RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2016

13.

RELATED PARTY TRANSACTIONS

The Company recorded investment income through September 30, 2015, and December 31, 2014 of $53 thousand and $49 thousand, respectively, related to its interest in Test Products International (‘‘TPI’’). For further details regarding TPI, see Note 2 discussion - Investment and Note Receivable.

During 2016, 2015 and 2014, $0.3 million, $0.3 million and $0.3 million, respectively in principal and interest payments were made in relation to the promissory notes issued to related party, IED, Inc. In 2013, the promissory note terms were amended to extend the due date to May 15, 2020 and the interest rate was reduced to 5% per annum, with interest payable monthly and the principal due as a balloon payment at maturity. At December 31, 2016, the balance of this note is $5.3 million and is held in long-term note payable, related party.

Chief Executive Officer, and Chairman of the Board of Directors, William J. Clough’s son Nicholas J. Clough, serves as President at Orbital Gas Systems, North America, Inc., a wholly owned subsidiary of the Company, and as Chief Sales Officer for the Energy Division. In 2016 and 2015, Mr. Clough received an aggregate salary of $188 thousand and $150 thousand, respectively, and received a cash bonus of $113 thousand and $50 thousand in fiscal 2016 and 2015, respectively. He also received stock compensation in 2016 and 2015 valued at $50 thousand and $50 thousand, respectively, and other benefits valued at $30 thousand and $21 thousand, respectively. As of December 31, 2016, there was an accrual of $50 thousand for compensation accrued to Nicholas Clough. Nicholas Clough does not report to the Chief Executive Officer nor does the Chief Executive Officer have input regarding Mr. Clough’s salary, bonus, or performance. Mr. Clough’s salary and bonus is set by his direct supervisor and relevant market conditions, while his performance is evaluated and monitored by his direct supervisor. In addition, pursuant to Company policy, any bonus and/or salary change in excess of $50,000 is independently reviewed and approved by the Company’s Compensation Committee, comprised of Independent Board Members from the Company’s Board of Directors.

Orbital employs two minority owners of EnDet, Ltd. from which the Company licenses its VE Technology. See Note 11 - Commitments and Contingencies - Commissions, Royalty and License Fee Agreements for more information on license fee agreements.