UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 5, 2019

GRAPHIC
LSI Industries Inc.
(Exact name of Registrant as Specified in its Charter)


Ohio
 
000-13375
 
31-0888951
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
 
(IRS Employer Identification No.)

10000 Alliance Rd, Cincinnati, Ohio
45242
(Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number, including area code          (513) 793-3200
 
(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:
     
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, no par value
LYTS
NASDAQ Global Select Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17CFR §240.12b-2).
Emerging growth company □
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act □

Item 5.02.   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective August 5, 2019 LSI Industries Inc., an Ohio corporation (“LSI”), appointed Thomas A. Caneris as Senior Vice President – Human Resources and General Counsel. Mr. Caneris, age 57, most recently served as Senior Vice President and General Counsel for PharMerica Corporation from 2007 through 2019. From 2004 to 2007, Mr. Caneris was employed by Convergys Corporation as a Senior Attorney and from 1998 to 2004 Mr. Caneris served as Commercial Affairs Counsel for AK Steel Corporation.
 
LSI and Mr. Caneris executed an Employment Offer Letter which provides that his employment with LSI shall begin on August 5, 2019. The Employment Offer Letter also provides:
 
 
-
Mr. Caneris shall receive an annual base salary of $345,000, a signing bonus of $50,000, and relocation expense package of $50,000;
 
 
 
 
-
Mr. Caneris shall be eligible to receive incentive compensation under LSI’s Short Term Incentive Plan for Fiscal Year 2020 (“2020 STIP”). At the threshold level of performance, his 2020 STIP opportunity is expected to be 25% of base salary. At the target level of performance, his 2020 STIP opportunity is expected to be 50% of base salary. At the maximum level of performance, his 2020 STIP opportunity is expected to be 100% of base salary; and
 
 
 
 
-
Mr. Caneris shall receive a non-statutory stock option (the “Option”) with a term of ten years to purchase 100,000 shares of the Company’s common stock which shall vest on the third anniversary of the grant date. The effective date of grant shall be the date of Mr. Caneris’s first day of employment with LSI and the exercise price shall be the closing price per share of the Company’s common stock on the NASDAQ Global Select Market on that same date. The Option is intended to qualify as an “inducement grant” under NASDAQ Listing Rule 5635(c)(4) and shall not be granted pursuant to the Company’s Amended and Restated 2012 Stock Incentive Plan.
 
This summary of the Employment Offer Letter described above does not purport to be complete and is qualified in its entirety by reference to the Employment Offer Letter, a copy of which is filed with this report as Exhibit 10.1 and is incorporated herein by reference. Please see this exhibit for further information. LSI issued a press release regarding the appointment of Mr. Caneris and the Option which is attached to this report as Exhibit 99.1.
 
LSI will require Mr. Caneris to execute the LSI’s Restrictive Covenant and Confidentiality Agreement effective August 5, 2019 pursuant to which he shall be subject to customary confidentiality restrictions that apply during his employment, an intellectual property assignment provision, and a covenant not to compete. The Restrictive Covenant and Confidentiality Agreement generally provides Mr. Caneris with nine months’ of severance payments if his employment is terminated without cause.

Item 9.01 Financial Statements and Exhibits.
 
 
(a)
Financial statements of business acquired. Not applicable.
 
 
(b)
Pro forma financial information. Not applicable.
 
 
(c)
Shell company transactions. Not applicable.
 
 
(d)
Exhibits.
 
 
Exhibit No
  
 
Description
 
 
 
10.1
 
LSI Industries Inc. Employment Offer Letter with Thomas A. Caneris dated August 5, 2019
99.1
 
LSI Press Release dated August 5, 2019

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.
   
LSI INDUSTRIES INC.
     
   
BY:/s/ James A. Clark
   
James A. Clark
   
President, Chief Executive Officer
     

August 5, 2019





EXHIBIT 10.1
Sent Via Email: tom.caneris@yahoo.com
August 5, 2019
Mr. Thomas A. Caneris

Re: Employment Offer
Dear Tom:
We are very pleased to extend to you an offer of employment with LSI Industries as Senior Vice President, Human Resources and General Counsel.  The position will report to me in my role as President and Chief Executive Officer.  The following is a summary description of the compensation, health and welfare benefits, and other Company plans and programs offered in connection with your employment.
1.
Base Salary; Start Date.  The annual base salary for this position is $345,000.  Any adjustment to base salary is subject to approval by the Compensation Committee of the Board of Directors. We anticipate that your first day of employment with the Company will be August 5, 2019.
2.
Short Term Incentive Compensation. The position will be eligible to participate in the Company's Short Term Incentive Plan commencing with the Company's 2020 fiscal year (July 1, 2019 through June 30, 2020) at the "B5A Named Executive Officer" level. The FY20 STIP metrics and related performance objectives, and the determination of FY20 STIP incentive payouts, will be subject in all respects to the review and approval of the Compensation Committee and to the terms and conditions of the FY20 STIP document which will govern all matters associated with the FY20 STIP.
The following summary is provided to help familiarize you with the current structure of the STIP. The  FY19 STIP (July 1, 2018 through June 30, 2019) was approved by the Compensation Committee and provides for the payment of a cash incentive, subject to the achievement of the FY19 STIP performance objectives. The FY19 STIP metrics, performance objectives and the potential bonus percentage opportunity of each executive officer were reviewed and approved by the Compensation Committee. The FY19 STIP is based on corporate performance as measured by the achievement of two corporate metrics, net sales and operating income. The net sales and operating income performance objectives are each weighted at 50%. These metrics and their respective weightings have been employed in the STIP since FY18.


The Board of Directors approves the Company's annual operating plan and, in general, the operating plan net sales and operating income objectives have been used in setting STIP targets. However, the Compensation Committee considers a wide range of factors and exercises its discretion in setting STIP thresholds, targets, and payout percentages, in order to balance executive officer interests and shareholder interests. Assuming the FY20 STIP maintains the same structure as the FY19 STIP: (i) at the threshold level of performance, it is anticipated that your FY20 STIP bonus opportunity will be 25% of base salary; (ii) at the target level of performance, it is anticipated that the bonus opportunity will be 50% of base salary; and (iii) at the maximum level of performance, it is anticipated that the bonus opportunity will be 100% of base salary.
3.
Long-Term Incentive Compensation. The Board of Directors approves the Company's Long Term Incentive Plans. Your position is eligible to participate in the LTIP, subject to review and approval of the Compensation Committee. Your participation in the LTIP will commence with FY20 LTIP awards made in or about August 2019, subject to the discretion of the Board of Directors. At that time, you will have the opportunity to receive equity-based awards to be issued under the Company's Amended and Restated 2012 Stock Incentive Plan (or any successor plan), pursuant to and in accordance with the terms of the LTIP document which governs all matters associated with the LTIP. In connection with this offer of employment and as an inducement to your agreement to join the Company, the Board of Directors has approved an inducement award of stock options for the purchase of shares of the Company's common stock on the terms and conditions as set forth in Exhibit A to this letter.
4.
Signing Bonus: Relocation Expense: Temporary Housing Expense. In connection with this offer of employment, the Company will pay a lump sum of $50,000 to you as a signing bonus (the "Signing Bonus"). In addition, in connection with this offer of employment, the Company will pay a lump sum of $50,000 to you for purposes of covering all out-of-pocket expenses incurred in connection with your relocation to the Cincinnati area, including, without limitation, expenses for temporary housing (the "Relocation Amount"). The position is based at the Company's Cincinnati headquarters and it is expected that you will perform the duties of the position at our Cincinnati offices. The Signing Bonus and the Relocation Amount will be paid to you within thirty (30) days after the first day of your employment with the Company. In the event that the Signing Bonus and the Relocation Amount are taxable as income under applicable federal, state or local law, the Company will not "gross-up" such payments and you shall be solely responsible for any such tax. If you voluntarily terminate your employment before August 5, 2020, or if the Company terminates your employment for cause before August 5, 2020, then you will be obligated to repay the Signing Bonus and the Relocation Amount not later than thirty (30) days after the date of such termination of employment. If you voluntarily terminate your employment after August 5, 2020 and prior to August 5, 2021, or if the Company terminates your employment for cause after August 5, 2020 and before August 5, 2021, then you will be obligated to repay the Signing Bonus and Relocation Amount on a basis pro-rated from August 5, 2019 not later than thirty (30) days after the date of such termination of employment.
5.
LSI 401(K) Savings Plan. Employees may contribute up to 75% of salary, subject to all applicable IRS annual limits, in accordance with the terms of the Company's 401(K) Plan. The Company currently provides a 50% matching contribution on the first 5% contributed by an employee. A summary description of the Plan will be provided.
6.
LSI Non-Qualified Deferred Compensation Plan. You will be eligible to participate in the LSI Deferred Compensation Plan which permits the deferral of salary and / or incentive compensation in accordance with the terms of the Plan. A summary description of the Plan will be provided.
7.
Paid time off. You will be eligible for four weeks of paid time off per fiscal year.
8.
Holidays. The Company has ten paid designated holidays per calendar year, which includes one floating personal holiday.
9.
The LSI Health Benefits Plan. LSI currently offers a preferred provider network health plan with three plan choices (High PRO, Low PRO and HDHP) from which to select. A summary of the Company's health benefits plan will be provided.
10.
The LSI Dental and Vision Plans. LSI currently offers a dental plan with two plan choices (High PPO, Low PPO) from which to select, including preventative care benefits, as well as a vision care plan, for all covered family members.
11.
Prescription Drug Card. Employee prescription co-payments are based upon the Health Benefits Plan choice selected.
12.
Flexible Spending Accounts. You may elect to establish Health Care and Dependent Care Flexible Spending Accounts under the PPO option health plan choices, or to establish a Health Savings Account under the HDHP option choice.
13.
Disability Insurance. The Company covers the cost of both short-term and long-term disability insurance coverage.
14.
Accidental Death and Dismemberment Insurance. LSI covers the cost of accidental death and dismemberment insurance coverage.
15.
Basic Life Insurance. The Company covers the cost of basic term life insurance coverage up to a maximum specified benefit level.
16.
Dependent Life Insurance. LSI covers the cost of dependent life insurance, under which your spouse is covered for $10,000 and your dependent children (6 months to 19 years) are covered for $5,000 each.
17.
Optional Insurance. You may also secure additional insurance coverage at your option and cost for term life, accidental injury and critical illness.
A copy of our Restrictive Covenant Agreement will be provided for your review. The Restrictive Covenant Agreement covers matters related to confidentiality, non-competition and non-solicitation. This offer of employment is subject to your execution and delivery of the Restrictive Covenant Agreement on your first day of employment by the Company. We will also work through the details of the public announcement, press release, SEC filings and other matters associated with the start of your employment with the Company. This offer is also contingent upon successful completion of a background check.

We're very pleased to make this proposal for you to assume this important role for the Company. If you have any questions, please contact me at 513-372-3600 or 860-830-0672.
Sincerely,
/s/ James A. Clark
James A. Clark
President and Chief Executive Officer, LSI Industries Inc.


Please sign below to confirm that you are accepting this offer of employment and agree to the terms of employment set forth above. Your signature also confirms that your employment and duties with LSI Industries will not violate any contractual or other legal obligation with any prior employer. You further confirm that you have not misappropriated and will not use any prior employer's proprietary information or trade secrets in connection with your LSI Industries employment.


 /s/ Thomas A. Caneris
Thomas A. Caneris
Date: August 5, 2019

Exhibit A
Stock Option Inducement Award Summary
The Company will award at the close of business on your first day of employment with the Company a nonqualified stock option, which will be intended to qualify as an "inducement grant" under NASDAQ Listing Rule 5635(c)(4) and which will not be granted pursuant to the Company's 2012 Stock Incentive Plan. The stock option award will grant the right to purchase 100,000 shares of the Company's common stock at a per share exercise price equal to the fair market value of the Company's common stock as of the date of grant (i.e., the closing price per share on the NASDAQ Global Select Market on your first day of employment). The stock option will have a term of ten (10) years and shall vest only if you are employed by the Company for a period of three (3) years following the date of grant.



EXHIBIT 99.1




LSI INDUSTRIES INC. APPOINTS THOMAS A. CANERIS AS SENIOR VICE PRESIDENT –HUMAN RESOURCES AND GENERAL COUNSEL

CINCINNATI, OH., August 5, 2019 -- LSI Industries Inc. (NASDAQ:  LYTS, or the “Company”) a leading U.S. based manufacturer of indoor/outdoor lighting and graphics solutions, today announced the appointment of Thomas A. Caneris as Senior Vice President –Human Resources and General Counsel, effective August 5, 2019.

Mr. Caneris brings to LSI more than 30 years of experience as a practicing attorney and senior advisor in both public and private company settings.  Previously, he served as Senior Vice President and General Counsel for PharMerica Corporation from 2007 through 2019. From 2004 to 2007, Mr. Caneris was employed by Convergys Corporation as a Senior Attorney.  Earlier in his career, Mr. Caneris served as Commercial Affairs Counsel for AK Steel Corporation.

“We are pleased to have Tom join our senior leadership team and look forward to deepening our bench as we position LSI for its next phase of growth,” stated Jim Clark, President and CEO.  “As a seasoned general counsel, his experience in corporate governance, regulatory compliance and human resources equip him to become a valued asset to our organization.”

As an inducement to accept his appointment with LSI, Mr. Caneris was granted an inducement stock option to purchase up to 100,000 shares of LSI common stock. The awards were granted by LSI’s Compensation Committee on June 19, 2019 as an inducement material to Mr. Caneris’ entering into employment with LSI in accordance with NASDAQ Listing Rule 5635(c)(4). The award was approved in connection with the commencement of his employment with the Company on August 5, 2019 and has a ten-year term. The option is exercisable at a price of $4.04 per share (the closing price on August 5, 2019) and will vest only if Mr. Caneris remains an employee of LSI for three years.


ABOUT LSI INDUSTRIES

LSI Industries Inc. is a U.S.-based manufacturer of lighting, graphics and technology solutions for both indoor and outdoor applications.  We are a leading solutions provider to the primary end-markets we serve, including petroleum, automotive, quick serve restaurants, grocery, banking, retail, renovation, parking and warehousing.  Our products are marketed throughout North America through a network of independent sales representatives and distributors, as well as through national accounts.  We partner with our customers to provide a full range of design support, engineering, installation and project management services.  Headquartered in Blue Ash, Ohio, LSI currently employs over 1,200 employees and operates seven facilities throughout the United States.

FORWARD-LOOKING STATEMENTS

For details on the uncertainties that may cause our actual results to be materially different than those expressed in our forward-looking statements, visit http://www.lsi-industries.com/fls as well as our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q which contain risk factors. 

INVESTOR CONTACT

Noel Ryan, IRC
720.778.2415
lyts@vallumadvisors.com