IPG PHOTONICS CORPORATION (NASDAQ:IPGP) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02
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Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
Executive Compensation
The Compensation Committee (the Committee) of the Board of
Directors (the “Board”) of IPG Photonics Corporation (the
Company) has taken the actions described below relating to the
compensation of the named executive officers, as such term is
defined in Item 402(a)(3) of Regulation S-K, of the Company as of
December 31, 2016 and certain other executive officers of the
Company.
Directors (the “Board”) of IPG Photonics Corporation (the
Company) has taken the actions described below relating to the
compensation of the named executive officers, as such term is
defined in Item 402(a)(3) of Regulation S-K, of the Company as of
December 31, 2016 and certain other executive officers of the
Company.
The Committee recently approved merit increases in base salaries,
performance measures and target incentive payouts for 2017, and
long term equity incentives for the named executive officers and
other executive officers.
performance measures and target incentive payouts for 2017, and
long term equity incentives for the named executive officers and
other executive officers.
In accordance with the employment agreements with such executive
officers, the Committee annually reviews each executive’s
performance and base salary in light of comparable data from peer
companies and other high-tech publicly held companies, and the
Companys performance and growth. As a result, the Committee
determined to increase the salaries as set forth below. The table
below sets forth the 2017 base salaries for each named executive
officer effective January 1, 2017:
officers, the Committee annually reviews each executive’s
performance and base salary in light of comparable data from peer
companies and other high-tech publicly held companies, and the
Companys performance and growth. As a result, the Committee
determined to increase the salaries as set forth below. The table
below sets forth the 2017 base salaries for each named executive
officer effective January 1, 2017:
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Name
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Base Salary 2016
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Base Salary 2017
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Valentin P. Gapontsev, Ph.D.
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$735,400
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$832,000
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Timothy P.V. Mammen
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$436,500
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$458,300
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Eugene Scherbakov, Ph.D.
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461,555
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500,850
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Alexander Ovtchinnikov, Ph.D.
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$397,300
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$417,200
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Trevor D. Ness
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$380,400
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$410,000
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The Committee approved annual targets and incentive payouts for the
named executive officers and other executive officers for fiscal
year 2017 under the Companys Senior Executive Annual Incentive Plan
(the AIP). Consistent with prior years, the Committee identified
two financial performance measures: net sales and adjusted EBIT
(excluding equity-based compensation expenses, expenses for
unbudgeted litigation and foreign currency transaction gains and
losses), each as determined under the AIP, and assigned a 50%
weighting factor to each financial performance goal. The Committee
chose to focus on revenue growth and pretax profits so that our
executive officers would be incentivized to deliver the types of
growth that benefit our stockholders, namely increasing sales and
profits.
named executive officers and other executive officers for fiscal
year 2017 under the Companys Senior Executive Annual Incentive Plan
(the AIP). Consistent with prior years, the Committee identified
two financial performance measures: net sales and adjusted EBIT
(excluding equity-based compensation expenses, expenses for
unbudgeted litigation and foreign currency transaction gains and
losses), each as determined under the AIP, and assigned a 50%
weighting factor to each financial performance goal. The Committee
chose to focus on revenue growth and pretax profits so that our
executive officers would be incentivized to deliver the types of
growth that benefit our stockholders, namely increasing sales and
profits.
Under the 2017 AIP, the executives can receive cash incentive
payments set forth in the table below as a percentage of base
salaries based upon achievement of the minimum to maximum
objectives for both financial performance measures and for
individual performance.
payments set forth in the table below as a percentage of base
salaries based upon achievement of the minimum to maximum
objectives for both financial performance measures and for
individual performance.
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Name
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Target
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Financial Performance Minimum
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Financial Performance Maximum
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Individual Performance Maximum
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Maximum Award Payout
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Valentin P. Gapontsev, Ph.D.
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50%
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18.8%
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112.5%
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25%
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225%
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Timothy P.V. Mammen
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75%
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14%
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84%
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19%
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225%
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Eugene Scherbakov, Ph.D.
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75%
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14%
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84%
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19%
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225%
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Trevor D. Ness
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75%
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14%
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75%
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17%
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225%
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Alexander Ovtchinnikov, Ph.D.
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67%
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12.5%
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75%
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17%
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225%
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The Committee may make adjustments to our overall corporate
performance goals and the ways that our actual performance
results are calculated that may cause differences between the
numbers used for our performance goals and the numbers reported
in our financial statements.
performance goals and the ways that our actual performance
results are calculated that may cause differences between the
numbers used for our performance goals and the numbers reported
in our financial statements.
The Committee also approved grants of long term incentives in the
form of equity awards. For 2017 equity-based awards, our program
consists service-based stock options, service-based restricted
stock units (“RSUs”) and performance-based stock units
(“PSUs”). Each is equally weighted.
form of equity awards. For 2017 equity-based awards, our program
consists service-based stock options, service-based restricted
stock units (“RSUs”) and performance-based stock units
(“PSUs”). Each is equally weighted.
The stock options awarded have an exercise price of $119.50 per
share, the closing price on February 17, 2017, the date of
grant,>and expire on February 16, 2027. The stock options and
RSUs vest in four equal annual installments, with the first 25%
vesting on March 1, 2018. With respect to the PSUs, the Committee
decided to measure performance of the Company’s stock as
compared to the Russell 3000 Index, of which the Company is a
member. For each 1% that IPG’s common stock exceeds the
performance of the Russell 3000 Index for the trailing 60 trading
days from the end of the performance measurement period (March 1,
2020) against the comparable period from the beginning of the
performance measurement period (March 1, 2017), the grant
recipient would receive a 2% increase in the number of shares
above target (up to a maximum cap of 200% of the target award).
For each 1% below the Russell 3000 Index’s performance, the
grant recipient would receive a 2% decrease in the number of
shares (down to zero). The vesting date for the PSUs is March 1,
2020, should any PSUs vest at all. Dividends, if any, on shares
underlying the PSUs do not vest until the PSUs vest.
share, the closing price on February 17, 2017, the date of
grant,>and expire on February 16, 2027. The stock options and
RSUs vest in four equal annual installments, with the first 25%
vesting on March 1, 2018. With respect to the PSUs, the Committee
decided to measure performance of the Company’s stock as
compared to the Russell 3000 Index, of which the Company is a
member. For each 1% that IPG’s common stock exceeds the
performance of the Russell 3000 Index for the trailing 60 trading
days from the end of the performance measurement period (March 1,
2020) against the comparable period from the beginning of the
performance measurement period (March 1, 2017), the grant
recipient would receive a 2% increase in the number of shares
above target (up to a maximum cap of 200% of the target award).
For each 1% below the Russell 3000 Index’s performance, the
grant recipient would receive a 2% decrease in the number of
shares (down to zero). The vesting date for the PSUs is March 1,
2020, should any PSUs vest at all. Dividends, if any, on shares
underlying the PSUs do not vest until the PSUs vest.
The table below sets forth the stock options, RSUs and PSUs
awarded by the Compensation Committee to the named executive
officers:
awarded by the Compensation Committee to the named executive
officers:
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Name
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Service-Based Stock Options
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Service-Based Restricted Stock Units
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Performance Stock Units
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Valentin P. Gapontsev, Ph.D.
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Timothy P.V. Mammen
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8,799
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2,876
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2,876
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Eugene Scherbakov, Ph.D.
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10,367
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3,388
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3,388
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Trevor D. Ness
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7,871
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2,572
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2,572
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Alexander Ovtchinnikov, Ph.D.
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7,119
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2,326
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2,326
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Historically, the Dr. Gapontsev, our Chief Executive Officer, has
not received annual grants of stock options, RSUs or PSUs
because, as the Companys founder and the holder of a large number
of common stock of the Company, he has the perspective of an
owner with a significant financial stake in the Company.
not received annual grants of stock options, RSUs or PSUs
because, as the Companys founder and the holder of a large number
of common stock of the Company, he has the perspective of an
owner with a significant financial stake in the Company.
Compensation Plans and Agreements
The Board of the Company approved amendments to several
compensation-related plans and agreements effective February 17,
2017:
compensation-related plans and agreements effective February 17,
2017:
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1.
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The IPG Photonics Corporation 2006 Incentive Compensation
Plan, as amended (the “2006 Plan”), was amended to modify acceleration of vesting upon death and disability. Also, the 2006 Plan was amended to permit tax withholding of shares up to the maximum statutory rate in the applicable jurisdiction (collectively, the >2006 Plan Amendments). |
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2.
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The IPG Photonics Corporation Senior Executive Short-Term
Incentive Plan was amended to change its name to the IPG Photonics Corporation Senior Executive Annual Incentive Plan (the AIP Amendment). |
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3.
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A new form of indemnification agreement for members of
the Board of Directors and senior officers of the Company was approved to reflect developments in case law and practices in this area (the Indemnification Agreements) which replaces the existing indemnification agreements with Directors and senior officers. |
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4.
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The IPG Photonics Corporation Non-Employee Director
Compensation Plan, as amended, was modified to reduce by 50% the equity compensation paid to a non-employee director upon initial election to the Board (the “Directors Compensation Plan Amendment”). |
In addition, the Committee approved amendments to the forms of
severance agreements attached to the executive employment
agreements of the named executive officers and the
non-disclosure, non-competition and non-solicitation agreements
of the named executive officers to reflect developments in law
and policy (collectively, the Executive Agreement Amendments).
Such amendments are effective February 17, 2017.
severance agreements attached to the executive employment
agreements of the named executive officers and the
non-disclosure, non-competition and non-solicitation agreements
of the named executive officers to reflect developments in law
and policy (collectively, the Executive Agreement Amendments).
Such amendments are effective February 17, 2017.
The foregoing summaries of the 2006 Plan Amendments, the AIP
Amendment, the Indemnification Agreement, Directors Plan
Amendment and Executive Agreement Amendments do not purport to
be complete and are qualified in their entirety by reference to
the complete copies of the 2006 Plan Amendments, the AIP
Amendment, the Indemnification Agreement, Directors Plan
Amendment and Executive Agreement Amendments, which are
attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5,
respectively, to this Current Report on Form 8-K and are
incorporated herein by reference.
Amendment, the Indemnification Agreement, Directors Plan
Amendment and Executive Agreement Amendments do not purport to
be complete and are qualified in their entirety by reference to
the complete copies of the 2006 Plan Amendments, the AIP
Amendment, the Indemnification Agreement, Directors Plan
Amendment and Executive Agreement Amendments, which are
attached hereto as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5,
respectively, to this Current Report on Form 8-K and are
incorporated herein by reference.
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Item 8.01
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Other Events
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Certain directors and officers of IPG Photonics Corporation
(the Company) adopt from time to time pre-arranged trading
plans (each, a Plan) designed to comply with Rule 10b5-1
under the Securities Exchange Act of 1934, as amended, and
the Companys policies regarding stock transactions. Under
Rule 10b5-1, directors, officers and other persons who are
not in possession of material non-public information may
adopt a plan or contract for pre-arranged sales of Company
securities under specified conditions and at specified times.
Using these Plans, insiders can gradually diversify their
investment portfolios, spread stock trades out over an
extended period of time to reduce market impact and avoid
concerns about transactions occurring at a time when they
might possess inside information.
(the Company) adopt from time to time pre-arranged trading
plans (each, a Plan) designed to comply with Rule 10b5-1
under the Securities Exchange Act of 1934, as amended, and
the Companys policies regarding stock transactions. Under
Rule 10b5-1, directors, officers and other persons who are
not in possession of material non-public information may
adopt a plan or contract for pre-arranged sales of Company
securities under specified conditions and at specified times.
Using these Plans, insiders can gradually diversify their
investment portfolios, spread stock trades out over an
extended period of time to reduce market impact and avoid
concerns about transactions occurring at a time when they
might possess inside information.
The Plan adopted by Igor Samartsev, Chief Technology Officer
and Director, provides for the sale of up to 19,900 shares,
including shares acquired upon exercise of stock options,
over a period ending March 2018, unless terminated sooner in
certain circumstances. Shares will be sold under the Plan on
the open market at prevailing market prices, subject to
minimum price thresholds.
and Director, provides for the sale of up to 19,900 shares,
including shares acquired upon exercise of stock options,
over a period ending March 2018, unless terminated sooner in
certain circumstances. Shares will be sold under the Plan on
the open market at prevailing market prices, subject to
minimum price thresholds.
The Plan adopted by Henry Gauthier, Independent Director,
provides for the sale of up to 16,250 shares, including
shares acquired upon exercise of stock options, over a period
ending March 2018, unless terminated sooner in certain
circumstances. Shares will be sold under the Plan on the open
market at prevailing market prices, subject to minimum price
thresholds.
provides for the sale of up to 16,250 shares, including
shares acquired upon exercise of stock options, over a period
ending March 2018, unless terminated sooner in certain
circumstances. Shares will be sold under the Plan on the open
market at prevailing market prices, subject to minimum price
thresholds.
The Company does not undertake to report Plans that may be
adopted by any directors or officers of the Company in the
future, or to report any modification or termination of any
Plan, except to the extent required by law.
adopted by any directors or officers of the Company in the
future, or to report any modification or termination of any
Plan, except to the extent required by law.
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Item 9.01
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Financial Statements and Exhibits
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(d) Exhibits
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Exhibit Number
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Description
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10.1
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IPG Photonics Corporation 2006 Incentive
Compensation Plan, as amended |
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10.2
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IPG Photonics Corporation Senior Executive Annual
Incentive Plan, as amended |
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10.3
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Form of Indemnification Agreement between the
Registrant and each of its Directors and Executive Officers |
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10.4
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Form of Letter Amending Employment Agreement and
Confidentiality, Non-Competition and Confirmatory Assignment Agreement between the Registrant and Valentin Gapontsev, Eugene Scherbakov, Timothy P.V. Mammen, Alexander Ovtchinnikov, Trevor Ness and Angelo P. Lopresti |
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10.5
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IPG Photonics Corporation Non-Employee Director
Compensation Plan, as amended |
>
About IPG PHOTONICS CORPORATION (NASDAQ:IPGP)
IPG Photonics Corporation is engaged in the design, development, production and distribution of fiber lasers, laser systems, fiber amplifiers and related optical components. The Company offers a line of lasers and amplifiers, which are used in materials processing, advanced communications and medical applications. The Company sells its products globally to original equipment manufacturers (OEMs), system integrators and end users. The Company has sales offices in the United States, Germany, Russia, Italy, Turkey, the United Kingdom, France, Spain, Poland, Czech Republic, China, Japan, South Korea, Singapore and India. The Company’s manufacturing facilities are located in the United States, Germany and Russia. The Company also manufactures complementary products used with its lasers, including optical delivery cables, fiber couplers, beam switches, optical processing heads and chillers. In addition, the Company offers laser-based systems for certain markets and applications. IPG PHOTONICS CORPORATION (NASDAQ:IPGP) Recent Trading Information
IPG PHOTONICS CORPORATION (NASDAQ:IPGP) closed its last trading session up +2.31 at 121.81 with 363,923 shares trading hands.
