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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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(e) On February 15, 2023, pursuant to the ModivCare Inc. (the “Company”) 2006 Long‐Term Incentive Plan, as amended (the “Plan”), the Company adopted a form of Performance Restricted Stock Unit Agreement (the “Award Agreement”) to be used as the template for awards of performance restricted stock units (“PRSUs”) that may be granted to eligible participants under the Plan during fiscal year 2023, unless otherwise determined by the Compensation Committee of the Board of Directors of the Company. Grants of PRSUs that may be made under the Plan and form of Award Agreement will be subject to both time- and performance-based vesting restrictions.
The time-based vesting restriction will be established at a period of three full years from the date of grant (the “Time Vesting Period”), and the participant’s continuous employment is required throughout the Time Vesting Period for any payouts to be made to the participants in respect of the PRSUs. Notwithstanding the foregoing, the Time Vesting Period may, however, be accelerated if, prior to the expiration of the Time Vesting Period, (i) there occurs a transaction resulting in a change in control of the Company or (ii) the Administrator (as defined under the Plan) waives, in its discretion, the Time Vesting Period.
The performance-based vesting restriction (the “Performance Vesting”) will be based on a range of target values tied to both Adjusted EBITDA of the Company (the “Adjusted EBITDA Performance Target”) and revenue of the Company (the “Revenue Performance Target” and, together with the Adjusted EBITDA Performance Target, the “Performance Targets”), each to be measured as of December 31, 2025. Without regard to the effects of any future acquisitions or divestitures that may affect the Company’s Adjusted EBITDA or revenue values, the Adjusted EBITDA Performance Target ranges from $255 million to $360 million, while the Revenue Performance Target ranges from $2,550 million to $3,600 million. The Performance Targets will be satisfied by the participant if (a) as of December 31, 2025, both the Adjusted EBITDA Performance Target and the Revenue Performance Target equals or exceeds the applicable minimum target value, or (b) prior to the expiration of the Time Vesting Period, there occurs a transaction resulting in a change in control of the Company.
On the date that both (i) the Time Vesting Period restriction and (ii) the Performance Vesting restrictions are satisfied (including, as applicable, by waiver or acceleration as described above), the holder of PRSUs will be entitled to receive: (A) that number of shares of common stock of the Company, if any, determined by multiplying the aggregate number of PRSUs subject to the Award Agreement by a percentage from 50% to 200% (each, a “Payout Percentage”) that corresponds to the highest Performance Targets achieved, to be issued as soon as reasonably practicable following the later of (i) the Company’s filing of its Annual Report on Form 10-K for fiscal year 2025 or (ii) the expiration of the Time Vesting Period; or (B) if the Time Vesting Period does not expire until after the closing date of a transaction resulting in a change in control of the Company, that amount and type of consideration the holder of PRSUs would have received under subclause (A) immediately above had 100% of the Performance Targets been achieved, with such payout to occur within 30 days of the change in control.
The foregoing description is a summary only of material terms of the form of Award Agreement, a copy of which is expected to be filed with the Company's Form 10-Q for the quarter ending March 31, 2023 as required by applicable securities laws. Investors and other interested parties are encouraged to read the form of Award Agreement in its entirety when it becomes available because it contains important information not summarized above.
On February 15, 2023, the Company granted 2,467 PRSUs to Ilias Simpson, President of ModivCare Mobility. The number of PRSUs awarded to Mr. Simpson assumes Performance Targets achieved that correspond to a 100% Payout Percentage. As described above, the payout, if any, to Mr. Simpson under the PRSUs will not be made until the expiration of the applicable Time Vesting Period, subject to the above discussed possible waiver or acceleration of such vesting period.