The following table sets forth the estimated payments and value of benefits that each of the continuing NEOs would be entitled to receive under their Change in Control Retention Agreement and the Severance Policy, including Ms. Zech’s Participation Agreement, in the event of the termination of employment under various scenarios, assuming that the termination occurred on December 31, 2024. The amounts represent the entire value of the estimated liability, even if some or all of that value has been disclosed elsewhere in this Proxy Statement. Actual amounts that the Company may pay out and the assumptions used in arriving at such amounts can only be determined at the time of each such NEO’s termination or the change in control and could differ materially from the amounts set forth below.
The NEOs are not entitled to receive any payment at, following, or in connection with the termination of their employment for cause.
In both the table below and the Share-Based Award Agreement Terms Related to Post-Employment Scenarios table which follows it:
| > | Disability refers to the executive becoming permanently and totally disabled during the term of employment; |
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| > | Termination Without Cause or Resignation for Good Reason means that the executive is asked to leave the Company for some reason other than “cause” (as defined in the Severance Policy) or the executive voluntarily leaves the Company for “good reason” (as defined in Ms. Zech’s Participation Agreement, which generally includes the Company failing to allow the executive to continue in a then - current or an improved position, or where the executive’s reporting relationship is changed so that the executive no longer reports to the CEO, and as further defined in Ms. Zech’s Participation Agreement); |
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| > | Change in Control Termination means the occurrence of both a change in control of the Company and the termination of the executive’s employment without “cause” or resignation for “good reason” within two years following the change in control; and |
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| > | Retirement means the executive’s voluntary departure at or after retirement age as defined by the Company’s SERP (typically, age 60). As of December 31, 2024, Mr. Kerins was the only NEO eligible for normal retirement. Each executive is eligible for early retirement in the event that such executive reaches the age of 55 and the combined years of age and service equals at least seventy-two. Mr. Nowak participates in the broad-based retirement and benefit programs provided to employees in France and meets the retirement eligibility requirements. As a result, should he retire, equity award vesting continues in accordance with their respective vesting schedules and stock options would remain exercisable for the remainder of their original terms. |
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2025 ANNUAL
PROXY STATEMENT
Kristin D. Russell – Separation Benefits
As noted in the CD&A, effective April 2, 2024, Ms. Russell separated from the Company. Due to her termination without cause and in exchange for Ms. Russell signing a general release of claims in favor of the Company, she became eligible for certain benefits pursuant to the Severance Policy during her eighteen-month severance period, which is expected to end on October 2, 2025. Pursuant to the Severance Policy, Ms. Russell is eligible to receive monthly salary continuation payments during the Severance Period in the amount of $825,000. Pursuant to the Severance Policy, Ms. Russell received a severance pro-rata bonus and a severance period bonus totaling $295,335. The severance pro-rata bonus was calculated based on the Company’s achievement of the financial and strategic performance goals and prorated for the period she was actively employed. The severance period bonus was calculated based on the Company’s achievement of the financial goals and prorated for the first nine months of her severance period, April 3 through December 31, 2024. Ms. Russell may receive additional severance period bonuses based only on the Company’s achievement of the financial goals and prorated for the remainder of the severance period. Assuming 100% achievement of the financial goals, Ms. Russell would be eligible to receive $414,370 of additional severance period bonus payments in the future. The following equity awards are expected to vest during the severance period in accordance with their respective vesting schedules (the estimated values are based on the Company’s closing stock price as of December 31, 2024 and assuming target performance in the case of the PSUs): 4,699 PSUs valued at $531,551 and 5,067 RSUs valued at $573,179, with the remainder of her unvested equity awards being forfeited. Ms. Russell received a severance benefit subsidy in the amount of $34,387 and is eligible to receive reimbursement for up to $50,000 in outplacement services. Further, as Ms. Russell was not eligible for retirement at the time of her departure, she will not receive any SERP benefit payments.
2025 ANNUAL
PROXY STATEMENT
| | | | | | | | | | | | | |
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| Potential Payouts Upon Termination |
|---|
| | | | | | | | | Termination | | | | |
|---|
| | | | | | | | | Without Cause | | | | |
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| | | | | | | | | or | | Change in | | |
|---|
| | | | | | | | | Resignation for | | Control | | |
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| | | | | Death | | Disability | | Good Reason | | Termination | | Retirement |
|---|
| Name | | Benefit | | ($) (1) | | ($) (2) | | ($) (3) (4) | | ($) (5) | | ($) (6) (7) |
|---|
| Sean J. Kerins | | Severance Payment | | — | | — | | 2,000,000 | | 9,000,000 | | — |
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| | | Prorated Annual Cash Incentive | | 2,000,000 | | 2,000,000 | | 2,000,000 | | 2,000,000 | | — |
|---|
| | | Annual Cash Incentive (Severance) | | — | | — | | 2,800,000 | | — | | — |
|---|
| | | TOTAL Annual Cash Incentives | | 2,000,000 | | 2,000,000 | | 4,800,000 | | 2,000,000 | | — |
|---|
| | | Performance Stock Unit Awards(8) | | 5,370,259 | | 5,370,259 | | 5,370,259 | | 5,370,259 | | 5,370,259 |
|---|
| | | Restricted Stock Unit Awards(8) | | 4,427,743 | | 4,427,743 | | 4,427,743 | | 4,427,743 | | 4,427,743 |
|---|
| | | TOTAL Long-Term Incentive Awards | | 9,798,002 | | 9,798,002 | | 9,798,002 | | 9,798,002 | | 9,798,002 |
|---|
| | | Management Insurance Benefit | | 12,000,000 | | — | | — | | — | | — |
|---|
| | | Welfare Benefits Continuation | | — | | 3,918 | | 15,890 | | 17,877 | | — |
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| | | Outplacement Services | | — | | — | | 75,000 | | — | | — |
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| | | Supplemental Executive Retirement Plan | | — | | 9,051,608 | | 9,125,236 | | 9,051,608 | | 9,125,236 |
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| | | TOTAL | | 23,798,002 | | 20,853,528 | | 25,814,128 | | 29,867,487 | | 18,923,238 |
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| Rajesh K. Agrawal | | Severance Payment | | — | | — | | 1,050,000 | | 2,800,000 | | — |
|---|
| | | Prorated Annual Cash Incentive | | 700,000 | | 700,000 | | 700,000 | | 700,000 | | — |
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| | | Annual Cash Incentive (Severance) | | — | | — | | 735,000 | | — | | — |
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| | | TOTAL Annual Cash Incentives | | 700,000 | | 700,000 | | 1,435,000 | | 700,000 | | — |
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| | | Performance Stock Unit Awards(8) | | 2,081,747 | | 2,081,747 | | 1,000,546 | | 2,081,747 | | — |
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| | | Restricted Stock Unit Awards(8) | | 4,114,174 | | 4,114,174 | | 2,182,311 | | 4,114,174 | | — |
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| | | TOTAL Long-Term Incentive Awards | | 6,195,921 | | 6,195,921 | | 3,182,857 | | 6,195,921 | | — |
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| | | Management Insurance Benefit | | 5,600,000 | | — | | — | | — | | — |
|---|
| | | Welfare Benefits Continuation | | — | | 7,763 | | 23,613 | | 31,484 | | — |
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| | | Outplacement Services | | — | | — | | 50,000 | | — | | — |
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| | | Supplemental Executive Retirement Plan | | — | | 751,774 | | — | | 793,412 | | — |
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| | | TOTAL | | 12,495,921 | | 7,655,458 | | 5,741,470 | | 10,520,817 | | — |
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| Eric C. Nowak | | Severance Payment | | — | | — | | 1,092,384 | | 2,913,024 | | — |
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| | | Prorated Annual Cash Incentive | | 728,256 | | 728,256 | | 728,256 | | 728,256 | | — |
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| | | Annual Cash Incentive (Severance) | | — | | — | | 764,669 | | — | | — |
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| | | TOTAL Annual Cash Incentives | | 728,256 | | 728,256 | | 1,492,925 | | 728,256 | | — |
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| | | Performance Stock Unit Awards(8) | | 1,542,391 | | 1,542,391 | | 1,542,391 | | 1,542,391 | | 1,542,391 |
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| | | Restricted Stock Unit Awards(8) | | 1,837,182 | | 1,837,182 | | 1,837,182 | | 1,837,182 | | 1,837,182 |
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| | | TOTAL Long-Term Incentive Awards | | 3,379,573 | | 3,379,573 | | 3,379,573 | | 3,379,573 | | 3,379,573 |
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| | | Management Insurance Benefit | | — | | — | | — | | — | | |
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| | | Welfare Benefits Continuation | | — | | — | | — | | — | | — |
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| | | Outplacement Services | | — | | — | | — | | — | | — |
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| | | Supplemental Executive Retirement Plan | | — | | — | | — | | — | | — |
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| | | TOTAL | | 4,107,829 | | 4,107,829 | | 5,964,882 | | 7,020,853 | | 3,379,573 |
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| | | | | | | | | | | | | |
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2025 ANNUAL
PROXY STATEMENT
| Potential Payouts Upon Termination |
|---|
| | | | | | | | | Termination | | | | |
|---|
| | | | | | | | | Without Cause | | | | |
|---|
| | | | | | | | | or | | Change in | | |
|---|
| | | | | | | | | Resignation for | | Control | | |
|---|
| | | | | Death | | Disability | | Good Reason | | Termination | | Retirement |
|---|
| Name | | Benefit | | ($) (1) | | ($) (2) | | ($) (3) (4) | | ($) (5) | | ($) (6) (7) |
|---|
| Gretchen K. Zech | | Severance Payment | | — | | — | | 1,012,500 | | 2,700,000 | | — |
|---|
| | | Prorated Annual Cash Incentive | | 675,000 | | 675,000 | | 675,000 | | 675,000 | | — |
|---|
| | | Annual Cash Incentive (Severance) | | — | | — | | 708,750 | | — | | — |
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| | | TOTAL Annual Cash Incentives | | 675,000 | | 675,000 | | 1,383,750 | | 675,000 | | — |
|---|
| | | Performance Stock Unit Awards(8) | | 2,083,784 | | 2,083,784 | | 1,346,580 | | 2,083,784 | | — |
|---|
| | | Restricted Stock Unit Awards(8) | | 1,753,473 | | 1,753,473 | | 1,214,456 | | 1,753,473 | | — |
|---|
| | | TOTAL Long-Term Incentive Awards | | 3,837,257 | | 3,837,257 | | 2,561,036 | | 3,837,257 | | — |
|---|
| | | Management Insurance Benefit | | 5,400,000 | | — | | — | | — | | |
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| | | Welfare Benefits Continuation | | — | | 7,426 | | 22,588 | | 30,117 | | — |
|---|
| | | Outplacement Services | | — | | — | | 50,000 | | — | | — |
|---|
| | | Supplemental Executive Retirement Plan | | — | | 3,163,871 | | — | | 4,447,355 | | — |
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| | | TOTAL | | 9,912,257 | | 7,683,554 | | 5,029,874 | | 11,689,729 | | — |
|---|
| Richard J. Marano | | Severance Payment | | — | | — | | 750,000 | | 2,000,000 | | — |
|---|
| | | Prorated Annual Cash Incentive | | 500,000 | | 500,000 | | 500,000 | | 500,000 | | — |
|---|
| | | Annual Cash Incentive (Severance) | | — | | — | | 525,000 | | — | | — |
|---|
| | | TOTAL Annual Cash Incentives | | 500,000 | | 500,000 | | 1,025,000 | | 500,000 | | — |
|---|
| | | Performance Stock Unit Awards(8) | | 1,106,087 | | 1,106,087 | | 516,393 | | 1,106,087 | | — |
|---|
| | | Restricted Stock Unit Awards(8) | | 982,560 | | 982,560 | | 619,558 | | 982,560 | | — |
|---|
| | | TOTAL Long-Term Incentive Awards | | 2,088,647 | | 2,088,647 | | 1,135,951 | | 2,088,647 | | — |
|---|
| | | Management Insurance Benefit | | 4,000,000 | | — | | — | | — | | — |
|---|
| | | Welfare Benefits Continuation | | — | | 8,354 | | 25,409 | | 33,879 | | — |
|---|
| | | Outplacement Services | | — | | — | | 50,000 | | — | | — |
|---|
| | | Supplemental Executive Retirement Plan | | — | | — | | — | | — | | — |
|---|
| | | TOTAL | | 6,588,647 | | 2,597,001 | | 2,986,360 | | 4,622,526 | | — |
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The benefits listed below are provided in accordance with the Executive Change in Control Retention Agreement, the Severance Policy, applicable equity award agreements, the Management Insurance Program, and the Supplemental Executive Retirement Plan.
| (a) | A prorated annual cash incentive award for the calendar year of termination, based upon actual performance, amount displayed is at target |
| (b) | Immediate vesting of all unvested equity awards |
| (c) | A lump-sum cash payment equal to four times the executive’s target total cash compensation, net of tax and payable under the Management Insurance Program |
| i. | As Mr. Nowak is employed in France, he participates in the broad-based retirement and benefit programs provided to employees in France and is not eligible for the Management Insurance Program |
| (a) | A prorated annual cash incentive award for the calendar year of termination, based upon actual performance; amount displayed is at target |
| (b) | Immediate vesting of all unvested equity awards |
| (c) | Continued medical coverage under Arrow’s health plan for one-hundred eighty days |
| i. | As Mr. Nowak is employed in France, he participates in the broad-based retirement and benefit programs provided to employees in France and is not eligible for medical coverage under Arrow’s health plan |
| (d) | SERP benefit payments begin at normal retirement date but are reduced by the Early Payment Discount to reflect the date of disability |
| (3) | Termination Without Cause |
| (a) | A prorated annual cash incentive award for the calendar year of termination, based upon actual performance, amount displayed is at target |
2025 ANNUAL
PROXY STATEMENT
| (b) | During the eighteen-month severance period (twenty-four-month severance period for the CEO) |
| ii. | Annual cash incentive award, based upon actual performance, but adjusted for 0% achievement on strategic goal performance |
iii.Equity award vesting continues
iv.Continued medical coverage under Arrow’s health plan or equivalent cash value
| a. | As Mr. Nowak is employed in France, he participates in the broad-based retirement and benefit programs provided to employees in France and is not eligible for medical coverage under Arrow’s health plan |
| (c) | SERP benefit payments begin if the termination date is after the earliest retirement date |
| (d) | Reimbursement for outplacement expenses – up to $50,000 ($75,000 for the CEO) |
| i. | As Mr. Nowak is employed in France, he participates in the broad-based retirement and benefit programs provided to employees in France and is not eligible for this benefit |
| (e) | If eligible for normal retirement, equity award vesting continues in accordance with their respective vesting schedules; stock options would remain exercisable for the remainder of their original term |
| (4) | As of December 31, 2024, of the NEOs, only Ms. Zech was eligible to receive payments upon a resignation for “good reason.” The numbers reflected for each of the other NEOs only apply in cases of termination without “cause.” |
| i. | As Mr. Nowak is employed in France, he participates in the broad-based retirement and benefit programs provided to employees in France and is not eligible medical coverage under Arrow’s health plan |
| (5) | Change in Control Termination |
| (a) | A lump-sum cash payment equal to two times the executive’s target total cash compensation (three times for the CEO) |
| (b) | A prorated annual cash incentive award for the calendar year of termination, based on actual performance, amount displayed is at target |
| (c) | Immediate vesting of all unvested equity awards |
| (d) | Continued medical coverage under Arrow’s health plan for the earlier of (i) twenty-four months (thirty-six months for the CEO) after the termination date and (ii) attaining age 65 |
| i. | As Mr. Nowak is employed in France, he participates in the broad-based retirement and benefit programs provided to employees in France and is not eligible medical coverage under Arrow’s health plan |
| (e) | SERP benefit payments begin at age 60 based upon Years of SERP Participation as of the termination date, but with no Early Payment Discount |
| (f) | Under the terms of the Change in Control Retention Agreements, if the payments and benefits to a NEO under his or her respective Change in Control Retention Agreement or another plan, arrangement or agreement would subject the NEO to the excise tax imposed by Section 4999 of the Internal Revenue Code, then such payments will be reduced by the minimum amount necessary to avoid such excise tax, if such reduction would result in the NEO receiving a higher net after-tax amount. The amounts reflected in this table do not reflect the application of any reduction in compensation or benefits pursuant to the terms of the Change in Control Retention Agreements. |
| (a) | If eligible for normal retirement, equity award vesting continues in accordance with their respective vesting schedules; stock options would remain exercisable for the remainder of their original term |
| (b) | SERP benefit payments begin if the termination date is after the earliest retirement date |
| (7) | Mr. Kerins was eligible for normal retirement as of April 1, 2022 and Mr. Nowak is eligible for retirement under his French pension scheme, a statutory plan not maintained by the Company |
| (8) | Long-Term Incentive Awards |
| (a) | The categories “Performance Stock Unit Awards” and “Restricted Stock Unit Awards” include restricted award grants made to the NEOs that were subject to performance criteria that required the Company to achieve non-GAAP net income greater than zero or they would be canceled |
| (b) | PSUs and RSUs are valued as of the closing market price of the Company’s common stock on December 31, 2024 |
2025 ANNUAL
PROXY STATEMENT
