Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 19, 2023, upon the recommendation of the Nominating and Corporate Governance Committee of the Board of Directors (the “Board”) of Butterfly Network, Inc. (the “Company”), the Board approved the appointment of Joseph DeVivo as President and Chief Executive Officer, principal executive officer, and Chairman of the Board, effective as of April 24, 2023 (the “Effective Date”). Mr. DeVivo will serve as a director until his term expires at the 2023 annual meeting of stockholders at which time he will stand for election by the Company’s stockholders.
Mr. DeVivo, age 56, previously served as the President of Hospital and Health Systems for Teladoc Health, Inc. (“Teladoc”) from July 2020 to April 2022. Mr. DeVivo was the Chief Executive Officer of InTouch Health from 2016 until June 2020, when it was acquired by Teladoc. Prior to that, Mr. DeVivo served as the President, Chief Executive Officer, and Director of AngioDynamics, Inc. from 2011 to 2016. Most recently, he also served as the Executive Chairman of the Board of Directors of Caption Health prior to the acquisition of Caption Health by GE Healthcare. Mr. DeVivo also serves on the Board of Directors of the American Telemedicine Association and on the Board of Governors of St. Jude Children’s Research Hospital. Mr. DeVivo received his Bachelor of Science degree in Business Administration and Marketing and Management from the University of Richmond.
Mr. DeVivo’s employment agreement with the Company provides for “at will” employment beginning on the Effective Date. Pursuant to the terms of his employment agreement, Mr. DeVivo is entitled to an annual base salary of $875,000 and is eligible for an annual cash bonus targeted at 125% of his base salary. Mr. DeVivo will receive a one-time sign-on bonus in the amount of $500,000, which is recoverable in full by the Company in the event that Mr. DeVivo resigns without good reason (as defined in his employment agreement) or the Company terminates Mr. DeVivo’s employment for cause (as defined in his employment agreement) within 12 months of the commencement of his employment. Pursuant to the terms of his employment agreement, and pursuant to the terms of the Company’s Amended and Restated 2020 Equity Incentive Plan, Mr. DeVivo will be granted (i) 2.4 million restricted stock units (“RSUs”) relating to shares of the Company’s Class A Common Stock, par value $0.0001 per share (“Common Stock”), with one-third of such RSUs vesting on the grant date and the remainder of such RSUs vesting on a pro rata annual basis over the next two years and (ii) 1.6 million restricted stock units relating to shares of Common Stock of the Company (“Performance RSUs”), with the Performance RSUs to vest as follows: (i) one-third shall vest upon the achievement of a price for the Common Stock equal to or exceeding $3.00 per share, (ii) one-third shall vest upon the achievement of a price for the Common Stock equal to or exceeding $4.50 per share and (iii) one-third shall vest upon the achievement of a price for the Common Stock equal to or exceeding $6.00 per share. In each case, the closing stock price for 20 consecutive trading days must equal or exceed the share price targets, and provided such share price is achieved prior to the fifth (5th) anniversary of the grant date of such Performance RSU.
Mr. DeVivo is eligible to participate in the employee benefit plans generally available to full-time employees, subject to the terms of those plans. Mr. DeVivo is also eligible for reimbursement of certain expenses incurred in connection with business travel and will receive a reimbursement for monthly housing and related miscellaneous expenses of up to $16,666.66, less withholdings, to commence upon written election by Mr. DeVivo, in light of the Company’s requirement that he work primarily away from his state of residence. Pursuant to the terms of his employment agreement, if Mr. DeVivo’s employment is terminated for any reason, Mr. DeVivo will receive certain customary termination benefits, including any earned but unpaid base salary through the date of termination and any annual bonus that Mr. DeVivo would have received, if his employment is terminated after the completion of a calendar year but prior to the date any annual bonuses for such completed year have been paid. Additionally, if Mr. DeVivo’s employment is terminated by the Company without cause (as defined in his employment agreement) or by Mr. DeVivo for good reason (as defined in his employment agreement) outside of the change of control period (as defined in his employment agreement), subject to Mr. DeVivo’s execution of and nonrevocation of a separation agreement (as defined in his employment agreement), Mr. DeVivo will be entitled to receive: (i) a cash payment in an amount equal to one times the sum of Mr. DeVivo’s then current base salary plus Mr. DeVivo’s target bonus for the then current year and $100,000, (ii) health continuation rights under COBRA, subject to the terms set forth in his employment agreement, and (iii) partial acceleration of vesting of any unvested time-based equity awards. If Mr. DeVivo’s employment is terminated by the Company without cause or by Mr. DeVivo for good reason within the change of control period, subject to Mr. DeVivo’s execution of and nonrevocation of a separation agreement, Mr. DeVivo will be entitled to receive: (i) a cash payment in an amount equal to two times the sum of Mr.