Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
2021 Management Incentive Plan
On February 25, 2021, the Compensation Committee of the Board of Directors (the
"Board") of Ceridian HCM Holding Inc. (the "Company") approved and recommended,
and the Board approved the Company's 2021 Management Incentive Plan (the "2021
MIP"). The 2021 MIP covers the incentive period of January 1, 2021 through
December 31, 2021. The 2021 MIP is designed to drive Company results related to
key financial metrics and to provide incentive compensation to active eligible
employees who play a key role in the Company accomplishing its objectives.
Receipt of performance based, incentive compensation under the 2021 MIP is based
on the Company's achievement of Cloud revenue and adjusted EBITDA margin
financial goals for fiscal year 2021. Both the Cloud revenue and adjusted EBITDA
margin goals are calculated based on the Company's operating results, excluding
float revenue and adjusted for foreign currency and interest rate impacts and
other unique impacts to the adjusted EBITDA margin as may be approved by the
Compensation Committee or the Board.
Target incentive compensation amounts are weighted 50% for the Cloud revenue
goal and 50% for the adjusted EBITDA margin goal. Each financial goal has a
potential threshold payout of 50%, a target payout of 100%, and a maximum payout
of 150%. No payout under the 2021 MIP will be made unless one of the following
conditions are met: (i) Cloud revenue must equal or exceed $795.7 million; or
(ii) adjusted EBITDA margin must equal or exceed 12.7%. The maximum total
combined incentive component payout for a participant may not exceed 150% under
the 2021 MIP. Payments for a financial goal achievement between threshold and
target and target and maximum will be determined on a straight-line basis.
A participant's individual incentive target in the 2021 MIP is based on either
(i) a fixed dollar amount or (ii) a percentage of the participant's annual base
salary ("Individual MIP Target"). Under the 2021 MIP, the Individual MIP Target
for a participant will be split where 50% of the Individual MIP Target will be
in the form of cash and 50% of the Individual MIP Target will be in the form of
a performance stock unit ("PSU") award to be granted under the Ceridian HCM
Holding Inc. 2018 Equity Incentive Plan (the "2018 EIP") and pursuant to the
terms of the 2018 EIP and the PSU award agreement, a copy of which is attached
as Exhibit 10.2 to this Current Report on Form 8-K (the "PSU Award Agreement").
Any cash payment under the 2021 MIP will be determined using the participant's
base salary as of December 31, 2021. The number of PSUs to be granted to a
participant in the 2021 MIP is determined using 50% of the participant's
Individual MIP Target in effect on February 25, 2021. The vesting conditions for
the PSU award will be determined based on the Company's performance against the
Cloud revenue and adjusted EBITDA margin goals and will be set forth in the PSU
Award Agreement. Upon vesting of a PSU, a participant will receive shares of
common stock of the Company ("Common Stock"). A PSU will vest upon the later of
(i) one year from the date of grant or (ii) the date that the Committee or the
Board certifies the attainment of a financial goal under the 2021 MIP.
Target incentive compensation levels under the 2021 MIP for the Company's named
executive officers listed in the Company's proxy statement, dated March 19,
2020, for the Company's 2020 annual stockholders meeting (the "NEOs") and the
Company's current principal financial officer are as follows: (i) David D.
Ossip, our Chair and Chief Executive Officer, is 100% of his base salary; (ii)
Leagh E. Turner, President and Chief Operating Officer, is 80% of her base
salary; (iii) Christopher R. Armstrong, Executive Vice President, Chief Customer
Officer, is 60% of his base salary; (iv) Erik J. Zimmer, Executive Vice
President, Head of Mergers & Acquisitions, is 60% of his base salary; and (v)
Noemie C. Heuland, Executive Vice President, Chief Financial Officer (principal
financial officer), is 60% of her base salary.
Pursuant to the 2021 MIP, the NEOs and Ms. Heuland will be granted PSUs with the
following values under the 2018 EIP and pursuant to the terms of the 2018 EIP
and the PSU Award Agreement: (i) Mr. Ossip, $400,000; (ii) Ms. Turner, $262,000;
(iii) Mr. Armstrong, $196,500; (iv) Mr. Zimmer, $196,500; and (v) Ms. Heuland,
$180,000. The number of units underlying the PSUs will be determined based upon
the dollar value for such individual noted above divided by the closing price of
a share of Common Stock on the New York Stock Exchange ("NYSE") on the date of
grant rounded up to the next whole unit.
The foregoing summary of 2021 MIP and the PSU Award Agreement do not purport to
be complete and is subject to, and qualified in its entirety by, the full text
of the 2021 MIP and PSU Award Agreement, copies of which are attached as
Exhibits 10.1 and 10.2, to this Current Report on Form 8-K and incorporated
herein by reference.
Compensation Increase
On February 25, 2021, the Compensation Committee of the Board approved and
recommended, and the Board approved (i) an increase in the base salary of Mr.
Ossip from $700,000 to $800,000 and a change in the short-term incentive from
$800,000 at target to 100% of his annual base salary effective as of April 1,
2021, and (ii) an increase in the short-term incentive for Ms. Turner from 60%
to 80% of her annual base salary effective as of January 1, 2021.
--------------------------------------------------------------------------------
Item 8.01 Other Events.
Forms of Equity Award Agreements under the Ceridian HCM Holding Inc. 2018 Equity
Incentive Plan
On February 25, 2021, the Compensation Committee of the Board approved and
recommended, and the Board approved new forms of stock option award, restricted
stock unit award, and performance stock unit award agreements under the 2018
EIP. Copies of the new forms of stock option award agreement, restricted stock
unit award agreements, and performance stock unit award agreements are attached
as Exhibits 10.2, 10.3, 10.4, 10.5, and 10.6 to this Current Report on Form 8-K
and the terms of which are incorporated herein by reference. The new forms of
agreements will be effective for grants made on or after February 25, 2021, and
reflect certain changes to the existing forms of equity award agreements under
the 2018 EIP, including the following: (i) addition of a "responsive trigger" to
accelerate vesting of the equity award in the event of a change in control of
the Company, whereas if a public acquiror of the Company assumes and converts
shares of Common Stock into acquiror stock, the vesting of the equity awards
will accelerate upon termination of individual within 12 months of transaction,
and if acquiror does not assume and convert shares of Common Stock into acquiror
stock, the vesting of the equity awards will accelerate immediately upon the
change of control of the Company; (ii) addition of an involuntary termination
other than for cause provision, whereas vesting of the equity award would be
accelerated to 100% for all tranches scheduled to vest in the 18-month period
following an employee's involuntarily termination from the Company; (iii)
addition of a retirement provision, whereas vesting of an equity award would be
accelerated to 100% upon retirement for employees at least age 65 with at least
10 years of continuous service; and (iv) stipulating a mandatory sale of a
portion of vested equity to cover the amount of tax withholding associated with
the vesting of equity.
Grant of Equity Awards to Certain Members of Management
On February 25, 2021, the Compensation Committee of the Board approved the
granting of stock option awards, PSU awards, and restricted stock unit ("RSU")
awards under the 2018 EIP with an aggregate value of approximately $81.8 million
to be made to certain members of management, key employees and newly hired and
promoted employees of the Company. In addition, on February 25, 2021, the
Compensation Committee of the Board recommended, and the Board approved the
granting of the following value and equity awards under the 2018 EIP to be made
to the NEOs: (i) Mr. Ossip, $6.75 million stock options and $2.25 million PSUs;
(ii) Ms. Turner, $3.93 million stock options and $1.31 million PSUs; (iii) Mr.
Armstrong, $1.5 million RSUs and $1.5 million PSUs; and (iv) Mr. Zimmer, $0.65
million RSUs and $0.65 million PSUs. Pursuant to the terms of her employment
agreement, Ms. Heuland will be eligible for long-term incentive equity awards
beginning in 2022.
The number of stock options underlying the stock options to be granted under the
2018 EIP pursuant to a stock option award agreement will equal the dollar value
of the stock option for an individual divided by the Black Scholes value which
will be calculated based on the closing price of a share of the Common Stock on
the NYSE on date of grant rounded down to the nearest whole share. The number of
units underlying the PSU and RSU awards to be granted under the 2018 EIP
pursuant to a PSU award agreement or RSU award agreement will equal the dollar
value of the award for an individual divided by the closing price of a share of
Common Stock on the NYSE on the date of grant rounded down to the nearest whole
unit. The stock options (i) have an exercise price equal to the closing price of
the Company's common stock on the NYSE on the date of grant, (ii) will vest as
to 25% of the stock option award on each of the first four anniversaries of the
date of grant, and (iii) have a ten-year term. The metrics to determine vesting
of the PSUs are based 50% on Cloud revenue, excluding float, and 50% on adjusted
EBITDA margin, excluding float, with each metric measured independently to
determine achievement, and are: (i) for Cloud revenue, 50% of PSUs will vest for
achieving $795.7 million (the "Cloud Revenue Threshold"); 100% of PSUs will vest
for achieving $816.1 million (the "Cloud Revenue Target"); 150% will vest for
achieving $836.5 million (the "Cloud Revenue Maximum"); with intermediate PSU
vesting being linearly interpolated, and (ii) for adjusted EBITDA margin, 50% of
PSUs will vest for achieving 12.7% (the "Adjusted EBITDA Threshold"); 100% of
PSUs will vest for achieving 13.1% (the "Adjusted EBITDA Target"); 150% will
vest for achieving 13.5% (the "Adjusted EBITDA Maximum); with intermediate PSU
vesting being linearly interpolated (together, the "Performance Goals"). The
PSUs will vest upon (i) the Committee or the Board certifying that the Company
has achieved at least the Cloud Revenue Threshold or the Adjusted EBITA Margin
Threshold, and (ii) upon certification of attainment of the Performance Goals,
one-third of the PSUs will vest annually on each of the first three
anniversaries of the date of grant. The RSUs will vest as to one-third of the
RSU award on each of the first three anniversaries of the date of grant.
--------------------------------------------------------------------------------
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 2021 Management Incentive Plan
10.2 Form of Performance Stock Unit Award Agreement (for awards made after
February 25, 2021)
10.3 Form of Stock Option Award Agreement (for awards made after February
25, 2021)
10.4 Form of Restricted Stock Unit Award Agreement (for awards made after
February 25, 2021)
10.5 Form of Restricted Stock Unit Award Agreement (for Canadian executive
awards made after February 25, 2021)
10.6 Form of Performance Stock Unit Award Agreement (for Canadian
executive awards made after February 25, 2021)
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses