Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On June 7, 2021, Vivint Smart Home, Inc. (the "Company") announced that David
Bywater has been appointed to serve as the Company's Chief Executive Officer,
effective June 15, 2021. Mr. Bywater has also been elected to the Company's
board of directors (the "Board"), effective June 15, 2021, to serve as a
Class II director with a term expiring at the Company's annual meeting of
stockholders in 2024.
Mr. Bywater, 51, most recently served as an advisor to Sunrun Inc. Prior to
that, he served as the Chief Executive Officer of Vivint Solar, Inc. from
December 2016 to April 2021. Mr. Bywater also served as Vivint Solar's interim
President and Chief Executive Officer from May 2016 until his appointment as
permanent Chief Executive Officer in December of 2016. Prior to joining Vivint
Solar, Mr. Bywater served as the Chief Operating Officer of Vivint, Inc. Prior
to that, Mr. Bywater served as Executive Vice President and Corporate Officer
for Xerox Corporation, and was the Chief Operating Officer of its State
Government Services from 2010 to July 2013. From 2003 to 2010, Mr. Bywater
worked at Affiliated Computer Services. From 1999 to 2003, Mr. Bywater was a
senior manager at Bain & Company. Mr. Bywater currently serves on the board of
directors of Sunrun Inc., however he will step down from such position, as well
as from his position as an advisor to Sunrun Inc., in connection with his
appointment as the Company's Chief Executive Officer. Mr. Bywater holds a B.S.
in economics from Brigham Young University and an M.B.A. from Harvard Business
School.
Compensation Arrangements with Mr. Bywater
In connection with his appointment as Chief Executive Officer, on June 6, 2021,
the Company entered into an employment agreement with Mr. Bywater, which
employment agreement is filed as Exhibit 10.1 hereto and incorporated herein by
reference. The principal terms of such agreement are summarized below.
The employment agreement with Mr. Bywater provides for a term ending on the
third anniversary of his commencement of employment, which extends automatically
for additional one-year periods unless either party elects not to extend the
term. Under the employment agreement, Mr. Bywater is eligible to receive a
minimum base salary of $1,021,200, and an annual bonus award with a target
amount equal to 100% of his base salary at the end of the performance period,
subject to the achievement of performance targets. For 2021, subject to
continued employment, Mr. Bywater's annual bonus is guaranteed at no less than
$1,021,200, with such guaranteed portion payable no later than December 31 2021.
Mr. Bywater is also entitled to receive a lump sum cash amount of $7,000,000 on
the commencement of his employment, subject to repayment upon a termination of
employment by the Company for "cause" (as defined below) or by Mr. Bywater
without "good reason" (as defined below), in each case on or prior to
December 31, 2021.
In connection with his commencement of employment, Mr. Bywater is entitled to
receive a one-time equity-based stock incentive grant (the "sign-on equity
grant") consisting of a number of shares of the Company's Class A common stock
(a "share") equal to $15,000,000 divided by the closing price on June 4, 2021
(the "grant share price"). One third of the sign-on equity grant will be subject
to time-based vesting and will vest in substantially equal installments on the
first, second and third anniversaries of the commencement of Mr. Bywater's
employment, subject to his continued employment on the applicable vesting date.
Two-thirds of the sign-on equity grant will be deemed earned based on the
satisfaction of the following performance conditions:
• 50% of such performance-based award will vest if (x) the average closing
price of a share over 20 consecutive trading days exceeds two times the
grant share price and (y) the Company's consolidated EBITDA for any
fiscal year during which the 20 consecutive trading day period begins or
ends equals or exceeds the Company's consolidated target adjusted EBITDA;
and
• 50% of such performance-based award will vest if both (x) the average
closing price of a share over 20 consecutive trading days exceeds three
times the grant share price and (y) the Company's consolidated EBITDA for
any fiscal year during which the 20 consecutive trading day period begins
or ends equals or exceeds the Company's consolidated target adjusted
EBITDA.
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The earned portion of the performance-based portion of the sign-on equity grant
will vest and be settled in shares on the third anniversary of the commencement
date, subject to Mr. Bywater's continued employment through the settlement date.
The sign-on equity grant will be subject to accelerated vesting of all or a
portion of such award on a termination by the Company without "cause" (as
defined below), due to death or "disability" or by Mr. Bywater for "good reason"
(as defined below) or a change in control, in each case, subject to certain
performance metrics being achieved.
Pursuant to the employment agreement, Mr. Bywater will be eligible to receive
annual equity grants under the Company's long-term equity incentive plan. For
each of calendar years 2021, 2022 and 2023, subject to continued employment, the
annual equity grants shall cover a number of shares equal to the quotient of (i)
$10,000,000 dived by (ii) the applicable share price on the date of grant and
granted with respect to (x) 50% in the form of restricted stock units (the
"initial RSU grants") vesting annually over three years and (y) 50% in the form
of performance stock units, subject to the achievement of performance metrics.
In the event of a termination by the Company without "cause" (as defined below),
due to death or "disability" or by Mr. Bywater for "good reason" (as defined
below) (i) the initial RSU grants shall fully vest and (ii) to the extent any
initial RSU grants have not been made as of such termination, Mr. Bywater shall
receive, for each such initial RSU grant that has not been made, fully vested
shares with an aggregate fair market value equal to $5,000,000.
If Mr. Bywater's employment terminates for any reason, Mr. Bywater is entitled
to receive: (1) any base salary accrued through the date of termination;
(2) reimbursement of any unreimbursed business expenses properly incurred by
him; and (3) such employee benefits, if any, as he may be entitled under the
Company's employee benefit plans (the payments and benefits described in
(1) through (3) being "accrued rights"). If Mr. Bywater resigns without "good
reason" he will also be entitled to any earned but unpaid annual bonus from any
prior year (the "earned prior year bonus").
If Mr. Bywater's employment is terminated by Mr. Bywater for "good reason (as
defined below) or by the Company without "cause" (as defined below) (including a
notice of non-renewal by the Company) and other than by reason of death or while
he is disabled (any such termination, a "qualifying termination"), Mr. Bywater
is entitled to the accrued rights and the earned prior year bonus and,
conditioned upon execution and non-revocation of a release and waiver of claims
in favor of the Company and its affiliates, and continued compliance with the
non-compete, non-solicitation, non-disparagement, and confidentiality provisions
set forth in the employment agreement:
• a pro rata portion of his target annual bonus based upon the portion of
the fiscal year during which Mr. Bywater was employed (the "pro rata
bonus");
• a lump-sum cash payment equal to 200% of Mr. Bywater's then-current base
salary plus 200% of the actual bonus Mr. Bywater received in respect of
the immediately preceding fiscal year (or, if a termination of employment
occurs prior to any annual bonus becoming payable under his employment
agreement, the target bonus for the immediately preceding fiscal year);
• a lump-sum cash payment equal to the cost of the health and welfare
benefits for Mr. Bywater and his dependents, at the levels at which he
received benefits on the date of termination, for 24 months (the "COBRA
payment"); and
• accelerated vesting of certain equity grants as set forth above.
For purposes of Mr. Bywater's employment agreement, the term "cause" means his
continued failure to substantially perform his employment duties for a period of
10 days following written notice from the Company; any dishonesty in the
performance of his employment duties that is materially injurious to the
Company; act(s) on his part constituting either a felony or a misdemeanor
involving moral turpitude; his willful malfeasance or misconduct in connection
with his employment duties that causes substantial injury to the Company; or his
material breach of the restrictive covenants set forth in the employment
agreement. Each of the foregoing events is subject to specified notice and cure
periods.
For purposes of Mr. Bywater's employment agreement, the term "good reason" means
a reduction in base salary or annual target bonus, a material diminution in
title, duties, authority or responsibilities, the relocation of Mr. Bywater's
primary office by more than 50 miles, or the Company's material breach of the
employment agreement. Each of the foregoing events is subject to specified
notice and cure periods.
. . .
Item 7.01 Regulation FD Disclosure.
On June 7, 2021, the Company issued a press release announcing Mr. Bywater's
appointment as the Company's Chief Executive Officer and his election to the
Board. The full text of the press release is furnished as Exhibit 99.1 hereto
and incorporated herein by reference.
The information in this Item 7.01 and in Exhibit 99.1 is being furnished
pursuant to Item 7.01 of Form 8-K and shall not be deemed to be "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise subject to the liabilities of that section, nor
shall it be deemed incorporated by reference in any filing made by the Company
under the Securities Act of 1933, as amended, or the Exchange Act, except as
shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
10.1 Employment Agreement, dated June 6, 2021, by and among Vivint Smart
Home, Inc. and David Bywater
99.1 Press Release of Vivint Smart Home, Inc., dated June 7, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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