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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Effective as of November 8, 2017, the Board of Directors of the Company appointed David Heard as an executive officer of the Company. Mr. Heard will continue to serve as the Company’s Senior Vice President, GM Products and Solutions, but as part of the announced restructuring plan, Mr. Heard’s role will now expand to include oversight of systems engineering and business development. In this expanded role, Mr. Heard will be responsible for driving
internal alignment between the Company’s engineering, product management and marketing teams, and ensuring efficiency in its overall development process.
Mr. Heard, 49, joined the Company in June 2017 to lead the Company’s Products and Solutions team. Prior to joining the Company, Mr. Heard served as a private consultant from 2015 to June 2017. From 2010 to 2015, Mr. Heard served as President of Network and Service Enablement at JDS Uniphase. From 2007 to 2010, Mr. Heard served as Chief Operating Officer at BigBand Networks (now part of Arris). From 2004 to 2006, Mr. Heard served as President and Chief Executive Officer at Somera (now part of Jabil). From 2003 to 2004, Mr. Heard served as President and General Manager Switching Division at Tekelec (now part of Oracle). From 1995 to 2003, Mr. Heard served in a number of leadership roles at Santera Systems Spatial Networks and at Lucent Technologies (both now part of Nokia). Mr. Heard holds a B.A. in Production and Operations Management from Ohio State University, an M.B.A. from the University of Dayton and an M.S. in Management from Stanford Graduate School of Business, where he was a Sloan Fellow. Mr. Heard currently serves as the Chairman of the Telecommunications Industry Association.
Mr. Heard receives an annual base salary of $500,000 and will be eligible for an annual cash incentive bonus payment of 75% of his base salary beginning in fiscal 2018. In addition, in June 2017, Mr. Heard was granted 150,000 restricted stock units and 50,000 performance stock units to be settled in shares of the Company’s common stock pursuant to the Company’s 2016 Equity Incentive Plan. The restricted stock units shall vest as to 1/4th of the underlying shares annually on each of July 5, 2018, 2019, 2020 and 2021, subject to Mr. Heard’s continued service to the Company. The performance stock units shall vest based on achievement of a specified level or levels of the Company’s total stockholder return (“TSR”), similar to the performance-based restricted stock unit awards made to the Company’s other executives in fiscal 2017 that are subject to achievement of TSR measured over three performance periods, as determined by the Compensation Committee, in its sole discretion.
There are no arrangements or understandings between Mr. Heard and any other persons pursuant to which Mr. Heard was appointed as Senior Vice President, GM Products and Solutions of the Company. There are no transactions in which Mr. Heard has an interest requiring disclosure under Item 404(a) of Regulation S-K.
Mr. Heard will enter into the Company's standard form change of control severance agreement and standard form indemnification agreement for executive officers.
As part of the restructuring discussed in Item 2.05 above, David F. Welch, Ph.D. will transition to the role of Chief Strategy and Technology Officer. The new position will allow Dr. Welch to focus on creating differentiated capabilities that will drive the Company’s strategy and to actively engage with customers to align the Company’s product roadmap and technology strategies.
Also as part of the restructuring, Thomas J. Fallon, the Company’s Chief Executive Officer, and Dr. Welch will each have their current annual base salary reduced. Mr. Fallon’s current base salary will be decreased from $650,000 to $520,000 and Dr. Welch’s current base salary will be decreased from $500,000 to $450,000.