Mellanox Technologies, Ltd. (NASDAQ:MLNX) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April16, 2018, the Compensation Committee of the Board of Directors (the “Board”) of Mellanox Technologies, Ltd. (the “Company”) and the Board approved the entry into amended and restated executive severance agreements providing for severance and other benefits on a qualifying termination in connection with a change in control (the “Amended Severance Agreements”) for the Company’s executives – other than Eyal Waldman, the Company’s President and Chief Executive Officer and Jacob Shulman, the Company’s Chief Financial Officer. The Amended Severance Agreements supersede the existing executive change in control severance agreements with the Company.
The Amended Severance Agreements followed benchmarking analysis reviewed by both the Compensation Committee and the Board of the terms of the existing executive change in control severance agreements in place for 2017 against the change in control arrangements provided by companies in our peer group. The peer group analysis indicated that the Company’s existing change in control benefits were well below market: on a qualifying termination following a change in control, of the 11 companies with contractual severance agreements or severance plans (as opposed to discretionary-based programs), one company provided a cash benefit equal to two times the amount of the individual’s base salary, five companies provided a cash benefit equal to two times the amount of the individual’s base salary and target bonus, and one company provided a cash benefit equal to three times the amount of the individual’s base salary and target bonus; and nine companies provided accelerated vesting of 50% of the individuals outstanding and unvested awards. Based on this analysis, the Compensation Committee and the Board approved the terms of the Amended Severance Agreements, as described below. The benefits provided under the Amended Severance Agreement, while increased from the current levels in place, continue to remain below the levels provided by the majority of our peers.
The Amended Severance Agreements for our executives including Marc Sultzbaugh, the Company’s Sr. Vice President of Worldwide Sales, and Michael Kagan, the Company’s Chief Technology Officer, provide that in the event the executive is terminated by the Company in connection with a change of control without “cause” or if he experiences a “constructive termination” (each, as defined in the Amended Severance Agreement), in each case, during the 12 months following a change in control of the Company, the executive will be entitled to receive the following payments and benefits:
|•||An amount equal to the sum of the executive’s annual base salary and the executive’s target annual bonus for the year of such termination; and|
|•||Full accelerated vesting of the executive’s outstanding equity awards.|
The Amended Severance Agreements for our U.S. executives also provide that if the executive should elect COBRA coverage under the Company’s group health plan, the Company will provide payment for the cost to continue COBRA coverage for the executive and the executive’s eligible dependents for up to 12 months following the executive’s termination date.
Payments and benefits received by our Israeli executives, including Mr.Kagan, under the Amended Severance Agreements are in addition to any payments or other benefits that the Israeli executive would be eligible to receive under applicable Israeli law.
Each executive’s entitlement to the payments and benefits under his Amended Severance Agreement is subject to the executive’s execution of a release of claims against the Company.
About Mellanox Technologies, Ltd. (NASDAQ:MLNX)
Mellanox Technologies, Ltd. is a fabless semiconductor company. The Company designs, manufactures and sells interconnect products and solutions primarily based on the InfiniBand and Ethernet standards. The Company operates in the development, manufacturing, marketing and sales of interconnect products segment. Its products facilitate data transmission between servers, storage systems, communications infrastructure equipment and other embedded systems. It operates its business across the globe and offers products to customers at various levels of integration. The products it offers include integrated circuits (ICs), adapter cards, switch systems, cables, modules, software, services and accessories as an integral part of networking solution focused on computing, storage and communication applications used in multiple markets, including high-performance computing (HPC), Web 2.0, storage, financial services, enterprise data center (EDC) and cloud.