Incredimail 2011 Annual Report Download - page 56

Internal Auditor
Under the Israeli Companies Law, the board of directors of a public company must appoint an internal auditor nominated in accordance with the audit
committee’s recommendation. The role of the internal auditor is to examine whether a company’
s actions comply with the law and proper business procedure. The
internal auditor may be an employee of the company employed specifically to perform internal audit functions but may not be an interested party or office holder, or a
relative of any interested party or office holder, and may not be a member of the company’
s independent accounting firm or its representative. The Israeli Companies
Law defines an interested party as a substantial shareholder of 5% or more of the shares or voting rights of a company, any person or entity that has the right to
nominate or appoint at least one director or the general manager of the company or any person who serves as a director or as the general manager of a company. The
internal auditor’
s term of office shall not be terminated without his or her consent, nor shall he or she be suspended from such position unless the board of directors
has so resolved after hearing the opinion of the audit committee and after giving him or her a reasonable opportunity to present his or her position to the board and to
the audit committee. The accounting firm of Yardeni-Gelfand provides us with internal auditor services.
Certain Employment Agreements with Directors
We have entered into employment agreements, effective July 6, 2010, with Josef Mandelbaum to retain his services as Chief Executive Officer. The
employment agreement does not provide for a specified term and may be terminated by either party upon 180 days prior notice. The employment agreement includes
the grant of options, the terms of which are as is customary in the Company. However, a portion of the options are also subject to the Company’
s share reaching a
strike price higher than market at the time. Upon termination by us of the employment of the executive other than for "cause" (as set forth in the agreement), we are
required to continue to pay the terminated executive his salary, benefits and bonus until the end of the 180 day notice period. However, we will have the option to pay
Mr. Mandlebaum a lump sum equal to all amounts due as of the notice date. As required by Israeli law, we will also remit severance payment to Mr. Mandlebaum in
an amount equal to one month’
s salary for each year of employment with us following the first year of employment (and a pro rata portion of such monthly salary for
each portion of a year of employment following the first year of employment). Such amount of severance payment will be remitted to the executive even if he
voluntarily terminates his employment with us. In the event that we terminate the employment of Mr. Mandelbaum for "cause," we will not be required to give prior
notice and/or to pay the executive severance payment, except for payment required by Israeli law. In the event that Mr. Mandlebaum resigns without giving the
required notice period, we may deduct from the money that we owe Mr. Mandlebaum an amount equal to the wages to which he would have been entitled had he
worked during the notice period. With regard to the options granted, in the event that Mr. Mandelbaum resigns: (1) the period during which his vested options will be
exercisable shall be one (1) year from termination date (as such term is define in the 2003 Plan); and (2) a number of unvested options equal to the pro rata options (as
such term is defined in his option agreement) shall become vested. In the event that the employment is terminated by the Company without “cause” (
as defined in the
2003 Plan): the period during which vested options will be exercisable shall be the period ending on the expiration date (as set forth in his option agreement) and (2) a
number of unvested options equal to the pro rata options (as such term is defined in his option agreement) shall become vested.
Josef Mandelbaum has agreed not to compete with us during the term of the agreement and for a period of 180 days thereafter. The agreement also contains
customary confidentiality and intellectual property assignment provisions.
We also have existing 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.
D. EMPLOYEES
As of December 31, 2011 we had 139 employees. The breakdown of our employees by department and fiscal period is as follows:
December 31,
2009
2010
2011
Management and administration
12
21
24
Support
16
14
14
Research and development
64
54
69
Selling and marketing
19
18
32
Total
111
107
139
53