Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

v3.21.2
Subsequent Events
6 Months Ended
Jun. 30, 2021
Subsequent Events [Abstract]  
Subsequent Events

Note 15. Subsequent Events

Executive Compensation

On July 23, 2021, in order to align our CEO compensation methodology with prevailing public company practices, the Compensation Committee of our Board of Directors and our Board of Directors approved our entering into an amended and restated employment agreement with our Chief Executive Officer and Chairman of the Board of Directors, Stephen E. Croskrey (“A&R Employment Agreement”).

The A&R Employment Agreement provides, among other things, that Mr. Croskrey shall continue to serve as Chief Executive Officer and Chairman of the Board of Directors and provides for an annual base salary of $875,000, effective as of January 1, 2021. Additionally, the A&R Employment Agreement provides that Mr. Croskrey is entitled to an immediate one-time bonus of $2,000,000. The A&R Employment Agreement also provides that upon satisfaction of performance targets to be established by the Board of Directors, Mr. Croskrey will be paid an annual cash bonus equal to between 1.25 and 2.5 times his annual base salary if certain performance thresholds are attained.

The A&R Employment Agreement states that in each year of employment, including 2021, Mr. Croskrey will receive a long term incentive award, of which 50% shall be in the form of performance stock awards that vest upon satisfaction of performance targets to be established by the Board of Directors for each such year and 50% shall be in the form of stock options that vest over time. If shares of common stock are not available to settle the awards as they come due, we will settle them in cash.

The A&R Employment Agreement also modified all stock compensation instruments previously granted to Mr. Croskrey, which stipulated that if shares of common stock are not available to settle the awards as they come due, we will settle them in cash. We previously awarded Mr. Croskrey approximately 1.2 million options with an exercise price of $24.20 that are contingently granted upon on shareholder approval of an increase in the number of shares issuable under the 2020 Incentive Plan, which has not occurred, and therefore these awards not were reflected in our consolidated financial statements. The liability for these options will be marked to market each period end, with the income statement effect of such revaluations prorated through February 2024 and included in stock compensation expense reported within selling, general and administrative expense.

The A&R Employment Agreement ends on December 31, 2024, unless earlier terminated in accordance with its terms.

Director Compensation

On August 12, 2021, we agreed to a modification of all stock compensation instruments previously granted to Mr. Stuart Pratt, Director, which stipulated that if shares of common stock are not available to settle the awards as they come due, we will settle them in cash. We previously awarded Mr. Pratt approximately 300 thousand options with an exercise price of $24.20 that are contingently granted upon on shareholder approval of an increase in the number of shares issuable under the 2020 Incentive Plan, which has not occurred, and therefore these awards were not reflected in our consolidated financial statements. The liability for these options will be marked to market each period end, with the income statement effect of such revaluations prorated through February 2024 and included in stock compensation expense reported within selling, general and administrative expense.

Business Combination

On July 28, 2021, we entered into an agreement and plan of merger (“Merger Agreement”) to acquire Novomer, Inc. in exchange for $152 million in cash, subject to certain customary adjustments as set forth in the Merger Agreement. We also entered into employment or consulting agreements with certain key employees and consultants of Novomer.

We closed this transaction on August 11, 2021. We will issue option awards exercisable for shares of our common stock to certain continuing employees and continuing consultants of Novomer.

The final purchase price determination is subject to customary post-close adjustments.