payments will be paid to the executivemade in a lumpsingle sum within 30 days afterfollowing the “change in control.” If the “change in control” occurs. Similarly, ifdoes not so qualify under Section 409A, then the executive is terminated within 2 years following a “change in control” of the Company, the severancepayments/ remaining payments would be transferred to a rabbi trust and monthly payments would be made from that trust unless the “change in control” qualifies under Section 409A of the Code, in which case the severance payments would be paid to the executive in a lump sum within 30 days of his termination of employment. In addition, the Company must reimburse the executive for his legal fees in connection with any good faith claim for severance payments under the employment agreement. Each employment agreement provides that the severance payments will not be offset or mitigated by any income from another source during the severance period.trust.
The employment agreements for Messrs. Attea, Myszka,(as amended and Rogers also provide for payments in the event of termination by reason of the executive’s death or disability during the term of his employment agreement. The payments will be in an amount equal to two times the executive’s thenrestated effective per annum rate of salary plus a pro rata portion of the incentive compensation for the calendar year in which the death or disability occurs. In the event of death, such payments will be paid in eight quarterly installments following the date of the executive’s death. In the case of the executive’s disability, such payments will be made in 24 monthly installments, with the first 6 installments paid in a lump sum within 30 days following the executive’s separation from service, and the remaining 18 installments made over 18 months beginning with the seventh month after the executive’s separation from service. The disability payments to the executive would be reduced by any amounts paid to the executive in connection with the Company’s disability insurance contracts.
Pursuant to the employment agreements with Messrs. Attea, Myszka, and Rogers and the Company’s award and option plan all stock options held by such parties will vest in the event of their termination without “cause”, for “good reason” or death or disability or in the event of a “change in control”.
For purposes of the employment agreements described above, the terms have the meanings set forth below:
“change in control” generally includes:
(i) the acquisition by any person of 20% or more of the outstanding stock of the Company;
(ii) approval by the shareholders of the Company of a consolidation, merger or other business combination involving the Company in which the Company is not the surviving entity, other than a transaction in which the holders of the Company’s Common Stock immediately prior to the transaction have substantially the same proportionate ownership of Common Stock of the surviving corporation after the transaction;
(iii) approval by the shareholders of the Company of any consolidation, merger or other business combination in which the Company is the continuing or surviving corporation but in which the common shareholders of the Company immediately prior to the transaction do not own at least a majority of the outstanding Common Stock of the continuing or surviving corporation;
(iv) approval by the shareholders of the Company of any sale, lease or exchange of substantially all of the assets of the Company and its subsidiaries;
(v) a change in the majority of the members of the Board of Directors within a 24-month period, unless the election or nomination for election by the Company’s shareholders of each new director was approved
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by the vote of 2/3 of the directors then still in office who were in office at the beginning of the 24-month period; or
(vi) more than 50% of the assets of the Company and its subsidiaries are sold, transferred or otherwise disposed of, other than in the usual and ordinary course of its business.
“cause” generally means a material breach of the executive’s duties under his employment agreement, or the fraudulent, illegal or other gross misconduct which is materially damaging or detrimental to the Company.
“good reason” generally means:
(i) a material change in the executive’s duties and responsibilities or a change in his title or position without his consent;
(ii) there arises a requirement that the services required to be performed by the executive would necessitate the executive to move his residence at least 50 miles from the Buffalo, NY area;
(iii) a material reduction by the Company in the executive’s compensation or benefits;
(iv) a material breach of the employment agreement by the Company;
(v) in the caseMarch 17, 2023) of Messrs. AtteaSaffire, Gress, and Myszka, the failure of the executive to be elected a director at any annual shareholders meeting; or
(vi) the failure of any successor to the Company to specifically assume responsibility for the employment agreement.
Potential Payments and BenefitsDodman also each provide that upon Death or Disability or upon Termination of Employment With No Change in Control of the Company. The tables below reflect the amount of compensation to each of Messrs. Attea, Myszka, and Rogers in the event of termination of such executive’s employment described below. The amounts shown assume that such termination was effective as of December 31, 2015 and uses the closing market price of the Company stock on such date, and thus includes amounts earned through such time and are estimates of the amounts that would be paid to such executives upon their termination. The actual amounts to be paid can only be determined at the time of such executive’s separation from the Company.
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The first column of each table below sets forth the payments to which the executive would be entitled, other than accrued but unpaid base salary and any benefits payable or provided under broad-based employee benefit plans and programs, in the event of a termination of the executive’s employment for any reason other than for “cause” by the Company or by the executive without “good reason,” and assuming such termination occurred prior to, or did not otherwise arise in connection with, a “change in control” of the Company. The second column of each table reflects payments that would be due in the event of the executive’s termination of employment due to death or disability prior to a change in control of the Company. No benefits are paid, other than earned but unpaid compensation, upon a termination of employment by the Company for “cause” or for termination by the executive upon retirement or without “good reason.”
| | | | | | | | |
| | | Termination by
Company without
“Cause” or
Termination by
Executive for
“Good Reason” | | | Death or
Disability | |
Robert J. Attea | | | | | | | | |
Cash Severance1 | | $ | 7,570,059 | | | $ | 1,096,000 | |
Continued Employee Welfare Benefits | | | 54,009 | | | | 0 | |
Acceleration of Equity Awards2 | | | 0 | | | | 2,433,147 | |
| | | | | | | | |
Total | | $ | 7,624,068 | | | $ | 3,529,147 | |
| | | | | | | | |
Kenneth F. Myszka | | | | | | | | |
Cash Severance1 | | $ | 7,570,059 | | | $ | 1,096,000 | |
Continued Employee Welfare Benefits | | | 69,045 | | | | 0 | |
Acceleration of Equity Awards2 | | | 0 | | | | 2,961,112 | |
| | | | | | | | |
Total | | | $7,639,104 | | | | $4,057,112 | |
| | | | | | | | |
David L. Rogers | | | | | | | | |
Cash Severance1 | | $ | 7,570,059 | | | $ | 1,096,000 | |
Continued Employee Welfare Benefits | | | 46,908 | | | | 0 | |
Acceleration of Equity Awards2 | | | 0 | | | | 3,376,187 | |
| | | | | | | | |
Total | | | $7,616,967 | | | | $4,472,187 | |
| | | | | | | | |
1 | Cash severance for disability is reduced by any amounts paid to the officer under the Company’s disability insurance contract.
|
2 | After termination by the Company without “Cause”, termination by the Executive for “Good Reason”, death or disability, the Executive will also be entitled to a pro rata portion of the performance-based restricted shares issued on December 18, 2013 and December 24, 2014, and performance based awards for Messrs. Myszka and Rogers issued on December 17, 2015, based upon the number of months of employment during the performance periods ending December 18, 2016, December 24, 2017, and December 17, 2018, respectively, and the Company’s performance through the end of the applicable performance period.
|
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Potential Payments and Benefits Following, or in Connection With a Change In Control of the Company. Upon a termination of the employment of Messrs. Attea, Myszka, or Rogerssuch executive without “cause” or a termination by such executive for “good reason” within twenty-four (24) months following a “change in control” qualifying under Section 409A of the Internal Revenue Code or a Non-Section 409A change in control” such of the Company, the executive is entitledshall be paid a severance equal to receive the following benefits:
| | | | |
Robert J. Attea | | | | |
Cash Severance | | $ | 7,570,059 | |
Acceleration of Equity Awards | | | 5,617,679 | |
Continued Employee Welfare Benefits | | | 54,009 | |
| | | | |
Total | | $ | 13,241,747 | |
| | | | |
Kenneth F. Myszka | | | | |
Cash Severance | | $ | 7,570,059 | |
Acceleration of Equity Awards | | | 6,145,644 | |
Continued Employee Welfare Benefits | | | 69,045 | |
| | | | |
Total | | $ | 13,784,748 | |
| | | | |
David L. Rogers | | | | |
Cash Severance | | $ | 7,570,059 | |
Acceleration of Equity Awards | | | 6,560,719 | |
Continued Employee Welfare Benefits | | | 46,908 | |
| | | | |
Total | | $ | 14,177,686 | |
| | | | |
| (1) | two and one-half (2.5) times the sum of: |
Cash
| i. | the executive’s annual base salary in effect immediately prior to the change in control of the Company, or |
| ii. | The Executive’s annual base salary in effect immediately prior to the date of the executive’s separation from service (not taking into account any reduction to the executive’s base salary that formed a basis for Good Reason as defined in the respective executive’s employment agreement; plus |
| i. | the bonus earned with respect to the calendar year immediately prior to the change in control of the Company that has been paid or would have been paid in the year of the change in control of the Company, as applicable (in the case of Mr. Gress, the bonus deemed earned for the 2022 calendar year and paid in 2023 shall be $675,000), or |
| ii. | the bonus earned with respect to the calendar year immediately prior to the date of the executive’s separation from service that has been paid or would have otherwise been paid for the year of the executive’s separation from service had the executive’s employment not been terminated (such greater amount pursuant to (b), the “Bonus Amount”); and |
| (2) | an amount equal to (a) the Bonus Amount, multiplied by (b) a fraction, the numerator of which is the number of days the executive was employed by the Company from the first day of the calendar year in which the separation from service occurred, and the denominator of which is the number of total days in the calendar year. |
In the event of a Section 409A “change in control”, such severance for Messrs. Attea, Myszka, and Rogers isshall be paid in 36a lump sum. If the “change in control” does not so qualify under Section 409A, then the payments/ remaining payments would be transferred to a rabbi trust within 30 days after the non-Section 409A change in control and payments made from the trust with payments made consistent with those discussed above when a change in control does not occur.
The employment agreement of Mr. Gregoire and the employment agreements (as in effect as of December 31, 2022) of Messrs. Saffire and Dodman provided for severance payments in the event the executive’s employment is terminated by the Company without “cause” or he resigns for “good reason” without a change of control of the Company. Such
Life Storage, Inc. 2023 Proxy Statement
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Please detach along perforated line and mail in the envelope provided. 
Robert J. Attea
