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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On
April 21, 2016, pursuant to the authority granted under the CombiMatrix Corporation 2006 Stock Incentive Plan, the Compensation
Committee of CombiMatrix Corporation (the “Company”) adopted a 2016 Executive Performance Bonus Plan (the “2016
Bonus Plan”), effective as of January 1, 2016, to provide certain members of the Company’s senior management the opportunity
to earn incentive bonuses based on the Company’s attainment of specific financial performance objectives for 2016. The Compensation
Committee determined that the Company’s Chief Executive Officer, Mark McDonough, and the Company’s Chief Financial
Officer, Scott Burell, are eligible to receive such awards under the 2016 Bonus Plan.
A
participant’s bonus under the 2016 Bonus Plan will consist of a cash incentive and will be based on the participant’s
achievement of three separate components as follows: (i) 40% tied to the achievement of the Company’s 2016 revenue target
as determined by the Company’s Compensation Committee; (ii) 30% tied to the Company’s 2016 gross margin target as
determined by the Company’s Compensation Committee; and (iii) 30% tied to the Company’s 2016 EBITDA loss target as
determined by the Company’s Compensation Committee. Also each component includes three levels of achievement in order to
encourage higher levels of performance.
If
the Company achieves 90% of the 2016 target revenue, the target revenue portion of the cash bonus for the CEO and CFO will equal
$35,000 and $20,800, respectively. If the Company achieves 100% of the 2016 target revenue, the target revenue portion of the
cash bonus for the CEO and CFO will equal $70,000 and $41,600, respectively. If the Company achieves 110% of the 2016 target revenue,
the target revenue portion of the cash bonus for the CEO and CFO will equal $87,500 and $52,000, respectively (and the target
revenue portion of the cash bonus will be computed on a pro rata basis between 100% and 110% of the target achieved).
If
the Company achieves 100% of the 2016 gross margin target, the target gross margin portion of the cash bonus for the CEO and CFO
will equal $18,375 and $10,920, respectively. If the Company achieves 105% of the 2016 gross margin target, the target gross margin
portion of the cash bonus for the CEO and CFO will equal $52,500 and $31,200, respectively. If the Company achieves 110% of the
2016 gross margin target, the target gross margin portion of the cash bonus for the CEO and CFO will equal $65,625 and $39,000,
respectively (and the target gross margin portion of the cash bonus will be computed on a pro rata basis between 105% and 110%
of the target achieved).
If
the Company achieves 98% of the 2016 EBITDA loss target, the EBITDA loss target portion of the cash bonus for the CEO and CFO
will equal $18,375 and $10,920, respectively. If the Company achieves 95% of the 2016 EBITDA loss target, the EBITDA loss target
portion of the cash bonus for the CEO and CFO will equal $52,500 and $31,200, respectively. If the Company achieves 90% of the
2016 EBITDA loss target, the EBITDA loss target portion of the cash bonus for the CEO and CFO will equal $65,625 and $39,000,
respectively (and the EBITDA loss target portion of the cash bonus will be computed on a pro rata basis between 95% and 90% of
the target achieved).
Cash
bonus payments, if earned, will be paid once the Company’s auditors have completed their annual audit of the Company’s
consolidated financial statements, and will be paid out within seventy-five days following December 31, 2016. In order to receive
a bonus payment, the participant must be employed by the Company or its subsidiary at the time bonuses are computed and distributed.
The
foregoing information is qualified in its entirety by reference to the actual terms of the 2016 Bonus Plan attached hereto as
Exhibit 10.1 and which is incorporated herein by reference.