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Executive
Compensation Narrative to the Fiscal Year 2022 Summary Compensation Table and Fiscal Year 2022 Grants of
Plan-Based Awards Table |
Option Grants
Prior to fiscal year 2014, we granted stock options under the Equity Incentive Plan. Our named executive officers only realize the compensation if our stock price
increases over the term of the award, which aligned this element of compensation with our performance. Stock options typically vest over a three-year period, with 331/3% of the shares subject to such option vesting on each of the first, second, and third anniversaries of the date of grant.
Employment Agreements
During fiscal year 2022,
we were a party to employment agreements with each of our named executive officers. The following is a summary of the key terms of each of these employment agreements.
Daniel J. Thoren. On August 9, 2021, the Company and Mr. Thoren entered into an Amended and Restated Employment Agreement (the Restated Employment
Agreement), effective as of the close of business on August 31, 2021, which amended and restated the employment agreement between the Company and Mr. Thoren dated as of June 1, 2021 (the Employment Agreement).
Pursuant to the terms of the Restated Employment Agreement, Mr. Thoren serves as the Companys President and Chief Executive Officer effective as of the close of business on August 31, 2021 (having previously served as the
Companys President and Chief Operating Officer under the Employment Agreement). The Restated Employment Agreement has a term of one year, subject to automatic renewal periods until the Restated Employment Agreement is terminated or
Mr. Thoren attains the age of 65. Mr. Thorens initial base salary rate pursuant to the Restated Employment Agreement is $400,000 per year. If Mr. Thoren remains continuously and actively employed by the Company through
June 1, 2023, he will receive a retention bonus equal to $730,000.
The Restated Employment Agreement also provides for us to make certain payments to
Mr. Thoren in the event we terminate his employment without cause or upon the occurrence of certain events relating to a change in control of the Company, as described under Involuntary Termination and Termination Following a
Change in Control under the heading Potential Payments Upon Termination or Change in Control.
In addition, if Mr. Thorens employment
with us is terminated for any reason, he will be subject to a 12-month covenant not to compete with us, not to interfere in certain of our business relationships, and not to disclose to anyone our confidential
information.
The Restated Employment Agreement also provides that we will indemnify Mr. Thoren for all acts or omissions and for any suits brought against him
which relate to duties he performed in good faith for us.
Matthew Malone. On June 1, 2021, we entered into an employment agreement with Mr. Malone.
The agreement provides that Mr. Malone will receive an annual minimum base salary as well as other customary benefits. Mr. Malones agreement automatically renews such that it always has a
one-year term remaining, unless we or Mr. Malone elect not to extend the term further, in which case the term will end on the first anniversary of the date on which notice of such election not to extend
is given. If not terminated sooner, the agreement will end on the last day of the month in which Mr. Malone turns 65. Effective as of April 1, 2022, Mr. Malones annual base salary rate is $300,000 following the Compensation
Committees approval of an increase from his prior annual rate of $250,000. Pursuant to his employment agreement, if Mr. Malone remains continuously and actively employed by the Company through June 1, 2023, he will receive a
retention bonus equal to $250,000.
Pursuant to our employment agreement with Mr. Malone, if his employment with us is terminated for any reason, he will be
subject to a 12-month covenant not to compete with us, not to interfere in certain of our business relationships, and not to disclose to anyone our confidential information.
Our employment agreement with Mr. Malone also provides for us to make certain payments to him in the event we terminate his employment without cause as described
below under Involuntary Termination under the heading Potential Payments Upon Termination or Change in Control.
Our employment agreement with
Mr. Malone provides that we will indemnify him for all acts or omissions and for any suits brought against him which relate to duties he performed in good faith for us.
James R. Lines. On August 9, 2021, we entered into a Severance and Transition Agreement (the Transition Agreement) with Mr. Lines pursuant to
which he resigned from his position as our Chief Executive Officer and as a member of the Board, and from positions he holds with all our subsidiaries and affiliates, effective as of the close of
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GRAHAM CORPORATION 2022 PROXY STATEMENT |