Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 12, 2020, the Board of Directors (the “Board”) of Luby's, Inc. (the “Company”) approved, upon the recommendation of the Compensation Committee of the Board, a severance agreement and a bonus opportunity agreement, pursuant to which certain executive officers and other specified senior level employees will receive separation payments upon the occurrence of certain events and will be eligible to receive both a cash bonus and a restricted stock award bonus (collectively, the “retention awards”). The retention awards are designed to retain certain key employees in their roles with the Company and to carry out the previously-announced intent of the Board to pursue a sale of the Company's operations and assets and to distribute the net proceeds to the Company’s stockholders.
Pursuant to the severance agreements, each recipient will be eligible to receive a separation payment, based on a percentage of such recipient’s current annual base salary, if such recipient is terminated without Cause (as defined in the severance agreement), resign for Good Reason (as defined in the severance agreement), or are not hired by a successor or buyer of the Company’s assets. The separation payment amount for the Company's named executive officers is calculated as follows: Benjamin T. Coutee—100% of Base Salary; Steven Goodweather—100% of Base Salary; and Philip Rider—83.3% of Base Salary.
The bonus opportunity agreement is designed to incentivize each recipient to complete the sale of the Company's operations and assets. Each recipient is eligible to earn both a cash bonus and a portion of a restricted stock award granted under the Luby’s Incentive Stock Plan. The restricted stock to be granted to each recipient will be issued upon entering into the bonus opportunity agreement and will be subject to being both earned upon the occurrence of a Triggering Event (as defined below) and vesting. Upon the closing of the contemplated sales of each of: (1) the Company's Fuddruckers brand, (2) the Company's Culinary Contract Services brand; and (3) at least 30 of the Company's Luby’s cafeterias (each, a "Triggering Event"), each recipient will receive the cash portion of the bonus and will earn a portion of the restricted stock granted to such recipient, subject to time-based vesting conditions. The target bonus amounts for the Company's named executive officers are as follows: Benjamin T. Coutee—$15,000 + 10,000 earned shares of restricted stock for each Triggering Event; Steven Goodweather—$12,500 + 8,000 earned shares of restricted stock for each Triggering Event; and Philip Rider—$12,500 + 8,000 earned shares of restricted stock for each Triggering Event.
The foregoing descriptions of the severance agreement and the bonus opportunity agreement do not purport to be complete and are qualified in their entirety by reference to such agreements filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.