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Policies / Board Policy 5000.05 | Severence

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Board Policy 5000.05 | Severence

Policy BP 5000.05 · Effective July 30, 2026 · Adopted by 260702

  1. Eligibility

    1. To be eligible for severance benefits under this Policy, an employee shall:

      1. Be a regular full-time or regular part-time employee of the Company at the time of separation;

      2. Have completed at least ninety (90) calendar days of continuous employment as of the Separation Date;

      3. Experience a Covered Separation as defined in Section II; and

      4. Execute a Release within the applicable review and revocation period specified in Section III. H.

    2. The following individuals are not eligible for severance benefits under this Policy:

      1. Employees whose separation is for Cause;

      2. Employees who resign voluntarily, other than pursuant to a Qualifying Resignation;

      3. Temporary, seasonal, contract, or per-diem workers, regardless of classification;

      4. Independent contractors or workers engaged through staffing agencies;

      5. Employees covered by a separate written employment or severance agreement that addresses severance, in which case such agreement governs;

      6. Employees who are offered a Comparable Position (defined as a position requiring substantially equivalent skills and responsibilities at the same or greater total cash compensation and within reasonable commuting distance) and decline such offer; and

      7. Employees who are re-employed by the Company or any affiliate within sixty (60) days of the Separation Date.

  2. Severance Benefit Tiers

    1. Severance benefits shall be structured in three (3) tiers based on employee level. Benefits within each tier are subject to the conditions, caps, and approval requirements set forth in this Policy.

  3. Payment Modality
    1. Severance Pay shall be paid as follows:
      1. Tier 1 (Executive): Paid in a lump sum within thirty (30) days following the effective date of the Release, unless a different modality is required to avoid adverse tax consequences under Section 409A of the Internal Revenue Code ("Section 409A").
      2. Tier 2 (Senior Management): Paid as salary continuation on regular Company payroll cycles for the duration of the Severance Pay period, commencing on the first payroll date following the effective date of the Release.
      3. Tier 3 (General Population): Paid as salary continuation on regular Company payroll cycles for the duration of the Severance Pay period, commencing on the first payroll date following the effective date of the Release.
    2. The Company shall structure all severance payments to comply with Section 409A. To the extent required, payments to "specified employees" (as defined under Section 409A) shall be delayed six (6) months from the Separation Date.
  4. Performance-Based Separations
    1. Employees separated primarily for documented performance deficiencies following a formal performance improvement process are eligible for reduced benefits at the Company's discretion:
      1. Tier 3 minimum (four weeks) shall apply regardless of tier or tenure;a
      2. No Benefit Continuation shall be provided unless required by applicable law;
      3. A Release shall still be required as a condition of receiving any severance benefit.
    2. Determination of Performance-Based Separation status shall be made by the CHRO in consultation with the applicable Division Head and the Office of the General Counsel, and documented in the employee's personnel file prior to the Separation Date.
  5. Change in Control — Double-Trigger Protections
    1. Eligible Executive (Tier 1) employees who experience a Covered Separation during the Change in Control Protection Period (commencing ninety (90) days prior to and ending twenty-four (24) months following a Change in Control) shall receive enhanced severance as follows:
      1. Severance Pay shall be calculated at two (2) times the Tier 1 formula, subject to a maximum of seventy-eight (78) weeks of Base Salary;
      2. Benefit Continuation shall be extended to eighteen (18) months;
      3. All outstanding equity awards subject to time-based vesting shall accelerate in full as of the Separation Date, subject to the terms of the applicable equity plan; and
      4. No reduction for the IRC Section 280G "golden parachute" excise tax shall be applied unless doing so produces a better net-after-tax result for the employee using the "better of" calculation methodology.
    2. Tier 2 and Tier 3 employees experiencing a Covered Separation during the Change in Control Protection Period shall receive standard severance benefits at the applicable tier with no enhancement, unless otherwise required by an individual agreement approved by the Board of Governors.
  6. Good Reason — Qualifying Resignation
    1. "Good Reason" shall mean any of the following occurring without the employee's written consent:
      1. A material reduction (more than ten percent (10%)) in the employee's Base Salary not applicable to similarly-situated employees;
      2. A material diminution in the employee's authority, duties, or responsibilities;
      3. A requirement to relocate the employee's primary place of work by more than fifty (50) miles; or
      4. A material breach by the Company of any written employment agreement with the employee.
    2. To invoke Good Reason, the employee shall: (i) provide written notice to the CHRO specifying the Good Reason event within thirty (30) days of its occurrence; (ii) allow the Company sixty (60) days to cure; and (iii) separate within ninety (90) days following expiration of the cure period if no cure is effected. Failure to comply with these procedures shall nullify Good Reason eligibility.
  7. Outplacement Assistance
    1. As a supplemental benefit, the Company shall provide access to a Company-designated outplacement services provider as follows:
      1. Tier 1: Up to twelve (12) months of individualized outplacement services;
      2. Tier 2: Up to six (6) months of group or individualized outplacement services;
      3. Tier 3: Up to three (3) months of group outplacement services.
    2. Outplacement services are subject to the terms of the Company's master services agreement with its designated provider and may be modified or discontinued by the CHRO with sixty (60) days' notice. Services must be commenced within sixty (60) days of the Separation Date or shall lapse.
  8. Release Requirements and Review Periods
    1. All severance benefits under this Policy are conditioned upon the employee's timely execution and non-revocation of a Release. The following review and revocation periods shall apply:
      1. Employees aged 40 and over: Twenty-one (21) days to review (or forty-five (45) days in a group layoff) and seven (7) days to revoke after execution, in compliance with the OWBPA.
      2. Employees under age 40: Twenty-one (21) days to review and five (5) days to revoke after execution.
    2. The Release shall not become effective until the expiration of the applicable revocation period (the "Release Effective Date"). No severance payments shall be made prior to the Release Effective Date. If an employee fails to execute the Release within the applicable review period, all severance benefits shall be forfeited.
  9. Restrictive Covenants
    1. As a condition of receiving severance benefits above Tier 3 minimum, employees shall be required to comply with the following post-separation restrictive covenants for the duration of the Severance Pay period:
      1. Non-disparagement obligation with respect to the Company, its officers, directors, and employees;
      2. Cooperation obligation with respect to pending or threatened litigation or regulatory proceedings of which the employee has knowledge; and
      3. Compliance with any non-disclosure, invention assignment, or confidentiality obligations that survive separation under any previously executed agreement.
    2. The Company shall not impose non-compete or customer non-solicitation covenants as a condition of severance benefits for employees below the Executive tier, consistent with California Business and Professions Code Section 16600. For Executive-tier employees, any post-employment restrictive covenants beyond those listed above shall require review and approval by the Office of General Counsel and shall be contained in a separately executed agreement.
  10. Forfeiture and Clawback
    1. The Company reserves the right to cease payments and recover all or a portion of severance paid if:
      1. The employee breaches the Release, including any non-disparagement or cooperation obligation;
      2. The employee is re-employed by the Company or any affiliate within sixty (60) days of the Separation Date;
      3. The Company subsequently determines that the separation should have been characterized as a termination for Cause based on facts that were not known or available at the Separation Date;
      4. The employee violates any surviving confidentiality or invention assignment obligation; or
      5. Clawback is required under any applicable law, regulation, or stock exchange listing rule, including the Company's Compensation Recoupment Policy (if adopted).
  11. Reduction in Force Protocol
    1. In the event of a reduction in force ("RIF") affecting five (5) or more employees within any forty-five (45) day period, the following additional requirements shall apply:
      1. WARN Act compliance: The CHRO and Office of the General Counsel shall assess applicability of the federal WARN Act (29 U.S.C. § 2102) and the California WARN Act (Cal. Labor Code §§ 1400–1408) at least sixty (60) days prior to the contemplated RIF effective date;
      2. Disparate impact analysis: Human Resources shall conduct a disparate impact analysis of the proposed selection criteria prior to issuing separation notices;
      3. Forty-five-day disclosure: 
        1. For group layoffs of employees age 40 and over, the Company shall provide the OWBPA-required job title and age information disclosure with each Release package; and
      4. CHRO sign-off: 
        1. A written RIF Plan approved by the CHRO, Division Head, and Office of the General Counsel shall be maintained in the HR records prior to commencing separations.