Irwin Simon
On July 27, 2021, the Company entered into an employment agreement with Irwin D. Simon in connection with his appointment as Chief Executive Officer and Chairman of the Board following the business combination with Aphria, Inc., at an annual base salary of $1,700,000, effective as of the Effective Date, which may be increased but not decreased, as determined at an annual review of his performance and compensation by the Compensation Committee. On July 26, 2022, Ms. Simon’s annual base salary was increased to $1,819,000 for Fiscal Year 2023.
Mr. Simon is eligible to earn an additional annual performance-based cash bonus in amounts ranging from 200% of his base salary at “target” to 350% of his base salary at “maximum,” if performance benchmarks, as determined in accordance with the employment agreement, are met. For the Fiscal Year 2022, the Compensation Committee determined Mr. Simon’s annual cash bonus to be $0.
Mr. Simon is also entitled to participate in the 2018 Equity Plan or any other equity compensation plan adopted and/or modified from time to time by the Compensation Committee. Mr. Simon is eligible to earn annual long-term incentive awards as a percentage of his base salary in effect on the grant date of such awards, 250% of his base salary at “target”, with such percentage to be determined by the Board. For Fiscal Year 2022, the Compensation Committee determined Mr. Simon’s annual RSU equity grant to be $4,250,000 in value as of the grant date (or 1,200,565 RSUs).
In exchange for Mr. Simon’s agreement to remain in his role as Chief Executive Officer or otherwise provide continued services through mutual agreement with the Company until December 31, 2022, Mr. Simon was entitled to receive a one-time cash bonus equal to $10,000,000 (less deductions and withholdings required by law) (the “Transformation Bonus”), which was paid in August 2021. The Transformation Bonus is subject to pro-rated clawback in the event Mr. Simon voluntarily resigns without “good reason” (other than in the event of his death or disability) prior to December 31, 2022.
As additional incentive to entering into the employment agreement, on July 27, 2021, Mr. Simon received the following one-time equity grants having an aggregate value as of the July 27, 2021 grant date equal to $15,000,000, calculated using the closing price of the Company’s Class 2 Common Stock on the grant date: (i) 392,772 performance-based restricted stock units (“PSUs”), subject to certain stock appreciation performance conditions and vesting as set forth in the employment agreement; (ii) 392,772 time-based restricted stock units (“RSUs”), which vest one-third on each of June 1, 2022, June 1, 2023, and June 1, 2024; and (iii) 392,772 restricted stock units (the “Synergy Equity Awards”), subject to performance-based vesting of 50% upon achievement of savings equal to $50,000,000 and 100% vesting upon achievement of savings of $80,000,000, and further subject to time-based vesting, with 50% vesting on July 27, 2022, and 25% vesting on each of July 27, 2023, and July 27, 2024, provided that the performance-based vesting conditions are satisfied as determined by the Compensation Committee.
The term of Mr. Simon’s employment agreement will continue until otherwise terminated in accordance with its terms. The employment agreement may be terminated by Mr. Simon at any time for any reason, provided that he gives the Company four weeks’ advance written notice of his resignation without “good reason” and subject to a notice and cure period in the event that he resigns with “good reason” as described below. The employment agreement may also be terminated by Tilray for any reason, with or without “cause,” subject to special notice requirements in certain instances as described below.
As defined in Mr. Simon’s employment agreement, a termination for “cause” includes termination by the Company due to conviction of a felony or entry of a plea of guilty or nolo contender to any felony (other than relating to cannabis); refusal to perform his reasonably assigned duties for the Company (other than as a result of incapacity due to physical or mental illness); engaging in any act of material dishonesty or fraud; willful misconduct or gross negligence in the performance of his duties; material breach of his employment agreement (other than violations of policies); or willfully and materially violating material written policy applicable to Mr. Simon that directly results in the Company incurring material liability. Any termination due to Mr. Simon’s refusal to perform his reasonably assigned duties, material breach of his employment agreement or willful and material violation of material written policies requires the Company to provide prior written notice and a 30-day cure period to Mr. Simon.
Mr. Simon’s employment will be considered to be terminated with “good reason” if he resigns because the Company (i) reduces his base salary or fails to pay any amounts which he is due; (ii) materially reduces Mr. Simon’s titles, duties, authorities or reporting relationships; (iii) assigns duties to him that are materially inconsistent with the positions of Chief Executive Officer and Chairman of the Board; (iv) removes Mr. Simon from such positions;
