Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On December 3, 2020, the Human Resources and Compensation Committee (the
"Committee") of the Board of Directors of Applied Materials, Inc. ("Applied" or
the "Company") approved a non-recurring long-term value creation award of a
target number of 116,145 performance shares ("PSUs") for Gary E. Dickerson,
Applied's President and Chief Executive Officer. On December 4, 2020, the
Committee also approved similar awards with a target number of 33,769 PSUs for
Daniel J. Durn, Applied's Senior Vice President, Chief Financial Officer and a
target number of 33,769 PSUs for Prabu G. Raja, Applied's Senior Vice President,
Semiconductor Products Group (and along with Mr. Dickerson, each, a
"Participant"). The actual number of PSUs that may be earned by each Participant
ranges from 0% to 200% of the target number of PSUs and is based on achievement
of specified levels of total shareholder return ("TSR Hurdle"), as shown below.
The TSR Hurdle is calculated as Applied's average closing stock price for any
consecutive 20 trading days during the five-year performance period beginning
fiscal year 2021 through fiscal year 2025 (the "Performance Period"), plus
dividends paid during the Performance Period.
Total Shareholder Return %
Percentage of Target Shares Total Shareholder vs. 20-Trading Day Average
that May Be Earned Return Hurdle on 12/3/2020 ($76.94)
50% $104.40 36%
100% $119.40 55%
150% $129.40 68%
200% $144.40 88%
If the threshold TSR Hurdle of $104.40 is not achieved, then no PSUs will vest.
If the actual TSR achievement measured at the end of the Performance Period
falls between the pre-defined levels, the portion of the award that may vest
will be determined based on straight-line interpolation. Any PSUs earned shall
vest in full at the end of the Performance Period, subject to the Participants'
continued employment through the vesting date. In the case of a Participant's
involuntary termination without cause prior to the end of the Performance
Period, the award will vest based on TSR achievement through the Participant's
last day of employment at Applied. Additionally, in the event of a Participant's
death during the Performance Period, the target number of PSUs will vest. The
PSUs were granted under the Company's Employee Stock Incentive Plan (the "Plan")
and are subject to the terms and conditions of the Plan.
After careful deliberation about the design of a long-term incentive award, the
Committee approved the value creation awards to recognize Mr. Dickerson's, Mr.
Durn's and Dr. Raja's significant contributions to Applied's success and to
secure the benefit of their leadership of the Company through its next phase of
growth, during an inflection point in the technology industry that presents a
range of unprecedented opportunities for our Company and our industry. The value
creation awards strengthen the alignment of Mr. Dickerson's, Mr. Durn's and Dr.
Raja's
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interests with the long-term interests of Applied's shareholders by delivering
value to them only if Applied's stockholders realize significant value as well.
The Committee does not anticipate granting any similar awards to Mr. Dickerson,
Mr. Durn or Dr. Raja in the coming years.
The value creation awards supplement the fiscal 2021 equity awards also granted
by the Committee to Mr. Dickerson, Mr. Durn and Dr. Raja on December 3, 2020 as
part of the annual grant process.
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