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Title: Chairman of the Compensation Committee of the Board of Directors of K12 Inc.
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Agreed and Accepted:
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/s/ Nathaniel A. Davis
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Nathaniel A. Davis
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