commenced on December 3, 2012 and he became our Chief Executive Officer effective February 1, 2013. The terms of Mr. Trojans employment agreement were approved by the
Compensation Committee as well as the entire Board after a period of negotiation with Mr. Trojan and his advisors. The Compensation Committee believes the employment agreement reflects appropriate and competitive compensation for services of an
executive of Mr. Trojans experience and skill set. The terms and conditions of Mr. Trojans employment agreement are presented below:
Term. Effective as of December 3, 2012, and terminating December 31, 2017 (unless earlier terminated in accordance with the terms of the employment agreement). Automatic
renewals for additional one year terms unless either party gives notice of its intention not to extend at least six months prior to the scheduled termination date.
Base Salary. $850,000 subject to increase at the discretion of the Compensation Committee.
Special Bonus. A special signing bonus in the amount of $350,000.
Bonus Opportunity. Annual bonus opportunity targeted at no less than 80% of Mr. Trojans base salary. Actual bonuses to be determined by the Board of Directors based upon
performance criteria established by the Compensation Committee after consultation with Mr. Trojan.
Benefits. Certain fringe benefits including up to $3,000 per year for unreimbursed out-of-pocket costs associated with an annual physical examination, the use of a company automobile or automobile allowance of up to $1,800 per month,
the right to participate in family group health insurance and in the other benefit plans made available to the Companys executive officers. In addition, the Company agreed to pay up to $20,000 of Mr. Trojans legal fees incurred in
connection with negotiation and documentation of the Employment Agreement.
Equity Grant. On
December 3, 2012, Mr. Trojan received an equity award under the Companys 2005 Equity Incentive Plan having an aggregate grant date value of $3,750,000 and consisting of non-qualified stock options and restricted stock units. The
stock options and restricted stock units vest in five equal annual installments of 20% commencing on the first yearly anniversary of Mr. Trojans start date and ending on the fifth yearly anniversary. The options expire on the earliest of
(i) the tenth yearly anniversary of the date of grant, (ii) 12 months following any termination of Mr. Trojan without Cause (as defined in the Employment Agreement), resignation for Good Reason (as defined in
the Employment Agreement), or termination as a result of the death or disability of Mr. Trojan, (iii) 90 days following Mr. Trojans resignation without Good Reason, or (iv) the date of any termination for Cause. If, prior
to December 3, 2013, Mr. Trojans employment is terminated without Cause or by Mr. Trojan for Good Reason, the stock options and restricted stock unit awards shall automatically vest so that 20% of the total award is vested as of
the termination date.
Termination; Severance. We may terminate Mr. Trojans employment at any
time. If Mr. Trojan is terminated for any reason (other than for Good Reason) or if Mr. Trojan dies or becomes disabled, he (or his estate) will be entitled to receive the following (the Base Termination Payments): (i) any
accrued but unpaid base salary and accrued vacation pay, (ii) unpaid reimbursements for expenses incurred prior to termination, (iii) accrued but unpaid car allowance, and (iv) any benefits required to be paid or provided under
applicable law, our plans, contracts or arrangements.
In the event of termination without Cause or by Mr. Trojan for
Good Reason, in addition to the Base Termination Payments, Mr. Trojan shall be entitled to receive the following: (i) any earned but unpaid bonus for the fiscal year ending immediately before the year of termination of employment and
(ii) a lump sum cash payment equal to 100% of his then current base salary; provided, however, that if the termination occurs prior to December 3, 2014, the lump sum cash payment shall equal 200% of his then current base salary.