ofix-8k_20190802.htm
false 0000884624 0000884624 2019-08-02 2019-08-02

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 2, 2019

 

 

ORTHOFIX MEDICAL INC.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

0-19961

 

98-1340767

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

 

 

 

 

3451 Plano Parkway

Lewisville, Texas

 

75056

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (214) 937-2000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common stock, $0.10 par value per share

 

OFIX

 

Nasdaq Global Select Market

 

 

 


 

Item 5.02  

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Appointment of Jon Serbousek as President of Global Spine and as Successor President and Chief Executive Officer of the Company

 

On August 2, 2019, Orthofix Medical Inc. (the “Company”) appointed Jon Serbousek as President of Global Spine, effective August 5, 2019.  In addition, on August 5, 2019, the Company announced that Mr. Serbousek would be the successor to Brad Mason, the company’s retiring President and Chief Executive Officer (CEO), to be effective November 1, 2019.

 

Mr. Serbousek, age 58, has served since 2015 as an independent advisor to companies in the medical technology industry. During this period, Mr. Serbousek has also served as an independent board member of several privately-held companies in the medical technology industry.  From 2008 until 2015, Mr. Serbousek served as a Senior Vice President of, and held senior operational positions with, Biomet, Inc. (“Biomet”), a medical device company.  From 2013 to 2015, he served as Worldwide President of Biomet Biologics, and prior thereto served as Worldwide Group President of Biomet Orthopedics from 2011 to 2013 and as President of U.S. Orthopedics from 2008 to 2011. From 2000 until 2008, Mr. Serbousek held diverse general management roles of increasing responsibility with the Spine and Biologics Divisions of Medtronic, Inc. (“Medtronic”), a medical device company, including serving as Worldwide Division President, Spine and Vice President and General Manager, Worldwide Biologics.  Before joining Medtronic, Mr. Serbousek served in various roles of increasing responsibility in the areas of joint reconstruction, spine, sports medicine, and biologics, at DePuy Orthopedics, a medical device company and subsidiary of Johnson & Johnson, from 1987 to 2000, including as Vice President of Marketing and Product Development and Vice President of Spinal Operations.  Mr. Serbousek earned a bachelor’s of science degree in Engineering from Washington State University, a master’s of science degree in Bioengineering from the University of Utah and later completed several advanced management programs including a program at the IMD International School of Management in Lausanne, Switzerland.

 

As President of Global Spine, Mr. Serbousek will receive an annual base salary of $500,000 per year, a target bonus opportunity under the Company’s annual incentive plan of 80% of his then-current base salary and will be eligible to receive future, annual equity incentive awards (subject to approval of the Company’s Board of Directors or the Compensation Committee thereof).  Mr. Serbousek also is eligible to receive certain temporary transition living and relocation assistance for up to six months after his hire date and received the inducement grants described below under “Inducement Stock Option Agreement and Restricted Stock Unit Agreement with Mr. Serbousek.”  The foregoing terms are set forth in a letter agreement between the Company and Mr. Serbousek, which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.  

 

Change in Control and Severance Agreement and Indemnification Agreement with Mr. Serbousek

 

The Company and Mr. Serbousek entered into a Change in Control and Severance Agreement that is materially consistent with the agreement the Company has entered into with its other U.S.-based executives. Under the Change in Control and Severance Agreement, Mr. Serbousek will be eligible to receive the following severance payments and benefits upon termination of the his employment (i) for death or “disability” (as defined in the agreement), (ii) by the Company without “cause” (as defined in the agreement) or (iii) by Mr. Serbousek for “good reason” (as defined in the agreement):

 

 

Any unpaid base salary, accrued vacation or prior years’ bonus payable or owing through the date of termination.

 

 

The pro rata amount of any incentive compensation for the year of termination of employment (based on the number of days he is actually employed by the Company during the year in which termination of employment occurs) based on the achievement of the Company's performance goals for such year.

 

 

An amount equivalent to 1.0 times the sum of: (i) Mr. Serbousek’s annual base salary plus (ii) his current year’s target bonus; provided that during the 24-month period following any change in control, the foregoing amount increases to 1.5 times such sum.

 

 

If Mr. Serbousek timely elects to continue coverage under the Consolidated Omnibus Budget Reconciliation Action of 1985 (“COBRA”) and remains eligible to receive COBRA coverage, the Company will reimburse him for his monthly premium payments for health care coverage under COBRA for a period of 12 months.

 

 

$12,500 for use towards outplacement services (plus an additional $6,250 during the 24-month period following any change in control).

 

 


 

The right to receive cash payments following a change in control remains subject to a “double trigger” provision, such that payments by the Company are only owed if Mr. Serbousek separates from employment in specific circumstances in connection with or following a change in control.

 

The agreement contains restrictive covenants, including non-competition and non-solicitation covenants effective so long as Mr. Serbousek is an employee and for a period of 12 months after his employment is terminated.  The agreement also contains provisions that define certain vesting and exercise rights in connection with time-based stock options, time-based restricted stock and time-based restricted stock units granted (such as by defining the terms “cause,” “good reason,” and “qualified retirement” for purposes of all prior and subsequent time-based equity grants).  The agreement does not guarantee any minimum levels of cash or equity-based compensation levels during Mr. Serbousek’s employment with the Company.  The term of the agreement continues in effect until the earlier of (i) the parties’ satisfaction of their respective obligations or (ii) the execution of a written agreement between the Company and Mr. Serbousek terminating the agreement.  

 

Inducement Stock Option Agreement and Restricted Stock Unit Agreement with Mr. Serbousek

As an inducement to Mr. Serbousek’s employment, the Board of Directors and Compensation Committee thereof awarded grants to Mr. Serbousek of (i) stock options to acquire up to 50,711 shares of common stock of the Company (“Common Stock”) pursuant to the Employee Inducement Non-Qualified Stock Option Agreement and (ii) 14,743 restricted stock units pursuant to the Employee Inducement Restricted Stock Unit Agreement.

 

The exercise price of the stock options granted pursuant to the Employee Inducement Non-Qualified Stock Option Agreement is $50.87, which was the closing price of the Common Stock on the NASDAQ Stock Market on August 5, 2019, the date of grant. Subject to certain further requirements set forth in the Employee Inducement Non-Qualified Stock Option Agreement and Employee Inducement Restricted Stock Unit Agreement, the stock option award and restricted stock unit award will vest in 25% increments on each of the first four anniversaries of the grant date.  The stock option and restricted stock unit grants were made pursuant to NASDAQ Marketplace Rule 5635(c)(4).  The Employee Inducement Non-Qualified Stock Option Agreement and Employee Inducement Restricted Stock Unit Agreement each include provisions for forfeiture if Mr. Serbousek’s service to Orthofix terminates prior to vesting, as well as provisions for full vesting acceleration (i) upon a termination by Orthofix without “cause” or resignation by Mr. Serbousek for “good reason,” in either case, within 24 months following a “corporate transaction” (each, as defined in the award agreements) in which such awards are assumed, continued, or substituted; (ii) immediately prior to the consummation of a corporate transaction in which such awards are not assumed, continued, or substituted; or (iii) upon Mr. Serbousek’s termination due to death or “disability” (as defined in the award agreements).  The Employee Inducement Non-Qualified Stock Option Agreement also provides for vesting acceleration upon Mr. Serbousek’s “qualified retirement” (as defined in the award agreement), with the amount of acceleration depending upon the timing of his retirement, and the Employee Inducement Restricted Stock Unit Agreement also provides for full vesting acceleration upon any termination by Orthofix without cause.

 

Item 7.01.

Regulation FD Disclosure.

On August 5, 2019, the Company issued a press release regarding the appointment of Mr. Serbousek as an officer of the Company and the inducement grants made to Mr. Serbousek. That press release is furnished herewith as Exhibit 99.1.

The information included in this Current Report on Form 8-K under this Item 7.01 (including Exhibit 99.1) shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

 

 

Item 9.01.

Financial Statements and Exhibits.

(d)Exhibits

10.1Letter agreement, dated July 30, 2019, between the Company and Jon Serbousek.

99.1Press release, dated August 5, 2019.

 


 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Orthofix Medical Inc.

 

 

By:

 

 

/s/ Kimberley A. Elting

 

 

 

Kimberley A. Elting

Chief Legal and Administrative Officer

 

 

 

Date: August 5, 2019

 

 

 

 

ofix-ex101_15.htm

Exhibit 10.1

 

 

July 30, 2019

 

 

Jon Serbousek

 

Offer Letter

 

Dear Jon,

 

It gives me great pleasure to present this offer of employment with Orthofix Medical, Inc. (with its subsidiaries and affiliates, “Orthofix”).  

 

Position:  The position we are offering you is that of President of Global Spine, reporting initially to Bradley Mason, Orthofix’s President and Chief Executive Officer.  Orthofix intends for you to remain in this position until Bradley Mason’s retirement, at which time Orthofix intends for you to assume the position of President and Chief Executive Officer, on terms commensurate with Orthofix’s overall executive compensation guiding principles.  

 

Start Date:  Your start date will be on August 5, 2019.

 

Base Salary:  Your base salary will be $500,000 per year (the “Base Salary”), less applicable deductions and tax withholdings.  

 

Annual Bonus:  Subject to Orthofix policies and satisfaction of applicable performance criteria, you will be eligible to participate in the annual bonus program, with a target bonus opportunity of 80% of your Base Salary.  Your 2019 annual bonus will be pro-rated based on your start date.  

 

Sign-On Equity Award:  As an inducement to and incentive for accepting this position, you will be eligible to receive a grant, effective as of your start date, of (i) stock options to purchase shares of Orthofix common stock, valued at $750,000 (based on the Black-Scholes value of Orthofix common stock on the grant date, subject to rounding to the nearest whole share) and (ii) restricted stock units with respect to shares of Orthofix common stock, valued at $750,000 (based on the closing price of Orthofix common stock on the grant date, subject to rounding to the nearest whole share), in each case vesting in 25% increments on each of the first four anniversaries of your start date, subject to your continued service with Orthofix on each such vesting date.  The sign-on equity awards are contingent upon and issued only upon approval by Orthofix’s Board of Directors and will be subject to the terms and conditions of applicable award agreements, which will be made available to you shortly after approval of your awards by Orthofix’s Board of Directors.  

 

Equity Incentives:  You will also be eligible to receive future, annual equity incentive awards.  Any future equity incentive awards are contingent upon and issued only upon

Orthofix, Inc. | 3451 Plano Parkway | Lewisville, TX 75056 | 214.937.2000

www.orthofix.com

  

  


 

approval by Orthofix’s Board of Directors (or Compensation Committee) and will be subject to the terms and conditions of applicable plan documents and award agreements.

 

Benefits:  Orthofix will offer you medical, dental, and vision insurance, effective the first of the month after your first 30 days of employment.  You will also be eligible to participate in the Orthofix 401(k) retirement plan as of the first of the month after your first 30 days of employment.  This plan currently provides an employer match of 100% for the first 2% contribution and 50% for the next 4% contribution.  A more detailed explanation of these benefits and other benefits will be provided to you under separate cover.  Orthofix defers to the provisions of its employee benefits plans, which plans shall govern to the extent of any conflict and which plans may be changed unilaterally by Orthofix.  

 

Location and Temporary Living Assistance:  Your position will be based in Orthofix’s Lewisville offices.  As such, Orthofix will provide support in establishing residency in the Lewisville, Texas area including reimbursement (upon submission of applicable supporting documentation) for 30 days temporary living, for weekly commuting costs to the Lewisville office beginning August 5 through November 1, 2019, and for closing costs on the purchase of a home.

  

Third-Party Confidentiality/Non-Compete Obligations:  Orthofix recognizes that, while you were employed with your prior employers, you may have been exposed to confidential, proprietary, and/or trade secret information (“Third-Party Confidential Information”).  Moreover, Orthofix recognizes that you have a legal duty and may have a contractual duty not to use or disclose Third-Party Confidential Information outside of your employment with your former employers.   Orthofix also recognizes that you may owe your former employers a contractual duty not to solicit certain customers (“Restricted Customers”).  Orthofix has no intention of obtaining any Third-Party Confidential Information in any form.  In fact, Orthofix’s expectation is that you will abide by, and comply fully with, the terms of any agreements you may have with respect to such information.  By signing below, you represent and warrant that you have complied, and will comply, with any such obligations, including, but not limited to, all confidentiality, non-solicitation, non-competition, and post-employment disclosure obligations.  You further represent and warrant that you have not misappropriated any Third-Party Confidential Information and, to the extent you may have access to such information, you will not disclose or use it for any purpose contrary to the terms of any agreements you may have with respect to such information, or to benefit Orthofix in any way.

 

Orthofix also wishes to ensure that you are not placed in a position which might require you to solicit Restricted Customers or cause the disclosure or use of Third-Party Confidential Information, either intentionally or inadvertently.  For this reason, this offer is contingent upon the legal department’s review of any agreements you may have with a current or former employer or business partner, and Orthofix reserves the right to rescind the offer if it determines, in its sole discretion, that you have continuing obligations to a current or former employer or business partner that could restrict or interfere with the responsibilities Orthofix anticipates you performing on its behalf.  If you are ever involved in any job situation which could require you to solicit Restricted Customers or cause you to use or disclose any Third-Party Confidential Information, you agree to immediately notify Orthofix’s Chief Legal

Orthofix, Inc. | 3451 Plano Parkway | Lewisville, TX 75056 | 214.937.2000

www.orthofix.com

  

  


Exhibit 10.1

Officer and advise Orthofix’s Chief Legal Officer of your concerns.  In the event it is determined that a risk of improper solicitation, disclosure, or use does exist, Orthofix will take appropriate measures.

 

Orthofix is also serious about protecting its own confidential, proprietary, and/or trade secret information.  Accordingly, this offer of employment is contingent upon your execution of a confidentiality, non-competition, and inventions agreement (a “Restrictive Covenant Agreement”).

 

Testing and Screening:  This offer is contingent on the successful completion of a drug test and background screening.  The drug screen must be completed within 48 hours of receipt of this offer letter.  If the drug screen is not completed by the designated date, we reserve the right to rescind the offer.    

 

Work Eligibility:  Federal law requires all employees to provide their employers with verification of identity and eligibility to work in the United States within the first three (3) days of employment.  All employees are required to show one or more forms of identification as a means of verification.  This offer of employment is contingent upon your return of the necessary documentation to Orthofix within three days of your first day of employment with a copy of the acceptable identification you choose to present.

 

Employment-At-Will:  You understand and acknowledge that, if you become employed by Orthofix, you will be an “at-will” employee at all times during your employment.  As an at-will employee, both Orthofix and you will have the right to terminate your employment at any time, with or without cause, and with or without notice.  At-will employment also means that your job duties, title, compensation, and benefits, as well as the company personnel policies and other procedures, may be changed or terminated at the sole discretion of Orthofix at any time.  Please note that, while this offer letter summarizes your anticipated terms and conditions of employment with Orthofix, they may change, and it is not an employment contract.  

 

Governing Law:  This offer letter shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its principles of conflicts of laws.

 

Other Agreements:  Under separate cover, you will receive a Change in Control and Severance Agreement, an Indemnity Agreement, and a Restrictive Covenant Agreement (the “Other Agreements”).  Kindly return one signed copy of this offer letter and each Other Agreement.

 

Acceptance:  Your signature at the end of this offer letter constitutes an acceptance of this offer and confirms that no promises, representations, or agreements that are inconsistent with any of the terms of this offer letter have been made to or with you by anyone at Orthofix.  You also acknowledge and agree that no modification of the terms and conditions set forth in this offer letter can be made without the written authorization of Orthofix’s President and Chief Executive Officer or Orthofix’s Compensation Committee.

 

This offer of employment will remain open until August 1, 2019.

Orthofix, Inc. | 3451 Plano Parkway | Lewisville, TX 75056 | 214.937.2000

www.orthofix.com

  

  


 

 

Jon, we look forward to working with you.  Your experience, background and leadership will be a significant asset to Orthofix.  

 

 

Sincerely,

 

/s/ Ronald Matricaria

 

Ronald Matricaria

Chairman of the Board of Directors

 

 

 

 

 

 

ACKNOWLEDGED, ACCEPTED, AND AGREED:

 

 

 

/s/ Jon SerbousekDate July 31, 2019

Jon Serbousek

Orthofix, Inc. | 3451 Plano Parkway | Lewisville, TX 75056 | 214.937.2000

www.orthofix.com

  

  

ofix-ex991_49.htm

 

Exhibit 99.1

 

 

 

 

Orthofix Names Jon Serbousek to Succeed CEO

 

 

-

Serbousek to succeed Brad Mason upon his retirement on October 31, 2019

 

-

Prior to assuming CEO role, Serbousek will serve as President of Global Spine

 

LEWISVILLE, TEXAS – August 5, 2019 – Orthofix Medical Inc. (NASDAQ:OFIX), a global medical device company focused on musculoskeletal products and therapies, today announced that it has named Jon Serbousek as President of its Global Spine business effective August 5, 2019, and the successor to Brad Mason, the company’s retiring President and Chief Executive Officer (CEO), to be effective November 1, 2019.

 

A seasoned executive with more than 30 years’ experience in the medical device and biotech industries, Serbousek served in several leadership positions at Biomet Inc., including Worldwide President of Biomet Biologics, Worldwide Group President of Orthopedics, and President of U.S. Orthopedics. Prior to joining Biomet, he held various general management positions within Medtronic Inc. including Worldwide Division President, Spine, Worldwide Vice President and General Manager of Biologics for their Spine and Biologics business. Additionally, Serbousek spent 13 years with DePuy Orthopedics, a Johnson & Johnson company where he served in numerous roles of increasing responsibility, including the Vice President of Marketing and Product Development and as Vice President of Spinal Operations.

 

“Jon’s expertise and proven track record are perfectly aligned with our business composition and make him an exceptional choice to lead the company as President and CEO,” said Brad Mason, Orthofix President and Chief Executive Officer. “With the recent leadership change in our spine business, I am pleased that Jon has agreed to serve as the President of Global Spine on an interim basis. This will give him time to focus on our needs and opportunities in that business before he takes on the broader CEO role, which should help ensure a seamless leadership transition for the benefit of all Orthofix stakeholders."

 

“Today's announcement underscores our commitment to finding a leader who can build on the Company’s current momentum and opportunities in the years ahead,” said Orthofix Chairman of the Board, Ron Matricaria. “After an extensive search, we have found that leader in Jon. His many years of experience and solid understanding of the medical device markets that Orthofix competes in, make him well qualified to lead the Company.”

 

“I am excited to join Orthofix,” said Jon Serbousek. “It is an honor to assume this leadership role, particularly at a time when the company is so well positioned for future shareholder value creation. I look forward to working with the great team at Orthofix as we continue to shape the company for the years ahead.”

 

Serbousek has held numerous board positions at for profit and not-for-profit organizations. He earned his BS in Engineering from Washington State University, his MS in Bioengineering from the University of Utah and later completed several advanced management programs including a program at the IMD International School of Management in Lausanne, Switzerland.

 

Inducement Grant

 

As an inducement to enter into employment with Orthofix, Mr. Serbousek was granted restricted stock units representing approximately 14,743 shares of Orthofix common stock and stock options to purchase approximately 50,711 shares of Orthofix common stock.  The exercise price of the stock options will be the August 5, 2019 closing price of the common stock on the NASDAQ Stock Market.  Subject to certain further requirements set forth in the award agreements, the restricted stock unit and option awards vests in 25% annual increments beginning on the first anniversary of grant. The grants, which were approved by Orthofix’s Board of Directors and Compensation Committee, were made under standalone inducement award agreements approved pursuant to NASDAQ Marketplace Rule 5635(c)(4).

 

About Orthofix

Orthofix Medical Inc. is a global medical device company focused on musculoskeletal products and therapies. The Company’s mission is to improve patients' lives by providing superior reconstruction and regenerative musculoskeletal solutions to physicians worldwide. Headquartered in Lewisville, Texas, Orthofix’s spine and orthopedic extremities

 


 

products are distributed in more than 70 countries via the Company's sales representatives and distributors. For more information, please visit www.orthofix.com.

 

Forward Looking Statements

This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “intends,” “predicts,” “potential,” or “continue” or other comparable terminology. These forward-looking statements are not guarantees of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. Therefore, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to further update any such statement, or the risk factors described in Part I, Item 1A under the heading Risk Factors in our Form 10-K for the year ended December 31, 2018, to reflect new information, the occurrence of future events or circumstances or otherwise.

 

 

CONTACT:

 

 

 

 

   Mark Quick

Denise Landry

 

 

 

   Investor Relations

Media Relations

 

 

 

   Tel    214 937 2924

Tel   214 937 2529

 

 

 

   markquick@orthofix.com

deniselandry@orthofix.com