Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
(b) Departure of Executive Vice President and Chief Financial Officer
On September 10, 2024, Healthcare Realty Trust Incorporated (the “Company”) and J. Christopher Douglas determined that Mr. Douglas would depart from his position as Executive Vice President and Chief Financial Officer of the Company, effective October 1, 2024. Mr. Douglas’ separation from the Company is not a result of any disagreement with other members of the Company’s management or the Company’s external auditor.
Mr. Douglas’s separation is governed pursuant to the “termination other than for cause” provisions of his employment agreement with the Company, as amended, a copy of which previously has been filed with the Securities and Exchange Commission (the “SEC”). Subject to Mr. Douglas’ execution and non-revocation of a release agreement, he will receive severance compensation and accelerated vesting of equity awards in accordance with the terms of his employment agreement. Mr. Douglas’ severance compensation is expected to be approximately $2.9 million, comprised of: (i) two times his annual base salary and average annual bonus; and (ii) a proration of his 2024 cash incentive awards (at target-level performance). The equity awards that will be accelerated total 342,016 shares, comprised of unvested restricted stock, restricted stock units, and LTIP Series C Units (with performance awards vesting at target-level performance). The Company expects to record a charge of approximately $6.5 million to $7.5 million for the quarter ended September 30, 2024 in connection with Mr. Douglas’ separation.
(c) Appointment of Interim Chief Financial Officer
The Board of Directors of the Company has appointed Austen B. Helfrich to serve as the Company’s Interim Chief Financial Officer effective October 1, 2024. The Company has engaged Ferguson Partners to conduct a search process for a permanent chief financial officer and Mr. Helfrich will be a candidate in the search process. The Company’s Board of Directors has formed a committee, chaired by Thomas Bohjalian, to oversee the search process.
Mr. Helfrich, age 37, has been employed by the Company since June 2019, most recently as First Vice President, Portfolio Strategy. Prior to that, Mr. Helfrich served in the roles of Vice President, Corporate Finance and Associate Vice President, Corporate Finance. Prior to joining the Company, Mr. Helfrich was employed at Point72 Asset Management, Columbus Hill Capital Management, and Citigroup’s investment banking division. There is no arrangement or understanding between Mr. Helfrich and any other person pursuant to which Mr. Helfrich was selected as the Company’s Interim Chief Financial Officer. Mr. Helfrich has no family relationships with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer of the Company. Mr. Helfrich is not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Mr. Helfrich and the Company expect to enter into an amendment to his existing employment agreement with the Company. For his service as Interim Chief Financial Officer, Mr. Helfrich is expected to receive a base salary equal to $450,000 on an annual basis. For the remainder of 2024, Mr. Helfrich will continue to be eligible for the cash incentive program established for his prior role, pursuant to which he could receive approximately $171,600 at target level performance for the year. If Mr. Helfrich remains in the Interim Chief Financial Officer position after January 1, 2025, Mr. Helfrich is expected to be eligible for performance-based cash incentive awards on the same terms as the Company’s Executive Vice Presidents for 2025.
Mr. Helfrich’s employment agreement is expected to provide for benefits generally available to officers of the Company. The employment agreement may be terminated for a variety of reasons, including: for cause, not for cause, voluntarily by the officer, death, or following a change in control. In all cases, Mr. Helfrich would receive all accrued salary, bonus compensation that has been awarded but not yet paid, benefits under plans of the Company, including defined contribution or health and welfare plans, accrued vacation pay and reimbursement of appropriate business expenses.
In the case of a termination other than for cause, Mr. Helfrich would also receive full vesting of any equity awards and severance compensation equal to $214,500.
In the event that Mr. Helfrich’s employment agreement is terminated in connection with a “change-in-control”, he would receive full vesting of any equity awards and severance compensation equal to his base salary for nine months.
The Company has agreed to indemnify Mr. Helfrich for certain liabilities arising from actions taken within the scope of his employment. The employment agreement is expected to contain restrictive covenants pursuant to which Mr. Helfrich will agree not to compete with the Company during the period of employment and any period following termination of his employment during which he is receiving severance payments. In the event of a “change-in-control” of the Company, the restrictive period would be for nine months.
