The Gorman-Rupp Company has entered into new Change of Control Severance Agreements with certain employees, including its Chief Executive Officer and President, Scott A. King, Executive Vice President, General Counsel and Corporate Secretary Brigette A. Burnell, and Chief Financial Officer Ronald F. Stoops. The agreements were executed on October 1, 2026.
The Severance Agreements have an initial term of one year with a one-year "evergreen" renewal period. Under the terms, executives become eligible for severance benefits if their employment is terminated by the Company without "Cause," "Disability," or death, or if they resign for "Good Reason." Eligibility also applies if termination occurs within six months prior to a Change of Control and is primarily in anticipation of that event.
The agreements stipulate that executives must execute a release of claims to receive benefits. The severance package includes a lump-sum payment based on the executive's annual base salary and prior bonus. For the Chief Executive Officer and President, the payment equals three times the sum of base salary and prior bonus, plus the prorated annual bonus. For other executive officers, the payment equals two times that sum, plus the prorated annual bonus.
Additional benefits include a lump-sum payment for eighteen months of COBRA medical coverage premiums, a lump-sum payment for the increase in benefits resulting from twenty-four months of credited service under retirement plans, and accelerated vesting of outstanding equity awards following a Change of Control. The agreements include a "best pay" provision designed to reduce payments to ensure a greater after-tax amount, but they do not provide a tax gross-up.
