Employment Arrangements
George A. Mangiaracina, Chief Executive Officer
On March 14, 2018, Mr. Mangiaracina and the Company executed an employment agreement, which had a term effective as of January 1, 2018 and ending on December 31, 2019. For the years 2020-2022, the Company and Mr. Mangiaracina continued to materially operate under the terms of such employment agreement. The following summarizes the terms of Mr. Mangiaracina’s employment agreement.
Base Salary, Annual Bonus and Other Compensation. Pursuant to such agreement, for 2022, Mr. Mangiaracina was entitled to receive a base annual salary of $750,000, a fixed bonus payment of $750,000 on December 1, 2022 (“Executive Bonus”) and an annual discretionary bonus at the sole discretion of the Board of Directors. $625,000 of the Executive Bonus was paid on January 20, 2023 by mutual agreement of the Company and Mr. Mangiaracina to align with the time when other executives and employees of the Company received their annual bonuses. The balance of the Executive Bonus, in the amount of $125,000, will be paid in equal $25,000 monthly installments, with the final installment paid in June 2023.
For 2023, Mr. Mangiaracina’s compensation has been adjusted as follows at Mr. Mangiaracina’s initiation and as approved by the Compensation Committee: (i) a voluntary reduction to his base salary from $750,000 to $400,000 effective July 1, 2023 and (ii) a voluntary waiver of his fixed 2023 Executive Bonus of $750,000 otherwise due December 1, 2023, while remaining eligible for a discretionary bonus. The Company and Mr. Mangiaracina will continue to materially operate under the terms of the employment agreement in all other material respects. To receive an annual discretionary bonus, Mr. Mangiaracina must be actively employed by the Company on December 31 of the applicable year, and any such bonus is paid in a combination of cash and RSUs in conformity with the terms of the employment agreement, unless otherwise agreed to between Mr. Mangiaracina and the Board of Directors. Beginning January 1, 2024, unless otherwise agreed in writing between the Company and Mr. Mangiaracina, the terms of the employment agreement with respect to base salary and the Executive Bonus will revert back to the March 14, 2018 employment agreement.
Severance Compensation. If (A) Mr. Mangiaracina is terminated by the Company without cause or (B) any of the following actions are taken: (i) there is a substantial diminution of his duties, authority, pay or responsibilities without performance or market justification, or (ii) in the event of a sale of all or substantially all of the Company’s or change of control, and Mr. Mangiaracina has provided the Company 30 days’ written notice of such giving the Company the opportunity to cure such circumstances in all material respects, then he will receive, after signing a general release, the following (and assuming, for purposes of severance, that Mr. Mangiaracina’s salary was $750,000):
(i)
the pro-rata remainder of his base salary from the date of termination to the end of the contract term, if any;
(ii)
any unpaid Executive Bonus;
(iii)
a severance payment of $750,000;
(iv)
any unpaid amounts of accrued salary, vacation time and benefits through the date of termination;
(v)
six months of COBRA family insurance coverage; and
(vi)
any unvested restricted stock will continue to vest over the remaining vesting schedule.
If the Company terminates Mr. Mangiaracina for cause by providing written notice and a 30-day period for Mr. Mangiaracina to cure such circumstances, then he will receive all accrued salary, vacation time and benefits through the date of termination. Pursuant to the employment agreement, “cause” generally means the existence of any of the following, as determined by an affirmative majority vote of the Board of Directors: (a) conviction of, or entry of plea of nolo contendere to, a crime of dishonesty or a felony leading to incarceration of more than 90 days or a penalty or fine of $100,000 or more, (b) material and substantial failure to perform duties after 30 days’ written notice (and given a reasonable time to correct any failures, if possible), (c) willful misconduct or gross negligence that causes material harm, (d) material breach by the employee of the terms of the employment agreement or any other obligation, or (e) employee is declared