Item 2.02. Results of Operations and Financial Condition.
On May 9, 2022, Allegro MicroSystems, Inc. (the "Company") issued a press
release announcing its financial results for the quarter and fiscal year ended
March 25, 2022. The full text of the press release issued is furnished as
Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by
reference.
The information set forth in this Item 2.02, including Exhibit 99.1, is being
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liabilities of that Section, nor shall it be deemed to be
incorporated by reference into any filing of the Company under the Securities
Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as
expressly set forth by specific reference in such filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On May 9, 2022, the Company announced that Ravi Vig is retiring from his
position as President and Chief Executive Officer of the Company, effective
June 13, 2022 (the "Retirement Date"). On May 6, 2022, Mr. Vig provided notice
of his retirement from the Board of Directors (the "Board") of the Company,
effective on the Retirement Date. The Company and the Board express their
appreciation to Mr. Vig for his dedicated and outstanding service to the Company
and wish him well in his retirement.
On May 7, 2022, the Board appointed Vineet Nargolwala to serve as President and
Chief Executive Officer of the Company, effective June 13, 2022 (the "Effective
Date"). On May 7, 2022, the Board elected, effective on the Effective Date,
Mr. Nargolwala as a Class I director of the Board to serve until the Company's
2024 annual meeting of stockholders and until his successor is elected or
appointed and qualified or until his earlier death, resignation,
disqualification or removal. Mr. Vig will work closely with Mr. Nargolwala until
the Retirement Date and will be available to consult with the Company until the
six-month anniversary of the Retirement Date (the "Consulting Period") to ensure
a smooth and orderly transition of responsibilities.
Mr. Nargolwala, age 49, is a technology executive with over 25 years of global
executive leadership experience. Prior to joining Allegro, Mr. Nargolwala
previously served as Executive Vice President of Sensing Solutions at Sensata
Technologies (NYSE: ST), a leading industrial technology company that develops
sensors and sensor-based solutions for the automotive, heavy vehicle and
off-road, industrial, and aerospace industries, from March 2020 to May 2022.
Mr. Nargolwala joined Sensata as Vice President, Sensors Americas in February
2013 and was later promoted to Senior Vice President, Performance Sensing, North
America, Japan and Korea in April 2016. In February 2019, he was appointed
Senior Vice President, General Manager, Global Safety & Mobility, and in
September 2019, he was appointed Senior Vice President, Sensing Solutions. Prior
to Sensata, he was with Honeywell International Inc. for over nine years in
business strategy and P&L leadership roles of increasing responsibility. Prior
to Honeywell, Mr. Nargolwala was at Nortel Networks in product management and
engineering roles. Mr. Nargolwala holds a Bachelor's degree in Electrical
Engineering from Maharaja Sayajirao University in Baroda, India, a Master's
degree in Electrical Engineering from the University of Texas and a Master of
Business Administration from Cornell University.
Second Amended and Restated Severance Agreement
On May 6, 2022, the Company entered into a second amended and restated severance
agreement (the "Second A&R Severance Agreement") with Mr. Vig. The Second A&R
Severance Agreement amends and restates the amended and restated severance
agreement that Mr. Vig previously entered into with the Company on September 30,
2020.
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Pursuant to the Second A&R Severance Agreement, if Mr. Vig incurs a qualifying
termination of employment, then in addition to payment of any accrued amounts
and subject to Mr. Vig's timely executing a release of claims and continuing to
comply with his restrictive covenant obligations, he will be entitled to receive
an amount equal to the sum of (i) 100% of his then-current base salary, plus
(ii) 100% of his then-current target bonus, plus (iii) a prorated annual bonus
for the fiscal year in which Mr. Vig's termination occurs (determined based on
Mr. Vig's projected annual performance bonus at the time of termination and
pro-rated based on time served during the applicable fiscal year), plus (iv) up
to 12 months of reasonable executive transition support following the
termination date, the total of which will be payable in a lump sum within 15
days following the date of his termination, and (v) continued coverage under the
Company's group health insurance under the Consolidated Budget Reconciliation
Act of 1985 ("COBRA") until Mr. Vig becomes eligible for Medicare insurance.
In addition, the Second A&R Severance Agreement provides that if Mr. Vig incurs
a qualifying termination of employment, any performance-based equity incentive
awards then-held by Mr. Vig will remain outstanding and eligible to vest in
accordance with their terms, to the extent earned based on the achievement of
applicable performance conditions. To the extent that any applicable performance
conditions have not been achieved as of the termination date, such
performance-based equity incentive awards will be forfeited as of the date of
termination (collectively, the "Forfeited Awards"). Immediately prior to the
date of such termination, as applicable, Mr. Vig will be granted an award of
time-vesting restricted stock units ("RSUs") covering a number of shares of the
Company's common stock equal to no less than the product obtained by multiplying
the number of shares of the Company's common stock underlying the Forfeited
Awards by the percentage achievement of the performance goals associated with
such Forfeited Awards, assuming target satisfaction thereof or, if greater,
generally based on the level of actual achievement of the performance goals,
measured through the end of the most recent fiscal quarter.
The foregoing description of the Second A&R Severance Agreement does not purport
to be complete and is qualified in its entirety by reference to the complete
text of the Second A&R Severance Agreement, a copy of which is filed as Exhibit
10.1 to this Current Report on Form 8-K and incorporated by reference herein.
Letter Agreement
On May 6, 2022, the Company entered into a letter agreement with Mr. Vig (the
"Letter Agreement"), which provides that in connection with Mr. Vig's retirement
from the Company, Mr. Vig will (i) receive the severance payments and benefits
described above under the Second A&R Severance Agreement and (ii) provide up to
eight hours per week of transition-related consulting services from time to time
as requested by the Company for a period of six months following the date of his
termination of employment with the Company, or a shorter period mutually agreed
upon by the Company and Mr. Vig, or as determined by the Company after providing
at least seven days' prior notice. In connection with such consulting services,
Mr. Vig will receive a fee of $10,000 per week.
The foregoing description of the Letter Agreement does not purport to be
complete and is qualified in its entirety by reference to the complete text of
the Letter Agreement, a copy of which is filed as Exhibit 10.2 to this Current
Report on Form 8-K and incorporated by reference herein.
Employment Agreement
On May 2, 2022, the Company entered into an employment agreement with
Mr. Nargolwala (the "Employment Agreement"), the material terms and conditions
of which are summarized below.
Under the Employment Agreement, Mr. Nargolwala's annual base salary will equal
$600,000 and his annual bonus will be targeted at 110% of his annual base
salary, up to a maximum of 220% of his annual base salary. Mr. Nargolwala's
annual bonus will be pro-rated for fiscal year 2023 based on the partial year
served, with the pro-rated amount being at least equal to 110% of his annual
base salary. In addition to any annual bonus that
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Mr. Nargolwala receives for fiscal year 2023, under the Employment Agreement,
Mr. Nargolwala is entitled to receive a $217,000 bonus on the first regular
payroll date following the Effective Date (the "Signing Bonus"). In the event
that Mr. Nargolwala resigns without "Good Reason" or the Company terminates his
employment for "Cause" (as such terms are defined in the Employment Agreement)
within 12 months following the Effective Date, Mr. Nargolwala will be required
to repay the Signing Bonus within 30 days of such termination. In the event that
Mr. Nargolwala resigns without Good Reason or the Company terminates his
employment for Cause following the 12-month anniversary of the Effective Date
but within 24 months following the Effective Date, Mr. Nargolwala will be
required to repay a portion of the Signing Bonus within 30 days of such
termination.
The Employment Agreement also provides that, on the Effective Date, subject to
approval by the Compensation Committee of the Board (the "Committee"), the
Company will grant to Mr. Nargolwala RSUs representing a number of shares of the
Company's common stock having a grant date fair value of $4,000,000 (the
"Sign-On RSU Award"). The Sign-On RSU Award will vest as to 60% of the RSUs on
the first anniversary of the Effective Date and as to the remaining 40% of the
RSUs on the second anniversary of the Effective Date, in each case, subject to
Mr. Nargolwala's continued employment with the Company through such anniversary.
In addition, subject to approval by the Committee, in August 2022, the Company
will grant to Mr. Nargolwala an equity award representing a number of shares of
the Company's common stock having a grant date fair value of $4,000,000 (the
"Initial Equity Award"). Forty percent (40%) of the Initial Equity Award will be
. . .
Item 7.01. Regulation FD Disclosure.
On May 9, 2022, the Company issued a press release announcing the appointment of
Mr. Nargolwala as President and Chief Executive Officer of the Company. A copy
of the press release is attached as Exhibit 99.2 and incorporated herein by
reference.
The information set forth in this Item 7.01, including Exhibit 99.2, is being
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Exchange Act or otherwise subject to the liabilities of that Section, nor shall
it be deemed to be incorporated by reference into any filing of the Company
under the Securities Act or the Exchange Act, except as expressly set forth by
specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
10.1 Second Amended and Restated Severance Agreement, dated May 6, 2022
10.2 Letter Agreement, dated May 6, 2022
10.3 Employment Agreement, dated May 2, 2022
99.1 Earnings Press Release issued by Allegro MicroSystems, Inc. on
May 9, 2022
99.2 Press Release issued by Allegro MicroSystems, Inc. on May 9, 2022
104 Cover Page Interactive Data File (formatted as Inline XBRL and
contained in Exhibit 101)
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