| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Appointment of Executive Vice President and Chief Financial Officer
(b)(c) On August 27, 2020, Superior Industries International, Inc. (the “Company”) appointed C. Timothy Trenary as its Executive Vice President and Chief Financial Officer, effective September 8, 2020. At that time, Troy Ford will cease his role as Interim Chief Financial Officer and will resume his position as Vice President of Corporate Finance.
Mr. Trenary, 64, was previously the Executive Vice President & Chief Financial Officer of Commercial Vehicle Group, Inc. (NASDAQ;CVGI), a publicly traded global commercial vehicle parts supplier, from 2013 to 2020. Prior to that, Mr. Trenary served as the Executive Vice President & Chief Financial Officer of ProBuild Holdings LLC, a building materials supplier owned by Fidelity Capital Operating LLC, from 2010 to 2013. From 2008 to 2010 Mr. Trenary served as Senior Vice President & Chief Financial Officer of EMCON Technologies Holdings Limited, a global automotive parts supplier owned by One Equity Partners. Mr. Trenary previously served in various executive positions with both public and private companies. Mr. Trenary began his career in public accounting at Arthur Young & Co. (from 1978-1981). Mr. Trenary holds a Bachelor of Arts degree in Accounting, with Honors, from Michigan State University and a Master of Business Administration degree, with Honors, from the University of Detroit Mercy. Mr. Trenary is also a Certified Public Accountant (registered status).
There are no family relationships between Mr. Trenary and any of the directors and executive officers of the Company, nor are there transactions in which Mr. Trenary has an interest requiring disclosure under Item 404(a) of Regulation S-K.
Mr. Trenary will receive an annual base salary of $475,000.00. Mr. Trenary may receive annual bonuses based on attainment of performance goals, determined by the Company’s independent Compensation and Benefits Committee (‘the “Committee”), in the amount of 70% of annual base salary. Mr. Trenary will also be eligible to participate in the Company’s 2018 Equity Incentive Plan, as administered by the Committee, upon approval of the Committee and the Board of Directors, and receive awards up to 125% of his base salary. Mr. Trenary is entitled to participate in all benefit plans generally made available to executive officers of the Company. A copy of the Offer Letter of Employment, dated August 17, 2020 (the “Offer Letter”), is attached hereto as Exhibit 10.1. The description of the Offer Letter set forth above is qualified in its entirety by reference to Exhibit 10.1.
Retention Bonus Agreements
(e) On August 25, 2020, the Company entered into Retention Bonus Agreements (“Retention Agreements”) with the following named executive officers: Majdi B. Abulaban, President and Chief Executive Officer and Kevin Burke, Senior Vice President and Chief Human Resources Officer.
COVID-19 has had a dramatic adverse impact on the automotive industry operating environment. In response, the Company’s management team took swift action to respond effectively to the pandemic, including executing safety, cost reduction, and cash flow initiatives to protect the health and safety of our employees, preserve liquidity and enhance financial flexibility. Additionally, prior to the pandemic, the management team executed various actions to improve performance with a focus on improving the operating performance in North America by rationalizing the Company’s footprint, expanding its product portfolio, and addressing troubled product lines. Nonetheless, the Company has seen a precipitous decline in market capitalization which has not recovered to prior levels, and as a result, the Company’s equity plan and the CEO’s inducement grants to join the Company have lost their intended value and retentive effect. These awards were granted to these two named executive officers as their retention is considered essential to onboard a new Chief Financial Officer and support continued near- and long-term financial and operational performance and achieve future milestones, including net debt reduction.
The Committee determined that cash awards were appropriate given that there are insufficient shares available for equity awards under the Company’s 2018 Equity Incentive Plan. In addition, any equity awards granted pursuant to the Retention Agreements would be significantly dilutive to current shareholders. Accordingly, awards under the Retention Agreements will be paid in cash only.
Mr. Abulaban’s Retention Agreement has a three year term which is two thirds time-based and one third performance-based. The Agreement provides for a restricted cash payment of $1 million on each of July 31, 2021 and July 31, 2022. On July 31, 2023, Mr. Abulaban has an opportunity to receive a performance cash payment with a target of $1 million and a range of $0 to $1.5 million, based on the Company’s net debt achievement as measured at June 30, 2023.
