Commitments And Contingencies

6 Months Ended

Jun. 30, 2014

Commitments And Contingencies [Abstract]

Commitments And Contingencies

12.  Commitments and Contingencies 

Liability Claims

The Company accrues its estimate of unreported product and tissue processing liability claims as a component of other long‑term liabilities and records the related recoverable insurance amount as a component of other long‑term assets, as appropriate.  At June 30, 2014 and December 31, 2013 the Company’s estimated unreported loss liability was $1.5 million.  The related recoverable insurance amounts were $610,000 and $580,000 as of June 30, 2014 and December 31, 2013, respectively.  Further analysis indicated that the liability as of June 30, 2014 could have been estimated to be as high as $2.7 million, after including a reasonable margin for statistical fluctuations calculated based on actuarial simulation techniques. 

Employment Agreements

The Company’s employment agreement with its current Chief Executive Officer (“CEO”) Mr. Steven G. Anderson, as amended, confers benefits, which become payable upon the occurrence of certain events, including the voluntary retirement of Mr. Anderson or termination of his employment in conjunction with certain change in control events.  As of both June 30, 2014 and December 31, 2013 the Company had $2.1 million in accrued expenses and other current liabilities on the Summary Consolidated Balance Sheets representing benefits payable upon Mr. Anderson’s voluntary retirement, for which he is currently eligible.  Mr. Anderson’s employment agreement took effect on January 1, 2013 and terminates on December 31, 2016. 

In July 2014 the Company’s Board of Directors appointed Mr. J. Patrick Mackin as President and CEO effective September 2, 2014.  Mr. Anderson will continue to serve CryoLife as its President and CEO until Mr. Mackin’s employment begins, and then continue as its Executive Chairman.  The Company’s Board of Directors and Mr. Anderson are renegotiating his employment agreement to make appropriate adjustments in consideration of Mr. Mackin’s appointment and anticipated changes in Mr. Anderson’s job responsibilities.

As a result of his appointment, the Company entered into an employment agreement in July 2014 with Mr. Mackin, which will become effective on September 2, 2014 and has an initial three year term.  Beginning on the second anniversary of the effective date, and subject to earlier termination pursuant to the agreement, the employment term will, on a daily basis, automatically extend by one day.  Mr. Mackin’s employment agreement confers certain benefits which become payable upon the effective date, including the payment of a $200,000 one-time signing bonus, as well as the issuance of grants of 400,000 stock options and 250,000 performance stock awards.  The agreement also contains provision for a severance payment, which would become payable upon the occurrence of certain employment termination events, including termination by the Company without cause.