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| Item 5.02 |
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Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers. |
(b) Charles W. Stankiewicz. On August 8, 2011, American Superconductor Corporation (the
“Company”) and Charles W. Stankiewicz, Executive
Vice President, Operations and Grid Segment, mutually agreed to end his employment with the Company, effective August 23, 2011.
The Company and Mr. Stankiewicz are currently parties to an Amended and Restated Executive
Severance Agreement, dated as of December 23, 2008 (the “Existing Stankiewicz Agreement”).
Under the Existing Stankiewicz Agreement, Mr. Stankiewicz is entitled to receive $517,500, which is
equal to eighteen (18) months of his current base salary, less all applicable taxes and
withholdings, and certain other benefits in exchange for his execution of a legal release. The
foregoing description of the terms of the severance agreement is qualified in its entirety by
reference to the Existing Stankiewicz Severance Agreement, which was filed as Exhibit 10.4 to the
Company’s Quarterly Report on Form 10-Q filed February 5, 2009, and which is incorporated herein by
reference.
The Compensation Committee of the Board of Directors (the “Committee”) has approved a
modified severance package for Mr. Stankiewicz, which would be set forth in a new severance
agreement (the “New Stankiewicz Agreement”), and include additional contractual protections
for the Company in exchange for additional consideration to be paid to Mr. Stankiewicz. The
parties are currently negotiating the terms and conditions of the New Stankiewicz Agreement, and if
executed, it would fully replace and supersede the Existing Stankiewicz Agreement.
The compensatory element of the New Stankiewicz Agreement, which will be paid to Mr. Stankiewicz
only if he signs the New Stankiewicz Agreement and does not revoke it within the revocation period
provided by law, would consist of: (i) $717,500, less all applicable taxes and withholdings, as
severance pay (an amount equivalent to eighteen (18) months of his current base salary plus
$200,000 of additional consideration); and (ii) an extension of Mr. Stankiewicz’s period to
exercise the 80,000 vested options granted to him on May 15, 2007 until May 14, 2017. In turn,
Mr. Stankiewicz would agree to certain restrictive covenants regarding non-competition,
non-solicitation and non-disparagement for the period beginning on the date of termination of his
employment with the Company through August 31, 2012. Since Mr. Stankiewicz has not yet signed the
New Stankiewicz Agreement, there can be no assurance that there will not be material changes to the
New Stankiewicz Agreement.
If Mr. Stankiewicz does not sign the New Stankiewicz Agreement, the Company expects to pay the
severance payable to him under the Existing Stankiewicz Agreement, subject to his execution and
non-revocation of the required legal release.
The foregoing description of the terms of the New Stankiewicz Agreement is qualified in its
entirety by the New Stankiewicz Agreement which, if executed and effective, we intend to file with
the Securities and Exchange Commission.
(b) Angelo R. Santamaria. On August 8, 2011, the Company and Angelo R. Santamaria, Senior Vice
President, Global Manufacturing Operations, mutually agreed to end his employment with the Company,
effective August 12, 2011.
The Company and Mr. Santamaria are currently parties to an Amended and Restated Executive Severance
Agreement, dated as of December 23, 2008 (the “Existing Santamaria Agreement”). Under the
Existing Santamaria Agreement, Mr. Santamaria is entitled to receive $250,000, which is equal to
twelve (12) months of his current base salary, less all applicable taxes and withholdings, and
certain other benefits in exchange for his execution of a legal release. The foregoing description
of the terms of the severance agreement is qualified in its entirety by reference to the Existing
Santamaria Agreement, which was filed as Exhibit 10.5 to the Company’s Quarterly Report on Form
10-Q filed February 5, 2009, and which is incorporated herein by reference.
The Committee has approved a modified severance package for Mr. Santamaria, which would be set
forth in a new severance agreement (the “New Santamaria Agreement”), and include additional
contractual protections for the Company in exchange for additional consideration to be paid to Mr.
Santamaria. The parties are currently negotiating the terms and conditions of the New Santamaria
Agreement, and if executed, it would fully replace and supersede the Existing Santamaria Agreement.
The compensatory element of the New Santamaria Agreement, which will be paid to Mr. Santamaria only
if he signs the New Santamaria Agreement and does not revoke it within the revocation period
provided by law, would consist of: (i) $350,000, less all applicable taxes and withholdings, as
severance pay (an amount equivalent to twelve (12) months of his current base salary plus $100,000
of additional consideration); and (ii) an extension of Mr. Santamaria’s period to exercise the
80,000 vested options granted to him on May 15, 2007 until May 14, 2017. In turn, Mr. Santamaria
would agree to certain restrictive covenants regarding non-competition, non-solicitation and
non-disparagement for the period beginning on the date of termination of his employment with the
Company through August 31, 2012. Since Mr. Santamaria has not yet signed the New Santamaria
Agreement, there can be no assurance that there will not be material changes to the New Santamaria
Agreement.
If Mr. Santamaria does not sign the New Santamaria Agreement, the Company expects to pay the
severance payable to him under the Existing Santamaria Agreement, subject to his execution and
non-revocation of the required legal release.
The foregoing description of the terms of the New Santamaria Agreement is qualified in its entirety
by the New Santamaria Agreement which, if executed and effective, we intend to file with the
Securities and Exchange Commission.
(e) Executive Incentive Plan. On August 9, 2011, the Committee, and on August 10, 2011, the
Board of Directors of the Company, approved an executive incentive plan for the Company’s fiscal
year ending March 31, 2012 (“fiscal 2011”). Participants in the plan include the Company’s
Chief Executive Officer and all remaining executive officers. The Committee is responsible for
determining the payout under the plan to each executive officer except the Chief Executive Officer.
The Board of Directors of the Company determines the payout under the plan for the Chief Executive
Officer, taking into account the recommendation received from the Committee.
Pursuant to the plan, the Committee designated for each executive officer a target cash incentive
amount, expressed as a percentage of the officer’s base salary. In establishing these targets, the
Committee took into account for each officer the level of total compensation including base salary,
cash incentive and equity paid by similar companies for comparable positions based on market data
compiled by the Committee’s outside compensation consultant Pearl Meyer & Partners.
The amount of the incentive award actually paid to each executive officer may be less than or
greater than the executive’s target cash incentive, with the amount capped at 156% of the target
incentive. For each executive officer, individual incentive awards will be determined following the
end of fiscal 2011 based on the following factors and their corresponding weightings:
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the Company’s net income (loss) before amortization of acquisition-related
intangibles, restructuring and impairments, stock-based compensation expense, other
unusual charges and any tax effects related to these items for fiscal 2011 as compared
to the target established by the Committee — 40% |
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the executive’s achievement of individual, measurable objectives during fiscal
2011 as determined by the Committee for all executives with the exception of the Chief
Executive Officer, who is evaluated by the Board of Directors — 40% |
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the executive’s overall contribution during fiscal 2011 towards the achievement of
the Company’s financial and non-financial objectives (subjective performance measure) —
20% |
The following table sets forth each current executive officer’s target cash incentive for fiscal
2011:
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Target Incentive as % of |
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| Executive Officer |
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Title |
|
Base Salary |
|
Target Incentive |
Daniel P. McGahn
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President and Chief
Executive Officer
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100 |
% |
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$ |
480,000 |
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David A. Henry
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Senior Vice
President, Chief
Financial Officer,
Treasurer and
Secretary
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50 |
% |
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$ |
153,000 |
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Timothy D. Poor
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Executive Vice
President, Sales,
Business
Development and
Wind Segment
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75 |
% |
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$ |
217,500 |
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Susan J. DiCecco
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Senior Vice President,
Corporate Administration
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50 |
% |
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$ |
121,000 |
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