Item
5.02 – Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Employment
Agreements:
On
April 20, 2023, Perma-Fix Environmental Services, Inc.’s (the “Company”) Compensation and Stock Option Committee (“Compensation
Committee”) and the Board of Directors (the “Board”) approved and Company entered into, an employment agreement with
each of Mark Duff, President and Chief Executive Officer (the “CEO Employment Agreement”), Ben Naccarato, Executive Vice
President (“EVP”) and Chief Financial Officer (the “CFO Employment Agreement”), Dr. Louis Centofanti, EVP of
Strategic Initiatives (the “EVP of Strategic Initiatives 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 CFO Employment Agreement, the EVP of Strategic Initiative 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 dated July 22, 2020, with
each of Mark Duff, Ben Naccarato, Dr. Louis Centofanti, Andrew Lombardo and Richard Grondin, with each of the five employment agreements
due to expire on July 22, 2023. These five employment agreements dated July 22, 2020 were terminated effective April 20, 2023.
The
New Employment Agreements, which are substantially identical, except for compensation, are effective April 20, 2023. Pursuant to the
New Employment Agreements, each of these executive officers is provided an annual salary, which annual salary may be increased from time
to time, but not reduced, as determined by the Compensation Committee. 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 2023 MIPs on January 19, 2023 (which are effective January 1,
2023) for each Mark Duff, Dr. Louis Centofanti, Ben Naccarato, Andrew Lombardo and Richard Grondin which remains effective for fiscal
year 2023.
Each
of the New Employment Agreements is effective for three years from April 20, 2023 (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. In the event that an executive officer’s employment is terminated due to death,
the Company will also pay a lump-sum payment (the “Cash Medical Continuation Benefit”) equal to eighteen times the monthly
premium that would be required to be paid, pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”)
to continue group health coverage for the executive officer’s eligible covered dependents in effect on the date of the executive
officer’s termination of employment, based on the premium for the first month of COBRA coverage. Such cash payment will be taxable
and will be made regardless of whether the executive officer’s eligible covered dependents elect COBRA continuation coverage.
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 agreements), the Company will pay the executive officer Accrued Amounts, (a) two years of full base salary,
plus (b) (i) two times the performance compensation (under the executive officer’s 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 yet been paid, or (ii) if performance compensation earned with respect to the fiscal year immediately
preceding the date of termination has already been paid 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, and (c) the Cash
Medical Continuation Benefit. If the executive officer terminates his employment for a reason other than for good reason, the Company
will pay to the executive officer an amount equal to the Accrued Amounts plus any performance compensation payable pursuant to the MIP
applicable to such executive officer.
Additionally,
in the event of a Change in Control (as defined in the agreements), all outstanding stock options to purchase the 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” (as defined in the agreements) or is terminated by the Company without cause, all outstanding
stock options to purchase common stock held by the 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 officer’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.
Newly
Appointed Director
Upon
the Company’s Amended and Restated By-laws being amended to increase the maximum number of board members from eight to nine members,
the Board elected Mark Duff, the Company’s President and CEO, to fill the newly created directorship, effective April 20,
2023. Mr. Duff’s directorship is subject to being re-elected by the Company’s stockholders at the Company’s 2023 Annual
Meeting of Stockholders to be held on July 20, 2023. As provided above, Mr. Duff, as the Company’s President and CEO, was subject
to an employment agreement dated July 22, 2020, which was terminated on April 20, 2023, when the Company and Mr. Duff executed the New
Employment Agreement dated April 20, 2023, as described above in this Item 5.02 and incorporated herein by reference. In addition, Mr.
Duff, in his capacity as President and CEO, is also subject to a broad-based performance compensation plan, defined above as an MIP,
that was effective as of January 1, 2023.
Under
the New Employment Agreement, Mr. Duff’s annual base compensation is $374,870, subject to being increased by the Board as provided
in the New Employment Agreement, as opposed to his annual based compensation of $344,400 under the July 22, 2020 employment agreement.
Mr.
Duff, as the Company’s President and CEO, may participate in the Company’s 2017 Stock Option Plan (the “2017 Plan”).
Under the 2017 Plan, Mr. Duff has been granted options from time to time to purchase up to an aggregate of 245,000 shares of the Company’s
common stock at an exercise price equal to the fair market value of the Company’s common stock on the date of grant.
Mr.
Duff has not been appointed to serve on any committees of the Board. As the Company’s President and CEO, Mr. Duff does not qualify
as an “Independent Director” under NASDAQ rules and is not eligible to receive compensation for his services as a director
or to participate in the Company’s 2003 Outside Directors Stock Plan.
Mr.
Duff has held the position of President and CEO since September 2017. Since joining the Company in 2016, Mr. Duff has developed and implanted
strategies to meet growth objectives in both the Company’s Treatment and Services Segments. Mr. Duff has over 38 years of management
and technical experience in the U.S. Department of Energy and U.S Department of Defense environmental and construction markets as a corporate
officer, senior project manager, co-founder of a consulting firm, and federal employee. Mr. Duff has an MBA from the University of Phoenix
and received his B.S. from the University of Alabama.