Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
CEO Compensation
As previously disclosed by the Company in its Current Report on Form 8-K filed with the Securities and Exchange Commission on January 2, 2020 (the “Prior Report”), the Company is party to an employment agreement with Peter Smith, the Company’s President and Chief Executive Officer, dated January 2, 2020 (the “Employment Agreement”), The Employment Agreement is described in the Prior Report. Such description is not complete and is qualified in its entirely by reference to the full text of the Employment Agreement, which was filed as Exhibit 10.1 to the Prior Report.
As described in the Prior Report, upon Mr. Smith’s termination of employment by the Company without “Cause” or resignation for “Good Reason” within 12 months following a “Change in Control” (each such quoted term as defined in the Employment
Agreement), the Employment Agreement provided Mr. Smith with the opportunity to receive cash severance payments equal to the sum of (i) his then-current base salary, payable in 12 substantially equal monthly installments, and (ii) an amount equal to his target annual incentive payment for the year in which the termination of employment occurs, payable in a lump sum (such payments, the “CIC Cash Severance Payments”). Pursuant to the Employment Agreement, the CIC Cash Severance Payments payable to Mr. Smith could not exceed $750,000.
On May 13, 2021, the Board approved an amendment to the Employment Agreement (the “Employment Agreement Amendment”) to eliminate the $750,000 limit applicable to the CIC Cash Severance Payments. The Employment Agreement Amendment also expands Mr. Smith’s relocation allowance to provide for six months of storage of his household items if needed rather than one month, as originally provided in the Employment Agreement.
The foregoing description of the Employment Agreement Amendment is not complete and is qualified in its entirety by reference to the full text of the Employment Agreement Amendment, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated in this Item 5.02 by reference.
Director Compensation
On May 13, 2021 the Board approved an increase in the annual equity compensation provided to non-employee directors to $100,000, from $75,000 effective at the beginning of the Company’s fiscal year 2022. The Board also approved an increase in the annual retainer paid to the non-employee Chairman of the Board to $40,000 from $25,000 for that role effective at the beginning of fiscal year 2022. There were no changes to the other annual retainers paid to non-employee directors, namely: $60,000 to each non-employee director $20,000 to the Audit Committee Chairman, $15,000 to the Governance and Nominating Committee Chairman, and $15,000 to the Compensation Committee Chairman. Aside from such cash compensation, non-employee directors are also reimbursed for their expenses incurred in attending Board and committee meetings. There are no fees based upon number of meetings attended.