Exhibit 10.1
Methode Electronics, Inc.
8750 West Bryn Mawr Avenue, Suite 1000
Chicago, Illinois 60131
June 25, 2024
Dear Mr. Jonathan DeGaynor:
By this letter (this “Offer Letter”), we are pleased to offer you the position of President and Chief Executive Officer (collectively, “CEO”) of Methode Electronics, Inc. (the “Company”). In the position of CEO, you will report directly to the Company’s Board of Directors (the “Board”).
In such position, you will perform senior executive duties and responsibilities on behalf of the Company consistent with such position and as set forth in the Company’s bylaws, and such other duties and responsibilities as the Board may prescribe from time to time. Except as described below, you will use your best efforts to promote the business of the Company and devote your full business attention, skill, and working time to performance of such duties and responsibilities, and you shall not engage in any other business activities or employment while employed by the Company without the written consent of the Board. Except for your continued service on the boards of Racing and Performance Inc. and The Wharton School, you shall not serve on any other public or private boards during your employment that are not affiliated with the Company, except that after two (2) years of service with the Company you may request, and the Board in its discretion may approve, your service on no more than one (1) additional board. You acknowledge that you will be legally obligated to observe, and will discharge, a duty of loyalty to act in the Company’s best interests during your employment by the Company.
You will be headquartered at the Company’s principal office in Chicago, Illinois, unless otherwise determined by the Board.
The start date of your employment will be July 15, 2024, or such earlier or later date as mutually agreed by the parties.
Your compensation, which is subject to applicable withholding taxes and other lawful deductions, and which may be adjusted by the Compensation Committee of the Board from time to time in its discretion, will be as follows:
Salary: $1,000,000 annually, payable in accordance with the Company’s standard payroll practices.
Bonus: You will be eligible for an annual bonus with a target amount equal to 125% of your base salary. For FY2025, your bonus eligibility will be based on the metrics established by the Compensation Committee for other executive officers, and any
bonus will be prorated based on your start date. Bonuses and target amounts for future fiscal years (after FY2025) will be determined in the Compensation Committee’s sole discretion after consultation with you. Except as set forth in the Executive Severance and Retention Agreement, your eligibility for a bonus is conditioned on your remaining employed by the Company through the date that such annual bonus is scheduled to be paid.
Long Term Incentive Plan: You will be eligible to participate in the Company’s LTI program. You shall receive an annual award in the amount of $4,000,000 (prorated for FY 2025), 40% of which shall be time vested restricted stock units and 60% of which shall be performance based restricted stock units. For the first year, the performance based restricted stock units shall be based on total shareholder return, and subsequent years shall be based on the performance goals designed by the Compensation Committee in its sole discretion after consultation with you. All equity grants under this section or others will require your execution of separate award agreements to be provided by the Compensation Committee that will contain other terms applicable to the award. The award agreements for your equity grants shall provide for accelerated vesting as follows:
For purposes of the preceding sentence, “Cause” will be defined in the Executive Severance and Retention Agreement and “Change in Control” will be defined in the Change in Control Agreement.
Expenses: The Company will, in accordance with Company policies as they may exist and be amended from time to time, reimburse reasonable business expenses incurred by you in the performance of your duties, and for your convenience for charging appropriate expenses, will issue you a Company corporate credit card.
Benefits: You will be eligible to participate in the Company’s benefit plans as they are made available to similarly-situated employees, subject to the terms and conditions of the applicable plan documents and subject to the Company’s right to change its benefit plans at any time. The Company shall not, however, by reason
of the preceding sentence, be obligated to institute, maintain, or refrain from changing, amending, or discontinuing, any such plan or policy, so long as such changes are applicable to similarly situated employees. You will not be eligible for any car allowance while employed.
Vacation: Under the Company’s vacation policy, employees accrue vacation over time (i.e., on an earn-as-you-go basis). From the start of your employment, you will accrue vacation at a rate of 20 days per year, subject to all of the other terms of the Company’s vacation policy.
Sign On Bonus: You will receive a sign-on bonus in the form of a one-time restricted stock unit grant, such grant to be in the amount of $500,000 (based upon the Company’s closing stock price on the first day of your employment). Except as otherwise provided in the Executive Severance and Retention Agreement or the Change in Control Agreement (each as described below), this award shall vest 50% on each of the first two anniversary dates of the grant date, subject to your continued employment as of each such anniversary date and subject to your execution of the Restricted Stock Unit Award Agreement in the form attached as Exhibit A.
Relocation and Personal Travel: Temporary housing will be covered for a period of up to twelve (12) months. In the event you relocate to Chicago, Illinois within the first twenty-four (24) months of employment, you will be eligible for assistance with reasonable relocation expenses including fees associated with the sale of your current residence, acquisition of your new residence, moving of household goods/personal effects, and related tax gross-ups on related imputed income, up to a maximum of $400,000. Until such time as you buy or lease a residential property in the Chicago area, you shall be reimbursed for the actual cost incurred by you for your reasonable personal travel between Chicago, Illinois and the Detroit, Michigan area via commercial airline. Expenses eligible for reimbursement under this paragraph shall be submitted to the Company monthly after incurring the expense and not later than January 15th of the calendar year immediately following the end of the calendar year during which such expenses were incurred, and the Company shall provide such reimbursement to you within forty-five (45) days after receipt of each such request for reimbursement.
All compensation is subject to the Company’s Incentive Compensation Recovery Policy (as posted on the Company’s website) and any amendment thereof, and any other recoupment, clawback, or similar policy in effect from time to time, as well as any similar provisions of applicable law.
As of the start of your employment, you will be afforded a Change in Control Agreement in the form attached to this letter as Exhibit B and an Executive Severance and Retention Agreement in the form attached to this letter as Exhibit C.
Subject to the start of your employment in accordance with this Offer Letter, you will be appointed to the Board as an employee director, without additional compensation, to fill a remaining term through the date of the Company’s next Annual Meeting of Stockholders
scheduled for September 12, 2024, or such earlier date upon which such term may expire. Any subsequent nominations to the Board will be at the sole discretion of the Board. If so requested, you also agree to serve, again without additional compensation, as an officer and/or director (or similar positions) of any of the affiliates or subsidiaries of the Company.
Your employment with the Company will be on an “at-will” basis, meaning that either you or the Company will be entitled to terminate your employment at any time, with or without prior notice and with or without cause. The “at-will” nature of your employment may only be changed with the express approval of the Board and an express written agreement signed by the Chair of the Board. This letter should not be construed as offering you employment for any definite period. Upon the termination of your employment for any reason, you agree to immediately resign, and shall be deemed to have resigned, as a director, officer, manager, trustee, and agent of, and any other position that you hold with, the Company or any of its subsidiaries or affiliates.
At all times, you will be subject to and agree to comply with all applicable Company policies and requirements in effect from time to time, including but not limited to those relating to insider trading, corrupt practices, health and safety, harassment, discrimination, political contributions, conflicts of interest, gifts and entertainment, technology, confidentiality, and travel and expense reimbursements. Without limiting the foregoing, you acknowledge that you have reviewed, and agree to abide by, the Company’s Code of Business Conduct and the associated Anti-Corruption Policy.
As a condition of your employment, you must comply with the terms of any agreements that you may have with your prior employers, including without limitation all such agreements affecting the protection of confidential or proprietary information and/or trade secrets, the solicitation of employees, and/or the solicitation of those entities’ customers. You represent and warrant to the Company that you have fully disclosed in writing to the Company all such agreements. The Company does not wish to receive from you any confidential or proprietary information of any third party to which you owe an obligation of confidence, and the Company strictly prohibits the use of any such information in your work for the Company.
By signing and accepting this offer, you represent, warrant and covenant that: (a) your employment with the Company will not violate or be restricted or limited in any way by any of your agreements with or obligations to any of your prior employers or any other third parties, including without limitation, any non-competition obligations; (b) you will not possess any document of a secret, confidential, or proprietary nature regarding the business of any of your prior employers (whether in hard copy or electronic form), and you will not breach any agreement or duty to keep in confidence or return any such information, knowledge, or data; (c) you will not disclose to anyone at the Company or any of its subsidiaries, affiliates, customers or suppliers, or use in any way to perform your job duties with the Company, any confidential or proprietary information and/or trade secrets of another person or entity; and (d) you have not solicited and will not solicit in the future, any employees, consultants, contractors, customers or suppliers of any prior employers in violation of any your contractual obligations owed to such prior employers.
The Company and its affiliates and subsidiaries may take such actions as they deem appropriate to ensure that all applicable federal, state, city, foreign and other payroll, withholding, income or other taxes arising from any compensation, benefits or any other payments made in connection with your employment are withheld or collected from you.
No provision of this Offer Letter may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in a writing signed by you and a duly authorized signatory of the Board. This Offer Letter is not assignable by you, and it will governed by, and construed in accordance with, the laws of the State of Illinois, without reference to principles of conflict of laws. The Company’s obligation to pay or provide any amounts or benefits to you is subject to set-off, counterclaim, or recoupment of any other amounts you owe to the Company or any of its affiliates or subsidiaries (except to the extent any such action would violate, or result in the imposition of tax under, Section 409A of the Internal Revenue Code of 1986, as amended). This Offer Letter (together with such documents and agreements to the extent referenced herein) constitutes the entire agreement between the parties as of the date hereof and supersedes all previous agreements and understandings between the parties with respect to the subject matter hereof.
Any dispute or claim relating to your employment with the Company shall, except as otherwise prohibited by applicable law, be adjudicated by arbitration administered by the American Arbitration Association (“AAA”) under its Employment Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the preceding sentence, the Company may, at its option, file a lawsuit in court to seek temporary, preliminary, or permanent injunctive relief against you for any claimed breach of the provisions of the Proprietary Interests Protection Agreement or any duty under statute or common law to preserve the confidentiality of the trade secrets of the Company or its subsidiaries or affiliates. Arbitration shall be by a single arbitrator. Unless otherwise required by law, each party shall bear its own attorneys’ fees associated with the arbitration, and the parties will share equally in the costs of the arbitration (e.g., the arbitrator’s fee). The arbitration will take place in Chicago, Illinois.
You acknowledge and agree that you have had an opportunity to seek such legal, financial, and other advice as you have deemed necessary or desirable in connection with this Offer Letter, and that you have not relied on any representations, warranties, documents or statements not contained in this Offer Letter.
If an arbitrator or court of competent jurisdiction determines that certain provisions of this Offer Letter are illegal, excessively broad, or otherwise unenforceable, then this Offer Letter will be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such illegal, overbroad or otherwise unenforceable provisions will be deemed, without further action on the part of any person, to be modified, amended, and/or limited to the limited extent necessary to render the same valid and enforceable in such jurisdiction.
Attached to this letter as Exhibit D is a Proprietary Interests Protection Agreement (the “PIPA”), and this offer is conditioned on your execution of the PIPA. Consistent with the PIPA, you will have no less than 14 days to consider this letter and the PIPA before signing,
and you are advised to consult with an attorney before signing this letter and the PIPA. This offer is also conditioned on a reference and background check and drug screening that is satisfactory to the Company as well as satisfactory documentation establishing your eligibility to work in the United States (as required by federal law). This offer is open for acceptance until the date which is 14 days after the date of this letter.
We very much look forward to you joining us as the new President and Chief Executive Officer of Methode Electronics, Inc.
Please sign, date and return a copy of this letter and the enclosed Proprietary Interests Protection Agreement to Ms. Andrea Barry at the Company, and retain a copy of each for your records.
Sincerely,
METHODE ELECTRONICS, INC.
By: /s/ Walter J. Aspatore
Walter J. Aspatore
Chairman of The Board
ACKNOWLEDGMENT AND AGREEMENT
I have read and agree to the above terms and conditions of my at-will employment with Methode Electronics, Inc.
/s/ Jonathan DeGaynor June 24, 2024
Jonathan DeGaynor Date
EXHIBIT A
METHODE ELECTRONICS, INC.
RESTRICTED STOCK UNIT AWARD AGREEMENT
This Restricted Stock Unit Award Agreement (the “Award Agreement”), dated and effective as of [DATE], 2024 (the “Award Date”), is entered into by and between Methode Electronics, Inc., a Delaware corporation (the “Company”), and Jonathan DeGaynor (“Grantee”).
WHEREAS, the Company desires to encourage Grantee to work for the benefit of the Company and the Company’s stockholders.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and obligations set forth herein, the Company agrees to award to Grantee Restricted Stock Units under the Methode Electronics, Inc. 2022 Omnibus Incentive Plan (the “Plan”) on the terms and conditions set forth herein and in the Plan.
(a) In the event of a Change of Control, the surviving or successor entity (or its parent corporation) may continue, assume or replace the Restricted Stock Units outstanding as of the date of the Change of Control on substantially the same terms and conditions (with such adjustments as may be required or permitted by Section 4.6 of the Plan), and such Restricted Stock Units or replacements therefor shall remain outstanding and be governed by their respective terms, subject to (c) and (d) below.
(b) If and to the extent that the outstanding Restricted Stock Units are not continued, assumed or replaced in connection with a Change of Control, then all unvested Restricted Stock Units will become immediately vested and non-forfeitable and payable as of the date of the Change of Control.
(c) If and to the extent that the Restricted Stock Units are continued, assumed or replaced under the circumstances described in (a), and if within two years after the Change of Control the Grantee experiences an involuntary termination of employment or other service for reasons other than Cause or Grantee shall terminate employment with Good Reason, then all unvested Restricted Stock Units will become immediately vested and non-forfeitable and payable as of the date of termination of employment.
(d) Notwithstanding whether an Award is continued, assumed or replaced in connection with a Change of Control, if Grantee experiences an involuntary termination of employment or other service for reasons other than Cause or Grantee shall terminate employment with Good Reason during the period beginning on the date an agreement is
entered into by the Company with respect to a merger, consolidation or similar transaction of the Company, which would constitute a Change of Control, and the effective time of such merger, consolidation or similar transaction of the Company, then all unvested Restricted Stock Units will become immediately vested and non-forfeitable and payable as of the date of the Change of Control.
“Good Reason” shall exist hereunder if, without Grantee’s express written consent any of the following events or actions occurs, provided that no finding of Good Reason shall be effective unless and until Grantee has provided the Company, within sixty (60) calendar days of becoming aware of the facts and circumstances underlying the finding of Good Reason, with written notice thereof stating with specificity the facts and circumstances underlying the finding of Good Reason and, if the basis for such finding of Good Reason is capable of being cured by the Company, providing the Company with an opportunity to cure the same within thirty (30) calendar days after receipt of such notice: (i) the Company materially reduces the nature, scope or level of Grantee’s responsibilities from the nature, scope or level of such responsibilities prior to the Change in Control (or prior to the Period Pending a Change in Control) or changes Grantee’s reporting relationship to the Board; (ii) the Company requires Grantee to move Grantee’s principal business office more than fifty (50) miles from Grantee’s principal business office at the time of this Agreement; provided, however, that if Grantee’s principal business office is not located at the Company’s then current corporate headquarters, and the Company requires Grantee to move Grantee’s principal business office to such corporate headquarters, such action shall not constitute “Good Reason” under this subsection (ii); (iii) the Company reduces Grantee’s annual salary or annual bonus or long-term incentive opportunity below that in effect as of the date of this Agreement (or as of the Change in Control, if greater); or (iv) the Company breaches in any material respect its obligations hereunder.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Award Agreement as of the Award Date first above written.
METHODE ELECTRONICS, INC.
By:
Bruce K. Crowther
Its: Chair, Compensation Committee
Please indicate your acceptance of the terms and conditions of this Award Agreement by signing in the space provided below and returning a signed copy of this Award Agreement to the Company. IF A COPY OF THIS AWARD AGREEMENT EXECUTED BY GRANTEE HAS NOT BEEN RECEIVED BY THE COMPANY WITHIN THIRTY (30) DAYS OF THE AWARD DATE, THE RESTRICTED STOCK UNITS GRANTED UNDER THIS AWARD AGREEMENT SHALL BE CANCELLED.
BY SIGNING BELOW, YOU ACKNOWLEDGE AND AGREE THAT YOU HAVE RECEIVED A COPY OF THE PLAN AND ARE FAMILIAR WITH THE TERMS AND PROVISIONS THEREOF, INCLUDING THE TERMS AND PROVISIONS OF THIS AWARD AGREEMENT. YOU HAVE REVIEWED THE PLAN AND THIS AWARD AGREEMENT IN THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO EXECUTING THIS AWARD AGREEMENT AND FULLY UNDERSTAND ALL PROVISIONS OF THIS AWARD AGREEMENT. FINALLY, YOU HEREBY AGREE TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE COMMITTEE UPON ANY QUESTIONS ARISING UNDER THE PLAN OR THIS AWARD AGREEMENT.
The undersigned hereby accepts, and agrees to, all terms and provisions of this Award Agreement and the Plan as they pertain hereto.
GRANTEE
____________________________________
Name: Jonathan DeGaynor
EXHIBIT B
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement is dated as of July __, 2024, between Methode Electronics, Inc., a Delaware corporation (the “Company”), and Jonathan DeGaynor (“Employee”).
WITNESSETH:
WHEREAS, Employee is employed by the Company or one of its subsidiaries or affiliates (referred to collectively as the “Company”) and the Company desires to provide certain security to Employee in connection with any potential change in control of the Company.
NOW, THEREFORE, it is hereby agreed by and between the parties, for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, as follows:
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first written above.
METHODE ELECTRONICS, INC.
By:
Bruce K. Crowther, Compensation Committee Chair
EMPLOYEE:
Name: Jonathan DeGaynor
EXHIBIT C
EXECUTIVE SEVERANCE AND RETENTION AGREEMENT
This Executive Severance and Retention Agreement (this “Agreement”), dated effective this ___ day of July 2024 (“Effective Date”), by and between Methode Electronics, Inc., a Delaware corporation (the “Company”), and Jonathan DeGaynor (“Executive”). This Agreement sets forth the terms and conditions of contingent severance arrangements between the Company and Executive and cancels and supersedes all other severance-related agreements between the parties (except it does not cancel and supersede the Change in Control Agreement between Executive and the Company).
It is hereby agreed by and between the parties, for good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, as follows:
Notwithstanding anything to the contrary in this Agreement, Executive shall not be obligated to release, (i) any rights of Executive to receive from the Company accrued and unpaid base salary, earned or vested incentive compensation, out of pocket expense reimbursement, or accrued, unused vacation owed to Executive, (ii) any vested equity rights, (iii) any obligations of the Company to pay any severance amounts, if applicable, pursuant to this Agreement, (iv) any claim which cannot be waived as a matter of law, or (v) any rights of indemnification or coverage under any insurance policy, corporate document or any statutory or common law.
If to Executive, addressed to: the last known residential address reflected in the Company’s records.
If to the Company, addressed to: Methode Electronics, Inc.
8750 W. Bryn Mawr Ave, Suite 1000
Chicago, IL 60631
Attention: Chief Administrative Officer
E-mail: Andrea.Barry@methode.com
Notice of change in address should be provided as stated in this section.
[Signature Page Attached]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first written above.
METHODE ELECTRONICS, INC.
By:
EXECUTIVE:
Name: Jonathan DeGaynor
EXHIBIT D
PROPRIETARY INTERESTS PROTECTION AGREEMENT
This Proprietary Interests Protection Agreement (the “Agreement”) is made and entered into by and between Methode Electronics, Inc. (the “Company”) and the undersigned employee (“Employee”).
WHEREAS, contemporaneous with Employee’s execution of this Agreement, Employee is entering into an agreement for employment with the Company on an “at will” basis; and
WHEREAS, in addition to other good and valuable consideration, Employee is expressly being given employment or continued employment with the Company, certain monies, benefits, training, and/or trade secrets and other confidential information of the Company and its customers, suppliers, vendors or affiliates, all of which Employee would not have access to but for Employee’s relationship with the Company in exchange for Employee agreeing to the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties agree as follows:
Confidential Information shall not be considered generally known to the public if Employee or others improperly reveal such information to the public without the Company’s express written consent and/or in violation of an obligation of confidentiality owed to the Company. Examples of Confidential Information include, but are not limited to, all customer, client, supplier and vendor lists, budget information, contents of any database, contracts, product designs, technical know-how, engineering data and/or drawings, specifications, pricing and cost information, performance standards, productivity standards, research and development work, software, business plans, proprietary data, projections, market research, strategic plans, marketing information, financial information (including financial statements), sales information, training manuals, employee lists and compensation of employees, and all other competitively sensitive information with respect to the Company, whether or not it is in tangible form, and including without limitation any of the foregoing contained or described on paper or in computer software or other storage devices, as the same may exist from time to time. Confidential Information does not include: (a) information about Employee’s own wages, hours, and other terms and conditions of employment; and (b) information regarding the wages, hours, and other terms and conditions of employment for other employees of the Company, except where Employee has access to such information only because of the nature of Employee’s job functions or where Employee’s job functions include safeguarding employee personnel information.
An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law. An individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
Employee acknowledges and agrees that nothing in this Agreement is intended to conflict with 18 U.S.C. §1833(b) or to create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. §1833(b).
If to the Company: Methode Electronics, Inc.
Attn: Andrea Barry
8750 West Bryn Mawr Avenue, Suite 1000
Chicago, Illinois 60131
If to Employee: At the Employee’s residence address as maintained by the Company in the regular course of its business for payroll purposes.
Either party may change the address for the giving of notices at any time by written notice given to the other party under the provisions of this section.
SIGNATURE PAGE TO
PROPRIETARY INTERESTS PROTECTION AGREEMENT
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the last day and year set forth below.
THE COMPANY:
Methode Electronics, Inc.
By: ___________________________
Walter J. Aspatore
Chairman of the Board
Dated: June 24, 2024
EMPLOYEE:
________________________
Jonathan DeGaynor
Dated: June 24, 2024