| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On November 14, 2022, Michael Fleishman became the Chief Executive Officer of Mastech InfoTrellis, Inc. (“Mastech InfoTrellis”), Mastech Digital, Inc.’s (the “Company”) wholly owned subsidiary. Prior to the effective date, he entered into an Executive Employment Agreement on October 26, 2022 with Mastech InfoTrellis and Mastech Digital Data, Inc. (“Mastech Digital Data”). The term of Mr. Fleishman’s employment may be terminated by the Company or Mr. Fleishman with or without Cause or for any or no reason.
The Employment Agreement provides that, effective November 14, 2022, Mr. Fleishman’s base salary shall be $550,000 per year, subject to review and modification annually by the Company. The Employment Agreement also provides that Mr. Fleishman is eligible to earn an annual performance-based cash bonus of $300,000 (the “Target Bonus”) for the achievement of certain financial and operational targets. 75% of the Target Bonus is guaranteed and the remaining 25% shall be based upon meeting certain key performance indicators. These targets, and the bonus dollars tied to such targets, will be determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) on an annual basis. The key performance indicators will be determined by Mr. Fleishman and the Compensation Committee. Under the Employment Agreement, Mr. Fleishman also received an award of a non-qualified stock option to purchase 300,000 shares of the Company’s common stock pursuant to the Company’s Stock Incentive Plan and is also eligible to receive non-qualified stock options and other awards pursuant to the Company’s Stock Incentive Plan in a manner and amount determined by the Compensation Committee.
In the event that Mr. Fleishman is terminated with “Cause”, the Company may immediately cease payment of any further wages, benefits or other compensation under the Employment Agreement other than salary and benefits (excluding options) earned through the date of termination (the “Accrued Obligations”). In the event that Mr. Fleishman is terminated without “Cause” or he resigns for “Good Reason” (in each case, other than within 12 months following a “Change of Control” involving the Company, Mastech InfoTrellis or Mastech Digital Data), he is entitled to all Accrued Obligations earned through the date of termination, a severance equal to 12 months of his last monthly base salary (less appropriate deductions) that is payable by the Company over a 12-month period following his termination date, continued coverage under the Company’s employee benefits and group health plans in accordance with the Company’s severance policy and payment of a portion of his Target Bonus dependent upon the term of employment, with 50% being paid out if termination occurs before Mr. Fleishman completes 12 months of employment and 100% being paid out if termination occurs after Mr. Fleishman completes 12 months of employment (less appropriate deductions). Mr. Fleishman is also entitled, for a 12-month period following his termination date, to the continued vesting of any outstanding unvested stock options he held on his termination date and granted under the Company’s Stock Incentive Plan. The exercise period for vested options held by Mr. Fleishman at the time of his termination will also be extended for a six-month period after the otherwise applicable expiration date, subject to certain restrictions.
In the event that Mr. Fleishman is terminated without “Cause” or he resigns for “Good Reason”, in each case within 12 months after a “Change of Control” involving the Company, Mastech InfoTrellis or Mastech Digital Data, he is entitled to all Accrued Obligations earned through the date of termination, a lump sum severance payment (less appropriate deductions) equal to two times the sum of (i) his average base salary for the three years preceding his termination (including the year of termination) and (ii) his average annual Target Bonus received for the three years preceding his termination (not including the year of termination). Mr. Fleishman is also entitled to the payment of the premiums required to continue coverage under the Company’s employee benefits and group health plans for up to 24 months after his termination, the acceleration in full of the vesting and/or exercisability of all outstanding equity awards held by Mr. Fleishman on his termination date and reimbursement of up to $25,000 for outplacement services. The exercise period for vested options held by Mr. Fleishman at the time of his termination will be accelerated in full, effective as of Mr. Fleishman’s final day of employment.
The foregoing descriptions of the Employment Agreement does not purport to be complete and is qualified in its entirety by the full text of the Employment Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
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