Employment Agreements and Employment Letters
As discussed above, on December 16, 2011, Mr. Connors entered into the Connors Employment Agreement, which was amended subsequently on December 10, 2013 to extend the term until December 31, 2017, further amended on December 13, 2016 to extend the term until December 31, 2021, further amended on December 30, 2020 to extend the term until December 31, 2025 and further amended on January 1, 2025 to extend the term until December 31, 2029. The Connors Employment Agreement originally provided for a base salary of $700,000 per year (which the Compensation Committee raised to $900,000 effective April 1, 2022) and a target bonus opportunity of 150% of base salary and provides that Mr. Connors is eligible to receive equity grants from the Company. In connection with a grant of restricted stock units in January 2011, Mr. Connors executed the Company’s form of restrictive covenant agreement (the “Restrictive Covenant Agreement”) requiring him not to disclose confidential information of the Company at any time, and for the period during which he is employed by the Company and 24 months thereafter, not to compete with us, not to interfere with our business, and not to solicit nor hire our employees or customers. The Compensation Committee believes that entering into the Connors Employment Agreement and the related commitments was advisable and appropriate in order for ISG to induce Mr. Connors to remain Chief Executive Officer and to encourage his long-term service to the Company.
Pursuant to an employment letter dated June 21, 2023 (the “Sherrick Employment Letter”), Mr. Sherrick is entitled to receive an annual base salary of $500,000 (subsequently increased to $550,000 effective October 1, 2024) and a target bonus opportunity of $300,000 beginning in 2024 and is also eligible to receive equity grants from the Company. To assist his transition to ISG, the Company and Mr. Sherrick agreed that Mr. Sherrick would receive a grant of RSUs on September 1, 2023 with a dollar value of $100,000 which vested on the first anniversary of the grant date (time-based), and which required Mr. Sherrick to execute our standard Restrictive Covenant Agreement containing obligations relating to confidentiality, non-competition, non-solicitation and other business protection covenants. In addition, Mr. Sherrick received a second grant of RSUs on August 1, 2024 with a dollar value of $100,000, which will also vest on the first anniversary of the grant date (time-based). Also on September 1, 2023, Mr. Sherrick was granted 100,000 RSUs that will vest 100% on the third-year anniversary of the grant date, 51,572 RSUs that will vest in four equal installments on each of the first, second, third and fourth anniversaries of the grant date and 17,191 performance-based RSUs, which will be earned at the target level if ISG’s stock price, measured over a period of ten trading days beginning on the first anniversary of the grant date and ending on the fourth anniversary of the grant date, is $7.00 or higher. The Sherrick Employment Letter also entitled Mr. Sherrick to elect to purchase up to $100,000 of our common stock in the open market, which then was matched 1:1 with a grant of RSUs on August 1, 2023. The Compensation Committee believes that entering into the Sherrick Employment Letter, the base salary and the related commitments was advisable and appropriate in order for ISG to induce Mr. Sherrick to become an executive officer and to encourage his long-term service to the Company.
Pursuant to an employment letter dated June 2, 2014 (the “Lavieri Employment Letter”), Mr. Lavieri was appointed as Partner & President, ISG Americas. Mr. Lavieri commenced his employment with the Company on July 21, 2014 with a base salary of $500,000 (which the Compensation Committee raised to $680,000 effective April 1, 2022), a target bonus opportunity of $375,000 (subsequently raised to $500,000) and is eligible to receive equity grants from the Company. In connection with a grant of RSUs in August 2014, Mr. Lavieri entered into the Restrictive Covenant Agreement with the Company containing obligations relating to confidentiality, non-competition and non-solicitation, among other business protection covenants. Mr. Lavieri was subsequently appointed to Vice Chairman and President – ISG Americas and Asia Pacific on July 26, 2018.
Stock Ownership Guidelines
The Company instituted stock ownership guidelines in 2014 for all of its directors and executive officers to better align their own financial interests with the interests of the Company’s stockholders. Non-employee Directors are expected to hold an amount of stock with a value of at least five times their annual cash retainer. Mr. Connors is expected to hold an amount of stock with a value of at least six times his annual base salary. Messrs. Sherrick and Lavieri are expected to hold an amount of stock with a value of at least three times their annual base salary. Other key employees of the Company are expected to hold an amount of stock with a value of at least one to two times their annual base salary. Directors and executive officers are required to achieve the applicable stock ownership threshold within five years of becoming subject to the guidelines. All shares and share equivalents, including unvested restricted stock, unvested restricted stock units and shares held, are considered in determining compliance with this requirement. Stock options are not considered, but shares
