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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
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(c)
Appointment of Chief Financial Officer
On
April 20, 2021, XL Fleet Corp. (the “Company”) issued a press release announcing that it had entered into an employment offer
letter with Cielo Hernandez (the “Offer Letter”), pursuant to which Ms. Hernandez agreed to serve as the Company’s
Chief Financial Officer effective as of April 19, 2021, or such other date mutually agreed to by the Company and Ms. Hernandez. On such
date, Ms. Hernandez will assume the duties and responsibilities of Principal Financial Officer and Principal Accounting Officer from
Dimitri N. Kazarinoff. A copy of the press release is furnished as Exhibit 99.1 to this Current
Report on Form 8-K.
Previously,
Ms. Hernandez, age 45, served as Senior Vice President and Chief Financial Officer of South Jersey Industries, Inc. beginning from
January 2019 to November 2020. From November 2013 to December 2018, Ms. Hernandez served as Vice President and Chief Financial Officer
of the North America and Canada Region for Maersk Agency U.S.A., Inc. Ms. Hernandez holds a bachelor of accounting from Universidad
Santiago de Cali and a master of business administration from the University of Miami. There are no family relationships among Ms. Hernandez
and any other executive officers or directors of the Company.
The Offer Letter provides for an initial annual base
salary of $400,000 per year, and an annual cash bonus with a target cash bonus of 60% of her base salary. In connection with her commencement
of employment, Ms. Hernandez will receive an initial equity grant award comprised of (i) $300,000 in non-qualified stock options, such
value calculated using a Black-Scholes valuation on the date of grant (the “Options”), to purchase shares of the Company’s
common stock, par value $0.0001 (the “Common Stock”), at an exercise price equal to the closing price of the Common Stock
on the New York Stock Exchange (“NYSE”) on April 19, 2021 (the “Grant Date”), (ii) $154,000 for relocation expenses,
and (iii) $300,000 in restricted stock units (the “RSUs”), such value calculated based on the closing price of the Common
Stock on the NYSE on the Grant Date. Each of the Options and RSUs shall vest as follows: (i) 25% of each of the Options and RSUs
will vest on the first anniversary of the Grant Date, and (ii) the remaining 75% of each of the Options and RSUs will vest in substantially
equal yearly installments over the next three (3) years following such first anniversary, such that each of the Options and RSUs are 100%
vested as of the fourth anniversary of the Grant Date, subject to Ms. Hernandez’s continuous service through each applicable vesting
date. In addition, Ms. Hernandez will be eligible to receive an annual target equity grant with a targeted value of $400,000. The annual
target equity grant will vest based upon the achievement of objective performance criteria, as determined by the Company’s board
of directors or its compensation committee prior to the grant date, during the period from commencement of employment through December 31,
2024, subject to Ms. Hernandez’s continuous service through each applicable vesting date.
In
addition, the Offer Letter provides that if Ms. Hernandez’s employment with the Company is terminated due to a change in control
and (i) by the Company without cause, or (ii) by Ms. Hernandez for good reason, she will receive the following severance benefits: (a)
continuing payments of her then-current annual base salary for nine months, (b) 100% acceleration of unvested equity grants, and (c)
nine months of benefits continuation. In the event that Ms. Hernandez’s employment with the Company is terminated not due to a
change in control and (i) by the Company without cause, or (ii) by Ms. Hernandez for good reason, she will receive the following severance
benefits: (a) continuing payments of her then-current annual base salary for six months, (b) forfeiture of unvested equity grants, and
(c) six months of benefits continuation.
The
foregoing is only a brief description of the above-specified compensatory arrangements, which does not purport to be a complete description
of the rights and obligations of the parties thereunder and is qualified in its entirety by the full text of to the Offer Letter, filed
hereto as Exhibit 10.1.
In
connection with her appointment as the Company’s Chief Financial Officer, the Company expects that Ms. Hernandez will enter into
the Company’s standard indemnification agreement. Ms. Hernandez has entered into the Company’s standard employee covenants
agreement, which contains customary restrictive provisions including covenants related to confidentiality and non-disclosure, assignment
of inventions and a one-year non-solicitation and non-competition.