Item
5.02 – Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Principal Officers.
Management
Incentive Plans (“MIPs”)
On
January 21, 2021, Perma-Fix Environmental Services, Inc.’s (the “Company”) Compensation and Stock Option Committee
(the “Compensation Committee”) and the Board of Directors (the “Board”) approved individual MIPs for the
calendar year 2021 for Mark Duff, our Chief Executive Officer (the “CEO”); Ben Naccarato, our Executive Vice President
(“EVP”) and Chief Financial Officer (the “CFO”); Dr. Louis Centofanti, our EVP of Strategic Initiatives;
Andy Lombardo, our EVP of Nuclear and Technical Services; and Richard Grondin our EVP of Waste Treatment Operations. The MIPs
are effective January 1, 2021 and applicable for year 2021. Each MIP provides guidelines for the calculation of annual cash incentive-based
compensation, subject to Compensation Committee oversight and modification. Each MIP awards cash compensation based on achievement
of performance thresholds, with the amount of such compensation established as a percentage of base salary. The potential target
performance compensation ranges from 5% to 150% of the 2021 base salary for the CEO ($17,220 to $516,600), 5% to 100% of the 2021
base salary for the CFO ($14,000 to $280,000), 5% to 100% of the 2021 base salary for the EVP of Strategic Initiatives ($11,667
to $233,336), 5% to 100% of the 2021 base salary for the EVP of Nuclear and Technical Services ($14,000 to $280,000) and 5% to
100% ($12,000 to $240,000) of the 2021 base salary for the EVP of Waste Treatment Operations.
The
performance compensation payable under each MIP for the CEO, CFO, EVP of Strategic Initiatives and EVP of Waste Treatment Operations
is based upon meeting certain corporate revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”),
health and safety, and environmental compliance (permit and license violations) targets and objectives during fiscal year 2021
from our operations, with such targets and objectives approved by the Company’s Board. The performance compensation payable
under the MIP for the EVP of Nuclear and Technical Services is based upon meeting certain corporate revenue, EBITDA, health and
safety, and cost performance index (“CPI”) (a metric used in measuring project performance) The Compensation Committee
believe performance compensation payable under each of the MIPs should be based on achievement of EBITDA, a non-GAAP (“Generally
Accepted Accounting Principles”) financial measurement, as the Company believes that this target provides a better indicator
of operating performance as it excludes certain non-cash items. EBITDA has certain limitations as it does not reflect all items
of income or cash flows that affect the Company’s financial performance under GAAP.
Performance
compensation is to be paid on or about 90 days after year-end, or sooner, based on finalization of our audited financial statements
for 2021.
The
Compensation Committee retains the right to modify, change or terminate each MIP and may adjust the various target amounts described
below, at any time and for any reason.
The
total to be paid to the CEO, CFO, EVP of Strategic Initiatives, EVP of Nuclear and Technical Services and EVP of Waste Treatment
Operations shall not exceed 50% of the Company’s pre-tax net income prior to the calculation of performance compensation.
Each
MIP is briefly described below, and the descriptions contained herein are qualified by reference to the respective MIPs attached
as exhibits 99.1 to 99.5 to this Report.
CEO
MIP:
CEO
performance compensation for 2021 is based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance
(permit and license violations) objectives for fiscal year 2021, all with respect to the Company’s operations. At achievement
of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation is payable at 5% to 50% of the
CEO’s 2021 base salary, weighted 60% based on the EBITDA goal, 10% on the revenue goal, and 15% on the number of health
and safety claim incidents that occur during fiscal 2021, with the remaining 15% on the number of notices alleging environmental,
health or safety violations under our permit or licenses that occur during the fiscal 2021. Upon achievement of 111% to 150%+
of each of the revenue and EBITDA targets, the potential performance compensation is payable at 75% to 150% of the CEO’s
2021 base salary, based on the four objectives noted above, with the payment of such performance compensation being weighted more
heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on our Board-approved revenue target and
EBITDA target. The 2021 target performance incentive compensation for our CEO is as follows:
Annualized Base Pay:
|
|
$
|
344,400
|
|
Performance Incentive Compensation Target (at 100% of MIP):
|
|
$
|
172,200
|
|
Total Annual Target Compensation (at 100% of MIP):
|
|
$
|
516,600
|
|
CFO
MIP:
CFO
performance compensation for fiscal 2021 is based upon meeting corporate revenue, EBITDA, health and safety, and environmental
compliance (permit and license violations) objectives for fiscal 2021, all with respect to the Company’s operations. At
achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation is payable at 5%
to 50% of the 2021 base salary, weighted 75% based on EBITDA goal, 10% on the revenue goal, and 7.5% on the number of health and
safety claim incidents that occur during fiscal 2021, with the remaining 7.5% on the number of notices alleging environmental,
health or safety violations under our permits or licenses that occur during the fiscal 2021. Upon achievement of 111% to 150%+
of each of the revenue and EBITDA targets, the potential performance compensation is payable at 65% to 100% of the CFO’s
2021 base salary, based on the four objectives noted above, with the payment of such performance compensation being weighted more
heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on the Board-approved revenue target and
EBITDA target. The 2021 target performance incentive compensation for the CEO is as follows:
Annualized Base Pay:
|
|
$
|
280,000
|
|
Performance Incentive Compensation Target (at 100% of Plan):
|
|
$
|
140,000
|
|
Total Annual Target Compensation (at 100% of Plan):
|
|
$
|
420,000
|
|
EVP
of Strategic Initiatives MIP:
EVP
of Strategic Initiatives performance compensation for fiscal 2021 is based upon meeting corporate revenue, EBITDA, health and
safety, and environmental compliance (permit and license violations) objectives for fiscal 2021, all with respect to the Company’s
operations. At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation is
payable at 5% to 50% of the 2021 base salary, weighted 75% based on EBITDA goal, 10% on the revenue goal, and 7.5% on the number
of health and safety claim incidents that occur during fiscal 2021, with the remaining 7.5% on the number of notices alleging
environmental, health or safety violations under our permits or licenses that occur during the fiscal 2021. Upon achievement of
111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation is payable at 65% to 100% of the
EVP of Strategic Initiative’s 2021 base salary, based on the four objectives noted above, with the payment of such performance
compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on the
Board-approved revenue target and EBITDA target. The 2021 target performance incentive compensation for the EVP of Strategic Initiative
is as follows:
Annualized Base Pay:
|
|
$
|
233,336
|
|
Performance Incentive Compensation Target (at 100% of Plan):
|
|
$
|
116,668
|
|
Total Annual Target Compensation (at 100% of Plan):
|
|
$
|
350,004
|
|
EVP
of Nuclear and Technical Services MIP:
EVP
of Nuclear and Technical Services performance compensation for 2021 is based upon meeting corporate revenue, EBITDA, health and
safety compliance, and cost performance index (“CPI”) (a metric used in measuring project performance) objectives
for fiscal 2021, all with respect to the Company’s operations. At achievement of 60% to 110% of each of the revenue and
EBITDA targets, the potential performance compensation is payable at 5% to 50% of the 2021 base salary, weighted 60% based on
the EBITDA goal, 10% on the revenue goal, and 15% on the number of health and safety claim incidents that occur during fiscal
2021, with the remaining 15% on CPI metric goals. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets,
the potential performance compensation is payable at 65% to 100% of the EVP of Nuclear and Technical Service’s 2021 base
salary, based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily
toward the EBITDA objective. Each of the revenue and EBITDA components is based on the Board-approved revenue target and the EBITDA
target. The 2021 target performance incentive compensation for the EVP of Nuclear and Technical Services is as follows:
Annualized Base Pay:
|
|
$
|
280,000
|
|
Performance Incentive Compensation Target (at 100% of Plan):
|
|
$
|
140,000
|
|
Total Annual Target Compensation (at 100% of Plan):
|
|
$
|
420,000
|
|
EVP
of Waste Treatment Waste Operations MIP:
EVP
of Waste Treatment Operation’s performance compensation for fiscal 2021 is based upon meeting corporate revenue, EBITDA,
health and safety, and environmental compliance (permit and license violations) objectives for fiscal 2021, all with respect to
the Company’s operations. At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance
compensation is payable at 5% to 50% of the 2021 base salary, weighted 60% based on EBITDA goal, 10% on the revenue goal, and
15% on the number of health and safety claim incidents that occur during fiscal 2021, with the remaining 15% on the number of
notices alleging environmental, health or safety violations under our permits or licenses that occur during the fiscal 2021. Upon
achievement of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation is payable at 65%
to 100% of the EVP of Waste Treatment Operation’s 2021 base salary, based on the four objectives noted above, with the payment
of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components
is based on the Board-approved revenue target and EBITDA target. The 2021 target performance incentive compensation for the EVP
of Waste Treatment Operations is as follows:
Annualized Base Pay:
|
|
$
|
240,000
|
|
Performance Incentive Compensation Target (at 100% of Plan):
|
|
$
|
120,000
|
|
Total Annual Target Compensation (at 100% of Plan):
|
|
$
|
360,000
|
|