Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Appointment of Brian Gephart as Chief Financial Officer
On October 16, 2020, the Board of Directors of Leaf Group Ltd. (the “Company”) appointed Brian Gephart as Chief Financial Officer, effective immediately. Mr. Gephart, age 41, had served as the Company’s interim Chief Financial Officer since May 19, 2020 and has served as the Company’s Chief Accounting Officer and principal accounting officer since June 2019. Prior to joining the Company, Mr. Gephart served as Chief Accounting Officer of JH Capital Group, a diversified specialty finance company providing a wide array of solutions for consumers and businesses across a broad range of assets, from August 2017 to April 2019. Prior to joining JH Capital Group, Mr. Gephart was a Director at PricewaterhouseCoopers LLP specializing in Capital Markets & Accounting Advisory Services, from 2011 to August 2017, where he advised a variety of private and public companies on capital market transactions, mergers and acquisitions and financial reporting and accounting matters. Mr. Gephart received a bachelor’s degree in Accounting from Hillsdale College and an M.B.A. from DePaul University. Mr. Gephart is a Certified Public Accountant.
There are no arrangements or understandings between Mr. Gephart and any other persons in connection with his appointment. There are no family relationships between Mr. Gephart and any director or executive officer of the Company, and Mr. Gephart is not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Amendment of Brian Gephart’s Employment Agreement
In connection with the appointment of Mr. Gephart as Chief Financial Officer, on October 16, 2020, the Compensation Committee of the Board of Directors approved the Amended and Restated Employment Agreement, dated as of October 16, 2020, between the Company and Brian Gephart (the “Amendment”). Prior to the Amendment, Mr. Gephart’s employment agreement provided for an annual base salary of $300,000 and an annual target bonus of 50% equal to $150,000. The Amendment provides for an increased annual base salary of $325,000 and, as a result, his target annual bonus of 50% is now $162,500. The Amendment also provides for a grant of 10,000 additional restricted stock units (“RSUs”), which will vest over three years, with one-third of the RSUs vesting on November 1, 2021 and the remaining two-thirds vesting in 24 substantially equal monthly installments commencing on each monthly anniversary thereafter, subject to Mr. Gephart’s continued employment through the applicable vesting date. In addition, the Amendment provides that in the event Mr. Gephart’s employment is terminated by the Company without Cause, by Mr. Gephart for Good Reason, or due to Mr. Gephart’s death or Disability (each, a “Qualifying Termination”), in each case, Mr. Gephart will be entitled to: (i) a lump-sum payment in an amount equal to 12 months of his then-current annual base salary; (ii) Mr. Gephart’s unpaid annual bonus amount (if any) for the fiscal year preceding the year of such Qualifying Termination that he would have been entitled to had he remained employed through the payment date, (iii) 12 months of accelerated time-based vesting of any time-based vesting awards (the “Time-Vesting Acceleration”); and (iv) healthcare continuation coverage for Mr. Gephart and his dependents for up to 12 months after the termination date at the same levels and cost to Mr. Gephart at the time of such Qualifying Termination, subject, in all cases to his execution (and non-revocation) of a general release in favor of the Company (the “Release Requirement”).
In addition to the benefits described above, and similarly subject to the Release Requirement, if such Qualifying Termination occurs 90 days prior to, or within one year following, a Change in Control, Mr. Gephart will also be entitled to: (i) accelerated vesting of all then unvested outstanding equity awards held by Mr. Gephart (provided, that if the Qualifying Termination occurs prior to such Change in Control, such equity acceleration (other than the Time-Vesting Acceleration) shall be contingent on a Change in Control occurring within 90 days); and (ii) a pro rata bonus equal to the amount of the annual bonus earned by Mr. Gephart during the prior fiscal year, based on the number of days worked during the year such Qualifying Termination occurs, and payable in a lump sum.
For purposes herein, “Cause,” “Disability,” “Change in Control,” and “Good Reason” shall have the meaning set forth in the Amendment.