ITEM 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory arrangements of certain officers
On September 7, 2020, the Board of Directors (the “Board”) of DSP Group, Inc. (the “Company”), unanimously approved the appointment of Tali Chen as the Chief Business Officer of the Company, effective immediately.
Ms. Chen, age 42, brings to the Company over 15 years of executive management experience in the semiconductor industry. Ms. Chen joined the Company in 2008 as VP Human Services and Legal Affairs and held various positions within the Company, including most recently as the Company’s Chief Marketing Officer from August 2018 to August 2020. Prior to joining the Company, Mrs. Chen was Director of Commercial Legal Affairs at RADA Electronic Industries, she served as a Major in the Israeli Defense Forces, was the founding manager of the “Atidim for Industry” program, and an intern at the IDF Ombudsman’s office. Ms. Chen holds an LLB in Law and Government with honors from the Interdisciplinary Center (IDC) of Herzliya, and an MBA from the Technion – Israel Institute of Technology.
In connection with Ms. Chen’s appointment, she executed a new employment agreement with the Company, effective August 1, 2020. Pursuant to the agreement, Ms. Chen’s annual salary is approximately $230,000, subject to adjustment from time to time (Ms. Chen’s salary is determined in New Israeli Shekel (“NIS”) and is 67,600 NIS per month). Furthermore, in connection with Ms. Chen’s relocation from the U.S. to Israel, she is provided a one-time adaptation bonus at the gross sum of approximately $87,000 (the bonus is determined in NIS and is exactly 300,000 NIS).
Ms. Chen also is eligible to receive an annual bonus based on criteria in light of the Company’s business and other objectives, including the Company achieving certain revenue goals, design win targets and profitability targets, as well as accomplishment of certain individual objectives. The target amount of such annual bonus would equal 0.6 times Ms. Chen’s then annual salary and the maximum amount of such annual bonus would not exceed 1.2 times Ms. Chen’s then annual salary. In consideration of Ms. Chen’s transition into her new role, for fiscal year 2020 only, Ms. Chen is entitled to a discretionary bonus, which shall be determined at the sole discretion of Board.
In addition to her salary and bonus eligibility, Ms. Chen is entitled to receive social benefits required pursuant to Israeli labor laws or are common practice in Israel, and are generally available to all Israeli employees of the Company. Specifically, the Company will make a payment of 8.333% of Ms. Chen’s monthly base salary to an insurance or pension fund to pay for the future liability owed to her upon termination of her employment. In addition, the Company will make a payment of 6.5% of her monthly base salary to insurance or pension fund, which accrued amount may be withdrawn by Ms. Chen after retirement or, subject to various tax restrictions in Israel, after leaving the Company’s employment. In addition, the Company will pay Ms. Chen’s disability income insurance in accordance with Company procedures. Further, as is customary in Israel applicable to all Israeli employees, the Company will provide Ms. Chen with an amount of monthly contributions equal to 7.5% of her base salary for the benefit of her study and training purposes.
Ms. Chen is employed at will. In the event Ms. Chen desires to terminate her employment with the Company, she must notify the Company six months in advance. Similarly, if the Company desires to terminate Ms. Chen’s employment with the Company, it must notify Ms. Chen six months in advance; provided that the Company may terminate Ms. Chen’s employment immediately without notice for the following reasons: (i) Ms. Chen committing a crime involving dishonesty, breach of trust, or physical harm to any person; (ii) Ms. Chen engaging in conduct that is in bad faith and materially injurious to the Company, including but not limited to, misappropriation of trade secrets, fraud or embezzlement; (iii) Ms. Chen committing a material breach of this Agreement; (iv) Ms. Chen refusing to implement or follow a lawful policy or directive of the Company; or (v) Ms. Chen engaging in misfeasance or malfeasance demonstrated by a pattern of failure to perform job duties diligently and professionally. Other than the cases set forth above, the Company also may terminate Ms. Chen’s employment without the six-months advance notice if it pays her an amount equal to six-months of her then-effective salary. In the event of termination of her employment without cause or her resignation for a good reason, in each case within six months prior to or twelve months following a change in control of the Company, all of Ms. Chen’s outstanding equity awards would accelerate and immediately vest.
Other than the employment agreement described above and agreements relating to equity awards that Ms. Chen was granted as an employee of the Company and unrelated to her appointment to her new role, there are no material plans, contracts or arrangements, between Ms. Chen and the Company to which she is a party or in which she participates that is entered into in connection with her position with the Company. There are no related party transactions exceeding $120,000 between Ms. Chen and the Company in which she has a direct or indirect material interest. There are no family relationships between Ms. Chen and any director or executive officer of the Company.
The foregoing description of Ms. Chen’s employment agreement is qualified in its entirety by reference to the complete text of the employment agreement which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.