Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Employment Agreement with Kevin M. Olsen
On January 10, 2019 Dorman Products, Inc. (the “Company”) entered into an employment agreement with Kevin M. Olsen, the Company’s President and Chief Executive Officer. The agreement has a term of three years expiring December 31, 2021 with the term of Mr. Olsen’s employment being automatically extended for an additional one year period on December 31, 2021 and on each anniversary of December 31, 2021, unless earlier terminated as provided in the employment agreement.
Pursuant to Mr. Olsen’s employment agreement, annual base salary was set at $600,000 per year, subject to increase but not decrease from time to time as determined by the Compensation Committee. The employment agreement also provides for eligibility for (i) annual cash bonuses under the 2018 Cash Bonus Plan or other cash incentive plans maintained by the Company, and (ii) grants of awards under the 2018 Stock Option and Stock Incentive Plan or other equity-related incentive plans maintained by the Company, in case of both clauses (i) and (ii) in such amounts as determined by the Compensation Committee, in its sole discretion. Further, the employment agreement provides that, subject to limitations related to the amount of applicable premiums, the Company will acquire and pay the applicable premium on (A) a $2.0 million term life insurance policy on the life of Mr. Olsen which will be payable to a beneficiary designated by Mr. Olsen; and (B) a long-term disability insurance policy for Mr. Olsen with a benefit in the amount of 60% of Mr. Olsen’s monthly earnings as of immediately prior to the incurrence of a disability. Mr. Olsen will also be eligible to participate in other employee benefit plans or arrangements generally available to the Company’s executive officers and entitled to four weeks paid vacation per year. In addition, in connection with the execution of the employment agreement, Mr. Olsen will be granted an equity incentive award with an aggregate value equal to $1,000,000, 50% of such award in the form of time-based restricted stock units and 50% of such award in the form of performance-based restricted stock units.
Mr. Olsen’s employment agreement may be terminated by the Company with or without “Cause” or by Mr. Olsen for “Good Reason” or for no reason, as such terms are defined in the employment agreement. Mr. Olsen’s employment agreement also provides fornon-solicitation andnon-competition provisions for the term of the agreement and eighteen months thereafter. The agreement also includes standard confidentiality and trade secret provisions typically included in agreements of this type.
Additionally, Mr. Olsen’s employment agreement contains provisions that provide for certain payments upon termination. The following table summarizes such payments provided in connection with Mr. Olsen’s termination of employment:
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Type of Termination | | Payments and Benefits |
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Termination with Cause or if Mr. Olsen Terminates Without Good Reason | | • any earned but unpaid base salary through the date of termination, paid in accordance with the Company’s standard payroll practices; • reimbursement for any unreimbursed expenses properly incurred and paid in accordance with the Company’s business expense reimbursement policy; • payment for any accrued but unused vacation time in accordance with Company policy; and • such vested accrued benefits, and other payments, if any, as to which the executive (and his eligible dependents) may be entitled under, and in accordance with, the terms and conditions of, the employee benefit arrangements, plans and programs of the Company as of the date of termination. The payments and benefits in the four bullet points above are collectively referred to as the “Amounts and Benefits.” |
