SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 23, 2013
PDL BioPharma, Inc.
(Exact name of Company as specified in its charter)
(Commission File Number)
932 Southwood Boulevard
Incline Village, Nevada 89451
(Address of principal executive offices, with zip code)
(Company’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions:
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
2013 Annual Bonus Plan
On January 23, 2013, the Compensation Committee (the Compensation Committee) of the Board of Directors (the Board) of PDL BioPharma, Inc. (the Company) approved, and the Board ratified, a cash bonus plan covering the named executive officers for fiscal year 2013 (the 2013 Annual Bonus Plan).
Bonuses under the 2013 Annual Bonus Plan will be determined after evaluating 2013 corporate performance against the Company’s 2013 corporate goals and 2013 individual performance against the 2013 individual goals. The corporate and individual performance determinations are then weighted for each named executive officer.
The target bonus percentages and the maximum bonus percentage of the named executive officers’ annual average base salary compensation and the weighting of corporate and individual goals that will be used to determine each of our named executive officers’ fiscal year 2013 bonuses are set forth in the chart below:
In connection with the adoption of the 2013 Annual Bonus Plan, the Board adopted the Company’s 2013 corporate goals. The 2013 corporate goals and their relative weight are set forth in the chart below:
2014 Long-Term Incentive Plan
On January 23, 2013, the Compensation Committee approved a long-term incentive plan to compensate, retain and incentivize its executive officers (the 2014 LTIP). The Compensation Committee designated the effective date of the 2014 LTIP as January 1, 2013.
Under the 2014 LTIP, each executive officer is eligible for awards consisting of (i) restricted stock and (ii) a cash payment. Each executive officer’s restricted stock award was granted on January 24, 2013, and the number of shares underlying the restricted stock award was determined based on the closing price of the Company’s common stock on January 24, 2013, which was $6.72 per share (rounded to the nearest whole share).
The target cash payment and the restricted stock award for each executive officer are set forth in the chart below:
The Compensation Committee fashioned the 2014 LTIP so that all awards under the plan are at risk if certain performance criteria are not met. The Compensation Committee approved, and the Board ratified, the accomplishment of one of the following goals as the minimum performance required to be eligible for any payment under the 2014 LTIP: (i) sale or merger of Company; (ii) acquisition of revenue generating assets with either: (a) an aggregate value equal to or greater than a specified number or (b) a rate of return that extends the Company’s ability to pay dividends commensurate with past practice; or (iii) develop and implement plan to wind down the Company in a manner that optimizes shareholder value.
Subject to the acceleration provisions set forth in the severance agreements of the named executive officers (disclosed on May 26, 2011), the restricted stock award will fully vest on December 12, 2014, provided the executive officer remains employed by the Company through such date and the specified minimum performance criteria has been accomplished. Dividend payments and other distributions made on the restricted stock during the vesting period of the restricted stock will accrue through the vesting period and will be paid, plus interest, to the executive officer upon vesting of the restricted stock award.
Payment of the target cash payment under the 2014 LTIP will be made on or as soon as practicable after December 12, 2014, provided the executive officer remains employed by the Company through such date. In addition, if any of the performance goals adopted by the Compensation Committee set forth below are achieved on or before December 12, 2014, the executive officer may receive an additional cash payment equal to a percentage of the target cash payment (the Adjustment). The amount of the Adjustment and the achievement of each performance goal will be determined by the Compensation Committee, in its sole discretion, provided that the aggregate maximum cash payment that any executive officer may receive under the 2014 LTIP may not exceed three times his or her target cash payment. The Adjustment for each performance goal is set forth in the chart below:
The following examples demonstrate the calculation of the Adjustments.
If, at December 12, 2014, Mr. McLaughlin remains employed by the Company, the Company has successfully acquired revenue generating assets in excess of the minimum performance amount, and the Committee has determined that the aggregate value of revenue generating assets acquired by the Company warrants a 30% Adjustment, then Mr. McLaughlin’s cash payment will be equal to $609,700 ($469,000 (employment through December 12, 2014, and minimum performance criteria met) + $140,700 (revenue generating asset acquisitions warranting a 30% Adjustment) = $609,700).
Alternatively, if, at December 12, 2014, Mr. McLaughlin remains employed by the Company but the Company did not accomplish one of the three specified minimum performance goals, then Mr. McLaughlin would not be eligible for any payment of cash or stock under the 2014 LTIP.
Departure of Caroline Krumel, Vice President of Finance and Principal Accounting Officer
On January 25, 2013, Caroline Krumel, our Vice President of Finance and Principal Accounting Officer, resigned from the Company without notice, effective immediately. Ms. Krumel did not advise the Company of any disagreements over any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: January 29, 2013