Intuitive Surgical sets up severance plan that includes every employee under same terms

Intuitive Surgical, the oh-so-successful Sunnyvale maker of robotic surgery tools, said that its board of directors approved a severance plan that covers its executives in the event of an involuntary separation from service within 12 months after a change in control” of the company.

The news here is: also covered by the same plan are all of Intuitive’s other current employees who have been with the company for at least six months when such an event occurs.

Under the terms of the plan, eligible employees would be entitled to:

  • a cash payment in the amount equal to the sum of six months of such eligible employee’s base compensation (defined in the Severance Plan as base salary and target bonus) plus an additional one month of base compensation for every year of such eligible employee’s service with the Company, such severance not to exceed 12 months;
  • six months of COBRA premiums, provided that such eligible employee elects continued coverage under COBRA; and
  • 100% vesting of all outstanding unvested equity awards that the eligible employee then holds.

Prior to this, the only executive who had a contract including language about severance pay in the case of a termination was Intuitive’s Chief Executive, Lonnie smith. And the terms of his agreement were not particularly lavish and included severance pay equal to twelve months of his then-current salary, and health insurance continuation premiums for twelve months.

Since its initial public offering in June 2000, Intuitive Surgical shares have jumped more than 600 percent, and have averaged a 26.4 percent return each year. (The S&P 500 is down 29 percent during that time, averaging a 4 percent annual return.)

 

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