Xylem Inc. (XYL): Other Hayati Yarkadas terminated without cause

Events in this filing

Item 5.02 as filed

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Effective January 1, 2027, Hayati Yarkadas will cease to serve as Executive Vice President and President, Water Infrastructure and will cease to be an executive officer of the Company as a result of the Company’s decision to reorganize into three business segments and eliminate the Water Infrastructure segment.
On October 22, 2026, the Company and Mr. Yarkadas agreed to certain terms of a Transition Services Agreement under which he will remain employed by the Company to facilitate a smooth and orderly transition of his responsibilities and he will also lead the Company’s planned divestiture of its Applied Water International (“AW Int’l”) and Specialty Flow Control (“SFC”) businesses (collectively, the “Divestitures”). Mr. Yarkadas’ employment is expected to terminate involuntarily without cause on the earlier of March 31, 2028 or the closing date of the last Divestiture (such date the “Separation Date”), provided, however, that the Company and Mr. Yarkadas may mutually agree in writing to extend the Separation Date if the closing of the Divestitures is delayed beyond March 31, 2028 (the period from January 1, 2027 through the Separation Date, the “Transition Period”).
During the Transition Period, Mr. Yarkadas will receive compensation as follows: (i) his base salary at an annual rate of CHF 557,469, to be prorated through the Transition Period, (ii) continued participation in the Company’s employee benefit plans and perquisites provided pursuant to local practice in Switzerland, (iii) payment of a 2026 Annual Incentive Plan for the Executive Leadership Team award consistent with the plan’s terms and conditions, subject to the Leadership Development and Compensation Committee (“LDCC”) of the Board of Directors certifying achievement of the plan targets, (iv) participation in the Executive Annual Incentive Plan (“AIP”) specific to AW Int’l and SFC in 2027 and 2028, if applicable, subject to his continued employment and with payment consistent with the terms and conditions of the Executive AIP or the Xylem Senior Executive Severance Plan (amended and restated as of January 1, 2026) (the “Severance Plan”), as applicable; and (v) a special cash Success Incentive of USD 1,200,000 intended to incentivize the closing of the Divestitures and related value creation for the Company and its shareholders resulting from the Divestitures, which incentive will be earned upon the closing of the final Divestiture, subject to continued compliance with applicable restrictive covenants and obligations. The Company retains sole discretion regarding whether and when to pursue or complete either Divestiture, the identity of the purchaser, the transaction value and other terms. The Success Incentive will be paid as soon as practicable following the closing of the final Divestiture, but no later than 30 days following the closing date of the last Divestiture. If Mr. Yarkadas’ employment is involuntarily terminated without cause, or terminates due to his death or disability, before the closing of both Divestitures, the Success Incentive will be paid within 30 days following his termination of employment. No Success Incentive will be payable if Mr. Yarkadas voluntarily resigns or his employment is terminated for cause before the Separation Date.
In addition, upon Mr. Yarkadas’ involuntary termination without cause, he will receive severance benefits consistent with the terms and conditions of the Severance Plan. The LDCC designated Mr. Yarkadas as a covered employee under the Severance Plan through the Separation Date and waived application of the Severance Plan’s divestiture exclusion in connection with the Divestitures.
In addition, consistent with the LDCC’s decision to provide similar treatment to other eligible employees impacted by the elimination of the Water Infrastructure segment or the Divestitures, Mr. Yarkadas will receive “Enhanced Equity Treatment” with modified terms and conditions as follows: (i) with respect to outstanding 2024 and 2025 long-term incentive (“LTI”) awards, pro-rata vesting and based on actual performance, as applicable; (ii) with respect to the outstanding 2026 LTI awards, pro-rata vesting of performance share units based on actual performance and continued vesting of restricted stock units and non-qualified stock options; (iii) with respect to non-qualified stock options granted in 2025 or earlier that are vested as of, or become vested in connection with, Mr. Yarkadas’ involuntary termination without cause, a three-year post-termination exercise period, but in any case no later than the applicable stock option’s original expiration date, and (iv) with respect to non-qualified stock options granted in 2026 that vest pursuant to the foregoing treatment, continued exercisability through their original expiration date.