Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
On September 13, 2017, Cadence Design Systems, Inc. (Cadence) announced that John
Wall has been appointed as Senior Vice President and Chief Financial Officer of Cadence, effective October 1, 2017.
Mr. Wall, age 47, has held
several positions at Cadence since October 2000, including his current role as Corporate Vice President and Corporate Controller of Cadence since April 2016, Vice President of Finance and Operations, Worldwide Revenue Accounting and Sales Finance,
from 2015 to 2016 and Vice President, Finance and Operations, EMEA and Worldwide Revenue Accounting, from 2005 to 2015.
Mr. Walls annualized
base salary has been increased to $360,000 and he will be eligible to earn an incentive bonus targeted at 75% of his annualized base salary in accordance with Cadences Senior Executive Bonus Plan. Mr. Walls employment at Cadence
will continue to be on an at will basis, and he will continue to participate in the benefit programs available to executives of Cadence, including Cadences 401(k) plan,
non-qualified
deferred
compensation plan, health insurance and life and disability insurance.
On September 13, 2017, the Compensation Committee of Cadences Board of
Directors (the Compensation Committee) approved the following equity grants to Mr. Wall, effective as of October 1, 2017 (the Grant Date):
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An incentive stock award of shares of Cadence common stock with a Grant Date value of approximately $1,000,000 and vesting subject to the achievement of a performance objective, and if such objective is achieved, 1/6
th
of the shares will vest every 6 months over 3 years; and
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A long-term performance-based stock award of 50,000 shares of Cadence common stock with vesting based on Cadences stock price and total shareholder return performance, measured from February 21, 2017 through
March 15, 2021, as compared to a peer group of companies, with the ability to earn up to 25% of the shares subject to the award based on Cadences stock price and total shareholder return performance through March 15, 2020, as
compared to a peer group of companies.
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The Compensation Committee also determined that Mr. Wall will be a participant in the Executive
Severance Plan (the Severance Plan). Under the Severance Plan, if Mr. Walls employment is terminated by Cadence without Cause (as defined in the Severance Plan) and not due to death or Permanent
Disability (as defined in the Severance Plan), he will be entitled to the benefits provided for in the Transition and Release Agreement which is an exhibit to the Severance Plan (the Transition Agreement) in exchange for his
execution and delivery of general release of claims in favor of Cadence. The Transition Agreement provides that Mr. Wall will continue to perform services for Cadence in a
non-executive
capacity for
one-year
following his termination of employment (the Transition). In exchange for such services during the Transition, Mr. Wall shall receive the following payments and benefits:
(i) accelerated vesting, as of the date of his Transition commencement, of outstanding unvested equity compensation awards, other than awards with performance-based vesting criteria, that would have vested over a 12 month period, whereas
unvested equity compensation awards that are subject to performance-based vesting criteria and that are outstanding as of the date of Transition commencement shall continue to vest through the end of the applicable performance period to the extent
the applicable performance conditions are satisfied, provided (A) any such performance period ends during his Transition period only, and (B) he remains employed pursuant to the Transition Agreement through the end of the applicable
performance period; (ii) provided he elects COBRA coverage, payment of his COBRA
premiums during the Transition period of up to one year; (iii) a monthly salary of $4,000 per month salary, payable for up to six months commencing on the first pay date that is at least
seven months after his Transition commencement; (iv) a
lump-sum
payment equal to one years base salary at the highest rate in effect during his employment, payable on the date that is seven months
after the date of his Transition commencement; and (v) a
lump-sum
payment equal to 75% of one years base salary at the highest rate in effect during his employment), payable 60 days following the
one-year
anniversary of his Transition commencement, provided he does not resign from employment with Cadence and Cadence does not terminate his employment with Cadence due to material breach of the duties under the
Transition Agreement.
In addition, the Transition Agreement provides that if, within three months before or 13 months after a Change in
Control (as defined in the Severance Plan), Mr. Walls employment is terminated without Cause or he terminates his employment due to a Constructive Termination (as defined in the Severance Plan, which includes
Mr. Wall ceasing to hold the title of Chief Financial Officer), then, in exchange for his execution and delivery of the Transition Agreement and general releases, he will be entitled to the following benefits: (A) in lieu of the
acceleration described in clause (i) above, all of his outstanding unvested equity compensation awards will immediately vest in full (unless specifically provided to the contrary in the equity grant agreement); (B) the
lump-sum
payment specified in clause (iv) above increased by 50%; and (C) the
lump-sum
payment specified in clause (v) above increased by 50%.
The Severance Plan also provides that if Mr. Walls employment is terminated due to death or Permanent Disability, he will be entitled
to the following payments and benefits if his estate executes and delivers a general release in favor of Cadence: (i) accelerated vesting, as of the date of his termination of employment, of outstanding unvested time-based equity compensation
awards that would have vested over the succeeding
12-month
period, and such awards and all previously vested equity awards shall remain exercisable for 24 months from the date of his termination of employment
(but not later than the expiration of the term of the applicable award); and (ii) solely in the case of termination of employment due to Permanent Disability and provided he elects COBRA coverage, payment of his COBRA premiums for
one year following such termination.
There are no arrangements or understandings between Mr. Wall and any other person pursuant to which he was
appointed as Senior Vice President and Chief Financial Officer of Cadence. Mr. Wall does not have any family relationship with any director or other executive officer of Cadence, and there are no transactions in which Mr. Wall has an
interest requiring disclosure under Item 404(a) of Regulation of
S-K.
Upon Mr. Walls appointment,
Geoffrey G. Ribar, who is currently serving as Cadences Senior Vice President and Chief Financial Officer, will become a Senior Advisor, effective October 1, 2017 through March 31, 2018, at which time he will retire from Cadence. In
the event Mr. Ribars employment with Cadence is terminated without cause in connection with a change in control prior to March 31, 2018, Mr. Ribar will continue to receive his base salary and health benefits through
March 31, 2018. Cadence will provide COBRA coverage for Mr. Ribar and his dependents for one year, commencing April 1, 2018.