Letter Agreement between the Company and Philip R. Gallagher dated November 17, 2020
November 17, 2020
Philip R. Gallagher
11749 N. 129th Way
Scottsdale, AZ 85259
We are pleased that you have agreed to serve as the Chief Executive Officer of Avnet, Inc. (the “Company”). This letter agreement (“Letter Agreement”) sets forth the terms and conditions of your employment as an officer (“Officer”) of the Company, and replaces in its entirety the letter agreement between yourself and the Company dated April 3, 2017.
1.Position and Term. On and after the date hereof, you shall serve as Chief Executive Officer of the Company. In addition, you will serve without additional compensation as a member of the Board of Directors of the Company (the “Board”). Except with respect to the restrictive covenants set forth in Annex A attached hereto, this Letter Agreement may be cancelled by either party upon written notice at any time. The period for which you will serve as the Chief Executive Officer of the Company is referred to herein as the “Term.”
2.Base Salary. During the Term, your base salary shall be at least $1,000,000 per year. The base salary will be paid in accordance with the Company’s standard payroll procedures.
3.Bonus. During the Term, the target amount for your annual cash incentive award shall be no less than 150% of your base salary. Any bonus will be determined based upon the achievement of specific financial and strategic targets in the sole discretion of the Compensation Committee of the Board.
4.Equity Grants. During the Term, the target amount for your long-term equity incentive award shall be no less than 350% of your base salary. Such equity awards are typically a mix of performance share units, stock options and restricted stock units, in the sole discretion of the Compensation Committee of the Board, and are subject to the terms of the Company’s equity incentive plan, standard grant agreements and vesting schedule.
5.Employee Benefits. You will be eligible to participate in the Company’s employee benefit plans on the same basis as other senior executives, in accordance with the terms of such plans as they may be amended from time-to-time. You will also receive the retirement benefits that you previously accrued under Avnet’s Supplemental Executive Retirement Plan, subject to the terms of that plan and applicable law.
6.Severance. If the Company terminates your employment without Cause, you will receive a lump sum payment equal to your base annual salary and your target bonus for the year in which the termination occurs. For purposes hereof, “Cause” includes, but is not limited to, your gross misconduct, breach of any material term of this Letter Agreement, willful breach, habitual neglect or wanton disregard of your duties, or conviction of any criminal act.
7.Restrictive Covenants. You agree to the restrictive covenants set forth in Annex A, which is attached hereto and incorporated herein by reference.
8.Tax Withholding. All amounts payable to you by the Company are subject to all applicable tax withholdings. In addition, you acknowledge that this Letter Agreement shall be interpreted consistent with the intent to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, such that there are no adverse tax consequences, interest, or penalties as a result of any amount paid or payable pursuant to this Letter Agreement.
9.Recoupment. Any incentive or bonus payment made to you shall be subject to the terms and conditions of the Company’s recoupment or clawback policy, as in effect and as may be amended from time to time, including disgorgement or repayment to the extent required by such policy.
10.Stock Ownership Guidelines. You agree to comply with the Company’s Stock Ownership Guidelines for Officers, as may be amended from time to time.
11. Entire Agreement/Governing Law. This Letter Agreement supersedes and replaces any prior agreements, representations or understandings (whether written, oral, implied or otherwise) between you and the Company, including that certain letter agreement dated April 3, 2017, and constitutes the complete agreement between you and the Company regarding your position as Chief Executive Officer. This Letter Agreement is governed by Arizona law, without giving effect to principles regarding conflict of laws, and the parties agree to the exclusive jurisdiction of the state and federal courts in Maricopa County, Arizona, with regard to any disputes arising hereunder.
12.Counterparts. This Letter Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.
13.Headings. Headings in this letter are for reference only and shall not be deemed to have any substantive effect.
We are very pleased to have you serve in this leadership role during this exciting time for the Company. Please confirm your agreement to the terms specified in this Letter Agreement by signing below.
By: /s/ Rodney Adkins
Name: Rodney Adkins
Title: Chair of the Board
AGREED AND ACKNOWLEDGED:
/s/ Philip R. Gallagher
Philip R. Gallagher
The Officer acknowledges and recognizes (i) his possession of Confidential Information (as defined in Section (b) below), (ii) the highly competitive nature of the business of the Company and its affiliates and subsidiaries, which is worldwide in scope, and (iii) that reasonable restrictions on the Officer’s future business endeavors and the Officer’s ability to disclose Confidential Information are necessary to protect valuable client and customer relationships of the Company. Accordingly, in consideration of the premises contained herein, the Officer agrees to the restrictions set forth in this Annex A.