This excerpt taken from the MDCO 8-K filed Mar 8, 2006.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
On March 3, 2006, Steven H. Koehler resigned as Senior Vice President and Chief Financial Officer of the Company effective as of March 17, 2006. On March 3, 2006, the Company appointed Mr. Sblendorio as Executive Vice President and agreed that Mr. Sblendorio would succeed Mr. Koehler as Chief Financial Officer of the Company on March 17, 2006. Prior to joining the Company, Mr. Sblendorio was Executive Vice President and Chief Financial Officer of Eyetech Pharmaceuticals, Inc. until it was acquired by OSI Pharmaceuticals, Inc. in November 2005. From July 2000 to February 2002, Mr. Sblendorio served as Senior Vice President of Business Development for the Company. From 1998 to July 2000, Mr. Sblendorio was the Chief Executive Officer and Managing Director of MPM Capital Advisors, LLC, an investment bank specializing in healthcare related transactions.
Although Mr. Sblendorios employment is at will, the letter agreement that provides that he will receive an annual base salary of $330,000 and he is eligible to receive, at the discretion of the board of directors of the Company, an annual bonus targeted to be forty percent (40%) of his annual base salary, subject to the Company and Mr. Sblendorio meeting performance goals. The Company granted Mr. Sblendorio 25,000 restricted shares of the Companys common stock. The restricted stock grant vests in increments of 25% per year on an annual basis commencing March 3, 2007. The Company also granted Mr. Sblendorio an option to purchase 150,000 shares of its common stock at an exercise price of $20.11 per share (the closing price of the Companys common stock on March 3, 2006). Twenty-five percent (25%) of the stock option vests on March 3, 2007 and the remainder of the stock option vests in thirty-six equal monthly installments beginning on April 3, 2007.
The Company also entered into an agreement with Mr. Sblendorio providing for severance pay, reimbursement of health care premiums and accelerated stock option vesting in the event that (i) the Company terminates Mr. Sblendorios employment without Cause (as defined in the agreement) or (ii) Mr. Sblendorio terminates his employment for Good Reason (as defined in the agreement). If Mr. Sblendorios employment is terminated for Cause, no benefits are provided to the officer under the agreement.
This agreement provides as follows:
Termination prior to a change in control. If the Company terminates Mr. Sblendorios employment without Cause, or if Mr. Sblendorio resigns for Good Reason, before a Change in Control Event (as defined in the agreement), he would be entitled to severance pay equal to one year of annual base salary, paid in a lump sum, one year of health care premium reimbursement (or reimbursement for a shorter period if Mr. Sblendorio commences employment with a new employer before the end of the one-year period), and one year of accelerated option vesting.
If Mr. Sblendorio resigns as the result of a material reduction in base salary prior to a Change in Control Event, the periods on which the severance pay and accelerated option vesting are based, as described above, would be reduced by 50%. The health care premium reimbursement period would not be reduced.
Termination after a change in control. If the Company terminates the employment of Mr. Sblendorio without Cause, or if Mr. Sblendorio resigns for Good Reason, during the one year period following a Change in Control Event, then in addition to the severance pay, health care premium reimbursement and accelerated option vesting described above, Mr. Sblendorio would receive an amount equal to 40% of his current annual base salary.
In order to receive any of these benefits, Mr. Sblendorio must deliver a general release in favor of the Company.
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.