Item 5.02 - Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(c) Departure and Appointment of Certain Officers.
Chief Financial Officer Retirement
Effective as of September 26, 2022, Mr. Jeffrey G. McGonegal stepped down from
his long-time position as the Chief Financial Officer (principal financial
officer and principal accounting officer) ("CFO") of Riot Blockchain, Inc.
("Riot" or the "Company"), as part of his planned retirement pursuant to the CFO
transition previously announced by the Company (the "CFO Transition"). As part
of the CFO transition, Mr. McGonegal will continue to be employed by the
Company, as a Senior Advisor to assist with the CFO Transition, through the end
of the current employment term of the Amended and Restated Executive Employment
Agreement with the Company, as amended, (the "McGonegal Employment Agreement")
which is set to expire as of February 7, 2023. Additionally, the Board has
authorized the Company to retain Mr. McGonegal as a Senior Advisor to further
assist with the CFO Transition for at least six months following the end of the
current term of the McGonegal Employment Agreement, as may be agreed by the
parties at that time. As part of the CFO Transition, the McGonegal Employment
Agreement was automatically amended, effective as of September 26, 2022, to
reflect the change in Mr. McGonegal's title from CFO to Senior Advisor, with all
other terms of the agreement remaining as disclosed by the Company as Exhibits
10.8, 10.9 and 10.10 of the Company's annual report on Form 10-K for the year
ended December 31, 2021, as filed with the Securities and Exchange Commission on
March 16, 2022 (the "2021 Form 10-K"). Mr. McGonegal's compensatory arrangements
did not change as a result of the CFO Transition.
Chief Financial Officer Appointment
Pursuant to the previously announced CFO Transition, Mr. Colin M. Yee, age 46,
was appointed as the Company's CFO (principal financial officer), effective as
of September 26, 2022, immediately following Mr. McGonegal stepping down as the
Company's CFO. Mr. Yee has served as the Head of Corporate and Financial
Operations at the Company since April 2022. Prior to joining Riot, Mr. Yee was
the Chief Financial Officer of a mid-market private equity firm specializing in
renewable energy and infrastructure, the CFO of a publicly traded real estate
company in Canada, and most recently, the Chief Operating Officer and Chief
Financial Officer of a family office with controlling interests in companies
focused on construction and geothermal systems. He is a Chartered Professional
Accountant and holds Bachelor of Science and Bachelor of Commerce degrees from
the University of Calgary. There are no family relationships, as defined in Item
401 of Regulation S-K, between Mr. Yee and any of Riot's other executive
officers or directors or persons nominated or chosen to become a director or
executive officer of the Company. There are no transactions in which Mr. Yee has
an interest requiring disclosure under Item 404(a) of Regulation S-K. Mr. Yee
was not appointed CFO pursuant to any arrangement with the Company or any of its
directors or officers, and there are no compensatory arrangements between Mr.
Yee and the Company, or any of its directors or officers, other than the Yee
Employment Agreement, as described under Item 5.02(e) below.
Chief Accounting Officer Appointment
Pursuant to the previously announced CFO Transition, Mr. Ryan D. Werner, age 43,
was appointed as the Company's Chief Accounting Officer (principal accounting
officer) ("CAO"), effective as of September 26, 2022, immediately following Mr.
McGonegal stepping down as the Company's principal accounting officer. Mr.
Werner has served as the Company's Vice President of Finance since joining Riot
in March 2021. Prior to joining Riot, Mr. Werner was a Senior Director of Real
Estate and Transactions Accounting at UDR, Inc., a publicly traded real estate
company in Colorado, and has extensive audit experience. Mr. Werner is a
Certified Public Accountant and holds a bachelor's degree in accounting and
business administration with an emphasis in finance, and a master's degree in
accounting and information systems from The University of Kansas. There are no
family relationships, as defined in Item 401 of Regulation S-K, between Mr.
Werner and any of Riot's other executive officers or directors or persons
nominated or chosen to become a director or executive officer of the Company.
There are no transactions in which Mr. Werner has an interest requiring
disclosure under Item 404(a) of Regulation S-K. Mr. Werner was not appointed CAO
pursuant to any arrangement with the Company or any of its directors or
officers, and there are no compensatory arrangements between Mr. Werner and the
Company, or any of its directors or officers, other than the Werner Employment
Agreement, as described under Item 5.02(e) below.
(e) Compensatory Arrangements of Certain Officers.
Conversion of Restricted Stock Unit Awards to Restricted Stock Awards.
Effective September 27, 2022, the Compensation and Human Resources Committee
("Committee") of the Board of Directors of the Company, in its capacity as
administrator of the Riot Blockchain, Inc. 2019 Equity Incentive Plan, as
amended, (the "2019 Equity Plan") and any sub-plans adopted thereunder,
including the Company's performance-incentive plan adopted by the Committee as
of August 12, 2021 (the "Performance Plan"), authorized and approved the
adoption of new forms of equity award agreements under the 2019 Equity Plan to
cover awards of service-based restricted shares of the Company's Common Stock
("RSAs") and awards of performance-based restricted shares of the Company's
Common Stock ("PSAs") granted to eligible award recipients under the 2019 Equity
Plan, copies of which are attached as Exhibits 10.1 and 10.2 hereto,
respectively (collectively, the "Restricted Stock Award Agreements"). These
Restricted Stock Award Agreements are on substantially the same terms as the
service-based restricted stock unit ("RSU") and performance-based restricted
stock unit ("PSU") award agreements previously disclosed by the Company,
including with respect to vesting, dividend rights, forfeiture and restrictions
on transfer; however, unlike the RSUs and PSUs they replace, shares are issued
as of the grant date for each RSA or PSA, and the recipients thereof have all of
the attendant rights of Company stockholders with respect to the issued shares,
subject to the restrictions, risk of forfeiture and other limitations specified
in the forms of Restricted Stock Award Agreements attached hereto. This summary
of the forms of Restricted Stock Award Agreements is qualified in its entirety
by reference to the full text of the Restricted Stock Award Agreements, copies
of which are attached as Exhibits 10.1 and 10.2 to this Current Report on Form
8-K (this "Current Report") and incorporated by reference herein.
The Committee also authorized the amendment of the Performance Plan to permit
PSAs to be granted thereunder. All other provisions of the Performance Plan, as
previously disclosed by the Company on its current report on Form 8-K filed on
August 16, 2021, remain unchanged.
Finally, the Committee, in its capacity as administrator of the 2019 Equity Plan
and the Performance Plan adopted thereunder, authorized the conversion,
effective as of September 27, 2022, of all outstanding unvested awards of RSUs
and PSUs granted under the 2019 Equity Plan into unvested RSAs and PSAs under
the 2019 Equity Plan, on a one-for-one basis, on substantially the same terms as
the RSU and PSU awards they replace. Accordingly, effective as of September 27,
2022, all outstanding unvested grants of RSUs and PSUs under the 2019 Equity
Plan were cancelled and replaced, on a one-for-one basis, with unvested grants
of RSAs and PSAs under the 2019 Equity Plan. These replacement RSAs and PSAs are
granted pursuant to Restricted Stock Award Agreements to be entered into between
with Company and the applicable equity award recipients under the 2019 Equity
Plan, as authorized by the Committee in its capacity as administrator of the
2019 Equity Plan and the Performance Plan adopted thereunder.
Adoption of Standard Form of Executive Employment Agreement; Amendments to
Existing Executive Employment Agreements.
Effective as of September 27, 2022, the Board, upon recommendation of the
Committee and its advisors, authorized and approved the amendment of all current
employment agreements between the Company and its executive officers, other than
the McGonegal Employment Agreement, to comport with the terms of the standard
form of executive employment agreement for the Company (the "Form Executive
Employment Agreement") adopted by the Board upon the recommendation of the
Committee, a copy of which is attached as Exhibit 10.1 hereto and incorporated
by reference herein. The Form Executive Employment Agreement is based on the
agreements currently in place with the Company's executive officers, as
previously disclosed by the Company in the 2021 Annual Report, with certain
clerical changes made to standardize the agreement's terms and to clarify the
rights, duties and obligations of the Company and its executive officers,
including with respect to bonus and equity compensation, benefits, expense
reimbursements, termination events, and payments upon separation. Accordingly,
as authorized and directed by the Board and the Committee, the Company will
enter into amended and restated executive employment agreements with its
officers (other than Mr. McGonegal) pursuant to the standard Form Executive
Employment Agreement. Except as disclosed by the Company, these amendments will
not affect the employment terms, compensation arrangements, or other rights of
the Company's executive officers, as previously disclosed by the Company. This
summary of the Executive Employment Agreement is qualified in its entirety by
reference to the full text of the Executive Employment Agreement filed as
Exhibit 10.3 to this Current Report and incorporated by reference herein. The
foregoing description of the Yee Employment Agreement does not purport to be
complete and is qualified in its entirety by reference to the complete text of
the Yee Employment Agreement, filed as Exhibit 10.1 to this Current Report on
Form 8-K and incorporated by reference herein.
Chief Financial Officer Agreement
Effective as of September 27, 2022, Mr. Colin Yee was appointed as the Company's
CFO (principal financial officer), as part of the previously announced CFO
transition. Prior to being appointed CFO, Mr. Yee had previously been engaged by
the Company to serve as its Head of Corporate and Financial Operations pursuant
to an agreement dated April 12, 2022 (the "Yee Agreement"). Upon his appointment
as CFO, the Yee Agreement was automatically amended to reflect his appointment
as CFO and to comport with the terms of the Form Executive Employment Agreement
adopted by the Committee for the Company, with all other terms of the Yee
Agreement remaining unchanged. Under terms of the amended Yee Agreement, Mr. Yee
has agreed to serve as the Company's CFO for an initial term expiring as of
April 12, 2024, which may be extended by the parties at that time. Under the
amended Yee Agreement, Mr. Yee's annualized base compensation is $350,000 per
year, and he is eligible to receive additional incentive compensation under the
annual incentive compensation program adopted by the Committee based on the
Company's evaluation of his performance as the Company's CFO, which will be paid
in accordance with the Company's regular payroll practices. Further, Mr. Yee is
eligible to receive equity awards under the 2019 Equity Plan as compensation for
serving as the Company's CFO. Mr. Yee's engagement by the Company is terminable
at will, and all of the compensation afforded to him thereunder is subject to
and contingent upon his continued service with the Company. The foregoing
description of the amended Yee Agreement does not purport to be complete and is
qualified in its entirety by reference to the complete text of the Form
Executive Employment Agreement filed as Exhibit 10.3 to this Current Report,
which is incorporated by reference herein.
Prior to his appointment as CFO, Mr. Yee was granted an award of 100,565 RSUs
under the 2019 Equity Plan as of April 12, 2022, which are eligible to vest in
eight (8) approximately equal quarterly installments following the grant date,
subject to Mr. Yee's continued service with the Company through the applicable
vesting dates. Furthermore, as of June 1, 2022, Mr. Yee was enrolled in the
Performance Plan adopted by the Committee under the 2019 Equity Plan, and was
granted an unvested and contingent target award of 242,000 PSUs thereunder,
representing the total maximum target award of shares allocated to Mr. Yee under
the Performance Plan. This target award represents the unvested and contingent
right to receive shares of Riot's Common Stock based on Company's achievement,
during the performance period expiring December 31, 2023 (the "Performance
Period"), of the Infrastructure Development Target and the Financial Performance
Target established for the Company under the Performance Plan, which is
evaluated by the Committee on a quarterly basis. The Infrastructure Development
Target and the Financial Performance Target are defined in the Performance Plan
and described in detail in the forms of Restricted Stock Award Agreements
attached as Exhibits 10.1 and 10.2 hereto, which are incorporated by reference
herein. As provided under the Performance Plan and the applicable award
agreement, vesting of the shares comprising the target award is contingent upon
the award recipient's continued service with the Company though the applicable
vesting date, and any shares of the total target award remaining unvested as of
the end of the Performance Period will automatically be forfeited and cancelled
without consideration. As part of the conversion authorized by the Committee and
described above in this Current Report, all RSUs and PSUs granted to Mr. Yee
under the 2019 Equity Plan were automatically converted to RSAs and PSAs
pursuant to Restricted Stock Award Agreements between Mr. Yee and the Company,
effective as of September 27, 2022.
Uponhis appointment as CFO, Mr. Yee was granted 74,294 RSAs under the 2019
Equity Plan pursuant to a Restricted Stock Award Agreement with the Company,
. . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
10.1 Form of Service-Based Restricted Stock Award Agreement.
10.2 Form of Performance-Based Restricted Stock Award Agreement.
10.3 Form of Executive Employment Agreement.
104 Cover Page Interactive Data File (embedded within the Inline XBLR document.)
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RIOT BLOCKCHAIN, INC.
By: /s/ Ryan D. Werner
Ryan D. Werner
Chief Accounting Officer (principal accounting officer)
Date: October 3, 2022
© Edgar Online, source Glimpses