Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) On July 8, 2019, VOXX International Corporation (“the Company”) entered into a new employment agreement with each of Mr. Patrick M. Lavelle, President and CEO, Mr. Charles M. Stoehr, Senior V.P. and CFO, and Ms. Loriann Shelton, Senior V.P. and COO, and amended its employment agreement with Mr. Thomas Malone, Senior V.P. and President of VOXX Advanced Solutions LLC. The following description of the employment agreements and amendment does not purport to be a complete statement of the parties’ rights and obligations under their respective employment agreements or amendment and is qualified in its entirety by reference to the employment agreements and amendment which are being filed as exhibits herewith.
(i) Mr. Lavelle has entered into a five (5) year Employment Agreement with an annual base salary of $1.0 million. His annual cash bonus shall be calculated and paid at 1.0% of the Company’s Adjusted EBITDA up to and including $10.0 million and 2.0% of the Company’s Adjusted EBITDA in excess of $10.0 million, with such $10.0 million threshold subject to adjust
ment for an acquisition, divestiture, or investment by the Company in excess of $5.0 million. Mr. Lavelle’s annual bonus has been changed to a combination of cash and stock to further align his interests with shareholders. As such, and in lieu of the former annual incentive bonus of $250,000 for each $5 million of pre-tax profit earned by the Company and a discretionary bonus, Mr. Lavelle shall immediately receive a stock grant (in lieu of further participating in any of the Company’s stock incentive plans) of 200,000 shares of the Company’s Class A common stock and on each of March 1, 2020, 2021 and 2022, Mr. Lavelle shall be granted an additional 100,000 shares of the Company’s Class A common stock with a hold requirement equal to one year’s base salary of $1.0 million subject to the terms of the Employment Agreement.
Mr. Lavelle shall also receive from the Company a grant of the Company’s Class A common stock, or the equivalence in cash, up to a maximum value of $5.0 million based on the closing NASDAQ price exceeding $5.00/share (“Market Stock Units or MSUs”) during the five year term of the Employment Agreement in accordance with a calculation set forth in a schedule to the Employment Agreement. As noted in Schedule A, “Market Stock Units Calculation,” to Mr. Lavelle’s Employment Agreement, Mr. Lavelle’s MSU’s will be calculated based on the price of the Company’s Class A Common Stock at various levels between $5.50/share and $15.00/share, with the number of shares received weighted more heavily towards achieving the higher stock price.
(ii) Mr. Stoehr has entered into a five (5) year Employment Agreement with an annual base salary of $400,000. His annual cash bonus shall be calculated and paid at .375% of the
Company’s Adjusted EBITDA up to a
nd including $10.0 million and .75% of the Company’s Adjusted EBITDA in excess of $10.0 million, with such $10.0 million threshold subject to adjustment for an acquisition, divestiture, or investment by the Company in excess of $5.0 million.
(iii) Ms. Shelton has entered into a five (5) year Employment Agreement with an annual base salary of $450,000. Her annual cash bonus shall be calculated and paid at (a) .375% of the Company’s Adjusted EBITDA up to [the Threshold (initially $10.0 million) minus $10.0 million] (but never less than Zero); plus (b) .75% of the Company’s Adjusted EBITDA in excess of [the Threshold, as adjusted by the Board of Directors for acquisitions, divestitures and investments by the Company in excess of $5.0 million, minus $10.0 million]; with no minimum Adjusted EBITDA required for the annual bonus to accrue and become payable and with no maximum cap on the annual bonus payable based upon the Company’s Adjusted EBITDA.
(iv) Mr. Malone’s Employment Agreement was amended to restructure his bonus arrangement. His new bonus criteria consists of (a) a guaranteed bonus of $125,000 annually; (b) an additional bonus of $100,000 annually provided that Mr. Malone achieves at least 100% of the net income budgeted for the applicable fiscal year in the original budget for VOXX Advanced Solutions LLC, as approved by the Company’s Board of Directors. Such $100,000 bonus shall be proportionately reduced by the ratio of net income achieved versus net income budgeted for a fiscal year; and (c) a payment of 1.0% of the Company’s net gain from the sale, less accumulated losses, of the Company’s ownership interest in EyeLock LLC, should a transaction materialize.