Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
President/Chief Executive Officer Fiscal Year 2019 Bonus
On December 3, 2018, the Board of the Directors (the "Board") of RF Industries,
Ltd. (the "Company") adopted certain quantitative and qualitative corporate
goals for the determination of cash and equity bonuses to be paid to certain
officers for the 2019 fiscal year ended October 31, 2019 ("fiscal 2019"). On
January 9, 2020, the Board reviewed the performance of the various participants
under the fiscal 2019 incentive bonus plan and approved bonus payments for the
participants based on their varying individual performance levels. The Board
determined that Mr. Dawson met all of the goals established for him under the
2019 incentive bonus plan and, accordingly, granted Mr. Dawson his full cash
bonus of $130,800.
Adoption of Fiscal Year 2020 Management Incentive Equity and Cash Compensation
Plan
On January 9, 2020, the Board adopted an incentive compensation plan for
officers (including the named executive officers) and senior managers of the
Company and its subsidiaries, under which each participant (i) is eligible to
receive a cash payments after the end of the fiscal year as short-term incentive
bonus, and (ii) received an equity award as a long-term incentive award.
Cash Incentives. Under the plan adopted by the Board, cash incentive bonuses, if
any, will be paid to each officer and senior manager based upon (i) the
Company's achievement of specified corporate goals and (ii) the satisfaction of
subjective personal performance and contribution goals established for that
participant. The corporate goals will apply equally to all participating
officers and managers. The subjective performance of each officer will be
evaluated and determined by the Compensation Committee, in its sole discretion,
after consultation with the Company's Chief Executive Officer.
The maximum target cash bonus payable to participants if all of the goals are
achieved will range from 15% to 50% of the recipient's fiscal 2020 base salary.
Bonuses will be weighted and based on (i) the Company's achievement of certain
fiscal 2020 revenues (weighted 30%), (ii) earnings before interest, taxes,
depreciation and amortization (EBITDA) (weighted 60%), and (iii) individual
subjective performance criteria (weighted 10%). The calculation of EBITDA will
exclude the impact of any business acquisitions or dispositions effected during
the year, earn-out liabilities, and stock option compensation expenses accrued
to management. The Board and the Compensation Committee reserve the right to
modify these goals, criteria and target percentage at any time, and to grant
bonuses to the participants even if the performance goals are not met. In
addition, the Board and Compensation Committee may modify the bonus plan targets
to reflect significant changes in Company's business, including changes due to
acquisitions or dispositions of businesses or product lines. The 2020 bonuses
will be paid within 75 days after the end to the fiscal year to participating
officers and managers who are employed with the Company or its subsidiaries on
the date of payment.
Equity Awards. In order to provide long term incentives to the Company's
officers and managers, on January 9, 2020 the Board granted participating
officers and managers shares of restricted stock and/or options to purchase the
Company's common stock. Provided the participating officer or manager is still
employed with the Company or its subsidiaries on the following dates, the shares
of restricted stock and the options shall vest over four years as follows: (i)
one-quarter of the restricted shares and options shall vest on January 9, 2021;
and (ii) the remaining restricted shares and options shall vest in twelve equal
quarterly installments over the next three years, commencing with the first
quarter following January 9, 2021. The options have a ten-year term and an
exercise price of $6.46 per share (which was the closing price of the Company's
common stock on the date of grant).
Mr. Dawson, the Company's President and Chief Executive Officer, is a
participant in the plan and was granted 21,000 shares of restricted stock, and
options to purchase 42,000 shares of common stock at an exercise price of $6.46
(the closing price of the Company's common stock on the date of grant). Mr.
Dawson's shares of restricted stock and the options have the same terms, vesting
schedule and price as the equity awards granted to other officers and managers
under the equity awards plan. Mr. Dawson was also awarded 5,062 fully-vested
shares valued at $32,700.
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