Item
5.02 – Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
New
Executive Officer of the Company
Executive
Vice President (“EVP”) of Treatment Waste Operations
On
July 22, 2020, Perma-Fix Environmental Services, Inc.’s (the “Company”) Board of Directors (the “Board”)
elected Mr. Richard Grondin (age 61) to the position of EVP of Waste Treatment Operations and an executive officer of the Company.
Since joining the Company in 2002, Mr. Grondin has held various positions within the Company’s Treatment Segment, including
Vice President of Technical Services, Vice President/General Manager of the Perma-Fix Northwest Richland, Inc. (“PFNWR”)
Facility and Vice President of Western Operations.
Mr.
Grondin, a Project Management Professional (“PMP”), has over 35 years of management and technical experience in the
highly regulated and specialized radioactive/hazardous waste management industry with the majority of his experience concentrated
on managing start-up waste management processing and disposal facilities for four different organizations in the commercial and
government sectors. Prior to joining the Company, Mr. Grondin held the position of Vice President of Mixed Waste Operations for
Allied Technology Group (“ATG”) in Richland, WA; Vice President of Operations for Waste Control Specialists (“WCS”)
in Andrews TX; and Technical Manager/Director of Operations for Rollins Environmental Services Facility in Deer Trail, CO.
In
his positions with the Company, Mr. Grondin, together with others, transformed the PFNWR facility to a profitable subsidiary after
its acquisition by the Company. Prior to his employment with the Company, he managed the startup of ATG Mixed Waste facility and
the startup of WCS facility.
Mr.
Grondin is recognized in the United States and Canada as an authority in hazardous and mixed waste treatment. He has been involved
in the treatment of several hundred thousand tons of waste in the last 35 years.
Mr.
Grondin has a Diploma of Collegial Studies in Pure and Applied Sciences from CEGEP of Amiante (Thetford-Mines, Canada) and Analytical
Chemistry Techniques from CEGEP of Ahuntsic (Montreal, Canada), Geography minor from Montreal University (Montreal, Canada) and
a Certificate of Business Management from the School of Higher Commercial Studies from Montreal University (Montreal, Canada).
There
is no family relationship between Mr. Grondin and any director or executive officer of the Company.
There
are no transactions involving Mr. Grondin and the Company requiring to be reported under Item 404(a) of Regulation S-K except
as disclosed below.
Employment
Agreements:
Immediately
after the appointment of Richard Grondin to the position of EVP of Waste Treatment Operations and an executive officer of the
Company, the Company’s Compensation and Stock Option Committee (“Compensation Committee”) and the Board approved,
and the Company entered into, an employment agreement with each of Mark Duff, Chief Executive Officer (the “CEO Employment
Agreement”), Dr. Louis Centofanti, EVP of Strategic Initiatives (the “EVP of Strategic Initiatives Employment Agreement”),
Ben Naccarato, Chief Financial Officer (the “CFO Employment Agreement”), Andrew Lombardo, EVP of Nuclear and Technical
Services (the “EVP of Nuclear and Technical Services Employment Agreement”), and Richard Grondin, EVP of Waste Treatment
Operations (the “EVP of Waste Treatment Operations Employment Agreement”), collectively with the CEO Employment Agreement,
the EVP of Strategic Initiative Employment Agreement, the CFO Employment Agreement, the EVP of Nuclear and Technical Services
Employment Agreement and the EVP of Waste Treatment Operations Employment Agreement, the “New Employment Agreements”
and each individually the “New Employment Agreement.” The Company had previously entered into an employment agreement
with each of Mark Duff, Dr. Louis Centofanti, and Ben Naccarato on September 8, 2017, all three of which are due to expire on
September 8, 2020. These three employment agreements dated September 8, 2017 were terminated effective July, 22, 2020.
Pursuant
to New Employment Agreements, which are effective July 22, 2020, each of these executive officers is provided an annual salary,
which annual salary may be increased, but not reduced, from time to time as determined by the Compensation Committee. As a result
of Richard Grondin’s promotion to EVP of Waste Treatment and an executive officer of the Company, his annual salary was
increased from $208,000 as the Vice President of Western Operations to $240,000, effective July 22, 2020. No change was made to
the salary of the remaining executive officers for fiscal year 2020. In addition, each of these executive officers is entitled
to participate in the Company’s broad-based benefits plans and to certain performance compensation payable under separate
Management Incentive Plan (“MIP”) as approved by the Company’s Compensation Committee and the Company’s
Board. The Company’s Compensation Committee and the Board had previously approved individual 2020 MIPs on January 16, 2020
(which are effective January 1, 2020) for each Mark Duff, Dr. Louis Centofanti, Ben Naccarato and Andrew Lombardo which remains
effective for fiscal year 2020. See MIP approved by the Compensation Committee and the Board for Richard Grondin below (“MIP”).
Each
of the New Employment Agreements is effective for three years from July 22, 2020 (the “Initial Term”) unless earlier
terminated by the Company or by the executive officer. At the end of the Initial Term of each New Employment Agreement, each New
Employment Agreement will automatically be extended for one additional year, unless at least six months prior to the expiration
of the Initial Term, the Company or the executive officer provides written notice not to extend the terms of the New Employment
Agreement.
Pursuant
to the New Employment Agreements, if the executive officer’s employment is terminated due to death/disability or for cause
(as defined in the agreements), the Company will pay to the executive officer or to his estate an amount equal to the sum of any
unpaid base salary and accrued unused vacation time through the date of termination and any benefits due to the executive officer
under any employee benefit plan (the “Accrued Amounts”) plus any performance compensation payable pursuant to the
MIP with respect to the fiscal year immediately preceding the date of termination.
If
the executive officer terminates his employment for “good reason” (as defined in the agreements) or is terminated
by the Company without cause (including any such termination for “good reason” or without cause within 24 months after
a Change in Control (as defined in the agreement)), the Company will pay the executive officer the Accrued Amounts, two years
of full base salary, and two times the performance compensation (under the MIP) earned with respect to the fiscal year immediately
preceding the date of termination provided the performance compensation earned with respect to the fiscal year immediately preceding
the date of termination has not been paid. If performance compensation earned with respect to the fiscal year immediately preceding
the date of termination has been made to the executive officer, the executive officer will be paid an additional year of the performance
compensation earned with respect to the fiscal year immediately preceding the date of termination. If the executive terminates
his employment for a reason other than for good reason, the Company will pay to the executive an amount equal to the Accrued Amounts
plus any performance compensation payable pursuant to the MIP with respect to the fiscal year immediately preceding the date of
termination.
If
there is a Change in Control (as defined in the agreements), all outstanding stock options to purchase common stock held by the
executive officer will immediately become exercisable in full commencing on the date of termination through the original term
of the options. In the event of the death of an executive officer, all outstanding stock options to purchase common stock held
by the executive officer will immediately become exercisable in full commencing on the date of death, with such options exercisable
for the lesser of the original option term or twelve months from the date of the executive officer’s death. In the event
an executive officer terminates his employment for “good reason” or is terminated by the Company without cause, all
outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing
on the date of termination, with such options exercisable for the lesser of the original option term or within 60 days from the
date of the executive’s date of termination. Severance benefits payable with respect to a termination (other than Accrued
Amounts) shall not be payable until the termination constitutes a “separation from service” (as defined under Treasury
Regulation Section 1.409A-1(h)).
Each
New Employment Agreement is briefly described above, and the descriptions contained herein are qualified by reference to the Employment
Agreement attached as exhibits 99.1 to 99.5 to this Report.
MIP:
Upon
the approval of Richard Grondin’s Employment Agreement as discussed above as the EVP of Waste Treatment Operations and an
executive officer of the Company, the Company’s Compensation Committee and the Board approved a MIP for Richard Grondin,
effective January 1, 2020, applicable for fiscal 2020. The MIP provides guidelines for the calculation of annual cash incentive-based
compensation, subject to Compensation Committee oversight and modification. The MIP awards cash compensation based on achievement
of performance thresholds, with the amount of such compensation established as a percentage of the Mr. Grondin’s 2020 annual
base salary as the EVP of Waste Treatment Operations. The potential target performance compensation ranges from 5% to 100% ($12,000
to $240,000) of the base salary for the EVP of Waste Treatment Operations, which became effective on July 22, 2020.
2020
EVP of Waste Treatment Operations performance compensation plan is based upon meeting certain corporate revenue, earnings before
interest, taxes, depreciation and amortization (“EBITDA”), health and safety, and environmental compliance (permit
and license violations) objectives during fiscal year 2020 from our operations. At achievement of 60% to 110% of each of the revenue
and EBITDA targets, the potential performance compensation is payable at 5% to 50% of the EVP of Waste Treatment Operation’s
2020 base salary. For this compensation, 60% is based on EBITDA goal, 10% on revenue goal, 15% on the number of notices alleging
environmental, health or safety violations under our permits or licenses that occur during the fiscal year 2020 and the remaining
15% on the number of health and safety claim incidents that occur during fiscal year 2020. Upon achievement of 111% to 150%+ of
each of the revenue and EBITDA targets, the EVP of Waste Treatment Operation’s potential performance compensation is payable
at 65% to 100% of the EVP of Waste Treatment Operation’s 2020 base salary which became effective on July 22, 2020. For this
compensation, the amount payable is based on the four objectives noted above, with the payment of such performance compensation
being weighted more heavily toward the EBITDA objective. No performance incentive compensation will be payable to the EVP of Waste
Treatment Operations for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of
60% of the EBITDA target is achieved. Each of the revenue and EBITDA components is based on our Board approved revenue target
and EBITDA target. The 2020 target performance incentive compensation for our EVP of Waste Treatment Operations is as follows:
Annualized Base Pay:
|
|
$
|
240,000
|
|
Performance Incentive Compensation Target (at 100% of Plan):
|
|
$
|
120,000
|
|
Total Annual Target Compensation (at 100% of Plan):
|
|
$
|
360,000
|
|
Performance
compensation is paid on or about 90 days after year-end, or sooner, based on finalization of our audited financial statements
for 2020.
The
Compensation Committee retains the right to modify, change or terminate each MIP and may adjust the various target amounts described
below, at any time and for any reason.
The
total performance compensation paid to CEO, CFO, EVP of Strategic Initiatives, EVP of Nuclear and Technical Services, and EVP
of Waste Treatment Operations as a group is not to exceed 50% of the Company’s pre-tax net income prior to the calculation
of performance compensation. 2020 MIP for each the CEO, CFO, EVP of Strategic Initiatives, and EVP of Nuclear and Technical Services
was previously approved by the Compensation Committee and the Board on January 16, 2020 (effective January 1, 2020 and applicable
for fiscal 2020).
The
MIP for Richard Grondin is briefly described above, and the descriptions contained herein are qualified by reference to the MIP
attached as exhibits 99.6 to this Report.
Item
5.07 – Submission of Matters to a Vote of Security Holders.
On
July 22, 2020, the Company held its 2020 annual meeting of stockholders (the “2020 Annual Meeting”).
As
of the record date for the 2020 Annual Meeting, 12,135,129 shares of the Company’s common stock, par value $.001 per share
(“Common Stock”), were outstanding, each entitled to one vote per share. Of such outstanding shares of Common Stock,
9,239,889 shares were present at the meeting in person or by proxy, representing approximately 76.14% of the Company’s securities
entitled to vote.
At
the 2020 Annual Meeting, stockholders (1) reelected the Company’s six directors; (2) approved the First Amendment to the
Company’s 2017 Stock Option Plan; (3) ratified the appointment of Grant Thornton, LLP, as the Company’s independent
registered public accounting firm for the 2020 fiscal year; and (3) approved, by non-binding advisory vote, the 2019 compensation
of the Company’s named executive officers.
The
final results of each of the proposals voted on by the Company’s stockholders are described below:
Proposal
No. 1—Election of Directors:
Nominee
|
|
Votes
For
|
|
Votes
Withhold
|
Dr.
Louis F. Centofanti
|
|
5,434,058
|
|
520,225
|
Joseph
T. Grumski
|
|
5,490,843
|
|
463,440
|
Joe
R. Reeder
|
|
3,591,829
|
|
2,362,454
|
Larry
M. Shelton
|
|
5,033,773
|
|
920,510
|
Zach
P. Wamp
|
|
5,036,121
|
|
918,162
|
Mark
A. Zwecker
|
|
5,093,338
|
|
860,945
|
There
were 3,285,606 broker non-votes for each nominee. The election of directors was determined by a plurality of the votes cast at
the meeting. Accordingly, withheld votes and broker non-votes were not treated as votes cast, and therefore had no effect on the
proposal to elect directors. Each nominee was reelected as a director of the Company, to serve until the Company’s next
annual meeting of stockholders or until their respective successors are duly elected and qualified.
Proposal
No. 2—Approval of the First Amendment to the Company’s 2017 Stock Option Plan:
Votes For
|
|
|
Votes Against
|
|
|
Votes Abstention
|
|
|
5,683,516
|
|
|
|
266,348
|
|
|
|
4,419
|
|
There
were 3,285,606 broker non-votes on this matter. The affirmative vote of the holders of a majority of the votes cast at the meeting
was necessary to approve the First Amendment to the Company’s 2017 Stock Option Plan. Withheld votes and broker non-votes
were not treated as votes cast, and therefore had no effect on this proposal.
Proposal
No. 3—Ratification of the Appointment of Grant Thornton, LLP as the Independent Registered Public Accounting Firm of the
Company for the 2020 Fiscal Year:
Votes For
|
|
|
Votes Against
|
|
|
Votes Abstention
|
|
|
9,226,212
|
|
|
|
9,610
|
|
|
|
4,067
|
|
There
were no broker non-votes on this matter. The affirmative vote of the holders of a majority of the votes cast at the meeting was
necessary to ratify the appointment of Grant Thornton, LLP as the Company’s independent registered public accounting firm.
Withheld votes and broker non-votes were not treated as votes cast, and therefore had no effect on this proposal.
Proposal
No. 4—Approval, by an Advisory (Non-Binding) Vote, of the 2019 Compensation of the Company’s Named Executive Officers:
Votes For
|
|
|
Votes Against
|
|
|
Votes Abstention
|
|
|
5,657,505
|
|
|
|
274,159
|
|
|
|
22,619
|
|
There
were 3,285,606 broker non-votes on this matter. The affirmative vote of the holders of a majority of the votes cast at the meeting
was necessary to approve the advisory vote on executive compensation. Withheld votes and broker non-votes were not treated as
votes cast, and therefore had no effect on this proposal.