| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
2021 Senior Level Performance Bonus Plan
On March 12, 2021, the Compensation Committee (the “Committee”) of the Board of Directors of Gentherm Incorporated (the “Company”) approved the Company’s Second Amended and Restated Senior Level Performance Bonus Plan (the “Bonus Plan”) applicable to all executive officers and certain other key employees. The Bonus Plan further amends and restates the original plan to, among other things, provide future flexibility in establishing and weighting Company performance goals and performance modifiers and setting performance periods. The Bonus Plan is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
The Committee also approved the 2021 bonus program for executive officers and other senior leaders under the Bonus Plan, consisting of two Company performance goals, revenue and Adjusted EBTIDA, equally weighted, for an annual performance period ending December 31, 2021. President and CEO Phil Eyler’s bonus is based solely on such performance goals. For other executive officers, the 2021 bonus program also includes a performance modifier, based on objective strategic goals of the Company that may increase (but not decrease) earned bonuses. Each executive officer has a maximum bonus opportunity of 200% of target bonus.
2021 Long-Term Incentive Program
On March 12, 2021, the Committee approved an updated form of Restricted Stock Unit (“RSU”) Award Agreement (the “RSU Agreement”) and Performance-Based Restricted Stock Unit (“PSU”) Award Agreement (the “PSU Agreement”) for grants of RSUs and PSUs under the Gentherm Incorporated 2013 Equity Incentive Plan (the “2013 Plan”) to make certain clarifications in connection with the 2021 annual equity awards. The updated forms of RSU Agreement and PSU Agreement are attached hereto as Exhibits 10.2 and 10.3, respectively, and are incorporated herein by reference.
The Committee also approved revisions to the Company’s long-term incentive program for executive officers in 2021 to include PSUs that are earned based on three-year cumulative Adjusted EBITDA. Accordingly, the Company’s 2021 long-term incentive program for executive officers consists of RSUs with three-year ratable vesting (representing 40% of the total grant value) and PSUs (representing 60% of the total grant value) to be earned based on achievement of the following performance metrics: (i) three-year relative total shareholder return based on a comparator group (representing 20% of the PSU grant value); (ii) ROIC in 2023 (representing 40% of the PSU grant value); and (iii) three-year cumulative Adjusted EBITDA (representing 40% of the PSU grant value).
On March 12, 2021, the Committee approved annual grants to the executive officers of the Company under the 2013 Plan. The RSUs and PSUs were granted on March 12, 2021.
Amendments to Executive Officer Agreements and Offer Letters
The information set forth under the heading “Amendments to Executive Officer Agreements and Offer Letters” under Item 8.01 below is incorporated herein by reference.
Executive Change in Control Severance Plan
In January 2021, the Company adopted a Severance Pay Plan for Eligible Employees of Gentherm Incorporated (the “Severance Plan”) to provide financial assistance to employees to help ease the burden that may result from involuntary termination of employment from the Company or its direct or indirect wholly-owned U.S. subsidiaries. The Severance Plan provides for the payment, as determined by the Company in its sole discretion on a case-by-case basis, of certain benefits to active full-time or part-time employees, including the Company’s executive officers, whose employment with the Company is terminated by the Company without Cause (as defined in the Severance Plan). The Severance Plan supersedes prior severance plans or arrangements, except for employment agreements and offer letters that contain applicable severance provisions. The treatment of equity awards shall continue to be governed by the terms and conditions of such applicable equity plan and award agreements.
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