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BEC » Topics » Change in Control Agreements with Named Executive Officers

This excerpt taken from the BEC DEF 14A filed Mar 5, 2009.

Change in Control Agreements with Named Executive Officers

The Company is a party to a change in control agreement with each named executive officer. The agreements are substantially identical (except as noted below with respect to our Chief Executive Officer) and provide for certain benefits to be paid to the named executive officer in connection with a termination of employment with the Company under the circumstances described below. As a condition to the benefits described below, the named executive officer must execute a release of claims in favor of the Company. The change in control agreements also contain a perpetual confidentiality provision and a covenant not to solicit the Company’s employees for one year following the termination date.

The change in control agreements provide for certain severance benefits in the event that, on or within two years following a change in control of the Company, the named executive officer’s employment is terminated by the Company (or a successor) without “cause” (as defined in the agreement) or by the executive for “good reason” (as defined in the agreement). A termination of employment under the circumstances described above is referred to as a “qualifying termination” in the agreements. In addition, if the named executive officer’s employment terminates under the circumstances described above within six months prior to a change in control, the executive may submit to arbitration proceeding the determination of whether the termination was a constructive qualifying termination entitling the named executive officer to severance under the agreement. In the event of a qualifying termination, a named executive officer will be entitled to the following severance pay and benefits:

 

  •  

A lump sum cash payment equal to two times (three times for our Chief Executive Officer) the sum of (i) the executive’s highest annual base salary rate in effect at any time while the executive was employed with the Company, plus (ii) a management bonus increment equal to an “applicable percentage” of the executive’s highest annual base salary rate. The “applicable percentage” is generally the executive’s target bonus percentage under the Company’s management bonus plan for the year in which the termination occurs. The agreements provide for certain equitable adjustments to be made to the applicable percentage if the Company’s management bonus plan is redesigned or eliminated after the date of the agreement.

 

  •  

A pro-rata (calculated to the nearest month) management bonus for the year of the qualifying termination, calculated as if the target performance had been achieved for the year.

 

  •  

Accelerated vesting of then-outstanding equity awards, with any outstanding stock options to remain exercisable for the maximum term of the option.

 

  •  

For a period of two years (three years for our Chief Executive Officer), the executive may participate in the group health, life insurance, long-term disability, outplacement services, directors and officers insurance and indemnification programs of the Company in the same manner and at the same level as in effect prior to the qualifying termination.

 

  •  

If the executive’s benefits are subject to the excise tax imposed under Section 280G, a gross-up payment so that the net amount of such payment (after taxes) he receives is sufficient to pay the excise tax due, provided that if a reduction of up to 10% in the amount of the benefits would result in the Section 280G excise taxes not be triggered, the benefits will be reduced to the extent necessary to avoid triggering the excise taxes, and no gross-up payment will be made.

 

56   BEC 2009 NOTICE & PROXY STATEMENT

Table of Contents

The following table lists the named executive officers and the estimated amounts they would have become entitled to under their change in control agreement had their employment with the Company terminated on December 31, 2008 under the circumstances described above.

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