Exhibit 10.2

 

OVERLAND STORAGE, INC.
SUMMARY SHEET
OF
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION

 

Non-Employee Director Compensation

 

Our compensation plan for non-employee directors consists of both a cash
component and an equity component. We pay each non-employee director $5,000 per
quarter, plus $2,500 for each Board meeting attended ($1,250 if held
telephonically), plus reimbursement for expenses. The Chairman of the Board
receives an additional $2,500 per quarter in addition to the non-employee
director fee of $5,000 per quarter.  Members of the Audit Committee and the
Compensation Committee receive a retainer of $500 per quarter in lieu of a fee
for committee meetings attended during a quarter and members of the Nominating
and Governance Committee receive $500 for each committee meeting attended ($250
if held telephonically and no fee if held the same day as a Board meeting). 
Members of the Special Committee on Shareholder Value will receive $500 for each
committee meeting attended (whether telephonically or in person).  Such fee will
not be paid for committee meetings in joint session with the full board. The
Board has not yet determined the compensation for directors serving on the
newly-created Strategy Committee.

 

In addition to the cash component of compensation, each non-employee director
receives stock options.  Under our 2003 Equity Incentive Plan, which we refer to
as the 2003 Incentive Plan, each non-employee director receives a ten-year
nonqualified stock option to purchase 18,000 shares on the same date as the
company’s annual meeting of shareholders.  These options are exercisable at fair
market value on the date of grant and vest in equal monthly installments over a
12-month period, as measured from the grant date.  When a new non-employee
director joins the board, such director will be awarded a new option for a
number of shares determined by multiplying 1,500 by the number of months
remaining until the next scheduled annual meeting date, giving credit for any
partial month.  Such option will vest at the rate of 1,500 shares per month and
will be fully vested at the next annual meeting date, at which time the director
will receive the normal annual grant. On November 15, 2005, the date of our last
annual meeting of shareholders, Scott McClendon, Robert Degan and Michael Norkus
each received an option for 18,000 shares.  In connection with their elections
to the Board, Mark Barrenechea received an option for 16,500 shares on December
21, 2005 and William Miller received an option for 7,500 shares on June 12,
2006.

 

Compensation of Executive Officers

 

Our executive officers serve at the discretion of the Board of Directors. From
time to time, the Compensation Committee of the Board of Directors reviews and
determines the salaries that are paid to our executive officers. The following
table sets forth the annual salary rates for the our current executive officers
as of the date of this report on Form 10-Q:

 

Scott McClendon

 

$

395,000

(1)

W. Michael Gawarecki

 

$

246,500

 

Christie Huff

 

$

195,000

 

Michael S. Kerman

 

$

225,000

 

Vernon A. LoForti

 

$

297,750

 

Robert J. Scroop

 

$

220,500

 

 

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(1)  In connection with his appointment as Interim President and Chief Executive
Officer, the Compensation Committee has approved a temporary compensation
package for Mr. McClendon that consists of a monthly salary of $32,916.67.

 

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Employment Arrangements with Current Executive Officers

 

The following discussion summarizes the employment arrangements between us and
our current executive officers as of the date of this report on Form 10-Q:

 

Scott McClendon.   On November 1, 2006, the Board appointed Scott McClendon as
our Interim President and Chief Executive Officer effective immediately. The
Compensation Committee has approved a temporary compensation package for
Mr. McClendon that consists of a monthly salary of $32,916.67. The base salary
is equivalent to the base salary earned by Mr. Calisi at the time of his
departure. Mr. McClendon will also be entitled to participate in the company’s
employee benefit plans. Mr. McClendon will not receive fees paid to the
company’s non-employee directors or the Chairman of the Board fee while serving
as Interim President and Chief Executive Officer.

 

W. Michael Gawarecki.   Mr. Gawarecki, our Vice President of Operations is an
at-will employee and may be terminated by us for any reason, with our without
notice.  Mr. Gawarecki currently earns an annual salary of $246,500.

 

Christie Huff.  Ms. Huff, our Vice President of Worldwide Marketing, is an
at-will employee and may be terminated by us for any reason, with or without
notice.  Ms. Huff currently earns an annual salary of $195,000 per year.

 

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Michael S. Kerman.  Mr. Kerman, our Vice President and General Manager of the
Appliance Business Unit, is an at-will employee and may be terminated by us for
any reason, with or without notice.  Mr. Kerman currently earns an annual salary
of $225,000 per year.

 

Vernon A. LoForti.  We entered into an employment agreement with Mr. LoForti on
December 4, 2000, pursuant to which Mr. LoForti is employed as our Vice
President and Chief Financial Officer. The employment agreement has a one-year
term, automatically renews for successive one-year terms, and provides that our
Board may unilaterally modify Mr. LoForti’s compensation at any time.  If we
terminate Mr. LoForti’s employment without cause, then we are obligated to pay
him a severance payment equal to his base salary, payable on a pro-rated basis
according to our normal payroll cycle for the 12 months following his
termination. In addition, he is entitled to receive accelerated vesting for any
stock options that would otherwise have vested during the 12-month period
following his termination. He is also entitled to receive the cash severance
payment if he resigns for good reason because of any of the following events:
(i) reduction in compensation of more than 10%; (ii) change in position or
duties so that his duties are no longer consistent with his previous position;
or (iii) change in principal place of work to more than 50 miles from our
current facility without his approval.  Mr. LoForti currently earns a salary of
$297,750 per year.

 

Robert J. Scroop.  Mr. Scroop, our Vice President Engineering, is an at-will
employee and may be terminated by us for any reason, with or without notice. 
Mr. Scroop currently earns an annual salary of $220,500 per year.

 

Stock Option Acceleration Program

 

In July 2005, our Board of Directors approved the accelerated vesting of all
unvested stock options, held by the company’s officers and employees, with an
exercise price at or above $12.00 per share, effective July 3, 2005. The stock
option acceleration program does not apply to stock options held by our
non-employee directors. The accelerated options were issued under the 2000 Stock
Option Plan, the 2001 Supplemental Stock Option Plan and the 2003 Incentive
Plan.  In connection with the acceleration of vesting of options held by our
executive officers, each executive officer agreed not to sell or transfer any
shares subject to accelerated vesting until the original vesting date would have
occurred based on the original vesting schedule (without giving effect to any
future termination of service). The primary purpose of the accelerated vesting
was to eliminate future stock-based employee compensation expense.

 

Retention Agreements

 

We entered into retention agreements with Messrs. LoForti, Scroop and Gawarecki
effective January 27, 2000, with Mr. Kerman effective August 30, 2004 and with
Ms. Huff effective September 14, 2005.   These agreements provide that the
officer will receive a severance payment if, within two years of the
consummation of a change in control of Overland, he or she is terminated without
cause or resigns with good reason. These severance payments are based on the
officer’s base salary at the time of the consummation of the change in control
or the termination date, whichever is higher, plus his or her target bonus for
the year prior to the consummation of the change in control. The agreements
provide that, upon a change in control, Mr. LoForti would be entitled to receive
an amount equal to 2.0 times his base salary plus target bonus; and Ms. Huff,
and Messrs. Gawarecki, Kerman, and Scroop each would be entitled to an amount
equal to his or her respective base salary plus target bonus. If any portion of
any payment under any of the agreements would constitute an “excess parachute
payment” within the meaning of Section 280G of the Internal Revenue Code, then
that payment will be reduced to an amount that is one dollar less than the
threshold for triggering the tax imposed by Section 4999 of the Internal Revenue
Code.

 

 

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