In connection with Mr. Feeney’s appointment as Chief Executive Officer, the Company entered into an employment agreement with Mr. Feeney, also dated and effective as of May 8, 2020 (the “Feeney Agreement”). Pursuant to the Feeney Agreement, Mr. Feeney shall serve as Chief Executive Officer of the Company, reporting to the Board, and shall be appointed to the Board as soon as reasonably practicable following the Company’s upcoming 2020 Annual Meeting (or as soon thereafter as the Company’sby-laws permit). The Feeney Agreement provides Mr. Feeney a base salary of $450,000 per year, and, commencing with the Company’s fiscal 2021 year, an annual cash bonus target opportunity each fiscal year equal to 100% of his base salary (up to a maximum of 150% of base salary), with any cash bonus earned based on the terms of the Company’s then-current annual incentive program (with a minimum bonus for fiscal 2021, only, equal to 50% of Mr. Feeney’s base salary).
In addition, Mr. Feeney was awarded an initial inducement equity grant of 1,000,000 stock options, with an exercise price equal to our closing price on May 8, 2020, subject to the terms of aNon-Qualified Stock Option Agreement, also dated as of May 8, 2020 (the “Option Agreement”). The stock options are eligible to vest as follows: (i) 50% of the options are eligible to vest in four equal annual installments on the first four anniversaries of the grant date, (ii) 12.5% of the options are eligible to vest on June 30, 2021, and (iii) an additional 12.5% of the options are eligible to vest on each of June 30, 2022, June 30, 2023, and June 30, 2024, subject to the achievement of performance goals for the fiscal year ending on each such date to be established by the Board, following consultation with Mr. Feeney, as soon as reasonably practicable following the commencement of the applicable fiscal year, and in each case subject to Mr. Feeney’s continued employment through the applicable vesting date. If at least 80% of the performance goals for an applicable fiscal year are achieved, the Compensation Committee may determine that the portion of the option eligible to vest in respect of such fiscal year will vest on a prorated basis. In addition, any of the stock options then-outstanding and unvested will immediately vest upon a “change of control,” as defined in the Feeney Agreement, subject to Mr. Feeney’s continued employment as of immediately prior to the “change of control.”
Under the Feeney Agreement, if Mr. Feeney is terminated without “cause” or resigns for “good reason” (as each term is defined under the Feeney Agreement), then, subject to Mr. Feeney’s execution of a release of claims and continued compliance with the Feeney Agreement, Mr. Feeney will be provided with a severance package consisting of (i) 12 months of continued base salary, (ii) senior executive-level outplacement support for 12 months, and (iii) up to a12-month COBRA subsidy. However, if such termination occurs within 24 months following a “change of control,” as defined in the Feeney Agreement, then Mr. Feeney will instead be provided a lump sum payment equal to the sum of his base salary and last annual bonus paid in the fiscal year completed prior to such termination.
The Feeney Agreement contains customary restrictive covenants, including perpetual confidentiality,non-disparagement, and intellectual property covenants, as well as anon-compete,non-solicit of customers and suppliers, andnon-solicit of employees (including ano-hire) that each apply during employment and for two years following any termination.
The foregoing summary of the Feeney Agreement and the Option Agreement does not purport to be complete and is qualified in its entirety by the complete text of the Feeney Agreement and the Option Agreement, respectively, which are filed as Exhibits 10.2 and 10.3 to this Current Report on Form8-K and incorporated herein by reference.
(e)COVID-19 Reductions in Certain Executive Salaries
Effective May 11, 2020, because of the uncertainty created by the COVID-19 global pandemic, the base salaries of Michael Wasserfuhr (Chief Financial Officer), James M. Pollock (Chief Compliance Officer), Glen E. Goold (Chief Accounting Officer), Anant Agrawal (Executive Vice President, Corporate Development), and certain other members of the Company’s senior leadership team have been reduced by 20%. These base salary reductions are expected to remain in effect through and including December 31, 2020.
