Executive Compensation (continued)
Under the Severance Plan, participants are entitled to severance payments if their employment with Cabot terminates
within two years following a change in control (for any reason other than cause, disability, death, or a termination initiated by the participant without good reason). Under the Severance Plan, Mr. Keohane is entitled to a lump sum payment
equal to three times the sum of his base salary and bonus (each, as determined below) and continued health and welfare benefits for a period of three years (i.e., medical and dental benefits, long-term disability coverage, and life insurance) and
Mses. McLaughlin and Kalita and Mr. Kalkstein are each entitled to a lump sum payment equal to two times the sum of their base salary and bonus (each, as determined below) and continued health and welfare benefits for a period of two years.
Prior to their terminations of employment, Messrs. Berube and Doubman were each entitled to these same severance benefits. In addition, under the Severance Plan, each participant is entitled to receive a
pro-rated bonus with respect to the fiscal year in which the termination occurs and outplacement services in an amount up to 15% of his or her base salary.
Base salary under the Severance Plan is calculated at the greater of the rate in effect (i) immediately before the change in control or (ii) as of the
participants employment termination date. The bonus is calculated at the greater of (i) the participants target annual incentive bonus for the fiscal year in which the change in control occurs or the fiscal year in which the
participants employment is terminated, whichever was greater or (ii) the highest annual incentive bonus amount paid or payable to the participant for any of the three fiscal years preceding the fiscal year in which the change in control
occurs.
The Severance Plan also includes a better of provision. Under this provision, a participant will be entitled to receive either the full amount
of payments (and pay any applicable excise tax imposed by Section 4999 of the Internal Revenue Code) or such lesser amount that is not subject to the excise tax, whichever results in the greater after-tax
benefit to him or her.
The provision of benefits under any other plan or program provided by Cabot or its affiliates, or pursuant to any agreement with Cabot or its
affiliates, or by law, counts toward our obligation to provide the benefits under the Severance Plan so that the benefits are not duplicative.
Retirement and Equity Incentive Plans
The accrued account
balances under the Cash Balance Plan, Supplemental Cash Balance Plan, 401(k) Plan and Supplemental 401(k) Plan immediately vest and become payable upon a change in control of Cabot. All of our named executive officers are vested in their account
balances under these plans.
Upon a change in control of Cabot, the Compensation Committee, as administrator of our 2017 Long-Term Incentive Plan and our 2009
Long-Term Incentive Plan, will have discretion to provide for the assumption or continuation of some or all outstanding awards or any portion of an award, the grant of new awards in substitution by the acquirer or survivor, or the cash-out of some or all awards. Further, the Compensation Committee retains authority to accelerate the vesting of awards. The Compensation Committee has provided, and intends to continue to provide, for
double trigger vesting upon a change in control. This means that if an award remains outstanding following a change in control, such as if the acquiring company assumes the award, vesting would be accelerated only if the
participants employment was involuntarily terminated without cause or by the participant for good reason within two years following the change in control.
Termination of Employment Upon Disability or Death
For Cabots
full-time employees based in the U.S., including our currently employed named executive officers, a termination of employment upon disability is determined under the terms of Cabots long-term disability plan and is deemed to occur one year
following the date of disability. A U.S.-based employee who becomes disabled would receive (i) benefits under our long-term disability plan, and (ii) continued participation in our medical, dental, and life insurance plans in accordance
with the terms of those plans if the employee has completed ten years of service with Cabot. We have not included a value for these benefits in the table on pages 57-58 because the plans do not discriminate in scope, terms or operation in favor of
our named executive officers compared to the benefits offered to all salaried U.S. employees. In addition, the accrued account balances under the Cash Balance Plan, Supplemental Cash Balance Plan, 401(k) Plan and Supplemental 401(k) Plan immediately
vest and become payable upon termination of employment by reason of death or disability.
CABOT CORPORATION 55