Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 30, 2023, the Board of Directors (the “Board”) of Lakeland Industries, Inc. (“Lakeland” or the “Company”) appointed Roger D. Shannon as the Company’s Chief Financial Officer, effective February 1, 2023. Also effective February 1, 2023, in connection with the appointment of Mr. Shannon as Chief Financial Officer, Allen E. Dillard, the Company’s Chief Operating and Financial Officer, will continue serving as Chief Operating Officer but will no longer serve in the role of Chief Financial Officer.
On January 30, 2023, the Company and Mr. Shannon entered into an employment agreement (the “Employment Agreement”), effective as of February 1, 2023. The Employment Agreement provides for, among other things, (i) an initial employment term ending on February 1, 2024, with one-year automatic renewals unless either party provides at least 90 days’ prior written notice of its intention not to extend the term; (ii) an annual base salary of $300,000 subject to annual review by the Compensation Committee of the Board; (iii) eligibility to receive an annual cash bonus initially targeted at 40% of base salary; and (iv) eligibility to receive grants of equity incentive awards pursuant to the Company’s 2017 Equity Incentive Plan, as amended (the “Plan”), as determined in the discretion of the Company’s Compensation Committee. In addition, on February 1, 2023, Mr. Shannon received an initial equity award under the Plan, consisting of a stock option for 24,000 shares of the Company’s common stock, with an exercise price of $14.44, the closing price of the Company’s common stock on the date of grant, which will vest ratably over three years and expire on February 1, 2033.
The Employment Agreement contains provisions providing for severance payments equal to 12 months of base salary plus a pro rata cash bonus, if any, to Mr. Shannon in the event that he is terminated by the Company without Cause or by Mr. Shannon for Good Reason (each as defined in the Employment Agreement). In the event that such termination without Cause or for Good Reason occurs within 18 months after a change of control, Mr. Shannon will be entitled to severance payments equal to 24 months of base salary plus two times his target bonus amount, if any, in effect on the date of termination. The Employment Agreement also provides non-competition and non-solicitation restrictive covenants during Mr. Shannon’s term of employment and for a period of one year thereafter.
The foregoing description of the terms of the Employment Agreement is not complete and is qualified in its entirety by reference to the full text of the Employment Agreement, a copy of which is attached hereto as Exhibit 10.1.
Mr. Shannon, 57, previously served as Chief Financial Officer and Treasurer of Charah Solutions from June 2019 to October 2022. Mr. Shannon previously served in various roles, including Chief Financial Officer, Senior Vice President of Finance, Treasurer and Head of Corporate Development at ADTRAN, a publicly-traded provider of next-generation networking solutions, from November 2015 to June 2019. Mr. Shannon also served as Chief Financial Officer and Treasurer for Steel Technologies and various senior finance roles at the Brown-Forman Corporation, British American Tobacco, and accounting positions at Vulcan Materials Company, Lexmark International and KPMG.
There are no arrangements or understandings between Mr. Shannon and any other person pursuant to which he has been selected to serve as Chief Financial Officer, nor is he a participant in any related party transactions required to be reported pursuant to Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).