Item 5. Other Information
Item 5. Other Information
Retirement of President and Chief Executive Officer; Appointment of Interim President and Chief Executive Officer
The Board of Directors (the “Board”) of Sensata Technologies plc (the “Company”) has appointed Martha Sullivan to succeed Jeffrey Cote as Interim President and Chief Executive Officer (“CEO”) effective May 1, 2024. Ms. Sullivan, 67, held the position of President of the Company from 2010 to 2019 and CEO of the Company from 2013 to 2020. In addition, Ms. Sullivan has served on the Board since 2013 and will continue to serve in such role. Additional background information on Ms. Sullivan can be found on page 12 of the Company’s 2024 Definitive Proxy Statement, filed with the Securities and Exchange Commission on April 29, 2024, which is incorporated herein by reference.
In connection with her appointment, Ms. Sullivan has entered into an offer letter with the Company providing for an annual base salary of $1.05 million, an annual incentive opportunity at 135% of her annual base salary (to be prorated based on target performance in the event a successor commences employment as permanent CEO before December 31, 2024), an equity incentive award with a grant date fair value of $6 million (vesting in equal monthly installments, while serving as Interim President and CEO) and eligibility to participate in employee benefits and perquisites generally made available to executive officers of the Company. Ms. Sullivan is not eligible for severance benefits and will not receive compensation for her service on the Board during her time as Interim President and CEO.
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On April 26, 2024, Sensata Technologies, Inc. and Mr. Cote entered into a Retirement and Release of Claims Agreement (the “Retirement and Release Agreement”) pursuant to which Mr. Cote retired from his role as President and Chief Executive Officer (“CEO”) of the Company effective April 30, 2024. On the same day, Mr. Cote also resigned from the Board.
Mr. Cote will be entitled to the retirement benefits payable in accordance with the existing terms of his employment agreement and applicable equity award agreements, including the continued vesting of unvested restricted stock units (“RSUs”) and the accelerated vesting of performance-based RSUs (“PRSUs”), based on actual performance for years prior to 2024 and prorated vesting at target for 2024. In addition, the Retirement and Release Agreement provides that Mr. Cote’s outstanding vested stock options will remain exercisable for the duration of their existing term. In consideration for these retirement benefits, Mr. Cote has agreed to a release of claims in favor of the Company and related parties and to comply with various restrictive covenants in his employment agreement and award agreements.
Adoption of Severance and Change in Control Plan
On April 26, 2024, the Board adopted the Sensata Technologies Holding plc Severance and Change in Control Plan (the “Plan”) for employees with the title of CEO, Executive Vice President (“EVP”), Senior Vice President (“SVP”) or Vice President (“VP”) or otherwise designated by the Compensation Committee of the Board (the “Committee”) to be eligible to receive benefits under the Plan (each, an “Eligible Employee”). An interim CEO, including Ms. Sullivan, will not be eligible to participate in the Plan unless otherwise determined by the Committee. Capitalized terms used in the following description are as defined in the Plan, unless otherwise indicated.
The Plan provides for the payment of severance and other benefits upon a termination of employment by the Company without Cause (other than as a result of death or Disability) or, solely in the case of the CEO, an EVP or an SVP, a resignation by the Eligible Employee for Good Reason (a “Covered Termination”). Subject to customary releases and agreements, the Plan provides for the payment of benefits (the “Change in Control Severance Payments”) upon a Covered Termination that occurs within 24 months after the date of a Change in Control (the “Change in Control Period”) as follows:
• a lump sum cash payment equal to base salary for 36 months for the CEO, 24 months for EVPs and SVPs and 12 months for VPs (such number of months, the “Change in Control Severance Period”);
• a lump sum equal to 300% of average bonus (200% for EVPs and SVPs and 100% for VPs);
• for the CEO, EVPs and SVPs only, continued participation throughout the Change in Control Severance Period in their health and dental benefit plans; and
• for the CEO, EVPs and SVPs only, a resignation for Good Reason will be treated as an involuntary termination without Cause for all purposes under the award agreements applicable to their outstanding equity incentive awards.
The Plan also provides for severance payments that are lower than the Change in Control Severance Payments upon a Covered Termination outside of a Change in Control Period. None of the Company’s named executive officers are currently eligible for these benefits.
Amendment to Award Agreements with Brian Roberts
On April 1, 2024, the Company entered into an RSU award agreement (the “RSU Award Agreement”) and a performance-based RSU award agreement (the “PRSU Award Agreement”) with Brian Roberts, the Company’s Chief Financial Officer, while making its annual equity incentive awards. Effective on April 26, 2024, the Company amended each of the RSU Award Agreement and the PRSU Award Agreement to provide, upon a Qualifying Termination (as defined in the respective agreement), accelerated vesting of (i) unvested RSUs that would have vested within twelve months of termination and (ii) unvested PRSUs that would have vested within twelve months of termination at the sum of (x) the banked amounts for those performance years completed plus (y) the target amount for any uncompleted performance year.
Cooperation Agreement with Elliott Investment
On April 29, 2024, the Company entered into a cooperation agreement (the “Cooperation Agreement”) with Elliott Investment Management L.P., Elliott Associates, L.P. and Elliott International, L.P. (together, “Elliott”).
Pursuant to the Cooperation Agreement, the Company agreed, among other things, to appoint Mr. Phillip Eyler (the “New Independent Director”) to the board of directors of the Company (the “Board”), effective as of July 1, 2024. Mr. Eyler shall serve as a director until the Company’s 2025 Annual General Meeting of Shareholders (the “2025 Annual Meeting”) (including any adjournments or postponements thereof) or his earlier resignation or removal from office. In connection with Mr. Cote’s
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retirement and resignation from the Board, the size of the Board was decreased to 10 directors. Upon the appointment of Mr. Eyler, effective as of July 1, 2024, the size of the Board will be increased to 11 directors.
Pursuant to the Cooperation Agreement, the Company also established a Chief Executive Officer Search Committee (the “CEO Search Committee”) to conduct a search to identify candidates for and assist the Board in selecting the Company’s next chief executive officer and president (the “New CEO”). The CEO Search Committee will be chaired by Mr. Andrew Teich and will also include Ms. Martha Sullivan and Mr. John Mirshekari and, upon his appointment to the Board, Mr. Eyler.
The Cooperation Agreement also includes procedures regarding the replacement of the New Independent Director. If Mr. Eyler fails to be appointed to the Board as of July 1, 2024, or if the New Independent Director resigns, is removed or ceases to serve as a director for any other reason prior to the Expiration Date (as defined below), Elliott has a right to participate in the selection of a mutually agreeable replacement for the New Independent Director, including on the CEO Search Committee, subject to, among other things, Elliott beneficially owning a “net long position” of, or having aggregate “net long” economic exposure to, at least 2% of the Company’s then outstanding Ordinary Shares.
As used herein, the term “Expiration Date” means February 28, 2025, except that the Expiration Date shall be at least 30 days prior to the earlier of (i) the record date for the determination of shareholders who are entitled to notice of and to vote at the Company’s 2025 Annual Meeting, (ii) the date of the Company’s notice of annual meeting and proxy statement for the 2025 Annual Meeting and (iii) the deadline for shareholders to deliver notice of a resolution (including with respect to the election of directors) in connection with the 2025 Annual Meeting.
Pursuant to the Cooperation Agreement, Elliott agreed to cause all of the ordinary shares that Elliott or any of its affiliates has the right to vote as of the applicable record date to be voted, during the period starting on the effective date of the Cooperation Agreement until the Expiration Date (such period, the “Cooperation Period”), in accordance with recommendations by the Board on all proposals that may be the subject of shareholder action, subject to certain exceptions (including, among others, that Elliott and its affiliates may vote in their sole discretion on any proposal related to an Extraordinary Transaction (as defined in the Cooperation Agreement)).
Under the terms of the Cooperation Agreement, during the Cooperation Period, Elliott also agreed to abide by certain standstill provisions (subject to certain exceptions) and the parties agreed to mutual non-disparagement provisions.
The foregoing summary of the Cooperation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Cooperation Agreement, including the Form of Press Release attached as an exhibit to the Cooperation Agreement, a copy of which is attached as Exhibit 10.5 to this Quarterly Report on Form 10-Q.
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Item 6. Exhibits.
Exhibit No. Description
3.1 Articles of Association of Sensata Technologies Holding plc (incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K filed on March 28, 2018).
10.1 Amended and Restated Employment Agreement, dated April 1, 2024, between Brian Wilkie and Sensata Technologies, Inc. †
10.2 Amended and Restated Employment Agreement, dated April 1, 2024, between Jennifer Slater and Sensata Technologies, Inc. †
10.3 Form of Award Agreement for Restricted Stock Units under the Sensata Technologies Holding plc 2021 Equity Incentive Plan. †*
10.4 Form of Award Agreement for Performance Restricted Stock Units under the Sensata Technologies Holding plc 2021 Equity Incentive Plan. †*
10.5 Cooperation Agreement, dated as of April 29, 2024, by and among Sensata Technologies Holding plc, Elliott Investment Management L.P., Elliott Associates L.P., and Elliott International L.P. *
10.6 Retirement and Release of Claims Agreement between Jeffrey Cote and Sensata Technologies, Inc., dated April 26, 2024. *†
10.7 Offer Letter, dated April 26, 2024, to Martha Sullivan for Interim President and Chief Executive Officer of Sensata Technologies, effective May 1, 2024. *†
10.8 RSU Award Agreement to Martha Sullivan from Sensata Technologies Holding plc, effective May 1, 2024. *†
10.9 Amendment to Award Agreements, dated April 26, 2024, between Brian Roberts and Sensata Technologies Holding plc. *†
10.10 Sensata Technologies Holding plc Severance and Change in Control Plan, dated April 26, 2024. *†
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document. *
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. *
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. *
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. *
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. *
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
___________________________________
* Filed herewith
† Indicates management contract or compensatory plan, contract, or arrangement
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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 thereunto duly authorized.
Date: April 29, 2024
SENSATA TECHNOLOGIES HOLDING PLC
/s/ Jeff Cote
(Jeff Cote)
Chief Executive Officer and President
(Principal Executive Officer)
/s/ Brian Roberts
(Brian Roberts)
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
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