8-KLeadership Changes

APPLIED MATERIALS INC /DE 8-K Report, Executive Changes (Jun 21, 2012)

Filed June 21, 2012For Securities:AMAT

Summary

Applied Materials, Inc. (AMAT) filed an 8-K on June 21, 2012, to report a significant leadership change and related compensation. The key event is the appointment of Gary E. Dickerson as the new President of the company, effective June 19, 2012. Mr. Dickerson, previously the CEO of Varian Semiconductor Associates before its acquisition by Applied Materials, will report directly to Chairman and CEO Michael R. Splinter, who previously held the President title. This appointment is accompanied by a comprehensive compensation package designed to incentivize Mr. Dickerson and align his interests with shareholders. The package includes a base salary, a target bonus, significant performance-based equity awards (performance shares and restricted stock) tied to operational and relative total shareholder return metrics, and specific severance provisions. Investors should note the performance metrics are designed to drive company profitability and market performance relative to peers, reflecting a strategic focus on achieving strong financial and market results under new leadership.

Key Highlights

  • 1Gary E. Dickerson appointed as President of Applied Materials, Inc., effective June 19, 2012.
  • 2Mr. Dickerson previously served as CEO of Varian Semiconductor Associates, acquired by AMAT in November 2011.
  • 3Mr. Dickerson will report to Chairman and CEO Michael R. Splinter.
  • 4Initial annual salary for Mr. Dickerson set at $750,000, with eligibility for a target bonus of 150% of base salary.
  • 5Awarded 500,000 performance shares tied to achieving targeted levels of annual, adjusted relative operating profit margin over four years.
  • 6Awarded an additional 550,000 shares of restricted stock vesting over three years, contingent on achieving a targeted operating profit margin.
  • 7Details specific severance provisions, including potential payments and benefits if terminated without cause or under a change of control scenario, with an expiration date for certain Varian-related provisions in May 2013.

Frequently Asked Questions

Gary E. Dickerson has been appointed as the new President of Applied Materials, Inc., effective June 19, 2012. He will report to Chairman and CEO Michael R. Splinter.

Mr. Dickerson's compensation includes an initial annual salary of $750,000, eligibility for an annual target bonus of 150% of his base salary, 500,000 performance shares tied to operational metrics, and 550,000 restricted shares tied to operating profit margin. Vesting for both equity awards is contingent on continued employment and achievement of specific performance targets over several years.

The performance shares are linked to achieving targeted levels of annual, adjusted relative operating profit margin compared to peer companies. Additionally, up to 50% of earned performance shares may vest if Applied's total shareholder return over a two-year period meets or exceeds certain relative levels against the S&P 500 Technology Sector peer group.

If Applied terminates Mr. Dickerson's employment without cause after May 11, 2013, he is entitled to 250% of his annual salary, provided he signs a release agreement. Prior to May 11, 2013, under a Varian change of control agreement, if he terminates employment, he could receive 299% of his pre-merger salary and bonus, along with continued insurance benefits for up to 24 months. These Varian-related rights expire on May 10, 2013.