Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
(e) Fiscal 2017 Executive Incentive Plan
.
On
June 28, 2017, the Compensation Committee of the Board of Directors of American Superconductor Corporation (the
Committee
) and the Board of Directors of American Superconductor Corporation (the
Company
)
approved an executive incentive plan for the Companys fiscal year ending March 31, 2018 (
fiscal 2017
). Participants in the plan include the Companys chief executive officer, all other current executive officers
and James F. Maguire, a former executive officer who was a named executive officer in our Definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission (
SEC
) on June 16, 2017. Pursuant to the
plan, each participant is designated a target cash incentive amount, expressed as a percentage of the participants base salary. The Committee is responsible for determining the payout under the plan to each participant except the chief
executive officer. The Board of Directors of the Company determines the payout under the plan for the chief executive officer, taking into account the recommendation of the Committee.
The amount of the incentive award actually paid to each participant may be less than or greater than the participants target cash
incentive, with the amount capped at 200% of the target incentive. For each participant, individual incentive awards will be determined following the end of fiscal 2017 based on the following factors and their corresponding weightings:
|
|
|
the Companys operating cash flow for fiscal 2017 as compared to the established target 40%
|
|
|
|
the participants achievement of other financial objectives relating to net loss, revenues, operating expenses and orders during fiscal 2017 as compared to the established target 40%
|
|
|
|
the participants individual and overall contribution during fiscal 2017 towards the achievement of the Companys financial and non-financial objectives (subjective performance measure) 20%
|
The following table sets forth the target cash incentive for fiscal 2017 for each current executive officer and Mr. Maguire:
|
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
Title
|
|
Target Incentive
as % of
Base Salary
|
|
|
Target Incentive
|
|
Daniel P. McGahn
|
|
President and Chief Executive Officer
|
|
|
100
|
%
|
|
$
|
500,000
|
|
John W. Kosiba, Jr.
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
50
|
%
|
|
$
|
125,000
|
|
James F. Maguire
|
|
Executive Vice President, Technology
|
|
|
75
|
%
|
|
$
|
221,250
|
|
(e) David A. Henry.
As described in the Companys Current Report on Form 8-K filed with the SEC on
April 4, 2017, David A. Henry resigned from the offices of Executive Vice President, Chief Financial Officer and Treasurer of the Company, effective April 4, 2017. Mr. Henry remained an employee of the Company and assisted with the
transition of his responsibilities and other related matters until June 30, 2017 (the
Termination Date
).
In connection with
Mr. Henrys termination of employment with the Company, the Company and Mr. Henry entered into a Severance and Consulting Services Agreement on June 30, 2017 (the
New Henry Agreement
), which, if not revoked by
Mr. Henry prior to July 8, 2017, will supersede the Amended and Restated Executive Severance Agreement by and between the parties dated as of December 23, 2008 (the
Previous Henry Agreement
), which was filed as
Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q filed February 5, 2009, and is incorporated herein by reference.
The New Henry
Agreement includes additional contractual protections for the Company in exchange for additional consideration to be paid to Mr. Henry. Specifically, the payments and benefits which the Company has agreed to pay or provide to Mr. Henry if
he has not revoked the New Henry Agreement prior to July 8, 2017, include the following:
|
|
|
$468,000 as severance pay (the
Cash Severance Pay
), an amount equivalent to eighteen
(18) months of his base salary on the Termination Date, provided that the Company may in its discretion, in lieu of unpaid Cash Severance Pay otherwise payable from and after January 1, 2018, issue to the Executive an award of immediately
vested shares of Company common stock (the
Equity Severance Payment
) under the Companys 2007 Stock Incentive Plan, as amended (the
2007 Stock
|
2
|
Incentive Plan
). The Equity Severance Payment, if any, shall be made in 2018 and shall consist of that number of shares of Company common stock equal to the remaining unpaid Cash
Severance Pay multiplied by 1.2, then divided by the closing stock price per share of Common Stock on the Nasdaq Global Select Market as of the last business day prior to the issuance of the Equity Severance Payment;
|
|
|
|
an award of 16,667 restricted stock units under the 2007 Stock Incentive Plan, which will vest in full on July 8, 2017 if Mr. Henry has not revoked the New Henry Agreement (which is equal to the number of
shares of time-based restricted stock awards that Mr. Henry forfeited to the Company on the Termination Date). Each restricted stock unit represents the right to receive one share of the Companys common stock;
|
|
|
|
payment by the Company of up to $5,000 in connection with either Mr. Henrys use of outplacement services and/or to pay reasonable fees incurred by Mr. Henry for his professional affiliations, memberships
and/or certifications; and
|
|
|
|
continued coverage under the Companys group health plan at the then-applicable employee rate for up to 18 months following termination (or, in certain cases, the cash equivalent thereof).
|
In addition, the Company has agreed to retain Mr. Henry as a consultant from the Termination Date through the date that is nine (9) months after the
Termination Date, unless the Company elects to terminate this consulting period earlier for any reason. The Company has agreed to pay Mr. Henry one hundred fifty dollars ($150.00) per hour of consulting services performed.
In turn, to the extent he does not revoke the New Henry Agreement, Mr. Henry has also agreed to release all claims against the Company and to comply with
certain restrictive covenants regarding non-competition, non-solicitation and non-disparagement for the period beginning on the Termination Date through December 31, 2018 (except that the non-disparagement obligations do not expire).
If Mr. Henry revokes the New Henry Agreement prior to July 8, 2017, then the Company expects to pay the severance payable to him under the Previous
Henry Agreement, subject to his execution and non-revocation of the required legal release and the other terms and conditions of the Previous Henry Agreement.
The foregoing description of the New Henry Agreement is qualified in its entirety by reference to such document, which is filed herewith as Exhibit 10.1 and
is incorporated herein by reference.