Item 5.02
Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements
of Certain Officers.
On
March 9, 2021, the Leadership Development, Compensation and Governance Committee of the Board of Directors of Shift Technologies,
Inc. (the “Company”) approved the appointment of Oded Shein, age 59, as the Company’s Chief Financial Officer,
replacing Cindy Hanford, who had been serving as Chief Financial Officer since the Company’s merger with Insurance Acquisition
Corp. Mr. Shein will join the Company on March 15, 2021. It is anticipated that Ms. Hanford will remain as the Chief Financial
Officer of the Company through the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020
and then will remain with the Company in a consulting capacity through April 21, 2021 to effect an orderly transition.
Mr.
Shein previously served as Chief Financial Officer of The Fresh Market, Inc. since August 2018. Prior to that, he served as Executive
Vice President and Chief Financial Officer of Stage Stores from January 2011 to August 2018. From July 2004 until January 2011,
Mr. Shein served in various financial positions at Belk, Inc., including as its Vice President, Finance and Treasurer. Prior to
joining Belk, Inc., Mr. Shein served as the Vice President, Treasurer of Charming Shoppes, Inc. Mr. Shein serves on the board
of directors of Conn’s, Inc. Mr. Shein holds a Bachelor of Business Administration in Information Systems from Baruch College
and a Master of Business Administration in Finance from Columbia University.
There
are no family relationships between Mr. Shein and any director, executive officer, or person nominated or chosen by the Company
to become a director or executive officer of the Company. Mr. Shein is not a party to any transaction required to be disclosed
pursuant to Item 404(a) of Regulation S-K.
Pursuant
to the employment agreement entered into between the Company and Mr. Shein (the “Employment Agreement”), Mr. Shein
shall receive an annual base salary of $390,000. Mr. Shein will be eligible to participate in an annual bonus program established
by the Company with a target annual bonus amount set at not less than two hundred percent (200%) of Mr. Shein’s base salary
in the 2021 performance year, which amount will be prorated for the remainder of 2021. Thereafter, Mr. Shein will be eligible
to participate in annual bonus programs established by the Company with a target annual bonus amount of not less than one hundred
percent (100%) of Mr. Shein’s base salary in the applicable performance year.
The
Employment Agreement also provides that Mr. Shein will receive a one-time equity grant of 273,311 restricted stock units (“RSUs”),
each of which represents the right to receive one (1) share of stock in the Company. 75% of the RSUs will vest based on the passage
of time (“Time RSUs”) and 25% of the RSUs will vest upon the achievement of specified performance metrics (“PSUs”).
The RSUs begin vesting on a date set by the Board, which is expected to be in May of 2021 (the “Vesting Commencement Date”).
Subject
to Mr. Shein’s continuous employment, the Time RSUs will vest in whole numbers as follows:
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25%
of the Time RSUs will vest on the first (1st) anniversary of the Vesting Commencement Date; and
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75%
of the Time RSUs will vest quarterly over the three (3) year period commencing on the first (1st) anniversary of the
Vesting Commencement.
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Subject
to the Grantee’s continuous employment, the PSUs will vest in whole numbers on a quarterly basis over the 3rd and
4th years following the Vesting Commencement Date, provided that the applicable performance hurdle for the applicable
performance year is met. Notwithstanding the foregoing:
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If
a performance hurdle is not met by the end of a quarterly vesting period, the PSUs available
to vest during such quarter will be available to vest in the next quarterly vesting period
within that performance year, and will vest, if applicable, on the last day of the quarterly
vesting period in which the performance hurdle is met.
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If
the performance hurdle for the third performance year is not met, the PSUs available
to vest in such third performance year remain eligible to vest in any applicable quarter
of the fourth performance year if the fourth performance year’s performance hurdle
is met during a calendar quarter of that year, with such vesting to occur on the last
day of such quarterly vesting period.
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If
a performance hurdle for a performance year is not met, the PSUs eligible to vest with
respect to that performance year will immediately terminate and become null and void.
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The
foregoing description of the Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety
by, the full text of the Employment Agreement, a copy of which is filed hereto as Exhibit 10.1 and is incorporated herein by reference.