SRM Entertainment Inc. filed SEC Form 8-K: Leadership Update, Financial Statements and Exhibits
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Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers
On September 10, 2024, the Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of SRM Entertainment, Inc. (the “Company”) reviewed and recommended approval that the Company enter into a new Employment Agreement (the “CEO Employment Agreement”) with Richard Miller as Chief Executive Officer (the “CEO”). Following approval from the Compensation Committee and the Board, the Company entered into the CEO Employment Agreement effective January 1, 2024 (the “Effective Date”), which cancels and supersedes Mr. Miller’s previous employment agreement with the Company as of the Effective Date. The CEO Employment Agreement is for an initial term of 3 years from the date thereof (the “Initial Term”) and automatically renews for successive 1-year periods (the “Renewal Term”).
Pursuant to the Employment Agreement, the Company will compensate Mr. Miller a base salary of $225,000. Thereafter, the base salary shall increase at the rate of at least ten percent (10%) on January 1 of each following year. The base salary will be paid in semi-monthly installments subject to customary withholding for federal, state, and local taxes and other normal and customary withholding items. For each additional Renewal Term, the salary will be a ten percent (10%) increase over the previous year’s salary.
An annual cash bonus for Mr. Miller’s work shall be set by the Board and Compensation Committee and may be paid, at the election of the CEO, in cash or shares of common stock.
The Company will grant a Restricted Share Award (“RSA”) of restricted shares of the Company’ common stock equal to the base salary to Mr. Miller and on January 1 of each year of the Initial Term or any Renewal Term thereafter, the Company shall grant him restricted shares pursuant to the Company’s Equity Incentive Plan (the “Plan”). Each RSA grant shall be fully vested upon grant. The RSA grants shall be subject to the terms of the Plan and any award agreement the Plan requires as a condition of the RSA grants.
As determined on a calendar year basis, the Company shall pay the CEO the following bonus payments (each a “Bonus”) when the following annual goals are met. Only one award shall be given for each of the following thresholds: 1% of any revenues up to $5 million; plus 1% of the second $5 million in revenues; plus 2% of the third $5 million in revenues; plus 2% of the fourth $5 million in revenues; plus 2% of all revenues in excess of $20 million; provided, that: (i) the Bonus is subject to a cap of $2 million; and (ii) the Bonus may be paid, at the election of the CEO, in cash or shares of common stock (calculated at the fair market value of such shares as determined by the Board).
When the Compensation Committee makes a written determination that the Company’s market capitalization, based on the closing price on a national securities exchange on 30 (thirty) consecutive trading days, exceeds the thresholds set forth below, the Company shall make the following equity incentive grants:
| Market Capitalization Goals | Value of Restricted Share Awards or Options to be Awarded | |
| $50,000,000 | $250,000 | |
| $100,000,000 | $500,000 | |
| $500,000,000 | $1,000,000 | |
| Each additional $500,000,000 | $1,000,000 |
The foregoing summary of the CEO Employment Agreement is not complete and is qualified in its entirety by reference to the complete text of the CEO Employment Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits
| Exhibit No. | Description | |
| 10.1 | Employment Agreement, dated September 10, 2024, by and between SRM Entertainment, Inc. and Richard Miller | |
| 104 | Cover Page Interactive Data File (embedded with the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SRM ENTERTAINMENT, INC. | ||
| Date: September 13, 2024 | By: | /s/ Richard Miller |
| Name: | Richard Miller | |
| Title: | Chief Executive Officer | |