What is the primary purpose of the new agreement with Jerald G. Fishman?

The primary purpose is to ensure the continued service and leadership of Jerald G. Fishman as CEO of Analog Devices through at least fiscal year 2010, a period referred to as the 'Retention Period,' which the Board believes is crucial for the company's best interests.

How will Jerald G. Fishman be compensated under this new retention agreement?

Mr. Fishman will receive a base amount of $5,000,000 to be credited to his deferred compensation account. Additionally, for fiscal years 2008, 2009, and 2010, his account will be credited with an amount equal to two times (2x) the annual bonus earned under the executive performance bonus plan, up to a maximum of $5,000,000 per year.

What happens to Mr. Fishman's compensation if his employment terminates before the end of the Retention Period?

If Mr. Fishman's employment terminates due to Analog Devices firing him without 'Cause,' or if he resigns for 'Good Reason,' or under specific severance conditions from his 1989 agreement, Analog will credit his deferred compensation account with the amount that would have been credited had he remained employed through the end of the Retention Period and achieved target bonuses.

Are there any tax implications for Analog Devices or Mr. Fishman related to this agreement?

Yes, the agreement includes a provision where Analog Devices will pay Mr. Fishman an additional amount to cover any excise taxes and income taxes resulting from Sections 280G and 4999 of the Internal Revenue Code, ensuring he retains the net amount he would have received had these taxes not been triggered.

ADI 8-K: Leadership Changes

Summary

Analog Devices Inc. (ADI) filed an 8-K on October 26, 2007, detailing a new Executive Retention Agreement entered into with its Chief Executive Officer, Jerald G. Fishman, effective October 22, 2007. The primary purpose of this agreement is to ensure Mr. Fishman's continued leadership at ADI through at least fiscal year 2010, a period referred to as the "Retention Period." This aligns with the Board of Directors' view that retaining Mr. Fishman is critical for the company's interests. The agreement outlines a significant compensation package designed to incentivize Mr. Fishman, including a base amount of $5,000,000 to be credited to his deferred compensation account, plus a multiple of his annual performance-based cash incentives for fiscal years 2008, 2009, and 2010. This incentive structure is intended to directly link his potential earnings to ADI's performance during the Retention Period, replacing any additional equity grants he would otherwise receive. The filing also addresses potential severance scenarios and ensures "gross-up" payments to cover excise taxes related to Section 280G of the Internal Revenue Code.

Key Highlights

1Analog Devices (ADI) has entered into an Executive Retention Agreement with CEO Jerald G. Fishman to retain him through fiscal year 2010.
2The agreement provides a retention incentive of $5,000,000 plus a multiplier of two (2) times his annual performance bonus for fiscal years 2008, 2009, and 2010.
3The maximum annual bonus contribution under the agreement is capped at $5,000,000 per fiscal year.
4The incentive package replaces any additional equity grants to Mr. Fishman during the retention period.
5Mr. Fishman's annual bonus target percentage is 160% of his base salary, which was $930,935 at the time.
6The agreement includes provisions for continued credit to his deferred compensation account in case of termination by ADI without 'Cause' or by Mr. Fishman for 'Good Reason' prior to the end of the retention period.
7Amendments to existing employment and retention agreements were made to comply with Section 409A of the Internal Revenue Code and align with the new retention agreement.

ANALOG DEVICES INC 8-K Report, Executive Changes (Oct 26, 2007)

Summary

Key Highlights

Frequently Asked Questions