by Douglas Messier
For 26 years, Michael Colglazier worked for a company whose theme parks feature a popular attraction named Space Mountain. They aren’t really mountains and they don’t go anywhere near space, but as rollercoasters they are pretty good.
When the former Walt Disney Company executive signed on to become Virgin Galactic’s CEO in July, his contract included a free ride to space for himself and three friends aboard his new employer’s SpaceShipTwo suborbital vehicle.
“Subject to availability, the parties acknowledge and agree that the Executive shall join a ‘Spaceflight’ (which may include a test Spaceflight) in connection with the performance of his duties hereunder; in addition, the Executive may invite three guests to join a Spaceflight (which may include a test Spaceflight),” the contract said.
Virgin Galactic has agreed to give Colglazier a cash payment to cover all federal, state and local taxes that might be due on the value of the flights. The company will also cover the taxes due on the cash payment.
Virgin Galactic has sold tickets at $200,000 and $250,000 apiece. (The price was increased in 2013.) The company said prices are set to increase once it starts selling tickets again.
Virgin Galactic’s former CEO, George Whitesides, has a provision in his contract that will allow him and his wife, Loretta Hildalgo Whitesides, to fly aboard SpaceShipTwo.
Whitesides, who is now the company’s chief space officer, is expected to fly on SpaceShipTwo VSS Unity during one of two upcoming suborbital flight test to be conducted from Spaceport America in New Mexico. The first of the flights is set for later this fall.
Those tests are intended to pave the way for the start of flights with tourists during the first quarter of next year. Virgin Group Chairman Richard Branson plans to be aboard the inaugural commercial launch.
Colglazier received an $1 million signing bonus, half of which was paid 15 days after his effective date of hire in July. The other half will be paid 15 days after his first anniversary on the job.
Colglazier’s contract indicates he is being paid an annual base salary of $1 million. Virgin Galactic’s Board of Directors will review the base salary annually to determine whether it should be increased.
Colglazier is also eligible for an annual bonus “targeted at 100% of the Executive’s Base Salary…and ranging from 50% of the Executive’s Base Salary (if minimum/threshold performance goals are achieved) to a maximum of 150% of the Executive’s Base Salary (if maximum performance goals are achieved),” the contract stated.
Colglazier’s contract also includes grants and options covering more than one million shares of Virgin Galactic’s publicly traded stock.
Colglazier received two restricted stock unit (RSU) awards of 570,000 shares upon his hiring. One award included 500,000 shares, the other was a signing bonus of 70,000 shares.
Twenty-five percent of the 500,000 shares will vest on the first anniversary of his hiring. The remaining stock will vest in roughly equal installments over 12 quarters.
Fifty percent of the 70,000 RSU signing award vested when Colglazier was hired in July. The rest will vest on the first anniversary of his hiring next year.
The contract said that Colglazier will be eligible for additional equity-based compensation “as the Board (or such subcommittee) shall determine in its sole discretion taking into account the Executive’s and the Company’s performance.”
Virgin Galactic also granted Colglazier the option to purchase 500,000 shares of common stock at a share price equal to the fair market value on the date of his hire. The option will vest in 60 installments over five years.
Virgin Galactic agreed to pay its new CEO up to $15,000 for the expenses he incurred in drafting and reviewing his employment contract.
Colglazier is also entitled to 200 hours of vacation annually.