Item 5.02 Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
|
(e)
|
Compensatory Plans and Arrangements
|
On November 1, 2016, the Board of Directors
(the “
Board
”) of Datawatch Corporation (“
Datawatch
”) approved the fiscal 2017 Corporate Officers
Compensation Plan (the “
2017 Compensation Plan
”), which provides for fiscal 2017 compensation for the executive
officers of Datawatch, including base salary, performance-based cash bonuses and awards of restricted stock units for shares of
Datawatch’s common stock (“
RSUs
”).
Base Salary and Cash Bonuses
The following table sets forth base salary
and performance-based cash bonus eligibility amounts under the 2017 Compensation Plan for the executive officers of Datawatch:
Name/Title
|
Base Salary ($)
|
Aggregate Target Cash Bonus ($)
|
Each Quarterly Bonus Eligibility at 80% Quarterly Revenue ($)
|
Quarterly Bonus Eligibility at 100% Quarterly Revenue ($)
|
Additional Bonus Eligibility at 125% Annual Revenue ($)
|
Michael A. Morrison,
Chief Executive Officer
|
375,000
|
200,000
|
30,000
|
50,000
|
100,000
|
James Eliason,
Chief Financial Officer
|
312,000
|
110,000
|
16,500
|
27,500
|
55,000
|
Ken Tacelli,
Senior Vice President of Worldwide Sales
|
300,000
|
200,000
|
n/a
|
n/a
|
n/a
|
Sanjay Mistry,
Controller
|
218,400
|
50,000
|
7,500
|
12,500
|
25,000
|
For executives other than Mr. Tacelli, aggregate
target cash bonus eligibility is split into four quarterly bonuses in equal target amounts that together represent 100% of the
aggregate target cash bonus amount and are payable based on: (A) whether Datawatch achieves earnings before interest, taxes, depreciation
and amortization in excess of a certain threshold for such fiscal quarter (each such threshold amount as approved by the Board
is referred to herein as the “
Quarterly EBITDA Threshold
”) and (B) only if such Quarterly EBITDA Threshold is
met, the extent to which Datawatch achieves its revenue targets for the applicable fiscal quarter (each such quarterly revenue
target referred to herein as the “
Quarterly Revenue Target
”, and each such quarterly bonus, a “
Quarterly
Bonus
”). Each Quarterly Bonus will be payable only if Datawatch’s earnings before income, taxes, depreciation and
amortization meets or exceeds the applicable Quarterly EBITDA Threshold. 100% of Mr. Tacellli’s cash bonus is annual, commission-based
and tied to fiscal 2017 revenue achievement.
Quarterly Bonus Eligibility and Calculation
Each Quarterly Bonus is eligible for payout
if Datawatch: (A) achieves the applicable Quarterly EBITDA Threshold and (B) achieves at least 80% of the applicable Quarterly
Revenue Target. Assuming the applicable Quarterly EBITDA Threshold is met, Quarterly Bonus eligibility at performance representing
80% of the Quarterly Revenue Target is 60% of the Quarterly Bonus amount, with bonus eligibility scaling up linearly as performance
improves between 80% and 100% of the applicable Quarterly Revenue Target. Assuming the applicable Quarterly EBITDA Threshold is
met, performance at 100% of the Quarterly Revenue Target will result in eligibility for 100% of the applicable Quarterly Bonus.
Additional Bonus Eligibility and Calculation
If Datawatch achieves earnings before interest,
taxes, depreciation and amortization in excess of Datawatch’s threshold for fiscal year 2017 (as such EBITDA threshold is
determined by the Board, the “
Annual EBITDA Threshold
”), performance over 100% of Datawatch’s revenue
target for fiscal year 2017 (as such revenue target is determined by the Board, the “
Annual Revenue Target
”)
will result in eligibility for additional cash bonus amounts calculated at a 2 to 1 rate up to the maximum eligibility for additional
cash bonus amounts of 50% of the aggregate target cash bonus amount for such executive officer, based on performance at 125% of
the Annual Revenue Target.
The Board retains the discretion at any
time to change the above cash bonus criteria (including bonus amounts, Quarterly EBITDA Thresholds, Quarterly Revenue Targets,
Annual EBITDA Threshold and Annual Revenue Target), including based on individual performance or in the event any operating changes
are approved during the fiscal year that materially impact Datawatch’s fiscal 2017 financial plan.
RSUs
The following table sets forth the RSUs
awarded to the executive officers of Datawatch on November 1, 2016:
Executive
|
RSUs
|
James Eliason,
Chief Financial Officer
|
7,000
|
Sanjay Mistry,
Controller
|
5,000
|
All of the RSUs awarded to each executive will vest in equal
installments on each of the first, second and third anniversaries of November 15, 2016.