Potential Payments Upon Termination or Change in Control
As of October 31, 2020, the Company had the following lump sum payment obligations, under the LCP as described above, to its Named Executive Officers upon a change in control or termination: Laurans A. Mendelson $31,728,602; Carlos L. Macau, Jr. $6,347,200; Eric A. Mendelson $11,732,868 and Victor H. Mendelson $10,761,636. As of October 31, 2020, the Company’s payment obligation under the LCP to Steven M. Walker upon a change in control was $0 and upon termination was $1,241,648.
The unexercisable (unvested) options held by the Named Executive Officers as detailed in “Outstanding Equity Awards at Fiscal 2020 Year-End” would become immediately vested and exercisable upon (i) a change in control of the Company, (ii) the liquidation or dissolution of the Company, or (iii) any reorganization, merger, consolidation or other form of corporate transaction in which the Company does not survive or the shares are exchanged for or converted into cash or securities issued by another entity, or an affiliate of such successor or acquiring entity, unless the successor or acquiring entity, or an affiliate thereof, assumes the option or substitutes an equivalent option or right pursuant to Section 10(c) of the Company’s 2018 Incentive Compensation Plan, (each, an “Acceleration Event”). As of October 31, 2020, the value of this acceleration to the Named Executive Officers upon an Acceleration Event was: Laurans A. Mendelson $1,113,600, Carlos L. Macau, Jr. $4,247,109, Eric A. Mendelson $8,838,355, Victor H. Mendelson $8,838,355 and Steven M. Walker $414,157. The value of the accelerated vesting of the unexercisable options was calculated by aggregating the difference between the closing price of the applicable share class as of October 31, 2020 and the exercise price of such unexercisable option multiplied by the number of options for the applicable share class.
Pursuant to Item 402(u) of SEC Regulation S-K, we are required to disclose the ratio of the compensation of our Chief Executive Officer to the compensation of our median employee during fiscal 2020. During fiscal 2020, there was no change to our employee population or compensation arrangements that we reasonably believe would significantly affect our pay ratio disclosure. Additionally, there was no change in the circumstances of the employee identified as the median employee in fiscal 2018 and 2019. Based on the aforementioned and in accordance with Item 402(u) of SEC Regulation S-K, we used the same employee that we identified for this purpose last year.
To calculate the annual total compensation of our median employee, we identified and calculated the elements of such employee’s fiscal 2020 compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. Based on the aforementioned methodology, we determined that the fiscal 2020 median total annual compensation of our median employee was $50,240. As reported in the Summary Compensation Table, the fiscal 2020 annual total compensation for Mr. Mendelson was $2,941,765 resulting in a pay ratio of 59:1.
Our pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.