Business Context and Reporting Period
This Form 8-K Current Report was filed by Applied Materials, Inc. on July 19, 2007. The filing discloses the entry into a formal separation agreement with Farhad Moghadam, who had previously announced his intention to resign on June 20, 2007.
Key Financial Metrics
The filing does not provide general financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The only financial data disclosed relates to the specific severance package for Dr. Moghadam:
- Total Cash Severance: $1,600,000.
- Payment Schedule: $400,000 on September 2, 2007; $400,000 on March 2, 2008; and $800,000 on December 31, 2008.
- Deferred Compensation: Payments will be credited to Dr. Moghadam's account under the 2005 Executive Deferred Compensation Plan (EDCP).
- Health Benefits: Reimbursement for COBRA coverage for up to 18 months post-termination.
Material Changes and Executive Departure
Dr. Moghadam's employment will end on September 1, 2007. Until that date, he will continue as Senior Vice President and General Manager of the Thin Films Products Business Group and Foundation Engineering, receiving his current salary and continuing to vest in unvested stock options and performance shares.
Stock Option and Equity Treatment:
- Standard Options: Three outstanding options covering 320,000 shares will remain exercisable until the earlier of the one-year anniversary of termination or the option's maximum expiration date.
- Other Options: Remaining outstanding options will expire 30 days after the termination date.
- Supplemental Agreement Incentive: If Dr. Moghadam signs a supplemental release within 21 days of termination, two options covering 112,500 shares and 12,500 performance shares will vest immediately.
Outlook, Risks, and Contingencies
The agreement includes standard non-solicitation, non-disparagement, and confidentiality obligations. A key contingency is a non-competition obligation effective September 1, 2007, continuing through December 31, 2008. The agreement is subject to a revocation period and will become effective eight days after signing if not revoked.
Investor Verification Checklist
- Verify the final effective date of the separation agreement (expected August 26, 2007, if not revoked).
- Confirm whether Dr. Moghadam executes the Supplemental Agreement to trigger the immediate vesting of 112,500 shares and 12,500 performance shares.
- Monitor the impact of the departure on the Thin Films Products Business Group and Foundation Engineering operations.
- Review the company's subsequent filings for any changes to the executive leadership structure following the September 1, 2007 termination date.