Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) As previously disclosed, effective February 7, 2018, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Acacia Communications, Inc. (the “Company”) approved awards of performance-based restricted stock units (each, a “PRSU,” collectively, the “PRSUs”) to the Company’s executive officers, including up to a maximum of 13,940 PRSUs for Murugesan Shanmugaraj, the Company’s President and Chief Executive Officer, up to a maximum of 8,712 PRSUs for John F. Gavin, the Company’s Chief Financial Officer and up to a maximum of 8,712 PRSUs for Bhupendra C. Shah, the Company’s Vice President of Engineering. Effective as of the same date, the Committee also approved up to a maximum of 8,712 PRSUs for Benny P. Mikkelsen, the Company’s Chief Technology Officer and up to a maximum of 8,712 PRSUs for Eric L. Fisher, the Company’s Vice President of Global Sales, under the Company’s 2016 Equity Incentive Plan (the “Plan”). Each PRSU was made pursuant to a restricted stock unit agreement with the applicable officer under the Plan in the form previously approved by the Board (the “Original PRSU Agreement”).
Each PRSU represents the right to receive one share of common stock, $0.0001 par value per share, of the Company (the “Common Stock”) upon vesting of the PRSU, subject to the terms and conditions set forth in the Plan and the applicable Original PRSU Agreement.
The PRSUs were subject to performance-based vesting. The number of PRSUs that vest were to be measured based on the level of achievement of a performance objective over a three-year period (the “Performance Period”) running from January 1, 2018 through December 31, 2020, as determined and certified by the Committee following the end of such Performance Period. Vesting of the PRSUs was also subject to the applicable officer’s continued provision of services to the Company through the vesting date, except in the case of death or disability where vesting would be pro-rated for time worked during the Performance Period.
The number of PRSUs that vest would be determined based on the Company's percentile achievement of relative total shareholder returns against an external comparator group during the Performance Period (the “Relative TSR Objective”). No PRSUs would vest unless a threshold level of achievement of the Relative TSR Objective was achieved.
The Performance Period ended on December 31, 2020.
In light of the long delay between (i) the closing under the amended and restated agreement and plan of merger (the “Amended and Restated Merger Agreement”), dated January 14, 2021, by and among the Company, Cisco Systems, Inc. (“Parent”) and Amarone Acquisition Corp. (“Merger Sub”), which provides for the acquisition of the Company by Parent by way of the merger of Merger Sub with and into the Company (the “Merger”) and (ii) the execution of the agreement and plan of merger, dated July 8, 2019, by and among the Company, Parent and Merger Sub, which has been amended and restated in its entirety by the Amended and Restated Merger Agreement, on January 15, 2021 the Committee amended the PRSUs to provide that the Payout Factor shall be 200% (the “PRSU Amendment”), which is the maximum Payout Factor, determined in accordance with the Original PRSU Agreements, that would have applied had the Merger closed on December 31, 2020, the final date of the Performance Period, using the Merger Consideration (as defined in the Amended and Restated Merger Agreement) of $115 per share, as the Ending Price (as defined in the Original PRSU Agreements).
Accordingly, 13,940 PRSUs, 8,712 PRSUs, 8,712 PRSUs, 8,712 PRSUs and 8,712 PRSUs vested as of January 15, 2021, for Mr. Shanmugaraj, Mr. Gavin, Mr. Shah, Mr. Mikkelsen and Mr. Fisher, respectively.
The foregoing description of the PRSUs does not purport to be complete and is qualified in its entirety by the complete text of the form of restricted stock unit agreement, which is incorporated herein by reference to Exhibit 10.9 to Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-208680) filed by the Company with the Securities and Exchange Commission on February 24, 2016.