| ITEM 5.02 | DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS. |
On August 20, 2020, the Board of Directors (the “Board”) of Kaman Corporation (the “Company”) named Ian K. Walsh as President and Chief Executive Officer and as a member of the Board, effective September 8, 2020. Mr. Walsh will succeed Neal J. Keating as President and Chief Executive Officer; Mr. Keating is retiring as described below.
Mr. Walsh previously served as Chief Operating Officer REV Group, Inc., a leading designer, manufacturer, and distributor of specialty vehicles and related aftermarket parts and services. Prior to joining REV Group, Mr. Walsh worked at Textron, Inc., where he most recently served as President and Chief Executive Officer of TRU Simulation and Training. Mr. Walsh’s career with Textron began in 1999 at Bell Helicopter and progressed through leadership roles of increasing responsibility, including Senior Vice President and General Manager of Lycoming Engines and Senior Vice President and General Manager of Textron’s Weapon & Sensor Systems business. Mr. Walsh is a certified Six Sigma Black Belt and achieved the prestigious International Shingo Silver Medallion for Operational Excellence for his work at Lycoming Engines. Prior to joining Textron, he served as an officer and naval aviator in the U.S. Marine Corps. He holds a bachelor’s degree from Hamilton College, a Master of Public Administration from Harvard University’s John F. Kennedy School of Government, and a Master of Business Administration from Harvard Business School. There are no arrangements or understandings between Mr. Walsh and any other person pursuant to which he was selected to serve on the Board, and there are no relationships between Mr. Walsh and the Company that require disclosure under Item 404(a) of Regulation S-K.
In connection with Mr. Walsh’s appointment as President and Chief Executive Officer, the Company has entered into an Executive Employment Agreement with Mr. Walsh, which governs the first three years of his employment. Under the agreement, Mr. Walsh will receive an annual base salary of $650,000 and will be eligible to receive a target annual cash bonus equal to 100% of his annual base salary (which will be pro-rated for 2020, subject to a minimum payout for 2020 of $125,000). He will also receive an upfront initial retention payment of $200,000, which amount must be repaid to the Company in full if, prior to December 31, 2021, he terminates his employment without Good Reason (as defined in the agreement) or the Company terminates his employment for Cause (also as defined in the agreement).
Mr. Walsh will be eligible to receive annual equity awards in such amounts and on such terms as are determined by the Compensation Committee of the Board. He will receive an initial grant of restricted stock units with respect to a number of shares of Company common stock with a fair market value at the time of grant of $1,250,000, which restricted stock units will fully vest (subject to continued employment) on September 8, 2023 (or upon an earlier qualifying termination of employment). Mr. Walsh will also participate in the long-term incentive program feature of the Company’s Amended and Restated 2013 Management Incentive Plan annually beginning with the performance period commencing on January 1, 2021 with a target opportunity to earn at least 300% of his base salary. For the performance period of January 1, 2021 – December 31, 2023 the target value of his long-term incentive program opportunity will be $2,550,000 (300% of base salary plus $600,000).
In the event of a qualifying termination of employment (except to the extent covered by the Change in Control Agreement (discussed below)), Mr. Walsh will be entitled to receive a pro-rata bonus for the year of termination (based on actual performance) a severance payment equal to two times the sum of his base salary and most recent annual bonus, eligibility to receive payout on then-ongoing long-term incentive plan awards (pro-rata based on actual performance), two years continued participation in Company benefit plans and vesting of his initial restricted stock unit award. The forgoing payments are all subject to the effectiveness of a release of claims in favor of the Company. The employment agreement also contains certain restrictive covenants and subjects compensation earned by Mr. Walsh to claw back by the Company under certain circumstances.
