ADESTO TECHNOLOGIES CORPORATION (NASDAQ:IOTS) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.
Awards of Performance Based Cash Compensation for Executive Officers
On April 24, 2018, the Compensation Committee (the “Committee”) of the Board of Directors of the Company approved a bonus plan for 2018 (“Bonus Plan”) for certain executive officers of the Company, including the named executive officers (the “NEOs”) of the Company listed in the Company’s annual report on Form 10-K for the year ended December 31, 2017, Narbeh Derhacobian, President and Chief Executive Officer, Ron Shelton, Chief Financial Officer, and Gideon Intrater, Chief Technology Officer. In addition, the Committee also approved target bonus amounts under the Bonus Plan for Messrs. Derhacobian, Shelton, and Intrater equal to 35%, 35% and 25% of his total base salary for 2018, respectively (each, the “on-target bonus payment”).
Under the Bonus Plan, following completion of 2018, participants are eligible to receive a bonus equal to the applicable on-target bonus payment multiplied by the Bonus Multiplier (as defined below), in each case based on attainment of performance objectives derived from the Company’s financial plan for 2018 and the non-financial management and business objectives (“MBOs”) established for each participant. The “Bonus Multiplier” (which may be less than or more than 50%) is calculated as follows:
(Financial objective weighting x (sum of financial objective performance percentages)) + MBO performance percentage
Under the Bonus Plan, the financial objective weighting is 70% for Messrs. Derhacobian and Shelton and 40% for Mr. Intrater, with the balance weighting percentage allocated to MBOs (which in the aggregate may not exceed 50% of such percentage). The financial objectives for all are expressed in terms of revenue, gross margin, and adjusted EBITDA (as defined in the Company’s earnings releases) and are measured independently and weighted at target level at 35% (53.8% maximum), 35% (53.8% maximum) and 30% (48.8% maximum), respectively. Specific MBOs for each participant are established by the Committee to align with the Company’s operational and strategic objectives and participant’s area of responsibility.
Grants of Performance-Based Restricted Stock Units for Executive Officers
On April 24, 2018, the Committee also approved grants of performance-based restricted stock units (“PRSUs”) to acquire shares of the Company’s common stock (“common stock”) to certain executive officers of the Company, including two of the NEOs. PRSUs were granted to the two NEOs for the following target number of shares of common stock (“target shares”): 58,977shares for Mr. Derhacobian and28,443shares for Mr. Shelton. These awards were granted under the 2015 Equity Incentive Plan. The PRSUs are subject to vesting based on the achievement of specified performance metrics as set forth below.
Under the PRSUs, depending on the percentage by which the cumulative appreciation of the closing price per share of the Company’s common stock from April 2, 2018 to March 31, 2019 (with such price at the end of the period being equal to the average closing price per share of the Company’s common stock for the 30 consecutive trading days prior to and including March 29, 2019 (the last trading day in March 2019)(“Company Stock Price Performance”) exceeds the cumulative appreciation of the Russell 2000 Index from April 2, 2018 to March 31, 2019 (“Index Performance”), 0% to 50% of the target shares will be eligible to be earned as of March 31, 2019. If (x) the Company Stock Price Performance for the performance period does not exceed Index Performance over the same period or (y) the closing price per share of the Company’s common stock on March 29, 2019 does not meet or exceed a pre-established price per share, then no shares will be earned under the awards and all shares will be forfeited under the awards. If any target shares become earned (“earned shares”) as a result of achievement of the performance metrics, then 20% of the earned shares shall vest on the date that the Committee determines the actual achievement of the performance metrics and the remainder will vest in equal quarterly installments on June 30, 2019and at the end of each of the next seven quarters thereafter until all of the earned shares have completed vested. Subject to certain exceptions, the awards shall vest, if at all, only following the end of March 31, 2019, and the executive officers must be employed by the Company at the time of vesting for the award to vest.