Datawatch Corporation (NASDAQ:DWCH) 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 Arrangements of Certain Officers
(e)Compensatory Plans and Arrangements
On December 1, 2017, the Board of Directors (the “Board”) of Datawatch Corporation (“Datawatch”) approved the fiscal 2018 Corporate Officers Compensation Plan (the “2018 Compensation Plan”), which provides for fiscal 2018 compensation for the executive officers of Datawatch, including base salary, performance-based cash bonuses and awards of restricted stock units for shares of Datawatch’s common stock (“RSUs”).
Base Salary and Cash Bonuses
The following table sets forth base salary and performance-based cash bonus eligibility amounts under the 2018 Compensation Plan for the executive officers of Datawatch:
| Name/Title | Base Salary ($) | Aggregate Target Cash Bonus ($) | Each Quarterly Bonus Eligibility at 90% Plan Revenue ($) | Quarterly Bonus Eligibility at 50% Plan Revenue ($) | Additional Bonus Eligibility at 105% Annual Revenue ($) | Additional Bonus Eligibility at 125% Annual Revenue ($) |
|
Michael A. Morrison, Chief Executive Officer |
380,000 | 275,000 | 55,000 | 68,750 | 33,000 | 247,500 |
|
Ken Tacelli, Chief Operating Officer |
350,000 | 250,000 | n/a | n/a | n/a | n/a |
|
James Eliason, Chief Financial Officer |
315,000 | 140,000 | 28,000 | 35,000 | 16,800 | 126,000 |
For executives other than Mr. Tacelli, aggregate target cash bonus eligibility is split into four quarterly bonuses in equal target amounts that together represent 50% of the aggregate target cash bonus amount and are payable based on: (A) whether Datawatch achieves earnings before interest, taxes, severance, depreciation and amortization in excess of a certain threshold for such fiscal quarter (each such threshold amount as approved by the Board is referred to herein as the “Quarterly EBITDA Threshold”) and (B) only if such Quarterly EBITDA Threshold is met, the extent to which Datawatch achieves its revenue targets for the applicable fiscal quarter (each such quarterly revenue target referred to herein as the “Quarterly Revenue Target”, and each such quarterly bonus, a “Quarterly Bonus”). Each Quarterly Bonus will be payable only if Datawatch’s earnings before interest, taxes, severance, depreciation and amortization meets or exceeds the applicable Quarterly EBITDA Threshold. 50% of Mr. Tacelli’s cash bonus is commission-based, tied to monthly revenue and will be paid out monthly in arrears.
Quarterly Bonus Eligibility and Calculation
Each Quarterly Bonus is eligible for payout if Datawatch: (A) achieves the applicable Quarterly EBITDA Threshold and (B) achieves at least 90% of the applicable Quarterly Revenue Target. Assuming the applicable Quarterly EBITDA Threshold is met, Quarterly Bonus eligibility at performance representing 90% of the Quarterly Revenue Target is 80% of the Quarterly Bonus amount, with bonus eligibility scaling up at a 2 to 1 rate as performance improves above 90% to 50% of the applicable Quarterly Revenue Target. Quarterly Revenue achievement above 50% of each Quarterly Revenue Target will not result in additional payments above 50% of the applicable Quarterly Bonus amount.
Additional Bonus Eligibility and Calculation
If Datawatch achieves year-to-date earnings before interest, taxes, severance, depreciation and amortization in excess of Datawatch’s threshold for fiscal year 2018 (as such EBITDA threshold is determined by the Board, the “Annual EBITDA Threshold”), performance over 50% of Datawatch’s revenue target for fiscal year 2018 (as such revenue target is determined by the Board, the “Annual Revenue Target”) will result in eligibility for additional cash bonus amounts calculated: (i) at a 2 to 1 rate as performance improves above 50% to 105% of the Annual Revenue Target and (ii) at a 4 to 1 rate as performance improves above 105% of the Annual Revenue Target. There is no cap on the amount of additional cash bonus amounts potentially payable as a result of Datawatch’s performance relative to the Annual Revenue Target. For example, assuming the Annual EBITDA Threshold is met, (y) performance at 105% of the Annual Revenue Target will result in eligibility for an additional cash bonus amount equal to 10% of the applicable aggregate target cash bonus amount for such executive and (z) performance at 125% of the Annual Revenue Target will result in eligibility for an additional cash bonus amount equal to 90% of the applicable aggregate target cash bonus amount for such executive.
The Board retains the discretion at any time to change the above cash bonus criteria (including bonus amounts, Quarterly EBITDA Thresholds, Quarterly Revenue Targets, Annual EBITDA Threshold and Annual Revenue Target), including based on individual performance or in the event any operating changes (including acquisitions) are approved during the fiscal year that materially impact Datawatch’s fiscal 2018 financial plan.
RSUs
The following table sets forth the time-based RSUs (“Time-Based RSUs”) awarded to the executive officers of Datawatch on December 1, 2017:
| Executive | RSUs |
| Michael Morrison, Chief Executive Officer | 70,000 |
| Ken Tacelli, Chief Operating Officer | 40,000 |
| James Eliason, Chief Financial Officer | 35,000 |
All of the Time-Based RSUs awarded to each executive will vest in equal installments on May 1, 2019 and each of the first and second anniversaries of May 1, 2019. Vesting with respect to fifty percent (50%) of the then unvested portion of each such Time-Based RSU award shall be accelerated and vest in full immediately prior to the consummation of a change in control of Datawatch and the vesting with respect to one hundred percent (50%) of the then unvested portion of each such Time-Based RSU award shall be accelerated and vest in full if such executive officer is terminated without cause or resigns with good reason within 12 months after the consummation of a change in control of Datawatch.
The following table sets forth the performance-based RSUs (“Performance-Based RSUs”) awarded to the executive officers of Datawatch on December 1, 2017:
| Executive | RSUs |
| Michael Morrison, Chief Executive Officer | 20,000 |
| Ken Tacelli, Chief Operating Officer | 15,000 |
| James Eliason, Chief Financial Officer | 5,000 |
Except for 10,000 Performance-Based RSUs awarded to Ken Tacelli, all of the Performance-Based RSUs awarded to each executive will vest as follows: one-third of such Performance-Based RSUs will vest on November 15, 2018 following Datawatch’s release of its fiscal 2018 earnings only if Datawatch achieves the Annual Revenue Target. If Datawatch achieves the Annual Revenue Target for fiscal 2018, the remaining two-thirds of such Performance-Based RSUs will vest in equal installments on the first and second anniversaries of November 15, 2018, provided the executive remains employed by Datawatch on these dates.
10,000 Performance-Based RSUs awarded to Ken Tacelli will vest as follows: one-third of such Performance-Based RSUs will vest on November 15, 2018 if Datawatch achieves its revenue target for the six months ended March 31, 2018 (the “1H Revenue Target”). If Datawatch achieves its 1H Revenue Target, the remaining two-thirds of such Performance-Based RSUs awarded to Mr. Tacelli will vest in equal installments on the first and second anniversaries of November 15, 2018, provided the executive remains employed by Datawatch on these dates.
Vesting with respect to fifty percent (50%) of the then unvested portion of each Performance-Based RSU award shall be accelerated and vest in full immediately prior to the consummation of a change in control of Datawatch and the vesting with respect to one hundred percent (50%) of the then unvested portion of each Performance-Based RSU award shall be accelerated and vest in full if such executive officer is terminated without cause or resigns with good reason within 12 months after the consummation of a change in control of Datawatch.
Amendments to Executive Agreements
On December 1, 2017, Datawatch entered into amended and restated executive severance agreements (the “Restated Executive Agreements”) with Michael Morrison, James Eliason and Ken Tacelli. Each Restated Executive Agreement provides that in the event that Datawatch terminates such executive’s employment for reasons other than for “Cause” (as defined in each Restated Executive Agreement) or such executive elects to terminate his employment with Datawatch for “Good Reason” (each such termination, a “Severance Trigger Event”) such executive is entitled to severance payments equal in the aggregate to his then current annual base salary, payable on a monthly basis for twelve months, in the case of Mr. Morrison, and six months, in the case of Mr. Eliason and Mr. Tacelli, following such executive’s termination date (the “Severance Payments”). If a Severance Trigger Event occurs within twelve months after a “Change in Control” of Datawatch (as defined in the Restated Executive Agreements), the Restated Executive Agreements extend Severance Payments for an additional six months following the payment of all Severance Payments resulting from the Severance Trigger Event.
For the duration of the applicable severance period, each executive is also entitled to a taxable monthly payment in an amount equal to Datawatch’s share of such executive’s monthly premium for group medical and dental coverage that is in effect immediately prior to termination (the “Benefits Coverage”). Purusant to Mr. Eliason’s Restated Executive Agreement, he is entitled to Benefits Coverage for a period of eighteen months, whether or not a Severance Trigger Event occurs within twelve months after a Change in Control of Datawatch.
The Restated Executive Agreements each provide that if any of the Severance Payments and other benefits provided for in the Restated Executive Agreements or otherwise payable to the executives (“280G Payments”) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and could be subject to excise tax under Section 4999 of the Internal Revenue Code, then the 280G Payments will be delivered in full or delivered as to such lesser extent which would result in no portion of such benefits being subject to excise tax, whichever results in the greater amount of after-tax benefits to such executive.
A copy of each Restated Executive Agreement, each dated as of December 1, 2017, is attached hereto as Exhibit 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference. The description of the Restated Executive Agreements contained in this Current Report on Form 8-K is qualified in its entirety by reference to such document.
| Item 9.01 | Financial Statements and Exhibits |
The following Exhibit is furnished as part of this report:
DATAWATCH CORP ExhibitEX-10.1 2 tv478780_ex10-1.htm EXHIBIT 10.1 Exhibit 10.1 December 1,…To view the full exhibit click here
About Datawatch Corporation (NASDAQ:DWCH)
Datawatch Corporation is engaged in the design, development, marketing, distribution and support of business computer software primarily for the self-service data preparation and visual data discovery markets. The Company also provides services, including implementation and support of its software products, as well as training on their use and administration. The Company’s product family includes Datawatch Monarch, Datawatch Panopticon and Datawatch Report Mining Server (RMS). The Company offers its enterprise products through perpetual licenses and subscription pricing models. The Company also offers educational services for customers and partners implementing and learning about the platform, maintenance and support, and professional services to provide in-depth technical assistance for software implementations. The Company offers an array of live and virtual classroom instruction, including private onsite classes.