UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 11, 2016
Premier, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-36092 | 35-2477140 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
13034 Ballantyne Corporate Place
Charlotte, NC 28277
(Address of Principal Executive Offices) (Zip Code)
(704) 357-0022
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 8.01. | Other Events. |
On August 11, 2016, the Board of Directors (the “Board”) of Premier, Inc. (the “Company”), upon the recommendation of the Compensation Committee of the Board, approved a new Director Compensation Policy (the “New Policy”) to provide an incentive to attract and retain the services of qualified persons to serve as directors of the Company. The New Policy, effective January 1, 2017, replaces the previous Directors’ Compensation Policy adopted by the Board on September 6, 2013 (the “Previous Policy”). The Compensation Committee’s recommendation was based upon market analysis of director compensation generally, peer group analysis of director compensation, and discussions with the Compensation Committee’s independent compensation consultant.
Under the Previous Policy, certain non-employee directors – those employed by a Company stockholder hospital or health system or by a group affiliate or other non-provider organization affiliated with one or more Premier member facilities participating in the Company’s group purchasing program – were not eligible to receive an annual cash retainer or annual equity awards as compensation for their service as a member of the Board. The New Policy provides for the following compensation of non-employee directors:
| • | an annual cash retainer of $80,000; |
| • | an annual equity award of restricted stock units valued at $125,000, with the exception of any director whose employer prohibits the receipt by such individual of equity from the Company; and |
| • | in lieu of the annual equity award in the preceding bullet, any director whose employer prohibits the receipt of equity from the Company shall receive an annual cash award of $100,000. |
The annual equity award, and any annual cash award granted in lieu of the annual equity award, will vest in full one year after the grant date and immediately upon a change in control.
Non-employee directors who begin their service mid-year will receive a pro-rated amount of compensation as applicable.
Consistent with the Previous Policy, the New Policy provides that non-employee directors will be paid designated cash fees in connection with ad hoc meeting attendance, committee meeting attendance, and service as chair of the Board or chair of a Board committee. Non-employee directors will be reimbursed for reasonable out-of-pocket business expenses incurred in connection with attending meetings of the Board and its committees or in connection with other Company business. Each director is entitled annually to direct an amount of $1,000 to his or her selected not-for-profit organization during the holiday season in lieu of receipt of a holiday gift.
Directors who are also our employees do not receive cash or equity compensation for service on the Board in addition to compensation payable for their service as employees of the Company.
The foregoing description of the New Policy is qualified in its entirety by reference to the terms of the New Policy, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference. In connection with the New Policy, the Company is adopting a new form of Director Cash Award Agreement, which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
In addition, conforming changes were made to the Company’s stock ownership guidelines to require directors receiving annual equity awards to hold our Class A common stock equal in value to at least three times the annual cash retainer. Directors are expected to meet the stock ownership guideline level within five (5) years after receipt of their first equity-based award for service to the Board and to continuously own sufficient shares to satisfy the guideline level once attained for as long they remain a member of the Board. Similarly, conforming changes were made to the Company’s Corporate Governance Guidelines (“CGG”) to reflect the New Policy and the Company’s revised stock ownership guidelines. A copy of the CGG is available in the Investors section of the Company’s website at investors.premierinc.com.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| 10.1 | Premier, Inc. Director Compensation Policy |
| 10.2 | Premier, Inc. Form of Director Cash Award Agreement |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Premier, Inc. | ||||||
| By: |
/s/ Susan D. DeVore |
|||||
| Name: | Susan D. DeVore | |||||
| Title: | Chief Executive Officer and President | |||||
| Date: August 11, 2016 | ||||||
Exhibit 10.1
Director Compensation Policy
Overview
The Board of Directors of Premier, Inc. (“Premier”) has approved the following Director Compensation Policy (“Policy”) to provide an incentive to attract and retain the services of qualified persons to serve as directors.
Objectives
This Policy is designed to achieve the following key objectives:
| • | Align the interests of the non-employee directors (as defined below) and stockholders |
| • | Support overall organizational objectives and encourage the creation of stockholder value |
| • | Attract and retain high quality talent |
| • | Reflect the broad spectrum of talent and diverse sources of market data |
| • | Target median competitive pay levels |
| • | Be simple to understand and administer |
Eligibility
This Policy shall apply to each director of the Board of Directors of Premier, Inc. (the “Board”) who is not an employee of, or compensated consultant to, Premier or any of its Affiliates (a “non-employee director”). Employees of Premier, Inc., Premier Healthcare Solutions, Inc., Premier Supply Chain Improvement, Inc. or their respective affiliates are not eligible to receive compensation under this Policy. The table below sets forth compensation levels for all Directors.
| Compensation Element | Compensation Amount | |
|
Annual Board Cash Retainer 1 |
$80,000 | |
|
Annual Equity or Cash Award 2 |
$125,000/$100,000 2 | |
|
Ad Hoc Meeting Fee (per meeting) 3 |
$1,000 | |
|
Committee Meeting Fee (per meeting) |
$1,500 | |
|
Additional Audit and Compliance Committee Chair Retainer |
$15,000 | |
|
Additional Compensation Committee Chair Retainer |
$15,000 | |
|
Additional Nominating and Governance Committee Chair Retainer |
$7,500 | |
|
Additional Member Agreement Review Committee Chair Retainer |
$7,500 | |
|
Additional Finance Committee Chair Retainer |
$7,500 | |
|
Short-term Ad Hoc Committee Chair Retainer |
$5,000 | |
|
Additional Board Chair Annual Cash Retainer |
$60,000 |
| 1) | Includes compensation for in-person meetings and telephonic meetings. |
| 2) | Annual Equity Award is payable in restricted stock units (RSUs). Directors that certify in writing that they are prohibited by their organizations from receiving equity-based compensation from Premier will receive an annual cash award of $100,000 in lieu of equity compensation. |
| 3) | Payment of $1,000 will be made for participation in any ad hoc meetings with Board members to discuss Board matters that are at least one hour in duration and are in addition to standard preparation meetings or calls with the Board Chair or a Committee Chair. |
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Equity Grants
Each Director shall be granted under Premier’s 2013 Equity Incentive Plan or any successor plan (the “Equity Plan”) restricted stock units (“RSUs”) for shares of Premier’s Class A common stock each year at the annual meeting of the Board following Premier’s annual meeting of stockholders (the “Annual Grant”). A Director joining the Board after the most recent Annual Grant, shall be entitled to a pro-rated grant based upon the number of days of service expected prior to the next Annual Grant (assuming the next Annual Grant date will be the anniversary date of the last Annual Grant) divided by 365. The number of shares subject to the RSUs shall be determined based on the closing price of a share as of the grant date. The RSUs shall vest one year from the date of grant, subject to the Director’s continued service on the Board. The grants shall vest in full immediately upon a Change in Control (as defined in the Equity Plan). Equity grants under this Policy are subject to the Premier, Inc. Stock Ownership Guidelines.
Annual Cash Awards (in lieu of Equity Grants)
Directors who are prohibited by their respective organizations from receiving equity-based compensation from Premier shall be granted an annual cash award of $100,000 in lieu of equity compensation each year at the annual meeting of the Board following Premier’s annual meeting of stockholders (the “Annual Award”). A Director must certify, in writing, that his or her employer prohibits the receipt of equity-based compensation from Premier to be eligible for an Annual Cash Award. A Director joining the Board after the most recent Annual Award, shall be entitled to a pro-rated award based upon the number of days of service expected prior to the next Annual Award (assuming the next Annual Award date will be the anniversary date of the last Annual Award) divided by 365. The cash award shall vest one year from the date of grant, subject to continued service on the Board. The cash award shall vest in full immediately upon a Change in Control (as defined in the Equity Plan). Directors that are prohibited from receiving equity-based compensation shall not subject to the Premier, Inc. Stock Ownership Guidelines.
Payment Term for Cash Fees and Retainer
Cash payments to non-employee directors for Board and board committee service shall be paid quarterly in arrears as of the last day of each fiscal quarter. Non-employee directors shall receive cash compensation after first being elected or appointed to the Board on a pro-rated basis during the first fiscal quarter in which initially appointed or elected based on the number of days during which service is provided. If a non-employee director dies, resigns, or is removed during any quarter, he or she shall be entitled to a cash payment on a pro-rated basis through his or her last day of service.
Expense Reimbursement
Upon presentation of documentation of such expenses reasonably satisfactory to Premier, each non-employee director shall be reimbursed for his or her reasonable out-of-pocket business expenses incurred in connection with attending meetings of the Board and its committees or in connection with other business related to the Board. Each non-employee director shall also be reimbursed for his or her reasonable out-of-pocket business expenses authorized by the Board or one of its committees that are incurred in connection with attendance at meetings with Premier’s management. Each non-employee director shall abide by Premier’s travel and other policies applicable to company personnel.
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Additional Services
On occasion, short-term ad hoc committees shall be formed to address a particular oversight need. In the event that an ad-hoc committee is formed, the committee chair shall be paid an annual retainer of $5,000 and committee members shall be paid on a per meeting basis similar to other committees.
The Board has the authority to provide additional compensation to directors for ad hoc requests that require a substantial amount of time and/or work. These ad hoc requests shall be compensated similar to ad hoc meetings at $1,000 per meeting, but not to exceed $8,000 for the duration of the specific event.
Additional Compensation
On an annual basis, each non-employee director shall have the ability to direct an amount of $1,000 to his or her selected not-for-profit organization during the holiday season in lieu of receipt of a holiday gift from Premier, Inc.
Policy Review / Amendments
The Compensation Committee or the Board shall review this Policy from time to time to assess whether any amendments in the type and amount of compensation provided herein should be adjusted in order to fulfill the objectives of this Policy. This Policy may only be amended by the Board.
Approved by the Premier, Inc. Board of Directors on August 11, 2016
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Exhibit 10.2
FORM OF DIRECTOR CASH AWARD AGREEMENT
THIS CASH AWARD AGREEMENT (the “Agreement”), effective (the “Agreement Date”), is made by and between Premier, Inc., a Delaware corporation (the “Company”), and the undersigned non-employee director of the Company (the “Grantee”). The grant date for this Cash Award is (the “Grant Date”).
WHEREAS, in accordance with the terms of the Director Compensation Policy of the Board, the Committee has determined that it would be to the advantage and best interest of the Company and its stockholders to grant the opportunity to earn the cash award provided for herein to the Grantee as an incentive for efforts during his or her term with the Company, and has advised the Company thereof and instructed the undersigned officer to enter into this Agreement to evidence this Cash Award opportunity.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have the meanings specified below.
“ Board ” means the Board of Directors of the Company.
“ Cash Award ” shall mean the cash award opportunity provided by the Company to the Grantee as evidenced by this Agreement.
“ Change in Control ” shall have the meaning given to it (including any related defined terms) in Section 13.3 of the Premier, Inc. 2013 Equity Incentive Plan (as amended and restated effective December 4, 2015), as amended through the date hereof.
“ Code ” shall mean the Internal Revenue Code of 1986 (and any successor thereto), as amended from time to time. References to a particular section of the Code include references to regulations and rulings thereunder and to successor provisions.
“ Committee ” shall mean the Compensation Committee of the Board.
“ Disability ” shall mean any of the following: (i) the Grantee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of at least twelve months, or the Grantee’s entitlement to and receipt of disability benefits under a disability insurance program that pays benefits on the basis of the foregoing definition; (ii) the Grantee is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of at least twelve months, receiving disability benefits under a disability insurance program that pays benefits on the basis of the foregoing definition; or (iii) the Grantee is determined to be totally disabled by the Social Security Administration or Railroad Retirement Board.
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“ Section 409A ” shall mean Section 409A of the Code and the applicable regulations or other guidance issued thereunder.
“ Separation from Service ” shall mean a termination of the Grantee’s service as a director of the Board (regardless of the reason therefor) that constitutes a separation from service as defined in Section 409A or applicable regulations or other guidance in effect thereunder.
ARTICLE II
GRANT OF CASH AWARD
2.1 Grant of Cash Award . The Company has granted to the Grantee on the Grant Date this Cash Award with respect to the cash amount set forth on the signature page hereto. The grant of the Cash Award has been made in consideration of the services to be rendered by the Grantee to the Board.
2.2 No Obligation of Service . Nothing in this Agreement shall confer upon the Grantee any right to continue in the service on the Board or interfere with or restrict in any way the rights of the Board, which are hereby expressly reserved, to terminate the service of the Grantee at any time for any reason whatsoever.
2.3 Change in Control . In order to maintain Grantee’s rights with respect to the Cash Award evidenced hereby, upon the occurrence of a Change in Control, the Committee may take any actions with respect to the Cash Award or make any modifications to the Cash Award as it deems appropriate to reflect such Change in Control.
ARTICLE III
VESTING OF CASH AWARD
3.1 Vesting . Subject to Sections 3.2 and 3.3, the Cash Award shall vest in full on the first anniversary of the Grant Date.
3.2 Acceleration Events . Notwithstanding the provisions of Section 3.1:
| (a) | In the event of the Grantee’s Disability or death, the Grantee shall immediately vest in a portion of the Cash Award equal to the full amount of the Cash Award granted times a fraction, the numerator of which is the number of days of active service elapsed since the Grant Date and the denominator of which is 365; and |
| (b) | In the event that the Grantee is serving as a director on the Board at the time of a Change in Control, the Cash Award shall vest in full. |
3.3 Effect of Separation from Service . Except as otherwise provided in Section 3.2, no unvested portion of the Cash Award shall become vested following the Grantee’s Separation from Service, and any unvested portion of the Cash Award shall be immediately and automatically forfeited upon the Grantee’s Separation from Service.
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ARTICLE IV
SETTLEMENT OF CASH AWARD
4.1 Calculation of Settlement Amount . Subject to the terms of this Agreement, as soon as administratively feasible following the first to occur of (a) the first anniversary of the Grant Date or (b) the date an acceleration event occurs pursuant to Section 3.2 (each such date, a “Computation Date”), and in no event later than sixty (60) days following the applicable Computation Date, the Company shall pay to the Grantee the amount of cash equal to such vested portion of the Cash Award. No interest shall accrue or be payable on the Cash Award at any time prior to payment of such Cash Award.
4.2 Forfeiture of Unvested Portion of Cash Award . To the extent that the Grantee does not vest in a portion of the Cash Award, all interest in such portion of the Cash Award shall be forfeited upon the Grantee’s Separation from Service. The Grantee has no right or interest in any portion of the Cash Award that is forfeited.
ARTICLE V
MISCELLANEOUS
5.1 Tax Consequences . Unless otherwise specifically provided in another agreement between the Company and the Grantee, the Company shall not be liable or responsible for any tax of the Grantee relating to the Cash Award, and the Grantee agrees to be responsible for, any and all such taxes with respect to the Cash Award.
5.2 Administration . The Committee has the power to interpret the Cash Award and this Agreement. All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Grantee, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Cash Award. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under this Agreement.
5.3 Cash Award Not Transferable . Neither the Cash Award nor any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Grantee or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition is voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 5.3 shall not prevent transfers by will or by the applicable laws of descent and distribution.
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5.4 Section 409A .
(a) To the extent applicable, this Agreement is intended to comply with Section 409A so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to Grantee, and this Agreement shall be construed, interpreted and administered in a manner that is consistent with this intent and the requirements for avoiding additional taxes or penalties under Section 409A. Notwithstanding the foregoing, in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Grantee on account of Section 409A.
(b) Except as permitted under Section 409A, any nonqualified deferred compensation (within the meaning of Section 409A of the Code) payable to a Grantee or for the Grantee’s benefit under this Agreement and grants hereunder may not be reduced by, or offset against, any amount owing by the Grantee to the Company or any of its subsidiaries.
(c) In the event that the Company determines that any amounts payable hereunder may be taxable to the Grantee under Section 409A prior to the payment and/or delivery to the Grantee of such amount, the Committee may adopt such amendments to the Agreement, and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Cash Award and this Agreement.
5.5 Titles . Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
5.6 Pronouns . The masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates.
5.7. Amendment . The Committee may amend this Agreement at any time; provided, however, that subject to Section 5.4 above, no such amendment shall materially impair the rights of the Grantee unless reflected in a writing that is executed by the parties hereto that specifically states that it is amending this Agreement.
5.8 Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each provision of this Agreement shall be severable and enforceable to the extent permitted by law.
5.9. Governing Law . The laws of the State of Delaware shall govern the interpretation, validity and performance of this Agreement regardless of the law that might be applied under principles of conflicts of laws.
5.10 Successors . All obligations of the Company under this Agreement with respect to the Cash Award shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
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5.11 Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signatures to this Agreement transmitted by facsimile, electronic mail, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the Company by one of its duly authorized officers has executed this Cash Award Agreement as of the day and year first above written.
PREMIER, INC.
| By: | ||
| Its: | ||
Please indicate your acceptance of the terms and conditions of this Cash Award Agreement by signing in the space provided below and returning a signed copy of this Cash Award Agreement to the Company. IF A FULLY EXECUTED COPY OF THIS CASH AWARD AGREEMENT HAS NOT BEEN RECEIVED BY THE COMPANY BY , THE AWARD UNDER THIS CASH AWARD AGREEMENT SHALL BE CANCELLED.
BY SIGNING BELOW, YOU ACKNOWLEDGE AND AGREE THAT YOU HAVE RECEIVED A COPY OF THIS CASH AWARD AGREEMENT AND ARE FAMILIAR WITH THE TERMS AND PROVISIONS THEREOF. YOU HAVE REVIEWED THIS CASH AWARD AGREEMENT IN ITS ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO EXECUTING THIS CASH AWARD AGREEMENT AND FULLY UNDERSTAND ALL PROVISIONS OF THIS CASH AWARD AGREEMENT. FINALLY, YOU HEREBY AGREE TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE COMMITTEE (OR THE BOARD, AS APPLICABLE) UPON ANY QUESTIONS ARISING UNDER THIS CASH AWARD AGREEMENT.
The undersigned hereby accepts, and agrees to, all terms and provisions of this Cash Award Agreement.
| By: | ||
| Name: | ||
| Cash Award Amount: | ||