Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On October 30, 2020, John M. Forsyth, the current President of Cirrus Logic,
was appointed by the Board of Directors (the “Board”) as the Company’s next Chief Executive Officer (“CEO”), effective January 1, 2021 (the “Effective Date”). In addition, the Board intends to appoint Mr. Forsyth as a member of the
Board upon the Effective Date, or as soon as practicable thereafter.
Mr. Forsyth, age 47, joined the Company in August 2014 through the acquisition of Wolfson Microelectronics, where he served as Vice President of Audio
Products. Following that acquisition, from August 2014 until June 2018, Mr. Forsyth served as the Company’s Vice President of Product Marketing. From June 2018 until his appointment as President in January 2020, he served as the Company’s Chief
Strategy Officer.
There are no family relationships between Mr. Forsyth and any director or executive officer of the Company, and Mr. Forsyth has no direct or indirect
material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
On October 30, 2020, in connection with his appointment, the Board’s Compensation Committee reviewed Mr. Forsyth’s compensation and approved a salary increase to $600,000. In addition, the Committee approved an increase in Mr. Forsyth’s semiannual target bonus under the Company’s 2007
Management and Key Individual Contributor Incentive Plan (“Incentive Plan”) to 50% of his base annual salary. A complete description of the Company’s Incentive Plan is included in the Company’s definitive proxy statement dated June 3, 2020
(the “Proxy Statement”).
The Committee increased Mr. Forsyth’s base salary in recognition of his appointment as CEO and believes that his targeted total cash compensation
(including salary and target incentive plan payout) strikes a balance between providing compensation that is competitive with compensation paid to CEO’s of peer companies while recognizing Mr. Forsyth’s level of experience as a public company
CEO. Further, the Committee set his level of compensation such that the Committee has the opportunity to increase his targeted total cash compensation towards the 50th percentile range of CEO’s of peer companies over time based on
their evaluation of his individual performance and the overall performance of the Company in the future.
Mr. Forsyth will also continue to participate in the Company's 2007 Executive Severance and Change of Control Plan (“2007 Severance Plan”). In the event
of Mr. Forsyth's involuntary termination other than for “cause” (as defined in the 2007 Severance Plan) he would be eligible to receive: (i) a continuation of base salary for a period of up to twelve months following termination, and (ii) payment
in full of a reasonable estimate of COBRA premiums for three months. If his employment is terminated either by the Company without “cause” or by him for “good reason” within 12 months following a “change of control” of the Company (as each
quoted term is defined in the 2007 Severance Plan), he would be eligible to receive a change of control termination payment, which is comprised of: (i) a lump sum payment equal to 24 months’ base salary, (ii) acceleration in full of any unvested
stock options or any other securities or similar incentive awards that have been granted or issued to him as of the employment termination date, and (iii) payment in full of a reasonable estimate of COBRA premiums for 12 months. In addition, he
would have until six months from the employment termination date to exercise any vested options, except that no option would be exercisable after the option's original expiration date.
In view of the timing of Mr. Forsyth’s appointment as CEO and the prior award of an equity grant to Mr. Forsyth to reflect his promotion to President in
January 2020, the Committee determined that it would review and propose additional equity grants for Mr. Forsyth as part of the Committee’s standard annual review of executive compensation. The Committee’s next review of executive compensation
is currently expected to take place sometime during the fourth quarter of fiscal year 2021 as described in the Proxy Statement.
Further, on October 30, 2020, Cirrus Logic entered into a Transition Agreement (the “Transition Agreement”) with Jason P. Rhode, the current Chief
Executive Officer, pursuant to which Dr. Rhode will transition from his service as Chief Executive Officer on January 1, 2021 (the “Transition Commencement Date”) into an Executive Fellow role, whereby he will provide certain transition and
advisory services to Cirrus Logic through January 1, 2022 (the “Transition Completion Date”). Dr. Rhode also resigned from the Company’s Board effective on the Transition Commencement Date. During the period between the Transition Commencement Date and the Transition Completion Date (the “Transition Period”), Dr.
Rhode will work with Mr. Forsyth following the transition of the CEO responsibilities, as well as continuing to be directly involved in customer relationships and talent development within the Company. In exchange for his services, Dr. Rhode
will be entitled to receive an annual base salary of $300,000 per year and continue to receive his current benefits. He will also be eligible to participate in the Company’s Incentive Plan at a semiannual target bonus of 37.5% of his base annual
salary. For the second Plan Cycle of the Company’s 2021 fiscal year, the Company agreed to prorate Dr. Rhode’s Target Incentive Amount (as described in the Proxy Statement) to reflect (1) Dr. Rhode’s Base Salary and Target Incentive Factor for
the portion of the second Plan Cycle during which Dr. Rhode serves as the Company’s Chief Executive Officer; and (2) Dr. Rhode’s Base Salary and Target Incentive Factor for the portion of the second Plan Cycle during which Dr. Rhode serves as an
Executive Fellow.
In addition to the requirements described above, if Dr. Rhode provides continual services throughout the Transition Period and signs a release of all
claims against the Company, then any portion of Dr. Rhode’s unvested equity awards pursuant to the Company’s 2018 Long Term Incentive Plan (the “LTI Plan”) that were scheduled or would become eligible to vest during the twelve month period
immediately following the Transition Completion Date shall fully vest automatically. With respect to any Awards (as defined in the LTI Plan) that are subject to performance-based vesting conditions, performance will be calculated based upon the
actual performance of such Award as of the Transition Completion Date as calculated in accordance with the terms and conditions of the LTI Plan and any individual Award agreements governing such Award. The Board believes that the total
compensation, including the acceleration of vesting of Awards if Dr. Rhode provides continual services through the Transition Period, properly balances the Board’s desire to induce Dr. Rhode to remain engaged with the leadership of the Company as
part of a planned executive succession strategy while also supporting the timely transition of his management roles and responsibilities to Mr. Forsyth.
During the Transition Period, Dr. Rhode will continue to be eligible to receive the benefits, if any, provided for non-CEO executives under the 2007
Severance Plan. In addition to the benefits provided under the 2007 Severance Plan, in connection with any determination by the Company to terminate Dr. Rhode
without Cause or Dr. Rhode’s resignation following a Change of Control (capitalized terms defined as in the 2007 Severance Plan), any portion of Dr. Rhode’s Awards (as defined in the LTI Plan) that were scheduled or would become eligible to vest
had Dr. Rhode remained employed with the Company until the Transition Completion Date shall fully vest automatically. With respect to any Awards referenced in the previous sentence that are subject to performance-based vesting conditions,
performance will be calculated based upon the actual performance of such Award as of the date of the applicable termination, calculated in accordance with the terms and conditions of the LTI Plan and any individual Award agreements governing such
Award.
The foregoing description of the material terms of the Transition Agreement is only a summary and is qualified in its entirety by the terms of the
Transition Agreement, a copy of which is attached hereto as Exhibit 10.1 to this report and is incorporated herein by reference.