Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
On
March 19, 2019, the Nominating and Corporate Governance/Compensation Committee (the “Committee”) of our Board of Directors
adopted the NTN Buzztime, Inc. Executive Incentive Plan for Eligible Employees of NTN Buzztime, Inc. Fiscal Year 2019 (the “2019
Plan”). The 2019 Plan provides for performance-based, at-risk compensation.
The
2019 Plan period is from January 1, 2019 to December 31, 2019. The Committee will administer and interpret the 2019 Plan. The
2019 Plan participants include those individuals with the title of Chief Executive Officer, Chief Financial Officer, and VP of
Finance (as Chief Accounting Officer), and any individual who we hire, promote or transfer to an executive level position, as
determined by the Committee, during 2019. Individuals who are eligible to participate in the 2019 Plan must be employed by us
on or before October 1, 2019, on active, full-time, paid status, and must not be a participant in any of our other incentive compensation
programs. Any individual who becomes eligible to participate in the 2019 Plan after January 1, 2019 (either through new hire,
promotion or transfer) will be eligible to earn incentive compensation under the 2019 Plan on a prorated basis.
The
2019 Plan participants will be eligible to earn incentive compensation based on the level of achievement of the following performance
measures:
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targeted
earnings before interest, tax, depreciation and amortization (EBITDA), as approved by the Committee (weighted up to 10%);
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targeted
revenue, as approved by the Committee (weighted up to 15%); and
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certain
strategic milestones, as evaluated and approved by the Committee (weighted up to 75%).
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Each
2019 Plan participant will have a target payout amount, based on a percentage of his or her annual base salary (excluding benefits)
as of December 31, 2019, that is assigned according to such participant’s position and job level. The target payout amounts
for current 2019 Plan participants are: Chief Executive Officer—75%; Chief Financial Officer and Executive Vice President—50%;
and VP of Finance (as Chief Accounting Officer)—10%.
The
Committee will determine the achievement level of the performance measures and the actual incentive payout amount awarded to a
participant. If the performance measures are exceeded, the Committee, in its sole discretion, may choose to pay out a larger pool
amount. The Committee’s determination will be made as soon as practicable following December 31, 2019. Subject to the other
terms of the 2019 Plan, the incentive payout, if any, will be paid at the discretion and in the sole determination of the Committee,
either in (i) cash, (ii) shares of our common stock issued under the NTN Buzztime, Inc. Amended 2010 Performance Incentive Plan
or any successor long-term incentive plan, or (iii) any combination of (i) and (ii). Such payment will be made within 30 days
after the date we receive our independent auditor’s report on our annual financial statements for 2019, but no later than
March 15, 2020.
The
table below sets out the target payout amount for each of our named executive officers under the 2019 Plan, assuming all performance
measures are achieved at a rate of 100%:
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Named
Executive Officer
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Target
Payout Amount ($)
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Ram
Krishnan, Chief Executive Officer
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262,500
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Allen
Wolff, Chief Financial Officer and Executive Vice President
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132,500
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Sandra
Gurrola, Vice President of Finance
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17,500
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In
order for a participant to earn and receive any incentive payout under the 2019 Plan, the Committee must have approved such incentive
payout as evidenced in the Committee meeting minutes and the participant must be employed by us on the payout date.
The
2019 Plan may be amended, modified or terminated at any time at the discretion of the Committee with or without advance notice.
If the 2019 Plan is amended prior to the end of the plan period, participants will be paid according to any amending or terminating
documents. The 2019 Plan will automatically terminate at the end of the plan period, except that the payout provisions will continue
in effect until satisfied.
The
foregoing summary description of the 2019 Plan does not purport to be complete and is qualified in its entirety by reference to
the 2019 Plan, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.