Luis Severino has reached an agreement with the New York Yankees on a four-year, $40 million extension, the team announced.

ESPN's Jeff Passan first reported the deal.

Passan noted the deal includes a fifth-year club option.

Here's a breakdown of the contract, per Passan:

• 2019: $4 million plus a $2 million bonus
• 2020: $10 million
• 2021: $10.25 million
• 2022: $11 million
• 2023 (club option): $15 million with $2.75 million buyout

The extension can max out at $52.25 million over five years. The deal buys out four arbitration years and potentially one free-agent season for Severino. The right-hander is now scheduled to enter free agency prior to his age-30 season, if the club option is picked up.

An extension comes on the same day Severino and the Yankees were scheduled to have an arbitration hearing. The pitcher had requested $5.25 million for the upcoming season while the Yankees countered at $4.4 million.

Severino made it known earlier this week that he hoped to avoid the hearing.

"Any player doesn't want to be in that situation," Severino said on Wednesday, per the New York Post's George A. King III. "I hear a lot that it is not fun."

Ultimately, the two sides were able to come to terms on an agreement.

The extension locks up New York's ace at a team-friendly price for the foreseeable future. Severino is coming off a season in which he went 19-8 with a 3.39 ERA and a 1.145 WHIP in 32 starts, striking out 220 hitters in 191.1 innings.

At just 24 years old, Severino has two All-Star selections and two top-10 finishes in American League Cy Young award voting. And he has done so while logging just two full years as a starter in the big leagues.

The biggest concern with Severino to this point has been his inability to pitch up to his regular-season numbers in the playoffs. Thus far, he is just 1-2 with a 6.26 ERA in six career postseason starts.

Severino's overall resume speaks for itself, though. Now, the Yankees can move forward and continue to build their rotation around the young star.