In connection with his new appointment, on August 2, 2022, the Company entered into an Amended Executive Employment and Severance Agreement with Mr. Jenkins, effective as of the Retirement Date (the “Amended Employment Agreement”), pursuant to which he will be provided with the following new compensation arrangements: (i) an annual base salary of $425,000; and (ii) a pre-change of control severance multiplier of 1.5x and a post-change of control severance multiplier of 2.0.
Additionally, Mr. Jenkins will receive (i) a new grant of restricted stock with a value of $42,750 (which will increase his total fiscal 2023 target long-term incentive award value to $403,750 from $361,000, or 95% of his new base salary), 75% of which will vest annually pro-rata over a three-year period and 25% of which will be subject to vesting based on the Company’s revenue growth targets over three fiscal years; (ii) a one-time promotion grant of 25,000 shares of restricted stock vesting annually pro rata over a three-year period; (iii) a special fiscal 2023 bonus of either $75,000 or $100,000 if the Company’s revenue for fiscal 2023 meets certain targets; and (iv) an increase in his target fiscal 2023 annual bonus eligibility potential to 90% of his actual base salary paid in fiscal 2023 from 60%.
Board Leadership and Composition Changes
Effective immediately after the Annual Meeting, as described above, the combined position of Chief Executive Officer and Board Chair will be separated and the Company’s lead independent director, Anthony L. Otten, will begin serving as the Company’s independent Board Chair.
In addition, effective on the Retirement Date, the size of the Company’s board of directors will be increased from five to six members and Mr. Jenkins will be appointed to the board of directors as a Class I director to serve an initial term set to expire at the Company’s 2023 annual meeting of shareholders. There are no arrangements or understandings between Mr. Jenkins and any other person pursuant to which Mr. Jenkins was selected as an officer and a director, there are no family relationships between Mr. Jenkins and any other director or other officer of the Company, and there are no transactions in which the Company is a party and in which Mr. Jenkins has a material interest subject to disclosure under Item 404(a) of Regulation S-K.
The foregoing descriptions of the Retirement Agreement and the Amended Employment Agreement are qualified in their entirety by reference to the full text of the Retirement Agreement and the Amended Employment Agreement, copies of which are filed herewith as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.
| Item 7.01. | Regulation FD Disclosure. |
On August 3, 2022, the Company issued a press release announcing the senior management and board of directors composition changes discussed above, and a separate press release announcing the Company’s financial results for its fiscal 2023 first quarter ended June 30, 2022. A copy of each press releases is furnished as Exhibit 99.1 and 99.2 to this Current Report on Form 8-K.
As previously disclosed in the Company’s proxy statement for the Annual Meeting, Alan Howe, a director since May 2019, has determined not to stand for reelection to the Company’s board of directors at the Annual Meeting because of his extensive board of director commitments at other companies. In connection with Mr. Howe’s decision not to stand for re-election, but in order to ensure the Company may still avail itself of Mr. Howe’s expertise, particularly in connection with evaluating potential acquisitions, the Company entered into a two-year consulting agreement on August 2, 2022 with Mr. Howe effective immediately after his departure from the board of directors after the Annual Meeting (the “Consulting Agreement”). Pursuant to the Consulting Agreement, the Company will pay Mr. Howe a retainer of $25,000 per year to provide his consulting services to the Company and his unvested restricted stock will be allowed to continue to vest over their term as if Mr. Howe remained on the board of directors.
The foregoing description of the Consulting Agreement is qualified in its entirety by reference to the full text of the Consulting Agreement, a copy of which is filed herewith as Exhibit 10.3, and is incorporated herein by reference.
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