Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Retirement of President & CEO and Succession
Yuval Wasserman, the current President & Chief Executive Officer of Advanced Energy Industries, Inc. (the “Company”), will be stepping down as President & Chief Executive Officer of the Company, effective on March 1, 2021 (the “Effective Date”). In connection with Mr. Wasserman’s decision to retire, Mr. Wasserman will also resign as a member of the Company’s Board of Directors (the “Board”), effective on the Effective Date.
On February 8, 2021, the Board appointed Stephen D. Kelley to succeed Mr. Wasserman as President and Chief Executive Officer of the Company, effective on the Effective Date. In addition, on February 8, 2021, the Board elected Mr. Kelley as a director of the Company, effective on the Effective Date, to fill the vacancy created by Mr. Wasserman’s resignation from the Board on the Effective Date.
Executive Advisory Agreement with Mr. Wasserman
Mr. Wasserman will remain as an executive advisor to the Board and Mr. Kelley to assist in the transition until his retirement on March 31, 2022 (the “Retirement Date”). In connection therewith, on February 8, 2021, the Company and Mr. Wasserman entered into a Transition and Retirement Agreement (the “Transition & Retirement Agreement”) whereby Mr. Wasserman (a) will agree to be an executive advisor to the Board and Mr. Kelley until the Retirement Date, (b) will receive his current base salary through the Retirement Date, (c) will continue to be eligible to participate in the Company’s short term incentive plan for 2020 and 2021 at his current bonus incentive opportunity percentage, subject to proration for the period that Mr. Wasserman served as President & Chief Executive Officer for 2021, (d) will continue to vest in his outstanding equity awards under the Company’s 2018, 2019 and 2020 long-term incentive equity plans, (e) will continue to participate in the October 2019 Artesyn Performance-Based Cash Integration Bonus Plan, (f) will continue to be eligible to participate under the Company’s benefit plans and (g) will continue to be covered under his Executive Change in Control & General Severance Agreement, dated August 2, 2018. The Transition & Retirement Agreement also includes customary confidentiality, proprietary information and indemnification provisions and includes a release from Mr. Wasserman. The foregoing is a summary of the material terms of the Transition & Retirement Agreement and is qualified in its entirety by reference to the Transition & Retirement Agreement. A copy of the complete Transition & Retirement Agreement is attached to this Current Report on Form 8-K as Exhibit 10.1, and the terms of the Transition & Retirement Agreement are incorporated herein by this reference.
Offer Letter with Mr. Kelley
In connection with the appointment of Mr. Kelley as the Company’s President and Chief Executive Officer effective on the Effective Date, on February 8, 2021, the Company and Mr. Kelley entered into an offer letter (the “Offer Letter”). The Offer Letter provides that Mr. Kelley (a) will be eligible to receive an annualized base salary of $850,000, (b) will be eligible under the Company’s 2021 short-term incentive plan to receive an annual cash target incentive of 100% of his base salary, (c) will be eligible under the Company’s 2021 long-term incentive plan to receive an equity incentive grant date value (using a 30-day average stock price) of $3.6 million, (d) will be eligible to receive an additional new hire inducement equity grant equal to $1.2 million of equity grant date value (using a 30-day average stock price), (e) will be provided relocation assistance under the Company’s relocation program in an amount up to $350,000, including the facilitation of the sale of his home through a buyer value option, (f) will be offered the Company’s standard CEO Executive Change in Control & General Severance Agreement as disclosed in the Company’s 2020 proxy statement and attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 6, 2018, (g) will be offered the Company’s standard Director Indemnification Agreement as disclosed in Exhibit 10.1 to the Company’s