Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 9, 2022, upon the recommendation of the Compensation and Talent Management Committee ("Committee"), the Board of Directors of the Company approved and adopted the Triton International Limited Executive Severance Plan (the "Plan"). The Plan is intended to provide severance benefits for selected senior management employees of the Company and its subsidiaries (each, a "Participant") in the event of such Participant's qualifying termination under the Plan. Capitalized terms used and not defined in this Current Report on Form 8-K have the respective meanings assigned to them in the Plan.
The Company's named executive officers, including Brian M. Sondey, the Company's Chief Executive Officer (the "CEO") (such officers together, the "NEOs"), will be eligible to participate in the Plan. The Plan will supersede, as to each Participant, the Company’s Employee Severance Plan, as well as any other separation protection agreements or understandings between the Company and any Participant, including the CEO's employment agreement, as further described below. The Plan has an effective date of February 9, 2022 and is administered by the Committee.
Under the Plan, upon a termination of employment without Cause or a resignation for Good Reason other than in connection with a Change in Control, each NEO would be eligible to receive the following severance benefits: (i) a payment equal to their base salary in effect at the time of termination, plus their target bonus opportunity for the fiscal year of termination, multiplied by one (or by 1.5 in the case of the CEO) and (ii) their pro-rated target bonus opportunity for the fiscal year of termination. NEOs are also entitled to COBRA (or other non-U.S. medical) continuation coverage paid by the Company for 18 months (or, if earlier, until the date they become eligible for coverage under another employer-provided plan).
Upon a termination of employment without Cause or a resignation for Good Reason during the period commencing ninety (90) days prior to, and ending on the second anniversary of, a Change in Control, each NEO would be entitled to receive the following severance benefits: (i) a payment equal to their base salary in effect at the time of termination, plus their target bonus opportunity for the fiscal year of termination, multiplied by 1.5 (or by 2 in the case of the CEO) and (ii) their full target bonus opportunity for the fiscal year of termination. NEOs are also entitled to COBRA (or other non-U.S. medical) continuation coverage paid by the Company for 18 months (or, if earlier, until the date they become eligible for coverage under another employer-provided plan).
As a condition of being eligible to participate in the Plan, each Participant will agree to be bound by certain non-competition, non-solicitation, confidentiality and non-disparagement covenants. The non-competition and non-solicitation covenants apply for 12-months following termination of employment for any reason. The confidentiality and non-disparagement covenants apply for an indefinite period. Participants are also required to sign a release of all claims against the Company prior to receiving severance benefits under the Plan.
Further, if any payments to a terminated Participant under the Plan or otherwise would be subject to "golden parachute" excise taxes under the Internal Revenue Code, the payments will be reduced to limit or avoid the excise taxes if and to the extent such reduction would produce an expected better after-tax result for the Participant.
In connection with the adoption of the Plan, and consistent with executive compensation actions taken by many other companies, the Committee has decided to cease the use of employment agreements for executive officers. As a result, the Company and Mr. Sondey have mutually agreed to terminate Mr. Sondey's Employment Agreement, dated November 3, 2004 (the "Employment Agreement"), effective as of February 11, 2022. The termination of the Employment Agreement does not reflect a termination of Mr. Sondey's employment with the Company and he will continue as the Company's CEO. The severance benefits previously provided to Mr. Sondey under the Employment Agreement will be superseded by the Plan.
The foregoing description of the Plan does not purport to be complete and is qualified in its entirety by reference to the plan document, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein. A copy of the letter agreement terminating the Employment Agreement is attached hereto as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated by reference herein.