| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Board of Directors
On July 23, 2024, John Donahoe notified PayPal Holdings, Inc. (the “Company”) of his decision to resign as Chair and member of the Board of Directors of the Company (the “Board”) effective immediately. Mr. Donahoe served as Chair of the Board since the Company became an independent public company in July 2015 and did not serve on any committees of the Board. Mr. Donahoe’s resignation is not related to any disagreement with the Company on any matter relating to its operations, policies or practices.
Effectively immediately upon Mr. Donahoe’s resignation, the Board reduced the size of the Board to eleven (11) directors and appointed Enrique Lores as Chair of the Board.
A copy of the Company’s press release announcing Mr. Donahoe’s resignation is attached hereto as Exhibit 99.1.
Amendment and Restatement of PayPal Holdings, Inc. Executive Change in Control and Severance Plan
On July 24, 2024, the Compensation Committee of the Board (the “Committee”) approved an amendment and restatement of the PayPal Holdings, Inc. Executive Change in Control and Severance Plan (the “Restated Plan”).
The Restated Plan (i) eliminates the Good Reason (as defined in the Restated Plan) severance trigger for the Company’s Executive Vice Presidents in connection with their terminations of employment from the Company Outside of a Change in Control Period (as defined in the Restated Plan); (ii) reduces the cash severance payment multiple for terminations of employment Outside of a Change in Control Period (“Non-CIC Terminations”) for the Company’s Chief Executive Officer and Executive Vice Presidents from 2x to 1.5x and 1.5x to 1x, respectively; (iii) eliminates the payment of a prorated cash bonus for the year of termination of employment in connection with Non-CIC Terminations; (iv) removes the job elimination/role restructuring severance trigger from the Executive Long Term Incentive Program (“ELTIP”), such that benefits under the ELTIP may only be triggered by a Qualifying Retirement (as defined in the ELTIP), death or Disability (as defined in the Restated Plan); (v) removes the potential for health benefits severance to pay out under the ELTIP and limits the awards eligible for continued vesting under the ELTIP to those granted at least 12 months prior to the participant’s Separation Date (as defined in the Restated Plan); (vi) amends non-competition restrictive covenants in the ELTIP to align with developments in applicable law and governance practices; and (vii) reflects other various non-substantive, clarifying changes, technical or standardizing changes and changes to reflect the passage of time.
Notwithstanding the foregoing, to the extent an executive officer of the Company has not consented to participate in the Restated Plan and such executive officer has an active, express contractual entitlement under an individual agreement with the Company that no amendment of the PayPal Holdings, Inc. Executive Change in Control and Severance Plan as amended and restated effective as of September 27, 2021 (the “Prior Plan”) would materially impair such officer’s rights thereunder unless mutually agreed between such executive officer and the Company, the Prior Plan rather than the Restated Plan will continue to apply to such executive officer to the extent required by such individual agreement.
The foregoing description of the Restated Plan does not purport to be a complete description and is qualified in its entirety by the full text of the Restated Plan, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
