Item
1.01. Entry into a Material Definitive Agreement.
On
December 8, 2017, Benchmark Electronics, Inc. (the “Company”) entered into a
Key Management Severance Agreement with Michael Buseman, Executive Vice
President of Operations. Mr. Buseman joined the Company in August 2017. Mr.
Buseman’s compensation arrangements are described in the Form 8-K filed by the
Company on July 18, 2017 and incorporated by reference herein. The form of the
severance agreement (the “agreement”) is filed as Exhibit 10.1 to this report,
and the following description of the agreement is qualified by the terms and
conditions of such exhibit, which is hereby incorporated by reference.
The
agreement contemplates an annual base salary, subject to adjustment from time
to time, as determined by the Chief Executive Officer and the Compensation
Committee of the Company’s Board of Directors, and an annual bonus consistent
with the employee’s current plan, or such other plan as may be approved from
time to time by the Chief Executive Officer and/or the Compensation Committee
for similarly situated key management employees.
The
agreement provides for the employee’s participation in all long-term incentive
compensation programs and other benefits consistent with those available to
other senior officers and provides for a one-year term subject to automatic
one-year extensions, unless terminated by the Company or the employee. Any
incentive compensation is subject to potential forfeiture or recovery by the
Company in accordance with the compensation recovery policy adopted by the
Board of Directors.
The
agreement contains restrictive covenants prohibiting the employee from
competing with the Company or soliciting its customers or service providers
during the term of the agreement and for one year thereafter (or two years, if
termination is related to a “change in control” (as defined in the
agreement)). During the same periods, the employee may not make disparaging
remarks about the Company, its subsidiaries or products and services or divert
customers of the Company to its competitors. Additionally, the agreement
contains confidentiality covenants that continue until three years after the
date of the employee’s termination.
The
agreement does not permit payment of excise taxes levied under Sections 280G
and 4999 of the U.S. Internal Revenue Code; rather, if payments and benefits
provided to the employee along with other payments and benefits provided by the
Company would collectively constitute “parachute payments” for purposes of
those sections, such payments and benefits would be reduced to an amount
sufficient to avoid application of the excise tax.
The
agreement provides for the payment of anything owing or accrued upon
termination and continuation of medical and other benefits for specified times
in qualifying circumstances. In addition, the agreement provides that:
·
If employment is terminated by the Company without cause, or by
the employee for “good reason,” (as defined in the agreement) severance will be
paid equal to the employee’s annual base salary and target-level bonus for the
full year (or twice such amounts if termination is in connection with a change
in control). If the employee secures other employment following termination,
the foregoing payments will be reduced to 50% of the balance still owing, except
in the case of terminations in connection with a change in control. The
employee must execute a general release and comply with the non-competition and
other requirements of the agreement to receive the severance.
·
If employment terminates due to death or disability, equity
awards that are not performance-based immediately vest in full, and the
employee (or the employee’s estate) receives a prorated bonus for the current
year.
·
If the employee retires, equity awards that are not
performance-based will continue vesting until fully vested.
·
If the employee is terminated for cause or terminates employment
without good reason no additional payments are made beyond those owing or
accrued.
On December 7, 2017, the Company entered
into a Transition Agreement and Release of All Claims (the “Transition
Agreement”) with Scott Peterson, the Company’s Vice President, General Counsel
and Secretary. The Transition Agreement supersedes certain provisions of Mr.
Peterson’s existing Executive Severance Agreement. The Transition Agreement
provides that Mr. Peterson will continue to serve as Vice President, General
Counsel and Secretary until December 31, 2017 and thereafter in a transitional
role through March 16, 2018. Subject to Mr. Peterson’s execution of a customary
release of all claims, he will continue to receive his annualized salary of
$371,000 during the transition period beginning January 1, 2018 and ending
March 16, 2018, and his restricted stock unit awards and nonqualified stock
option awards that vest solely based on the passage of time will continue to
vest through March 16, 2018. In addition, Mr. Peterson will receive the
severance and continued health insurance premium payments he is entitled to
receive under his Executive Severance Agreement for a termination by the
Company without cause, except that the amount of the severance payment will be
reduced from 100% of his base salary for 12 full months and only be paid during
the severance period beginning March 16, 2018 and ending December 31, 2018, and
the duration of the continued health insurance premium payments will be reduced
from a period of 12 months and only be paid during the period beginning March
16, 2018 and ending December 31, 2018. The Transition Agreement further
provides that the bonus, if any, due to Mr. Peterson for the 2017 calendar year
will be calculated and paid in accordance with the existing terms of the
Company’s executive annual incentive compensation plan.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 5, 2017, Scott Peterson, the Company’s Vice
President, General Counsel and Secretary, notified the Company he will resign
from his position effective December 31, 2017. In connection with this event,
on December 7, 2017, Mr. Peterson and the Company entered into a Transition
Agreement and Release of All Claims. The terms of this agreement are described
above under Item 1.01.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.
Description
of Exhibit
10.1
Form of Key Management Severance Agreement
10.2
Transition Agreement and Release of All Claims by
and between Scott Peterson and the Company