|
Item 5.02
|
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers
|
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(e)
|
Compensatory Plans and Arrangements
|
Amended
and Restated 2018 Compensation Plan
On July 13, 2018, the Board
of Directors (the “
Board
”) of Datawatch Corporation (the “
Corporation
”) amended and restated
in its entirety the fiscal 2018 Corporate Officers Compensation Plan (as amended and restated, the “
Amended 2018 Compensation
Plan
”). The 2018 Corporate Officers Compensation Plan (the “
Prior 2018 Compensation Plan
”) was previously
disclosed in the Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission (“
SEC
”)
on December 6, 2017 (the “
Prior 8-K
”).
Base salaries, performance-based
cash bonuses for the first fiscal quarter and second fiscal quarter of the Corporation’s 2018 fiscal year and existing performance-based
cash bonuses for Mr. Tacelli have not been amended in the Amended 2018 Compensation Plan compared to the Prior 2018 Compensation
Plan disclosed in the Prior 8-K. The Amended 2018 Compensation Plan provides for amended performance-based cash bonuses for the
third fiscal quarter, the fourth fiscal quarter and fiscal year as a whole of the Corporation based on fiscal 2018 performance
of the Corporation and Angoss Software Corporation (“
Angoss
”), the Corporation’s wholly owned Canadian
subsidiary which the Corporation acquired on January 30, 2018.
Base Salary, First
Quarter Bonuses and Second Quarter Bonuses
The following table sets
forth the base salary of the executive officers of the Corporation, eligibility of the executive officers of the Corporation for
the first fiscal quarter and second fiscal quarter performance-based cash bonuses, and the performance-based cash bonus eligibility
amount for Mr. Tacelli under the Amended 2018 Compensation Plan:
Executive
|
Base Salary ($)
|
First Quarter Target Bonus ($)
|
Second Quarter Target Bonus ($)
|
Tacelli Commission-Based Target Bonus Amount ($)
|
Michael A. Morrison,
Chief Executive Officer
|
380,000
|
68,750
|
68,750
|
n/a
|
Ken Tacelli,
Chief Operating Officer
|
350,000
|
n/a
|
n/a
|
250,000
|
James Eliason,
Chief Financial Officer
|
315,000
|
35,000
|
35,000
|
n/a
|
First and Second Quarter Bonus
Eligibility and Calculation
For executives other than Mr. Tacelli, first
fiscal quarter and second fiscal quarter cash bonuses are payable based on: (A) whether the Corporation achieved earnings before
interest, taxes, severance, 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 the
Quarterly EBITDA Threshold was met, the extent to which the Corporation achieved its revenue targets for the applicable fiscal
quarter (each such quarterly revenue target as approved by the Board is referred to herein as the “
Quarterly Revenue Target
”,
and each such quarterly bonus, a “
Quarterly Bonus
”). Each Quarterly Bonus is payable only if Datawatch’s
earnings before interest, taxes, severance, depreciation and amortization met or exceeded the applicable Quarterly EBITDA Threshold.
Each Quarterly Bonus is eligible for payout
if the Corporation: (A) achieved the applicable Quarterly EBITDA Threshold and (B) achieved at least 90% of the applicable Quarterly
Revenue Target. Assuming the applicable Quarterly EBITDA Threshold was met, Quarterly Bonus eligibility at performance representing
90% of the Quarterly Revenue Target is 80% of the Quarterly Bonus amount, with bonus eligibility scaling up at a 2 to 1 rate as
performance improves above 90% to 100% of the applicable Quarterly Revenue Target. Quarterly EBITDA achievement above 100% of each
Quarterly Revenue Target will not result in additional payments above 100% of the applicable Quarterly Bonus amount.
Tacelli Bonus Eligibility
Except for the Tacelli Additional Cash Bonus
Amount discussed below, Mr. Tacelli’s cash bonus is commission-based, tied to monthly bookings of the Corporation and will
be paid out monthly in arrears.
Third Quarter Bonuses,
Fourth Quarter Bonuses, Annual Bonuses and Additional Bonuses
The following table sets
forth the eligibility of the executive officers of the Corporation for third fiscal quarter, fourth fiscal quarter, annual and
additional performance-based cash bonuses under the Amended 2018 Compensation Plan:
|
Bonus Eligibility for each of the Third and Fourth Quarters
|
Annual Bonus Eligibility
|
Additional Bonus Eligibility
|
Executive
|
Datawatch Quarterly Target Bonus ($)
|
Angoss Quarterly Target Bonus ($)
|
Datawatch Annual Target Bonus ($)
|
Angoss Annual Target Bonus ($)
|
Integration Cash Bonus Amount ($)
|
Tacelli Additional Cash Bonus Amount ($)
|
Michael A. Morrison,
Chief Executive Officer
|
55,000
|
13,750
|
247,500
|
27,500
|
55,000
|
n/a
|
Ken Tacelli,
Chief Operating Officer
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
50,000
|
James Eliason,
Chief Financial Officer
|
28,000
|
7,000
|
126,000
|
14,000
|
28,000
|
n/a
|
Third and Fourth Quarter
Bonus Eligibility and Calculation
For executives other than Mr.
Tacelli, the third fiscal quarter bonuses and the fourth fiscal quarter bonuses are only payable if the Corporation and Angoss
achieve certain minimum levels of earnings before interest, taxes, severance, depreciation and amortization for such quarter on
a consolidated basis (such amount as approved by the Board is referred to herein as the “
Combined Quarterly EBITDA Threshold
”).
If the applicable Combined Quarterly EBITDA Threshold is met, (1) a quarterly target bonus amount (the “
Datawatch Quarterly
Target Bonus
”) is payable based on the extent to which the Corporation achieves its revenue target for the applicable
fiscal quarter (each such quarterly revenue target of the Corporation as approved by the Board is referred to herein as the “
Datawatch
Quarterly Revenue Target
”) and (2) an additional quarterly target bonus amount (the “
Angoss Quarterly Target
Bonus
”) is payable based on the extent to which Angoss achieves its revenue target for the applicable fiscal quarter
(each such quarterly revenue target of Angoss as approved by the Board is referred to herein as the “
Angoss Quarterly
Revenue Target
”).
Assuming the applicable Combined
Quarterly EBITDA Threshold is met, the Datawatch Quarterly Target Bonus is eligible for payout if the Corporation achieves at least
90% of the applicable Datawatch Quarterly Revenue Target. Assuming the applicable Combined Quarterly EBITDA Threshold is met, the
Datawatch Quarterly Target Bonus at performance representing 90% of the Datawatch Quarterly Revenue Target is 80% of the Datawatch
Quarterly Target Bonus, with bonus eligibility scaling up at a 2 to 1 rate as performance improves above 90% to 100% of the applicable
Datawatch Quarterly Revenue Target. Quarterly revenue achievement above 100% of each Datawatch Quarterly Revenue Target will not
result in additional payments above 100% of the applicable Datawatch Quarterly Target Bonus.
Assuming the applicable Combined
Quarterly EBITDA Threshold is met, the Angoss Quarterly Target Bonus is eligible for payout if Angoss achieves at least 90% of
the applicable Angoss Quarterly Revenue Target. Assuming the applicable Combined Quarterly EBITDA Threshold is met, the Angoss
Quarterly Target Bonus at performance representing 90% of the Angoss Quarterly Revenue Target is 80% of the Angoss Quarterly Target
Bonus, with bonus eligibility scaling up at a 2 to 1 rate as performance improves above 90% to 100% of the applicable Angoss Quarterly
Revenue Target. Quarterly revenue achievement above 100% of each Angoss Quarterly Revenue Target will not result in additional
payments above 100% of the applicable Angoss Quarterly Target Bonus.
Annual Bonus Eligibility and Calculation
Each executive, other than
Mr. Tacelli, is eligible for up to two (2) annual performance-based cash bonuses, each payable after the end of the Corporation’s
fiscal 2018 year, which are in addition to any quarterly bonuses or additional bonuses payable to the executives. If the Corporation
and Angoss achieve earnings before interest, taxes, severance, depreciation and amortization in excess of a threshold for the Corporation’s
fiscal year 2018 and, with respect to Angoss, for the six month period ending September 30, 2018, on a consolidated basis (as such
combined EBITDA threshold is determined by the Board, the “
Combined EBITDA Threshold
”), (1) an annual target
bonus amount is payable based on the extent to which the Corporation (excluding Angoss) achieves its revenue target for the fiscal
year (the “
Datawatch Annual Target Bonus
”) and (2) an annual target bonus amount is payable based on the extent
to which Angoss achieves its revenue target for the six month period ending September 30, 2018 (the “
Angoss Annual Target
Bonus
”).
If the Combined EBITDA Threshold
is met, performance over 100% of the revenue target of the Corporation for fiscal year 2018 (as such revenue target of the Corporation
is determined by the Board, the “
Datawatch Annual Revenue Target
”) will result in eligibility for the Datawatch
Annual Target Bonus calculated: (i) at a 2 to 1 rate as performance improves above 100% to 105% of the Datawatch Annual Revenue
Target and (ii) at a 4 to 1 rate as performance improves above 105% of the Datawatch Annual Revenue Target. There is no cap on
the amount of annual cash bonus potentially payable as a result of the Corporation’s performance relative to the Datawatch
Annual Revenue Target. For example, assuming the Combined EBITDA Threshold is met, (y) performance at 105% of the Datawatch Annual
Revenue Target will result in eligibility for an annual cash bonus amount equal to 10% of the applicable Datawatch Annual Target
Bonus and (z) performance at 125% of the Datawatch Annual Revenue Target will result in eligibility for an annual cash bonus amount
equal to 90% of the applicable Datawatch Annual Target Bonus.
If the Combined EBITDA Threshold
is met, performance over 100% of the revenue target of Angoss for the six month period ending September 30, 2018 (as such revenue
target of Angoss is determined by the Board, the “
Angoss Annual Revenue Target
”) will result in eligibility
for the Angoss Annual Target Bonus calculated: (i) at a 2 to 1 rate as performance improves above 100% to 105% of the Angoss Annual
Revenue Target and (ii) at a 4 to 1 rate as performance improves above 105% of the Angoss Annual Revenue Target. There is no cap
on the amount of annual cash bonus potentially payable as a result of Angoss’s performance relative to the Angoss Annual
Revenue Target. For example, assuming the Combined EBITDA Threshold is met, (y) performance at 105% of the Angoss Annual Revenue
Target will result in eligibility for an annual cash bonus amount equal to 10% of the applicable Angoss Annual Target Bonus and
(z) performance at 125% of the Angoss Annual Revenue Target will result in eligibility for an annual cash bonus amount equal to
90% of the applicable Angoss Annual Target Bonus.
Integration Cash Bonus Amount
In addition to any other
cash bonus amounts payable as described above, for executives other than Mr. Tacelli, each executive will be eligible for an additional
one-time integration cash bonus (“
Integration Cash Bonus Amount
”) if: (i) the Corporation (excluding Angoss)
achieves performance at or above 105% the Datawatch Annual Revenue Target and (ii) Angoss achieves performance at or above 105%
the Angoss Annual Revenue Target.
Tacelli Additional Cash
Bonus Amount
Mr. Tacelli is eligible for
additional cash bonuses up to an aggregate additional cash bonus amount of $50,000 (the “
Tacelli Additional Cash Bonus
Amount
”), which additional cash bonuses are commission-based, tied to monthly bookings of Angoss and will be paid out
monthly in arrears.
The Board retains the discretion at any time to
change the above cash bonus criteria (including bonus amounts, Quarterly EBITDA Thresholds, Quarterly Revenue Targets, the Tacelli
Additional Cash Bonus Amount, Integration Cash Bonus Amount, Combined Quarterly EBITDA Thresholds, Datawatch Quarterly Target Bonus,
Angoss Quarterly Target Bonus, Datawatch Quarterly Revenue Targets, Angoss Quarterly Revenue Targets, Angoss Bookings Target, Combined
EBITDA Threshold, Datawatch Annual Revenue Target and Angoss Annual Revenue Target), including based on individual performance
or in the event any operating changes (including acquisitions) are approved during the fiscal year that materially impact the Corporation’s
fiscal 2018 financial plan.
Equity
Awards
On July 13, 2018, the Corporation
granted to Ken Tacelli an award of restricted stock units for 10,000 shares of the Corporation’s common stock (“
RSUs
”)
under the Corporation’s Third Amended and Restated Equity Compensation and Incentive Plan (the “
2011 Plan
”)
which will vest as follows: (i) one-third of such RSUs will vest upon the Corporation, including Angoss, achieving its annual booking
target for the twelve month period ending September 30, 2018 (the “
2018 Booking Target
”) and (ii) if the Corporation
achieves its 2018 Booking Target, the remaining two-thirds of such RSUs will vest in equal installments on the first and second
anniversaries of May 1, 2019, provided that Mr. Tacelli remains employed by the Corporation on these dates.
Time-based and performance-based
RSUs previously granted by the Board to the executive officers of the Corporation as described in the Prior 8-K have not been amended
by the Amended 2018 Compensation Plan.