Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On August 26, 2022, the Board of Directors appointed Xun (Kenneth) Li as chief
financial officer of Power Solutions International, Inc. ("the Company"),
effective August 29, 2022, succeeding Matthew Thomas who had been serving in an
interim role since April 2022. Mr. Thomas will resume his role as corporate
controller.
Mr. Li is an accomplished executive who has more than 20 years of professional
experience in the areas of finance, accounting, financial planning & analysis,
internal controls and strategy, among others. Most recently, Mr. Li served as
chief financial officer for ND Paper, a leading pulp, packaging and paper
company, from 2020 to August 2022, where he was a member of the executive
leadership management team with primary responsibility for finance, accounting,
tax, auditing, treasury, risk management, internal audit, and strategic
planning, among other areas, and served as a strategic advisor to the CEO. Prior
to this role, Mr. Li was with Caterpillar Inc., a publicly traded company on the
NYSE, from 2008 through 2020, where he served in various financial leadership
positions, the most recent of which was chief financial officer of the global
mining machine product group from 2013 to 2020. Prior to Caterpillar, Mr. Li was
with Ford Motor Company, a publicly traded company on the NYSE, where he held
finance leadership roles of increasing responsibility, from 2003 to 2008.
Mr. Li holds an MBA with high distinction and an M.S. in Accounting, both from
the University of Michigan. He also holds an M.S. in Mechanical Engineering from
the University of Oklahoma and a B.S. in Mechanical Engineering from Shanghai
JiaoTong University. Mr. Li is a certified public accountant.
There are no family relationships between Mr. Li and any of the directors or
executive officers of the Company, and there are no transactions in which Mr. Li
has an interest requiring disclosure under Item 404(a) of Regulation S-K. There
is no arrangement or understanding between Mr. Li and any other person pursuant
to which Mr. Li was appointed as an officer of the Company.
Employment Agreement with Kenneth Li
On August 29, 2022, the Company entered into an employment agreement with
Kenneth Li (the "Employment Agreement"). The Employment Agreement provides that
Mr. Li's employment is "at will" and may be terminated at any time by either
party. The Employment Agreement provides for (i) an annual base salary of
$360,000, subject to increase from time to time; (ii) a sign-on bonus of
$20,000; (iii) eligibility to participate in the Company Key Performance
Indictor ("KPI") plan at a target amount equal to 50% of his base salary;
(iv) eligibility to participate in the Company Long Term Incentive ("LTI") Plan
with a target LTI bonus equal to 60% of his Base Salary; and (v) eligibility to
receive an award of 30,000 Stock Appreciation Rights ("SARs Award") with a
strike price determined by the Compensation Committee at the grant date, to be
vested in four equal installments on the anniversaries of the grant date. In the
event that Mr. Li's employment is terminated by the Company without Cause (as
defined in the Employment Agreement) during the employment term, he will be
entitled to receive, among other things, (i) severance equal to base salary for
6 months if his employment period is less than 48 months, and for 1 year if his
employment period is 48 months or longer; and (ii) any unpaid awarded KPI and
LTI bonuses. The Employment Agreement restricts Mr. Li from competing with the
Company during the term of the agreement and for one year after termination of
his employment with the Company. The Employment Agreement also restricts Mr. Li
from soliciting the Company's customers or employees during the term of the
agreement and for one year after termination of his employment with the Company.
The foregoing description of the Employment Agreement is qualified in its
entirety by reference to the complete text of the Employment Agreement, which is
filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by
reference herein.
Item 7.01 Regulation FD Disclosure.
On August 29, 2022, the Company issued a press release announcing the
appointment of a Chief Financial Officer, which is attached as Exhibit 99.1
hereto. The information contained in this Item 7.01 and Exhibit 99.1 hereto
shall not be deemed "filed" for purposes of Section 18 of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by
reference in any filing under the Securities Act of 1933 (the "Securities Act")
or the Exchange Act, except as shall be expressly set forth by reference in such
a filing.
Caution Regarding Forward-Looking Statements
This Form 8-K contains forward-looking statements regarding the current
expectations of the Company about its prospects and opportunities. These
forward-looking statements are entitled to the safe-harbor provisions of
Section 21E of the Securities Exchange Act of 1934. The Company has tried to
identify these forward-looking statements by using words such as "anticipate,"
"believe," "budgeted," "contemplate," "estimate," "expect," "forecast,"
"guidance," "may," "outlook," "plan," "projection," "should," "target," "will,"
"would," or similar expressions, but these words are not the exclusive means for
identifying such statements. These statements are subject to a number of risks,
uncertainties, and assumptions that may cause actual results, performance or
achievements to be materially different from those expressed in, or implied by,
such statements.
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The Company cautions that the risks, uncertainties and other factors that could
cause its actual results to differ materially from those expressed in, or
implied by, the forward-looking statements, include, without limitation: the
impact of the ongoing COVID-19 pandemic could have on the Company's business and
financial results; the Company's ability to continue as a going concern; the
Company's ability to raise additional capital when needed and its liquidity;
uncertainties around the Company's ability to meet funding conditions under its
financing arrangements and access to capital thereunder; the potential
acceleration of the maturity at any time of the loans under the Company's
uncommitted senior secured revolving credit facility through the exercise by
Standard Chartered Bank of its demand right; the impact of rising interest
rates; the timing of completion of steps to address, and the inability to
address and remedy, material weaknesses; the identification of additional
material weaknesses or significant deficiencies; risks related to complying with
the terms and conditions of the settlements with the Securities and Exchange
Commission (the "SEC") and the United States Attorney's Office for the Northern
District of Illinois (the "USAO"); variances in non-recurring expenses; risks
relating to the substantial costs and diversion of personnel's attention and
resources deployed to address the internal control matters; the Company's
obligations to indemnify past and present directors and officers and certain
current and former employees with respect to the investigations conducted by
the SEC, which will be funded by the Company with its existing cash resources
due to the exhaustion of its historical primary directors' and officers'
insurance coverage; the ability of the Company to accurately forecast sales, and
the extent to which sales result in recorded revenues; changes in customer
demand for the Company's products; volatility in oil and gas prices; the impact
of U.S. tariffs on imports from China on the Company's supply chain; impact on
the global economy of the war in Ukraine; the impact of supply chain
interruptions and raw material shortages; the potential impact of higher
warranty costs and the Company's ability to mitigate such costs; any delays and
challenges in recruiting and retaining key employees consistent with the
Company's plans; any negative impacts from delisting of the Company's common
stock par value $0.001 from the NASDAQ Stock Market and any delays and
challenges in obtaining a re-listing on a stock exchange; and the risks and
uncertainties described in reports filed by the Company with the SEC, including
without limitation its Annual Report on Form 10-K for the fiscal year
ended December 31, 2021 and the Company's subsequent filings with the SEC.
The Company's forward-looking statements are presented as of the date hereof.
Except as required by law, the Company expressly disclaims any intention or
obligation to revise or update any forward-looking statements, whether as a
result of new information, future events or otherwise.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit Number Description
Exhibit
No. Description
10.1 Employment Agreement, effective as of August 29, 2022, by and
between Kenneth Li and Power Solutions International, Inc.
99.1 Press Release, dated August 29, 2022, announcing the appointment of
a chief financial officer.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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