Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of WRAL.com.
RESEARCH TRIANGLE PARK, N.C. – Your company is losing money but you get an $75,000 raise?
Yes sir, if you are Ryan Wuerch.
The caveat? A successful initial public offering.
Wuerch, chief executive officer at , is already a wealthy man but the disclosures included in Motricity’s bid to go public shows just how much he is making – and how much more he will make should the mobile services company succeed with a $250 million IPO or if the company is sold.
In a filing with the Securities and Exchange Commission for the IPO (), Motricity disclosed that Wuerch recently signed a new employment contract that kicked in Jan.. 19.
New base salary: $450,000, if the IPO is successful.
Previous salary: $375,000.
He also will continue to receive 20 percent “Temporary Adjustment” payments – or $90,000 per year – as a cost of living adjustment for living in the state of Washington rather than in the Research Triangle.
Plus, if the IPO is executed, Wuerch will receive 5 million shares of stock.
If the company is sold rather than go public, he gets a cash payment of at least $2 million.
Wuerch and Motricity bolted from a posh headquarters in Durham for the Far West in march 2008 in order to be closer to some of its major clients. The company is growing revenues but is not yet profitable.
In the SEC filing, the company spells out not just Wuerch’s earnings and stock vesting but also of several other top executives.
Here are the details about Wuerch’s new deal:
“Mr. Wuerch has entered into an amended and restated employment agreement with the Company effective January 19, 2010 for an initial 24 month term, which will automatically renew for successive one year periods unless either the Company or Mr. Wuerch provides at least 90 days prior written notice of an intent to terminate the employment agreement earlier.
“Under the terms of the amended agreement, Mr. Wuerch is entitled to an annual base salary of $375,000; provided that on the effective date of the Company’s initial public offering of its common stock (“initial public offering”), Mr. Wuerch’s annual base salary will increase to $450,000.
“Mr. Wuerch will also receive “Temporary Adjustment” payments (which represent a COLA adjustment agreed upon in 2008 in connection with his relocation from North Carolina to the state of Washington) equal to 20% of his base salary, payable on the 15th and the last day of each month until either (i) the effective date of an initial public offering or (ii) July 25, 2010, whichever occurs first. The Temporary Adjustment payments are not included in the definition of base salary for the purpose of any incentive, bonus, severance or change of control payments.
“Mr. Wuerch is a current participant in the 2009 CIP with a target earnings opportunity of 75% of his annual base salary. He will continue to be an eligible participant in the 2010 CIP, whereby his target earnings opportunity will continue to be 75% of his annual base salary until an initial public offering of the Company’s common stock.
“At that time, Mr. Wuerch’s incentive opportunity under the CIP will increase to 100% of his annual base salary, prorated based upon the date of the initial public offering. Additionally, in the event a “company sale” (as defined in his employment agreement) occurs prior to the earlier of an initial public offering and July 25, 2010, in which the “aggregate value” (as defined in the agreement) is (i) $300,000,000 or less, Mr. Wuerch will receive a lump sum payment equal to $2,000,000 (less the applicable percentage if less than 100% of the Company’s equity is sold), or (ii) greater than $300,000,000, Mr. Wuerch will receive a lump sum payment equal to 1% times the aggregate value of the company sale (less the applicable percentage if less than 100% of the Company’s equity is sold ), in any case such lump sum to be reduced by the aggregate “equity proceeds” (as defined in the agreement); provided, that Mr. Wuerch must remain employed by the Company at the time of the company sale or have been terminated without “cause” or have resigned for “good reason” (each as defined in the agreement) within four months prior to such company sale.
“Under the terms of the agreement, Mr. Wuerch is entitled to a grant of 5,000,000 stock options to vest in pro rata equal installments on each of the first four anniversaries of the effective date of the initial public offering, provided that the initial public offering occurs prior to July 25, 2010 and the employment agreement has not been previously terminated.
“Under the terms of his employment agreement, in the event Mr. Wuerch is terminated by the Company without cause or he resigns for good reason, as defined in his employment agreement, contingent upon his execution of a release and waiver of claims in favor of the Company, he will receive (i) twelve months of continued base salary payments, (ii) a pro rated amount of his annual bonus based on actual performance for the year in which his employment terminated, payable in a lump sum at the time the Company pays such bonuses under the CIP and (iii) accelerated vesting of 50% of all outstanding and unvested options issued in connection with the employment agreement.
“In the event Mr. Wuerch is terminated by the Company without cause or he resigns for good reason in connection with a change of control (as defined in his employment agreement), contingent upon his execution of a release and waiver of claims in favor of the Company, Mr. Wuerch will receive (i) an amount equal to two times the sum of (x) his base salary and (y) the average actual annual bonuses received by him over the three year period prior to the date of his termination, payable in installments over the twelve month period following his termination of employment and (ii) accelerated vesting of 50% of all outstanding and unvested options issued in connection with the employment agreement.
“The employment agreement specifies that during his employment with us and for twelve months thereafter, Mr. Wuerch will not engage in specified competitive activities and for two years following his termination, he agrees not to solicit our customers or interfere with our business. Mr. Wuerch’s agreement states that he is subject to the terms and conditions of our non-disclosure agreement.”
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