UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): February 22, 2018

 

BENCHMARK ELECTRONICS, INC.

(Exact Name of Registrant as Specified in Charter)

 

Texas
(State or Other Jurisdiction
of Incorporation)
1-10560
(Commission
File Number)
74-2211011
(IRS Employer
Identification No.)

 

4141 N. Scottsdale Road  
Scottsdale, Arizona 85251
(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code: (623) 300-7000

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

 

  ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 1.01 entry into a material definitive agreement

 

On February 22, 2018, Benchmark Electronics, Inc. (the “ Company ”) and Paul J. Tufano, the Company’s President and CEO, agreed to amend Mr. Tufano’s employment agreement (the “ Amendment ”), the original terms of which are described in the Company’s current report on Form 8-K filed on December 7, 2016 (the “ Employment Agreement ”).

 

The Amendment extends the term of the Employment Agreement through December 31, 2019. In the event of a transition of executive leadership to a successor President and Chief Executive Officer of the Company prior to December 31, 2019, Mr. Tufano will continue to serve in the position of a special advisor to the board of directors of the Company and to his successor through December 31, 2019. Mr. Tufano’s employment with the Company will terminate, in all events, on December 31, 2019.

 

In connection with the execution of the Amendment, Mr. Tufano will be entitled to receive an award of time-based restricted stock units with a grant date fair value of $1,650,000 that will vest in two equal installments on December 31, 2018 and December 31, 2019, in each case subject to Mr. Tufano’s continued employment through the applicable vesting date, and an award of performance-based restricted stock units with a grant date fair value of $1,650,000 that will cliff vest based on a two-year performance period ending December 31, 2019, subject to Mr. Tufano’s continued employment through December 31, 2019.

 

In addition, the parties have agreed on the terms of Mr. Tufano’s 2019 annual cycle equity award. The Amendment contemplates an award of time-based restricted stock units and performance-based restricted stock units in or around March 2019, in each case with respect to the same number of shares of the Company’s common stock as the awards described in the immediately preceding paragraph. The time-based restricted stock units that will be granted in or around March 2019 will vest in two equal installments on December 31, 2019 and December 31, 2020, in each case subject to Mr. Tufano’s continued employment through December 31, 2019 and his compliance with his other obligations described in the Amendment. The performance-based restricted stock units that will be granted in or around March 2019 will cliff vest based on a two-year performance period ending December 31, 2020, subject to Mr. Tufano’s continued employment through December 31, 2019 and his compliance with his other obligations described in the Amendment.

 

In the event the Company terminates Mr. Tufano’s employment without “cause” or Mr. Tufano terminates his employment for “good reason” (in each case as defined in the Employment Agreement) on or after January 1, 2019 (and prior to December 31, 2019), Mr. Tufano would be entitled to receive a lump-sum cash payment equal to the remainder of his annual base salary through December 31, 2019 and he would remain entitled to receive an annual bonus with respect to the Company’s 2019 fiscal year. In the event such termination of employment occurs within the three-month period immediately preceding or the 24-month period immediately following a change in control of the Company and prior to the transition of executive leadership to a successor President and Chief Executive Officer of the Company as described above, Mr. Tufano would instead be entitled to receive a lump-sum cash payment equal to three times the sum of (1) Mr. Tufano’s annual base salary at the time of his termination plus (2) the greater of (A) his target annual bonus for the year in which the termination date occurs and (B) the last annual bonus paid to Mr. Tufano prior to such termination date. The severance benefits described in this paragraph are in addition to the continued health insurance coverage described in the Employment Agreement.

 

All other terms and conditions of Mr. Tufano’s Employment Agreement and all terms and conditions relating to his outstanding equity-based incentive compensation awards remain in full force and effect.

 

The Amendment to the Employment Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference, and the foregoing description is qualified in its entirety by reference to Exhibit 10.1.

 

Item 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

 

On February 22, 2018, the Company and Paul J. Tufano, the Company’s President and CEO, agreed to amend Mr. Tufano’s Employment Agreement in order to extend the term of the Employment Agreement through December 31, 2019. In connection with this event, on February 22, 2018, the Company and Mr. Tufano entered into the Amendment to the Employment Agreement. The terms and conditions of the Amendment are described under Item 1.01.

 

 

 

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits.

 

Exhibit No.   Description
     
10.1   Amendment to Employment Agreement, dated as of February 22, 2018
     
     

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: February 23, 2018  
   
  BENCHMARK ELECTRONICS, INC.
     
  By: /s/ Roop K. Lakkaraju
  Name: Roop K. Lakkaraju
  Title: Chief Financial Officer

 

 

 

 

 

Exhibit 10.1

 

AMENDMENT TO

EMPLOYMENT AGREEMENT

 

This Amendment (this “ Amendment ”) to the Employment Agreement, dated as of December 1, 2016 (the “ Employment Agreement ”), by and between Benchmark Electronics, Inc., a Texas corporation (the “ Company ”), and Paul J. Tufano (“ Employee ”), is entered into by the Company and Employee as of February 22, 2018. Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Employment Agreement.

 

WHEREAS, Employee is currently employed as the President and Chief Executive Officer of the Company pursuant to the Employment Agreement;

 

WHEREAS, the Company and Employee wish to extend the term of Employee’s employment pursuant to the Employment Agreement in accordance with the terms and conditions set forth herein; and

 

WHEREAS, this Amendment is intended to amend the Employment Agreement in order to set forth the mutual understanding and agreement between the Company and Employee regarding Employee’s continued employment following the date hereof.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

 

1.                   The Company hereby offers to extend the term of the Employment Agreement as contemplated in Section 3 of the Employment Agreement and Employee hereby accepts such offer. As a result, the “Employment Term” (as defined in the Employment Agreement) is hereby extended until December 31, 2019.

 

2.                   In addition to Employee’s duties described in Section 2 of the Employment Agreement, during the Employment Term (as hereby extended), Employee shall provide reasonable support and assistance to the Board of Directors of the Company (the “ Board ”) in connection with the Board’s search for, and transition of executive leadership to, a successor to the position of President and Chief Executive Officer of the Company (such individual, the “ Successor CEO ”, and such search and transition, collectively, the “ CEO Transition ”).

 

3.                   Effective as of the earlier of (i) December 31, 2019 and (ii) the date on which the Successor CEO commences employment as President and Chief Executive Officer of the Company (the “ Transition Date ”), Employee shall retire as a member of the Board (and, in addition, as a director or officer of any subsidiary of the Company) and shall retire from Employee’s position as President and Chief Executive Officer of the Company. Such retirement shall be automatic and without any further action on Employee’s part, and Employee hereby agrees to execute any additional documentation with respect thereto reasonably requested by the Company.

 

 

 

 

4.                   (a) Notwithstanding the foregoing, in the event that the Transition Date occurs prior to December 31, 2019, Employee shall continue active, full-time employment with the Company during the period following the Transition Date through December 31, 2019 (such period, the “ Advisory Period ”) in the position of a special advisor to the Board and to the Successor CEO (“ Special Advisor ”) and, during the Advisory Period, Employee shall report to the Board and provide such services as are reasonably requested by the Board or the Successor CEO from time to time; provided that, as Special Advisor, Employee shall not have the authority to bind the Company in any respect and no employee of the Company shall report to Employee. Employee and the Company acknowledge that Employee’s transition into the position of Special Advisor is not expected to constitute a “separation from service” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended. As a Special Advisor, Employee shall be an “at will” employee, subject to the terms of the Employment Agreement as amended hereby. Effective as of the expiration of the Advisory Period (if any), Employee’s employment as Special Advisor shall terminate, and thereafter Employee shall have no further employment relationship with the Company.

 

(b)                Employee’s termination of employment with the Company on December 31, 2019 (whether pursuant to Section 3 or 4(a) of this Amendment) shall be considered a voluntary resignation by Employee, and not a termination of employment without “Cause” or for “Good Reason” within the meaning of the Employment Agreement; provided that such voluntary resignation shall not result in a forfeiture of Employee’s opportunity to receive an annual bonus payment with respect to the Company’s 2019 fiscal year.

 

(c)                Sections 6(c) and 6(d) of the Employment Agreement shall continue to govern in the event the Company’s terminates Employee’s employment without Cause or Employee terminates his employment for Good Reason at any time prior to December 31, 2019; provided that (i) clause (A) of the definition of “Good Reason” shall not apply during the Advisory Period and (ii) commencing as of January 1, 2019, Section 6(c)(3) shall be removed in its entirety and replaced with the following:

 

“Except as otherwise set forth in this Section 6(c)(3), subject to Employee satisfying the conditions in Section 6(f), (i) Employee shall be entitled to a lump-sum cash payment in an amount equal to the remainder of Employee’s Base Salary through December 31, 2019, payable in a lump-sum on the 60th day following the Termination Date, and (ii) Employee shall remain entitled to receive an annual bonus under the Executive Bonus Plan with respect to the Company’s 2019 fiscal year, in an amount to be determined by the Compensation Committee based on the performance metrics established by the Compensation Committee for such plan year, payable when bonuses for such plan year are paid to other executives of the Company. Any equity-based incentive compensation awards held by Employee as of the Termination Date shall be treated in accordance with their terms. Employee shall have no obligation of mitigation or similar obligation with respect to such payments. Notwithstanding the foregoing, in the event that the Termination Date in respect of Employee’s termination without Cause or termination for Good Reason (as defined below) occurs within the three months immediately preceding or the 24 months immediately following a Change in Control (as defined below) and prior to the Transition Date (as defined in the amendment to this Agreement dated February 22, 2018), then, in lieu of the amounts described in clauses (i) and (ii) of this Section 6(c)(3) and subject to Employee satisfying the conditions of Section 6(f), Employee shall be entitled to a lump-sum cash payment in an amount equal to three times the sum of (A) the Base Salary at the Termination Date plus (B) the greater of (x) Employee’s target bonus under the Executive Bonus Plan in effect for the year in which the Termination Date occurs and (y) the last annual cash bonus actually paid to Employee prior to the Termination Date, payable in a lump-sum on the 60th day following the Termination Date.”

 

 

 

 

5.                   (a) As soon as practicable following the date hereof, Employee shall be granted (i) time-based restricted stock units (“ RSUs ”) under the Company’s 2010 Omnibus Incentive Compensation Plan (the “ Plan ”) with an aggregate grant date value of $1,650,000 and (ii) performance-based restricted stock units (“ PSUs ”) under the Plan with an aggregate grant date target value of $1,650,000. The RSUs described in this Section 5(a) shall vest in two equal installments on December 31, 2018 and December 31, 2019, in each case subject to Employee’s continued employment as described in this Amendment through the applicable vesting date, and the PSUs described in this Section 5(a) shall cliff vest based on a two-year performance period ending December 31, 2019, subject to Employee’s continued employment as described in this Amendment through December 31, 2019.

 

(b)                On or around March 2019, Employee shall be granted (i) RSUs under the Plan with respect to the same number shares of the Company’s common stock as the grant of RSUs described in Section 5(a)(i) above and (ii) PSUs under the Plan with respect to the same number of shares of the Company’s common stock as the grant of PSUs described in Section 5(a)(ii) above. The RSUs described in this Section 5(b) shall vest in two equal installments on December 31, 2019 and December 31, 2020, in each case subject to Employee’s continued employment as described in this Amendment through December 31, 2019, and the PSUs described in this Section 5(b) shall cliff vest based on a two-year performance period ending December 31, 2020, subject to Employee’s continued employment as described in this Amendment through December 31, 2019.

 

(c)                In addition to the vesting and performance criteria described in Sections 5(a) and 5(b) above and any other terms and conditions as may be set forth in the applicable award agreements, the RSUs and PSUs described in Sections 5(a) and 5(b) above shall also be subject to Employee’s compliance with his obligations described in this Amendment (including, without limitation and where applicable, Employee’s obligation to provide reasonable support and assistance to the Board in connection with the CEO Transition, to provide such services as are reasonably requested by the Board or the Successor CEO from time to time during any Advisory Period and to retire from Employee’s position as President and Chief Executive Officer (and as Special Advisor, if applicable)). The RSUs and PSUs described in Sections 5(a) and 5(b) above shall also be subject to Employee’s compliance with his obligations under Section 8 (Confidential Information) and Section 9 (Non-Competition, Non-Solicitation, Non-Disparagement) of the Employment Agreement.

 

6.                   All other terms and conditions of the Employment Agreement and all terms and conditions relating to Employee’s equity-based incentive compensation awards outstanding as of the date hereof shall remain in full force and effect (including, without limitation, Employee’s obligations under Section 8 (Confidentiality) and Section 9 (Non-Competition, Non-Solicitation, Non-Disparagement) of the Employment Agreement).

 

 

 

 

7.                   This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered, in person or by facsimile, or by electronic image scan, receipt acknowledged, to the other party.

 

[ Signature Page Follows ]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the day and year first above written.

 

 

 

  /s/ Paul J. Tufano
  Paul J. Tufano
  BENCHMARK ELECTRONICS, INC.
  By: /s/ Victor L. Harris
  Name: Victor L. Harris
  Title: Secretary