01—Abstract
Summary
Summary of the 8-K filed November 4, 2016. Cited figures are marked; the original filing is the authoritative source.
CIENA CORP (CIEN) filed an 8-K on November 4, 2016, primarily to announce the adoption of a new Deferred Compensation Plan and the execution of new Change in Control Severance Agreements for its executive officers.
The Deferred Compensation Plan, effective November 1, 2016, allows eligible senior management to defer a portion of their salary, bonuses, and other compensation, with specific limits and investment options. This plan is unfunded and intended to be exempt from ERISA regulations, with deferred amounts becoming general unsecured obligations of the company, though typically held in a rabbi trust. The company also entered into new Change in Control Severance Agreements with its executive officers, effective November 1, 2016, which will expire on November 30, 2019, unless terminated earlier.
These agreements largely mirror the terms of prior agreements, providing severance benefits upon termination without cause or resignation for good reason within a specific window around a change in control. Notably, the CEO's agreement extends the post-change in control termination window to 18 months, from the standard 12 months for other executives.
02—Key points
Key Highlights
- Ciena Corporation adopted a new Deferred Compensation Plan effective November 1, 2016, allowing eligible management to defer compensation.
- The plan permits deferral of up to 75% of base salary and 100% of other compensation, with initial year limitations.
- No matching or discretionary contributions are provided, except for restorative matching payments to offset forgone 401(k) contributions.
- Deferred compensation will be treated as general unsecured obligations of Ciena, likely held in a rabbi trust.
- New Change in Control Severance Agreements were executed with executive officers, effective November 1, 2016, with a term through November 30, 2019.
- These agreements provide severance benefits upon termination without cause or resignation for good reason within a specified period around a change in control.
- The CEO's agreement uniquely extends the post-change in control termination period for severance benefits to 18 months, compared to 12 months for other executives.
03—Questions
Frequently Asked Questions
What is the primary purpose of the new Deferred Compensation Plan?
The primary purpose of the new Deferred Compensation Plan is to provide eligible senior management employees with an opportunity to defer a portion of their current compensation (salary, bonuses, etc.) for future payment, potentially offering tax advantages and long-term financial planning benefits.
Are the deferred compensation amounts guaranteed or secured?
The deferred compensation amounts represent general unsecured obligations of Ciena Corporation. While Ciena intends to hold these amounts in a separate rabbi trust to facilitate payments, they are not secured by specific company assets and are subject to the company's ability to pay.
What are the key changes or similarities in the new Change in Control Severance Agreements?
The new Change in Control Severance Agreements largely maintain the same material terms and severance benefits as the prior agreements. The primary modification is the fixed term, now through November 30, 2019, and a specific extension of the post-change in control termination period for severance eligibility to 18 months for the CEO, compared to 12 months for other executives.
Who is eligible to participate in the Deferred Compensation Plan?
Eligibility for the Deferred Compensation Plan is limited to a select group of management employees in the United States, including Ciena's named executive officers, who meet certain compensation requirements.
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