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: June 19, 2017
(Date of earliest event reported)
Halyard Health, Inc.
(Exact name of registrant as specified in its charter)
|
|
|
|
|
|
|
Delaware
|
001-36440
|
46-4987888
|
|
(State or other jurisdiction of incorporation)
|
(Commission file number)
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
5405 Windward Parkway
Suite 100 South
Alpharetta, Georgia
|
|
30004
|
|
(Address of principal executive offices)
|
|
(Zip code)
|
Registrant’s telephone number, including area code: (678) 425-9273
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:
|
|
|
|
|
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensation Arrangements of Certain Officers.
On June 23, 2017, Halyard Health, Inc. (the “Corporation”, “we”, “us” or “our”) announced that, effective June 26, 2017, Robert E. Abernathy will retire as CEO but will continue as Chairman of the Board of Directors (the “Board”).
On June 23, 2017, the Company also announced that, effective upon Mr. Abernathy’s retirement as CEO, Joseph F. Woody has been appointed as CEO of the Corporation. Also effective as of June 26, 2017, the Board has determined to expand the size of the Board to 10 from 9, and Mr. Woody has been elected to serve on the Board as a member of Class III, with a term expiring at the Annual Meeting of Stockholders to be held in 2020.
Mr. Woody, age 51, has more than 20 years of experience in the healthcare sector. Prior to joining the Corporation, Mr. Woody served as Director, President and Chief Executive Officer of Acelity Holdings, Inc. (“Acelity”), a global advanced wound care and regenerative medicine company, from August 2015 until April 2017. Prior to that, Mr. Woody served as President and Chief Executive Officer for the combined organization of Kinetic Concepts, Inc. (“KCI”), LifeCell Corporation (“LifeCell”), and Systagenix Wound Management B.V., which became Acelity, from September 2013 until August 2015. Prior to that, Mr. Woody served in leadership roles at KCI and LifeCell from November 2011 until September 2013, having been promoted to President and Chief Executive Officer of KCI in January 2012 and interim Chief Executive Officer of LifeCell in April 2013. Previously, Mr. Woody served as global president of Vascular Therapies for Covidien plc., and global president for Smith & Nephew Advanced Wound Management, and he held other leadership positions at Alliance Imaging, Inc., Acuson and GE Medical Systems.
We believe Mr. Woody’s qualifications to serve as our CEO include his experience in terms of leadership, industry, operations, risk management, and financial and strategic planning. We believe his qualifications to serve on our Board include his leadership experience as a chief executive officer, knowledge of, and experience in, the healthcare industry, including significant acquisition and integration experience, international experience, and company board experience.
Mr. Woody was not selected pursuant to any arrangement or understanding between him and any other person, and Mr. Woody has no family relationships with any of the Company’s directors or executive officers. There have been no related-person transactions between the Company and Mr. Woody reportable under Item 404(a) of Regulation S-K.
In connection with Mr. Woody’s appointment as CEO and his election to our Board, the Compensation Committee of the Board has approved a compensation package for him, which is attached to this Current Report on Form 8-K as Exhibit 10.1. Among other things, it provides that Mr. Woody will have a starting salary of $885,000 per year, be entitled to participate in our Executive Officer Achievement Award Plan with a bonus incentive target of 115% of his base pay earned during the year, and will be eligible for annual long-term incentive grants under our Equity Participation Plan. For 2017, Mr. Woody’s target award value is $3,540,000, which is comprised of stock options (valued at $1,416,000) and performance-based restricted share units (valued at $2,124,000). Mr. Woody will also be granted a one-time sign-on award of $1,000,000, granted as time-based restricted share units that will vest over three years, with one-third vesting annually each year. Further details about Mr. Woody’s compensation package, including his eligibility to participate in our Executive Level Relocation Program, Severance Plan, and Executive Severance Plan, can be found on Exhibit 10.1 and the description above is qualified in its entirety by reference to the terms of the compensation package set forth on Exhibit 10.1. Details about our compensation plans can be found in our 2017 proxy statement.
Item 7.01. Regulation FD Disclosure.
The Corporation issued a press release on June 23, 2017, announcing the executive transition. A copy of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information presented in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Corporation specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
See Exhibit Index immediately following the signature page.
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.
|
|
|
|
|
|
|
|
|
|
|
|
HALYARD HEALTH, INC.
|
|
|
|
|
|
|
|
Date:
|
June 23, 2017
|
|
By:
|
/s/Ross Mansbach
|
|
|
|
|
|
Name: Ross Mansbach
Title: Vice President, Deputy General Counsel and Secretary
|
The following exhibits are filed with this Current Report on Form 8-K:
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Number
|
|
Description
|
|
10.1
|
|
Offer Letter dated June 20, 2017
|
|
99.1
|
|
Press Release dated June 23, 2017
|
June 20, 2017
Mr. Joseph F. Woody
12 Esquire
San Antonio, TX 78257
Dear Joe:
We are pleased to extend to you an offer of employment to join Halyard Health, Inc. (“Halyard”) in the position of Chief Executive Officer. In this role, you will report to the Board of Directors. If you accept this offer, the Board of Directors intends to also elect you as a member of the Board.
Start Date
Your anticipated start date is June 26, 2017.
Base Salary
Your starting salary will be $885,000 per year and is subject to applicable withholdings and deductions. Consistent with our practices for salaried officers, you will be paid monthly on the last working day of the month.
Short-Term Incentive Compensation
You will be eligible to participate in Halyard Health's Executive Officer Achievement Award Plan (EOAAP). Your bonus incentive target will be 115% of your base pay earned during the year. Bonus criteria are established each year by the Compensation Committee. For the year 2017, your bonus will be based on Halyard Health performance for the year against targets previously established by the Compensation Committee. In early 2018, the Committee will assess the extent to which those performance targets have been met and then approve the resulting payouts to executive officers. The complete terms and conditions of the EOAAP are set forth in Halyard’s plan document.
Long-Term Incentive
Compensation
You will be eligible for annual long-term incentive grants under Halyard’s Equity Participation Plan. For 2017, your target award value
is $3,540,000. Your award will be granted as of your start date, and will consist of a combination of the following:
|
|
|
|
•
|
stock options, with a grant date value of $1,416,000. The number of options to be granted will be equal to the grant date value ($1,416,000) divided by the Black-Scholes value of the options on that date. The strike price for the options will be equal to the closing stock price for Halyard shares on the grant date. Stock options will vest over a three-year period (30% year 1, 30% year 2, and $40% year 3).
|
|
|
|
|
•
|
performance-based restricted share units, with a grant date value of $2,124,000. The target number of performance-based share units to be granted will be equal to the grant date value ($2,124,000) divided by the closing stock price for Halyard shares on the grant date. Performance-based restricted share units will vest at the end of the three-year performance period (1/1/2017 - 12/31/2019). The number of performance-based restricted share units that will ultimately vest will depend on the extent to which the performance metrics for those units have been met, as determined by the Compensation Committee after the end of the three-year performance period.
|
Future annual long-term incentive target grant amounts, along with the grant type and mix, are subject to change by the Board of Directors in their discretion. The complete terms and conditions of Halyard’s Equity Participation Plan are set forth in Halyard’s plan document.
Sign-on Equity Award
You will also be awarded a one-time equity award in the amount of $1,000,000. This award will be granted as of your start date, and will consist of time-based restricted share units. The number of time-based restricted share units to be granted will be equal to the sign-on equity award amount ($1,000,000) divided by the closing stock price for Halyard shares on the grant date. These time-based restricted share units will vest over a three-year period (33.3% year 1, 33.3% year 2, and 33.4% year 3).
Benefits
Halyard offers a comprehensive benefits package that includes medical, dental, vision, life insurance, flexible spending accounts, company-paid disability programs and a matching 401(k) plan. You will be provided a benefits guide with details of these programs.
Vacation
As an employee of Halyard, you will receive four (4) weeks of vacation and four (4) personal holidays per year. Vacation and personal holidays are prorated based on your date of hire.
Relocation
You will be eligible to participate in Halyard’s Executive Level Relocation Program. Weichert Workforce Mobility Inc. administers Halyard’s relocation services. A Weichert representative will contact you following your acceptance of this employment offer to review the Relocation Program with you.
Halyard will provide you with temporary living expense coverage of up to $5,000 per month for six months following your acceptance of this offer to facilitate your relocation.
In the unlikely event that you voluntarily leave the organization before your second anniversary, you will be obligated to repay to Halyard any relocation payments you have received under the Relocation Program.
Severance
You will be eligible to participate in Halyard’s existing Severance Plan and Executive Severance Plan. The general terms of those plans are described in Halyard’s proxy statement, and the complete terms and conditions are set forth in Halyard’s plan documents.
Other Considerations
This offer is contingent upon: (1) the satisfactory completion of a background check and drug test; (2) verification of your legal right to work in the United States; (3) acknowledgment that you are not under any non-compete, non-solicitation or any other agreements that would prevent you from working for Halyard Health; and (4) your acceptance of Halyard’s Confidentiality, Non-Solicitation and Assignment of Business Ideas Agreement. This agreement is required of all new hires of Halyard Health because of an employee's potential access to confidential information, customer lists and trade secrets.
Employment at Halyard is at-will and can be ended by you or the company for any reason at any time. Furthermore, this letter is simply intended to provide a general description of the terms of your at-will employment. It does not constitute a contract or give rise to any contractual or quasi-contractual rights, and the offer of employment or the terms of the employment may be changed or rescinded by Halyard at any time.
You will be an executive officer of Halyard and as such you will have obligations to file reports under Section 16 of the Securities and Exchange Act of 1934. The company has a compliance program to assist officers and board members to meet their Section 16 filing obligation. In order to file Section 16 reports required as a result of your hiring (a Form 3) and your receipt of the equity grants referenced above (a Form 4), the company will need you to provide it with your SEC filing codes as soon as possible. If you have not previously been a Section 16 reporting officer, then the company can help you apply for those codes. Your Form 4 to report your equity grants will be due no later than 2 days following the grant date.
We look forward to your acceptance of this offer and would appreciate your prompt response.
If you have any questions or need additional information, please give me or Julie Shimer a call
.
Sincerely,
/s/Ron Dollens
Ron Dollens, Lead Director
To indicate your acceptance of this offer and its terms and conditions, please sign in the space provided below.
ACCEPTED:
/s/ Joseph F. Woody
Joseph F. Woody
June 20, 2017
Halyard Health Announces CEO Transition
Abernathy to Retire as CEO; Continue as Chairman
Woody Elected as CEO; Member of the Board of Directors
ALPHARETTA, Ga., (June 23, 2017)
- Halyard Health, Inc., today announced that Robert E. Abernathy will retire as CEO, effective June 26, 2017. The board of directors has appointed Joseph F. Woody to succeed Abernathy. Woody has also been elected to serve on the board of directors and Abernathy will continue as chairman of the board.
“On behalf of the board and Halyard employees, we are grateful for Robert’s dedicated leadership these past three plus years,” said Ronald W. Dollens, Halyard’s independent lead director. “During his tenure, Robert reestablished Halyard’s innovative culture and positioned the company for future growth.”
“Leading Halyard has been an incredible journey,” said Abernathy. “I’m honored to have been part of this extraordinary team and thank them for their commitment to Halyard. Together, we’ve accelerated growth in our medical devices business, generated greater than expected free cash flow, and met or exceeded earnings analysts’ expectations the past seven quarters.”
“Halyard is successfully executing its transformation and we’re confident that we’ll continue to do so under Joe’s leadership,” Dollens continued. “Joe is an experienced healthcare CEO with proven success driving revenue growth and spearheading portfolio transformations. He brings the laser focus needed to propel Halyard forward in this fast-paced industry.”
“I’m thrilled to be joining Halyard. This talented team is poised to capitalize on the incredible opportunities that lie before us,” said Woody. “We will continue to accelerate the execution of our transformation strategy.”
“We’re pleased the board identified Joe to succeed Robert. We’re excited Joe is joining us and we’re fully optimistic about the future of Halyard,” Dollens concluded.
Woody’s entire career has been in the medical technology industry. Most recently he served as president and CEO of Acelity. He has also served in several board positions.
About Halyard Health
Halyard Health, Inc. (NYSE: HYH) is a medical technology company focused on eliminating pain, speeding recovery and preventing infection for healthcare providers and their patients. Headquartered in Alpharetta, Ga., Halyard is committed to addressing some of today’s most important healthcare needs, such as reducing the use of opioids while helping patients move from surgery to recovery and preventing healthcare-associated infections. Halyard’s business segments - Medical Devices and Surgical and Infection Prevention (S&IP) - develop, manufacture and market clinically superior solutions that improve medical outcomes and business performance in more than 100 countries. For more information, visit
www.halyardhealth.com
.
Forward-Looking Statements
This press release contains information that includes or is based on “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the current plans and expectations of management and are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may”, “believe”, “will”, “expect”, “project”, “estimate”, “anticipate”, “plan”, or “continue” and similar expressions, among others. Such factors include, but are not limited to: weakening of economic conditions that could adversely affect the level of demand for our products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; changes in foreign exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products; changes in reimbursement
levels from third-party payors; a significant increase in product liability claims; the impact of investigative and legal proceedings and compliance risks; the impact of the federal legislation to reform the United States healthcare system; changes in financial markets; and changes in the competitive environment. Additional information concerning these and other factors that may impact future results is contained in our filings with the U.S. Securities and Exchange Commission, including our most recent Form 10-K and Quarterly Reports on Form 10-Q.
