8-KLeadership ChangesExhibits & Filings

COHERENT CORP. 8-K Report, Executive Changes (Jan 30, 2020)

Filed January 30, 2020For Securities:COHR

Summary

This 8-K filing by Coherent Corp. (COHR), formerly II-VI Incorporated, announces an amended and restated employment agreement for its CEO, Dr. Vincent D. Mattera, Jr., effective January 26, 2020. The changes are designed to align with the company's post-acquisition of Finisar Corporation and ensure Dr. Mattera's continued leadership. The agreement extends his employment term, adjusts his total direct compensation to reflect the 50th percentile of a new peer group, and significantly enhances retention incentives through increased contributions to a deferred compensation plan over the next three and a half years. Furthermore, the amended agreement revises severance benefits, particularly in the event of a "qualifying" involuntary termination, with an extended "change in control protected period" and updated calculations for cash severance and accelerated equity vesting. These adjustments underscore the company's commitment to retaining its CEO during a critical integration period and reflect the expanded scope of the combined entity.

Key Highlights

  • 1CEO employment term extended to August 1, 2023, with automatic one-year renewals thereafter, ensuring leadership stability.
  • 2CEO's total direct compensation for FY2020 adjusted to the 50th percentile of a new peer group post-Finisar acquisition, comprising base salary, annual incentive, and long-term equity awards.
  • 3Significant increase in deferred compensation contributions over the next 3.5 years as a retention incentive, with amounts escalating from $150,000 to $1,000,000.
  • 4Enhanced severance benefits for "qualifying" involuntary termination, including a longer 24-month "change in control protected period" and full vesting of outstanding equity awards.
  • 5Cash severance during the change in control protected period increased to 3 times average annual salary and cash bonus over three years.
  • 6Post-employment non-compete and non-solicitation covenants extended from one to two years.
  • 7Special retirement provisions for equity awards granted after the agreement, with options continuing to vest and RSUs vesting fully (time-based) or as per performance metrics (performance-based).

Frequently Asked Questions

The employment agreement is being amended to reflect the significant changes in the company following the acquisition of Finisar Corporation and to incentivize Dr. Mattera's continued service and leadership in shaping the combined business. The company believes these changes will benefit shareholders by ensuring continuity and strategic direction.

The CEO's total direct compensation for fiscal year 2020 has been adjusted to align with the 50th percentile of a new compensation competitor group, reflecting the combined entity post-Finisar acquisition. This includes a base salary of $920,200, target annual incentive compensation of $1,809,248, and target long-term equity incentive awards of $4,710,550. Additionally, contributions to his deferred compensation plan are significantly increasing over the next 3.5 years as a retention incentive.

The amended agreement enhances severance benefits for a 'qualifying' involuntary termination. The 'change in control protected period' has been extended to 24 months (from 18 months), cash severance during this period is now three times the average annual salary and cash bonus over three years (from 2.99 times over five years), and all outstanding equity awards will fully vest under these conditions. Medical coverage severance has been converted to a lump sum payment for 18 or 24 months of COBRA premiums.

Yes, the duration of the post-employment non-compete and non-solicitation covenants has been increased from one year to two years, providing the company with a longer period of protection for its confidential information, inventions, and customer/employee relationships.