Summary
PayPal Holdings, Inc. (PYPL) filed an 8-K on July 2, 2021, detailing amendments to its Executive Change in Control and Severance Plan. The key change introduces severance benefits for qualifying retirements, defined by age (60+) and years of service (7+ as CEO or VP+). This new provision will apply to the CEO and Executive Vice Presidents starting in July 2021. Furthermore, the amendments significantly alter the treatment of outstanding and unvested equity awards upon termination. Previously, these awards would receive pro-rata acceleration. Now, in cases of qualifying involuntary termination, disability, or retirement, unvested equity awards will continue to vest on their original schedule. Death will result in full acceleration of unvested equity awards. These enhanced benefits are contingent upon continued compliance with post-termination restrictive covenants. The CEO's specific PSU award is explicitly excluded from these new vesting provisions.
Key Highlights
- 1Introduction of severance benefits for qualifying retirements (age 60+, 7+ years as CEO/VP+).
- 2Enhanced equity award vesting provisions for involuntary termination, disability, and retirement.
- 3Unvested equity awards will now continue to vest on their original schedule in qualifying termination scenarios, rather than pro-rata acceleration.
- 4Death of a participant will result in full acceleration of unvested equity awards.
- 5Post-termination health benefits extended to cover medical premiums until the last equity award vesting date for qualifying terminations.
- 6These amendments are effective for CEO and Executive Vice Presidents in July 2021.
- 7CEO's specific PSU award is excluded from accelerated/continued vesting under the new plan.