Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On March 25, 2021 SunPower Corporation (the "Company") announced that Thomas H.
Werner, the Company's Chief Executive Officer, will retire from his position,
effective April 19, 2021, and Peter Faricy will succeed him as the Company's
Chief Executive Officer, effective on the same day. Mr. Werner will continue in
his role of Chairman of the Board of Directors for period of time to aid in the
transition.
Mr. Faricy, who is 54 years old, served as Chief Executive Officer, Global
Direct-to-Consumer, of Discovery Inc. from September 2018 to August 2020,
overseeing businesses including Discovery+, Food Network Kitchen, Magnolia,
Eurosport Player, and GOLFTV. Prior to Discovery, Mr. Faricy spent 13 years with
Amazon.com, Inc., most recently as Vice President leading the Amazon Marketplace
from January 2009 to September 2018. From July 2006 to January 2009, he served
as Amazon's Vice President, Music and Movies. Prior to Amazon, Faricy held
management roles at Borders Group, Ford Motor Company, and McKinsey & Co. He
received his MBA with distinction from the University of Michigan and his BA in
Business Administration from Michigan State University. Since October 2020,
Mr. Faricy has served on the board of directors of Blue Apron Holdings, Inc.,
and since 2013 he has also served on the University of Michigan Ross School of
Business Advisory Board.
There are no arrangements or understandings between Mr. Faricy and any other
persons pursuant to which Mr. Faricy will be named to this position with the
Company. Mr. Faricy does not have any family relationship with any of the
Company's directors or executive officers or any persons nominated or chosen by
the Company to be a director or executive officer. Mr. Faricy has no direct or
indirect material interest in any transaction or proposed transaction required
to be reported under Section 404(a) of Regulation S-K.
Employment Agreement
On March 20, 2021, with the approval of the Board of Directors of the Company,
the Company entered into an employment agreement with Mr. Faricy, pursuant to
which Mr. Faricy will commence employment with us in his position of President
and Chief Executive Officer on April 19, 2021 (the "Effective Date"). In such
position, Mr. Faricy will report to our Board of Directors. Mr. Faricy's
employment is "at-will" and may be terminated at any time by either party.
The agreement provides that Mr. Faricy shall receive an initial base salary of
$660,000, subject to review and increase annually, and shall be eligible to
receive (i) an annual cash bonus under the Company's Executive Performance Bonus
Plan, with a target annual bonus opportunity of 150% of base salary,
(ii) benefits pursuant to the Company's employee benefit plans, (iii) vacation
in accordance with the Company's paid time off policy, and (iv) equity awards
under the Company's long-term incentive compensation arrangements subject to the
approval of our Board of Directors or Compensation Committee. Mr. Faricy is also
entitled to a lump sum cash relocation bonus of $800,000 to assist him in
relocating to the San Francisco Bay Area, which bonus is earned in 12 equal
installments upon the completion of each month of continuous employment by
Mr. Faricy with us following the start date. If Mr. Faricy terminates employment
with us other than for good reason (as defined in the employment agreement) or
if we terminate his employment for cause (as defined in the employment
agreement), he will be required to repay any unearned installment.
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The Company has agreed to grant Mr. Faricy a sign-on grant of restricted stock
units covering a number of shares of our common stock worth $5.3 million,
determined based on the Company's average closing trading price during March
2021. Subject to Mr. Faricy's continued employment, these sign-on restricted
stock units will vest annually over a 4-year period, with 50% also being subject
to achievement of performance goals established by the Board of Directors.
In addition, the Company will grant Mr. Faricy one restricted stock unit for
each share of Company common stock Mr. Faricy purchases within 12 months after
his start date, up to an aggregate of $3 million (the "Matching RSUs"). Each
Matching RSU will vest annually over two years from the last day of the calendar
quarter in which Mr. Faricy purchased the related share of common stock as long
as he remains employed with the Company and continues to hold such related share
through the vesting date.
If Mr. Faricy's employment is terminated by the Company without cause, or if
Mr. Faricy resigns for good reason, and such termination or resignation is in
connection with a change in control, Mr. Faricy will be entitled to: (i) a
lump-sum payment equal to (a) two multiplied by (b) the sum of his base salary
and target bonus for the then current fiscal year, (ii) continuation of his and
his eligible dependents' coverage under the Company's health, dental, and vision
plans at the Company's expense for up to 18 months or, if earlier, the date
Mr. Faricy becomes eligible for coverage in connection with new employment or
self-employment (the "COBRA Benefits"), (iii) full vesting on the termination
date of all of then-outstanding unvested restricted stock units and other equity
awards that would otherwise vest solely based upon continued employment, and
(iv) vesting on the termination date of all then-outstanding unvested restricted
stock units and other equity awards that are subject to performance conditions,
with the number vesting based on target performance. Mr. Faricy shall also be
entitled to his accrued and unpaid base salary, unreimbursed business expenses,
accrued but unpaid paid time off through the date of termination, and unpaid
bonus for a completed fiscal year (the "Accrued Obligations") and the pro rata
portion of his target bonus through the date of termination (the "Pro Rata
Bonus").
If Mr. Faricy resigns for good reason, or the Company terminates his employment
without cause, and such termination is not in connection with a change in
control, he is entitled to: (i) a lump-sum payment equal to the sum of his base
salary and target bonus for the then current fiscal year, (ii) the COBRA
Benefits, (iii) 12 months acceleration of vesting on the termination date of all
of his then-outstanding unvested restricted stock units and other equity awards
that would otherwise vest solely based upon continued employment, (iv) pro rata
vesting of all then-outstanding unvested restricted stock units and other equity
awards subject to performance conditions based on actual performance, as of the
termination date, (v) all stock options and stock appreciation rights remain
exercisable for two years (or the remainder of the full scheduled term, if
shorter), (vi) full vesting on the termination date of the Matching RSUs and the
portion of the sign-on restricted stock units that were at all times only
subject to service-based vesting, and (vii) accelerated vesting of the portion
of the sign-on restricted stock units that were granted with performance vesting
conditions (the "Sign-On PSUs") based on actual performance, with service credit
given for (a) 50% of the Sign-On PSUs for a termination within two years after
the grant date and (b) 100% of the Sign-On PSUs for a termination following two
years of service. Mr. Faricy will also be entitled to the Accrued Obligations
and the Pro Rata Bonus.
In exchange for the severance and related benefits described in the preceding
two paragraphs, Mr. Faricy has waived any right to participate in the Company's
2019 Management Career Transition Plan or any successor program and must sign
and not revoke a release of claims in favor of the Company.
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The foregoing description is qualified in its entirety by the provisions set
forth in the employment agreement attached hereto as Exhibit 10.1.
Item 7.01. Regulation FD Disclosure.
On March 25, 2021, the Company issued a press release, included as Exhibit 99.1
hereto, announcing Mr. Werner's planned retirement and Mr. Faricy's appointment.
The information furnished in Item 7.01 and Item 9.01 of this Current Report on
Form 8-K and Exhibit 99.1 hereto shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or
otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933 or the
Exchange Act, except as expressly set forth by specific reference in such
filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Employment Agreement, dated March 20, 2021, between SunPower
Corporation and Peter Faricy
99.1 Press Release, dated March 25, 2021
104.1 Cover Page Interactive File (the cover page tags are embedded
within the Inline XBRL document)
Forward-Looking Statements
This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including, but not limited to,
statements regarding Mr. Faricy's succession as the Company's Chief Executive
Officer and plans for our board of directors' composition, including the
chairmanship. These forward-looking statements are based on the Company's
current assumptions, expectations and beliefs and involve substantial risks and
uncertainties that may cause results, performance or achievement to materially
differ from those expressed or implied by these forward-looking statements. A
detailed discussion of risks and uncertainties that affect the Company's
business is included in filings the Company makes with Securities and Exchange
Commission (the "SEC") from time to time, including the Company's most recent
report on Form 10-K, particularly under the heading "Risk Factors." Copies of
these filings are available online from the SEC or on the SEC Filings section of
the Company's Investor Relations website at investors.sunpower.com. All
forward-looking statements in this report are based on information currently
available to the Company, and the Company assumes no obligation to update these
forward-looking statements in light of new information or future events.
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