8-KLeadership ChangesExhibits & Filings

CASEYS GENERAL STORES INC 8-K Report, Executive Changes (Dec 19, 2019)

Filed December 19, 2019For Securities:CASY

Summary

This 8-K filing from Casey's General Stores, Inc. (CASY) on December 19, 2019, details significant changes to the "change of control" employment agreements for its named executive officers (NEOs), including the Chief Financial Officer, General Counsel, and Head of Operations. The company has provided notice of non-renewal for their existing agreements, which are set to expire in May and June 2021. This action triggers the implementation of new Change of Control (COC) Agreements. These new COC Agreements, effective after the expiration of the current ones, introduce altered terms regarding severance. Notably, the severance multiplier for Senior Vice Presidents, including the NEOs, is reduced from three times to two times their salary and bonus. Additionally, the new agreements incorporate a "best net" cutback provision for Section 280G excise taxes, which may offer a more favorable after-tax outcome for executives compared to the previous "straight cutback" method. The filing also outlines the terms for termination under the new agreements and clarifies that NEOs will not receive excise tax gross-up payments.

Key Highlights

  • 1Casey's General Stores (CASY) is modifying "change of control" employment agreements for key senior officers.
  • 2Existing "change of control" agreements for NEOs will expire in May/June 2021 as notices of non-renewal were issued.
  • 3New Change of Control (COC) Agreements will become effective upon the expiration of the existing ones.
  • 4Severance multiplier for Senior Vice Presidents (including NEOs) is reduced from 3x to 2x salary and bonus under new COC agreements.
  • 5New COC Agreements include a "best net" cutback provision for Section 280G excise taxes, replacing a straight cutback.
  • 6Severance payments under a "Qualifying Termination" (termination without cause or resignation for good reason) are detailed, including salary, bonus, and COBRA continuation.
  • 7NEOs will not receive excise tax gross-up payments under the new agreements.

Frequently Asked Questions

The company is undertaking an ongoing review of its severance practices, which led to the decision to provide notice of non-renewal for the existing "change of control" employment agreements and enter into new ones with updated terms.

The most significant change is the reduction in the severance multiplier for Senior Vice Presidents, including the named executive officers, from three times their compensation (salary + bonus) under the old agreements to two times their compensation under the new agreements. Additionally, the method for handling potential Section 280G excise taxes has changed from a straight cutback to a "best net" approach, which aims to optimize the executive's after-tax payout.

The new COC Agreements become effective immediately following the expiration of the respective existing agreements (May 27, 2021, for Mr. Walljasper and Ms. Jackowski; June 10, 2021, for Mr. Soupene). The new agreements are generally effective through June 30, 2023, or the NEO's retirement date, with provisions for automatic annual extensions unless non-renewal is provided. These agreements remain in effect under their original terms if a change of control occurs before their expiration.

Yes, the new COC Agreements still provide for severance payments in the event of a "Qualifying Termination" (termination by the company without cause or by the NEO for good reason) during the term of the agreement. The specific calculation of severance is outlined, including salary, bonus, and COBRA continuation, with adjustments if a change of control actually occurs after a termination related to a potential change of control.