Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
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Employment Agreement with Chief Executive Officer
On July 29, 2019, IEH entered into an employment agreement with
David Offerman, its Chief Executive Officer and President. The employment agreement with Mr. Offerman is effective as of July 29,
2019 and will expire on December 31, 2024. The following is a summary of the terms of the employment agreement with Mr. Offerman,
which summary is qualified in its entirety by reference to the full text of such agreement, which is filed as Exhibit 10.1 to this
Current Report on Form 8-K.
Mr. Offerman serves as the Chief Executive Officer and President
of IEH Corporation. and as a member of its board of directors. Under the employment agreement, Mr. Offerman will receive a base
salary of $395,000 per annum and be eligible to receive an annual bonus of up to 100% of base salary for each fiscal year of employment
based on performance targets and other key objectives established by the Compensation Committee of the board of directors (the
“Committee”).
He will also be eligible to receive additional option grants to
the Company’s 2011 Equity Incentive Plan as follows: 225,000 additional options to purchase 225,000 shares of the Company’s
common stock at an exercise price of $20.00 per common share for the fiscal year ended March 29, 2019, provided that one-third
(75,000 shares) shall vest immediately, 75,000 shares will vest on July 29, 2020, and 75,000 shares will vest on July 29, 2021.
During the term of the agreement, he shall also be eligible to receive
equity or performance awards pursuant to any long-term incentive compensation plan adopted by the Committee or the board of directors.
In the event of the termination of Mr. Offerman’s employment
by us without “cause” or by him for “good reason”, as such terms are defined in the employment agreement,
he would be entitled to: (a) a severance payment of 36 months of base salary; (b) continued participation in our health and welfare
plans for up to 24 months; and (c) all accrued but unpaid compensation. Further, under the employment agreement, if within the
three (3) year period of a “change in control” (as defined in the employment agreement) either Mr. Offerman’s
employment is terminated, or his title, position or responsibilities are materially reduced and he terminates his employment, the
Company shall pay and/or provide to him substantially the same compensation and benefits as if his termination was without “cause”
or for “good reason”, subject to limitation to avoid the imposition of the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”) if such payments would constitute an “excess parachute
payment” as defined in Section 280G of the Code.. Pursuant to the employment agreement, Mr. Offerman is subject to customary
confidentiality, non-solicitation of employees and non-competition obligations that survive the termination of such agreement.
Discretionary Special Cash Bonus Awards
Effective as of July 29, 2019, the Committee
approved discretionary special cash bonus awards for Mr. Offerman, its Chief Executive Officer, and also for Mr. Robert
Knoth, its Chief Financial Officer, with respect to the fiscal year ended March 31, 2019. A cash bonus of $65,000 was
awarded to Mr. Offerman and a cash bonus of $40,000 was awarded to Mr. Knoth.
The information furnished pursuant to Item 5.02 of this Current
Report, including Exhibit 10.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such
information be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act,
except as shall be expressly set forth by specific reference in such filing.