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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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On August 19, 2019, the Board of Directors
(the “
Board
”) of the Company appointed Jason B. Few as the Company’s President and Chief Executive Officer,
effective as of August 26, 2019 (the “
Effective Date
”). Mr. Few will also continue to serve as a director of
the Company following the Effective Date.
Beginning on the Effective Date, Mr. Few,
in his capacity as President, will assume the responsibilities previously undertaken by Jennifer D. Arasimowicz in her role as
Interim President of the Company and, accordingly, her term and service as Interim President will cease as of the Effective Date.
Ms. Arasimowicz will remain in her role as General Counsel, Corporate Secretary, Executive Vice President, and Chief Commercial
Officer.
Mr. Few, age 53, has served as a director
of the Company since 2018. Prior to his appointment as the President and Chief Executive Officer of the Company, Mr. Few served
as President of Sustayn Analytics LLC, a cloud-based software waste and recycling optimization company, since 2018, and as the
Founder and Senior Managing Partner of BJF Partners, LLC, a privately held strategic transformation consulting firm, since 2016.
Mr. Few has over 30 years of experience increasing enterprise value for Global Fortune 500 and privately-held technology,
telecommunication, and energy firms. He has overseen transformational opportunities across the technology and industrial energy
sectors, in roles including Founder and Senior Managing Partner of BJF Partners, LLC; President and Chief Executive Officer of
Continuum Energy, an energy products and services company, from 2013 to 2016; various roles including Executive Vice President
and Chief Customer Officer of NRG Energy, Inc., an integrated energy company, from 2011 to 2012; and from 2008 to 2009, Vice President,
Smart Energy, and from 2009 to 2012, President of Reliant Energy, a retail electricity provider. Mr. Few also has served as
a Senior Advisor to Verve Industrial Protection, an industrial cybersecurity software company, since 2016. Mr. Few was elected
to the board of directors of Marathon Oil Corporation, a publicly traded exploration and production company based in Houston, Texas, effective April 1, 2019. Mr. Few is
active in his community, serving on the boards of Memorial Hermann Healthcare System, the American Heart Association, and the St.
John’s School Endowment Investment Committee. He earned a bachelor’s degree in computer systems in business from Ohio
University. He received an MBA from Northwestern University’s J.L. Kellogg Graduate School of Management.
In connection with Mr. Few’s appointment
as the President and Chief Executive Officer, on August 19, 2019, the Company entered into an employment agreement with Mr. Few
(the “
Employment Agreement
”), which is effective as of the Effective Date. The Employment Agreement provides
that Mr. Few will receive a base salary of $475,000 per year, subject to periodic review and potential adjustment by the Compensation
Committee of the Board (the “
Committee
”) and, beginning with the Company’s fiscal year 2020, he will be
eligible to participate in the Company’s annual cash incentive plans and programs that are generally provided to the senior
executives of the Company, with a target bonus equal to no less than 90% of base salary. For the portion of the Company’s
2019 fiscal year following the Effective Date, Mr. Few will be eligible to receive a pro rata portion of the target bonus amount
(based on the number of days that he is employed during the fiscal year) to the extent the three milestone goals the Company’s
other executive officers are required to achieve to receive the cash incentive awards pursuant to the letter agreements entered
into in July 2019 (as described in the Current Report on Form 8-K filed by the Company on July 24, 2019) are achieved, as determined
by the Committee.
Mr. Few will also receive a signing bonus
of $500,000, 50% of which will be paid immediately and 50% of which will be paid in 2020, subject to and following the Board’s
approval of a business plan for the Company’s fiscal year 2020. The signing bonus is subject to repayment, on a pro-rated
basis, if, within 18 months after the Effective Date, the Company terminates Mr. Few’s employment for “cause”
(as defined in the Employment Agreement), or Mr. Few terminates his employment other than for “good reason” (as defined
in the Employment Agreement) or other than on account of his death or disability.
Under the Employment Agreement, Mr. Few
will receive an award of 500,000 restricted stock units (the “
Initial RSU Award
”), contingent on stockholder
approval of a sufficient number of additional shares under the FuelCell Energy, Inc. 2018 Omnibus Incentive Plan (the “
Plan
”).
The Initial RSU Award will vest on the third anniversary of the Effective Date if Mr. Few remains employed through the vesting
date, or if the Company earlier terminates his employment without cause or Mr. Few terminates his employment for good reason. Mr.
Few will be eligible to receive additional restricted stock units under the Initial RSU Award if, during the 30 days prior to the
vesting date, the weighted average price of the Company’s common stock exceeds $1.00. The number of additional restricted
stock units will range from zero for a weighted average price of $1.00 to a maximum of 500,000 units for a weighted average price
of $6.00, with linear interpolation for stock prices between $1.00 and $6.00.
If the Company’s stockholders do not
approve sufficient additional shares under the Plan to settle the Initial RSU Award, then the Initial RSU Award will be null and
void and the Company will grant to Mr. Few a cash-settled award of restricted stock units (the “
Cash-Settled RSU Award
”)
with similar terms to the Initial RSU Award except that such award will be settled in cash rather than shares and will be subject
to a cap on the amount payable by the Company of $10,000,000.
Mr. Few will be eligible to participate
in such long-term incentive plans or programs of the Company as are generally provided to the senior executives of the Company
beginning with the Company’s fiscal year 2020.
In recognition of Mr. Few’s agreement
to relocate to the Danbury, Connecticut area, the Company will pay Mr. Few a lump sum cash payment in the gross amount of $200,000
within 30 days following his relocation, provided that such relocation occurs by the first anniversary of the Effective Date and
that Mr. Few is employed by the Company on the date of such payment. A pro-rata portion of such amount will be subject to repayment
if Mr. Few resigns without good reason or his employment is terminated by the Company for cause before the first anniversary following
such relocation.
In recognition of Mr. Few’s agreement
to commute until he is able to relocate, the Company will also pay Mr. Few the gross amount of $13,000 per month through the first
anniversary of the Effective Date or until the earlier date of his relocation. The Company will also provide him with an apartment
in Danbury, Connecticut through such date.
Mr. Few will be eligible for 5 weeks of
vacation annually and to participate in the Company’s other employee benefit plans in accordance with the terms of such plans
and be reimbursed for other reasonable fees and expenses, including business expenses, specified organization membership fees of
up to $10,000 annually and tax preparation and planning fees of up to $10,000 annually. The Company will also pay, or reimburse
Mr. Few, for the reasonable attorney’s fees incurred by Mr. Few to negotiate the Employment Agreement, up to a maximum of
$25,000.
In addition, if Mr. Few is subject to an
eligibility waiting period under the Company’s medical plan, then the Company will reimburse Mr. Few for any COBRA group
health plan continuation coverage premium costs that he actually incurs during such waiting period.
The Employment Agreement also provides
for payments upon termination of Mr. Few’s employment under specified circumstances. In general, Mr. Few will be
entitled to accrued but unpaid benefits upon any termination of employment. In addition, if the Company terminates Mr.
Few’s employment without cause or Mr. Few terminates employment for “good reason” (as defined in the
Employment Agreement with respect to a termination other than in connection with a “change of control”), in each
case, other than during the 3 months prior to, or the 18 months following, a “change of control” (as defined in
the Employment Agreement), he will be entitled to receive severance equal to (i) the sum of his annual base salary plus his
target annual cash bonus for the year of termination, plus (ii) a pro-rated portion of his annual cash bonus for the year of
termination (paid based on actual performance). Upon such a termination, Mr. Few will also receive accelerated vesting of all
outstanding equity awards (other than unearned performance awards, which will be forfeited to the extent not earned),
reimbursement of reasonable relocation expenses back to Houston, Texas or another city, provided that the expenses will not
exceed the cost of a relocation to Houston, Texas, and subject to a maximum of $200,000, and continued coverage under the
Company’s group health and dental insurance plans for 12 months following his termination.
In the event that Mr. Few’s
employment is terminated within 3 months prior to, or 18 months following, a change of control by the Company without cause
or by Mr. Few for good reason (as defined in the Employment Agreement with respect to a termination in connection with a
change of control), he will be entitled to receive severance equal to (i) two times the sum of his annual base salary plus
his target annual cash bonus for the year of termination, plus (ii) a pro-rated portion of his annual cash bonus for the year
of termination (paid based on actual performance). Upon such a termination, Mr. Few will also receive accelerated vesting of
all outstanding equity awards (with any performance awards being deemed earned at target), reimbursement of reasonable
relocation expenses back to Houston, Texas or another city, provided that the expenses will not exceed the cost of a
relocation to Houston, Texas, and subject to a maximum of $200,000, and continued coverage under the Company’s group
health and dental insurance plans for 24 months following his termination.
To receive the foregoing severance benefits,
Mr. Few will be required to provide a release of claims.
The Employment Agreement includes customary
restrictive covenants, including confidentiality obligations and non-solicitation and non-competition provisions extending until
two years following termination of employment. The Employment Agreement also provides that all compensation and benefits provided
for in the agreement are subject to applicable withholding for taxes (federal, state, and local) and any other proper deductions,
and that the Company is not obligated to make any gross-up or make-whole payments relating to taxes or withholdings on amounts
or benefits received by Mr. Few.
The foregoing summary of the Employment
Agreement is not a complete description and is qualified in its entirety by reference to the full text of the Employment Agreement,
a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.2 and incorporated herein by reference.
A copy of the news release related to Mr.
Few’s appointment is attached hereto as Exhibit 99.1 and incorporated herein by reference.