Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Chief Executive Officer Termination
On February 23, 2023, the Board of Directors (the "Board") of Shoals
Technologies Group, Inc. (the "Company") made the decision to terminate
Jason Whitaker's employment as Chief Executive Officer of the Company, effective
as of March 15, 2023. Mr. Whitaker will also cease to be a member of the Board
on that date.
The Board determined that the termination of Mr. Whitaker's employment
constitutes a termination due to disability under both (i) the employment
agreement entered into by and between Mr. Whitaker and Shoals Technologies
Group, LLC, dated as of December 18, 2020 (the "Employment Agreement"), and
(ii) the grant agreements governing the outstanding time-based restricted stock
units ("RSUs") and performance-based restricted stock units ("PSUs") held by
Mr. Whitaker (collectively, the "Grant Agreements").
On February 24, 2023, the Company entered into a separation agreement with
Mr. Whitaker (the "Separation Agreement"), memorializing the terms and
conditions of his termination for disability under the Employment Agreement and
the Grant Agreements. Pursuant to the Grant Agreements, Mr. Whitaker is entitled
to the following treatment of his outstanding RSUs and PSUs, subject to
Mr. Whitaker's continued employment in good standing with the Company through
March 15, 2023, continued compliance with the terms of the Separation Agreement
and the restrictive covenants contained in the Employment Agreement, and the
execution, re-execution and non-revocation of a customary release of claims:
(i) all of his unvested RSUs will accelerate and immediately vest, and (ii) a
prorated portion of his unvested PSUs will accelerate and immediately vest based
on target performance, determined by the number of days Mr. Whitaker was
employed with the Company during the three-year performance period that started
on January 1, 2022. Mr. Whitaker is not entitled to any additional benefits or
severance payments under the Employment Agreement.
The foregoing description of the Separation Agreement does not purport to be
complete and is qualified in its entirety by reference to the Separation
Agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.1
and incorporated herein by reference.
Interim Chief Executive Officer Appointment
On February 23, 2023, the Board appointed Jeffery Tolnar, the Company's
President, as interim Chief Executive Officer, effective immediately following
Mr. Whitaker's termination as contemplated above. As of that date, Mr. Tolnar
will assume the duties of the Company's principal executive officer until his
successor is appointed, or until his earlier resignation or removal.
Mr. Tolnar, 59, was appointed as President of the Company effective as of
December 19, 2022. He previously served as Senior Vice President, Electric
Vehicle Solutions of the Company after successfully launching the Company's
eMobility business unit. Mr. Tolnar will continue to be responsible for leading
the Company's growth, operational excellence, technology development and product
innovation. Prior to joining the Company, Mr. Tolnar was most recently Chief
Commercial Officer for Shell Greenlots, where he was responsible for growing
their electric mobility solutions. Prior to Shell Greenlots, he served as
President of Global Software Solutions for Honeywell's Homes, Buildings and
Utilities businesses and was also President of Elster Solutions, a global leader
in electronic metering solutions. Mr. Tolnar holds a Bachelor of Science degree
in Electrical Engineering Technology from Youngstown State University and a
Master of Business Administration from Baker University.
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Mr. Tolnar does not have any family relationships with any director, executive
officer or person nominated or chosen by the Company to become a director or
executive officer of the Company. The Company is not aware of any related
transactions or relationships between Mr. Tolnar and the Company that would
require disclosure under Item 404(a) of Regulation S-K. There are no
arrangements or understandings between Mr. Tolnar and any other person pursuant
to which Mr. Tolnar was selected as an officer of the Company.
Adoption of Executive Severance Plan
On February 23, 2023, the Board adopted the Shoals Technologies Group, Inc.
Executive Severance Plan (the "Severance Plan"), effective as of February 23,
2023. The Severance Plan will be administered by the Compensation Committee of
the Board (the "Committee"). Eligible executives will be designated by the
Committee, and will be required to enter into a participation agreement with the
Company in order to participate in the Severance Plan. Mr. Whitaker will not be
eligible to participate in the Severance Plan.
Upon a Qualifying Termination outside of the Change in Control Protection Period
(each as defined in the Severance Plan), participants in the Severance Plan will
be eligible to receive, subject to the execution and non-revocation of a release
of claims and continued compliance with restrictive covenants, the following
severance payments and benefits:
• a cash severance payment equal to 12 months of the participant's base
salary (or 24 months for the Company's Chief Executive Officer (the
"CEO")), payable in substantially equal installments over the 12-month
period following the date of termination (or the 24-month period for
the CEO); and
• during the portion of the participant's severance period that the
participant is eligible for and timely elects continued coverage
pursuant to COBRA, the Company will, at its option, pay or reimburse
the participant for the difference between the amount paid to continue
coverage and the employee contribution amount (the "COBRA Benefits").
Upon a Qualifying Termination during the Change in Control Period, participants
in the Severance Plan will be eligible to receive, subject to the execution and
non-revocation of a release of claims and continued compliance with restrictive
covenants, the following severance payments and benefits:
• a cash severance payment equal to the sum of (i) 12 months of the
participant's base salary plus (ii) the participant's target annual
bonus for the year that includes the date of termination (or, for the
CEO, the sum of (i) 24 months of the CEO's base salary plus (ii) two
times the CEO's target annual bonus for the year that includes the
date of termination), payable in substantially equal installments over
the 12 month period following the date of termination, (or the 24
month period for the CEO); and
• the COBRA Benefits.
Upon a participant's termination of employment for any reason (pursuant to a
Qualifying Termination or otherwise), all outstanding equity awards held by the
participant will be treated in accordance with the applicable award agreements
and the Company's 2021 Long-Term Incentive Plan, as amended from time to time.
Further, in the event a participant is covered by an employment agreement that
may duplicate the severance payments and benefits described above, the Committee
will reduce or eliminate the duplicative benefits provided for under the
Severance Plan.
The foregoing description of the Severance Plan does not purport to be complete
and is qualified in its entirety by reference to the Severance Plan, which is
attached to this Current Report on Form 8-K as Exhibit 10.2 and incorporated
herein by reference.
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Item 7.01 Regulation FD Disclosure.
On February 27, 2023, the Company issued a press release announcing the Chief
Executive Officer transition described in Item 5.02 above. A copy of the press
release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information included in Item 7.01 of this Current Report on Form 8-K and the
exhibits attached hereto are being furnished and shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference into any other filing under the Securities Act of
1933, as amended, regardless of any general incorporation language in any such
filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
10.1 Separation Agreement, dated February 24, 2023, by and between
Jason Whitaker and Shoals Technologies Group, Inc.
10.2 Shoals Technologies Group, Inc. Executive Severance Plan
99.1 Press Release, dated February 27, 2023.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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