What is the purpose of these special performance awards?

The special performance awards are intended to incentivize Vertiv's senior management to achieve ambitious, multi-year strategic goals, specifically regarding Adjusted Operating Profit (AOP), and to promote the long-term retention of key executives crucial for achieving these objectives.

Are the AOP targets provided in this filing considered financial guidance for Vertiv?

No, the company explicitly states that the Target AOP goals are not intended to be financial guidance for any of the covered years. They represent challenging 'stretch goals' designed to drive significant upside performance beyond publicly disclosed outlooks.

How will the performance awards be paid out and when will they vest?

Upon achieving the AOP targets, the earned dollar amounts will be converted into restricted stock units (RSUs) based on Vertiv's stock price after the release of fiscal year 2025 earnings. These RSUs will then vest on January 1, 2027, provided the executive remains employed with the company, with specific provisions for vesting upon death, disability, or certain termination scenarios, particularly around a change in control.

What is 'Adjusted Operating Profit' (AOP) as defined by Vertiv?

Vertiv defines 'Adjusted Operating Profit' (AOP) as operating profit (loss) adjusted to exclude amortization of intangibles and certain significant non-recurring expenses.

VRT 8-K: Leadership Changes & Regulation FD

Summary

Vertiv Holdings Co. (VRT) filed an 8-K on November 21, 2022, detailing the establishment of special, one-time long-term performance awards for key executives. These awards, granted on November 18, 2022, are designed to incentivize the achievement of multi-year strategic goals and promote executive retention. The awards vest over a four-year period, contingent upon the attainment of specific Adjusted Operating Profit (AOP) targets for 2023, 2024, and 2025, and continued employment through January 1, 2027. The performance targets are set as 'stretch goals,' meaning they are intended to be challenging but achievable, representing significant upside potential beyond current outlooks. The company explicitly stated these targets are not financial guidance. The awards will convert into restricted stock units (RSUs) upon successful achievement of these AOP targets, with vesting tied to continued employment, though provisions exist for certain termination events, including those related to a change in control.

Key Highlights

1Key executives, including the incoming CEO, CFO, CTO, and Chief Legal Counsel, have been granted special, one-time long-term performance awards.
2The awards are designed to incentivize the achievement of multi-year strategic goals and ensure long-term executive retention.
3Vesting is contingent upon achieving specific Adjusted Operating Profit (AOP) targets for fiscal years 2023, 2024, and 2025.
4The AOP targets are set at $1.0 billion for 2023, $1.4 billion for 2024, and $1.75 billion for 2025, considered 'stretch goals' by the Board.
5Executives can earn additional amounts (up to 20% of target award) for every $50 million increment AOP exceeds the target in a given performance year.
6Earned award amounts will be converted into restricted stock units (RSUs) based on the stock price after fiscal year 2025 earnings release and will vest on January 1, 2027.
7The company clarified that these performance targets are not financial guidance, with the 2023 AOP outlook provided as $730 million to $750 million.

Vertiv Holdings Co 8-K Report, Executive Changes (Nov 21, 2022)

Summary

Key Highlights

Frequently Asked Questions