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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
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President/Chief
Executive Officer Fiscal Year 2019 Bonus
On December 3, 2018,
the Board of the Directors (the “Board”) of RF Industries, Ltd. (the “Company”) adopted certain
quantitative and qualitative corporate goals for the determination of cash and equity bonuses to be paid to certain officers for
the 2019 fiscal year ended October 31, 2019 (“fiscal 2019”). On January 9, 2020, the Board reviewed the performance
of the various participants under the fiscal 2019 incentive bonus plan and approved bonus payments for the participants based on
their varying individual performance levels. The Board determined that Mr. Dawson met all of the goals established for him under
the 2019 incentive bonus plan and, accordingly, granted Mr. Dawson his full cash bonus of $130,800.
Adoption of Fiscal
Year 2020 Management Incentive Equity and Cash Compensation Plan
On January 9, 2020,
the Board adopted an incentive compensation plan for officers (including the named executive officers) and senior managers of the
Company and its subsidiaries, under which each participant (i) is eligible to receive a cash payments after the end of the fiscal
year as short-term incentive bonus, and (ii) received an equity award as a long-term incentive award.
Cash Incentives.
Under the plan adopted by the Board, cash incentive bonuses, if any, will be paid to each officer and senior manager based upon
(i) the Company’s achievement of specified corporate goals and (ii) the satisfaction of subjective personal performance and
contribution goals established for that participant. The corporate goals will apply equally to all participating officers and managers.
The subjective performance of each officer will be evaluated and determined by the Compensation Committee, in its sole discretion,
after consultation with the Company’s Chief Executive Officer.
The maximum target
cash bonus payable to participants if all of the goals are achieved will range from 15% to 50% of the recipient’s fiscal
2020 base salary. Bonuses will be weighted and based on (i) the Company’s achievement of certain fiscal 2020 revenues (weighted
30%), (ii) earnings before interest, taxes, depreciation and amortization (EBITDA) (weighted 60%), and (iii) individual subjective
performance criteria (weighted 10%). The calculation of EBITDA will exclude the impact of any business acquisitions or dispositions
effected during the year, earn-out liabilities, and stock option compensation expenses accrued to management. The Board and the
Compensation Committee reserve the right to modify these goals, criteria and target percentage at any time, and to grant bonuses
to the participants even if the performance goals are not met. In addition, the Board and Compensation Committee may modify the
bonus plan targets to reflect significant changes in Company’s business, including changes due to acquisitions or dispositions
of businesses or product lines. The 2020 bonuses will be paid within 75 days after the end to the fiscal year to participating
officers and managers who are employed with the Company or its subsidiaries on the date of payment.
Equity Awards.
In order to provide long term incentives to the Company’s officers and managers, on January 9, 2020 the Board granted participating
officers and managers shares of restricted stock and/or options to purchase the Company’s common stock. Provided the participating
officer or manager is still employed with the Company or its subsidiaries on the following dates, the shares of restricted stock
and the options shall vest over four years as follows: (i) one-quarter of the restricted shares and options shall vest on January
9, 2021; and (ii) the remaining restricted shares and options shall vest in twelve equal quarterly installments over the next three
years, commencing with the first quarter following January 9, 2021. The options have a ten-year term and an exercise price of $6.46
per share (which was the closing price of the Company’s common stock on the date of grant).
Mr. Dawson, the Company’s
President and Chief Executive Officer, is a participant in the plan and was granted 21,000 shares of restricted stock, and options
to purchase 42,000 shares of common stock at an exercise price of $6.46 (the closing price of the Company’s common stock
on the date of grant). Mr. Dawson’s shares of restricted stock and the options have the same terms, vesting schedule and
price as the equity awards granted to other officers and managers under the equity awards plan. Mr. Dawson was also awarded 5,062
fully-vested shares valued at $32,700.