Employment Agreements, Offer Letters and Other Compensatory Agreements
Matthias Aydt
Mr. Aydt entered into an offer letter with Faraday&Future, Inc., a California corporation and a wholly-owned subsidiary of FF (“FF U.S.”), dated March 31, 2016, that provided for his employment as Vehicle Line Executive. The offer letter provided for Mr. Aydt to receive an annual base salary of $240,000. The offer letter also provided that Mr. Aydt would be paid a signing bonus of $40,000 within 30 days of his start date of July 1, 2016 (the “Employment Date”), as well as a settling in allowance of $6,000. Pursuant to the offer letter, Mr. Aydt is entitled to receive a discretionary annual performance bonus (with a target amount of $40,000). Mr. Aydt is also entitled to participate in FF U.S.’s health insurance, 401(k) plan, paid time off and paid holidays. Pursuant to the offer letter, Mr. Aydt was entitled to receive an employee stock option grant equal to 250,000 stock options. The stock option grant vested 25% on the first anniversary of the Employment Date and 1/36th on each of the following 36 months, subject to Mr. Aydt's continued employment. Pursuant to the offer letter, Mr. Aydt's employment constitutes employment at will.
Effective September 29, 2023, Mr. Aydt was appointed to the position of Global Chief Executive Officer of Faraday Future. In connection with his appointment to Global Chief Executive Officer, the Board approved an annual base salary of $400,000, which was consistent with his salary as Senior Vice President of Business Development and Product Definition. Mr. Aydt is also eligible to receive a discretionary annual performance bonus of up to $100,000.
Xuefeng Chen
Effective November 28, 2022 (the “Global CEO Effective Date”), Mr. Chen was appointed to the position of Global CEO. In connection with his appointment as Global CEO, FF and FF U.S., entered into an employment agreement with Mr. Chen, dated as of November 27, 2022 (the “XF Employment Agreement”), setting forth the terms of his employment and compensation. Pursuant to such employment agreement and contingent on continued service as Global CEO, Mr. Chen was entitled to a base salary of $900,000 and was eligible for an annual performance-based bonus of up to $600,000 under the FF’s bonus plan beginning in 2023. Mr. Chen also received a cash signing and retention bonus of $500,000, subject to repayment (i) in full within 15 business days of termination of Mr. Chen for “Cause” (as defined in the employment agreement), or (ii) on a pro-rated basis, within 15 days, if Mr. Chen either resigns or is terminated without Cause within 36 months of the Global CEO Effective Date. In addition, Mr. Chen was eligible to participate in the Faraday Future Intelligent Electric Inc. Amended and Restated 2021 Stock Incentive Plan (the “2021 Plan”) in order. Subject to increase the numberterms of shares of Class A Common Stock available for issuance under the 2021 Plan by an additional 206,785,991 shares,Mr. Chen has received $250,000 in grant date fair value of restricted stock units (“RSUs”). Additionally, in accordance to the terms of the 2021 Plan and subject to approval by the Company’s stockholdersBoard, Mr. Chen (i) received, as of the first anniversary of the Global CEO Effective Date, $300,000 in grant date fair value of RSUs, and (ii) will receive (A) as of the second anniversary of the Global CEO Effective Date, $400,000 in grant date fair value of RSUs, (B) as of the third anniversary of the Global CEO Effective Date, $450,000 in grant date fair value of RSUs, and (C) as of the fourth anniversary of the Global CEO Effective Date, $600,000 in grant date fair value of RSUs. Each RSU grant vest in equal 25% increments on each of the first four anniversaries of the applicable grant date, provided Mr. Chen remains employed with the Company on each such vesting date.
Subject to proportionate adjustment for stock splitsapproval by the Board and similar events as provided inthe terms of the 2021 Plan, (the “Plan Amendment”).
If the Plan Amendment is adoptedMr. Chen was eligible based on continued service as Global CEO to receive an additional number of PSUs having a target grant date fair value equal to $2,000,000 if FF reached certain milestones and/or performance goals on certain dates, as specified by the stockholders,Board (each a “Milestone”), and would be granted as follows: (i) $250,000 in value after FF achieves the Company will continuefirst Milestone; (ii) $300,000 in value after FF achieves the second Milestone; (iii) $400,000 in value after FF achieves the third Milestone; (iv) $450,000 in value after FF achieves the fourth Milestone; and (v) $600,000 in value after FF achieves the fifth Milestone. Should FF reach any such Milestone, the PSUs associated with such Milestone were to be ableissued on the date(s) such Milestone was reached and were to make awardsvest in equal one-third increments on each of long-term equity incentives,the first three annual Milestone anniversary dates following the applicable grant date, provided Mr. Chen remains employed with FF on each such vesting date. On February 3, 2023, the Board granted Mr. Chen an additional $650,000 of PSUs, which we believe are critical for attracting, motivating, rewarding and retaining a talented team who will contributevest in equal one-fourth increments on each of the first four annual Milestone anniversary dates.
Pursuant to our success. In the event that the Plan Amendment is not approved by the stockholders, we will not have sufficient shares available for future grant needs and will lose a critical tool for attracting, retaining and motivating applicable executives, personnel and non-employee directors, and the compensation committee would be requiredMr. Chen’s employment agreement, on February 3, 2023, Mr. Chen received an option to revise its compensation philosophy and formulate other cash-based programs to attract, retain, and compensate eligible officers, employees and non-employee directors. We are therefore requesting that stockholders approve the Plan Amendment to increase the number ofpurchase 2,000,000 shares of the Class A Common Stock authorized for issuance under the 2021 Plan by 206,785,991 shares.
Request for Additional Shares(the “Standard Grant”) 50% of Class A Common Stock
In order to provide us with the flexibility to responsibly address our future equity compensation needs and so that we may continue to attract, retain and motivate officers, employees, consultants and non-employee directors and to align their interests with the interests of stockholders, we are requesting that stockholders approve the Plan Amendment, which increases the number of shares of Class A Common Stock authorized for issuance under the 2021 Plan by 206,785,991 shares, bringing the total number of shares of Class A Common Stock available for awards under the 2021 Plan to 263,616,683 shares of Class A Common Stock. As of July 14, 2023, there were 59,597,918 shares of Class A Common Stock remaining available for grant under the 2021 Plan.
Purposesvests in equal 25% increments on each of the 2021 Plan
The purposesfirst four anniversaries of the 2021 Plan are (i) to alignGlobal CEO Effective Date, and the interestsother 50% commences vesting on the fourth anniversary of the Company’s stockholdersGlobal CEO Effective Date, and the recipients of awards under the 2021 Plan by increasing the proprietary interest of such recipientsvests in the growth, development and financial successequal 25% increments on each of the Company, (ii) to advance the interestsnext four anniversaries of the Company by attracting and retaining non-employee directors, officers, other employees, consultants, independent contractors and agents and (iii) to motivateGlobal CEO Effective Date following such persons to act in the long-term best interests of the Company and its stockholders.
Description of the 2021 Plan
The following description is qualified in its entirety by reference to the plan document, a copy of which is attached as Annex B and incorporated into this proxy statement by reference.
Administration
The 2021 Plan will be administered by the Compensation Committee of the Board, or a subcommittee thereof, or such other committee designated by the Board (the “Plan Committee”),date, in each case, consisting of two or more members of the Board. Each member of the Plan Committee is intendedsubject to be (i) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, and (ii) “independent” within the meaning of the rules of Nasdaq. The Compensation Committee of the Board currently administers the 2021 Plan.
Subject to the express provisions of the 2021 Plan, the Plan Committee has the authority to select eligible persons to receive awards and determine all of the terms and conditions of each award. All awards are evidenced by an agreement containing such provisions not inconsistent with the 2021 Plan as the Plan Committee approves. The Plan Committee also has authority to establish rules and regulations for administering the 2021 Plan and to decide questions of interpretation or application of any provision of the 2021 Plan. The Plan Committee may take any action such that (i) any outstanding options and SARs become exercisable in part or in full, (ii) all or any portion of a restriction period on any outstanding awards lapse, (iii) all or a portion of any performance period applicable to any awards lapse, and (iv) any performance measures applicable to any outstanding awards be deemed satisfied at the target, maximum or any other level.Mr. Chen’s continued