Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.
(e) On August 16, 2019, the Board of Directors ofII-VI Incorporated (the “Company”) adopted theII-VI Incorporated Executive Severance Plan (the “Plan”). The Plan provides severance benefits upon a qualifying termination of employment to selected employees of the Company. The Committee also designated the initial participants in the Plan, which included each of the current named executive officers of the Company and certain other key personnel, but excluded Dr. Vincent D. Mattera, Jr., the Chief Executive Officer of the Company, whose severance and other benefits continue to be covered by his employment arrangement with the Company dated August 1, 2016. Each of the named executive officers currently has an employment agreement with the Company that includes coverage for severance benefits. By executing a Participation Agreement for the Plan, a participating named executive officer agrees that the named executive officer’s employment agreement is terminated. The Plan also contains certainnon-duplication provisions such that the severance payments and benefits under the Plan offset or are reduced by any severance payments and benefits that otherwise would be received by a participant under the terms of any other agreement, policy, or plan maintained by the Company that provides for severance benefits.
In the event of a termination by the Company without “cause” or by a participant for “good reason,” a participant who is a Class 1 Executive, which includes all of the Company’s named executive officers other than the Chief Executive Officer, generally will be eligible to receive the following:
| | • | | if the termination takes place outside of a Change in Control (“CIC”) Period (which is a period of 18 months beginning on a CIC with respect to a Class 1 Executive), an amount equal to 12 months of his or her then-current annual base salary, payable in accordance with the Company’s regular pay schedule over the 12-month period following the qualifying termination; |
| | • | | if the termination takes place during a CIC Period, (i) a lump sum cash payment equal to the sum of (A) 24 months of his or her then-current annual base salary, plus (B) the participant’s annual target bonus for the year in which the termination occurs, and (ii) accelerated vesting of all outstanding equity compensation awards; and |
| | • | | a lump sum cash payment by the Company equal to the cost of the participant’s heath care insurance premiums for a period of (x) 12 months in the event of a qualifying termination other than during a CIC Period or (y) 18 months in the event of a qualifying termination during a CIC Period. |
Severance benefits are conditioned upon the participant giving the Company a general release of claims at the time of separation. Benefits are also conditioned upon the participant’s compliance with certain covenants regarding confidentiality, assignment of inventions,non-competition, andnon-solicitation. No taxgross-ups are provided to any participant under the Plan in case of any excise taxes under Sections 280G and 4999 of the Internal Revenue Code as a result of payments under the Plan in connection with a CIC. Instead, if those excise taxes would be triggered, payments would be cut back if doing so would result in a greaterafter-tax payment to the participant than if he or she received the payments and paid the excise taxes.
The foregoing summary of the terms and conditions of the Plan is not a complete discussion of the document. Accordingly, the foregoing is qualified in its entirety by reference to the full text of the Plan included as Exhibit 10.1 to this Current Report on Form8-K, and to the related form of Participation Agreement with respect to the Plan to be signed by each of the covered executives of the Company included as Exhibit 10.2 to this Current Report on Form8-K, each of which are incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
