| ITEM 5.02 | DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS. |
CFO Resignation
On June 24, 2024, the Board of Directors (the “Board”) of NN, Inc. (the “Company”) announced that Michael C. Felcher, Senior Vice President, Chief Financial Officer, tendered his resignation from the Company, effective as of the close of business on June 24, 2024. Mr. Felcher’s departure is not the result of any disagreement with the Company with respect to any matter relating to the Company’s operations, policies or practices, including its accounting procedures.
Additionally, the Company and Mr. Felcher have entered into a Consulting Agreement (the “Consulting Agreement”), effective as of June 25, 2024 (the “Transition Date”), to facilitate an orderly transition. The Consulting Agreement provides that, in exchange for his provision of transition services, the Company will compensate Mr. Felcher at an hourly rate of $230 per hour for a period of one month. The term of the Consulting Agreement will automatically renew for successive one month periods unless earlier terminated by either party upon seven days’ prior written notice. Finally, as required to receive the benefits under his previously disclosed Separation Agreement, Mr. Felcher provided the Company with a general release of all claims.
The foregoing description of the terms of the Consulting Agreement is only a summary and is qualified in its entirety by the full text of the Consulting Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K (this “Current Report”).
CFO Appointment
In connection with Mr. Felcher’s departure, the Board also announced that Christopher H. Bohnert has been appointed to fill the newly-created vacancy of Senior Vice President, Chief Financial Officer, effective as of the Transition Date. Mr. Bohnert has more than 30 years of global financial experience across a wide variety of industries. He previously served as advisor to the CEO at Commercial Vehicle Group (“CVGI”), a publicly traded manufacturer of electrical, mechanical and seating systems for electric and internal combustion engine commercial vehicles, as well as warehouse automation and robotic systems to retailers and ecommerce shippers, from September 2022 to June 2024. Prior to that, from October 2020 to September 2022, Mr. Bohnert was Chief Financial Officer of CVGI. Prior to his experience at CVGI, Mr. Bohnert served as Chief Financial Officer of Finished Lubricants & Chemicals from 2017 to October 2020. Mr. Bohnert holds a Bachelor of Science degree in Business Administration, Economics, and Accountancy from the University of Missouri and a Master of Science in Accountancy from the University of South Carolina. Mr. Bohnert is also a Certified Public Accountant (inactive status).
The Company and Mr. Bohnert have entered into a letter of understanding (the “Letter of Understanding”), setting forth the terms of his employment, compensation and relocation benefits. Pursuant to the Letter of Understanding, Mr. Bohnert’s annual base salary will be $425,000, and he will be eligible to receive an annual incentive award under the Company’s Executive Incentive Compensation Program, which is based on a target amount of 50% of his annual base salary, with a guaranteed minimum bonus of $60,000 for 2024. The Letter of Understanding also provides that Mr. Bohnert will not be eligible to participate in the Company’s long-term equity incentive program until 2029.
As an inducement material to his entering into employment with the Company, Mr. Bohnert was granted as of the Transition Date a one-time conditional equity grant, consisting of (i) 189,000 time-vesting restricted stock units, which will vest ratably in one fifth increments on each of the first five anniversaries of the Transition Date (the “RSU Award”); and (ii) 287,000 performance-vesting restricted stock units (“PSUs”) that will be realized incrementally upon certain increases in the price of the Company’s common stock, par value $0.001 per share, over a five-year performance period (the “PSU Award” and together with the RSU Award, the “Inducement Grants”). The RSU Award was granted pursuant to that certain Restricted Share Award Agreement (the “RSU Award Agreement”), and the PSU Award was granted pursuant to that certain Performance Share Unit Award Agreement (the “PSU Award Agreement”), each to be effective as of the Transition Date.
The Company entered into its standard form of separation agreement with Mr. Bohnert (the “Separation Agreement”), to be effective as of the Transition Date. Under the Separation Agreement, if terminated by the Company without cause or if Mr. Bohnert resigns with “Good Reason”) (as defined in the Separation Agreement”), Mr. Bohnert would receive: (i) payment of Mr. Bohnert’s base salary (as of the date of termination) for a period of 18 months, (ii) any vested rights in accordance with the terms of his RSU Award Agreement and PSU Award Agreement, and (iii) a lump sum payment in an amount equal to twelve (12) months of monthly premiums that Mr. Bohnert would be required to pay to continue the group health coverage for himself and/or his eligible dependents. The Separation Agreement also includes non-competition and non-solicitation obligations of Mr. Bohnert for the period ending when the salary continuation benefit ends or, in circumstances not entitling Mr. Bohnert to such salary continuation, on the date one year after the termination of his employment with the Company.
