CPI CARD GROUP INC. (NASDAQ:PMTS) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 5.02 Departure of Directors or Certain Officers; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 21, 2017, the Compensation Committee (the Committee) of the Board of Directors (the Board) of CPI Card Group Inc. (the Company) adopted guidelines governing executive severance and changes in control (the Executive Severance Guidelines). The Executive Severance Guidelines apply to U.S.-based officers of the Company, as officer is defined by Section 16 of the Securities Exchange Act of 1934, as amended, including named executive officers (Section 16 Officers), who are not otherwise parties to individual employment and/or severance agreements with the Company that provide for benefits in the event of a termination of employment.
Under the Executive Severance Guidelines, if the employment of a participating Section 16 Officer is terminated without cause, as hereinafter defined, or he or she resigns for good reason, as hereinafter defined, in each case, not in connection with a change in control, as hereinafter defined, he or she would be eligible to receive an amount equal to (i) for the Companys Chief Executive Officer, 1.5 times the sum of his or her base salary plus bonus target, or (ii) for all other Section 16 Officers, one times the sum of his or her base salary plus bonus target. In the event of such a termination occurring within the 24 months following a change in control, the applicable severance multiple would be increased to two times (for the Chief Executive Officer) and 1.5 times (for all other Section 16 Officers). All such amounts would be paid in accordance with the Companys standard payroll procedures. In addition, the Executive Severance Guidelines provide that the Company would continue to pay for the portion of the cost of coverage for medical, dental and vision benefits that it paid on behalf of a Section 16 Officer as of the date of his or her termination of employment for the greater of (i) the severance period or (ii) the eligibility and enrollment period applicable to such Section 16 Officer to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), for so long as the Section 16 Officer properly elects COBRA continuation coverage. Finally, under the Executive Severance Guidelines, the Company may provide up to six months of outplacement services, at managements discretion.
Cause and change in control are each as defined in the Companys Omnibus Incentive Plan, and good reason means, without the Section 16 Officers consent, (1) the Section 16 Officers refusal to relocate a distance greater than 50 miles as required by the Company, (2) a significant reduction in duties, title or authority, or (3) a material reduction in base salary.
The receipt of all benefits under the Executive Severance Guidelines is subject to the Section 16 Officers execution, delivery and non-revocation of a separation and release of claims agreement, which includes certain restrictive covenants.