iRhythm Holdings, Inc. 10-Q

ITEM 5. OTHER INFORMATION On August 1, 2019, the Compensation Committee of the Company’s Board of Directors (and, with respect to our Chief Executive Officer, the independent members of our Board of Directors, on August 2, 2019) approved a new Severance and Change in Control Policy (the “Policy”), which provides a standardized approach for the receipt of severance and change in control payments and benefits by certain employees with a title of Vice President or above, including Kevin M. King, Douglas Devine, David A. Vort and Mark J. Day (each an “Officer”). On August 4, 2020, our Board of Directors approved the plan documents associated with the Policy. 67 Generally, the Policy replaced the individual Change of Control and Severance Agreements which we had previously entered into with each Officer who was employed at the time, which had expired at the completion of their two-year term in September 2019. Under the Policy, if, within the period three months prior to and 12 months following a “change of control” (such period, the “Change in Control Period”), we terminate the employment of the applicable Officer other than for “cause,” death or “disability,” or the Officer resigns for “good reason” (as such terms are defined in the Policy) and, within 60 days following the Officer’s termination, the Officer executes an irrevocable separation agreement and release of claims, the Officer is entitled to receive from the Company (i) a lump sum severance payment equal to the payment of the Officer’s base salary (as in effect immediately prior to the qualifying termination, or if the qualifying termination is due to good reason based on a material reduction in base salary, then the Officer’s base salary in effect immediately prior to such reduction) for 24 months for Mr. King, and 15 months for Messrs. Devine, Vort and Day, (ii) payment of premiums to maintain group health insurance continuation benefits pursuant to “COBRA” for the employee and the employee’s dependents for up to 24 months for Mr. King and 15 months for Messrs. Devine, Vort and Day, (iii) a lump sum payment equal to 150% of the target bonus in effect for the fiscal year in which termination occurs for Mr. King, and 100% of the target bonus for Messrs. Devine, Vort and Day, (iv) accelerated vesting as to 100% of the Officer’s outstanding unvested equity awards (if vesting depends on achievement of performance criteria, then assuming performance criteria has been achieved at target levels), and (v) with respect to Mr. King only, the stock options granted to Mr. King on September 27, 2012 and June 13, 2013 will remain exercisable until the earlier of the 18 month anniversary of Mr. King’s qualifying termination, the 10 year anniversary of the applicable option’s grant date, or the original maximum term of the option. In addition, under the Policy, if, outside of a Change in Control Period, we terminate the employment of the applicable Officer other than for cause, death or disability, or the Officer resigns for good reason and, within 60 days following the Officer’s termination, the Officer executes an irrevocable separation agreement and release of claims, the Officer is entitled to receive (i) continuing payments of severance pay at a rate equal to the aggregate amount of the Officer’s base salary (as in effect immediately prior to the qualifying termination, or if the qualifying termination is due to good reason based on a material reduction in base salary, then the Officer’s base salary in effect immediately prior to such reduction) for up to 18 months for Mr. King, and 12 months for Messrs. Devine, Vort and Day, and (ii) payment of premiums to maintain group health insurance continuation benefits pursuant to “COBRA” for the Officer and the Officer’s dependents for 18 months for Mr. King, and 12 months for Messrs. Devine, Vort and Day. Under the Policy, in the event any payment to the applicable Officer pursuant to the Policy would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, as amended, or the Code (as a result of a payment being classified as a parachute payment under Section 280G of the Code), the Officer will receive such payment as would entitle the Officer to receive the greatest after-tax benefit, even if it means that we pay the Officer a lower aggregate payment so as to minimize or eliminate the potential excise tax imposed by Section 4999 of the Code. The Policy does not require us to provide any tax gross-up payments to an Officer. The foregoing description of the Policy is qualified in its entirety by reference to the Policy, which is filed as exhibit 10.1 to this Form 10-Q. We were incorporated in Delaware on September 14, 2006. Our principal executive offices are now located at 699 8th Street, Suite 600, San Francisco, CA 94103, and our telephone number is (415) 632-5700. Our website address is www.iRhythmTech.com. Investors and others should note that we announce material financial information to our investors using SEC filings, press releases, our investor relations website, public conference calls and webcasts. We use these channels as well as social media to communicate with investors, customers and the public about our company, our products and other issues. It is possible that information we post on social media channels could be deemed to be material information. We encourage investors, our customers and others interested in our company to review the information we post on our Facebook page (https://www.facebook.com/iRhythmTechnologies/) and Twitter feed (https://twitter.com/iRhythmTech). The information on, or that may be accessed through, our website and social media channels is not incorporated by reference into this Quarterly Report on Form 10-Q and should not be considered a part of this Quarterly Report on Form 10-Q. ITEM 6. EXHIBITS The exhibits listed in the accompanying exhibit index are filed as part of, and incorporated by reference into, this Quarterly Report on Form 10-Q. 68 EXHIBIT INDEX Exhibit Number Description 31.1 Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document * The certifications filed as Exhibits 32.1 are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the Company under the Securities Exchange Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof irrespective of any general incorporation by reference language contained in any such filing, except to the extent that the registrant specifically incorporates it by reference. 69 SIGNATURES 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 thereunto duly authorized. iRhythm Technologies, Inc. Date: November 6, 2020 By: /s/ Kevin M. King Kevin M. King President and Chief Executive Officer (Principal Executive Officer) Date: November 6, 2020 By: /s/ Douglas J. Devine Douglas J. Devine Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer) 70