| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On January 27, 2023, Lawson Products, Inc., an Illinois corporation (the “Company”), a wholly-owned subsidiary of Distribution Solutions Group, Inc., a Delaware corporation (the “Registrant”), entered into an Employment Agreement with Ronald J. Knutson to serve as the Executive Vice President and Chief Financial Officer of the Registrant and the Executive Vice President and Chief Financial Officer of the Company. Pursuant to the Employment Agreement, Mr. Knutson is entitled to receive a base salary of $435,000 per annum. The base salary may be increased by the Compensation Committee of the Registrant’s Board of Directors. Mr. Knutson will be employed on an “at will” basis, and his employment may be terminated at any time at the option of the Company or Mr. Knutson, on the terms and subject to the conditions set forth in the Employment Agreement. Mr. Knutson will also be eligible for additional performance based compensation, at an annual target payout level of no less than 80% of his base salary, based upon his ability to meet or exceed the targeted expectations applicable to his position, as the Committee determines and in accordance with and subject to the terms of any applicable performance based compensation plan or program.
If Mr. Knutson’s employment is terminated by the Company for Cause (as defined in the Employment Agreement) or by Mr. Knutson voluntarily (other than for Good Reason (as defined in the Employment Agreement)), Mr. Knutson shall be entitled to receive Accrued Compensation (as defined in the Employment Agreement).
If Mr. Knutson’s employment is terminated by the Company without Cause, or if Mr. Knutson’s employment is terminated due to his death or Disability (as defined in the Employment Agreement) or by Mr. Knutson for Good Reason, Mr. Knutson will be entitled to receive (A) Accrued Compensation, (B) an amount equal to two years’ of Mr. Knutson’s then current base salary, payable monthly over a period of two years, and (C) continued health plan coverage for Mr. Knutson and his spouse and dependents during the Severance Period (as defined in the Employment Agreement), at their cost.
The receipt of the termination benefits described above in the case of a termination of Mr. Knutson’s employment by the Company without Cause or by Mr. Knutson for Good Reason, other than Accrued Compensation, is conditioned upon Mr. Knutson’s execution and delivery of a release in the form specified by the Employment Agreement. Mr. Knutson is subject to non-compete and non-solicitation obligations for a period of eighteen months following the date of his termination of employment.
In addition to the foregoing, the Employment Agreement for Mr. Knutson provides that Mr. Knutson shall be entitled to a grant of 10,000 Restricted Stock Units, which will vest in 20% installments on each of January 27, 2024, April 1, 2024, April 1, 2025, April 1, 2026, and April 1, 2027, respectively, subject in all respects to the terms and conditions of the applicable RSU Award Agreement and the Distribution Solutions Group, Inc. Equity Compensation Plan (as amended and restated effective October 17, 2022, as amended November 10, 2022, and as the same may be further amended from time to time, the “Equity Compensation Plan”). Mr. Knutson will also be entitled to a grant of 123,000 Options to acquire shares of Common Stock of the Registrant at the following exercise prices: (A) 48,000 Options with an exercise price of $55.00 per share; (B) 15,000 Options with an exercise price of $80.00 per share; (C) 30,000 Options with an exercise price of $110.00 per share; and (D) 30,000 Options with an exercise price of $140.00 per share. Each of the four tranches of Options will vest in 20% installments on each of January 27, 2024, April 1, 2024, April 1, 2025, April 1, 2026, and April 1, 2027, respectively, subject in all respects to the terms and conditions of the applicable Option Award Agreement and the Equity Compensation Plan. Subject to the terms of the Option Award Agreement, the Options will expire on the 10-year anniversary of the grant date.
The foregoing description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the Employment Agreement, which is attached to this Current Report as Exhibit 10.1 and hereby incorporated herein by reference.