Item 1.01. Entry into a Material Definitive Agreement.
Closing of Internalization and Termination of Management Agreement
In connection with the Closing of the Internalization, on
Company acquired all of the assets and liabilities of the Manager (the net
effect of which is immaterial in amount), and the Company transitioned from an
externally-managed real estate investment trust (“REIT”) to an internally
managed REIT. At the Closing, as required by the Internalization Agreement, all
employees of the Manager became employees of the Company. The parties terminated
the Amended and Restated Management Agreement by and between the Company and the
Manager (the “Management Agreement”) and therefore the Company will no longer
pay a management fee to the Manager. Pursuant to the Internalization Agreement,
the Manager waived any Acceleration Fee (as defined in the Management
Agreement).
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
Adoption of Executive Severance Plan
In satisfaction of a condition in the Internalization Agreement, at Closing the
Company implemented an executive severance plan, which was previously approved
by the Compensation Committee of the Company’s Board of Directors (the
“Compensation Committee”), pursuant to which the Company will provide certain
severance protections to the Company’s executive officers (the “Executive
Severance Plan”).
The Executive Severance Plan provides benefits upon a participant’s involuntary
termination of employment by the Company without “cause” (as such term is
defined in the Executive Severance Plan). Severance benefits are payable in a
lump sum and are calculated based on the participant’s title, base salary and
average or target cash bonus (depending on the year of termination), as
described below.
If the Chief Executive Officer has an involuntary termination of employment, the
Chief Executive Officer will be eligible to receive the following amount of
severance benefits:
• if the involuntary termination of employment occurs in 2020, the sum of
(i) 1.0 times the Chief Executive Officer's annual base salary and (ii)
1.0 times the Chief Executive Officer's average cash bonus for the
2018-2019 calendar years; or
• if the involuntary termination of employment occurs in a calendar year
after 2020, the sum of (i) 1.5 times the Chief Executive Officer's annual
base salary and (ii) 1.5 times the Chief Executive Officer's target cash
bonus for the plan year in which the involuntary termination of employment
occurs.
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If any other executive participating in the Executive Severance Plan has an
involuntary termination of employment, the other executive will be eligible to
receive the following amount of severance benefits:
• if the involuntary termination of employment occurs in 2020, the sum of
(i) 0.75 times the executive's annual base salary and (ii) 0.75 times the
executive's average cash bonus for the 2018-2019 calendar years; or
• if the involuntary termination of employment occurs in a calendar year
after 2020, the sum of (i) 1.25 times the executive's annual base salary
and (ii) 1.25 times the executive's target cash bonus for the plan year in
which the involuntary termination of employment occurs.
In addition, a participant who experiences an involuntary termination of
employment after
prorated bonus payment based on the amount of the participant’s bonus earned for
the prior year (subject to the Company’s discretion to adjust the bonus amount
for performance in the current year).
Severance benefits are conditioned upon the participant giving the Company a
general release of claims at the time of separation. Benefits are also
conditioned upon the participant’s compliance with the covenants applicable to
the participant under any written agreement with the Company or as required by
the Company’s Code of Business Conduct and Ethics. Benefits may also be subject
to repayment if the participant engages in certain “Detrimental Conduct” as
defined under the Company’s Policy on the Recovery (Clawback) of Incentive
Compensation. No tax gross-ups are provided to any participant under the
Executive Severance Plan in case of any excise taxes under Sections 280G and
4999 of the Internal Revenue Code as a result of payments under the Executive
Severance Plan in connection with a change in control. Instead, if such excise
taxes would be triggered, payments would be cut back if doing so would result in
a greater after-tax payment to the participant than if he or she received the
payments and paid the excise taxes.
The foregoing summary of the terms and conditions of the Executive Severance
Plan is not a complete discussion of the document. Accordingly, the foregoing is
qualified in its entirety by reference to the full text of the Plan included as
Exhibit 10.1 to this Current Report on Form 8-K.
Issuance of Equity Awards to Certain Named Executive Officers; Approval of Forms
of Equity Awards
As previously disclosed in the
Form 8-K filed by the Company on
respective employment arrangements that became effective at Closing, certain of
our named executive officers (
compensation plan. These equity awards were issued at Closing, each in the
amounts and upon the terms and conditions as described in those prior Form 8-K
disclosures. In connection with these awards, the Compensation Committee
approved new forms of (i) performance stock unit award (the “Form PSU Award”)
and (ii) restricted stock unit award (the “Form RSU Award”) for awards made
pursuant to the Company’s 2020 Equity Incentive Plan. The awards granted to
Messrs. Finkelstein, Coffey and Green at Closing were pursuant to award
agreements identical in all material respects to the Form PSU Award and Form RSU
Award. The Form PSU Award and Form RSU Award are filed as Exhibit 10.2 and 10.3,
respectively, to this Current Report on Form 8-K and incorporated by reference
herein.
Retirement of
As previously disclosed,
Executive Officer and President, was appointed to the role of Senior Advisor to
the Company on
Company’s Chief Executive Officer.
intention to retire from his role as Senior Advisor effective
his retirement as Senior Advisor.
Appointment of Chief Operating Officer
On
Chief Operating Officer.
most recently serving as the Head of Business Operations.
20 years of experience in financial services. Prior to joining the Company,
including serving as a Managing Director in the
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Credit Funds business. Previously,
Capital Corporation and
restructuring.
and a M.B.A. from the
The Company has entered into its standard form of indemnification agreement with
Form 8-K filed with the
between any of our directors or officers and
be disclosed under Item 401(d) of Regulation S-K. There are no other
arrangements or understandings between
pursuant to which
required to be disclosed under Item 404(a) of Regulation S-K.
Item 7.01. Regulation FD Disclosure.
A copy of the Company’s press release (the “Press Release”) announcing the
Company’s Closing of the Internalization, the appointment of
Company’s new Chief Operating Officer, the retirement of
Advisor to the Company and other matters described in this Current Report on
Form 8-K is attached hereto and furnished as Exhibit 99.1.
This Press Release is being furnished pursuant to Item 7.01, and shall not be
deemed “filed” for the 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, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange Act, except as
shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 10.1Annaly Capital Management, Inc. Executive Severance Plan 10.2 Form of Performance Stock Unit Award 10.3 Form of Restricted Stock Unit Award 99.1 Press Release, datedJuly 1, 2020 104 Cover page (formatted in Inline XBRL)
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