Dolby Laboratories has set its fiscal 2027 executive bonus framework and adopted a severance policy for four senior executives. The changes establish how bonuses may be determined and what benefits those executives could receive if their employment ends, including enhanced terms around a change in control.
Key details
-
CEO bonus: President and CEO Marc Whitten’s target bonus for fiscal 2027 is 100% of his base salary, and his bonus will be paid at 100% of that target.
-
Other executives’ bonuses: The target bonus percentages for other named executive officers have not yet been set. Their awards will be based on base salary and adjusted according to performance measures that may include non-GAAP operating income, revenue and other goals. The compensation committee retains discretion over the final awards, and the CEO may recommend increases or decreases of up to 25% to an executive’s calculated payout.
-
Bonus cap: Funding under the fiscal 2027 plan is capped at 150% of target. Individual payments also remain subject to limits under Dolby’s 2020 stock plan.
-
Who is covered by the severance policy: The policy applies to four named executives: Andy Sherman, general counsel and corporate secretary; Robert Park, chief financial officer; John Couling, head of entertainment; and Shriram Revankar, head of the Advanced Technology Group. It does not list Whitten as a participant.
-
Severance outside a change-in-control period: If a covered executive is terminated without cause, or resigns for defined “good reason,” and the departure is not within the policy’s change-in-control window, the executive may receive:
- A lump sum equal to 100% of base salary, plus 100% of target annual incentive compensation, plus a prorated annual incentive payment based on company performance.
- Up to 12 months of continued health coverage through COBRA, paid or reimbursed by Dolby.
-
Accelerated vesting of time-based equity awards that otherwise would have vested through the next 12 months. Performance-based awards would remain tied to actual performance, with the eligible target shares prorated using the completed months in the performance period plus 12 months.
-
Severance around a change in control: If a qualifying departure occurs within 60 days before or 12 months after a change in control, the potential package is larger:
- A lump sum equal to 150% of base salary, plus 150% of target annual incentive compensation, plus a prorated target incentive amount for the portion of the fiscal year completed.
- Up to 18 months of COBRA coverage.
- Full acceleration of outstanding time-based equity awards. Options or similar awards assumed or continued after the transaction would have a 12-month exercise period.
-
Performance-based awards would vest at 100% of target, unless the governing award agreement provides otherwise.
-
Conditions and tax treatment: Severance is contingent on the executive signing and not revoking a release of claims. If the package could trigger the federal excise tax on certain change-in-control payments, the policy calls for either full benefits or a reduction, whichever produces the greater after-tax value for the executive.
The bonus plan sets a performance-based framework rather than a guaranteed payout for most executives; Whitten’s fiscal 2027 payout is specified at target. The severance policy establishes different benefit levels for qualifying departures, with stronger salary, incentive, health coverage and equity protections around a change in control.