Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
James R. Lines Retirement and Severance and Transition Agreement
On August 9, 2021, Graham Corporation (the “Company”) and James R. Lines entered into a Severance and Transition Agreement (“Transition Agreement”) pursuant to which Mr. Lines will resign from his position as the Company’s Chief Executive Officer and as a member of the Board of Directors, and from positions he holds with all Company subsidiaries and affiliates, effective as of the close of business on August 31, 2021 (the “Separation Date”). The Transition Agreement provides that for a period of 18 months following the Separation Date, Mr. Lines will provide certain transition-related services to the Company. The Transition Agreement also provides that the Company will pay Mr. Lines (i) a severance payment in an amount equal to 18 months of Mr. Lines’ base salary, less applicable deductions and withholdings, payable in accordance with the Company’s regular payroll schedule and practices, and (ii) monthly health premiums for a period of 18 months following the Separation Date subject to certain conditions contained in the Transition Agreement.
The foregoing description of the Transition Agreement does not purport to be complete and is qualified in its entirety by reference to the Transition Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Appointment of Daniel Thoren as Chief Executive Officer and Amended and Restated Employment Agreement
On August 9, 2021, the Company and Daniel Thoren, the Company’s President and Chief Operating Officer, entered into an Amended and Restated Employment Agreement (the “Restated Employment Agreement”), effective as of the close of business on August 31, 2021, which amends and restates the Employment Agreement between the Company and Mr. Thoren dated as of June 1, 2021. Pursuant to the terms of the Restated Employment Agreement, Mr. Thoren will become the Company’s President and Chief Executive Officer effective as of the close of business on August 31, 2021.
The Restated Employment Agreement has a term of one year, subject to automatic renewal periods until the Restated Employment Agreement is terminated or Mr. Thoren attains the age of 65. Mr. Thoren’s initial base salary rate pursuant to the Restated Employment Agreement is $400,000 per year. If Mr. Thoren remains continuously and actively employed by the Company through June 1, 2023, he will receive a retention bonus equal to $730,000.
The Restated Employment Agreement provides that, upon termination of Mr. Thoren’s employment by the Company without cause, or if Mr. Thoren resigns because of the Company’s material breach of the Restated Employment Agreement, the Company will pay Mr. Thoren compensation due him through the date of termination, including any accrued bonus, and continue his base salary for 12 months following such termination. The Restated Employment Agreement also provides that, if following a change in control of the Company, Mr. Thoren’s employment is terminated by the Company without cause, or if Mr. Thoren resigns in certain situations set forth in the Restated Employment Agreement, the Company will make a payment
