8-K: Ultra Clean Holdings CEO Resigns Due to Health Reasons; Clarence Granger Appointed Interim CEO

Ultra Clean Holdings announces the resignation of CEO James P. Scholhamer due to a personal medical condition, with Clarence L. Granger stepping in as interim CEO while the board searches for a permanent replacement.

Summary

• Ultra Clean Holdings, Inc. announced that James P. Scholhamer resigned as CEO and Board member, effective March 4, 2025, due to a personal medical condition.
• Clarence L. Granger, Chairman of the Board, has been appointed as interim CEO until a new CEO is found.
• The Board has initiated a search for a permanent CEO.
• Mr. Scholhamer will receive a lump sum cash payment of $2,548,796.00 as part of a Separation Agreement, subject to a release of claims.
• Mr. Granger will receive an annual base salary of $810,000.00 (prorated), a target bonus equal to 110% of his prorated base salary, and an equity award of approximately $900,000.00 in restricted stock units that will vest on the last day of his service as interim CEO.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the CEO's resignation is a negative event, the appointment of an experienced interim CEO and the company's continued growth strategy provide some reassurance.

Positives

• Clarence Granger's extensive experience with UCT, including 12 years as CEO, provides stability during the transition.
• The company has a leadership team that has demonstrated the ability to continually outgrow the WFE industry.
• UCT has expanded and diversified its portfolio of offerings, broadening the applications and platforms that support all stages of industry growth.

Negatives

• The unexpected departure of the CEO may create uncertainty in the short term.
• The company is now incurring additional costs to pay the outgoing CEO and the interim CEO.

Risks

• The search for a new CEO could be lengthy and disruptive.
• The transition period may impact the company's strategic direction and operational efficiency.
• The company's future performance is subject to risks and uncertainties, including those identified in its annual report on Form 10-K.

Future Outlook

The company is searching for a permanent CEO and expects to continue its growth strategy, leveraging its expanded portfolio and operational excellence to support customer demand.

Management Comments

• Mr. Granger stated, 'On behalf of the entire company, I would like to thank Jim for his leadership.'
• Mr. Granger continued, 'the experienced leadership team has demonstrated the ability over several years to continually outgrow the WFE industry due to their deep relationships with their customers, strong manufacturing execution and technical expertise.'

Industry Context

The semiconductor industry is cyclical, and UCT's performance is tied to the overall health of the industry. The company's diversification strategy aims to mitigate the impact of these cycles.

Comparison to Industry Standards

• Comparing UCT's executive compensation to companies like Applied Materials (AMAT) or Lam Research (LRCX) shows that the interim CEO's compensation package is competitive for the role and duration.
• Separation agreements are standard practice, and the terms offered to Mr. Scholhamer appear to be in line with industry norms for executives at his level.

Management Changes

Stakeholder Impact

• Shareholders may experience short-term uncertainty due to the CEO transition.
• Employees may be affected by the change in leadership, but the appointment of an experienced interim CEO should provide stability.
• Customers and suppliers are unlikely to be significantly impacted, as the company's operations are expected to continue as normal.

Next Steps

• The Board of Directors will continue the search for a permanent CEO.
• Clarence Granger will serve as interim CEO until a permanent replacement is found.
• The company will host a conference call and webcast to discuss the CEO transition.

Key Dates