| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
Appointment of Mr. Cesar Johnston as Chief Executive Officer
On December 9, 2021, Energous Corporation (the “Company”) announced that Cesar Johnston has been appointed as the Company’s Chief Executive Officer, effective as of December 6, 2021. Mr. Johnston, had been serving as acting Chief Executive Officer of the Company since July 23, 2021, in addition to serving as both Chief Operating Officer and Executive Vice President of Engineering of the Company.
In connection with Mr. Johnston’s appointment as Chief Executive Officer, the Company and Mr. Johnston executed an offer letter dated as of December 6, 2021 (the “Johnston Offer Letter”). Under the Johnston Offer Letter, Mr. Johnston will receive an annual base salary of $400,000 per year, and, beginning in 2022, will be eligible to receive a discretionary annual performance bonus of up to 100% of his base salary, as determined and at the discretion and recommendation of the Company’s independent compensation committee (the “Compensation Committee”) with approval of the Board of Directors.
In addition, under the Johnston Offer Letter and as an inducement to accept his appointment as Chief Executive Officer, Mr. Johnston will receive, subject to continued employment, (a) a special one-time sign-on bonus in the amount of $120,000, payable in two equal installments of $60,000 each on the first payroll date in 2022 and the first payroll date after December 6, 2022, (b) a grant of 150,000 restricted stock units to acquire shares of the Company’s common stock, one third of which will vest on December 6, 2022 and the remaining two thirds of which will vest in eight equal installments of 12,500 each on each quarterly anniversary thereafter and (c) a grant of an option to purchase 300,000 shares of the Company’s common stock at an exercise price equal to the fair market value of the Company’s common stock on the grant date, half of which shall vest on December 31, 2023, a quarter of which shall vest on December 31, 2024 and the remainder of which shall vest on December 31, 2025.
Mr. Johnston will further be eligible for (a) an additional equity award in the amount of 287,000 performance share units to acquire shares of the Company’s common stock, which will vest up to one third per year over a three year period commencing January 1, 2022 and ending December 31, 2024, upon the achievement of performance criteria to be mutually established by Mr. Johnston and the Compensation Committee, and (b) an additional equity award of up to 25,000 performance share units per calendar year for 2022, 2023 and 2024, respectively, based on outperformance per calendar year, as determined by the Compensation Committee with approval of the Board of Directors.
In connection with Mr. Johnston’s appointment as Chief Executive Officer, the Company and Mr. Johnston additionally entered into an amended & restated severance and change in control agreement (the “Johnston A&R CIC Agreement”), dated as of December 6, 2021, to update several terms of Mr. Johnston’s current severance and change in control agreement with the Company as follows. The Johnston A&R CIC Agreement provides that, in the event of a Qualifying Termination that is not a CIC Qualifying Termination (each as defined in the Johnston A&R CIC Agreement), (a) Mr. Johnston is entitled to a one-time lump sum payment by the Company in an amount equal to 18 months of his monthly base salary plus an amount equal to 100% of his target bonus plus, if agreed by the Compensation Committee, a discretionary bonus for the year in which the Qualifying Termination occurs, (b) any then-outstanding unvested equity awards held by Mr. Johnston that would vest in the next 18 months of continuing employment (other than any equity awards that vest upon satisfaction of performance criteria) will accelerate and become vested and (c) if Mr. Johnston timely elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company or its successor will pay the full amount of Mr. Johnston’s COBRA premiums on his behalf for 18 months (or, if the Company determines that it cannot provide the foregoing subsidy without potentially violating or causing the Company to incur additional expense as a result of noncompliance with applicable law, make a taxable monthly payment to Mr. Johnston in an amount equal to the monthly COBRA premium that Mr. Johnston would be required to pay to continue the group health coverage upon separation from the Company for up to 18 months after such separation).
The Johnston A&R CIC Agreement additionally provides that, in the event of a CIC Qualifying Termination, (a) Mr. Johnston is entitled to a one-time lump sum payment by the Company in an amount equal to 18 months of his monthly base salary plus an amount equal to 150% of his target bonus plus a prorated bonus for the year in which the CIC Qualifying Termination occurs, (b) any then-outstanding unvested equity awards held by Mr. Johnston (including any equity awards that vest upon satisfaction of performance criteria) will accelerate in full and become
