8-KLeadership ChangesExhibits & Filings

APPLIED MATERIALS INC /DE 8-K Report, Executive Changes (Jul 13, 2007)

Filed July 13, 2007For Securities:AMAT

Summary

This 8-K filing by Applied Materials, Inc. (AMAT) on July 13, 2007, details an amendment to its 2005 Executive Deferred Compensation Plan (EDCP). The primary change allows eligible employees, including named executive officers, to defer a portion of their potential cash severance payments on a pre-tax basis. This amendment, approved by the Human Resources and Compensation Committee, aims to comply with Section 409A of the Internal Revenue Code and applies to severance arrangements negotiated at arm's length during a separation from service. For investors, this amendment signifies a refinement in executive compensation practices, specifically concerning post-employment payments. While not directly impacting current financial performance, it reflects the company's attention to tax compliance and retention strategies for its key management personnel. The EDCP itself allows deferrals of salary and bonuses, with account balances credited with deemed interest and fully vested. Distributions are generally made at times elected by the participant, subject to specific conditions like death, disability, change in control, or hardship withdrawals.

Key Highlights

  • 1Applied Materials amended its 2005 Executive Deferred Compensation Plan (EDCP).
  • 2The amendment permits eligible executives to defer pre-tax cash severance payments.
  • 3This change applies to severance agreements negotiated at a separation from service.
  • 4The EDCP is designed to comply with Section 409A of the Internal Revenue Code.
  • 5Participation in the EDCP is limited to Managing Director level and above.
  • 6Account balances within the EDCP are 100% vested.
  • 7The company does not make any employer contributions to the EDCP.

Frequently Asked Questions

The primary purpose of the amendment is to allow eligible executives to defer cash severance payments on a pre-tax basis, in addition to base salary and bonuses. This is intended to provide greater flexibility in executive compensation planning and ensure compliance with tax regulations.

Eligibility for the EDCP is restricted to employees who hold positions at the Managing Director level or above within Applied Materials and its participating affiliates. This includes the company's named executive officers.

The EDCP account balances are not directly invested. Instead, they are credited with a 'Deferral Interest Rate' at the end of each pay period. This rate is calculated as the yield-to-maturity of five-year U.S. Treasury notes on the first business day of December preceding the plan year, plus 1.5%.

Generally, EDCP account balances are distributed upon dates elected by the participant. However, distributions can also occur upon specific events such as death, disability, separation from service, a change in control, or in-service withdrawals due to extreme financial hardship, subject to the plan's terms.