Item 5. Other Information
Item 5 . Other Information.
Severance and Change in Control Policy
On August 9, 2022, the Board approved a Severance and Change in Control Policy (the “Severance & CIC Policy”) pursuant to which certain employees of the Company and our subsidiaries selected by the Board or its delegate will be eligible to participate (each, an “Eligible Employee”), including each of our currently employed named executive officers, Michael K. Lester (President and Chief Executive Officer) and J. Michael Bruff (Chief Financial Officer and Treasurer) (the “Named Executive Officers”). The terms “Cause,” “Good Reason” and “Change in Control” referred to below are defined in the Severance & CIC Policy.
Under the Severance & CIC Policy, an Eligible Employee whose employment is terminated by the Company without Cause or who resigns for Good Reason (a “Qualifying Termination”), in either case other than during the period beginning six months before a Change in Control and ending 12 months after the Change in Control, will be eligible to receive the following severance benefits: (a) 12 months (the “Severance Period”) of continued base salary; (b) monthly payments during the Severance Period equal to the Eligible Employee’s premium costs for continued coverage under the Company’s health, dental and other insurance plans; and (c) for the Chief Executive Officer (“CEO”) only, a pro-rata portion of the CEO’s annual cash bonus for the year of termination based on actual performance, generally payable at the same time as annual bonuses are paid to our other executives.
Under the Severance & CIC Policy, if the Eligible Employee’s Qualifying Termination occurs during the period beginning six months before a Change in Control and ending 12 months after the Change in Control, the Eligible Employee will be eligible to receive the following severance benefits instead of the benefits described in the previous paragraph: (a) a lump sum payment equal to 12 months of the Eligible Employee’s base salary (or 24 months for the CEO); (ii) a lump sum amount equal to the Eligible Employee’s target annual bonus for the year of termination, (iii) 12 monthly payments (or 24 for the CEO) equal to the Eligible Employee’s premium costs for continued coverage under the Company’s health, dental and other insurance plans; and (iv) except to the extent that an award agreement or applicable employment agreement entered into before the effective date of the plan provides for more favorable vesting terms or the terms of an award agreement or employment agreement entered after the effective date of the plan provides otherwise (x) full acceleration of the vesting of all of the Eligible Employee’s unvested and outstanding time-based equity
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awards and performance-based equity awards originally granted on or after June 9, 2021 (it being understood that such performance-based awards shall be deemed earned at the Change in Control assuming target performance and shall thereafter be converted into time-based equity awards) and (y) vesting of the Eligible Employee’s unvested and outstanding performance-based equity awards originally granted prior to June 9, 2021 based on actual performance through the Change in Control.
Receipt and retention of any severance benefits provided under the Severance & CIC Policy will be conditioned on (i) the Eligible Employee signing a release of claims in favor of the Company and our affiliates and on (ii) the Eligible Employee’s continued compliance with all non-competition, non-solicitation and confidentiality obligations contained in any agreement between the Eligible Employee and the Company or any of our affiliates.
The Board or its delegate will administer the Severance & CIC Policy. The Company generally may amend or terminate the Severance & CIC Policy in our discretion without the consent of participants, except that we may not, without an Eligible Employee’s consent, alter the terms of the Severance & CIC Policy so as to affect materially and adversely the Eligible Employee’s rights under the Severance & CIC Policy.
The terms of the Severance and CIC Policy reflect recommendations from an independent compensation consultant to the compensation committee of the Board, following a review of various executive compensation policies including the level of cash severance and equity treatment for a not-for-cause termination and a termination following a change in control, in accordance with market-based pay practices.
The foregoing is only a summary of the Severance & CIC Policy and is qualified in its entirety by reference to the full and complete terms of the Severance & CIC Policy, a copy of which is attached to this Periodic Report on Form 10-Q as Exhibit 10.6 and is incorporated herein by reference.
Base Salary and Target Bonus Increases
On August 8, 2022, the compensation committee of the Board approved an increase to the base salary for Mr. Lester (to $611,200 per year) retroactive to July 1, 2022. The compensation committee of the Board also approved an increase to Mr. Lester’s target annual bonus to 100% of his annual base salary (as in effect at the end of the year), effective for 2022. These adjustments reflect recommendations from an independent compensation consultant to the compensation committee of the Board, following a review of various executive compensation policies including the level of cash compensation and total direct compensation, in accordance with market-based pay practices.
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Item 6 . Exhibits.
Description of Exhibit Incorporated Herein by Reference
Exhibit
Number
Description
Form
File No.
Exhibit
Filing Date
Filed Herewith
10.1*
Credit Agreement, dated as of May 4, 2022, among LifeStance Health Holdings, Inc., Lynnwood Intermediate Holdings, Inc., and Capital One, National Association
X
10.2*+
Separation and General Release Agreement, dated as of May 22, 2022, between LifeStance Health Group, Inc. and Gwendolyn Booth
X
10.3*+
Independent Contractor Agreement, dated as of July 1, 2022, between LifeStance Health Group, Inc. and Gwendolyn Booth
X
10.4*+
Amendment to Restricted Stock Unit Award Agreement, dated as of June 30, 2022, between LifeStance Health Group, Inc. and Gwendolyn Booth
X
10.5*
Amendment to Stock Transfer Restriction Agreement, dated as of June 30, 2022, between LifeStance Health Group, Inc. and Gwendolyn Booth
X
10.6*+
Severance and Change in Control Policy
X
31.1*
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2*
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1*
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2*
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Filed herewith.
+ Indicates a management contract or compensatory plan, contract or arrangement.
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SIG NATURES
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.
LifeStance Health Group, Inc.
Date: August 10, 2022
By:
/s/ J. Michael Bruff
J. Michael Bruff
Chief Financial Officer and Treasurer
(principal financial and accounting officer)
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