Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Chief Executive Officer Succession
On May 11, 2023, Sterling Griffin, Chairman of the Board of Directors, Chief Executive Officer, and President of Harbor Custom Development, Inc. (the “Company”), notified the Company that he will retire from all roles with the Company effective as of July 12, 2023 (the “Transition Date”). In order to provide for a smooth transition of his roles, Mr. Griffin has agreed to remain to be engaged by the Company and serve in a new, non-executive role of Strategic Advisor, effective as of July 12, 2023 through January 12, 2025. Mr. Griffin’s retirement is not due to any disagreement with the Company on any matter related to the Company’s operations, policies, or practices.
Mr. Griffin will not stand for re-election as a director on the board of directors of the Company (the “Board”) at the Company’s upcoming Annual Shareholder Meeting.
The Board expects to appoint Jeffrey Habersetzer, currently the Chief Operating Officer, General Counsel, and Corporate Secretary of the Company, as Interim Chief Executive Officer and Interim President of the Company, effective as of July 12, 2023, to succeed Mr. Griffin. Terms of an agreement with Mr. Habersetzer will be announced when determined by the Board.
Mr. Habersetzer joined the Company in 2019. He has more than a decade of experience in real estate, contracts, and corporate governance. As Chief Operating Officer and General Counsel, Mr. Habersetzer has played an integral role in four successful capital raises for the Company; was extensively involved in taking the Company public in 2020; oversees company operations and construction activities; and currently chairs the acquisitions and due diligence committee. Prior to joining the Company, Mr. Habersetzer owned a legal practice specializing in real estate, debt-financing, and corporate law. Mr. Habersetzer holds a Bachelor’s degree from the University of Washington, and a law degree and a Master’s in Business Administration from Seattle University, graduating Cum Laude in both programs simultaneously. Mr. Habersetzer has been a licensed attorney in the state of Washington since 2017.
Letter Agreement with Mr. Griffin
In connection with Mr. Griffin’s retirement, the Company and Mr. Griffin entered into a letter agreement on May 11, 2023. Pursuant to the letter agreement, effective July 12, 2023, Mr. Griffin will remain engaged by the Company in a new, non-executive role of Strategic Advisor and provide strategic advisory services as requested by the Board for a period of 18 months ending on January 12, 2025. During such transition period, Mr. Griffin will be paid monthly compensation of $27,777.77 and may receive performance fees for closing sales of certain specified multifamily projects.
The foregoing is not a complete description of the letter agreement entered into with Mr. Griffin and is qualified by reference to the full text and terms of the document which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Chief Operating Officer Succession
The Company also plans to appoint Lance Brown, currently Chief Financial Officer of the Company, as Interim Chief Operating Officer to succeed Mr. Habersetzer, effective as of July 12, 2023.
Mr. Brown joined the Company in 2021. His primary focus is providing financial support and oversight for operations, financial planning & analysis, general ledger accounting, SEC reporting, and tax. Prior to joining the Company, Mr. Brown was Vice President and Chief Accounting Officer at Select Interior Concepts (NASDAQ: SIC), where he was responsible for Finance, Accounting, SEC Reporting, and Tax. During his time at SIC, Mr. Brown developed the public company accounting and reporting infrastructure; was extensively involved in the diligence and integration for multiple completed acquisitions; assisted with the sale, divestiture, and de-integration of SIC’s largest business unit to a major competitor; and provided significant support for the sale and going private transaction of SIC. Mr. Brown started his career in public accounting at PricewaterhouseCoopers. He holds a Bachelor of Business Administration degree from the University of Georgia and a Master of Accountancy from Auburn University. Mr. Brown is a Certified Public Accountant.
Brown Employment Agreement Amendment
The terms of Mr. Brown’s Employment Agreement will not change other than to add his new title and duties as Chief Operating Officer effective July 12, 2023.
There are no arrangements or understandings between Mr. Brown and any other person pursuant to which Mr. Brown was appointed as Chief Operating Officer of the Company. Mr. Brown does not have any family relationship with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer of the Company. The Company is not aware of any related person transactions (within the meaning of Item 404(a) of Regulation S-K promulgated by the “SEC”) between Mr. Brown and the Company.