Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As previously reported, in light of the economic and financial challenges caused by the COVID-19 pandemic, on March 30, 2020, the Board of Directors (the “Board”) of The ExOne Company (the “Company”) determined to reduce by 20% the cash salaries of its leadership team, including the Company’s named executive officers, for at least the second quarter of fiscal year 2020. On August 5, 2020, the Compensation Committee of the Board approved the grant of special equity awards of restricted stock to its leadership team, to be made on August 10, 2020, as a replacement for the 20% cash salary reduction continuing for the second half of the year. The special equity awards included a grant of 4,400 shares of restricted stock to John F. Hartner, the Company’s Chief Executive Officer, and a grant of 2,900 shares of restricted stock to Douglas D. Zemba, the Company’s Chief Financial Officer. The restricted stock awards will vest in equal increments over two quarters, on September 30, 2020 and December 31, 2020.
In February 2020, the Compensation Committee adopted the 2020 annual incentive program (the “Program”) under the 2013 Equity Incentive Plan, which provided an opportunity for performance-based compensation to the leadership team of the Company, including the named executive officers, in the form of equity awards to be settled in fully vested common stock, based on the achievement of certain goals for the Company’s revenue and Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) during fiscal year 2020. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is defined as net income (loss), as calculated under accounting principles generally accepted in the United States, plus interest expense, provision (benefit) for income taxes, depreciation and amortization, adjusted by equity-based compensation, and other (income) expense-net. On August 5, 2020, the Compensation Committee considered that the goals for the Program were not achievable due to the depressed economy and other effects of the COVID-19 pandemic, including the suppression of travel necessary for the installation of foreign and domestic machine sales. The Compensation Committee also recognized the achievements of its leadership team in acting promptly in this environment to (i) conserve cash and access government programs and the capital markets to the extent available to the Company, and (ii) streamline and restructure employee headcount to reduce expenses, including implementation of a 20% salary reduction for the Company’s leadership team beginning in the second quarter of 2020, while maintaining key marketing and development priorities to allow the Company to preserve and strengthen its market position post-pandemic. In consideration of management’s crisis response, the Compensation Committee approved special equity awards of restricted stock to the leadership team, to be made on August 10, 2020, in an amount equal to 50% of the shares of restricted stock granted to such individuals pursuant to the annual long-term equity incentive awards made the same day. The special equity award included a grant of 22,000 shares of restricted stock to Mr. Hartner and a grant of 10,000 shares of restricted stock to Mr. Zemba. The restricted stock awards will vest in equal annual increments over a three-year period.
