Summary
Amgen Inc. (AMGN) filed an 8-K on December 15, 2010, reporting on the approval of an amendment and restatement of its Change of Control Severance Plan, effective December 9, 2010. This revised plan aims to align with current governance best practices and industry trends. The primary focus for investors is the modification of severance benefits for key employees in the event of a change of control. Significant changes include a reduction in the severance multiple from three times to two times annual salary and targeted bonus, the elimination of excise tax reimbursement (gross-ups), and simplification of the bonus calculation component. Additionally, the plan removes stock option acceleration offset and in-kind health and welfare benefits, though COBRA coverage for group health and dental will be provided for up to 18 months. These adjustments generally represent a reduction in potential payouts and benefits for senior executives under change of control scenarios.
Key Highlights
- 1Amgen amended and restated its Change of Control Severance Plan, effective December 9, 2010.
- 2Severance multiples for senior executives (SVP and above) were reduced from 3x to 2x annual salary and targeted bonus.
- 3The plan now eliminates excise tax reimbursement (gross-ups) for executives.
- 4The calculation for the bonus component of severance has been simplified.
- 5Stock option acceleration value offsets have been removed, simplifying severance calculations.
- 6In-kind health and welfare benefits have been largely removed, with a provision for 18 months of COBRA coverage.
- 7The retirement benefit component has been updated to reflect new retiree medical and supplemental retirement plans.