| 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 Ms. Sherri Luther has been appointed to serve as Corporate Vice President and Chief Financial Officer, effective January 2, 2019. A copy of the press release is furnished hereto as Exhibit 99.1. Mr. Max Downing, who had been serving as the Chief Financial Officer of the Company, departed effective December 28, 2018.
Ms. Luther, 53, brings to the role 29 years of strategic and financial operations experience, with an expertise in financial reporting, forecasting, SOX compliance, M&A, operations and global supply chain management. Over the last 16 years, she has been a senior financial executive at Coherent Inc., most recently serving as Corporate Vice President of Finance. Prior to Coherent, Ms. Luther held a number of senior finance and accounting positions at companies including Quantum, Ultra Network Technologies and Arthur Andersen. Ms. Luther is a Certified Public Accountant (CPA) and holds a Bachelor of Business Administration, with a dual major in Accounting and Finance, from Wright State University.
In connection with Ms. Luther’s appointment, the Company entered into an Employment Agreement with Ms. Luther (the “Employment Agreement”), effective January 2, 2019 (the “Effective Date”) that sets forth certain terms related to her 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, Ms. Luther will receive a base salary at an annual rate of $345,000.
Annual Incentive. Ms. Luther will be eligible to participate in a Cash Incentive Plan established by the Company (the “CIP”). Under the CIP, Ms. Luther will be eligible for an annual incentive bonus of 65% of her 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, Ms. Luther may earn a maximum annual incentive bonus of up to 130% of her annual base salary. For fiscal year 2019, the Target Amount Milestones for Ms. Luther will be the same as those applicable to the other senior executives of the Company.
Sign-on Bonus. Within 30 days of the Effective Date, Ms. Luther will receive asign-on bonus of $200,000. Ms. Luther will be required to refund the net (after tax) amount of thesign-on bonus to the Company if she voluntarily terminates her employment or is terminated for Cause (as defined in the Employment Agreement) within the first twenty-four months following the Effective Date.
Equity Grants. As of the Effective Date, Ms. Luther 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. The number of units granted will be determined by dividing $950,000 by 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 25% of the shares on the first anniversary of the Effective Date and 6.25% of the shares quarterly thereafter.
(ii)Market Performance (TSR) Based Award. An award of restricted stock units with a value of $950,000 calculated based on a Monte-Carlo simulation that will vest and become payable over a three-year period based upon the total shareholder return (TSR) of the Company relative to the PHLX Semiconductor Sector Index, with 100% of the units vesting at the 50th percentile and a multiplier to 200% of the units vesting at 75th percentile achievement, zero vesting if relative TSR is below the 25th percentile, and vesting scaling linearly for achievement between the 25th and 75th percentile.
The equity awards will be granted subject to the terms and conditions of the Company’s stockholder approved equity compensation plan (the “Plan”) and standard grant documents, to the extent consistent with the terms and conditions of the Employment Agreement. Accelerated vesting may occur pursuant to the terms of the Employment Agreement or the Plan. Ms. Luther will be eligible for additional equity grants in accordance with Company guidelines, at times and in amounts to be determined by the Committee.
