| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Officer Appointment
On March 4, 2019, IES Holdings, Inc. (the “Company”) announced the appointment of Gary S. Matthews as Chief Executive Officer of the Company and as a Director on the Board of Directors of the Company (the “Board”), effective as of March 4, 2019.
Prior to joining the Company, Mr. Matthews, age 61, served as Managing Director of Morgan Stanley Capital Partners since 2007, where he worked with the private equity team in evaluating companies for direct investments and helping to oversee the management and strategies for those businesses. Prior to joining Morgan Stanley, Mr. Matthews led several private equity-backed manufacturing companies, including serving as President of Simmons Bedding Company, Chief Executive Officer of Sleep Innovations, Inc. and Chief Executive Officer of Derby Cycle Corporation, and also led business units of several public companies, including serving as President of Worldwide Consumer Medicines at Bristol-Myers Squibb Company, Managing Director for Diageo/Guinness Limited in the UK and President and Chief Executive Officer of Guinness Import Company in Stamford, Connecticut. Mr. Matthews has also held senior management positions at PepsiCo, Inc. and McKinsey & Company. Mr. Matthews currently serves on the board of directors of Pathway Partners Vet Holding LLC and Manna Pro Products, LLC. He has previously served as Chairman of the board of directors of Hojeij Branded Foods, Creative Circle, LLC and Tops Markets, LLC, and as a member of the board of directors of Lagunitas Brewing Company, Molson Coors Brewing Company, Lenox Group Inc. (previously Department 56), Learning Care Group, Inc., Van Wagner, Inc. and Canyon Ranch.
The Nominating/Governance Committee believes that Mr. Matthews is qualified to serve on the Board given his extensive board experience, his broad leadership experience at public and private companies across a diverse range of industries and his experience identifying and overseeing strategic investments.
The Employment Agreement
In connection with his appointment, the Company has entered into an employment agreement with Mr. Matthews, dated February 28, 2019 (the “Employment Agreement”). The Employment Agreement provides for a term of employment for Mr. Matthews commencing on March 4, 2019 (the “Effective Date”) and ending on September 30, 2022 (the “Employment Term”). Pursuant to the Employment Agreement, Mr. Matthews’ employment may be terminated at any time during the Employment Term.
Pursuant to the Employment Agreement, during the Employment Term, Mr. Matthews will be entitled to an annual base salary of $650,000, subject to annual review and adjustment by the Board.In addition, pursuant to the Employment Agreement, during each year of the Employment Term, he will be eligible to receive a target annual cash award under the Company’s Short-Term Incentive Plan (“STIP”) that is equal to 100% of his base salary for such fiscal year(pro-rated for any partial year of service). The payout percentage of his STIP awards is set at a range of 100% for achievement of target or better performance to 50% for achievement of threshold performance, with a payout percentage of 0% for performance below threshold. If during any fiscal year during the Employment Term, Mr. Matthews’ actual individual performance is less than individual threshold performance, then the individual performance-based component of the award and the Company performance-based component of the award shall both equal zero, regardless of actual Company financial performance. Pursuant to the Employment Agreement, the STIP cash award for fiscal year 2019 shall be based only on the individual component.
For each fiscal year during the Employment Term, Mr. Matthews will be eligible for an award under the Company’s Long-Term Incentive Plan Annual Grant Program (“LTIP”), equal to a number of restricted shares of common stock calculated by dividing (i) his base salary for such fiscal year(pro-rated for any partial year of service) by (ii) the average price of the Company’s common stock for the five trading days immediately prior to the grant date. Each LTIP award will vest based on Company performance over a three-year performance period at a range of 100% for target or better performance to 50% for threshold performance, with 0% vesting for performance below threshold.
