Exhibit 10.4

 

 

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EXECUTIVE SEVERANCE POLICY

 

PURPOSE

 

The purpose of this Executive Severance Policy (this “Policy”) is to provide
Executives with security from certain involuntary terminations and to better
enable Executives to devote their full-time, attention and energy to the
business of Littelfuse, Inc. (the “Company”), thereby benefiting the Company and
its stockholders.

 

This Policy was approved by the Board of Directors of the Company (the “Board”)
and is effective as of January 15, 2018 (the “Effective Date”).

 

ELIGIBILITY

 

Only employees of the Company with a designated title of senior vice-president
(SVP) or higher and any other key employee specifically designated as a
participant by the Board or a designated committee thereof (each, an
“Executive,” and collectively, the “Executives”) shall be eligible for the
payments and benefits described in this Policy.  Notwithstanding the foregoing,
any Executive who is otherwise eligible to receive severance payments and/or
benefits under any individual agreement between the Executive and the Company or
any subsidiary thereof shall not be eligible for benefits under this Policy.

 

ADMINISTRATION

 

The Compensation Committee of the Board or a designee thereof (the “Committee”)
shall act as the administrator of this Policy for purposes of the Employee
Retirement Income Security Act of 1974 (“ERISA”).  The Chief Human Resources
Officer (the “CHRO”) shall act as the “named fiduciary” of this Policy for
purposes of Section 402(a)(1) of ERISA with respect to all duties and powers
assigned to the CHRO hereunder and will be responsible for complying with all
reporting and disclosure requirements of Part I of Subtitle B of Title I of
ERISA.  The CHRO shall have sole and absolute discretion and authority to
administer this Policy and any severance benefits provided under this Policy. 
The CHRO may, in his or her discretion, secure the services of other parties,
including agents and/or employees, to carry out the day-to-day functions
necessary to an efficient operation of this Policy.

 

The CHRO shall have the exclusive, discretionary power and authority to make
reasonable rules and regulations required in the administration of this Policy;
to interpret the terms of this Policy wherever necessary to carry out its intent
and purpose and to facilitate its administration, to determine eligibility for
coverage and severance benefits; to waive requirements under this Policy’s
terms, and to make such other determinations and to exercise such other powers
and responsibilities as shall be provided for in this Policy (except those
determinations which the Policy requires others to make); to construe,
interpret, apply and enforce this Policy and any such rules and to remedy
ambiguities, errors or omissions in this Policy; and the CHRO’s good-faith
interpretations and decisions shall be binding and conclusive upon all persons. 
Any dispute as to eligibility, type, amount, or duration of severance benefits
under this Policy or any amendment or modification thereof shall be resolved by
the CHRO under and pursuant to this Policy, in its sole and absolute discretion,
and the CHRO’s decision of the dispute shall be binding and final on all parties
to the dispute.  The Company’s decisions need not be uniform with respect to
similarly-situated Executives.

 

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The CHRO shall prepare, or cause to be prepared and distributed to the
Executives, and filed with appropriate governmental agencies, such reports,
disclosures, and forms as are required by said governmental agencies, if any,
and shall retain all such reports, disclosures and forms in the CHRO’s files.

 

If the CHRO becomes eligible or makes a claim for benefits under this Policy, he
or she will have no authority with respect to any matter specifically affecting
his or her individual interest under this Policy, and the Committee will
exercise (or delegate to another officer of the Company) all powers, authorities
and obligations otherwise vested in the CHRO pursuant to the foregoing
provisions.

 

SEVERANCE BENEFITS

 

If the Company terminates the Executive’s employment other than for Cause
(defined below), the Company shall pay the Executive the following severance
benefits under this Policy (the “Severance Benefits”):

 

(a)           the multiple of the sum of (x) the Executive’s annual base salary
as in effect immediately prior to the effective date of the Executive’s
termination plus (y) the annual bonus that could otherwise be payable to the
Executive in accordance with the terms of the applicable annual bonus plan in
which the Executive is, immediately prior to the effective date of the
Executive’s termination, otherwise eligible to participate for the fiscal year
in which the termination date occurs (the “Annual Bonus”), assuming achievement
of all applicable Company and individual performance metrics at target levels,
as designated below, which shall be payable in a single lump sum on the 60th day
following the Executive’s termination of employment, subject to the execution
without revocation of the release as provided below; provided, however, that if
the 60-day period begins in one calendar year and ends in a second calendar
year, such amounts shall be paid in the second calendar year by the last day of
such 60-day period:

 

Position

 

Annual Base Salary Plus Target
Annual Bonus Multiple

 

Chief Executive Officer

 

2x

 

Executive Vice President

 

1.5x

 

Senior Vice President

 

1x

 

 

(b)           the product of (x) the Executive’s actual Annual Bonus for the
fiscal year in which the Executive’s termination date occurs, multiplied by
(y) a fraction, the numerator of which is the number of days in such fiscal year
from the beginning of the fiscal year until the Executive’s termination date,
and the denominator of which is 365. This prorated Annual Bonus amount (if any)
will be determined based on actual Company and individual performance through
the end of such fiscal year and paid at the same time that Annual Bonuses are
otherwise paid to other employees who participate in the Annual Bonus plan, but
in no event later than March 15th following the end of the applicable fiscal
year.

 

In addition to the Severance Benefits, the Executive shall be entitled to:
 (i) his or her annual base salary through the Executive’s date of termination
of employment to the extent not already paid, paid according to normal payroll
practices within two payroll periods after the Executive’s termination date;
(ii) any vested employee benefits due to the Executive under the Company’s
benefit plans, paid in accordance with the applicable employee benefit program;
(iii) any accrued

 

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but unpaid vacation pay, paid in accordance with Company policy but in any event
within two payroll periods after the Executive’s termination date;
(iv) continuation of all perquisites, on the same terms, as were, immediately
prior to the Executive’s termination date, provided to the Executive, through
the end of the year of termination; and (v) for a period of up to one year after
the date of termination, monthly outplacement services at reasonable levels as
provided to peer executives of the Company, for the purpose of assisting the
Executive to seek a new position, provided, however, that the Company shall have
no further obligations to provide such outplacement services once the Executive
has accepted a position with a third party.

 

To the extent the Company in its discretion determines in accordance with the
Company’s policies regarding COBRA for terminated U.S. employees generally, the
Executive may also be eligible for payment by the Company of up to 100% of the
premiums payable for COBRA coverage at employee rates for the maximum period
shown below (or, if shorter, the maximum COBRA period, which shall be assumed to
be 18 months). This COBRA premium amount is payable, if at all, in accordance
with such policies (or otherwise as the CHRO may choose, in his or her sole
discretion, so long as all benefits described in this paragraph are paid in full
by March 15th following the end of the calendar year in which the Executive’s
termination date occurs).

 

Position

 

Maximum Period

 

Chief Executive Officer

 

18 months

 

Executive Vice President

 

18 months

 

Senior Vice President

 

12 months

 

 

The Company may withhold from any amounts payable under this Policy such
federal, state, local or foreign taxes as required by any applicable law or
regulation.

 

If the Executive’s termination of employment is for Cause, due to death or
disability, or the Executive voluntarily terminates his or her employment for
any reason, no benefits shall be due under this Policy. “Cause” shall be as
defined in any change of control agreement in effect between the Executive and
the Company at the time of the Executive’s termination of employment (or, in the
absence of such an agreement, as determined by the Board, in its sole
discretion). The failure by the Company to set forth in a notice of termination
any fact or circumstance that contributes to a showing of Cause shall not waive
any right of the Company or preclude the Company from asserting such fact or
circumstance in enforcing the Company’s rights hereunder.

 

RELEASE

 

Severance Benefits shall be payable under this Policy only if the Executive
timely signs and submits a separation and release agreement (“Separation and
Release Agreement”) to the CHRO.  Such Separation and Release must be executed,
and any time period for revocation must have expired without the Executive
revoking the release contained therein, by the earlier of (a) the date specified
in the Separation and Release Agreement or (b) 55 days following the Executive’s
termination date. Such Separation and Release Agreement shall be in a form
acceptable to the Company and shall include, without limitation, the Executive’s
agreement to (i) release all claims against the Company, its affiliates and its
or their shareholders, directors, officers or agents; (ii) not solicit or hire
employees, or interfere with employee, customer, vendor or other relationships,
of the Company or its affiliates; (iii) certain non-compete provisions;
(iv) cooperate in any legal proceedings by or against the Company or its
affiliates; and (v) protect the confidentiality of trade secrets and other
nonpublic confidential information of the Company and

 

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its affiliates. This requirement shall not apply to the extent prohibited by
applicable law or where waived in writing by the Company.

 

CODE SECTION 409A

 

To the extent necessary to exempt amounts payable hereunder from
Section 409A(a)(1)(B) under the short-term deferral exception described in
Treasury Regulation Section 1.409A-1(b)(4), references to “termination of
employment” or “termination” shall mean a “separation from service” within the
meaning of Section 409A of the Internal Revenue Code (“Section 409A”), and
references to the “termination date” shall mean the date on which the
Executive’s separation from service occurs.  Each payment provided for in this
Policy is a separate payment for purposes of Section 409A, and this Policy is
intended to be construed in such a manner that all amounts payable to the
Executive qualify for such short-term deferral exception. In no event, however,
shall the Company or its affiliates be liable for any additional tax, interest
or penalty that may be imposed on the Executive under Section 409A (or any
similar tax) or for any damages for failing to comply with Section 409A.  Any
reimbursements that may be payable under this Policy shall be paid as soon as
administratively practicable, but in no event shall any reimbursement be paid
after the last day of the taxable year following the taxable year in which the
expense was incurred.  The amount of in-kind benefits provided or reimbursable
expenses incurred in one taxable year shall not affect the in-kind benefits to
be provided or the expenses eligible for reimbursement in any other taxable
year. Such right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.

 

FUNDING

 

It is intended that this Policy constitute an unfunded plan maintained primarily
for the purpose of providing deferred compensation for a select group of
management or highly compensated employees.

 

CLAIMS PROCEDURES

 

Severance benefits under this Policy will automatically be paid to Executives
who qualify for such severance benefits (for the avoidance of doubt, subject to
each Executive executing and not revoking a Separation and Release Agreement). 
An Executive who believes that he or she is entitled to severance benefits under
this Policy, but who has not been provided such severance benefits, should file
a claim with the Company’s Human Resources Department.  The claim must be in
writing.  If the claim is denied, written notice of the denial will be provided
within 90 days (180 days if additional processing time is required) of the
initial receipt of the claim.  Such notice will include an explanation of the
factors on which the denial is based (including specific reasons for the denial
and specific references to provisions in this Policy) and what, if any,
additional information is needed to support the claim or to request a review of
the decision. Further review of the claim and access to relevant information in
this Policy may be obtained by filing a written request for review with the
Company’s Human Resources Department within 60 days of receiving the denial. The
decision on the review will be made no later than 60 days (120 days if
additional processing time is required) after the request for review is received
and shall contain an explanation of the right to file suit under ERISA
Section 502(a) with respect to a claim denied upon such review.

 

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STATEMENT OF RIGHTS UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

 

This Policy is an employee benefit plan subject to the provisions of ERISA. The
following statement is required by ERISA:

 

ERISA provides that all employees who may become eligible for benefits under the
Policy shall be entitled to:

 

i. Examine, without charge, at the Company’s offices all documents relating to
the Policy.

 

ii. Obtain copies of all documents relating to this Policy upon written
request.  A reasonable charge may be imposed for the copies.

 

In addition to creating rights for employees, ERISA imposes duties upon the
people who are responsible for the operation of the employee benefit plan. 
These people, called “fiduciaries” of the plan, have a duty to act prudently and
in the interest of all employees.  No one, including the Company or any other
person, may fire an Executive or otherwise discriminate against an Executive in
any way to prevent an Executive from obtaining a benefit or exercising his or
her rights under ERISA.  If an Executive’s claim for a benefit is denied in
whole or in part, the Executive must receive a written explanation of the reason
for the denial.  An Executive has the right to have the Company review and
reconsider the Executive’s claim.  Under ERISA, there are steps an Executive can
take to enforce the above rights.  For instance, if an Executive requests
materials from the Company and does not receive them within 30 days, the
Executive may file a suit in federal court and the court may require the Company
to provide the materials and pay the Executive a penalty of up to $110 per day
until the Executive receives the materials, unless the materials were not sent
because of reasons beyond the control of the Company.  If the Executive has a
claim for benefits that is denied or ignored, in whole or in part, the Executive
may file suit in a state or federal court.  If the Executive is discriminated
against for asserting his or her rights, the Executive may seek assistance from
the U.S. Department of Labor, or the Executive may file suit in a federal
court.  The court will decide who should pay court costs and legal fees.  If the
Executive is successful, the court may order the person the Executive has sued
to pay these costs and fees.  If the Executive loses, the court may order the
Executive to pay these costs and fees, for example, if it finds the Executive’s
claim is frivolous.  If the Executive has any questions about this Policy, the
Executive should contact the Human Resources department of the Company.  If the
Executive has any questions about this statement or about the Executive’s rights
under ERISA, the Executive should contact the nearest Area Office of the
Employee Benefits Security Administration, U.S. Department of Labor, listed in
the Executive’s telephone directory or the Division of Technical Assistance and
Inquiries, Employee Benefits Security Administration, U.S. Department of Labor,
200 Constitution Avenue, NW, Washington, DC 20210.

 

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AMENDMENT AND TERMINATION OF POLICY

 

The Board may amend or terminate this Policy in any respect at any time;
provided, however, in no event may the Board reduce or terminate the payments
and benefits being provided to any Executive whose employment has been
terminated under circumstances giving rise to payments or benefits under this
Policy.

 

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