Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 10, 2023, Agilysys, Inc. (the “Company”) entered into a new employment agreement (the “Employment Agreement”) with Ramesh Srinivasan, the Company’s Chief Executive Officer and President. In accordance with the Employment Agreement, Mr. Srinivasan will continue to serve as the Chief Executive Officer and President for a three-year initial term. The term of employment will automatically extend for successive periods of one year unless either the Company or Mr. Srinivasan provides written notice of non-renewal at least 90 days before the end of the then-current employment term.
Mr. Srinivasan will continue to receive a base salary of $600,000 per year, subject to annual review and adjustment (which salary may be increased but not decreased) by the Company’s Board of Directors (the “Board”), and will be eligible to receive a bonus at an annual target amount equal to his base salary with a maximum bonus of up to 150% of his base salary per year, which bonus will be payable in shares of common stock that will vest based upon attainment of annual performance goals as determined by the Board.
Also, pursuant to the Employment Agreement on March 10, 2023, Mr. Srinivasan received a grant of 67,856 restricted stock units (“RSUs”), which was equal to $5,400,000 divided by the closing price of the Company’s common stock on March 10, 2023, the date of grant. Of those, 33,928 RSUs, or 50% of the total grant, will vest in equal annual amounts over the next three years, subject to Mr. Srinivasan’s continued employment with the Company on the vesting date. Of the remaining 33,928 RSUs, 21,035 RSUs (the “First Tranche”) will vest if both the closing price of the Company’s stock has been equal to or higher than $100 per share for 20 consecutive trading days following the grant date and Mr. Srinivasan continues to be employed with the Company through the third anniversary of the grant date. 12,893 of the remaining RSUs (the “Second Tranche”) will vest if both the closing price of the Company’s stock has been equal to or higher than $115 per share for 20 consecutive trading days following the grant date and Mr. Srinivasan continues to be employed with the Company through the third anniversary of the grant date. Upon vesting, the Company will issue and deliver to Mr. Srinivasan the number of shares of the Company’s common stock equal to the number of vested RSUs. The annual bonus performance shares and the RSUs are subject to the terms and conditions of the Company’s 2020 Stock Incentive Plan, and the RSUs are subject to the terms and conditions of a restricted stock unit award agreement.
In addition, pursuant to the Employment Agreement, Mr. Srinivasan will be entitled to receive the Company’s current customary employee benefits.
If the Employment Agreement is terminated by the Company without Cause or by Mr. Srinivasan for Good Reason (in each case as defined in the Employment Agreement), or if notice of non-renewal is given within the last 12 months of the initial three-year employment term, then subject to his execution of a release of claims, Mr. Srinivasan will be entitled to receive severance equal to two years’ then-current base salary and two times the value of his target annual bonus performance shares, which will be paid during regular pay intervals over the course of two years. In addition, he will also receive (a) a lump sum payment in cash, on the 60th day after the termination date, equal to the total after-tax premiums required to pay for 24 months of COBRA continuation coverage under the Company’s medical, dental and vision insurance plans; (b) a lump sum payment in cash of his pro-rated bonus for the year of termination based on actual performance with no negative discretion by the Board; and (c) twelve (12) months of accelerated vesting of all equity compensation awards that are subject only to time or service-based vesting and were unvested and outstanding on the termination date. If such termination occurs within three months before or 24 months after a Change in Control, Mr. Srinivasan will receive two times the sum of his then-current base salary and target annual bonus, two times the COBRA payment and 100% release of any post-closing restrictions related to equity awards that were deemed vested as a result of the Change of Control. In addition, upon any termination of employment, Mr. Srinivasan will receive accrued but unpaid base salary and unreimbursed expenses.
During the term of his employment and for 24 months thereafter, Mr. Srinivasan will be subject to the Company’s standard confidentiality and non-disclosure requirements, as well as non-competition and non-solicitation obligations.
The description of the Employment Agreement and restricted stock unit award agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the full text of the Employment Agreement and the form of restricted stock unit award agreement, which are filed as Exhibit 10.1 and Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.