8-KLeadership Changes

Seagate Technology Holdings plc 8-K Report, Executive Changes (Dec 7, 2006)

Filed December 7, 2006For Securities:STX

Summary

This 8-K filing from Seagate Technology Holdings plc (STX) reports on the final determination and payment of severance benefits to Dr. C.S. Park, former Chairman and CEO of Maxtor Corporation, following the consummation of the merger between Seagate and Maxtor on May 19, 2006. Dr. Park's termination of employment as CEO of Maxtor occurred under circumstances entitling him to severance under Maxtor's Executive Retention and Severance Plan. The filing clarifies the final payout amount, which includes basic severance, supplemental severance, a pro-rated bonus, and a lump-sum payment in lieu of continued benefits. It also confirms Dr. Park's entitlement to a "gross-up" payment to cover potential excise taxes on excess parachute payments. Investors should note the total estimated severance payout to Dr. Park is approximately $6.165 million. This figure comprises a cash severance payment of $4,466,575.34, a payment of $78,405.00 in lieu of benefits continuation, and an approximate "gross-up" payment of $1,620,000 for taxes. This filing provides a definitive update on the financial implications of Dr. Park's post-merger separation, as previously outlined in the company's Form S-4.

Key Highlights

  • 1Seagate Technology Holdings plc has finalized severance payments to Dr. C.S. Park, former Maxtor CEO.
  • 2Dr. Park's employment termination occurred under conditions triggering severance benefits as per Maxtor's Executive Severance Plan.
  • 3Total cash severance and bonus payment to Dr. Park amounts to $4,466,575.34.
  • 4A lump-sum payment of $78,405.00 will be made in lieu of continued health, life insurance, and disability benefits.
  • 5Dr. Park is entitled to an approximate "gross-up" payment of $1,620,000 to cover excise taxes on "excess parachute payments".
  • 6The total estimated severance payout to Dr. Park is approximately $6,165,000.
  • 7These payments were made or are scheduled to be made in December 2006.

Frequently Asked Questions

This 8-K filing is primarily to report the definitive amount and payment of severance benefits due to Dr. C.S. Park, former Chairman and CEO of Maxtor, following the merger with Seagate Technology. It clarifies the financial details of his post-merger separation according to existing severance plans.

The total estimated severance payout to Dr. Park, including cash severance, a payment in lieu of benefits, and a tax "gross-up" payment, is approximately $6,165,000. The cash severance payment was $4,466,575.34, the payment in lieu of benefits was $78,405.00, and the estimated tax gross-up payment is $1,620,000.

Seagate is making a "gross-up" payment because Dr. Park is entitled to it under the terms of Maxtor's Executive Severance Plan. This payment is intended to cover any additional federal taxes he may incur due to the severance package being considered an "excess parachute payment" under tax law.

The severance payment of $4,466,575.34 was paid on December 1, 2006. The payment in lieu of benefits of $78,405.00 was scheduled to be paid on or about December 7, 2006. The "gross-up" payment will be paid to tax authorities on Dr. Park's behalf on or prior to December 31, 2006.