Incredimail 2013 Annual Report Download - page 54

We pay each of our directors $40,000 per year, subject to adjustment for changes in the Israeli consumer price index and applicable
changes in the Israeli regulations governing the compensation of external directors. Each of our directors also receives an annual grant of
options to purchase 10,000 ordinary shares under the Incentive Plan. Each option is exercisable for a term of five years at an exercise price per
share equal to the closing price of our ordinary shares on the date of the annual meeting of shareholders on which such option was granted, as
reported by the NASDAQ Stock Market. The options vest in three equal installments on each anniversary of date of grant. Following
termination or expiration of the applicable director's service with the Company, provided that the termination or expiration is not for “
cause" and
is not a result of the director's resignation, the options would retain their original expiration dates and, with respect to each grant, the upcoming
tranche of options that are scheduled to vest immediately subsequent to the termination date, if any, will automatically vest and become
exercisable. All unvested options held by the director will automatically vest and become exercisable upon a change of control of the Company,
which is defined for this purpose as (i) a merger, acquisition or reorganization of the Company with one or more other entities in which the
Company is not the surviving entity, (ii) a sale of all or substantially all of the assets of the Company; (iii) a transaction or a series of related
transactions as a result of which more than 50% of the outstanding shares or the voting rights of the Company are beneficially owned by one
person or group (as defined in the SEC rules).
Compensation Terms of our Chief Executive Officer
Josef Mandelbaum, our Chief Executive Officer since July 2010, is currently entitled to a base salary of NIS 140,000 per month. He is
entitled to an annual salary increase at a rate equal to the average rate of the increase in annual salaries
of our senior management in the
applicable year. In addition, Mr. Mandelbaum is entitled to an annual bonus equal to up to 50% of his base salary, subject to our meeting our
annual targets for revenue and EBIT set by our Board of Directors. Half of the bonus depends on meeting the revenue target and half on meeting
the EBIT target.
Mr. Mandelbaum's employment agreement provided for a one-
time grant of options upon commencement of employment and an annual
grant of options thereafter, the terms of which are substantially in accordance with the Incentive Plan and as is customary in the Company.
However, the vesting of the one-
time grant of options is also subject to our share price reaching a strike price higher than the market price at the
time of grant. Following the approval of Mr. Mandelbaum's new compensation package in November 2013, he will not receive such annual
grants going forward. In addition, we granted to Mr. Mandelbaum 200,000 RSUs on November 18, 2013 and 232,400 RSUs on January 2,
2014. These RSUs were granted under the Incentive Plan and have a purchase price of NIS 0.01 per share. They vest over a period of three
years, subject to continued employment, with 20% of each grant vesting on the first anniversary of the applicable grant date, 30% on the second
anniversary and 50% on the third anniversary.
Mr. Mandelbaum's employment agreement does not provide for a specified term and may be terminated by either party. If we terminate
his employment, we are required to provide him with twelve month's notice. If Mr. Mandelbaum resigns, he must provide us with six months’
notice. During the notice period, Mr. Mandelbaum would be entitled to all payments and benefits pursuant to his then-
current compensation
terms, including continued vesting of any equity-based awards.
As required by Israeli law, we will also remit severance payment to Mr.
Mandelbaum in an amount equal to one month’
s salary for each year of employment with us. Such amount of severance payment will be payable
even if he resigns. In the event that Mr. Mandelbaum resigns, his vested options will be exercisable for one year from the termination date, the
amount of unvested options equal to the pro rata options (as such term is defined in Mr. Mandelbaum's option agreement) will become vested. In
the event that Mr. Mandelbaum's employment is terminated by us without "cause" (as defined in the Incentive Plan), his vested options will be
exercisable until the expiration date thereof and the amount of unvested options equal to the pro rata options will become vested.
Mr. Mandelbaum also receives certain additional benefits, such as a company car, health insurance, life insurance and a mobile phone.
Mr. Mandelbaum has agreed not to compete with us during his term of employment and for a period of 180 days thereafter. His employment
agreement also contains customary confidentiality and intellectual property assignment provisions.
We also have employment agreements with our other executive officers. These agreements do not contain any change of control
provisions and otherwise contain salary, benefit and non-competition provisions that we believe to be customary in our industry.
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