Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 9, 2022, Taylor Greenwald, Chief Financial Officer of the Company, and the Company agreed that Mr. Greenwald will commence an unpaid leave of absence to address health matters affecting a family member on August 12, 2022. As a result of Mr. Greenwald’s leave of absence, the Company’s Board of Directors (the “Board”) has appointed Lou Ferraro, the Company’s Executive Vice President, Financial Operations and Chief Human Resources Officer, as the Company’s acting Chief Financial Officer and EVP, principal financial officer, principal accounting officer and treasurer, effective August 12, 2022.
Mr. Ferraro, age 65, has served as the Company’s Executive Vice President Financial Operations and Chief Human Resources Officer since November 2021, and as the Company’s Acting Chief Financial Officer from August 2021 to November 2021. Prior to August 2021, Mr. Ferraro served as the Company’s Executive Vice President Financial Operations and Chief Human Resources Officer since May 2021, and as the Company’s Senior Vice President of Financial Operations from January 2018, when he joined the Company, until May 2021. Before joining the Company, Mr. Ferraro was a business consultant with the Populus Group, a company providing financial and economic consultants to various businesses from June 2016 until October 2017. From 2014 through 2016, Mr. Ferraro was the Chief Operating Officer and Chief Financial Officer of BrandYourself.com, Inc. where he led the finance and operations team during a period of intense growth. From 2010 to 2014, Mr. Ferraro served as Chief Financial Officer of AWI/iMobile as well as Chief Executive Officer of the Magicpins.com business unit. From 2008 to 2019 he served as the Chief Financial Officer of Vitaltrax.com. From 2004 to 2008, Mr. Ferraro was a senior vice president for IDT where he founded TuYo Mobile, a wireless MVNO. From 1991 to 2004, he held various positions with AT&T Mobility and prior to that he held various finance and operations positions at Verizon Wireless. Mr. Ferraro graduated with a Bachelor of Science degree from Montclair State University and earned his CPA in New Jersey. On August 9, 2022, in connection with Mr. Ferraro’s appointment, the Company and Mr. Ferraro entered into an appointment letter agreement (the “Appointment Letter"). The foregoing description of the Appointment Letter does not purport to be complete and is qualified in its entirety by reference to the copy of the Appointment Letter filed as Exhibit 10.1 to this Current Report on Form 8-K.
There are no arrangements or understandings between Mr. Ferraro and any other person pursuant to which Mr. Ferraro was appointed to serve as acting Chief Financial Officer. There are no family relationships between Mr. Ferraro and any of the
Company’s directors or executive officers and Mr. Ferraro does not have any direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
In connection with Mr. Ferraro’s appointment, the Compensation Committee of the Board (the “Compensation Committee”) increased Mr. Ferraro’s annual base salary to $375,000, effective as of August 1, 2022, and his target incentive cash bonus to $262,500 during his tenure as acting Chief Financial Officer. The Compensation Committee also granted Mr. Ferraro an initial award of 25,000 time-based restricted stock awards (the “RSAs”), time-based stock options to purchase 25,000 shares of the Company’s common stock (the “Options”) and 50,000 performance-based cash units (the “Performance Units”, together with the RSAs and Options, the “Initial Award”), effective on August 9, 2022. The RSAs were issued under the Company’s 2015 Equity Incentive Plan (the “Plan”) and will vest in equal installments on each anniversary of the grant date over a period of three years. The Options were issued under the Plan and have an exercise price per share equal to the closing price of the Company’s common stock on the Nasdaq Global Select Market on August 9, 2022, and will vest in equal installments on each anniversary of the grant date over a period of three years. The Performance Units will vest upon the approval of the Board or its Compensation Committee based upon whether the Company has met the required performance goals for the Company’s three year performance period. At the time of vesting of the Performance Units, the Compensation Committee will pay Mr. Ferarro in either cash or shares of the Company’s common stock. The three year performance goals shall be established by the Board or its Compensation Committee at the time the Company’s business plan for such period is determined.
In addition, if Mr. Ferraro’s tenure as acting Chief Financial Officer is greater than 90 days, the Company has agreed to grant Mr. Ferraro an additional equity award consisting of 25,000 time-based restricted stock awards, time-based stock options to purchase 25,000 shares of the Company’s common stock and 50,000 performance-based cash units, with vesting terms and conditions similar to the Initial Award.
Mr. Greenwald’s equity vesting will be paused during the leave of absence. On August 9, 2022, in connection with Mr. Greenwald’s leave of absence and related reduction of duties, the Company and Mr. Greenwald entered into an amendment (the “Greenwald Amendment") to the employment agreement entered into as of November 1, 2021 between the Company and Mr. Greenwald (the “Employment Agreement”) which provides for his continued employment during his leave of absence, modifies the definition of a termination for good reason to exclude changes in employment responsibilities and provides that the leave of absence will be for a period of 60 days. Pursuant to the terms of the Greenwald Amendment, in the event that Mr. Greenwald does not return to his position as Chief Financial Officer on a full-time basis prior to the expiration of the initial 60-day period and the Company and Mr. Greenwald do not mutually agree to an extension of the leave of absence, then Mr. Greenwald has agreed to resign from his positions with the Company without the Company being obligated to pay any termination or severance benefits that otherwise may have been owed pursuant to the terms and conditions of the Employment Agreement or otherwise. The foregoing description of the Greenwald Amendment does not purport to be complete and is qualified in its entirety by reference to the copy of the Greenwald Amendment filed as Exhibit 10.2 to this Current Report on Form 8-K.