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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 22, 2013
BOSTON SCIENTIFIC CORPORATION
(Exact name of registrant as specified in charter)
DELAWARE |
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1-11083 |
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04-2695240 |
(State or other |
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(Commission |
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(IRS employer |
jurisdiction of |
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file number) |
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identification no.) |
incorporation) |
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One Boston Scientific Place, Natick, Massachusetts |
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01760-1537 |
(Address of principal executive offices) |
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(Zip code) |
Registrants telephone number, including area code: (508) 650-8000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
5.02(b), (e) Transition of Jeffrey D. Capello from Executive Vice President and Chief Financial Officer Effective December 31, 2013 to Senior Advisor
On October 24, 2013, Boston Scientific Corporation (the Company) announced that Mr. Capello will transition out of his role as Executive Vice President and Chief Financial Officer of the Company effective as of December 31, 2013. At that time, Mr. Capello is expected to remain with the Company as a senior advisor (a Senior Advisor) through May 15, 2014 (such date, or any earlier date, the Separation Date).
Pursuant to a Transition and Separation Agreement, Mr. Capello will be entitled to the following:
· A base salary as a Senior Advisor at his current annual base salary of $610,029 (the Base Salary), assuming full-time status.
· After the Separation Date, subject to certain conditions, a lump sum payment representing his Base Salary prorated from the Separation Date through December 31, 2014.
· A bonus payment under the Companys 2013 Annual Bonus Plan (the 2013 Bonus Plan) at the incentive target percentage of 80% of Mr. Capellos Base Salary, subject to and modified by bonus pool funding/allocations and provided that Mr. Capello is an employee of the Company as of the bonus payout date, which will be at the same time and in the same manner as all other participants in the 2013 Bonus Plan, but in any event no later than March 15, 2014. The Companys 2013 Bonus Plan was previously filed with the Securities and Exchange Commission (the SEC).
· Waiver of certain requirements under the Companys 2012 and 2013 Free Cash Flow Performance Share Programs and Total Shareholder Return Performance Share Programs (collectively, the 2012 and 2013 FCF and TSR Programs) in order to retain eligibility to receive shares of Company common stock in respect of target performance share units awarded to Mr. Capello as to which the performance criteria under such programs have been satisfied. Shares of Company common stock to be issued in respect thereto will be prorated for the number of months worked during the respective service and/or performance periods and delivered at the same time and in the same manner as all other participants in such programs. The Companys 2012 and 2013 FCF and TSR Programs were previously filed with the SEC.
· Reimbursement for certain attorneys fees, in an amount up to $25,000, and for business travel and other out-of-pocket expenses incurred through the Separation Date in the performance of duties as an employee of the Company.
A form of Mr. Capellos Transition and Separation Agreement is included in this filing as Exhibit 10.1 and is incorporated herein by reference. This summary does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Transition and Separation Agreement.
5.02 (c), (e) Appointment of Daniel J. Brennan as Executive Vice President and Chief Financial Officer of Boston Scientific Corporation
On October 24, 2013, the Company announced the appointment of Daniel J. Brennan as Executive Vice President and Chief Financial Officer of the Company effective January 1, 2014 to coincide with the effective date of Mr. Capellos transition out of that role.
Mr. Brennan, 48, joined the Company in December 1996 as Controller of the Meditech Vascular Division. During his long tenure, he has held roles with increased responsibilities. In 1999, Mr. Brennan became Group Controller of the Non-Vascular Division. From 2001 through 2008, Mr. Brennan served as a Vice President of Finance and Information Technology for the Cardiovascular Division (2001-2005), International Finance (2005-2006), Investor Relations (2006-2007), Worldwide Financial & Strategic Planning (2008) and he served as Vice President and Assistant Corporate Controller for 2009. As Vice President over Investor Relations, Mr. Brennan served as the primary Company interface with the investment community; and as Vice President over the other functions, he had responsibility for, in various capacities, the Companys global accounting, financial and strategic planning processes for the Companys operations, among other things. Mr. Brennan is currently the Companys Senior Vice President and Corporate Controller, a role he has served in since January of 2010. In this role, he has been responsible for the Global Controllership organization, including, among other things, the Companys accounting and financial planning processes.
Under the terms of Mr. Brennans offer letter (the Offer Letter), as Executive Vice President and Chief Financial Officer, he will be entitled to the following:
· An annual base salary of $450,000.
· Continued eligibility to participate in the Companys Annual Bonus Plan (the Bonus Plan), and commencing with the Companys 2014 Bonus Plan, Mr. Brennans annual target incentive will be 70% of his base salary.
· Continued eligibility to participate in the Companys Deferred Bonus Plan (the DBP), and commencing in 2014, Mr. Brennan will be able to elect to defer up to 75% of the annual bonus awarded to him in 2014 or any subsequent year. The Companys DBP was previously filed with the SEC.
· An equity award having a total value of $1,500,000 on the effective date of grant to be made pursuant to the Companys 2014 Long Term Incentive Program under the Companys 2011 Long Term Incentive Plan (the LTIP) and on the date that 2014 long term incentive awards are made to other senior executives of the Company. The 2014 Long Term Incentive Program provides for a mix of performance share units, non-qualified stock options and deferred stock units, awards of which will be subject to the provisions of the LTIP, applicable award agreements and performance share programs and be provided with standard vesting conditions. The Companys LTIP was previously filed with the SEC.
· The opportunity to participate in the Companys Executive Retirement Plan, under which Mr. Brennan would be eligible to receive certain benefits if he retires (as defined in the Executive Retirement Plan) from the Company, including a lump sum payment equal to 2.5 months base salary for each year of service, subject to a maximum benefit of 36 months. The Companys Executive Retirement Plan was previously filed with the SEC.
· Payments and benefits provided for under the Companys standard Change in Control Agreement for its executive officers in the event of his termination by the Company without cause or his resignation for good reason following a Change in Control, all subject to and in accordance with the agreement. The form of executive level Change in Control Agreement was previously filed with the SEC.
Along with our other executive officers, Mr. Brennan will be provided with an Indemnification Agreement, in the form previously filed with the SEC.
A form of Mr. Brennans Offer Letter is included in this filing as Exhibit 10.2 and is incorporated herein by reference. This summary does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Offer Letter.
Item 8.01 Other Events.
A copy of the Companys press release dated October 24, 2013 announcing the events described under Item 5.02 above is included in this filing as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
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Description |
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10.1 |
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Form of Transition and Separation Agreement between Jeffrey D. Capello and Boston Scientific Corporation |
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10.2 |
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Form of Offer Letter dated October 22, 2013 between Daniel J. Brennan and Boston Scientific Corporation |
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99.1 |
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Press Release issued by Boston Scientific Corporation dated October 24, 2013 |
Cautionary Statement Regarding Forward-Looking Information
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like anticipate, expect, project, believe, plan, estimate, intend and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. These forward-looking statements include, among other things, statements regarding our leadership, management transition plans, growth and business strategy. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. These risks and uncertainties, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the statements expressed in this Current Report on Form 8-K. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements.
Factors that may cause such differences include, among other things: plans of our executives and their performance; future economic, competitive, reimbursement and regulatory conditions; new product introductions; demographic trends; intellectual property; litigation; financial market conditions; and future business decisions made by us and our competitors. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item 1A Risk Factors in our most recent Annual Report on Form 10-K filed with the SEC, which we may update in Part II, Item 1A Risk Factors in Quarterly Reports on Form 10-Q we have filed or will file hereafter. We disclaim any intention or obligation to publicly update or revise any forward-looking statements to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. This cautionary statement is applicable to all forward-looking statements contained in this document.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
October 24, 2013 |
BOSTON SCIENTIFIC CORPORATION | |
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By: |
/s/ Vance R. Brown |
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Vance R. Brown |
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Vice President and Chief Corporate Counsel |
INDEX TO EXHIBITS
Exhibit No. |
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Description |
10.1 |
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Form of Transition and Separation Agreement between Jeffrey D. Capello and Boston Scientific Corporation |
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10.2 |
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Form of Offer Letter dated October 22, 2013 between Daniel J. Brennan and Boston Scientific Corporation |
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99.1 |
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Press Release issued by Boston Scientific Corporation dated October 24, 2013 |
Exhibit 10.1
Duplicate Original 1 of 2
TRANSITION AND SEPARATION AGREEMENT
This Transition and Separation Agreement (the Agreement) is made as of its latest date of execution between Boston Scientific Corporation (Boston Scientific, BSC, or the Company) and Jeffrey D. Capello (you). Except as expressly provided herein, this Agreement and the Release (as defined below) supersede and cancel any prior employment agreements or arrangements you may have entered into with BSC except for (i) the Agreement Concerning Employment for U.S. Employees (Employment Agreement) attached hereto as Attachment 1, which you entered into by electronic acknowledgment on May 31, 2012, and (ii) the Directors and Officers Indemnification Agreement (Directors and Officers Indemnification Agreement) attached hereto as Attachment 2. Your obligations under the Employment Agreement shall be in addition or complementary to and shall not be superseded by this Agreement. However, if there is any conflict in terms between this Agreement and the Employment Agreement, the terms of this Agreement prevail.
WHEREAS, you are transitioning from your role as Executive Vice President and Chief Financial Officer (CFO) of the Company to a role as a Senior Advisor; and
WHEREAS, the Company desires you to continue your service as CFO for the remainder of 2013 and seeks your assistance as a Senior Advisor through May 15, 2014;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. TRANSITION TO SENIOR ADVISOR
(a) Transition from CFO. Effective December 31, 2013 (the Transition Date), you shall transition from your position as CFO and member of the Executive Committee and from any other positions that you then hold with Boston Scientific or any affiliate. Such actions shall be considered to be resignations from such positions. Immediately thereafter, you shall become a Senior Advisor to the Company until the Separation Date, as defined in Paragraph 1(e), below. If so requested by the Company, you shall sign any resignation document reasonably requested by the Company to confirm any such actions, provided such document is not inconsistent with anything set forth in this Agreement.
(b) Duties and Salary as a Senior Advisor. Your duties as a Senior Advisor shall be any duties reasonably assigned to you by the Companys President and Chief Executive Officer (the CEO) that are appropriate for an individual of your knowledge and experience in the industry. Your base salary as a Senior Advisor shall be at your current annual base salary of Six Hundred Ten Thousand Twenty-Nine Dollars and Sixteen Cents ($610,029.16), and will be payable on a bi-weekly basis, less withholding for taxes and other applicable deductions,
assuming full-time status. Nothing herein shall be construed as requiring you to come into the office during your employment as a Senior Advisor except upon request by the CEO with reasonable advance notice.
(c) Full-Time Status. Unless otherwise provided in writing by the CEO, you shall devote your working time during your employment as a Senior Advisor to your assigned responsibilities for the Company, except that you may engage in charitable or other nonprofit activities or serve as an advisor, consultant, director or trustee of any noncompetitive public or private for-profit organizations (in accordance with Company policies), provided that such services and activities are disclosed in writing to the CEO and the Company does not reasonably object to such services and activities.
(d) Classification. You shall continue to be classified as an employee of the Company during the period you serve as a Senior Advisor (the Transition Period). The transition of your position from CFO to Senior Advisor shall not be considered to result in a termination of your employment for any purpose, including without limitation, for employee benefits or equity vesting.
(e) Separation Date. Your last date of employment shall be May 15, 2014, or the date of your earlier resignation on or after January 1, 2014, or termination for Cause under Paragraph 3, below (in each case, the Separation Date).
2. PAYMENTS BY BSC
(a) Separation Pay. Within thirty (30) days following the Separation Date, and subject to your execution of the general release of claims in the form attached hereto as Attachment 3 (the Release) no earlier than the Separation Date but within twenty-one (21) days following the Separation Date and non-revocation thereof, you will receive a lump sum payment representing your base salary of Six Hundred Ten Thousand Twenty-Nine Dollars and Sixteen Cents ($610,029.16), prorated from the Separation Date through December 31, 2014, less withholding for taxes and other applicable deductions as required by law, if any (Separation Pay). You expressly acknowledge that as of your Separation Date, you are not eligible for any payments or benefits in addition to those described in this Agreement including under any existing BSC severance pay plan.
(b) Outplacement Assistance. Boston Scientific agrees to provide you with outplacement assistance provided by the firm of Lee, Hecht, Harrison, in an amount not to exceed Twenty Five Thousand Dollars ($25,000). In the event you choose not to utilize this outplacement assistance, you are not entitled to a cash payment in lieu of such services.
(c) Accrued Vacation and Salary. BSC will pay you, as soon as administratively practicable on or after the Separation Date, but in no event later than BSCs next regular pay date: (i) all accrued but unused vacation time through the Separation Date under applicable BSC policy and in accordance with applicable state law and (ii) all accrued but unpaid salary through
the Separation Date. You are entitled to these payments regardless of whether you execute this Agreement or the Release.
(d) Bonus. You will receive a bonus payment under the 2013 Boston Scientific Annual Bonus Plan (2013 Bonus Plan). Your bonus payment shall be at your previously established incentive target percentage of eighty percent (80%) of your base salary, modified by and subject to bonus funding to be determined in the ordinary course but only to the extent consistent with any such modifications and/or determinations made with respect to the bonuses of BSC executives participating in the Corporate Business Group under the 2013 Bonus Plan. For the avoidance of doubt, the calculation of the bonus payment referenced in the previous sentence shall not be subject to adjustment based on any determination regarding your individual performance. The bonus is payable at the same time and in the same manner as all other participants in the 2013 Bonus Plan. In order to receive the 2013 bonus payment, you must be an employee of the Company as of the bonus payout date, which shall be no later than March 15, 2014. You acknowledge that you will not be eligible for consideration for any bonus payments under any other or future Boston Scientific annual bonus plan, including without limitation the 2014 Annual Bonus Plan.
(e) Attorneys fees. Boston Scientific will reimburse you for legal fees you expend in connection with this Agreement in an amount up to Twenty-Five Thousand Dollars ($25,000).
3. TERMINATION FOR CAUSE
BSC shall not have the right to terminate your employment prior to May 15, 2014 other than for Cause. Cause shall be defined herein under the definition in the 2011 Long Term Incentive Plan. In the event of your termination for Cause under this Paragraph, you shall not be entitled to Separation Pay under Paragraph 2(a), and the Company reserves all forfeiture and recoupment rights under any other Company plans or policies.
4. TERMINATION OF EMPLOYMENT BENEFITS
(a) Your participation in BSCs Medical/Dental/Vision Plans and Healthcare Flexible Spending Account (as well as the participation of any of your dependents who were covered by such Plans or Account just prior to the Separation Date) shall continue through the Separation Date, on the same terms and conditions as such coverage and/or participation is made available from time to time to active BSC employees generally. You may continue your participation in BSCs Medical/Dental/Vision Plans and Healthcare Flexible Spending Account for eighteen (18) (or possibly more) months as provided under the Consolidated Omnibus Budget and Reconciliation Act of 1986 (COBRA), should you be eligible for and elect it. During the time of such participation, you will be responsible for making timely payments for the then applicable costs and fees. BSC shall directly pay, or reimburse you, for that portion of the premium for you and your covered dependents for an amount equal to the employer costs of COBRA from the Separation Date through December 31, 2014 (i.e., such monthly installments
shall be at the same level at which BSC makes contributions for such coverage on behalf of similarly situated, active employees). To enable BSC to comply with its obligation to provide notification of your rights to continue Medical/Dental/Vision Plan and/or Healthcare Flexible Spending Account participation, you agree to inform BSC of any change in address, dependent or marital status. You also acknowledge that you understand that the terms of BSCs Medical/Dental/Vision Plans and Healthcare Flexible Spending Account offered to BSC employees generally may change from time to time, and that your coverage and/or participation and associated costs will be subject to any such change.
(b) You further agree and acknowledge that your participation in all other Company benefits and benefit plans in which you are currently enrolled, including but not limited to Accidental Death and Dismemberment (AD&D), Business Travel Accident, Life Insurance, and Short-Term and Long-Term Disability Plans, shall continue through the Separation Date on the same terms and conditions as such coverage and/or participation is made available from time to time to active BSC employees generally, except that as of the Transition Date, you will no longer be eligible to participate in the Companys Executive Retirement Plan and your Change in Control Agreement shall terminate. To the extent permitted by the plans, you will be given the same rights to continue your coverage on a non-group basis as afforded to other employees and/or officers who have separated from employment.
5. STOCK OPTIONS, DEFERRED STOCK UNITS AND PERFORMANCE SHARE UNITS
You expressly agree and acknowledge that you will no longer be eligible to receive any new long term equity incentive awards under Boston Scientifics Long Term Incentive Plans and related programs, including without limitation the 2014 Long Term Incentive Program. Nothing in this Agreement is intended to modify the Companys or your rights and obligations (and restrictions on such rights and obligations) with respect to awards of stock options, deferred stock units and/or performance share units made to you under Boston Scientifics Long Term Incentive Plans and related programs, including without limitation your right to exercise vested stock options for twelve (12) months from the Separation Date and your forfeiture of all stock options, deferred stock units and performance share units that, in each instance, have not vested on or before the Separation Date. The terms of all applicable award agreements and plan documents remain in effect with respect to such awards, and for avoidance of doubt, you must be an employee of the Company as of any vesting dates in order for vesting to occur.
Notwithstanding the foregoing, (a) with respect to the performance share units awarded to you under the Boston Scientific 2012 and 2013 Free Cash Flow Performance Share Programs (respectively, the 2012 FCF Program and the 2013 FCF Program) and provided that with respect to such performance share units awarded under the 2013 FCF Program the Separation Date is after December 31, 2013: (i) Boston Scientific will waive the requirement that you be employed by the Company on December 31, 2014 and December 31, 2015, respectively, to be eligible to receive shares of Boston Scientific common stock in respect of such performance share units as to which the performance criteria under such programs have been satisfied and (ii)
any shares of Boston Scientific common stock to be issued in respect of such performance share units as to which the performance criteria under such program have been satisfied shall be prorated for the number of months worked during the respective Service Periods (as defined by 2012 FCF Program and 2013 FCF Program) and shall be delivered or otherwise made available to you in settlement thereof at the same time and in the same manner as other participants in such programs, but in any event no later than January 15, 2015 and January 15, 2016, respectively, and (b) with respect to the performance share units awarded to you under the Boston Scientific 2012 and 2013 Total Shareholder Return Performance Share Programs (respectively, the 2012 TSR Program and the 2013 TSR Program) and provided that with respect to such performance share units awarded under the 2013 TSR Program the Separation Date is after December 31, 2013: (i) Boston Scientific will waive the requirement that you be employed by the Company on December 31, 2014 and December 31, 2015, respectively, to be eligible to receive shares of Boston Scientific common stock in respect of such performance share units as to which the performance criteria under such programs have been satisfied and (ii) any shares of Boston Scientific common stock to be issued in respect of such performance share units as to which the performance criteria under such programs have been satisfied shall be prorated for the number of months worked during the respective Performance Periods (as defined by the 2012 TSR Program and the 2013 TSR Program) and shall be delivered or otherwise made available to you in settlement thereof at the same time and in the same manner as other participants in such programs, but in any event no later than March 15, 2015 and March 15, 2016, respectively. For the avoidance of doubt, the prorations discussed in this paragraph shall be based on the number of months of your employment during the Service Period or Performance Period, as applicable, over 36 (the number of months in the Service Period or Performance Period, as applicable), rounded to the nearest whole month. For example, assuming a Separation Date of May 15, 2014, the prorations contemplated by this paragraph shall be based on the ratio of (i) 29 to 36, with respect to the 2012 FCF Program and the 2012 TSR Program and (ii) 17 to 36, with respect to the 2013 FCF Program and the 2013 TSR Program. BSC agrees that it will provide, annually and for illustrative purposes only, (with the first such schedule being provided on or prior to the date of this Agreement) a schedule of the awards that you are eligible to earn under the 2012 FCF Program, 2013 FCF Program, 2012 TSR Program and 2013 TSR Program, including those for which the Company performance criteria have been satisfied. On or before January 31 of each of 2014, 2015 and 2016, BSC will provide you with the total shareholder return performance for BSC and the control group under the 2012 TSR Program and 2013 TSR Program for the previous calendar year.
6. EXPENSE REIMBURSEMENT
BSC will reimburse you in accordance with usual BSC policy for all unreimbursed business travel and other out-of-pocket expenses incurred by you through the Separation Date in the performance of your duties as an employee of BSC. Such expenses must be submitted in accordance with BSC policies. You are entitled to these payments regardless of whether you execute this Agreement or the Release.
7. RELEASE BY EMPLOYEE
You hereby release and forever discharge BSC and its subsidiaries, affiliates, predecessors, successors, and assigns and the Directors, officers, shareholders, employees, representatives and agents of each of the foregoing (collectively Releasees) of and from the following as of the date of your execution of this Agreement:
(a) Any and all claims, demands, and liabilities whatsoever of every name and nature (other than those arising directly out of this Agreement and/or the Directors and Officers Indemnification Agreement referenced below, and those you may have for workers compensation benefits, equity, BSCs 401(k) plan and deferred compensation plan, that, in each instance, are vested as of the Separation Date, or under COBRA or unemployment compensation), including (without limitation) any claim in the nature of so-called whistleblower complaints to the extent permitted by applicable law, and any and all claims, demands and liabilities with respect to your employment or the terms and conditions or notice of termination or termination of your employment, benefits or compensation which you have against Releasees, or ever had;
(b) As included in the above, without limitation, all claims known or unknown for tortious injury, breach of contract (other than claims for breach of this Agreement and/or the Directors and Officers Indemnification Agreement referenced below), and wrongful discharge (including without limitation, any claim for constructive discharge), all claims for infliction of emotional distress, all claims for slander, libel, or defamation of character, all claims of retaliation, and all claims for attorneys fees, as related to your employment, or the terms and conditions or notice of termination or termination of your employment, benefits, or compensation; and
(c) You specifically release and forever discharge Releasees from any and all claims based upon any allegation of employment discrimination, including (without limitation) discrimination on the basis of race, color, sex, sexual orientation, age, religion, disability, genetic testing or national origin; provided that this sentence shall not have any effect on your ability to participate in any investigation or proceedings conducted by the Equal Employment Opportunity Commission (EEOC, which term hereinafter shall be deemed to refer to the EEOC or any state or local fair employment practices agency); provided, however, that you do release your right to secure damages for any alleged discriminatory, harassing or retaliatory treatment.
(d) In accordance with the Older Workers Benefit Protection Act, you expressly acknowledge and agree that, by entering into this Agreement, you are waiving any and all rights or claims that you may have under the Age Discrimination in Employment Act of 1967 (ADEA), as amended, arising on or before the date you execute this Agreement. You further expressly acknowledge and agree that you have been given the opportunity, if you so desire, to consider this Agreement for twenty-one (21) days before executing it. In the event that you execute the Agreement within less than twenty-one (21) days of the date of its delivery to you, you acknowledge that such decision was entirely voluntary and that you had the opportunity to
consider this Agreement for the entire twenty-one (21) day period. You agree that any modifications, material or otherwise, made to this Agreement do not restart or affect in any manner the original twenty-one (21) day consideration period. BSC acknowledges that for a period of seven (7) days from the date of the execution of this Agreement, you shall retain the right to revoke this Agreement by written notice to Boston Scientific c/o Wendy Carruthers, Sr. Vice President, Human Resources, One Boston Scientific Place, Natick, MA 01760-1527, or her successor, and that this express Agreement shall not become effective or enforceable until the date such revocation period expires (the Effective Date). Therefore, no BSC obligations will be met and payments called for by BSC under Paragraph 2, other than Paragraph 2(c) hereto, shall not be made until after the Effective Date.
8. RELEASE BY BSC
BSC hereby releases and forever discharges you of and from the following as of the date of your execution of this Agreement: Any and all claims, demands, and liabilities whatsoever of every name and nature (other than those arising directly out of this Agreement) with respect to your employment and/or service as an officer, or your separation from employment and/or service as an officer, which it has against you, or ever had, as a result of any facts or circumstances that occurred or existed or of which BSC had notice or about which, with usual and customary diligence BSC would have known, at any time to the date of BSCs execution of this Agreement; provided, that notwithstanding the foregoing, BSC does not release any and all forfeiture and recoupment rights under any annual bonus plans or equity incentive plans or agreements; and, provided, further, that, notwithstanding the foregoing, BSC does not release you from any civil claims based on any facts and/or omissions that satisfy the elements of a criminal offense or claims arising out of your deliberate misconduct that resulted in material injury to BSC, provided, however, that BSC hereby represents that it knows of no such claims.
9. NO DAMAGES SOUGHT
You represent and state that you have not sought and will not seek or accept any damages or individualized relief in connection with any complaints or charges filed against Releasees with any local, state or federal agency or court, and you agree that if any complaint or charge is filed on your behalf, you shall take all reasonable steps necessary to refuse any damages or individualized relief in connection therewith.
10. INDEMNIFICATION
You shall have all rights to indemnification with respect to legal claims and legal expenses that are available to current and former officers of BSC under the Certificate of Incorporation and Bylaws of BSC and to you under your Directors and Officers Indemnification Agreement, attached hereto as Attachment 2.
11. NO LIABILITY ADMITTED
You and BSC acknowledge that neither the execution of this Agreement nor the performance of any of its terms shall constitute an admission by you or BSC of any wrongdoing by any of the Releasees or by you.
12. RESTRICTIVE COVENANTS AND OTHER OBLIGATIONS
You acknowledge that you are subject to restrictions on post-employment activities and obligations with respect to the protection of confidential and proprietary information and the return of BSC property under the Employment Agreement as set forth in Attachment 1 hereto.
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
In addition to the Employment Agreement, you agree that you shall keep entirely secret and confidential, and shall not disclose to any person or entity, in any fashion or for any purpose whatsoever, any information that is (i) not available to the general public, and/or (ii) not generally known outside BSC, regarding Releasees (other than information related to persons for which neither you nor BSC or its subsidiaries or affiliates had a duty or obligation to maintain the confidentiality of), to which you have had access or about which you heard in the course of performing your duties for BSC, including, without limitation, any information relating to any of the Releasees business; their plans, strategies, prospects or objectives; their technology, processes or specifications; their manufacturing, distribution, procurement, sales and support practices and operations; their financial conditions and results of their operations; their operational strengths and weaknesses; and their personnel and compensation policies, procedures and transactions. Notwithstanding the foregoing, the obligations described in the previous sentence shall not apply to information (i) that is or becomes generally known to or available for use by the public through no act or fault on your part, or (ii) that is required to be disclosed by an order of a court of competent jurisdiction or by applicable law or regulation; provided, however, that if you are so required to disclose such confidential information, you shall, to the extent permitted by law and reasonable under the circumstances and at BSCs expense, (A) provide BSC an opportunity to seek to prevent the disclosure of, or to obtain a protective order for, such confidential information by giving BSC advance notice of such disclosure and (B) make such required disclosures in consultation with BSC and cooperate with BSC as reasonably requested.
14. NO DETRIMENTAL COMMUNICATIONS
You agree that you will not make or cause to be disclosed any negative, adverse or derogatory statements to any media outlet, industry group, financial institution or current or former employee, consultant, client or customer of the Releasees regarding any of the Releasees or about any of the Releasees products or services, business affairs, financial condition or prospects for the future. Furthermore, you hereby represent to BSC that you have made no such communication, and you acknowledge that BSC relies upon this representation in agreeing to enter into this Agreement. BSC likewise agrees that neither it nor any of its directors or executive officers will make or cause to be disclosed any negative, adverse or derogatory
statements to any media outlet, industry group, financial institution, current or former employee, consultant, client or customer of the Releasees, or a third party that is your prospective employer, client or business associate regarding you. Furthermore, BSC hereby represents to you that none of its executive officers has made any such communication, and BSC acknowledges that you rely upon this representation in agreeing to enter into this Agreement. BSC acknowledges that the parties shall mutually agree on talking points to be used when responding to third party inquiries.
15. FUTURE ASSISTANCE
BSC may seek your assistance, cooperation or truthful testimony in connection with any investigation, litigation, patent application or prosecution, or intellectual property or other proceeding arising out of matters within your knowledge and/or related to your position as an employee of BSC, and in any such instance, you shall provide such assistance, cooperation or truthful testimony and BSC shall pay your reasonable costs and expenses in connection therewith.
16. CONFIDENTIALITY
You acknowledge and understand that the terms of this Agreement may be filed in accordance with the rules and regulations of the Securities and Exchange Commission and may therefore become publicly available.
17. RECOUPMENT OF SEPARATION PAY
In the event of a final determination by a court of competent jurisdiction that there has been a breach by you of a material obligation under this Agreement or the Employment Agreement, and following advance notice (to the extent reasonable under the circumstances) by BSC of the breach and an opportunity to cure, to the extent such breach is susceptible to cure in the sole discretion of BSC, you shall repay to BSC the Separation Pay, and shall be liable, moreover, for any damages which a court may finally determine and shall be subject to injunctive relief damages, and any other relief which a court may award; provided that this sentence shall not have any effect on your ability to participate in any investigation or proceedings conducted by the EEOC; provided, however, that you do release your right to secure damages for any alleged discriminatory, harassing or retaliatory treatment. In addition, for the one-year period following the Separation Date, the Company will have the right to require you to repay the full amount of the Separation Pay to the Company, if it is finally determined by a court of competent jurisdiction that, within such one-year period, BSC reasonably had Cause for termination, as defined in the 2011 Long Term Incentive Plan. BSC hereby represents that it knows of no facts or circumstances that would constitute Cause for your termination.
Notwithstanding anything to the contrary this Agreement, you acknowledge and agree that any and all forfeiture and recoupment rights under any annual bonus plans or equity incentive plans or agreements remain in full force and effect. For the avoidance of doubt, BSCs
rights to repayment of the Separation Pay shall be pursuant to and governed solely by the terms of this Agreement.
18. GOVERNING LAW; SEVERABILITY
This Agreement is entered into and shall be construed under the laws of the State of Massachusetts. In the event any provision of this Agreement is determined to be illegal or unenforceable by a duly authorized court of competent jurisdiction, then the remainder of this Agreement shall not be affected thereby, it being the intention of the parties that each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. You acknowledge and agree that you will forfeit the amounts paid or payable under Paragraph 2(a) if you challenge the validity of the release.
19. WAIVERS; AMENDMENTS
The failure of either party to require the performance of any term or obligation of this Agreement, or the waiver by either party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation and shall not be deemed a waiver of any subsequent breach. No modification, alteration, or change or waiver of any provision of this Agreement shall be effective unless in writing and signed by both parties wherein specific reference is made to this Agreement.
20. NO OTHER INDUCEMENTS
This Agreement sets forth the entire understanding of the parties in connection with its subject matter. Any and all prior negotiations are merged in this Agreement. Neither of the parties has made any settlement, representation or warranty in connection with the issues addressed in this Agreement (except those expressly set forth in this Agreement) which has been relied upon by the other party, or which acted as an inducement for the other party to enter into this Agreement.
21. PERSONS BOUND BY THE AGREEMENT
This Agreement shall be binding upon and inure to the benefit of you and to the benefit of each of the Releasees and their respective successors and assigns.
22. ASSIGNMENT OF INTERESTS
You warrant that you have not assigned, or transferred or purported to assign or transfer any claim against Releasees.
23. PREVAILING PARTY ENTITLED TO FEES
In the event that any action or proceeding is initiated to enforce or interpret the provisions of this Agreement, or to recover for a violation of the Agreement, the prevailing party
in any such action or proceeding shall be entitled to its costs (including reasonable attorneys fees).
24. SECTION 409A OF THE CODE
This Agreement is intended, to the greatest extent permitted under law, to comply with the short-term deferral exemption and the separation pay exemption provided in Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other interpretative guidance issued thereunder (Section 409A) such that no benefits or payments under this Agreement are subject to Section 409A. Notwithstanding anything herein to the contrary, the timing of any payments under this Agreement shall be made consistent with such exemption. Your right to receive a series of installment payments under this Agreement, if any, shall be treated as a right to receive a series of separate payments. To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A, including without limitation any such regulations or other guidance that may be issued after the Separation Date. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any amounts payable hereunder may be subject to Section 409A, the Company may, to the extent permitted under Section 409A cooperate in good faith to adopt such amendments to this Agreement or adopt other appropriate policies and procedures, including amendments and policies with retroactive effect, that the Company determines are necessary or appropriate to avoid the imposition of taxes under Section 409A; provided, however, that this paragraph shall not create an obligation on the part of the Company to adopt any such amendment, policy or procedure or take any such other action, nor shall the Company have any liability for failing to do so. To the extent that any reimbursements payable pursuant to this Agreement are subject to the provisions of Section 409A, such reimbursements shall be paid to you no later than December 31 of the year following the year in which the expense was incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, and your right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
25. TAXES. You understand and agree that all payments under this Agreement will be subject to appropriate tax withholding and other deductions as required by law, if any.
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25. REPRESENTATION
BSC hereby advises you to consult an attorney of your choice before executing this Agreement. You represent that, prior to executing this Agreement; you were advised to and had the opportunity to review the provisions of this Agreement with counsel of your choice.
The parties have read the foregoing Agreement and know its contents, and know that its terms are contractual and legally binding. The parties further agree that they enter this Agreement voluntarily and that they have not been pressured or coerced in any way into signing this Agreement.
IN WITNESS WHEREOF, the parties hereby agree.
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Exhibit 10.2
October 22, 2013
Daniel J Brennan
95 Thornton Road
Needham, MA 02492
Dear Dan,
We are pleased to offer you the position of Executive Vice President and Chief Financial Officer reporting to Michael Mahoney, President and Chief Executive Officer, effective January 1, 2014. As part of this offer, you will become a member of Boston Scientifics Executive Committee. The terms and conditions of your offer are as follows:
BASE SALARY
Base salary for this position will be $17,307.70 currently payable bi-weekly (less withholding for taxes and other applicable deductions), equivalent to $450,000.20 on an annualized basis. Your performance and compensation would generally be reviewed on an annual basis during the normal executive review process. The Boston Scientific performance year currently runs from January 1st through December 31st of each year. Your 2014 performance and base salary will be reviewed during the normal executive review process expected to commence in the first quarter of 2015.
ANNUAL BONUS PLAN
You will continue to be eligible to participate in the Boston Scientific Corporation Annual Bonus Plan subject to and in accordance with its terms. The Annual Bonus Plan provides employees with the opportunity for a variable financial incentive in recognition of performance in a given performance year. Starting with the 2014 Annual Bonus Plan, your annual target incentive will be 70% of base salary. Your actual award will be based on your achievement of individual goals and the companys achievement of corporate/business performance goals. Under the current plan, you would have to be an active employee on the date of payment to receive any award pay-out under the plan.
DEFERRED BONUS PROGRAM
You will continue to be eligible to participate in the Boston Scientific Corporation Deferred Bonus Plan subject to and in accordance with its terms. This plan allows eligible employees to save additional tax-deferred money for the future by deferring a portion of their annual bonus awarded under the Annual Bonus Plan. Specifically, under the plan, on an annual basis, you would be able to elect to defer up to 75% of the Annual Bonus Plan bonus awarded to you starting with 2014 or any subsequent year.
ANNUAL AND PROMOTIONAL EQUITY:
During the normal executive performance and compensation review process expected to occur in the first quarter of 2014, management will recommend an annual equity incentive award, inclusive of a promotional equity award, having a total value of $1,500,000.00 on the date of grant per Boston Scientifics Long Term Incentive Program. The effective date of grant would be the date that the 2014 annual equity incentive awards are made to other senior executives of Boston Scientific. The current program provides for a mix of performance shares, non-qualified stock options, and deferred stock units.
Total Shareholder Return Performance Share Program (TSR PSP) Award: A TSR PSP award reflects Boston Scientifics commitment to grant to you a number of shares of Boston Scientific common stock (less applicable tax and other withholdings), subject to certain performance, eligibility and other conditions, and will fully vest at the end of a three year period beginning on the effective date of the grant. The target number of Performance Share Units
(PSU) to be awarded to you will be calculated using the Fair Market Value (closing price) of Boston Scientific common stock on the effective date of grant. The actual number of shares delivered to you at the end of the vesting period will be based on Boston Scientifics stock performance over the three year period as compared to the S&P HealthCare Index and may be earned at less than, at or greater than the target number of PSUs awarded. The TSR PSP award will be subject to the provisions of the Boston Scientific 2011 Long Term Incentive Plan (2011 LTIP), the TSR PSP and the PSU Award Agreement and be provided with the standard vesting provisions.
Free Cash Flow Performance Share Program (FCF PSP) Award: A FCF PSP award reflects Boston Scientifics commitment to grant to you a number of shares of Boston Scientific common stock (less applicable tax and other withholdings), subject to certain performance, eligibility and other conditions, and will fully vest at the end of a three year period beginning on the effective date of the grant. The target number of Performance Share Units (PSU) to be awarded to you will be calculated using the Fair Market Value (closing price) of Boston Scientific common stock on the effective date of grant. The actual number of shares delivered to you at the end of the vesting period will be based on Boston Scientifics Free Cash Flow performance against plan in 2014 and may be earned at less than, at or greater than the target number of PSUs awarded. The FCF PSP award will be subject to the provisions of the Boston Scientific 2011 Long Term Incentive Plan (2011 LTIP), the FCF PSP and the PSU Award Agreement and be provided with the standard vesting provisions.
DSU Award: An award of Deferred Stock Units (DSUs) reflects Boston Scientifics commitment to grant to you a number of shares of Boston Scientific common stock (less applicable tax and other withholdings), to be issued in five equal annual increments beginning on the first anniversary of the date of the grant. The DSU award will be subject to the provisions of the Boston Scientific 2011 Long Term Incentive Plan (2011 LTIP) the DSU Award Agreement and be provided with the standard vesting provisions.
Non-Qualified Stock Options: A stock option grant provides an opportunity to purchase shares of Boston Scientific common stock at the exercise price. The number of stock options granted to you would be calculated using a Black Scholes calculation of the value of the options on the effective date of grant. The exercise price would be equal to the Fair Market Value (closing price) of Boston Scientific common stock on the effective date of grant. The stock option grant would vest in four equal annual installments beginning on the first anniversary of the date of grant and would expire on the 10th anniversary of the grant date. The stock option award will be subject to the provisions of the Boston Scientific 2011 Long Term Incentive Plan (2011 LTIP) the Non-Qualified Stock Option Award Agreement and be provided with the standard vesting provisions.
Thereafter, you would continue to be eligible for consideration for an annual equity incentive award subject to and in accordance with the terms of Boston Scientifics Long Term Incentive Program during the normal executive review process. An award would depend on both company and individual performance. The target value for your level is evaluated annually by the Compensation Committee of the Boston Scientific Board of Directors.
BENEFITS
You will continue to be eligible for Boston Scientifics current U.S. benefit programs subject to and in accordance with its terms. Please understand that the company reserves the right to unilaterally amend or terminate any of these programs, or to require or change employee premium contributions toward benefits.
EXECUTIVE RETIREMENT PLAN
As an Executive Committee Member, if you were to Retire from Boston Scientific (as that term is defined in our Executive Retirement Plan), you may be eligible to receive certain benefits provided under that plan subject to and in accordance with its terms. A copy of Boston Scientifics Executive Retirement Plan is attached for your information.
CHANGE IN CONTROL AGREEMENT
As an Executive Committee Member, Boston Scientific will provide you an executive-level Change in Control agreement. In general, the Change in Control agreement would entitle you to a lump sum payment of three times your base salary and assumed on-plan incentive bonus if, following a change in control of Boston Scientific, either your employment is terminated other than for cause or you resign for good reason (each as defined in the Change in Control agreement) all subject to and in accordance with the agreement. A copy of this agreement would be distributed to you in your first week of your new role.
EMPLOYMENT AT WILL
You will remain an at will employee of Boston Scientific. This means that you will be free to resign at any time. Likewise, Boston Scientific will have the right to terminate your employment at any time with or without reason or notice. Acceptance of this offer acknowledges your understanding and acceptance of the at will nature of your employment.
ACCEPTANCE
This offer letter is contingent upon the following:
· An acceptance date of no later than October 23, 2013;
· Your immediate signing of the 2013 Agreement Concerning Employment.
Dan, we believe this opportunity to be a mutually-rewarding one and look forward to your contributions and continued success with Boston Scientific.
Sincerely,
Michael Mahoney
President and Chief Executive Officer
Agreed to and Accepted by: |
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Daniel J Brennan |
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Enclosures
Agreement Concerning Employment
The Boston Scientific Corporation Executive Retirement Plan
Exhibit 99.1
FOR IMMEDIATE RELEASE
BOSTON SCIENTIFIC ANNOUNCES TRANSITION PLAN FOR NEW
CHIEF FINANCIAL OFFICER
JEFFREY CAPELLO TO TRANSITION OUT OF CFO ROLE AT YEAR-END
DANIEL BRENNAN, BOSTON SCIENTIFIC CORPORATE CONTROLLER,
NAMED AS SUCCESSOR
Natick, Mass. (October 24, 2013) Boston Scientific Corporation (NYSE: BSX) has initiated a transition plan for its new chief financial officer. Noting a desire to pursue opportunities for a broader management position, Jeffrey Capello, Boston Scientifics executive vice president and chief financial officer, will transition out of the role effective December 31, 2013. Effective January 1, 2014, Daniel Brennan, currently the companys senior vice president and corporate controller, will be promoted to executive vice president and chief financial officer of Boston Scientific. At that time, Brennan will become a member of the companys Executive Committee and report directly to Mike Mahoney, president and chief executive officer, Boston Scientific.
Capello will work with Brennan to help ensure a smooth transition through December 2013, and is expected to remain with the company as a senior advisor until mid-May 2014.
I would like to thank Jeff for the significant contributions he made to Boston Scientific during the past five years, stated Mahoney. I am confident that by promoting Dan to the critical role of CFO, there will be a seamless transition as we continue to execute against our strategic plan.
Brennan joined Boston Scientific in 1996. During his tenure, he has held roles with increased responsibilities, including vice president of finance and information technology for the Cardiovascular Division, vice president of international finance and vice president of investor relations. Brennan was named to his current role as senior vice president and corporate controller in January, 2010.
Editors Note: For a high-resolution photo of Dan Brennan, please CLICK HERE to access the companys Media Newsroom site.
About Boston Scientific
Boston Scientific transforms lives through innovative medical solutions that improve the health of patients around the world. As a global medical technology leader for more than 30 years, we advance science for life by providing a broad range of high performance solutions that address unmet patient needs and reduce the cost of healthcare. For more information, visit www.bostonscientific.com and connect on Twitter and Facebook.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like anticipate, expect, project, believe, plan, estimate, intend and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. These forward-looking statements include, among other things, statements regarding our leadership, management transition plans, growth and business strategy. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. These risks and uncertainties, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the statements expressed in this press release. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements.
Factors that may cause such differences include, among other things: plans of our executives and their performance; future economic, competitive, reimbursement and regulatory conditions; new product introductions; demographic trends; intellectual property; litigation; financial market conditions; and future business decisions made by us and our competitors. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item 1A Risk Factors in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which we may update in Part II, Item 1A Risk Factors in Quarterly Reports on Form 10-Q we have filed or will file hereafter. We disclaim any intention or obligation to publicly update or revise any forward-looking statements to reflect any change in our expectations or in events, conditions or circumstances on which those expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. This cautionary statement is applicable to all forward-looking statements contained in this document.
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CONTACT: |
Denise Kaigler |
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508-650-8330 (office) |
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Corporate Affairs & Communications |
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Boston Scientific Corporation |
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denise.kaigler@bsci.com |
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Michael Campbell |
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508-650-8023 (office) |
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Investor Relations |
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Boston Scientific Corporation |
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investor_relations@bsci.com |
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