| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Lattice Semiconductor Corporation (the “Company”) announced that effective September 4, 2018, Mr. James R. Anderson will be appointed to serve as President and Chief Executive Officer of the Company. In connection with and contingent upon Mr. Anderson’s employment as President and Chief Executive Officer of the Company, the Board of Directors of the Company (the “Board”) acted to enlarge the Board from eight to nine members and appointed Mr. Anderson to the Board effective September 4, 2018. A copy of the press release is furnished hereto as Exhibit 99.1. Mr. Glen Hawk has been serving as interim Chief Executive Officer of the Company since March 16, 2018 while the Company sought a permanent replacement for the position, and has agreed to remain employed with the Company and serve as a Special Advisor to the CEO through October 31, 2018 to ensure a smooth transition.
Mr. Anderson, 46, most recently served as the Senior Vice President and General Manager of the Computing and Graphics Business Group at Advanced Micro Devices, Inc. (“AMD”). Prior to joining AMD in May 2015, Mr. Anderson served at Intel Corporation from November 2014 to May 2015, where he completed the acquisition and successful integration of the Axxia processor business from Broadcom Limited (formerly, Avago Technologies Limited). Prior to Intel, Mr. Anderson spent nearly a decade at Avago Technologies Limited and LSI Corporation in a variety of leadership positions. Mr. Anderson’s extensive background and experience managing all aspects of strategy, business management, marketing, engineering, and sales for high technology semiconductor companies led the Board to the conclusion that he should serve as a member of the Board. Mr. Anderson serves on the Board of Directors of Qylur Intelligent Systems, Inc.
In connection with Mr. Anderson’s appointment as President and Chief Executive Officer, the Company entered into an Employment Agreement with Mr. Anderson (the “Employment Agreement”), effective September 4, 2018 (the “Effective Date”) that sets forth certain terms related to his employment. The terms of the Employment Agreement are summarized below, and the foregoing summary is qualified in its entirety by reference to the Employment Agreement, which is filed hereto as Exhibit 10.1 and incorporated by reference herein.
Salary. As of the Effective Date, Mr. Anderson will receive a base salary at an annual rate of $550,000.
Annual Incentive. Mr. Anderson will be eligible to participate in a Cash Incentive Plan established by the Company (the “CIP”). Under the CIP, Mr. Anderson will be eligible for an annual incentive bonus of 100% of his annual base salary, or such higher figure as the Compensation Committee (the “Committee”) of the Board may select (the “Target Bonus”) upon the achievement of specific milestones to be established by the Committee (the “Target Amount Milestones”). Upon superior achievement of the Target Amount Milestones, Mr. Anderson may earn a maximum annual incentive bonus of up to 200% of his annual base salary. For fiscal year 2018, the Target Amount Milestones for Mr. Anderson will be the same as those applicable to the other senior executives of the Company. The incentive payable to Mr. Anderson for fiscal year 2018 will be the greater of: (i) 75% of his annual base salary; or (ii) the actual incentive earned by Mr. Anderson pursuant to the terms of the CIP for fiscal year 2018, subject topro-ration for the partial fiscal year measured from the Effective Date.
Sign-on Bonus. Within 30 days of the Effective Date, Mr. Anderson will receive asign-on bonus of $400,000. Mr. Anderson will be required to refund the net (after tax) amount of thesign-on bonus to the Company if he voluntarily terminates his employment or is terminated for Cause (as defined in the Employment Agreement) within the first twelve months following the Effective Date.
Equity Grants. As of the Effective Date, Mr. Anderson will be granted the following equity awards:
(i)Time-Based Award. An award with respect to shares of the Company’s common stock, with the type of award to be restricted stock units and stock options. With respect to the award of stock options, the number of shares of Company common stock subject to the options will have a value of $1.5 million calculated based on a Black-Scholes valuation using the Average Price (as defined below) and will have a seven-year term. With respect to the award of restricted stock units, the number of units granted will have a value of $2.9 million calculated based on the average closing price of the Company’s common stock over a30-day period prior to the grant (the “Average Price”). The Time-Based Awards will vest and become exercisable or payable at a rate of 1/3 of the shares on the first anniversary of the Effective Date and 1/12 of the shares quarterly thereafter.
