Item 5.02
Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of
Certain Officers.
On
September 30, 2021, Shift Technologies, Inc. (the “Company”) announced that Jeff Clementz will become the Company’s
President, effective October 1, 2021. In connection with Mr. Clementz’s appointment, Tobias Russell stepped down from this role
as President and will remain the Company’s Co-Chief Executive Officer.
Mr.
Clementz, age 47, previously served in various management positions at Walmart from October 2015 to September 2021, most recently serving
as Senior Vice President and General Manager of Marketplace and Partner Operations. Prior to that, he served in various management positions
at PayPal from May 2003 to October 2015, including as its Vice President and Managing Director of Australia and New Zealand. Mr. Clementz
also previously served in various positions with Vendio Services and Intel. Mr. Clementz holds a Master of Business Administration from
the University of California, Berkeley and a Bachelor of Arts in Business Administration from the University of Washington.
There
are no family relationships between Mr. Clementz and any director, executive officer, or person nominated or chosen by the Company to
become a director or executive officer of the Company. Mr. Clementz 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. Clementz, dated September 27, 2021 (the “Employment Agreement”),
Mr. Clementz shall initially receive an annual base salary of $450,000, increasing to $510,000 beginning January 1, 2022. Mr. Clementz
shall also receive a signing bonus of $500,000, payable in two equal installments on April 1, 2022 and October 1, 2022, subject to continued
employment with the Company through each applicable payment date. Mr. Clementz will be eligible to participate in annual bonus programs
established by the Company, with a target annual bonus amount of up to two hundred fifty percent (250%) of Mr. Clementz’s base
salary in 2021, which amount will be prorated for the remainder of 2021. Thereafter, Mr. Clementz will be eligible to participate in
annual bonus programs established by the Company with a target annual bonus amount of up to at least one hundred fifty percent (150%)
of Mr. Clementz’s base salary in the applicable performance year. Mr. Clementz will also be eligible to receive a one-time special
cash bonus of $2,000,000, payable on October 1, 2024, subject to continued employment with the Company and achievement of performance
acceptable to the Board of Directors of the Company (the “Board”) in the sole discretion of the Board.
Also
pursuant to the Employment Agreement, Mr. Clementz will be granted no later than December 31, 2021 an equity grant of 781,784 restricted
stock units (“RSUs”). 586,338 RSUs will vest based on the passage of time (“Time RSUs”), with twenty-five
percent (25%) of Time RSUs vesting on Mr. Clementz’s one-year anniversary and the remaining Time RSUs vesting quarterly in equal
installments over the following three years. 195,446 RSUs will vest quarterly over the third and fourth years of Mr. Clementz’s
employment, provided that the applicable performance hurdle for the applicable performance year is met. The vesting of the foregoing
RSUs is subject to Mr. Clementz’s continued employment with the Company.
In
addition, the Employment Agreement provides that Mr. Clementz will be granted (i) an equity grant of 58,634 RSUs no later than December
31, 2021, which shall vest in full on Mr. Clementz’s six-month anniversary of employment with the Company, (ii) an equity grant
of 195,446 RSUs no later than December 31, 2022, which shall vest in full on Mr. Clementz’s three-year anniversary of employment
with the Company, and (iii) an equity grant of 117,268 RSUs no later than December 31, 2023, which shall vest in full on Mr. Clementz’s
four-year anniversary of employment with the Company, provided that the applicable performance hurdle for the performance year has been
met. Each of the foregoing awards is subject to continued employment with the Company through the applicable vesting date, and, for (ii)
and (iii), achievement of performance acceptable to the Board.
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.