On February 16, 2016, the Company notified Sampen Corporation (“Sampen”), a New York corporation owned by members of the immediate family of Steven Esses, the Company’s President and Chief Executive Officer, that it was, effective June 30, 2016, terminating its amended and restated consulting agreement with Sampen (the “Sampen Agreement”).
4. Amended and Restated Employment Agreement with Steven Esses
On February 16, 2016, the Company and its subsidiary Epsilor-Electric Fuel Ltd. entered into an amended and restated employment agreement with its President and Chief Executive Officer, Steven Esses (the “Esses Employment Agreement”).
The Esses Employment Agreement will be effective as of July 1, 2016 and expires on December 31, 2018. The Esses Employment Agreement provides that Mr. Esses will serve as the Company’s President and Chief Executive Officer.
The Esses Employment Agreement provides for the institution of a “double-trigger” severance in the event of a change of controlwhere Mr. Esses can receive his severance after a change of control only if subsequently terminated by new management of the Company.
The Esses Employment Agreement provides for a monthly base salary of NIS 150,000 (approximately $38,334 at the rate of exchange in effect on February 16, 2016), as adjusted for Israeli inflation. Additionally, the Board may at its discretion raise Mr. Esses’ base salary.
The amount paid to Mr. Esses pursuant to the Esses Employment Agreement is higher than the amount paid to him under his previous employment agreement with the Company, however it is substantially unchanged from the total of the amounts previously paid to Mr. Esses and entities affiliated with Mr. Esses prior to termination of the Sampen Agreement. The Compensation Committee of the Board (the “Compensation Committee”) has determined that the amounts payable to Mr. Esses pursuant to the Esses Employment Agreement are within the median range of the amounts paid by similarly-sized companies in the industry for the services of a chief executive officer.
The Esses Employment Agreement provides that if the Company obtains results in a given year of at least 100% of the amount budgeted at the beginning of the applicable year, Mr. Esses is entitled to a cash bonus, on a sliding scale, in an amount equal to a minimum of 25% of Mr. Esses’s annual base salary then in effect, and up to a maximum of 75% of his annual base salary then in effect, if the results the Company obtains results for the year in question are 110% or more of the amount budgeted at the beginning of the applicable year. Budget targets in the past have included combinations of revenues, EBITDA, backlog, and/or other factors. For 2013, 2014 and 2015, the Compensation Committee chose financial targets for determining eligibility for the above-referenced cash incentive bonus that were determined on the achievement of set budgetary forecast targets for adjusted EBITDA, a non-GAAP measurement, and, in the case of 2013, in part on the achievement of a target for revenues. Bonus targets will be chosen for 2016 based upon future budgetary forecasts.
The Esses Employment Agreement provides that Mr. Esses will be entitled to receive annual equity awards in the form of options to purchase shares of the Company’s common stock, par value $0.01 (the “Common Stock”) and restricted shares of Common Stock to be determined based on the recommendation of the Chairman of the Board and the Compensation Committee.
