Initial Equity Grant. On the Effective Date, for the fiscal year 2017–2019, fiscal year 2018–2020, and fiscal year 2019–2021 performance periods under the Company’s long-term incentive program, Mr. Nagarajan will receive performance share units with a number of target shares equal to $300,000, $540,000 and $760,000, respectively. Payout under the awards is based on the achievement of performance objectives established previously by the Compensation Committee for the applicable performance period.
The Company has agreed to provide additionalone-time awards to Mr. Nagarajan on the Effective Date if Mr. Nagarajan’s most recent employer prior to the Effective Date does not treat his termination of employment with that employer as a retirement, resulting in a forfeiture of Mr. Nagarajan’s equity-based awards issued by that employer. In that event, in addition to the performance share units described above, Mr. Nagarajan will receive: (a) for the fiscal year 2017–2019, fiscal year 2018–2020, and fiscal year 2019–2021 performance periods under the Company’s long-term incentive program, additional performance share units with a number of target shares equal to $75,000, $150,000, and $175,000, respectively; (b) nonqualified stock options with a grant date value of $500,000, which become exercisable after three years of employment; and (c) restricted shares equal to $500,000, which become vested and transferrable after three years of employment.
Long-Term Incentives. Mr. Nagarajan will be entitled to participate in the long-term incentive program of the Company at a level that is competitive with market practices, as determined by the Compensation Committee. In November 2019, in connection with the Compensation Committee’s approval of annual awards for executives generally, Mr. Nagarajan will receive: (a) performance share units for the Company’s fiscal year 2020–2022 performance period with a number of target shares having a grant date value equal to $1,280,000; (b) nonqualified stock options with a grant date value of $1,280,000; and (c) restricted shares with a grant date value of $640,000.
The initial and future equity awards described above will each be subject to the terms of Company’s Amended and Restated 2012 Stock Incentive and Award Plan (the “Stock Incentive and Award Plan”) and the applicable award agreement to be approved by the Compensation Committee. In general, the number of target shares subject to performance share units and the number of restricted shares for the awards described above is determined by dividing the grant date value by the most recent fiscal quarter closing average share price, and the number of shares subject to nonqualified stock option awards described above is based on aBlack-Scholes valuation methodology.
Other Benefits. Other benefits include paid-time off, participation in our health and welfare plans, life insurance, 401(k) retirement investment plan, supplemental retirement benefits, disability benefit plans, professional club and airline club memberships, relocation benefits in accordance with our standard relocation assistance program, and, to the extent we provide them to other named executive officers generally, financial, tax and estate planning services (up to a maximum of $5,000/year) and annual physical exams.
Legal Expenses. We will reimburse Mr. Nagarajan for reasonable legal expenses and attorneys’ fees incurred by him in connection with the review of the Employment Agreement, up to a maximum of $15,000.
Supplemental Pension Benefit. The Company will establish and provide to Mr. Nagarajan an individual nonqualified pension benefit that will treat Mr. Nagarajan as if he were fully vested in the Nordson Corporation Salaried Employees Pension Plan, solely in the event that Mr. Nagarajan experiences a termination due to death, “disability,” or without “cause,” or resignation with “good reason” (whether or not in connection with a “change in control”), as those terms are defined in the Employment Agreement, prior to becoming one hundred percent (100%) vested in the Nordson Corporation Salaried Employees Pension Plan. Once Mr. Nagarajan has accrued sufficient service to be fully vested in the Nordson Corporation Salaried Employees Pension Plan, we will have no obligation to provide the Supplemental Individual Pension Benefit.
Post-Termination Payments. Upon a termination by us without cause or by Mr. Nagarajan for good reason, excluding a termination within two years following a change in control of the Company, then, in addition to payment of any accrued and unpaid compensation and benefits, Mr. Nagarajan is entitled to post-termination payments and benefits as follows, subject to his execution of a customary release of claims in favor of the Company:
| | (a) | an amount equal to two times (i) his annual base salary rate as of the termination date, plus (ii) his target bonus amount for the fiscal year in which a termination occurs; |
| | (b) | a prorated amount of his annual bonus for the fiscal year in which a termination occurs, based on actual performance in the applicable performance period; |
| | (c) | apro-rata payout of his incentive-based equity awards for any performance period(s) not completed on the termination date, based on actual performance in the applicable performance period; |
| | (d) | full, immediate vesting of his service-based restricted share awards; |
| | (e) | continued vesting of his service-based stock options; |
