Item 9A. Controls and Procedures
ITEM
9A.
CONTROLS
AND PROCEDURES
Evaluation
of disclosure controls and procedures.
We
maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic
reports filed with the Securities and Exchange Commission (the “Commission”) is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and
communicated to our management, including the Chief Executive Officer (“CEO”) (Principal Executive Officer), and Chief
Financial Officer (“CFO”) (Principal Financial Officer), as appropriate to allow timely decisions regarding the required
disclosure. In designing and assessing our disclosure controls and procedures, our management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their stated control
objectives and are subject to certain limitations, including the exercise of judgment by individuals, the difficulty in identifying
unlikely future events, and the difficulty in eliminating misconduct completely. Our management, with the participation of our
CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of
the Securities Exchange Act of 1934, as amended. Based upon this assessment, our CEO and CFO have concluded that our disclosure
controls and procedures were effective as of December 31, 2020.
Management’s
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934. Internal control over financial reporting is
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of
its inherent limitations, internal control over financial reporting may not prevent or detect misstatements or fraudulent acts.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A control
system, no matter how well designed, can provide only reasonable assurance with respect to financial statement preparation and
presentation.
Internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit the preparation of the consolidated financial statements
in accordance with generally accepted accounting principles in the United States of America, and that receipts and expenditures
of the Company are being made only in accordance with appropriate authorizations of management and directors of the Company; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
the Company’s assets that could have a material effect on the consolidated financial statements.
Management,
with the participation of our CEO and CFO, conducted an assessment of the effectiveness of internal control over financial reporting
as of December 31, 2020 based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management, with the participation
of our CEO and CFO, concluded that the Company’s internal control over financial reporting was effective as of December
31, 2020.
This
Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding
internal control over financial reporting. Since the Company is not a large accelerated filer or an accelerated filer, management’s
report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules
of the Commission that permit the Company to provide only management’s report in this Form 10-K.
Changes
in Internal Control over Financial Reporting
There
was no other change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act) during the fiscal quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect,
our internal controls over financial reporting.
ITEM
9B.
OTHER
INFORMATION
None.
76
PART
III
ITEM
10.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS
The
following table sets forth, as of the date of this Report, information concerning our Board of Directors (“Board”):
NAME
(1)
AGE
POSITION
Dr.
Louis F. Centofanti
76
Director;
Executive Vice President (“EVP”) of Strategic Initiatives; President of Perma-Fix
Medical (“PF Medical”)
Mr.
Thomas P. Bostick (1)
64
Director
Mr.
Joseph T. Grumski (2)
59
Director
The
Honorable Joe R. Reeder
73
Director
Mr.
Larry M. Shelton
67
Chairman
of the Board
The
Honorable Zach P. Wamp
63
Director
Mr.
Mark A. Zwecker
70
Director
Each
director is elected to serve until the next annual meeting of stockholders.
(1)
Mr.
Bostick was unanimously elected by the Board effective August 10, 2020 to fill a Board vacancy.
(2)
Mr.
Grumski was unanimously elected by the Board effective February 4, 2020 to fill a Board vacancy.
Director
Information
Our
directors and executive officers, their ages, the positions with us held by each of them, the periods during which they have served
in such positions and a summary of their recent business experience are set forth below. Each of the biographies of the current
directors listed below also contains information regarding such person’s service as a director, business experience, director
positions with other public companies held currently or at any time during the past five years, and the experience, qualifications,
attributes and skills that our Board considered in nominating or appointing each of them to serve as one of our directors.
Dr.
Louis F. Centofanti
Dr.
Centofanti, the founder of the Company and a director of the Company since its inception in 1991, currently holds the position
of EVP of Strategic Initiatives. Effective January 26, 2018, Dr. Centofanti was appointed to the position of President of PF Medical
and no longer a member of the Supervisory Board of PF Medical (a position he had held since June 2, 2015). From March 1996 to
September 8, 2017 and from February 1991 to September 1995, Dr. Centofanti held the position of President and Chief Executive
Officer (“CEO”) of the Company. Dr. Centofanti served as Chairman of the Board from the Company’s inception
in February 1991 until December 16, 2014. In January 2015, Dr. Centofanti was appointed by the U.S Secretary of Commerce Penny
Prizker to serve on the U.S. Department of Commerce’s Civil Nuclear Trade Advisory Committee (“CINTAC”). The
CINTAC is composed of industry representatives from the civil nuclear industry and meets periodically throughout the year to discuss
the critical trade issues facing the U.S. civil nuclear sector. From 1985 until joining the Company, Dr. Centofanti served as
Senior Vice President (“SVP”) of USPCI, Inc., a large publicly-held hazardous waste management company, where he was
responsible for managing the treatment, reclamation and technical groups within USPCI. In 1981, he and Mark Zwecker, a current
Board member of the Company, founded PPM, Inc. (later sold to USPCI), a hazardous waste management company specializing in treating
PCB-contaminated oil. From 1978 to 1981, Dr. Centofanti served as Regional Administrator of the U.S. Department of Energy for
the southeastern region of the United States. Dr. Centofanti has a Ph.D. and a M.S. in Chemistry from the University of Michigan,
and a B.S. in Chemistry from Youngstown State University.
77
As
founder of Perma-Fix and PPM, Inc., and as a senior executive at USPCI, Dr. Centofanti combines extensive business experience
in the waste management industry with a drive for innovative technology which is critical for a waste management company. In addition,
his service in the government sector provides a solid foundation for the continuing growth of the Company, particularly within
the Company’s Nuclear business. Dr. Centofanti’s comprehensive understanding of the Company’s operations and
his extensive knowledge of its history, coupled with his drive for innovation and excellence, positions Dr. Centofanti to optimize
our role in this competitive, evolving market, and led the Board to conclude that he should serve as a director.
Mr.
Thomas P. Bostick
Effective
August 10, 2020, Mr. Bostick was unanimously elected by the Board to serve as a member of the Company’s Board of Directors.
Mr. Bostick is currently the CEO of Bostick Global Strategies, LLC, a position he has held since July 2016. Bostick Global Strategies,
LLC provides strategic advisory support in the areas of Engineering, Environmental Sustainability, Human Resources, Biotechnology,
Education, Executive Coaching, and Agile Project Management. In February 2021, Mr. Bostick was selected by U. S. Senator Jack
Reed, Chairman of the Senate Armed Services Committee, to serve as a member of a new commission consisting of eight appointed
individuals, tasked with renaming Confederate-named military bases and property. Mr. Bostick previously served as the Chief Operating
Officer (“COO”) and President of Intrexon Bioengineering from November 2017 to February 2020, a division of Intrexon
Corporation (formerly NASDAQ: XON; now NASDAQ: PGEN). Intrexon Bioengineering addresses
global challenges across food, agriculture, environmental, energy, and industrial fields by advancing biologically engineered
solutions to improve sustainability and efficiency. As the COO and President of Intrexon Bioengineering, Mr. Bostick oversaw
operations across the company’s multiple technology divisions, driving efficiency and effectiveness in the application of
the company’s assets toward its development projects, and led a major restructuring of Intrexon Corporation. Mr. Bostick
is a member of the board of HireVue, Inc., a privately-held company specializing in online video interviewing services for employers,
and Streamside Systems, Inc., a privately-held, veteran-led company that provides
services and solutions for global water resource problems . In October 2020, Mr. Bostick
was appointed to the board of CSX Corporation (NASDAQ: CSX), a publicly-held rail transportation company, where in December 2020
he was appointed to serve as a member of both the Finance Committee and the Governance Committee. In addition to Mr. Bostick’s
service on the boards of for profit companies, he has since November 2016 also served on the board of American Corporate Partners,
a 501(c)(3) nonprofit organization dedicated to assisting U.S. veterans in their transition from the armed services to the civilian
workforce.
Mr.
Bostick has also had a distinguished career in the U.S. military, retiring from the US Army in July 2016 with the rank of Lieutenant
General. During his distinguished military career, he served
as the 53rd U.S. Army Chief of Engineers and the Commanding General of the U.S. Army Corps of Engineers (USACE). As the senior
military officer of the Army Corps of Engineers, General Bostick was responsible for overseeing and supervising most of the Nation’s
civil works infrastructure and military construction, hundreds of environmental protection projects, as well as managing 34,000
civilian employees and military personnel in over 110 countries around the world with a $25 billion annual budget. As the Chief
of Engineers, General Bostick
led a $5 billion recovery
program after Superstorm Sandy.
Before
his command of USACE, General
Bostick served in a variety
of command and staff assignments with the U.S. Army both in the U.S. and abroad, including as Deputy Chief of Staff, G-1, Personnel,
U.S. Army; Commanding General, U.S. Army Recruiting Command; Assistant Division Commander, 1st Cavalry Division; Executive Officer
to the Chief of Engineers; Executive Officer to the Army Chief of Staff; and Deputy Director of Operations for the National Military
Command Center, J-3, the Joint Staff in the Pentagon.
78
General
Bostick’s military honors and decorations
include the Distinguished Service Medal, the Defense Superior Service Medal, the Bronze Star, the Legion of Merit with two oak
leaf clusters, the Defense Meritorious Service Medal, the Meritorious Service Medal with four oak leaf clusters, the Joint Service
Commendation Medal, the Army Commendation Medal, the Army Achievement Medal with one oak leaf cluster, the Combat Action Badge,
the U.S Parachutist badge, the Army Recruiter Badge, and the Ranger Tab.
As
a White House Fellow, one of America’s most prestigious programs for leadership and public service, General Bostick was
a special assistant to the Secretary of Veterans Affairs .
He graduated with a Bachelor of Science degree from the U.S. Military Academy at West Point and later returned to the Academy
to serve as an Associate Professor of Mechanical Engineering. He holds Master’s degrees in Civil Engineering and Mechanical
Engineering from Stanford University and a Doctorate in Systems Engineering from George Washington University. He is a Member
of the National Academy of Engineering and the National Academy of Construction.
Mr.
Bostick’s distinguished career in both the government and private sectors brings valuable experience and insight into solving
complex issues domestically and globally. His
extensive knowledge and problem-solving experiences enhance the Board’s ability to address significant challenges in the
nuclear market and led the Board to conclude that he should serve as a director.
Mr.
Joseph T. Grumski
Effective
February 4, 2020, Mr. Grumski was unanimously elected by the Board as a director to fill a vacancy on the Board. From May 2013
through March 2020, Mr. Grumski served as President and CEO and a board member of TAS Energy Inc. (“TAS”), a privately-held
company that delivers efficient modular systems manufactured offsite and utilized in power, data centers, industrial and commercial
applications. TAS has successfully managed over 400 projects in over 32 countries. In April 2020, TAS was acquired by Comfort
Systems USA, Inc. (NYSE: FIX), and now operates as a wholly-owned subsidiary of that company. Comfort Systems USA. Inc. is a publicly-held
company that provides mechanical and electrical contracting services in 139 locations in 114 cities throughout the United States.
Mr. Grumki continues to serve as the President and CEO of TAS. From 1997 to February 2013, Mr. Grumski was employed with Science
Applications International Corporation (“SAIC”) (NYSE: SAIC), a publicly-held company that provides government services
and information technology support. During his employment with SAIC, Mr. Grumski held various senior management positions, including
the positions of President of SAIC’s Energy, Environment & Infrastructure (“E2I”) commercial subsidiary
and General Manager of the E2I Business Unit. SAIC’s E2I commercial subsidiary and Business Unit is comprised of approximately
5,200 employees performing over $1.1 billion of services for federal, commercial, utility and state customers. Mr. Grumski’s
many accomplishments with SAIC included growing SAIC’s $300 million federal environmental business to a top ranked, $1.1
billion business; receiving the National Safety Council “Industry Leader” award in 2009; and receiving highest senior
executive performance rating three years in a row. Mr. Grumski began his career with Gulf Oil Company and has progressed through
senior level engineering, operations management, and program management positions with various companies, including Westinghouse
Electric Corporation and Lockheed Martin, Inc. Mr. Grumski received a B.S. in Mechanical Engineering from The University of Pittsburgh
and a M.S in Mechanical Engineering from West Virginia University.
Mr.
Grumski has had an extensive career in solving and overseeing solutions to complex issues involving both domestic and international
concerns. In addition, his extensive experience in companies that provide services to the government sector as well as his experience
in the commercial sector provide solid experience for the continuing growth of the Company’s Treatment and Services Segment.
Mr. Grumski’s extensive knowledge and problem-solving experiences, executive operational leadership experience and governance
experience enhance the Board’s ability to address significant challenges in the nuclear market, and led the Board to conclude
that he should serve as a director.
79
The
Honorable Joe R. Reeder
Mr.
Reeder, a director since 2003, is a principal shareholder in the law firm of Greenberg Traurig LLP, one of the nation’s
largest U.S.-based law firms, with 41 offices and 2,200 attorneys worldwide, for which Mr. Reeder served as Shareholder-in-Charge
of the law firm’s Mid-Atlantic Region (1999-2008). His clientele includes celebrities, heads of state, sovereign nations,
international corporations, and law firms. As the 14th Undersecretary of the U.S. Army (1993-97), Mr. Reeder also served three
years as Chairman of the Panama Canal Commission’s Board, overseeing a multibillion-dollar infrastructure program. For the
past 18 years, he has served on the Canal’s International Advisory Board. He has served on the boards of the National Defense
Industry Association (“NDIA”), chairing NDIA’s Ethics Committee, the Armed Services YMCA, the Marshall Legacy
Institute, and many other private companies and charitable organizations. After successive 4-year appointments by Virginia Governors
Mark Warner and Tim Kaine, Mr. Reeder served seven years as Chairman of two Commonwealth of Virginia military boards, and 10 years
on the USO Board of Governors. Mr. Reeder was appointed by Governor Terry McAuliffe to the Virginia Military Institute’s
Board of Visitors (2014), and reappointed in 2018 by current Virginia Governor Ralph Northam. Mr. Reeder, who has been a television
commentator on legal and national security issues, has consistently been named a Super Lawyer for Washington, D.C., most recently
in 2020. Among other corporate positions, he’s been a director since September 2005 for ELBIT Systems of America, LLC, a
subsidiary of Elbit Systems Ltd. (NASDAQ: ESLT), a publicly-held company that provides product and system solutions focusing on
defense, homeland security, and commercial aviation. Mr. Reeder served on the Washington First Bank (“WFB”) board
from 2004 to 2017, and, since January 2018, has served on the board of Sandy Spring Bancorp, Inc. (NASDAQ: SASR), which acquired
WFB in January 2018. Since April 2018, Mr. Reeder has served on the Audit Committee of Sandy Spring Bancorp, Inc.
In
May 2018 Mr. Reeder was appointed to the Advisory Council Bid Protest Committee to the United States Court of Federal Claims.
A
West Point graduate who served in the 82nd Airborne Division after Ranger School, Mr. Reeder earned his J.D. from the University
of Texas, and L.L.M. from Georgetown University.
Mr.
Reeder’s career has focused on solving and overseeing solutions to complex domestic and international issues. This experience
has enhanced the Board’s ability to address major challenges in the nuclear market, as well as day-to-day corporate challenges,
which is why the Board values his service as a director.
Mr.
Larry M. Shelton
Mr.
Shelton, a director since July 2006, has also held the position of Chairman of the Board of the Company since December 16, 2014.
Mr. Shelton served as the Chief Financial Officer (“CFO”) of S K Hart Management, LLC, a private investment management
company (“S K Hart Management”), from 1999 until August 2018. Mr. Shelton served as President of Pony Express Land
Development, Inc. (an affiliate of SK Hart Management), a privately held land development company, from January 2013 until August
2017, and has served on its board since December 2005. Mr. Shelton served as Director and CFO of S K Hart Ranches (PTY) Ltd, a
private South African Company involved in agriculture, from March 2012 to March 2020. Mr. Shelton continues to provide advisory
services to S K Hart Ranches (PTY) Ltd. Mr. Shelton served as a member of the Supervisory Board of PF Medical from April 2014
to December 2016. Mr. Shelton has over 20 years of experience as an executive financial officer for several waste management companies,
including as CFO of Envirocare of Utah, Inc. (now EnergySolutions, Inc. (1995–1999)), a privately held nuclear waste services
company, and as CFO of USPCI, Inc. (1982–1987), then a NYSE- listed public company engaged in the hazardous waste business.
Since July 1989, Mr. Shelton has served on the board of Subsurface Technologies, Inc., a privately held company specializing in
providing environmentally sound innovative solutions for water well rehabilitation and development. Mr. Shelton has a B.A. in
accounting from the University of Oklahoma.
With
his years of accounting experience as CFO for various companies, including a number of waste management companies, Mr. Shelton
combines extensive industry knowledge and understanding of accounting principles, financial reporting requirements, evaluating
and overseeing financial reporting processes and business matters. These factors led the Board to conclude that he should serve
as a director.
80
The
Honorable Zach P. Wamp
Mr.
Wamp, a director since January 2018, is currently the President of Zach Wamp Consulting, a position he has held since 2011. As
the President and owner of Zach Wamp Consulting, he has served some of the most prominent companies from Silicon Valley to Wall
Street as a business development consultant and advisor. From September 2013 to November 2017, Mr. Wamp chaired the Board of Directors
for Chicago Bridge and Iron Federal Services, LLC (a subsidiary of Chicago Bridge & Iron Company, NYSE: CBI, which provides
critical services primarily to the U.S. government). From January 1995 to January 2011, Mr. Wamp served as a member of the U.S.
House of Representatives from Tennessee’s 3 rd Congressional District. His district included the Oak Ridge National
Laboratory, with strong science and research missions from energy to homeland security. Among his many accomplishments, which
included various leadership roles in the advancement of education and science, Mr. Wamp was instrumental in the formation and
success of the Tennessee Valley Technology Corridor, which created thousands of jobs for Tennesseans in the areas of high-tech
research, development, and manufacturing. During his career in the political arena, Mr. Wamp served on several prominent subcommittees
during his 14 years on the House Appropriations Committee, including serving as a “ranking member” of the Subcommittee
on Military Construction and Veterans Affairs and Related Agencies. Mr. Wamp has been a regular panelist on numerous media outlets
and has been featured in a number of national publications effectively articulating sound social and economic policy. Mr. Wamp’s
business career has also included work in the real estate sector for a number of years as a licensed industrial-commercial real
estate broker, for which he was named Chattanooga’s Small Business Person of the Year. He is a founder and Board Chair of
Learning Blade, the nation’s premiere STEM education platform, which is now operating statewide in six states with deployment
in another 10 states. Learning Blade is owned and operated by SAI Interactive, Inc., d/b/a Thinking Media, a privately-held educational
products and services company.
Mr.
Wamp has an extensive career in solving and overseeing solutions to complex issues involving domestic concerns. In addition, his
wide-ranging career, particularly with respect to his government-related work, provides solid experience for the continuing growth
of the Company’s Treatment and Services Segments. His extensive knowledge and problem-solving expertise enhance the Board’s
ability to address significant challenges in the nuclear market, and led the Board to conclude that he should serve as a director.
Mr.
Mark A. Zwecker
Mr.
Zwecker, a director since the Company’s inception in January 1991, previously served as the CFO and a board member for JCI
US Inc. from 2013 to 2019. JCI US Inc. is a telecommunications company and wholly-owned subsidiary of Japan Communications, Inc.
(Tokyo Stock Exchange (Securities Code: 9424)), which provides cellular service for M2M (machine to machine) applications. From
2006 to 2013, Mr. Zwecker served as Director of Finance for Communications Security and Compliance Technologies, Inc., a wholly-owned
subsidiary of JCI US Inc. that develops security software products for the mobile workforce. From 1997 to 2006, Mr. Zwecker served
as President of ACI Technology, LLC, a privately-held IT services provider, and from 1986 to 1998, he served as Vice President
of Finance and Administration for American Combustion, Inc., a privately-held combustion technology solutions provider. In 1981,
with Dr. Centofanti, Mr. Zwecker co-founded a start-up, PPM, Inc., a hazardous waste management company. He remained with PPM,
Inc. until its acquisition in 1985 by USPCI. Mr. Zwecker has a B.S. in Industrial and Systems Engineering from the Georgia Institute
of Technology and an M.B.A. from Harvard University.
As
a director since our inception, Mr. Zwecker’s understanding of our business provides valuable insight to the Board. With
years of experience in operations and finance for various companies, including a number of waste management companies, Mr. Zwecker
combines extensive knowledge of accounting principles, financial reporting rules and regulations, the ability to evaluate financial
results, and understanding of financial reporting processes. He has an extensive background in operating complex organizations.
Mr. Zwecker’s experience and background position him well to serve as a member of our Board. These factors led the Board
to conclude that he should serve as a director.
BOARD
LEADERSHIP STRUCTURE
We
currently separate the roles of Chairman of the Board and CEO. The Board believes that this leadership structure promotes balance
between the Board’s independent authority to oversee our business, and the CEO and his management team, who manage the business
on a day-to-day basis.
81
The
Company does not have a written policy with respect to the separation of the positions of Chairman of the Board and CEO. The Company
believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and CEO in
any way that is in the best interests of the Company at a given point in time; therefore, the Company’s leadership structure
may change in the future as circumstances may dictate.
Mr.
Mark Zwecker, a current member of our Board, continues to serve as the Independent Lead Director, a position he has held since
February 2010. The Lead Director’s role includes:
●
convening
and chairing meetings of the non-employee directors as necessary from time to time and Board meetings in the absence of the
Chairman of the Board;
●
acting
as liaison between directors, committee chairs and management;
●
serving
as information sources for directors and management; and
●
carrying
out such responsibilities as the Board may delegate from time to time.
AUDIT
COMMITTEE
We
have a separately designated standing Audit Committee of our Board established in accordance with Section 3(a)(58)(A) of the Exchange
Act. Members of the Audit Committee are Mark A. Zwecker (Chairperson), Larry M. Shelton, and Joseph T. Grumski, who replaced Zach
Wamp as a member of the Audit Committee effective April 16, 2020.
Our
Board has determined that each of our Audit Committee members is and was independent within the meaning of the rules of the NASDAQ
and is an “audit committee financial expert” as defined by Item 407(d)(5)(ii) of Regulation S-K of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
The
Audit Committee has also discussed with Grant Thornton, LLP, the Company’s independent registered accounting firm, the matters
required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 16 (Communications
with Audit Committee).
BOARD
OF DIRECTOR INDEPENDENCE
The
Board has determined that each director, other than Dr. Centofanti, is “independent” within the meaning of the applicable
NASDAQ rules. Dr. Centofanti is not deemed to be an “independent director” because of his employment as an executive
officer of the Company.
COMPENSATION
AND STOCK OPTION COMMITTEE
The
Compensation and Stock Option Committee (the “Compensation Committee”) reviews and recommends to the Board the compensation
and benefits of all of the Company’s officers and reviews general policy matters relating to compensation and benefits of
the Company’s employees. The Compensation Committee also administers the Company’s stock option plans. The Compensation
Committee has the sole authority to retain and terminate a compensation consultant, as well as to approve the consultant’s
fees and other terms of engagement. It also has the authority to obtain advice and assistance from internal or external legal,
accounting or other advisors. No compensation consultant was employed during 2020. Members of the Compensation Committee during
2020 were Larry M. Shelton (Chairperson), Joe R. Reeder, and Mark A. Zwecker. Effective January 21, 2021, Joseph T. Grumski replaced
Larry M. Shelton as the Chairperson and a member of the Compensation Committee and Zach P. Wamp replaced Joe R. Reeder as a member
of the Compensation Committee. None of the members of the Compensation Committee has been or is an officer or employee of the
Company or has had or has any relationship with the Company requiring disclosure under applicable Commission regulations.
CORPORATE
GOVERNANCE AND NOMINATING COMMITTEE
We
have a separately-designated standing Corporate Governance and Nominating Committee (the “Nominating Committee”).
Members of the Nominating Committee during 2020 were Joe R. Reeder (Chairperson), Zach P. Wamp, and Larry M. Shelton. Effective
January 21, 2021, Mr. Bostick replaced Larry M. Shelton as a member of the Nominating Committee. All members of the Nominating
Committee are and were “independent” as that term is defined by current NASDAQ listing standards.
82
The
Nominating Committee recommends to the Board of Directors candidates to fill vacancies on the Board and the nominees for election
as directors at each annual meeting of stockholders. In making such recommendation, the Nominating Committee takes into account
information provided to them from the candidate, as well as the Nominating Committee’s own knowledge and information obtained
through inquiries to third parties to the extent the Nominating Committee deems appropriate. The Company’s Bylaws sets forth
certain minimum director qualifications to qualify for nomination for election as a director. To qualify for nomination or for
election as a director, an individual must:
●
be
an individual at least 21 years of age who is not under legal disability;
●
have
the ability to be present, in person, at all regular and special meetings of the Board of Directors;
●
not
serve on the boards of more than three other publicly-held companies;
●
satisfy
the director qualification requirements of all environmental and nuclear commissions, boards or similar regulatory or law
enforcement authorities to which the Company is subject so as not to cause the Company to fail to satisfy any of the licensing
requirements imposed by any such authority;
●
not
be affiliated with, employed by or a representative of, or have or acquire a material personal involvement with, or material
financial interest in, any “Business Competitor” (as defined in the Bylaws);
●
not
have been convicted of a felony or of any misdemeanor involving moral turpitude; and
●
have
been nominated for election to the Board of Directors in accordance with the terms of the Bylaws.
In
addition to the minimum director qualifications as mentioned above, in order for any proposed nominee to be eligible to be a candidate
for election to the Board, such candidate must deliver to the Nominating Committee a completed questionnaire with respect to the
background, qualifications, stock ownership and independence of such proposed nominee. The Nominating Committee reviews each candidate’s
qualifications to include considerations of:
●
standards
of integrity, personal ethics and values, commitment, and independence of thought and judgment;
●
ability
to represent the interests of the Company’s stockholders;
●
ability
to dedicate sufficient time, energy and attention to fulfill the requirements of the position; and
●
diversity
of skills and experience with respect to accounting and finance, management and leadership, business acumen, vision and strategy,
charitable causes, business operations, and industry knowledge.
The
Nominating Committee does not assign specific weight to any particular criteria and no particular criterion is necessarily applicable
to all prospective nominees. The Nominating Committee does not have a formal policy for the consideration of diversity in identifying
nominees for directors. However, d iversity is one of the many factors taken into account
when considering potential candidates to serve on the Board of Directors. The Company generally views and values diversity from
the perspective of professional and life experiences, as well as geographic location, representative of the markets in which we
do business. The Company recognizes that diversity in professional and life experiences may include consideration of gender, race,
cultural background or national origin, in identifying individuals who possess the qualifications that the Nominating Committee
believes are important to be represented on the Board. The Company believes that the inclusion of diversity as one of many factors
considered in selecting director nominees is consistent with the Company’s goal of creating a board of directors that best
serves our needs and those of our shareholders.
Stockholder
Nominees
There
have been no changes to the stockholder nomination process since the Company’s last proxy statement. The procedure for stockholder
nominees to the Board of Directors is set out below.
83
The
Nominating Committee will consider properly submitted stockholder nominations for candidates for membership on the Board of Directors
from stockholders who meet each of the requirements set forth in the Bylaws, including, but not limited to, the requirements that
any such stockholder own at least 1% of the Company’s shares of the Common Stock entitled to vote at the meeting on such
election, has held such shares continuously for at least one full year, and continuously holds such shares through and including
the time of the annual or special meeting. Nominations of persons for election to the Board of Directors may be made at any Annual
Meeting of Stockholders, or at any Special Meeting of Stockholders called for the purpose of electing directors. Any stockholder
nomination (“Proposed Nominee”) must comply with the requirements of the Company’s Bylaws and the Proposed Nominee
must meet the minimum qualification requirements as discussed above. For a nomination to be made by a stockholder, such stockholder
must provide advance written notice to the Nominating Committee, delivered to the Company’s principal executive office address
(i) in the case of an Annual Meeting of Stockholders, no later than the 90 th day nor earlier than the 120 th
day prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; and (ii) in the case of a Special
Meeting of Stockholders called for the purpose of electing directors, not later than the 10 th day following the day
on which public disclosure of the date of the Special Meeting of Stockholders is made.
The
Nominating Committee will evaluate the qualification of the Proposed Nominee and the Proposed Nominee’s disclosure and compliance
requirements in accordance with the Company’s Bylaws. If the Board of Directors, upon the recommendation of the Nominating
Committee, determines that a nomination was not made in accordance with the Company’s Bylaws, the Chairman of the Meeting
shall declare the nomination defective and it will be disregarded.
STRATEGIC
ADVISORY COMMITTEE
We
have a separately designated Strategic Advisory Committee (the “Strategic Committee”). The primary functions of the
Strategic Committee are to investigate and evaluate strategic alternatives available to the Company and to work with management
on long-range strategic planning and identification of potential new business opportunities. The members of the Strategic Advisory
Committee are Dr. Louis Centofanti (Chairperson), Joe R. Reeder, Mark A. Zwecker, and Larry M. Shelton. The Strategic Advisory
Committee does not have a charter.
EXECUTIVE
OFFICERS OF THE REGISTRANT
The
following table sets forth, as of the date hereof, information concerning our executive officers:
NAME
AGE
POSITION
Mr.
Mark Duff
58
President
and CEO
Mr.
Ben Naccarato
58
CFO,
EVP, and Secretary; CFO and member of the Management Board of PF Medical
Dr.
Louis Centofanti
76
EVP
of Strategic Initiatives; President of PF Medical
Mr.
Andrew Lombardo
61
EVP
of Nuclear and Technical Services; Member of the Supervisory Board of PF Medical
Mr.
Richard Grondin
62
EVP
of Waste Treatment Operations; Member of the Supervisory Board of PF Medical
Mr.
Mark Duff
Mr.
Mark Duff has held the position of President and CEO of the Company since September 2017. Since joining the Company in June 2016
and prior to being named the President and CEO, Mr. Duff held the positions of Chief Operating Officer and Executive Vice President
of the Company. Since joining Perma-Fix, Mr. Duff has developed and implemented strategies to meet aggressive growth objectives
in both the Treatment and Services Segments. In the Treatment Segment, he has upgraded each facility to increase efficiency and
modernize treatment capabilities to meet the changing markets associated with the waste management industry. In the Services Segment,
which encompasses all field operations, he has completed the revitalization of business development programs which has resulted
in increased competitive procurement effectiveness and broadened the market penetration within both the commercial and government
sectors. Both of these implemented strategies have contributed to continuous growth in revenues and profitability. Mr. Duff has
over 30 years of management and technical experience in the U.S Department of Energy (“DOE”) and U.S. Department of
Defense (“DOD”) environmental and construction markets as a corporate officer, senior project manager, co-founder
of a consulting firm, and federal employee. Mr. Duff has an MBA from the University of Phoenix and received his B.S. from the
University of Alabama.
84
Mr.
Ben Naccarato
Mr.
Naccarato has served as the Company’s CFO since February 26, 2009. On January 16, 2020, the Company’s Board, with
the approval of the Compensation Committee, promoted Mr. Naccarato to EVP and CFO from Vice President and CFO. Mr. Naccarato joined
the Company in September 2004 and served as Vice President, Finance of the Company’s Industrial Segment until May 2006,
when he was named Vice President, Corporate Controller/Treasurer. Since July 2015 and December 2015, Mr. Naccarato has served
as the CFO of PF Medical and a member of the Management Board of PF Medical, respectively. Mr. Naccarato has over 30 years of
experience in senior financial positions in the waste management and used oil industries. From December 2002 to September 2004,
Mr. Naccarato was the CFO of a privately held company in the fuel distribution and used waste oil industry. Mr. Naccarato is a
graduate of University of Toronto with a Bachelor of Commerce and Finance Degree and is a Chartered Professional Accountant, Certified
Management Accountant (CPA, CMA).
On
March 3, 2021, Mr. Naccarato was appointed to serve as an independent director of PyroGenesis Canada, Inc., a high-tech company
involved in the design, development, manufacture and commercialization of advanced plasma processes and products and whose stock
is listed for trading on the Toronto (PYR) and NASDAQ (PYR) Stock Exchange. Effective March 11, 2021, Mr. Naccarato was appointed
to serve as a member of both the Audit and Compensation Committee of PyroGenesis.
Dr.
Louis Centofanti
See
“Director – Dr. Louis F. Centofanti” in this section for information on Dr. Centofanti.
Mr.
Andrew (“Andy”) Lombardo
On
January 16, 2020, the Company’s Board appointed Mr. Lombardo to the position of EVP of Nuclear and Technical Services and
an executive officer of the Company. Since joining the Company in 2011, Mr. Lombardo has held various positions within the Company’s
Services Segment, including SVP of Nuclear and Technical Services. Since May 2019, Mr. Lombardo has served as a member of the
Supervisory Board of PF Medical.
Mr.
Lombardo, a Certified Health Physicist (“CHP”), has over 35 years of management and technical experience in the commercial
nuclear reactor market, and the DOE and DOD environmental and construction markets as a senior director, senior project manager,
senior CHP and chemist. Prior to joining the Company, Mr. Lombardo held the position of Vice President of Technical Services for
Safety and Ecology Corporation (“SEC”), a subsidiary of Homeland Security Capital Corporation, a publicly traded environmental
services company, prior to the acquisition of SEC by the Company in 2011. In his positions with both the Company and SEC, Mr.
Lombardo procured and performed greater than $20 million a year in health physics and radioactive material management projects
across the DOE and DOD complex while managing a professional staff of engineers and health physicists and an instrumentation laboratory.
Prior to his employment with the Company and SEC, he managed decommissioning projects for two engineering firms which included
the successful deployment of soil segregation technology, resulting in client savings of more than $100 million in transportation
and disposal costs. During this time, he developed an expertise characterizing and managing naturally occurring radioactive material
(“NORM”) and technologically enhanced NORM (“TENORM”) waste streams across multiple industries including
oil and gas exploration and production. As a result of his expertise, he was recently appointed to the National Council on Radiation
Protection and Measurement Committee to provide a commentary on the generation and disposal of TENORM waste. Mr. Lombardo began
his career as a chemist and health physicist for the Duquesne Light Company at two commercial reactor sites and one joint DOE/Naval
Reactors Duquesne Light test reactor in Shippingport, PA. Mr. Lombardo is certified in comprehensive practice of health physics,
and has a M.S. degree in Health Physics from the University of Pittsburgh and a B.S. in Natural Sciences from Indiana University
of Pennsylvania.
85
Mr.
Richard Grondin
On
July 22, 2020, the Company’s Board appointed Mr. Richard Grondin to the position of EVP of Waste Treatment Operations and
an executive officer of the Company. Effective January 21, 2021, Mr. Grondin was elected to serve as a member of the Supervisory
Board of PF Medical. Since joining the Company in 2002, Mr. Grondin has held various positions within the Company’s Treatment
Segment, including Vice President of Technical Services, Vice President/General Manager of the Perma-Fix Northwest Richland, Inc.
(“PFNWR”) Facility and Vice President of Western Operations. Mr. Grondin, a Project Management Professional (“PMP”),
has over 35 years of management and technical experience in the highly regulated and specialized radioactive/hazardous waste management
industry with the majority of his experience concentrated on managing start-up waste management processing and disposal facilities
for four different organizations in the commercial and government sectors. Prior to joining the Company, Mr. Grondin held the
position of Vice President of Mixed Waste Operations for Allied Technology Group (“ATG”) in Richland, Washington;
Vice President of Operations for Waste Control Specialists (“WCS”) in Andrews Texas; and Technical Manager/Director
of Operations for Rollins Environmental Services Facility in Deer Trail, Colorado. In his positions with the Company, Mr. Grondin,
together with others, transformed the PFNWR facility to a profitable subsidiary after its acquisition by the Company. Mr. Grondin
is recognized in the United States and Canada as an authority in hazardous and mixed waste treatment. He has been involved in
the treatment of several hundred thousand tons of waste in the last 35 years. Mr. Grondin has a Diploma of Collegial Studies in
Pure and Applied Sciences from CEGEP of Amiante (Thetford-Mines, Canada) and Analytical Chemistry Techniques from CEGEP of Ahuntsic
(Montreal, Canada), a Geography minor from Montreal University (Montreal, Canada) and a Certificate of Business Management from
the School of Higher Commercial Studies from Montreal University (Montreal, Canada).
Certain
Relationships
There
are no family relationships between any of the directors or executive officers.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act, and the regulations promulgated thereunder require our executive officers and directors and beneficial
owners of more than 10% of our Common Stock to file reports of ownership and changes of ownership of our Common Stock with the
Commission, and to furnish us with copies of all such reports. Based solely on a review of the copies of such reports furnished
to us and written information provided to us, we believe that during 2020 none of our executive officers, directors, or beneficial
owners of more than 10% of our Common Stock failed to timely file reports under Section 16(a).
Capital
Bank–Grawe Gruppe AG (“Capital Bank”) has advised us that it is a banking institution regulated by the banking
regulations of Austria, which holds shares of our Common Stock as agent on behalf of numerous investors. Capital Bank has represented
that all of such investors are accredited investors under Rule 501 of Regulation D promulgated under the Act. In addition, Capital
Bank has advised us that none of such investors, individually or as a group, beneficially own more than 4.9% of our Common Stock
as calculated in accordance with Rule 13d-3 of the Exchange Act. Capital Bank has further informed us that its clients (and not
Capital Bank) maintain full voting and dispositive power over such shares. Consequently, Capital Bank has advised us that it believes
it is not the beneficial owner, as such term is defined in Rule 13d-3 of the Exchange Act, of the shares of our Common Stock registered
in the name of Capital Bank because it has neither voting nor investment power, as such terms are defined in Rule 13d-3, over
such shares. Capital Bank has informed us that it does not believe that it is required to file, and has not filed, (a) reports
under Section 16(a) of the Exchange Act or (b) either Schedule 13D or Schedule 13G in connection with the shares of our Common
Stock registered in the name of Capital Bank.
If
the representations of, or information provided by Capital Bank, are incorrect or Capital Bank was historically acting on behalf
of its investors as a group, rather than on behalf of each investor independent of other investors, then Capital Bank and/or the
investor group would have become a beneficial owner of more than 10% of our Common Stock on February 9, 1996, as a result of the
acquisition of 1,100 shares of our Preferred Stock that were convertible into a maximum of 256,560 shares of our Common Stock.
If either Capital Bank or a group of Capital Bank’s investors became a beneficial owner of more than 10% of our Common Stock
on February 9, 1996, or at any time thereafter, and thereby required to file reports under Section 16(a) of the Exchange Act,
then Capital Bank has failed to file a Form 3 or any Forms 4 or 5 since February 9, 1996. (See “Item 12 - Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matter – Security Ownership of Certain Beneficial Owners”
for a discussion of Capital Bank’s current record ownership of our securities).
86
Code
of Ethics
Our
Code of Ethics applies to all our executive officers and is available on our website at www.perma-fix.com . If any amendments
are made to the Code of Ethics or any grants of waivers are made to any provision of the Code of Ethics to any of our executive
officers, we will promptly disclose the amendment or waiver and nature of such amendment or waiver on our website at the same
web address.
ITEM
11.
EXECUTIVE
COMPENSATION
Summary
Compensation
The
following table summarizes the total compensation paid or earned by each of the named executive officers (“NEOs”)
for the fiscal years ended December 31, 2020 and 2019.
Name
and Principal Position
Year
Salary
Bonus
Option
Awards
Non-Equity
Incentive Plan Compensation
All
other Compensation
Total
Compensation
($)
($)
($)
(5)
($)
($)
(8)
($)
Mark
Duff
2020
344,400
—
—
107,010 (6)
29,930
481,340
President
and CEO
2019
287,000
—
35,564
110,699 (7)
29,680
462,943
Ben
Naccarato
2020
280,000
—
—
86,000 (6)
41,594
407,594
EVP
and CFO
2019
235,231
—
21,338
81,070 (7)
40,861
378,500
Dr.
Louis Centofanti
2020
233,336
—
—
71,668 (6)
33,780
338,784
EVP
of Strategic Initiatives
2019
228,985
—
21,338
78,918 (7)
32,264
361,505
Andy
Lombardo (1)
2020
280,000
27,000 (3)
—
83,000 (6)
12,385
402,385
EVP
of Nuclear & Technical Services
2019
258,662
—
14,225
89,147 (7)
5,168
367,202
Richard
Grondin (2)
2020
223,151
—
—
71,143 (6)
29,216
323,510
EVP
of Waste Treatment Operations
2019
183,904
30,341 (4)
14,225
— (7)
29,137
257,607
(1)
On
January 16, 2020, the Board appointed Mr. Lombardo to the position of EVP of Nuclear and Technical Services and an executive
officer of the Company. Previously, Mr. Lombardo held the position of SVP of Nuclear and Technical Services (within the Services
Segment). As the EVP of Nuclear and Technical Services, Mr. Lombardo’s annual base salary was increased to $280,000,
effective January 1, 2020.
(2)
On
July 22, 2020, the Board appointed Mr. Grondin to the position of EVP of Waste Treatment Operations and an executive officer
of the Company. Previously, Mr. Grondin held the position of Vice President of Western Operations. As the EVP of Waste Treatment
Operations, Mr. Grondin’s annual base salary was increased to $240,000, effective July 22, 2020.
(3)
Reflects
a discretionary bonus earned by Mr. Lombardo which was approved by the Company’s Compensation Committee and which is
to be paid upon payment of the compensation earned under Mr. Lombardo’s 2020 MIP as described in footnote (6) below.
87
(4)
Reflects
a discretionary bonus earned by Mr. Grondin which was approved by the Company’s CEO and paid in May 2020. See also footnote
(7) below.
(5)
Reflects
the aggregate grant date fair value of awards computed in accordance with ASC 718, “Compensation – Stock Compensation.”
Assumptions used in the calculation of this amount are included in “Note 7 – Capital Stock, Stock Plans, Warrants
and Stock Based Compensation” to “Notes to Consolidated Financial Statement.”
(6)
Represents
performance compensation earned under the Company’s Management Incentive Plan (“MIP”). The MIP for each
individual in the table is described under the heading “2020 MIPs.” Compensation earned under the 2020 MIPs is
to be paid on or about 90 days after year-end, or sooner based on final Form 10-K filing.
(7)
Represents
performance compensation earned under the Company’s 2019 MIP. As discussed above, Mr. Lombardo was named an executive
officer of the Company effective January 16, 2020. Mr. Lombardo had a MIP for 2019 as the SVP of Nuclear and Technical Services,
prior to his election as an executive officer by the Board on January 16, 2020. Mr. Lombardo’s MIP as SVP of Nuclear
and Technical Services was subject to the approval of the CEO. Mr. Grondin did not have a MIP for 2019 but earned a bonus
which is described in footnote (4) above. Compensation earned under the MIPs for 2019 was paid by the Company at the end of
May 2020.
(8)
The
amount shown includes a monthly automobile allowance, insurance premiums (health, disability and life) paid by the Company
on behalf of the NEO, and 401(k) matching contributions.
Insurance
401(k)
Name
Premium
Auto
Allowance
match
Total
Mark
Duff
$ 14,430
$ 9,000
$ 6,500
$ 29,930
Ben
Naccarato
$ 26,853
$ 9,000
$ 5,741
$ 41,594
Dr.
Louis Centofanti
$ 18,516
$ 9,000
$ 6,264
$ 33,780
Andy
Lombardo
$ —
$ 5,885
$ 6,500
$ 12,385
Richard
Grondin
$ 18,516
$ 4,200
$ 6,500
$ 29,216
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth unexercised options held by the NEOs as of the fiscal year-end.
Outstanding
Equity Awards at December 31, 2020
Name
Number
of Securities Underlying Unexercised Options (#) Exercisable
Number
of Securities Underlying Unexercised Options (#) (1) Unexercisable
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
Option
Exercise Price ($)
Option
Expiration Date
Mark
Duff
50,000 (2)
— (2)
—
3.97
5/15/2022
60,000 (3)
40,000
(3)
—
3.65
7/27/2023
5,000 (4)
20,000 (4)
3.15
1/17/2025
Ben
Naccarato
30,000 (3)
20,000 (3)
—
3.65
7/27/2023
3,000 (4)
12,000 (4)
3.15
1/17/2025
Dr.
Louis Centofanti
30,000 (3)
20,000 (3)
—
3.65
7/27/2023
3,000 (4)
12,000
(4)
3.15
1/17/2025
Andy
Lombardo
4,000 (5)
8,000 (5)
—
3.60
10/19/2023
— (4)
8,000 (4)
3.15
1/17/2025
Richard
Grondin
12,000 (5)
8,000 (5)
—
3.60
10/19/2023
2,000 (4)
8,000 (4)
3.15
1/17/2025
(1)
Pursuant
to each of the employment agreements between the Company and, respectively, Mark Duff, Ben Naccarato, Dr. Lou Centofanti,
Andy Lombardo, and Richard Grondin, each dated July 22, 2020, in the event of a change in control, death of the executive
officer, the executive officer terminates his employment for “good reason” or the executive officer is terminated
by the Company without cause, each outstanding option and award shall immediately become exercisable in full (see “Employment
Agreements” below for further discussion of the event pursuant to which accelerated exercise of the respective NEO’s
outstanding options can arise).
(2)
Incentive
stock option granted on May 15, 2016 under the Company’s 2010 Stock Option Plan. The option has a contractual term of
six years with one-third yearly vesting over a three-year period.
88
(3)
Incentive
stock option granted on July 27, 2017 under the Company’s 2017 Stock Option Plan. The option has a contractual term
of six years with one-fifth yearly vesting over a five-year period.
(4)
Incentive
stock option granted on January 17, 2019 under the Company’s 2017 Stock Option Plan. The option has a contractual term
of six years with one-fifth yearly vesting over a five-year period.
(5)
Incentive
stock option granted on October 19, 2017 under the Company’s 2017 Stock Option Plan. The option has a contractual term
of six years with one-fifth yearly vesting over a five-year period.
Option
Exercises
The
table below reflects options exercised by our NEO’s in 2020.
Number
of Shares
Value
Realized
Name
Acquired
on Exercise (#)
on
Exercise ($) (1)
Andy
Lombardo
2,000
$ 7,700
(1)
Realized
value determined based on the difference between (a) the total proceeds received by the Company from the exercise of options
for the purchase of 2,000 shares of the Company’s Common Stock at $3.15 per share, and (b) the market value ($7.00 per
share) of the 2,000 shares of the Company’s Common Stock acquired by Mr. Lombardo on the date of the exercise of the
options.
Employment
Agreements
Effective
July 22, 2020, each of the NEOs entered into an employment agreement with the Company (each, an “Employment Agreement”
and, collectively, the “Employment Agreements”). Each of the Employment Agreements, which are substantially identical,
provides for a specified annual base salary, which annual salary may be increased from time to time, but not reduced, as determined
by the Compensation Committee. In addition, each of the NEOs is entitled to participate in the Company’s broad-based benefits
plans and to certain performance compensation payable under separate MIPs as approved by the Company’s Compensation Committee
and Board. The Company’s Compensation Committee and the Board approved individual 2020 MIPs on January 16, 2020 (which were
effective January 1, 2020 and applicable for the 2020 fiscal year) for each of Mark Duff, Ben Naccarato, Dr. Louis Centofanti,
and Andy Lombardo. Additionally, the Compensation Committee and the Board approved a 2020 MIP for Richard Grondin on July 22,
2020 (which was effective January 1, 2020 and applicable for the 2020 fiscal year) (see discussion of each of the 2020 MIPs below
under “2020 MIPs”). The Employment Agreements for each of Mark Duff, Dr. Louis Centofanti, and Ben Naccarato replaced
existing employment agreements between the Company and each such individual originally entered into on September 8, 2017.
Each
of the Employment Agreements is effective for three years from July 22, 2020 (the “Initial Term”) unless earlier terminated
by the Company or by the respective NEO. At the end of the Initial Term of each Employment Agreement, each Employment Agreement
will automatically be extended for one additional year, unless at least six months prior to the expiration of the Initial Term,
the Company or the respective NEO provides written notice not to extend the terms of the Employment Agreement.
Each
of the Employment Agreements provides that, if an NEO’s employment is terminated due to death/disability or for cause (as
defined in the agreements), the Company will pay to the NEO or to his estate an amount equal to the sum of any unpaid base salary,
accrued unused vacation time through the date of termination, any benefits due to the NEO under any employee benefit plan (the
“Accrued Amounts”) and any performance compensation payable pursuant to the MIP applicable to such NEO.
If
the NEO terminates his employment for “good reason” (as defined in the agreements) or is terminated by the Company
without cause (including any such termination for “good reason” or without cause within 24 months after a Change in
Control (as defined in the agreements), the Company will pay the NEO the Accrued Amounts, two years of full base salary, and two
times the performance compensation (under the NEO’s MIP) earned with respect to the fiscal year immediately preceding the
date of termination provided the performance compensation earned with respect to the fiscal year immediately preceding the date
of termination has not yet been paid. If performance compensation earned with respect to the fiscal year immediately preceding
the date of termination has been paid to the NEO, the NEO will be paid an additional year of the performance compensation earned
with respect to the fiscal year immediately preceding the date of termination. If the NEO terminates his employment for a reason
other than for good reason, the Company will pay to the executive an amount equal to the Accrued Amounts plus any performance
compensation payable pursuant to the MIP applicable to such NEO.
89
If
there is a Change in Control (as defined in the agreements), all outstanding stock options to purchase the common stock held by
the NEO will immediately become exercisable in full commencing on the date of termination through the original term of the options.
In the event of the death of an NEO, all outstanding stock options to purchase common stock held by the NEO will immediately become
exercisable in full commencing on the date of death, with such options exercisable for the lesser of the original option term
or twelve months from the date of the NEO’s death. In the event an NEO terminates his employment for “good reason”
or is terminated by the Company without cause, all outstanding stock options to purchase common stock held by the NEO will immediately
become exercisable in full commencing on the date of termination, with such options exercisable for the lesser of the original
option term or within 60 days from the date of the NEO’s date of termination. Severance benefits payable with respect to
a termination (other than Accrued Amounts) shall not be payable until the termination constitutes a “separation from service”
(as defined under Treasury Regulation Section 1.409A-1(h)).
Potential
Payments
The
following table sets forth the potential (estimated) payments and benefits to which each NEO would be entitled upon termination
of employment or following a Change in Control of the Company, as specified under each of their respective Employment Agreements
with the Company, assuming each circumstance described below occurred on December 31, 2020, the last day of our most recent fiscal
year.
Name
and Principal Position
Potential
Payment/Benefit
Disability/
Retirement
For
Cause
Death
By
Executive for
Good
Reason or by
Company
Without
Cause
Change
in Control
of
the Company
Mark
Duff
President
and CEO
Accrued
Amounts
$ 24,163 (6)
$ 24,163 (6)
$ 24,163 (6)
$ 712,963 (1)
$ 712,963 (1)
Performance
compensation
$ 107,010 (2)
$ 107,010 (2)
$ 107,010 (2)
$ 214,020 (3)
$ 214,020 (3)
Stock
Options
$ 253,300 (5)
$ 253,300 (5)
$ 402,500 (4)
$ 402,500 (4)
$ 402,500 (4)
Ben
Naccarato
EVP
and CFO
Accrued
Amounts
$ 54,762 (6)
$ 54,762 (6)
$ 54,762 (6)
$ 614,762 (1)
$ 614,762 (1)
Performance
compensation
$ 86,000 (2)
$ 86,000 (2)
$ 86,000 (2)
$ 172,000 (3)
$ 172,000 (3)
Stock
Options
$ 78,060 (5)
$ 78,060 (5)
$ 158,300 (4)
$ 158,300 (4)
$ 158,300 (4)
Dr.
Louis Centofanti
EVP
of Strategic Initiatives
Accrued
Amounts
$ 166,967 (6)
$ 166,967 (6)
$ 166,967 (6)
$ 633,639 (1)
$ 633,639 (1)
Performance
compensation
$ 71,668 (2)
$ 71,668 (2)
$ 71,668 (2)
$ 143,336 (3)
$ 143,336 (3)
Stock
Options
$ 78,060 (5)
$ 78,060 (5)
$ 158,300 (4)
$ 158,300 (4)
$ 158,300 (4)
Andy
Lombardo
EVP
of Nuclear and Technical Services
Accrued
Amounts
$ 19,276 (6)
$ 19,276 (6)
$ 19,276 (6)
$ 579,276 (1)
$ 579,276 (1)
Performance
compensation
$ 83,000 (2)
$ 83,000 (2)
$ 83,000 (2)
$ 166,000 (3)
$ 166,000 (3)
Stock
Options
$ 9,480 (5)
$ 9,480 (5)
$ 51,000 (4)
$ 51,000 (4)
$ 51,000 (4)
Richard
Grondin
EVP
of Waste Treatment Operations
Accrued
Amounts
$ 91,201 (6)
$ 91,201 (6)
$ 91,201 (6)
$ 571,201 (1)
$ 571,201 (1)
Performance
compensation
$ 71,143 (2)
$ 71,143 (2)
$ 71,143 (2)
$ 142,286 (3)
$ 142,286 (3)
Stock
Options
$ 34,080 (5)
$ 34,080 (5)
$ 75,600 (4)
$ 75,600 (4)
$ 75,600 (4)
(1)
Represents
two times the base salary of the NEO at December 31, 2020 plus “Accrued Amounts” noted in footnote (6) below.
(2)
Represents
performance compensation earned for fiscal year 2020 (see “2020 MIPs” below). Pursuant to each MIP, performance
compensation is to be paid about 90 days after year-end, or sooner based on final Form 10-K filing.
(3)
Represents
two times the performance compensation earned for fiscal year 2020 (see “2020 MIPs” below). Pursuant to the MIP,
performance compensation is to be paid about 90 days after fiscal year-end, or sooner based on final Form 10-K filing.
(4)
Benefit
is calculated based on the difference between the exercise price of each option and the market value of the Company’s
Common Stock per share (as reported on the NASDAQ) at December 31, 2020 times the number of options outstanding at December
31, 2020.
90
(5)
Benefit
is calculated based on the difference between the exercise price of each option and the market value of the Company’s
Common Stock per share (as reported on the NASDAQ) at December 31, 2020 times the number of options vested at December 31,
2020.
(6)
Represents
accrued base salary earned for 2020 but paid in 2021, as well as accrued unused vacation/sick time and benefits (defined as
“Accrued Amounts” in each of the respective per the Employment Agreement).
2020
Executive Compensation Components
For
the fiscal year ended December 31, 2020, the principal components of compensation for executive officers were:
●
base
salary;
●
performance-based
incentive compensation;
●
long
term incentive compensation;
●
retirement
and other benefits; and
●
perquisites.
Based
on the amounts set forth in the Summary Compensation table, during 2020, salary accounted for approximately 69.7% of the total
compensation of our NEOs, while equity option awards, MIP compensation, and other compensation accounted for approximately 30.3%
of the total compensation of the NEOs.
Base
Salary
The
NEOs, other officers, and other employees of the Company receive a base annual salary. Base salary ranges for executive officers
are determined for each executive based on his or her position and responsibility by using market data and comparisons to companies
in similar industry.
During
its review of base salaries for executives, the Compensation Committee primarily considers:
●
market
data and comparisons to companies in similar industry;
●
internal
review of the executive’s compensation, both individually and relative to other officers; and
●
individual
performance of the executive.
Salary
levels are typically considered annually as part of the performance review process as well as upon a promotion or other change
in job responsibility. Merit-based salary increases for executives are based on the Compensation Committee’s assessment
of the individual’s performance. The base salary and potential annual base salary adjustments for the NEOs are set forth
in their respective employment agreements. On January 16, 2020, the Compensation Committee and the Board approved a base salary
increase for each of the following individuals, which became effective January 1, 2020: (a) approximately $57,400 increase from
$287,000 to $344,400 for Mark Duff, CEO and President; (b) approximately $44,769 increase from $235,231 to $280,000 for Ben Naccarato
who was named EVP and CFO from VP and CFO; and (c) approximately $21,338 increase from $258,662 to $280,000 for Andy Lombardo,
who was named an executive officer of the Company effective January 16, 2020 and appointed to the position of EVP of Nuclear and
Technical Services from SVP of Nuclear and Technical Services. Lou Centofanti, EVP of Strategic Initiatives, was approved a base
salary increase of 1.9%, effective January 1, 2020 (from $228,985 to $233,336). As a result of Richard Grondin’s promotion
to EVP of Waste Treatment and being named an executive officer of the Company, his annual salary was increased from $208,000 as
the Vice President of Western Operations to $240,000, effective July 22, 2020. In February 2021, the Compensation Committee approved
a cost of living adjustment of approximately 2.3% of each NEO’s base salary, effective April 1, 2021.
Performance-Based
Incentive Compensation
The
Compensation Committee has the latitude to design cash and equity-based incentive compensation programs to promote high performance
and achievement of our corporate objectives by directors and the NEOs, encourage the growth of stockholder value and enable employees
to participate in our long-term growth and profitability. The Compensation Committee may grant stock options and/or performance
bonuses. In granting these awards, the Compensation Committee may establish any conditions or restrictions it deems appropriate.
In addition, the CEO has discretionary authority to grant stock options to certain high-performing executives or officers, subject
to the approval of the Compensation Committee. The exercise price for each stock option granted is at or above the market price
of our Common Stock on the date of grant. Stock options may be awarded to newly hired or promoted executives at the discretion
of the Compensation Committee. Grants of stock options to eligible newly hired executive officers are generally made at the next
regularly scheduled Compensation Committee meeting following the hire date.
91
2020
MIPs
On
January 16, 2020, the Board and the Compensation Committee approved individual MIPs for the CEO, CFO, EVP of Strategic Initiatives
and EVP of Nuclear and Technical Services. Additionally, on July 22, 2020, the Board and the Compensation Committee approved a
MIP for the EVP of Treatment Waste Operations in connection with his appointment to such position on that date. The MIPs were
effective January 1, 2020 and applicable for the 2020 fiscal year. Each MIP provides guidelines for the calculation of annual
cash incentive-based compensation, subject to Compensation Committee oversight and modification. Each MIP awarded cash compensation
based on achievement of performance thresholds, with the amount of such compensation established as a percentage of the executive’s
2020 annual base salary. The potential target performance compensation ranged from 5% to 150% of the base salary for the CEO ($17,220
to $516,600), 5% to 100% of the base salary for the CFO ($14,000 to $280,000), 5% to 100% of the base salary for the EVP of Strategic
Initiatives ($11,667 to $233,336), 5% to 100% of the base salary for the EVP of Nuclear and Technical Services ($14,000 to $280,000)
and 5% to 100% of the base salary for the EVP of Waste Treatment Operations ($12,000 to $240,000).
Performance
compensation, if any, is to be paid on or about 90 days after year-end, or sooner, based on final Form 10-K filing. The Compensation
Committee retains the right to modify, change or terminate each MIP and may adjust the various target amounts described below,
at any time and for any reason.
The
total performance compensation paid to the CEO, CFO, EVP of Strategic Initiatives, EVP of Nuclear and Technical Services and EVP
of Waste Treatment Operations as a group is not to exceed 50% of the Company’s pre-tax net income computed prior to the
calculation of performance compensation.
The
following describes the principal terms of the respective 2020 MIP applicable to each NEO:
CEO
MIP:
CEO
performance compensation for fiscal 2020 was based upon meeting corporate revenue, EBITDA, health and safety, and environmental
compliance (permit and license violations) objectives for fiscal 2020, all with respect to the Company’s operations. The
Compensation Committee believes performance compensation payable under each of the 2020 MIPs as discussed herein and below should
be based on achievement of an EBITDA target, which excludes certain non-cash items, as this target provides a better indicator
of operating performance. However, EBITDA has certain limitations as it does not reflect all items of income or cash flows that
affect the Company’s financial performance under GAAP. At achievement of 60% to 110% of each of the revenue and EBITDA targets,
the potential performance compensation was payable at 5% to 50% of the 2020 base salary, weighted 60% based on the EBITDA goal,
10% on the revenue goal, and 15% on the number of health and safety claim incidents that occurred during fiscal 2020, with the
remaining 15% on the number of notices alleging environmental, health or safety violations under our permits or licenses that
occurred during the fiscal 2020. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance
compensation was payable at 75% to 150% of the CEO’s 2020 base salary, based on the four objectives noted above, with the
payment of such performance compensation weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components
was based on the Board-approved revenue target and EBITDA target. The 2020 target performance incentive compensation for the CEO
was as follows:
Annualized
Base Pay:
$ 344,400
Performance
Incentive Compensation Target (at 100% of Plan):
$ 172,200
Total
Annual Target Compensation (at 100% of Plan):
$ 516,600
92
Perma-Fix
Environmental Serivces, Inc.
2020
Management Incentive Plan
CEO
MIP MATRIX
Performance
Target Achieved
<60%
60%-74%
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue
(1) (5)
$ -
$ 1,722
$ 8,610
$ 17,220
$ 29,520
$ 41,820
$ 66,420
EBITDA
(2)
-
10,332
51,660
103,320
177,120
250,920
398,520
Health
& Safety (3) (5)
-
2,583
12,915
25,830
25,830
25,830
25,830
Permit
& License Violations (4) (5)
-
2,583
12,915
25,830
25,830
25,830
25,830
$ -
$ 17,220
$ 86,100
$ 172,200
$ 258,300
$ 344,400
$ 516,600
1)
Revenue
was defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2020 financial
statements. The percentage achieved was determined by comparing the actual consolidated revenue for 2020 to the Board approved
Revenue Target for 2020, which was $86,201,000. The Board reserved the right to modify or change the Revenue Targets as defined
herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)
EBITDA
was defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations,
including PF Medical. The percentage achieved was determined by comparing the actual EBITDA to the Board approved EBITDA Target
for 2020, which was $6,913,000. The Board reserved the right to modify or change the EBITDA Targets as defined herein in the
event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)
The
Health and Safety Incentive Target was based upon the actual number of Worker’s Compensation Lost Time Accidents, as
provided by the Company’s Worker’s Compensation carrier. The Corporate Controller submitted a report on a quarterly
basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s
Compensation Loss Report provided by the company’s carrier or broker. Such claims were identified on the loss report
as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding
Performance Target Thresholds was established for the annual Incentive Compensation Plan calculation for 2020.
Work
Comp.
Claim Number
Performance
Target Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
4)
Permits
or License Violations incentive was earned/determined according to the scale set forth below: An “official notice of
non-compliance” was defined as an official communication during 2020 from a local, state, or federal regulatory authority
alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision,
which resulted in a facility’s implementation of corrective action(s).
93
Permit
and
License Violations
Performance
Target Achieved
4
60%-74 %
3
75%-89
%
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
5)
No
performance incentive compensation was payable for achieving the health and safety, permit and license violation, and revenue
targets unless a minimum of 60% of the EBITDA Target was achieved.
CFO
MIP:
CFO
performance compensation for fiscal 2020 was based upon meeting corporate revenue, EBITDA, health and safety, and environmental
compliance (permit and license violations) objectives for fiscal 2020, all with respect to the Company’s operations. At
achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation was payable at 5%
to 50% of the 2020 base salary, weighted 75% based on EBITDA goal, 10% on the revenue goal, and 7.5% on the number of health and
safety claim incidents that occurred during fiscal 2020, with the remaining 7.5% on the number of notices alleging environmental,
health or safety violations under our permits or licenses that occurred during the fiscal 2020. Upon achievement of 111% to 150%+
of each of the revenue and EBITDA targets, the potential performance compensation was payable at 65% to 100% of the CFO’s
2020 base salary, based on the four objectives noted above, with the payment of such performance compensation weighted more heavily
toward the EBITDA objective. Each of the revenue and EBITDA components was based on the Board-approved revenue target and EBITDA
target. The 2020 target performance incentive compensation for the CEO was as follows:
Annualized
Base Pay:
$ 280,000
Performance
Incentive Compensation Target (at 100% of Plan):
$ 140,000
Total
Annual Target Compensation (at 100% of Plan):
$ 420,000
94
Perma-Fix
Environmental Serivces, Inc.
2020
Management Incentive Plan
CFO
MIP MATRIX
Performance
Target Achieved
<60%
60%-74%
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue
(1) (5)
$ -
$ 1,400
$ 7,000
$ 14,000
$ 23,000
$ 31,000
$ 37,000
EBITDA
(2)
-
10,500
52,500
105,000
138,000
186,000
222,000
Health
& Safety (3) (5)
-
1,050
5,250
10,500
10,500
10,500
10,500
Permit
& License Violations (4) (5)
-
1,050
5,250
10,500
10,500
10,500
10,500
$ -
$ 14,000
$ 70,000
$ 140,000
$ 182,000
$ 238,000
$ 280,000
1)
Revenue
was defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2020 financial
statements. The percentage achieved was determined by comparing the actual consolidated revenue for 2020 to the Board approved
Revenue Target for 2020, which was $86,201,000. The Board reserved the right to modify or change the Revenue Targets as defined
herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)
EBITDA
was defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations,
including PF Medical. The percentage achieved was determined by comparing the actual EBITDA to the Board approved EBITDA Target
for 2020, which was $6,913,000. The Board reserved the right to modify or change the EBITDA Targets as defined herein in the
event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)
The
Health and Safety Incentive Target was based upon the actual number of Worker’s Compensation Lost Time Accidents, as
provided by the Company’s Worker’s Compensation carrier. The Corporate Controller submitted a report on a quarterly
basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s
Compensation Loss Report provided by the company’s carrier or broker. Such claims were identified on the loss report
as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding
Performance Target Thresholds was established for the annual Incentive Compensation Plan calculation for 2020.
Work
Comp.
Claim
Number
Performance
Target
Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
4)
Permits
or License Violations incentive was earned/determined according to the scale set forth below: An “official notice of
non-compliance” was defined as an official communication during 2020 from a local, state, or federal regulatory authority
alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision,
which resulted in a facility’s implementation of corrective action(s).
Permit
and
License Violations
Performance
Target Achieved
4
60%-74 %
3
75%-89
%
2
90%-110 %
1
111%-129
%
1
130%-150
%
1
>150 %
5)
No
performance incentive compensation was payable for achieving the health and safety, permit and license violation, and revenue
targets unless a minimum of 60% of the EBITDA Target was achieved.
EVP
of Strategic Initiatives MIP:
The
2020 performance compensation plan for the EVP of Strategic Initiative was based upon meeting corporate revenue, EBITDA, health
and safety, and environmental compliance (permit and license violations) objectives for fiscal 2020, all with respect to the Company’s
operations. At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation was
payable at 5% to 50% of the 2020 base salary, weighted 75% based on EBITDA goal, 10% on revenue goal, and 7.5% on the number of
health and safety claim incidents that occurred during fiscal 2020, with the remaining 7.5% on the number of notices alleging
environmental, health or safety violations under our permits or licenses that occurred during fiscal 2020. Upon achievement of
111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation was payable at 65% to 100% of
the EVP of Strategic Initiative’s 2020 base salary, based on the four objectives noted above, with the payment of such performance
compensation weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components was based on the Board-approved
revenue target and EBITDA target. The 2020 target performance incentive compensation for the EVP of Strategic Initiatives was
as follows:
Annualized
Base Pay:
$ 233,336
Performance
Incentive Compensation Target (at 100% of Plan):
$ 116,668
Total
Annual Target Compensation (at 100% of Plan):
$ 350,004
95
Perma-Fix
Environmental Serivces, Inc.
2020
Management Incentive Plan
EVP
OF STRATEGIC INITIATIVES MIP MATRIX
Performance
Target Achieved
<60%
60%-74%
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue
(1) (5)
$ -
$ 1,167
$ 5,833
$ 11,667
$ 19,167
$ 25,834
$ 30,834
EBITDA
(2)
-
8,750
43,751
87,501
115,001
155,002
185,002
Health
& Safety (3) (5)
-
875
4,375
8,750
8,750
8,750
8,750
Permit
& License Violations (4) (5)
-
875
4,375
8,750
8,750
8,750
8,750
$ -
$ 11,667
$ 58,334
$ 116,668
$ 151,668
$ 198,336
$ 233,336
1)
Revenue
was defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2020 financial
statements. The percentage achieved was determined by comparing the actual consolidated revenue for 2020 to the Board approved
Revenue Target for 2020, which was $86,201,000. The Board reserved the right to modify or change the Revenue Targets as defined
herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)
EBITDA
was defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations,
including PF Medical. The percentage achieved was determined by comparing the actual EBITDA to the Board approved EBITDA Target
for 2020, which was $6,913,000. The Board reserved the right to modify or change the EBITDA Targets as defined herein in the
event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)
The
Health and Safety Incentive Target was based upon the actual number of Worker’s Compensation Lost Time Accidents, as
provided by the Company’s Worker’s Compensation carrier. The Corporate Controller submitted a report on a quarterly
basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s
Compensation Loss Report provided by the company’s carrier or broker. Such claims were identified on the loss report
as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding
Performance Target Thresholds was established for the annual Incentive Compensation Plan calculation for 2020.
Work
Comp.
Claim
Number
Performance
Target
Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
96
4)
Permits
or License Violations incentive was earned/determined according to the scale set forth below: An “official notice of
non-compliance” was defined as an official communication during 2020 from a local, state, or federal regulatory authority
alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision,
which resulted in a facility’s implementation of corrective action(s).
Permit
and
License Violations
Performance
Target Achieved
4
60%-74 %
3
75%-89
%
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
5)
No
performance incentive compensation was payable for achieving the health and safety, permit and license violation, and revenue
targets unless a minimum of 60% of the EBITDA Target was achieved.
EVP
of Nuclear and Technical Services MIP:
The
2020 performance compensation plan for the EVP of Nuclear and Technical Services was based upon meeting corporate revenue, EBITDA,
health and safety compliance, and Cost Performance Index (“CPI”) (a metric used in measuring project performance)
objectives for fiscal 2020, all with respect to the Company’s operations. At achievement of 60% to 110% of each of the revenue
and EBITDA targets, the potential performance compensation was payable at 5% to 50% of the 2020 base salary, weighted 60% based
on the EBITDA goal, 10% on the revenue goal, and 15% on the number of health and safety claim incidents that occur during fiscal
2020, with the remaining 15% on CPI metric goals. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets,
the potential performance compensation was payable at 65% to 100% of the SVP of Nuclear and Technical Services’ 2020 base
salary, based on the four objectives noted above, with the payment of such performance compensation weighted more heavily toward
the EBITDA objective. Each of the revenue and EBITDA components was based on the Board-approved revenue target and the EBITDA
target. The 2020 target performance incentive compensation for the EVP of Nuclear and Technical Services was as follows:
Annualized
Base Pay:
$ 280,000
Performance
Incentive Compensation Target (at 100% of Plan):
$ 140,000
Total
Annual Target Compensation (at 100% of Plan):
$ 420,000
97
Perma-Fix
Environmental Serivces, Inc.
2020
Management Incentive Plan
EVP
OF NUCLEAR & TECHNICAL SERVICES MIP MATRIX
Performance
Target Achieved
<60%
60%-74%
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue
(1) (5)
$ -
$ 1,400
$ 7,000
$ 14,000
$ 20,000
$ 28,000
$ 34,000
EBITDA
(2)
-
8,400
42,000
84,000
120,000
168,000
204,000
Health
& Safety (3) (5)
-
2,100
10,500
21,000
21,000
21,000
21,000
CPI
(4) (5)
-
2,100
10,500
21,000
21,000
21,000
21,000
$ -
$ 14,000
$ 70,000
$ 140,000
$ 182,000
$ 238,000
$ 280,000
1)
Revenue
was defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2020 financial
statements. The percentage achieved was determined by comparing the actual consolidated revenue for 2020 to the Board approved
Revenue Target for 2020, which was $86,201,000. The Board reserved the right to modify or change the Revenue Targets as defined
herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)
EBITDA
was defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations,
including PF Medical. The percentage achieved was determined by comparing the actual EBITDA to the Board approved EBITDA Target
for 2020, which was $6,913,000. The Board reserved the right to modify or change the EBITDA Targets as defined herein in the
event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)
The
Health and Safety Incentive target was based upon the actual number of Worker’s Compensation Lost Time Accidents in
the Company’s Services Segment, as provided by the Company’s Worker’s Compensation carrier. The Corporate
Controller submitted a report on a quarterly basis documenting and confirming the number of Worker’s Compensation Lost
Time Accidents, supported by the Worker’s Compensation Loss Report provided by the company’s carrier or broker.
Such claims were identified on the loss report as “indemnity claims.” The following number of Worker’s Compensation
Lost Time Accidents and corresponding Performance Target Thresholds was established for the annual Incentive Compensation
Plan calculation for 2020.
Work
Comp.
Claim Number
Performance
Target Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 )%
98
4)
CPI
incentive was earned/determined by maintaining project performance metrics for all Firm Fixed Price task orders and projects
to include monitoring CPI based on recognized earned value calculations. As defined through monthly project reviews, all CPI
metrics should exceed 1.0 for Nuclear Services Projects. A cumulative CPI (CCPI) was calculated from all fixed cost contracts.
The following CCPI and corresponding Performance Target Thresholds were established for annual incentive compensation plan
calculation for 2020.
CPI
(if CCPI is)
Performance
Target
Achieved
<.0.60
(n/a)
0.60-0.74
60%-74 %
0.75-0.89
75%-89 %
0.90-1.10
90%-110 %
1.11-1.29
111%-129 %
1.30-1.50
130%-150 %
>1.50
>150 %
5)
No
performance incentive compensation was payable for achieving the health and safety, and CPI, and revenue targets unless a
minimum of 60% of the EBITDA Target was achieved.
EVP
of Waste Treatment Operations:
The
2020 performance compensation plan for the EVP of Waste Treatment Operations was based upon meeting corporate revenue, EBITDA,
health and safety, and environmental compliance (permit and license violations) objectives for fiscal 2020, all with respect to
the Company’s operations. At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance
compensation was payable at 5% to 50% of the 2020 base salary, weighted 60% based on EBITDA goal, 10% on revenue goal, and 15%
on the number of health and safety claim incidents that occurred during fiscal 2020, with the remaining 15% on the number of notices
alleging environmental, health or safety violations under our permits or licenses that occurred during fiscal 2020. Upon achievement
of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation was payable at 65% to 100%
of the EVP of Waste Treatment Waste Operation’s 2020 base salary, based on the four objectives noted above, with the payment
of such performance compensation weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components
was based on the Board-approved revenue target and EBITDA target. The 2020 target performance incentive compensation for the EVP
of Waste Treatment Operations was as follows:
Annualized
Base Pay:
$ 240,000
Performance
Incentive Compensation Target (at 100% of Plan):
$ 120,000
Total
Annual Target Compensation (at 100% of Plan):
$ 360,000
99
Perma-Fix
Environmental Serivces, Inc.
2020
Management Incentive Plan
EVP
OF WASTE TREATMENT OPERATIONS MIP MATRIX
Performance
Target Achieved
<60%
60%-74%
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue
(1) (5)
$ -
$ 1,200
$ 6,000
$ 12,000
$ 17,143
$ 24,000
$ 29,143
EBITDA
(2)
-
7,200
36,000
72,000
102,857
144,000
174,857
Health
& Safety (3) (5)
-
1,800
9,000
18,000
18,000
18,000
18,000
Permit
& License Violations (4) (5)
-
1,800
9,000
18,000
18,000
18,000
18,000
$ -
$ 12,000
$ 60,000
$ 120,000
$ 156,000
$ 204,000
$ 240,000
1)
Revenue
was defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2020 financial
statements. The percentage achieved was determined by comparing the actual consolidated revenue for 2020 to the Board approved
Revenue Target for 2020, which was $86,201,000. The Board reserved the right to modify or change the Revenue Targets as defined
herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)
EBITDA
was defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations,
including PF Medical. The percentage achieved was determined by comparing the actual EBITDA to the Board approved EBITDA Target
for 2020, which was $6,913,000. The Board reserved the right to modify or change the EBITDA Targets as defined herein in the
event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)
The
Health and Safety Incentive Target was based upon the actual number of Worker’s Compensation Lost Time Accidents, as
provided by the Company’s Worker’s Compensation carrier. The Corporate Controller submitted a report on a quarterly
basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s
Compensation Loss Report provided by the company’s carrier or broker. Such claims were identified on the loss report
as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding
Performance Target Thresholds was established for the annual Incentive Compensation Plan calculation for 2020.
Work
Comp.
Claim
Number
Performance
Target
Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
4)
Permits
or License Violations incentive was earned/determined according to the scale set forth below: An “official notice of
non-compliance” was defined as an official communication during 2020 from a local, state, or federal regulatory authority
alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision,
which resulted in a facility’s implementation of corrective action(s).
Permit
and
License Violations
Performance
Target Achieved
4
60%-74 %
3
75%-89
%
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
5)
No
performance incentive compensation was payable for achieving the health and safety, permit and license violation, and revenue
targets unless a minimum of 60% of the EBITDA Target was achieved.
2020
MIP Targets
As
discussed above, 2020 MIPs approved by the Board and the Compensation Committee for the CEO, CFO, EVP of Strategic Initiatives,
EVP of Nuclear and Technical Services and EPV of Waste Treatment Operations provided for the award of cash compensation based
on achievement of performance targets which included revenue and EBITDA targets as approved by our Board. The 2020 MIP revenue
target of $86,201,000 and EBITDA target of $6,913,000 were set by the Compensation Committee taking into account the Board-approved
budget for 2020 as well as the committee’s expectations for performance that in its estimation would warrant payment of
incentive cash compensation. In formulating the revenue target of $86,201,000, the Board considered 2019 results, economic conditions,
and forecasts for 2020 government (U.S DOE) spending. The Compensation Committee believed the performance targets were likely
to be achieved, but not assured.
The
following tables set forth the MIP compensation earned by the CEO, CFO, EVP of Strategic Initiatives, EVP of Nuclear and Technical
Services and EVP of Waste Treatment Operations for fiscal year 2020.
CEO
Performance Target
MIP Compensation
Target Objectives:
Threshold Achieved
Earned
Revenue
111%-129 %
$ 29,520
EBITDA
75%-89 %
51,660
Health & Safety
<60 %
—
Permit & License Violations
111%-129 %
25,830
Total Performance Compensation
$ 107,010
100
CFO
Performance Target
MIP Compensation
Target Objectives:
Threshold Achieved
Earned
Revenue
111%-129 %
$ 23,000
EBITDA
75%-89 %
52,500
Health & Safety
<60 %
—
Permit & License Violations
111%-129 %
10,500
Total Performance Compensation
$ 86,000
EVP of Strategic Initiatives
Performance Target
MIP Compensation
Target Objectives:
Threshold Achieved
Earned
Revenue
111%-129 %
$ 19,167
EBITDA
75%-89 %
43,751
Health & Safety
<60 %
—
Permit & License Violations
111%-129 %
8,750
Total Performance Compensation
$ 71,668
EVP of Nuclear and Technical Services
Performance Target
MIP Compensation
Target Objectives:
Threshold Achieved
Earned
Revenue
111%-129 %
$ 20,000
EBITDA
75%-89 %
42,000
Health & Safety
<60 %
—
CPI
90%-110 %
21,000
Total Performance Compensation
$ 83,000
EVP of Waste Treatment Operations
Performance Target
MIP Compensation
Target Objectives:
Threshold Achieved
Earned
Revenue
111%-129 %
$ 17,143
EBITDA
75%-89 %
36,000
Health & Safety
<60 %
—
Permit & License Violations
111%-129 %
18,000
Total Performance Compensation
$ 71,143
2021
MIPs
On
January 21, 2021, the Company Compensation Committee and the Board approved individual MIPs for the calendar year 2021 for the
CEO, CFO, EVP of Strategic Initiatives, EVP of Nuclear and Technical Services and EVP of Waste Treatment Operations. The MIPs
are effective January 1, 2021 and applicable for the 2021 fiscal year. Each MIP provides guidelines for the calculation of annual
cash incentive-based compensation, subject to Compensation Committee oversight and modification. Each MIP awards cash compensation
based on achievement of performance thresholds, with the amount of such compensation established as a percentage of base salary
at the time of the approval of the MIP. The potential target performance compensation ranges from 5% to 150% of the 2021 base
salary for the CEO ($17,220 to $516,600), 5% to 100% of the 2021 base salary for the CFO ($14,000 to $280,000), 5% to 100% of
the 2021 base salary for the EVP of Strategic Initiatives ($11,667 to $233,336), 5% to 100% of the 2021 base salary for the EVP
of Nuclear and Technical Services ($14,000 to $280,000) and 5% to 100% ($12,000 to $240,000) of the 2021 base salary for the EVP
of Waste Treatment Operations.
Performance
compensation, if any, is to be paid on or about 90 days after year-end, or sooner, based on final Form 10-K filing. The Compensation
Committee retains the right to modify, change or terminate each MIP and may adjust the various target amounts described below,
at any time and for any reason. Subsequent to the approval of the MIPs for fiscal year 2021 on January 21, 2021 as described below,
in February 2021, the Compensation Committee approved a cost of living adjustment of approximately 2.3% of each NEO’s base
salary, effective April 1, 2021. As such, compensation payable, if any, under each of the MIPs for fiscal year 2021 as discussed
below for our NEOs will be adjusted accordingly to reflect this cost of living adjustment.
The
total performance compensation, if any, to be paid to the CEO, CFO, EVP of Strategic Initiatives, EVP of Nuclear and Technical
Services and EVP of Waste Treatment Operations is not to exceed 50% of the Company’s pre-tax net income prior to the calculation
of performance compensation.
The
following describes the principal terms of each 2021 MIP as approved on January 21, 2021:
CEO
MIP:
CEO
performance compensation for 2021 is based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance
(permit and license violations) objectives for fiscal year 2021, all with respect to the Company’s operations. At achievement
of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation is payable at 5% to 50% of the
CEO’s 2021 base salary, weighted 60% based on the EBITDA goal, 10% on the revenue goal, and 15% on the number of health
and safety claim incidents that occur during fiscal 2021, with the remaining 15% on the number of notices alleging environmental,
health or safety violations under our permit or licenses that occur during the fiscal 2021. Upon achievement of 111% to 150%+
of each of the revenue and EBITDA targets, the potential performance compensation is payable at 75% to 150% of the CEO’s
2021 base salary, based on the four objectives noted above, with the payment of such performance compensation weighted more heavily
toward the EBITDA objective. Each of the revenue and EBITDA components is based on our Board-approved revenue target and EBITDA
target. The 2021 target performance incentive compensation for our CEO is as follows:
Annualized
Base Pay:
$ 344,400
Performance
Incentive Compensation Target (at 100% of Plan):
$ 172,200
Total
Annual Target Compensation (at 100% of Plan):
$ 516,600
101
Perma-Fix
Environmental Serivces, Inc.
2021
Management Incentive Plan
CEO
MIP MATRIX
Performance
Target Achieved
<60%
60%-74%
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue
(1) (5)
$ -
$ 1,722
$ 8,610
$ 17,220
$ 29,520
$ 41,820
$ 66,420
EBITDA
(2)
-
10,332
51,660
103,320
177,120
250,920
398,520
Health
& Safety (3) (5)
-
2,583
12,915
25,830
25,830
25,830
25,830
Permit
& License Violations (4) (5)
-
2,583
12,915
25,830
25,830
25,830
25,830
$ -
$ 17,220
$ 86,100
$ 172,200
$ 258,300
$ 344,400
$ 516,600
1)
Revenue
is defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2021 financial
statements. The percentage achieved is determined by comparing the actual consolidated revenue for 2021 to the Board approved
Revenue Target for 2021, which is $101,810,000. The Board reserves the right to modify or change the Revenue Targets as defined
herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)
EBITDA
is defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations,
including PF Medical. The percentage achieved is determined by comparing the actual EBITDA to the Board approved EBITDA Target
for 2021, which is $3,623,000. The Board reserves the right to modify or change the EBITDA Targets as defined herein in the
event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)
The
Health and Safety Incentive Target is based upon the actual number of Worker’s Compensation Lost Time Accidents, as
provided by the Company’s Worker’s Compensation carrier. The Corporate Controller will submit a report on a quarterly
basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s
Compensation Loss Report provided by the company’s carrier or broker. Such claims will be identified on the loss report
as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding
Performance Target Thresholds has been established for the annual Incentive Compensation Plan calculation for 2021.
Work
Comp.
Claim Number
Performance
Target Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
4)
Permits
or License Violations incentive is earned/determined according to the scale set forth below: An “official notice of
non-compliance” is defined as an official communication during 2021 from a local, state, or federal regulatory authority
alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision,
which results in a facility’s implementation of corrective action(s).
Permit
and
License Violations
Performance
Target Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129
%
1
130%-150
%
1
>150
%
5)
No
performance incentive compensation will be payable for achieving the health and safety, permit and license violation, and
revenue targets unless a minimum of 60% of the EBITDA Target is achieved.
CFO
MIP:
CFO
performance compensation for fiscal 2021 is based upon meeting corporate revenue, EBITDA, health and safety, and environmental
compliance (permit and license violations) objectives for fiscal 2021, all with respect to the Company’s operations. At
achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation is payable at 5%
to 50% of the 2021 base salary, weighted 75% based on EBITDA goal, 10% on the revenue goal, and 7.5% on the number of health and
safety claim incidents that occur during fiscal 2021, with the remaining 7.5% on the number of notices alleging environmental,
health or safety violations under our permits or licenses that occur during the fiscal 2021. Upon achievement of 111% to 150%+
of each of the revenue and EBITDA targets, the potential performance compensation is payable at 65% to 100% of the CFO’s
2021 base salary, based on the four objectives noted above, with the payment of such performance compensation weighted more heavily
toward the EBITDA objective. Each of the revenue and EBITDA components is based on the Board-approved revenue target and EBITDA
target. The 2021 target performance incentive compensation for the CEO is as follows:
Annualized
Base Pay:
$ 280,000
Performance
Incentive Compensation Target (at 100% of Plan):
$ 140,000
Total
Annual Target Compensation (at 100% of Plan):
$ 420,000
102
Perma-Fix
Environmental Serivces, Inc.
2021
Management Incentive Plan
CFO
MIP MATRIX
Performance
Target Achieved
<60%
60%-74%
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue
(1) (5)
$ -
$ 1,400
$ 7,000
$ 14,000
$ 23,000
$ 31,000
$ 37,000
EBITDA
(2)
-
10,500
52,500
105,000
138,000
186,000
222,000
Health
& Safety (3) (5)
-
1,050
5,250
10,500
10,500
10,500
10,500
Permit
& License Violations (4) (5)
-
1,050
5,250
10,500
10,500
10,500
10,500
$ -
$ 14,000
$ 70,000
$ 140,000
$ 182,000
$ 238,000
$ 280,000
1)
Revenue
is defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2021 financial
statements. The percentage achieved is determined by comparing the actual consolidated revenue for 2021 to the Board approved
Revenue Target for 2021, which is $101,810,000. The Board reserves the right to modify or change the Revenue Targets as defined
herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)
EBITDA
is defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations,
including PF Medical. The percentage achieved is determined by comparing the actual EBITDA to the Board approved EBITDA Target
for 2021, which is $3,623,000. The Board reserves the right to modify or change the EBITDA Targets as defined herein in the
event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)
The
Health and Safety Incentive Target is based upon the actual number of Worker’s Compensation Lost Time Accidents, as
provided by the Company’s Worker’s Compensation carrier. The Corporate Controller will submit a report on a quarterly
basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s
Compensation Loss Report provided by the company’s carrier or broker. Such claims will be identified on the loss report
as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding
Performance Target Thresholds has been established for the annual Incentive Compensation Plan calculation for 2021.
Work
Comp.
Claim
Number
Performance
Target
Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
4)
Permits
or License Violations incentive is earned/determined according to the scale set forth below: An “official notice of
non-compliance” is defined as an official communication during 2021 from a local, state, or federal regulatory authority
alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision,
which results in a facility’s implementation of corrective action(s).
Permit
and
License Violations
Performance
Target Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129
%
1
130%-150 %
1
>150 %
5)
No
performance incentive compensation will be payable for achieving the health and safety, permit and license violation, and
revenue targets unless a minimum of 60% of the EBITDA Target is achieved.
EVP
of Strategic Initiatives MIP:
EVP
of Strategic Initiatives performance compensation for fiscal 2021 is based upon meeting corporate revenue, EBITDA, health and
safety, and environmental compliance (permit and license violations) objectives for fiscal 2021, all with respect to the Company’s
operations. At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation is
payable at 5% to 50% of the 2021 base salary, weighted 75% based on EBITDA goal, 10% on the revenue goal, and 7.5% on the number
of health and safety claim incidents that occur during fiscal 2021, with the remaining 7.5% on the number of notices alleging
environmental, health or safety violations under our permits or licenses that occur during the fiscal 2021. Upon achievement of
111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation is payable at 65% to 100% of the
EVP of Strategic Initiative’s 2021 base salary, based on the four objectives noted above, with the payment of such performance
compensation weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on the Board-approved
revenue target and EBITDA target. The 2021 target performance incentive compensation for the EVP of Strategic Initiative is as
follows:
Annualized
Base Pay:
$ 233,336
Performance
Incentive Compensation Target (at 100% of Plan):
$ 116,668
Total
Annual Target Compensation (at 100% of Plan):
$ 350,004
103
Perma-Fix
Environmental Serivces, Inc.
2021
Management Incentive Plan
EVP
OF STRATEGIC INITIATIVES MIP MATRIX
Performance
Target Achieved
<60%
60%-74%
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue
(1) (5)
$ -
$ 1,167
$ 5,833
$ 11,667
$ 19,167
$ 25,834
$ 30,834
EBITDA
(2)
-
8,750
43,751
87,501
115,001
155,002
185,002
Health
& Safety (3) (5)
-
875
4,375
8,750
8,750
8,750
8,750
Permit
& License Violations (4) (5)
-
875
4,375
8,750
8,750
8,750
8,750
$ -
$ 11,667
$ 58,334
$ 116,668
$ 151,668
$ 198,336
$ 233,336
1)
Revenue
is defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2021 financial
statements. The percentage achieved is determined by comparing the actual consolidated revenue for 2021 to the Board approved
Revenue Target for 2021, which is $101,810,000. The Board reserves the right to modify or change the Revenue Targets as defined
herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)
EBITDA
is defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations,
including PF Medical. The percentage achieved is determined by comparing the actual EBITDA to the Board approved EBITDA Target
for 2021, which is $3,623,000. The Board reserves the right to modify or change the EBITDA Targets as defined herein in the
event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)
The
Health and Safety Incentive Target is based upon the actual number of Worker’s Compensation Lost Time Accidents, as
provided by the Company’s Worker’s Compensation carrier. The Corporate Controller will submit a report on a quarterly
basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s
Compensation Loss Report provided by the company’s carrier or broker. Such claims will be identified on the loss report
as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding
Performance Target Thresholds has been established for the annual Incentive Compensation Plan calculation for 2021.
Work
Comp.
Claim
Number
Performance
Target
Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
4)
Permits
or License Violations incentive is earned/determined according to the scale set forth below: An “official notice of
non-compliance” is defined as an official communication during 2021 from a local, state, or federal regulatory authority
alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision,
which results in a facility’s implementation of corrective action(s).
Permit
and
License Violations
Performance
Target Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
5)
No
performance incentive compensation will be payable for achieving the health and safety, permit and license violation, and
revenue targets unless a minimum of 60% of the EBITDA Target is achieved.
EVP
of Nuclear and Technical Services MIP:
EVP
of Nuclear and Technical Services performance compensation for 2021 is based upon meeting corporate revenue, EBITDA, health and
safety compliance, and Cost Performance Index (“CPI”) (a metric used in measuring project performance) objectives
for fiscal 2021, all with respect to the Company’s operations. At achievement of 60% to 110% of each of the revenue and
EBITDA targets, the potential performance compensation is payable at 5% to 50% of the 2021 base salary, weighted 60% based on
the EBITDA goal, 10% on the revenue goal, and 15% on the number of health and safety claim incidents that occur during fiscal
2021, with the remaining 15% on CPI metric goals. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets,
the potential performance compensation is payable at 65% to 100% of the EVP of Nuclear and Technical Service’s 2021 base
salary, based on the four objectives noted above, with the payment of such performance compensation weighted more heavily toward
the EBITDA objective. Each of the revenue and EBITDA components is based on the Board-approved revenue target and the EBITDA target.
The 2021 target performance incentive compensation for the EVP of Nuclear and Technical Services is as follows:
Annualized
Base Pay:
$ 280,000
Performance
Incentive Compensation Target (at 100% of Plan):
$ 140,000
Total
Annual Target Compensation (at 100% of Plan):
$ 420,000
104
Perma-Fix
Environmental Serivces, Inc.
2021
Management Incentive Plan
EVP
OF NUCLEAR & TECHNICAL SERVICES MIP MATRIX
Performance
Target Achieved
<60%
60%-74%
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue
(1) (5)
$ -
$ 1,400
$ 7,000
$ 14,000
$ 20,000
$ 28,000
$ 34,000
EBITDA
(2)
-
8,400
42,000
84,000
120,000
168,000
204,000
Health
& Safety (3) (5)
-
2,100
10,500
21,000
21,000
21,000
21,000
CPI
(4) (5)
-
2,100
10,500
21,000
21,000
21,000
21,000
$ -
$ 14,000
$ 70,000
$ 140,000
$ 182,000
$ 238,000
$ 280,000
1)
Revenue
is defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2021 financial
statements. The percentage achieved is determined by comparing the actual consolidated revenue for 2021 to the Board approved
Revenue Target for 2021, which is $101,810,000. The Board reserves the right to modify or change the Revenue Targets as defined
herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)
EBITDA
is defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations,
including PF Medical. The percentage achieved is determined by comparing the actual EBITDA to the Board approved EBITDA Target
for 2021, which is $3,623,000. The Board reserves the right to modify or change the EBITDA Targets as defined herein in the
event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)
The
Health and Safety Incentive target is based upon the actual number of Worker’s Compensation Lost Time Accidents in the
Company’s Services Segment, as provided by the Company’s Worker’s Compensation carrier. The Corporate Controller
will submit a report on a quarterly basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents,
supported by the Worker’s Compensation Loss Report provided by the company’s carrier or broker. Such claims will
be identified on the loss report as “indemnity claims.” The following number of Worker’s Compensation Lost
Time Accidents and corresponding Performance Target Thresholds has been established for the annual Incentive Compensation
Plan calculation for 2021.
Work
Comp.
Claim
Number
Performance
Target
Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 )%
105
4)
CPI
incentive is earned/determined by maintaining project performance metrics for all Firm Fixed Price task orders and projects
to include monitoring CPI based on recognized earned value calculations. As defined through monthly project reviews, all CPI
metrics should exceed 1.0 for Nuclear Services Projects. A cumulative CPI (CCPI) will be calculated from all fixed cost contracts.
The following CCPI and corresponding Performance Target Thresholds have been established for annual incentive compensation
plan calculation for 2021.
CPI
(if
CCPI is)
Performance
Target
Achieved
<.0.60
(n/a )
0.60-0.74
60%-74 %
0.75-0.89
75%-89 %
0.90-1.10
90%-110 %
1.11-1.29
111%-129 %
1.30-1.50
130%-150
%
>1.50
>150 %
5)
No
performance incentive compensation will be payable for achieving the health and safety, and CPI, and revenue targets unless
a minimum of 60% of the EBITDA Target is achieved.
EVP
of Waste Treatment Operations MIP:
EVP
of Waste Treatment Operation’s performance compensation for fiscal 2021 is based upon meeting corporate revenue, EBITDA,
health and safety, and environmental compliance (permit and license violations) objectives for fiscal 2021, all with respect to
the Company’s operations. At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance
compensation is payable at 5% to 50% of the 2021 base salary, weighted 60% based on EBITDA goal, 10% on the revenue goal, and
15% on the number of health and safety claim incidents that occur during fiscal 2021, with the remaining 15% on the number of
notices alleging environmental, health or safety violations under our permits or licenses that occur during the fiscal 2021. Upon
achievement of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation is payable at 65%
to 100% of the EVP of Waste Treatment Operation’s 2021 base salary, based on the four objectives noted above, with the payment
of such performance compensation weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components
is based on the Board-approved revenue target and EBITDA target. The 2021 target performance incentive compensation for the EVP
of Waste Treatment Operations is as follows:
Annualized
Base Pay:
$ 240,000
Performance
Incentive Compensation Target (at 100% of Plan):
$ 120,000
Total
Annual Target Compensation (at 100% of Plan):
$ 360,000
106
Perma-Fix
Environmental Serivces, Inc.
2021
Management Incentive Plan
EVP
OF WASTE TREATMENT OPERATIONS MIP MATRIX
Performance
Target Achieved
<60%
60%-74%
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue
(1) (5)
$ -
$ 1,200
$ 6,000
$ 12,000
$ 17,143
$ 24,000
$ 29,143
EBITDA
(2)
-
7,200
36,000
72,000
102,857
144,000
174,857
Health
& Safety (3) (5)
-
1,800
9,000
18,000
18,000
18,000
18,000
Permit
& License Violations (4) (5)
-
1,800
9,000
18,000
18,000
18,000
18,000
$ -
$ 12,000
$ 60,000
$ 120,000
$ 156,000
$ 204,000
$ 240,000
1)
Revenue
is defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2021 financial
statements. The percentage achieved is determined by comparing the actual consolidated revenue for 2021 to the Board approved
Revenue Target for 2021, which is $101,810,000. The Board reserves the right to modify or change the Revenue Targets as defined
herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)
EBITDA
is defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations,
including PF Medical. The percentage achieved is determined by comparing the actual EBITDA to the Board approved EBITDA Target
for 2021, which is $3,623,000. The Board reserves the right to modify or change the EBITDA Targets as defined herein in the
event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)
The
Health and Safety Incentive Target is based upon the actual number of Worker’s Compensation Lost Time Accidents, as
provided by the Company’s Worker’s Compensation carrier. The Corporate Controller will submit a report on a quarterly
basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s
Compensation Loss Report provided by the company’s carrier or broker. Such claims will be identified on the loss report
as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding
Performance Target Thresholds has been established for the annual Incentive Compensation Plan calculation for 2021.
Work
Comp.
Claim
Number
Performance
Target
Achieved
4
60%-74 %
3
75%-89 %
2
90%-110 %
1
111%-129 %
1
130%-150 %
1
>150 %
4)
Permits
or License Violations incentive is earned/determined according to the scale set forth below: An “official notice of
non-compliance” is defined as an official communication during 2021 from a local, state, or federal regulatory authority
alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision,
which results in a facility’s implementation of corrective action(s).
Permit
and
License Violations
Performance
Target Achieved
4
60%-74 %
3
75%-89
%
2
90%-110 %
1
111%-129 %
1
130%-150
%
1
>150 %
5)
No
performance incentive compensation will be payable for achieving the health and safety, permit and license violation, and
revenue targets unless a minimum of 60% of the EBITDA Target is achieved.
107
2021
MIP Targets
As
discussed above, 2021 MIPs approved by the Board and the Compensation Committee for the CEO, CFO, EVP of Strategic Initiatives,
EVP of Nuclear and Technical Services and EVP of Waste Treatment Operations provide for the award of cash compensation based on
achievement of performance targets which include revenue and EBITDA targets as approved by our Board. The 2021 MIP revenue target
of $101,810,000 and EBITDA target of $3,623,000 were set by the Compensation Committee taking into account the Board-approved
budget for 2021 as well as the committee’s expectations for performance that in its estimation would warrant payment of
incentive cash compensation. In formulating the revenue target of $101,810,000, the Board considered 2020 results, economic conditions,
impact of COVID-19 and forecasts for 2021 government (U.S. DOE) spending. The Compensation Committee believes the performance
targets are likely to be achieved, but not assured, particularly in light of the uncertainty from the impact of COVID-19.
Long-Term
Incentive Compensation
Employee
Stock Option Plans
The
2017 Stock Option Plan (“2017 Option Plan”) encourages participants to focus on long-term performance and provides
an opportunity for executive officers and certain designated key employees to increase their stake in the Company. Stock options
succeed by delivering value to executives only when the value of our stock increases. The 2017 Option Plan authorizes the grant
of Non-Qualified Stock Options (“NQSOs”) and Incentive Stock Options (“ISOs”) for the purchase of our
Common Stock.
The
2017 Option Plan assists the Company to:
●
enhance
the link between the creation of stockholder value and long-term executive incentive compensation;
●
provide
an opportunity for increased equity ownership by executives; and
●
maintain
competitive levels of total compensation;
Stock
option award levels are determined based on market data, vary among participants based on their positions with the Company and
are granted generally at the Compensation Committee’s regularly scheduled July or August meeting. Newly hired or promoted
executive officers who are eligible to receive options are generally awarded such options at the next regularly scheduled Compensation
Committee meeting following their hire or promotion date.
Options
are awarded with an exercise price equal to or not less than the closing price of the Company’s Common Stock on the date
of the grant as reported on the NASDAQ. In certain limited circumstances, the Compensation Committee may grant options to an executive
at an exercise price in excess of the closing price of the Company’s Common Stock on the grant date.
The
Company’s NEOs have outstanding options from the Company’s 2017 Option Plan (See “Item 11 – Executive
Compensation – Outstanding Equity Awards at Fiscal Year-End - Outstanding Equity Awards at December 31, 2020” for
outstanding options for each of our NEOs). An option granted to our President and CEO in May 2016 for the purchase of up to 50,000
shares of the Company’s Common Stock at $3.97 per share with an expiration date of May 15, 2022 remains outstanding under
the 2010 Stock Option Plan. The 2010 Stock Option Plan expired on September 29, 2020; however, the option remains in effect until
the earlier of the exercise date by the optionee or the maturity date of May 15, 2022.
In
cases of termination of an executive officer’s employment due to death, by the executive for “good reason,”
by the Company without cause, and due to a “change of control,” all outstanding stock options to purchase common stock
held by the executive officer will immediately become exercisable in full (see further discussion of the exercisability term of
these options in each of these circumstances in “Item 11 – EXECUTIVE COMPENSATION – Employment Agreements”).
Otherwise, vesting of option awards ceases upon termination of employment and exercise right of the vested option amount ceases
upon three months from termination of employment except in the case of retirement (subject to a six-month limitation) and disability
(subject to a one-year limitation).
108
Accounting
for Stock-Based Compensation
We
account for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) 718, “Compensation
– Stock Compensation.” ASC 718 establishes accounting standards for entity exchanges of equity instruments for goods
or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based
on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
ASC 718 requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the income
statement based on their fair values. The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based
awards which requires subjective assumptions. Assumptions used to estimate the fair value of stock options granted include the
exercise price of the award, the expected term, the expected volatility of the Company’s stock over the option’s expected
term, the risk-free interest rate over the option’s expected term, and the expected annual dividend yield. We recognize
stock-based compensation expense using a straight-line amortization method over the requisite period, which is the vesting period
of the stock option grant.
Retirement
and Other Benefits
401(k)
Plan
The
Company adopted the Perma-Fix Environmental Services, Inc. 401(k) Plan (the “401(k) Plan”) in 1992, which is intended
to comply with Section 401 of the Internal Revenue Code and the provisions of the Employee Retirement Income Security Act of 1974.
All full-time employees who have attained the age of 18 are eligible to participate in the 401(k) Plan. Eligibility is immediate
upon employment but enrollment is only allowed during four quarterly open periods of January 1, Apri1 1, July 1, and October 1.
Participating employees may make annual pretax contributions to their accounts up to 100% of their compensation, up to a maximum
amount as limited by law. At our discretion, we may make matching contributions based on the employee’s elective contributions.
Company contributions vest over a period of five years. In 2020, the Company contributed approximately $594,000 in 401(k) matching
funds, of which approximately $31,500 was for our NEOs (see the “Summary Compensation” table in this section for 401(k)
matching fund contributions made for the NEOs for 2020).
Perquisites
and Other Personal Benefits
The
Company provides executive officers with limited perquisites and other personal benefits (health/disability/life insurance) that
the Company and the Compensation Committee believe are reasonable and consistent with its overall compensation program to better
enable the Company to attract and retain superior employees for key positions. The Compensation Committee periodically reviews
the levels of perquisites and other personal benefits provided to executive officers. The executive officers are provided an auto
allowance.
Compensation
of Directors
Directors
who are employees receive no additional compensation for serving on the Board or its committees. In 2020, the Company provided
the following annual compensation to non-employee directors:
●
options
to purchase 2,400 shares of Common Stock with each option having a 10-year term and being fully vested after six months from
grant date;
●
a
quarterly director fee of $8,000;
●
an
additional quarterly fee of $5,500 and $7,500 to the Chairman of the Audit Committee and Chairman of the Board (non-employee),
respectively; and
●
a
fee of $1,000 for each board meeting attendance and a $500 fee for meeting attendance via conference call.
Each
director may elect to have either 65% or 100% of such fees payable in Common Stock under the 2003 Outside Directors Stock Plan
(“2003 Outside Directors Plan”), with the balance, if any, payable in cash.
Dr.
Louis Centofanti, a current member of the Board, is not eligible to receive compensation for his service as a director of the
Company as he is an employee of the Company (see “Summary Compensation” table in this section for Dr. Centofanti’s
annual salary and other compensation as an employee of the Company).
The
table below summarizes the director compensation expenses recognized by the Company for director options and stock awards (resulting
from fees earned) for the year ended December 31, 2020. The terms of the 2003 Outside Directors Plan are further described below
under “2003 Outside Directors Plan.”
109
Director
Compensation
Name
Fees
Earned or Paid In Cash
Stock
Awards
Option
Awards
Non-Equity
Incentive Plan Compensation
Nonqualified
Deferred Compensation Earnings
All
Other Compensation
Total
($)
(1)
($)
(2)
($)
(5)
($)
($)
($)
($)
Thomas
P. Bostick
—
18,027
26,160 (4)
—
—
—
44,187
Joseph
T. Grumski
—
43,343
40,656 (3)
—
—
—
83,999
Joe
R. Reeder
—
48,662
11,256 (3)
—
—
—
59,918
Larry
M. Shelton
23,275
57,633
11,256 (3)
—
—
—
92,164
Zach
P. Wamp
12,775
31,630
11,256 (3)
—
—
—
55,661
Mark
A. Zwecker
20,475
50,701
11,256 (3)
—
—
—
82,432
(1)
Under
the 2003 Outside Directors Plan, each director elects to receive 65% or 100% of the director’s fees in shares of our
Common Stock. The amounts set forth above represent the portion of the director’s fees paid in cash and exclude the
value of the directors’ fee elected to be paid in Common Stock under the 2003 Outside Directors Plan, which values are
included under “Stock Awards.”
(2)
The
number of shares of Common Stock comprising stock awards granted under the 2003 Outside Directors Plan is calculated based
on 75% of the closing market value of the Common Stock as reported on the NASDAQ on the business day immediately preceding
the date that the quarterly fee is due. Such shares are fully vested on the date of grant. The value of the stock award is
based on the market value of our Common Stock at each quarter end times the number of shares issuable under the award. The
amount shown is the fair value of the Common Stock on the date of the award.
(3)
Reflects
options granted under the Company’s 2003 Outside Directors Plan resulting from re-election to the Board on July 22,
2020. Options are for a 10-year period with an exercise price of $6.70 per share and are fully vested in six months from grant
date. The value of the option award for each outside director is calculated based on the fair value of the option per share
(approximately $4.69) on the date of grant times the number of options granted, which was 2,400 for each director, pursuant
to ASC 718, “Compensation – Stock Compensation.” Option awards for Joseph T. Grumski also included the grant
of options for the purchase of up to 6,000 shares of our Common Stock granted to him upon initial election to the Board on
February 4, 2020. The option is for a 10-year period with an exercise price of $7.00 per share and are fully vested six months
from date of grant. The fair value of the 6,000 options was determined to be approximately $29,400 based on fair value of
$4.90 per share.
(4)
Reflects
options for the purchase of up to 6,000 shares of the Company’s Common Stock granted under the Company’s 2003
Outside Directors Plan resulting from initial election to the Board on August 10, 2020. The options are for a 10-year period
with an exercise price of $7.29 per share and are fully vested six months from date of grant. The fair value of the option
was determined to be approximately $26,160 based on fair value of $4.36 per share.
(5)
The
following table reflects the aggregate number of outstanding non-qualified stock options held by the Company’s directors
at December 31, 2020. As an employee of the Company or its subsidiaries, Dr. Centofanti is not eligible to participate in
the 2003 Outside Directors Plan. Options reflected below for Dr. Centofanti were granted from the 2017 Stock Option Plan as
discussed previously:
110
Options
Outstanding at
Name
December
31, 2020
Dr.
Louis Centofanti
65,000
Thomas
P. Bostick
6,000
Joseph
T. Grumski
8,400
Joe
R. Reeder
24,000
Larry
M. Shelton
24,000
Zach
P. Wamp
13,200
Mark
A. Zwecker
24,000
Total
164,600
On
January 21, 2021, the Company’s Compensation Committee and the Board approved the following revision to the annual compensation
of each non-employee Board member and the Board Committee(s) for which the Board member serves, effective January 1, 2021.
●
each
director is to be paid a quarterly fee of $11,500, compared to the previous quarterly fee of $8,000;
●
the
Chairman of the Board is to be paid an additional quarterly fee of $8,750, compared to the Chairman’s previous additional
quarterly fee of $7,500;
●
the
Chairman of the Audit Committee is to be paid an additional quarterly fee of $6,250, compared to the Audit Chair’s previous
additional quarterly fee of $5,500;
●
the
Chairman of each of the Compensation Committee, the Nominating Committee, and the Strategic Committee is to receive $3,125
in additional quarterly fees. No additional quarterly fees were previously paid to the chairs of such committees. The Chairman
of the Board is not eligible to receive a quarterly fee for serving as the Chairman of any the aforementioned committees ;
●
each
Audit Committee member (excluding the Chairman of the Audit Committee) is to receive an additional quarterly fee of $1,250;
and
●
each
member of the Compensation Committee, the Nominating Committee, and the Strategic Committee is to receive a quarterly fee
of $500. Such fee is payable only if the member does not serve as the Chairman of the Audit Committee, the Nominating Committee,
the Strategic Committee or as the Chairman of the Board.
Each
non-employee Board member will continue to receive $1,000 for each board meeting attendance and a $500 fee for meeting attendance
via conference call. Also, each director will continue to receive an option to purchase up to 2,400 shares of the Company’s
Common Stock on the date of his re-election to the Board at the annual meeting of stockholders, with each option having a 10-year
term and becoming fully vested after six months from grant date.
Each
director may continue to elect to have either 65% or 100% of such fees payable in Common Stock under the 2003 Outside Directors
Plan, with the balance, if any, payable in cash.
2003
Outside Directors Plan
We
believe that it is important for our directors to have a personal interest in our success and growth and for their interests to
be aligned with those of our stockholders; therefore, under our 2003 Outside Directors Plan, as amended, each outside director
is granted a 10-year option to purchase up to 6,000 shares of Common Stock on the date such director is initially elected to the
Board, and receives on each re-election date an option to purchase up to another 2,400 shares of our Common Stock, with the exercise
price being the fair market value of the Common Stock preceding the option grant date. No option granted under the 2003 Outside
Directors Plan is exercisable until after the expiration of six months from the date the option is granted and no option shall
be exercisable after the expiration of ten years from the date the option is granted. At December 31, 2020, options to purchase
146,400 shares of Common Stock were outstanding under the 2003 Outside Directors Plan, of which 128,400 were vested at December
31, 2020.
As
a member of the Board, each director may elect to receive either 65% or 100% of his director’s fee in shares of our Common
Stock. The number of shares received by each director is calculated based on 75% of the fair market value of the Common Stock
determined on the business day immediately preceding the date that the quarterly fee is due. The balance of each director’s
fee, if any, is payable in cash. In 2020, the fees earned by our outside directors totaled approximately $307,000. Reimbursements
of expenses for attending meetings of the Board are paid in cash at the time of the applicable Board meeting. As a management
director, Dr. Centofanti is not eligible to participate in the 2003 Outside Directors Plan.
111
As
of December 31, 2020, we have issued 714,623 shares of our Common Stock in payment of director fees since the inception of the
2003 Outside Directors Plan.
In
the event of a “change of control” (as defined in the 2003 Outside Directors Plan), each outstanding stock option
and stock award shall immediately become exercisable in full notwithstanding the vesting or exercise provisions contained in the
stock option agreement.
ITEM
12.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security
Ownership of Certain Beneficial Owners
The
table below sets forth information as to the shares of Common Stock beneficially owned as of February 12, 2021 by each person
known by us to be the beneficial owners of more than 5% of any class of our voting securities.
Name
of Beneficial Owner
Title
Of
Class
Amount
and
Nature
of
Ownership
Percent
Of
Class
(1)
Heartland
Advisors, Inc. (2)
Common
1,352,530
11.1 %
(1)
The number of shares and the percentage of outstanding Common Stock shown as beneficially owned by a person are based upon
12,165,734 shares of Common Stock outstanding on February 12, 2021, and the number of shares of Common Stock which such person
has the right to acquire beneficial ownership of within 60 days. Beneficial ownership by our stockholders has been determined
in accordance with the rules promulgated under Section 13(d) of the Exchange Act.
(2)
This information is based on the Schedule 13D of Heartland Advisors, Inc., an investment advisor, filed with the Commission
on January 13, 2021, disclosing that at January 8, 2021, each Heartland Advisors, Inc. and Mr. William Nasgovitz, as a control
person of Heartland Advisors, Inc. had shared dispositive power over all shares shown above and shared voting power over 1,346,030
of such shares. The address of Heartland Advisors, Inc. is 789 North Water Street, Milwaukee, WI 53202.
As
of February 12, 2021, Capital Bank–Grawe Gruppe AG (“Capital Bank”), a banking institution regulated by the
banking regulations of Austria, holds of record as a nominee for, and as an agent of, certain accredited investors, 2,057,359
shares of our Common Stock. None of such investors beneficially own more than 4.9% of our Common Stock and to the best knowledge
of Capital Bank, as far as stocks held by such investors in accounts with Capital Bank, none of such investors act together as
a group or otherwise act in concert for the purpose of voting on matters subject to the vote of our stockholders or for purpose
of disposition or investment of such stock. Additionally, the investors for whom Capital Bank acts as nominee with respect to
such shares maintain full voting and dispositive power over the Common Stock beneficially owned by such investors, and Capital
Bank has neither voting nor investment power over such shares. Accordingly, Capital Bank believes that (i) it is not the beneficial
owner, as such term is defined in Rule 13d-3 of the Exchange Act, of the shares of Common Stock registered in Capital Bank’s
name because (a) Capital Bank holds the Common Stock as a nominee only, (b) Capital Bank has neither voting nor investment power
over such shares, and (c) Capital Bank has not nominated or sought to nominate, and does not intend to nominate in the future,
any person to serve as a member of our Board; and (ii) it is not required to file reports under Section 16(a) of the Exchange
Act or to file either Schedule 13D or Schedule 13G in connection with the shares of our Common Stock registered in the name of
Capital Bank.
112
Notwithstanding
the previous paragraph, if Capital Bank’s representations to us described above are incorrect or if the investors for whom
Capital Bank acts as nominee are acting as a group, then Capital Bank or a group of such investors could be a beneficial owner
of more than 5% of our voting securities. If Capital Bank was deemed the beneficial owner of such shares, the following table
sets forth information as to the shares of voting securities that Capital Bank may be considered to beneficially own on February
12, 2021:
Name
of
Record Owner
Title
Of
Class
Amount
and
Nature
of
Ownership
Percent
Of
Class
(*)
Capital
Bank-Grawe Gruppe
Common
2,057,359 (+)
16.9 %
(*)
This calculation is based upon 12,165,734 shares of Common Stock outstanding on February 12, 2021, plus the number of shares
of Common Stock which Capital Bank, as agent for certain accredited investors has the right to acquire within 60 days, which is
none.
(+)
This amount is the number of shares that Capital Bank has represented to us that it holds of record as nominee for, and
as an agent of, certain accredited investors. As of the date of this report, Capital Bank has no warrants or options to acquire,
as agent for certain investors, additional shares of our Common Stock. Although Capital Bank is the record holder of the shares
of Common Stock described in this note, Capital Bank has advised us that it does not believe it is a beneficial owner of the Common
Stock or that it is required to file reports under Section 16(a) or Section 13(d) of the Exchange Act. Capital Bank has advised
us that it (a) holds the Common Stock as a nominee only and that it does not exercise voting or investment power over the Common
Stock held in its name and that no one investor for which it holds our Common Stock holds more than 4.9% of our issued and outstanding
Common Stock and (b) has not nominated, and has not sought to nominate, and does not intend to nominate in the future, any person
to serve as a member of our Board. Accordingly, we do not believe that Capital Bank is our affiliate. Capital Bank’s address
is Burgring 16, A-8010 Graz, Austria.
Security
Ownership of Management
The
following table sets forth information as to the shares of voting securities beneficially owned as of February 12, 2021, by each
of our directors and NEOs and by all of our directors and NEOs as a group. Beneficial ownership has been determined in accordance
with the rules promulgated under Section 13(d) of the Exchange Act. A person is deemed to be a beneficial owner of any voting
securities for which that person has the right to acquire beneficial ownership within 60 days.
Amount
and Nature
Name
of Beneficial Owner (2)
of
Beneficial Owner (1)
Percent
of Class (1)
Thomas
P. Bostick
8,865 (3)
*
Dr.
Louis F. Centofanti (4)
266,325 (4)
2.18 %
Joseph
T. Grumski (5)
15,376 (5)
*
Joe
R. Reeder (6)
218,253 (6)
1.79 %
Larry
M. Shelton (7)
151,657 (7)
1.24 %
Zack
P. Wamp (8)
33,785 (8)
*
Mark
A. Zwecker (9)
213,858 (9)
1.75 %
Mark
Duff (10)
138,321 (10)
1.13 %
Richard
Grondin (11)
16,036 (11)
*
Andy
Lombardo (12)
11,900 (12)
*
Ben
Naccarato (13)
39,318 (13)
*
Directors
and Executive Officers as a Group (11 persons)
1,113,694 (14)
8.92 %
*Indicates
beneficial ownership of less than one percent (1%).
(1)
See footnote (1) of the table under “Security Ownership of Certain Beneficial Owners.”
(2)
The business address of each person, for the purposes hereof, is c/o Perma-Fix Environmental Services, Inc., 8302 Dunwoody
Place, Suite 250, Atlanta, Georgia 30350.
113
(3)
Mr. Bostick has sole and voting and investment power over all shares shown, which include: (i) 2,865 shares of Common Stock
held of record by Mr. Bostick, and (ii) immediately exercisable options to purchase 6,000 shares.
(4)
These shares include (i) 167,525 shares held of record by Dr. Centofanti, (ii) immediately exercisable options to purchase
36,000 shares, and (iii) 62,800 shares held by Dr. Centofanti’s wife. Dr. Centofanti has sole voting and investment power
over all such shares, except for the shares held by Dr. Centofanti’s wife, over which Dr. Centofanti shares voting and investment
power. Dr. Centofanti also owns 700 shares of PF Medical’s Common Stock.
(5)
Mr. Grumski has sole and voting and investment power over all shares shown, which include: (i) 6,976 shares of Common Stock
held of record by Mr. Grumski, and (ii) immediately exercisable options to purchase 8,400 shares.
(6)
Mr. Reeder has sole voting and investment power over all shares shown, which include: (i) 194,253 shares of Common Stock
held of record by Mr. Reeder, and (ii) immediately exercisable options to purchase 24,000 shares.
(7)
Mr. Shelton has sole voting and investment power over all shares shown, which include: (i) 127,657 shares of Common Stock
held of record by Mr. Shelton, and (ii) immediately exercisable options to purchase 24,000 shares. Mr. Shelton also owns 750 shares
of PF Medical’s Common Stock.
(8)
Mr. Wamp has sole voting and investment power over all shares shown, which include: (i) 20,585 shares of Common Stock held
of record by Mr. Wamp, and (ii) immediately exercisable options to purchase 13,200 shares.
(9)
Mr. Zwecker has sole voting and investment power over all shares shown, which include: (i) 189,858 shares of Common Stock
held of record by Mr. Zwecker, and (ii) immediately exercisable options to purchase 24,000 shares.
(10)
Mr. Duff has sole voting and investment power over all shares shown, which include: (i) 18,321 shares of Common Stock held
of record by Mr. Duff, and (ii) immediately exercisable options to purchase 120,000 shares.
(11)
Mr. Grondin has sole voting and investment power over all shares shown, which include: (i) 36 shares of Common Stock held
of record by Mr. Grondin, and (ii) immediately exercisable options to purchase 16,000 shares.
(12)
Mr. Lombardo has sole voting and investment power over all shares shown, which include: (i) 5,900 shares of Common Stock
held of record by Mr. Lombardo, and (ii) immediately exercisable options to purchase 6,000 shares.
(13)
Mr. Naccarato has sole voting and investment power over all shares shown, which include: (i) 3,318 shares of Common Stock
held of record by Mr. Naccarato, and (ii) immediately exercisable options to purchase 36,000 shares. Mr. Naccarato also owns 100
shares of PF Medical’s Common Stock.
(14)
Amount includes 313,600 immediately exercisable options.
114
Equity
Compensation Plans
The
following table sets forth information as of December 31, 2020, with respect to our equity compensation plans.
Equity
Compensation Plan
Plan
Category
Number
of securities to
be issued upon exercise
of outstanding options
warrants and rights
Weighted
average
exercise price of
outstanding
options, warrants
and rights
Number
of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities
reflected in
column (a)
(a)
(b)
(c)
Equity
compensation plans
approved by stockholders
658,400
$ 3.87
866,077
Equity
compensation plans not
approved by stockholders
—
—
—
Total
658,400
$ 3.87
866,077
ITEM
13.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
We
describe below transactions to which we were a party during our last two fiscal years or to which we currently propose to be a
party in the future, and in which:
●
the
amounts involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end
for the last two completed fiscal years; and
●
any
of our directors, executive officers or beneficial owners of more than 5% of any class of our voting securities, or any member
of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.
Audit
Committee Review
Our
Audit Committee Charter provides for the review by the Audit Committee of any related party transactions, other than transactions
involving an employment relationship with the Company, which are reviewed by the Compensation Committee. Although we do not have
written policies for the review of related party transactions, the Audit Committee reviews transactions between the Company and
its directors, executive officers, holders of more than 5% of any class of the Company’s voting securities, and their respective
immediate family members. In reviewing a proposed transaction, the Audit Committee takes into account, among other factors it
deems appropriate:
(1)
the
extent of the related person’s interest in the transaction;
(2)
whether
the transaction is on terms generally available to an unaffiliated third-party under the same or similar circumstances;
(3)
the
cost and benefit to the Company;
(4)
the
impact or potential impact on a director’s independence in the event the related party is a director, an immediate family
member of a director or an entity in which a director is a partner, stockholder or executive officer;
(5)
the
availability of other sources for comparable products or services;
(6)
the
terms of the transaction; and
(7)
the
risks to the Company.
In
addition, as applicable, the Audit Committee considers Section 144 of the Delaware General Corporation Law (“DGCL”)
and the Company’s Code of Ethics.
The
provisions of Section 144 of the DGCL apply to transactions between the Company and any of its officers or directors, or any organization
in which any such individual has a financial interest or serves as a director or officer (individually, a “Section 144 Related
Party,” and, collectively, “Section 144 Related Parties”). Section 144 provides that a transaction between a
corporation and any Section 144 Related Party will not be void or voidable solely because such transaction involves the corporation
and the Section 144 Related Party, or solely because the Section 144 Related Party is present at or participates or votes in the
meeting of the board or committee which authorizes the transaction, if the transaction (a) is approved in good faith after full
disclosure of the material facts of the transaction by a majority vote of (i) the disinterested directors, or (ii) the stockholders,
and (b) is fair as to the corporation as of the time it is authorized, approved, or ratified by the board, a committee or the
stockholders.
115
The
provisions of the Code of Ethics apply to our NEOs and provides that such individuals must exhibit and promote honest and ethical
conduct in connection with the performance of his or her duties for and on behalf of the Company, including the ethical handling
of actual or apparent conflicts of interest involving such individual and the Company, by, among other considerations:
●
not
entering into a transaction that would result in a conflict of interest with what is in the best interest of the Company and
that is reasonably likely to result in material personal gain to any such individuals or their affiliates;
●
not
having a personal financial interest in any of the Company’s suppliers, customers or competitors that could cause divided
loyalty as a result of having the ability to influence the Company’s decisions with that particular supplier or customer
or actions to be taken by the Company that could materially benefit a competitor.
Related
party transactions are reviewed by the Audit Committee prior to the consummation of the transaction. With respect to a related
party transaction arising between Audit Committee meetings, the CFO may present it to the Audit Committee Chairperson, who will
review and may approve the related party transaction subject to ratification by the Audit Committee at the next scheduled meeting.
Our Audit Committee shall approve only those transactions that, in light of known circumstances, are not inconsistent with the
Company’s best interests.
Related
Party Transactions
David
Centofanti
David
Centofanti serves as our Vice President of Information Systems. For such position, he received annual compensation of $181,000
and $177,000 for 2020 and 2019, respectively. David Centofanti is the son of Dr. Louis F. Centofanti, our EVP of Strategic Initiatives
and a Board member.
Employment
Agreements and MIPs
We
entered into an employment agreement with each of our NEOs, Mark Duff (President and CEO), Ben Naccarato (CFO), Dr. Louis Centofanti
(EVP of Strategic Initiatives), Andy Lombardo (EVP of Nuclear and Technical Services) and Richard Grondin (EVP of Waste Treatment
Operations), with each employment agreement dated July 22, 2020 (see “Item 11. Executive Compensation – Employment
Agreements” for a discussion of these employment agreements). Each of our NEOs also has a MIP for fiscal years 2020 and
2021 (see “Item 11. Executive Compensation - Performance-Based Incentive Compensation – 2020 MIPs and 2021 MIPs”
for a discussion of these MIPs).
Board
Independence
Our
Common Stock is listed on the Nasdaq Capital Market. Rule 5605 of the Nasdaq Marketplace Rules requires a majority of a listed
company’s board of directors to be comprised of independent directors. In addition, the Nasdaq Marketplace Rules require
that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate
governance committees be independent under applicable provisions of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Audit committee members must also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act, and
compensation committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under
Nasdaq Rule 5605(a)(2), a director will only qualify as an “independent director” if, in the opinion of our Board,
that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. In order to be considered independent for purposes of Rule 10A-3 under the Exchange Act, a member of an audit committee
of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or
any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed
company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. In order
to be considered independent for purposes of Rule 10C-1, the board must consider, for each member of a compensation committee
of a listed company, all factors specifically relevant to determining whether a director has a relationship to such company which
is material to that director’s ability to be independent from management in connection with the duties of a compensation
committee member, including, but not limited to: the source of compensation of the director, including any consulting advisory
or other compensatory fee paid by such company to the director; and whether the director is affiliated with the company or any
of its subsidiaries or affiliates.
116
Our
Board annually undertakes a review of the composition of our Board of Directors and its committees and the independence of each
director. Based upon information requested from and provided by each director concerning his background, employment and affiliations,
including family relationships, our Board of Directors has determined that each of Messrs. Thomas P. Bostick, Joseph T. Grumski,
Joe R. Reeder, Larry M. Shelton, Zach P. Wamp and Mark A. Zwecker is an “independent director” as defined under the
Nasdaq Marketplace Rules. Our Board of Directors has also determined that each member of our Audit Committee, consisting of Mark
A. Zwecker (Chairperson), Zach Wamp (who was a member of the Audit Committee until April 16, 2020), Larry M. Shelton, and Joseph
T. Grumski (who became a member of the Audit Committee effective April 16, 2020), and each member of our Compensation Committee,
consisting of Joseph T. Grumski (who became a member and the Chairperson effective January 21, 2021), Zach P. Wamp (who became
a member effective January 21, 2021), Mark A. Zwecker, Larry M. Shelton (who was replaced by Joseph T. Grumski as a member and
the Chairperson effective January 21, 2021), and Joe R. Reeder (who was replaced by Zach P. Wamp as a member effective January
21, 2021) satisfy/satisfied the independence standards for such committees established by the Commission and the Nasdaq Marketplace
Rules, as applicable. In making such determination, our Board of Directors considered the relationships that each such non-employee
director has with our Company and all other facts and circumstances our Board of Directors deemed relevant in determining independence,
including the beneficial ownership of our capital stock by each non-employee director.
Our
Board of Directors has determined that Dr. Centofanti is not deemed to be an “independent director” because of his
employment as a senior executive of the Company.
ITEM
14.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The
following table reflects the aggregate fees for the audit and other services provided by Grant Thornton LLP, the Company’s
independent registered public accounting firm, for fiscal years 2020 and 2019:
Fee
Type
2020
2019
Audit
Fees (1)
$ 557,000
608,000
Tax
Fees (2)
104,000
113,000
Total
$ 661,000
721,000
(1)
Audit
fees consist of audit work performed in connection with the annual financial statements, the reviews of unaudited quarterly
financial statements, and work generally only the independent registered accounting firm can reasonably provide, such as consents
and review of regulatory documents filed with the Securities and Exchange Commission.
(2)
Fees
for income tax planning, filing, and consulting.
Engagement
of the Independent Auditor
To
ensure that our independent registered public accounting firm is engaged only to provide audit and non-audit services that are
compatible with maintaining its independence, the Audit Committee has a policy that requires the Committee to review and approve
in advance all services to be provided by the Company’s independent accounting firm before the firm is engaged to provide
those services. The Audit Committee considers non-audit services and fees when assessing auditor independence, and determined
that tax return preparation and other tax compliance services is compatible with maintaining our accounting firm’s independence.
All services under the headings Audit Fees and Tax Fees were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C)
of Rule 2-01 of Regulation S-X of the Exchange Act. The Audit Committee’s pre-approval policy provides as follows:
●
The
Audit Committee will review and pre-approve on an annual basis all audits, audit-related, tax and other services, along with
acceptable cost levels, to be performed by the independent accounting firm and any member of the independent accounting firm’s
alliance network of firms, and may revise the pre-approved services during the period based on later determinations. Pre-approved
services typically include: audits, quarterly reviews, regulatory filing requirements, consultation on new accounting and
disclosure standards, employee benefit plan audits, reviews and reporting on management’s internal controls and specified
tax matters.
●
Any
proposed service that is not pre-approved on the annual basis requires a specific pre-approval by the Audit Committee, including
cost level approval.
●
The
Audit Committee may delegate pre-approval authority to one or more of the Audit Committee members. The delegated member must
report to the Audit Committee, at the next Audit Committee meeting, any pre-approval decisions made.
117
PART
IV
ITEM
15.
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULE
The
following documents are filed as a part of this report:
(a)(1)
Consolidated
Financial Statements
See
Item 8 for the Index to Consolidated Financial Statements.
(a)(2)
Financial
Statement Schedule
Schedules
are not required, are not applicable or the information is set forth in the consolidated financial statements or notes thereto.
(a)(3)
Exhibits
The
Exhibits listed in the Exhibit Index are filed or incorporated by reference as a part of this report.
118
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Perma-Fix
Environmental Services, Inc.
By
/s/
Mark Duff
Date
March
29, 2021
Mark
Duff
Chief
Executive Officer, President and
Principal
Executive Officer
By
/s/
Ben Naccarato
Date
March
29, 2021
Ben
Naccarato
Chief
Financial Officer and
Principal
Financial Officer
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in capacities and on the dates indicated.
By
/s/
Thomas P. Bostick
Date
March
29, 2021
Thomas
P. Bostick, Director
By
/s/
Dr. Louis F. Centofanti
Date
March
29, 2021
Dr.
Louis F. Centofanti, Director
By
/s/Joseph
T. Grumski
Date
March
29, 2021
Joseph
T. Grumski
By
/s/
Joe R. Reeder
Date
March
29, 2021
Joe
R. Reeder, Director
By
/s/
Larry M. Shelton
Date
March
29, 2021
Larry
M. Shelton, Chairman of the Board
By
/s/
Zach P. Wamp
Date
March
29, 2021
Zach
P. Wamp, Director
By
/s/
Mark A. Zwecker
Date
March
29, 2021
Mark
A. Zwecker, Director
119
EXHIBIT
INDEX
Exhibit
No.
Description
3(i)
Restated Certificate of Incorporation, as amended, of Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 3(i) to the Company’s 2018 Form 10-K filed on April 1, 2019.
3(ii)
Second Amended and Restated Bylaws, as amended effective January 21, 2021, of Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 3(ii) to the Company’s 8-K filed on January 26, 2021.
4.1
Shareholder Rights Agreement dated and effective as of May 2, 2018 between Perma-Fix Environmental Services, Inc. as the Company and Continental Stock Transfer & Trust Company, as Rights Agent, as incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed on May 2, 2018.
4.2
First Amendment to Shareholder Rights Agreement dated May 2, 2019 between Perma-Fix Environmental Services, Inc. and Continental Stock Transfer & Trust Company as Rights Agent, as incorporated by reference from Exhibit 4.2 to the Company’s Form 8-K filed on May 3, 2019.
4.3
Amended and Restated Revolving Credit, Term Loan and Security Agreement between Perma-Fix Environmental Services, Inc. and PNC Bank, National Association (as Lender and as Agent), dated October 31, 2011, as incorporated by reference from Exhibit 4.8 to the Company 2016 Form 10-K filed on March 24, 2017.
4.4
First Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated November 7, 2012, between the Company and PNC Bank, National Association, as incorporated by reference from Exhibit 4.4 to the Company 2017 Form 10-K filed on March 16, 2018.
4.5
Second Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement and Waiver, dated May 9, 2013, between the Company and PNC Bank, National Association, as incorporated by reference from Exhibit 4.4 to the Company 2018 Form 10-K filed on April 1, 2019.
4.6
Third Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated August 2, 2013, as incorporated by reference from Exhibit 4.5 to the Company 2018 Form 10-K filed on April 1, 2019.
4.7
Third Amended, Restated and Substituted Revolving Credit Note between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated August 2, 2013, as incorporated by reference from Exhibit 4.6 to the Company 2018 Form 10-K filed on April 1, 2019.
4.8
Fourth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement and Waiver between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated April 14, 2014, as incorporated by reference from Exhibit 4.8 to the Company’s 2019 Form 10-K filed on March 20, 2020.
4.9
Fifth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated July 25, 2014, as incorporated by reference from Exhibit 4.9 to the Company’s 2019 Form 10-K filed on March 20, 2020.
4.10
Sixth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated July 28, 2014, as incorporated by reference from Exhibit 4.10 to the Company’s 2019 Form 10-K filed on March 20, 2020.
4.11
Seventh Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated March 24, 2016, as incorporated by reference from Exhibit 4.17 to the Company’s 2015 Form 10-K filed on March 24, 2016.
4.12
Eighth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated August 22, 2016, as incorporated by reference from Exhibit 4.9 to the Company’s Form 10-Q for the quarter ended June 30, 2016 filed on August 22, 2016.
120
4.13
Ninth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated November 17, 2016, as incorporated by reference from Exhibit 4.10 to the Company’s Form 10-Q for the quarter ended September 30, 2016 filed on November 18, 2016.
4.14
Tenth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated July 26, 2018, as incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed on July 30, 2018.
4.15
Eleventh Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement and Waiver between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated March 29, 2019, as incorporated by reference from Exhibit 4.14 to the Company’s 2018 Form 10-K filed on April 1, 2019.
4.16
Twelfth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated June 20, 2019, as incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed on June 21, 2019.
4.17
Thirteenth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated December 13, 2019, as incorporated by reference from Exhibit 4.17 to the Company’s 2019 Form 10-K filed on March 20, 2020.
4.18
Second Amended and Restated Revolving Credit, Term Loan and Security Agreement between Perma-Fix Environmental Services, Inc. and PNC Bank, National Association (as Lender and as Agent), dated May 8, 2020, as incorporated by reference from Exhibit 4.1 to the Company’s Form 10-Q for the Quarter ended March 31, 2020 filed on May 12, 2020.
4.19
Payment Protection Program Term Note dated April 11, 2020, by and between Perma-Fix Environmental Services, Inc. and PNC Bank, National Association, as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on April 15, 2020.
4.20
Loan and Securities Purchase Agreement, dated April 1, 2019 between Robert L. Ferguson and Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 4.15 to the Company’s 2018 Form 10-K filed on April 1, 2019.
4.21
Common Stock Purchase Warrant dated April 1, 2019 for Robert L. Ferguson, as incorporated by reference from Exhibit 4.16 to the Company’s 2018 Form 10-K filed on April 1, 2019.
10.1
2003 Outside Directors’ Stock Plan of the Company, as incorporated by reference from Exhibit 10.1 to the Company’s 2019 Form 10-K filed on March 20, 2020.
10.2
First Amendment to 2003 Outside Directors Stock Plan, as incorporated by reference from Exhibit 10.2 to the Company’s 2019 Form 10-K filed on March 20, 2020.
10.3
Second Amendment to 2003 Outside Directors Stock Plan, as incorporated by reference from Exhibit 10.3 to the Company’s 2017 Form 10-K filed on March 16, 2018.
10.4
Third Amendment to 2003 Outside Directors Stock Plan, as incorporated by reference from Exhibit 10.4 to the Company’s 2017 Form 10-K filed on March 16, 2018.
10.5
Fourth Amendment to 2003 Outside Directors Stock Plan, as incorporated by reference from Exhibit A to the Company’s Proxy Statement for its 2017 Annual Meeting of Stockholders filed on June 22, 2017.
10.6
2017 Stock Option Plan, as incorporated by reference from Exhibit B to the Company’s Proxy Statement for its 2017 Annual Meeting of Stockholders filed on June 22, 2017.
10.7
Employment Agreement dated July 22, 2020 between Mark Duff, Chief Executive Officer, and Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on July 27, 2020.
10.8
Employment Agreement dated July 22, 2020 between Dr. Louis Centofanti, Executive Vice President of Strategic Initiatives, and Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on July 27, 2020.
121
10.9
Employment Agreement dated July 22, 2020 between Ben Naccarato, Chief Financial Officer, and Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on July 27, 2020.
10.10
Employment Agreement dated July 22, 2020 between Andy Lombardo, EVP of Nuclear and Technical Services, Inc. and Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 99.4 to the Company’s Form 8-K filed on July 27, 2020.
10.11
Employment Agreement dated July 22, 2020 between Richard Grondin, EVP of Waste Treatment Operations and Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 99.5 to the Company’s Form 8-K filed on July 27, 2020.
10.12
2020 Incentive Compensation Plan for Chief Executive Officer, effective January 1, 2020, as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on January 22, 2020.
10.13
2020 Incentive Compensation Plan for Chief Financial Officer, effective January 1, 2020, as incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on January 22, 2020.
10.14
2020 Incentive Compensation Plan for Executive Vice President of Strategic Initiatives, effective January 1, 2020, as incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on January 22, 2020.
10.15
2020 Incentive Compensation Plan for Executive Vice President of Nuclear and Technical Services, effective January 1, 2020, as incorporated by reference from Exhibit 99.4 to the Company’s Form 8-K filed on January 22, 2020.
10.16
2020 Incentive Compensation Plan for Executive Vice President of Waste Treatment Operations, effective January 1, 2020, as incorporated by reference from Exhibit 99.6 to the Company’s Form 8-K filed on July 27, 2020.
10.17
Incentive Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc., and Chief Executive Officer, as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on August 2, 2017.
10.18
Incentive Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc., and Executive Vice President/Chief Operating Officer, as incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on August 2, 2017.
10.19
Incentive Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc., and Chief Financial Officer, as incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on August 2, 2017.
10.20
Incentive Stock Option Agreement dated January 17, 2019 between Perma-Fix Environmental Services, Inc., and Chief Executive Officer, as incorporated by reference from Exhibit 99.4 to the Company’s Form 8-K filed on January 23, 2019.
10.21
Incentive Stock Option Agreement dated January 17, 2019 between Perma-Fix Environmental Services, Inc., and Chief Financial Officer, as incorporated by reference from Exhibit 99.5 to the Company’s Form 8-K filed on January 23, 2019.
10.22
Incentive Stock Option Agreement dated January 17, 2019 between Perma-Fix Environmental Services, Inc., and EVP of Strategic Initiatives, as incorporated by reference from Exhibit 99.6 to the Company’s Form 8-K filed on January 23, 2019.
10.23
Incentive Stock Option Agreement dated October 19, 2017 between Perma-Fix Environmental Services, Inc., and Richard Grondin, as incorporated by reference from Exhibit 99.11 to the Company’s Form 8-K filed on July 27, 2020.
10.24
Incentive Stock Option Agreement dated January 17, 2019 between Perma-Fix Environmental Services, Inc., and Richard Grondin, as incorporated by reference from Exhibit 99.12 to the Company’s Form 8-K filed July 27, 2020.
10.25
Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc., and Mr. Robert L. Ferguson, as incorporated by reference from Exhibit 10.6 to the Company’s third quarter Form 10-Q filed on August 9, 2017.
10.26
First Amendment to Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc. Mr. Robert L. Ferguson, as incorporated by reference from Exhibit 10.23 to the Company 2018 Form 10-K filed on April 1, 2019.
122
10.27
Second Amendment to Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc. Mr. Robert L. Ferguson, as incorporated by reference from Exhibit 99.3 to the Company Form 8-K filed on March 31, 2020.
10.28
Task Order Agreement for Small Scales Remediation Package between Canadian Nuclear Laboratories LTD and Perma-Fix Canada Inc., as incorporated by reference from Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended March 31, 2019 filed on May 9, 2019. CERTAIN INFORMATION WITHIN SCHEDULE 2 – PRICE INFORMATION OF THIS EXHIBIT HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
10.29
2021 Incentive Compensation Plan for Chief Executive Officer, effective January 1, 2021, as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on January 26, 2021.
10.30
2021 Incentive Compensation Plan for Chief Financial Officer, effective January 1, 2021, as incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on January 26, 2021.
10.31
2021 Incentive Compensation Plan for EVP of Strategic Initiatives, effective January 1, 2021, as incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on January 26, 2021.
10.32
2021 Incentive Compensation Plan for EVP of Nuclear and Technical Services, effective January 1, 2021, as incorporated by reference from Exhibit 99.4 to the Company’s Form 8-K filed on January 26, 2021.
10.33
2021 Incentive Compensation Plan for EVP of Waste Treatment Operations, effective January 1, 2021, as incorporated by reference from Exhibit 99.5 to the Company’s Form 8-K filed on January 26, 2021.
10.34
Time
and Material Master Task Ordering Agreement Subcontract Form of Agreement (subcontract 573512) dated February 23, 2020 and
Modification 4 between Perma-Fix Environmental Services, Inc. and Triad National Security, LLC. CERTAIN INFORMATION OF THIS
EXHIBIT WITHIN “EXHIBIT C” – “Form A-1 SCHEDULE OF RATES AND NOT-TO-EXCEED AMOUNTS” HAS BEEN
EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBICLY DISCLOSED.
10.35
Time
and Material Master Task Ordering Agreement Subcontract Form of Agreement (subcontract 554628) dated August 21, 2019 and Modification
6 between Perma-Fix Environmental Services, Inc. and Triad National Security, LLC. CERTAIN INFORMATION OF THIS EXHIBIT WITHIN
“EXHIBIT C” – “FORM A-1 SCHEDULE OF RATES AND NOT-TO-EXCEED AMOUNTS” HAS BEEN EXCLUDED FROM
THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBICLY DISCLOSED.
21.1
List
of Subsidiaries
23.1
Consent of Grant Thornton, LLP
31.1
Certification
by Mark Duff, Chief Executive Officer and Principal Executive Officer of the Company pursuant to Rule 13a-14(a) and 15d-14(a).
31.2
Certification
by Ben Naccarato, Chief Financial Officer and Principal Financial Officer of the Company pursuant to Rule 13a-14(a) and 15d-14(a).
32.1
Certification
by Mark Duff, Chief Executive Officer and Principal Executive Officer of the Company furnished pursuant to 18 U.S.C. Section
1350.
32.2
Certification
by Ben Naccarato, Chief Financial Officer and Principal Financial Officer of the Company furnished pursuant to 18 U.S.C. Section
1350.
101.INS
XBRL
Instance Document*
101.SCH
XBRL
Taxonomy Extension Schema Document*
101.CAL
XBRL
Taxonomy Extension Calculation Linkbase Document*
101.DEF
XBRL
Taxonomy Extension Definition Linkbase Document*
101.LAB
XBRL
Taxonomy Extension Labels Linkbase Document*
101.PRE
XBRL
Taxonomy Extension Presentation Linkbase Document*
*Pursuant
to Rule 406T of Regulation S-T, the Interactive Data File in Exhibit 101 hereto are deemed not filed or part of a registration
statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purpose
of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
123