MOLX » Topics » Potential Payments Upon Termination or Change-in-Control

This excerpt taken from the MOLX DEF 14A filed Sep 10, 2009.
Potential Payments Upon Termination or Change-in-Control
 
We do not currently provide executive officers with pension benefits or employment, severance or change in control agreements. On a case-by-case basis, the Compensation Committee has approved individual retirement packages to retiring executive officers based on years of service and contribution to Molex.
 
Under our equity compensation plans, outstanding and unvested stock options will become fully vested and exercisable, and outstanding and unvested restricted stock will become fully vested and be distributed upon a participant’s death, disability, retirement, or involuntary termination. In addition, the awards will vest upon a change in control irrespective of a termination of employment. In the event of a change in control where the Company ceases to have publicly traded equity securities, after the consummation of the change in control, if no replacement awards are issued in lieu of outstanding awards under the equity plans, then the plans and all outstanding awards granted under the plans will terminate, and the Company (or successor) will pay the participants an amount for their outstanding awards determined using the change-in-control price. These provisions apply to all employees who participate in the Company’s equity plans. The outstanding equity awards held by the NEOs as of June 30, 2009 are described above under “Outstanding Equity Awards at 2009 Fiscal Year-End.”
 
We have estimated the amount of incremental compensation for each of Messrs. Slark, Johnson, McCarthy, Hirokawa and Brock would receive due to accelerated vesting of outstanding restricted stock awards upon termination of the officer’s employment in the event of the officer’s death, disability, retirement or involuntary termination, or upon a change of control irrespective of a termination of employment, as follows: Mr. Slark, $2,561,437; Mr. Johnson, $952,675; Mr. McCarthy, $1,060,525; Mr. Hirokawa, $1,595,274; and Mr. Brock, $1,420,025. These amounts assume that the termination of employment or change in control was effective as of June 30, 2009 and that the price of Class A Common Stock on which the calculations are made was the closing price of $14.38 on that date. There is no value reflected for acceleration of stock options as of June 30, 2009 for Messrs. Slark, Johnson and McCarthy because the exercise prices of all unvested stock options held by these officers are greater than the closing price of our Class A Common Stock on June 30, 2009. We have estimated the value for the acceleration of stock options as of June 30, 2009 for Messrs. Hirokawa and Brock at $116,000 and $40,840, respectively. The amounts shown above are estimates of the incremental compensation these officers would receive upon such terminations or a change of control. The actual amounts to be received can only be determined at the time of the officer’s termination of employment or at the time of a change in control.
 
An “involuntary termination” is defined for purposes of the Company’s equity plans to mean the Company’s or a subsidiary’s termination of a participant’s employment pursuant to a planned employee reduction plan if:
 
  •   The participant has reached age 55 and was employed at least 20 years with the Company or a subsidiary; or
 
  •   The participant was employed at least 25 years with the Company or a subsidiary.


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A “change in control” is defined for purposes of the Company’s equity plans to mean:
 
  •   The purchase or other acquisition by any person, entity or group of beneficial ownership of more than 50% of either the outstanding shares of Common Stock or the combined voting power of Molex’s then outstanding voting securities entitled to vote generally;
 
  •   The approval by Molex’s stockholders of a reorganization, merger or consolidation, in each case, with respect to which persons who were Molex stockholders immediately prior to such reorganization, merger or consolidation, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then outstanding securities;
 
  •   A liquidation or dissolution of Molex; or
 
  •   The sale of all or substantially all of Molex’s assets (i.e., greater than 40% of the total gross fair market value of all of the assets of Molex immediately prior to such sale or disposition) within a 12-month period ending on the date of the most recent sale or disposition.
 
In addition, as described in greater detail below under “Transactions with Related Persons,” we have agreements with each of Frederick A. Krehbiel and John H. Krehbiel, Jr., pursuant to which we have agreed that if either of them dies while employed, we will pay his wife, if she survives him, $125,000 per year for the remainder of her life.
 
Potential Payments upon Termination or Change-in-Control
 
We do not currently provide executive officers with pension benefits, employment, severance or change in control agreements or arrangements. On a case-by-case basis, the Compensation Committee has approved individual retirement packages to retiring executive officers based on years of service and contribution to Molex.


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Potential Payments upon Termination or Change-in-Control

We do not currently provide executive officers with pension benefits, employment, severance or change in control agreements or arrangements. On a case-by-case basis, the Compensation Committee has approved individual retirement packages to retiring executive officers based on years of service and contribution to Molex.

In April 2006, we entered into a retirement agreement with Mr. Schubel in light of his planned retirement on September 30, 2007. The retirement agreement provides for an annual payment of $500,040 for three years following retirement, payable in equal bi-monthly installments. It also provides for medical coverage under our retiree medical program which provides Mr. Schubel and his covered dependents with medical coverage at applicable retiree rates. Mr. Schubel agreed to non-compete and non-solicitation restrictions in the retirement agreement. Mr. Schubel’s unvested stock options and restricted stock awards will become immediately vested and exercisable upon his retirement and will expire in accordance with the terms of the applicable equity plan.

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