Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 6, 2020, CECO Environmental Corp. (the "Company") announced that,
effective July 5, 2020, Mr. Dennis Sadlowski ceased serving as Chief Executive
Officer and a member of the Board of Directors of the Company (the "Board"),
and, effective July 6, 2020, Mr. Todd Gleason commenced serving as Chief
Executive Officer and a member of the Board.
Mr. Gleason, age 49, most recently served, from April 2015 to July 2020, as
President and Chief Executive Officer of Scientific Analytics Inc., a predictive
analytic technologies and services company. Prior to that position, Mr. Gleason
served from June 2007 to March 2015 in a number of senior officer and executive
positions for Pentair plc, a water treatment company. During his tenure with
Pentair, Mr. Gleason served as Senior Vice President and Corporate Officer from
January 2013 to March 2015, President, Integration and Standardization from
January 2010 to January 2013, and Vice President, Global Growth and Investor
Relations from June 2007 to January 2010. Before joining Pentair, Mr. Gleason
served as Vice President, Strategy and Investor Relations for American Standard
Companies Inc. (later renamed to Trane Inc. prior to its acquisition by
Ingersoll-Rand Company Limited), a global, diversified manufacturing company,
and in a number of different roles (including as Chief Financial Officer,
Honeywell Process Solutions) at Honeywell International Inc., a diversified
technology and manufacturing company. Mr. Gleason's qualifications to sit on the
Board include his financial and business background, as well as his extensive
executive and leadership experience. As the Company's new Chief Executive
Officer, Mr. Gleason will provide the Board with insight on the day-to-day
operations of the Company and the issues it faces.
On July 5, 2020, the Company entered into a separation and consulting agreement
("Separation Agreement") with Mr. Sadlowski specifying that Mr. Sadlowski's
departure from the Company is a termination without "cause" for purposes of
Mr. Sadlowski's employment agreement with the Company. Under the Separation
Agreement, Mr. Sadlowski is entitled to the benefits previously negotiated under
his employment agreement with the Company for a termination without cause,
except that Mr. Sadlowski will be entitled to (1) up to 18 months (rather than
up to 12 months) of health and welfare premium reimbursements, (2) a pro-rata
2020 annual incentive payout based on achievement of 50% of the target award
(rather than actual performance), and (3) payments equal to 4 weeks of vacation
pay. The Company has also agreed to provide for the reasonable transition of
Mr. Sadlowski's Company-provided executive life insurance plan to Mr. Sadlowski,
and to allow Mr. Sadlowski to retain his Company-provided laptop computer and
mobile phone. Pursuant to the Separation Agreement, in order to facilitate an
orderly transition of CEO duties, Mr. Sadlowski has agreed to provide consulting
services to the Company through December 31, 2020 at the rate of $48,917 per
month.
In connection with Mr. Gleason's appointment as the Company's Chief Executive
Officer, the Company and Mr. Gleason entered into an employment agreement
effective July 6, 2020 (the "Employment Agreement"). The Employment Period has
an initial term of three years (the "Employment Period"), subject to annual
extensions unless the Company timely terminates such extensions. Under the
Employment Agreement, the Company expects to nominate Mr. Gleason annually for
election to the Board. In general terms, the Employment Agreement also provides
for the following:
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• Annual base salary rate not less than $450,000;
• Sign-on cash bonus equal to $150,000, partly in lieu of relocation
payments, with the sign-on bonus subject to repayment under certain
circumstances if Mr. Gleason terminates employment without good reason
prior to September 30, 2021;
• 2020 cash bonus equal to $150,000, and subsequent performance-based
annual cash bonuses with a target opportunity equal to 100% of base
salary and a maximum opportunity equal to 200% of base salary;
• Annual participation in the Company's long-term equity program at a
target value of $1,000,000, provided that at least 60% of such equity
awards will be performance-based;
• Initial equity awards for approximately $600,000 in time-based restricted
stock units that generally vest over four years, approximately $900,000
in nonqualified stock options (granted at market value) that generally
vest over four years, and approximately $1,500,000 in premium-priced
nonqualified stock options (exercise price equal to two times market
value) that generally vest over four years. The standard stock option
award will have an exercise price equal to the closing price of the
Company's common stock on July 2, 2020, and the premium-priced stock
option award will have an exercise price equal to two times the closing
price of the Company's common stock on July 2, 2020 (July 2 is the last
trading day immediately preceding the July 6, 2020 grant date);
• Monthly $1,000 car allowance; and
• Reimbursement through June 30, 2021 for up to $2,500 per month for
apartment or comparable rental expenses in the Dallas, Texas area.
In terms of severance benefits, in general, the Employment Agreement provides
for one times Mr. Gleason's annual base salary rate, a pro-rated annual bonus
for the year of termination based on actual performance, and reimbursement for
up to one year of health and welfare premiums under COBRA if Mr. Gleason is
terminated without cause or terminates his employment for good reason (other
than in connection with a change in control of the Company). If Mr. Gleason is
terminated without cause or terminates his employment for good reason within two
years after a change in control of the Company, this cash severance amount would
include Mr. Gleason's target annual bonus for the year of termination (rather
than a pro-ratabonus based on actual performance). These severance amounts are
in addition to certain accrued compensation and benefits for terminations of his
employment, and are subject to Mr. Gleason's timely execution of a release of
claims, all as described in the Employment Agreement.
Under the Employment Agreement, Mr. Gleason is subject to customary one-year
post-employment non-competition obligations and indefinite employee
non-solicitation and confidentiality obligations. The Employment Agreement also
includes a mutual non-disparagement provision that applies for one year
following termination of Mr. Gleason's employment.
On July 2, 2020, the Board also approved a grant, effective July 6, 2020, of
50,000 time-based restricted stock units to Matthew Eckl, the Company's Chief
Financial Officer. This award generally vests in equal installments over four
years, subject substantially to the terms of the Company's form restricted stock
unit award agreement previously approved for similar awards.
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