UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Chief Executive Officer and President Transition
On April 12, 2024, the Board of Directors of Spruce Power Holding Corporation (the “Company”) appointed Mr. Christopher Hayes, as Chief Executive Officer and President of the Company, effective April 12, 2024 (“Transition Date”). Mr. Hayes, who has served as the Chair of the Board of Directors since January 2023, will continue to serve in that capacity in addition to serving as Chief Executive Officer and President. Mr. Hayes succeeds Christian Fong, whose separation from the Company and resignation as a director is effective as of the Transition Date.
As noted in the press release issued by the Company on April 13, 2024, John Miller, Chair of Nominating and Governance Committee and the newly appointed Lead Director of the Board stated: “On behalf of the Board, I would like to thank Mr. Fong for his contributions to Spruce and wish him all the best in his future endeavors.”
In connection with his separation from the Company, Mr. Fong will be eligible to receive the severance payments provided by his employment agreement with the Company, as described below. Mr. Fong’s resignation from the Board was not because of a disagreement with the Company, known to an executive officer of the Company, on any matter relating to the Company’s operations, policies or practices.
Mr. Hayes has served as a member of the Board since December 2020, and has been Chair of the Board since January 2023. From August 30, 2019 until December 2020, Mr. Hayes served as a member of the Board of the Company’s predecessor, XL Hybrids. From January 1, 2016 to January 1, 2017, Mr. Hayes served as the Senior Vice President of Corporate Development at Edison International, a publicly traded energy and power markets company, following Edison’s acquisition of Altenex, a renewable energy procurement company co-founded by Mr. Hayes in 2011. Most recently, Mr. Hayes served as managing partner and director of Alturus, a sustainable infrastructure investment company he co-founded in 2018. Mr. Hayes’s extensive experience with sustainability-focused companies provides substantial guidance and expertise to the Company.
The selection of Mr. Hayes to perform the functions of Chief Executive Officer and President and to serve as a member of the Board was not pursuant to any arrangement or understanding between Mr. Hayes and any other person. There are no family relationships between Mr. Hayes and any director or executive officer of the Company, and there are no transactions between Mr. Hayes and the Company that would be required to be reported under Item 404(a) of Regulation S-K.
Mr. Fong’s Severance Payments
Mr. Fong’s is eligible for severance per the terms of his employment agreement, subject to Mr. Fong’s execution of a separation agreement and release of claims in substantially the form attached to Mr. Fong’s employment agreement, Mr. Fong will receive the following severance benefits in accordance with his employment agreement: (a) continuing payments in an amount equal to the sum of eighteen months of his current annual base salary of $650,000 and 1.5 times his target bonus, payable ratably over an eighteen month period (less all customary and required taxes and employment related deductions), (b) acceleration of unvested equity grants with time-based vesting that would have vested during the twelve month period following the Transition Date, and (c) a lump sum payment equal to COBRA premiums at active employee rates for eighteen months, which Mr. Fong is obligated to repay to the Company to the extent he obtains subsequent medical coverage and has unused months of COBRA coverage.
Mr. Hayes’s Chief Executive Officer Offer Letter
In connection with Mr. Hayes’s appointment as Chief Executive Officer and President, Mr. Hayes and the Company entered into a CEO Offer Letter on April 12, 2024, under which Mr. Hayes’s service to the Company as its Chief Executive Officer and President commenced on the Transition Date (the “Hayes Offer Letter”) and will continue until terminated by the Company or Mr. Hayes. Mr. Hayes’s compensation is substantially similar to the compensation terms of the Company’s former Chief Executive Officer.
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Specifically, the Hayes Offer Letter provides for (i) an initial annual base salary of $650,000 and (ii) an annual cash bonus opportunity with a target of 100% of his base salary to be based on achieving annual performance metrics determined by the Board or as may be payable by the Board in its discretion.
Mr. Hayes was also awarded equity awards effective upon the Transition Date valued at 170% of his initial base salary, with 70% of such equity awards being in the form of stock options to purchase shares of Company’s common stock (“Common Stock”) and 30% of such equity awards being in the form of restricted stock units. These equity awards will vest in equal annual installments over four years following the Transition Date, subject to Mr. Hayes’s continued service on the applicable vesting date.
The Company intends to adopt an executive severance plan under which Mr. Hayes will be named a participant with severance benefits no less favorable, in all material respects, than the severance benefits of the Company’s former Chief Executive Officer. In addition, Mr. Hayes will be entitled to the indemnification arrangements available to the Company’s other executive officers and directors.
The foregoing description of the Hayes Offer Letter does not purport to be complete and is qualified in its entirety by the terms and conditions of the Hayes Offer Letter, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2024, and the foregoing description is subject in all respects to the actual terms of the Hayes Offer Letter.
Audrey Lee, Ph.D Appointment as New Director
Effective as of the Transition Date, the Board appointed Audrey Lee to serve as a Class C director on the Board filling the vacancy on the Board newly created through the resignation of Mr. Fong. Effective as of Transition Date, the Board also appointed Dr. Lee as a member of the Compensation Committee and Nominating and Corporate Governance Committees. There are no arrangements or understandings between Dr. Lee and any other person pursuant to which Dr. Lee was appointed as a director. There are no family relationships between Dr. Lee and any director or executive officer of the Company, and there are no transactions between Dr. Lee and the Company that would be required to be reported under Item 404(a) of Regulation S-K.
Dr. Lee will be compensated in accordance with the Company’s non-employee director compensation policy. Also, in connection with her appointment to the Board, Dr. Lee entered into an indemnification agreement with the Company in substantially the same form of indemnification agreement that the Company has entered into with its other directors, a copy of which was filed as Exhibit 10.11 to the Company’s Current Report on Form 8-K filed on December 23, 2020. The Indemnification Agreement provides that the Company will indemnify Dr. Lee for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by her in any action or proceeding arising out of her service as a director.
| Item 8.01. | Other Events. |
On April 15, 2024, Company issued a press release announcing the changes to the executive team and Board composition described above. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| 99.1 | Press Release, dated April 15, 2024 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| SPRUCE POWER HOLDING CORPORATION | ||
| Date: April 15, 2024 | By: | /s/ Jonathan M. Norling |
| Name: | Jonathan M. Norling | |
| Title: | Chief Legal Officer | |
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Exhibit 99.1
Spruce Power Holding Corporation Announces Leadership Changes
Chairman of the Board Chris Hayes Appointed as President & CEO
Dr. Audrey Lee joins the Board of Directors
DENVER‒April 15, 2024 ‒Spruce Power Holding Corporation (NYSE: SPRU) (“Spruce” or the “Company”), a leading owner and operator of distributed solar energy assets across the United States, today announced that Chris Hayes, Spruce’s Chairman of the Board, will succeed Christian Fong as President and Chief Executive Officer, effective April 12, 2024. Additionally, Dr. Audrey Lee has joined the Board of Directors.
“The Board is confident that Chris is the right leader to take Spruce to the next stage of its evolution and develop avenues of growth. Chris brings a wealth of experience to his role as CEO, including sustainable infrastructure investing, entrepreneurship, and technology. Chris has a long history of creating valuable intellectual property and a successful track record in generating returns for investors. He was most recently the founder and managing partner of Alturus, which develops, owns, and operates sustainable infrastructure projects for the Fortune 1000 and a pioneer in leveraging an energy-as-a-service (EaaS) platform for decarbonization. He was also a founder and managing partner at Altenex, which was acquired by Edison International (NYSE: EIX) in 2015,” said John Miller, Chair of the Nominating & Corporate Governance Committee and the newly appointed Lead Director of the Board. Mr. Miller added: “On behalf of the Board, I would like to thank Mr. Fong for his contributions to Spruce and wish him all the best in his future endeavors.”
Commenting on his new role, Mr. Hayes said, “I am honored to take on the role of President and CEO. Given my familiarity with the company, I am confident this will be a seamless transition.” With respect to his priorities, Mr. Hayes stated, “We are focusing on several exciting initiatives. This includes leveraging our core capabilities to enhance our organic growth strategy by utilizing our technology platform and scale to leverage our existing 75,000 home solar assets and customer contracts into a proprietary managed service platform that other solar asset owners can utilize and in doing so, create new, recurring revenue streams for Spruce. We have several additional exciting growth avenues, and my initial focus will be to identify and execute the best opportunities to drive organic growth.”
Mr. Hayes continued: “As part of our strategic move forward, I am pleased to announce that Dr. Audrey Lee will join our Board of Directors. Audrey is a clean energy executive with 20 years of experience in the private and public sectors. She is a strategic leader pioneering the next generation of energy solutions with expertise at the intersection of technology, product, and market development. We are excited to have her as part of the team and look forward to her contribution.” Currently, Dr. Audrey Lee is the Senior Director of Datacenter Energy Strategy at Microsoft (Nasdaq: MSFT). She succeeds director Christian Fong, who has stepped down from the Board as part of the above transition.
About Spruce Power
Spruce Power is a leading owner and operator of distributed solar energy assets across the United States. We provide subscription-based services that make it easy for homeowners to benefit from rooftop solar power and battery storage. Our power as-a-service model allows consumers to access new technology without making a significant upfront investment or incurring maintenance costs. Our Company owns the cash flows from over 75,000 home solar assets and contracts across the United States. For additional information, please visit www.sprucepower.com.
Forward Looking Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements can be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intends,” “may,” “opportunity,” “plans,” “goals,” “target” “predict,” “potential,” “estimate,” “should,” “will,” “would,” “continue,” “likely” or the negative of these terms or other words of similar meaning. These statements are based upon our current plans and strategies and reflect our current assessment of the risks and uncertainties. Forward-looking statements in this release include statements regarding the future direction of the Company, growth opportunities and the above referenced leadership transition. These statements are based on various assumptions, whether or not identified in this press release and on the current expectations of management, and are not predictions of actual performance. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including but not limited to: expectations regarding the growth of the solar industry, home electrification, electric vehicles and distributed energy resources; the ability to successfully integrate XL Fleet and Spruce; the ability to identify and complete future acquisitions; the ability to develop and market new products and services; the effects of pending and future legislation; the highly competitive nature of the Company’s business and markets; the ability to execute on and consummate business plans in anticipated time frames; litigation, complaints, product liability claims, government investigations and/or adverse publicity; cost increases or shortages in the components or chassis necessary to support the Company’s products and services; the introduction of new technologies; the impact of natural disasters and other events beyond our control, such as hurricanes, wildfires or pandemics, on the Company’s business, results of operations, financial condition, regulatory compliance and customer experience; privacy and data protection laws, privacy or data breaches, or the loss of data; general economic, financial, legal, political and business conditions and changes in domestic and foreign markets; risks related to the rollout of the Company’s business and the timing of expected business milestones; the effects of competition on the Company’s future business; the availability of capital; and the other risks discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 9, 2024, subsequent Quarterly and Annual Reports on Form 10-Q and Form 10-K, respectively, and other documents that the Company files with the SEC in the future. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. These forward-looking statements speak only as of the date hereof and the Company specifically disclaims any obligation to update these forward-looking statements.
Cover |
Apr. 12, 2024 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Apr. 12, 2024 |
| Entity File Number | 001-38971 |
| Entity Registrant Name | Spruce Power Holding Corporation |
| Entity Central Index Key | 0001772720 |
| Entity Tax Identification Number | 83-4109918 |
| Entity Incorporation, State or Country Code | DE |
| Entity Address, Address Line One | 2000 S Colorado Blvd |
| Entity Address, Address Line Two | Suite 2-825 |
| Entity Address, City or Town | Denver |
| Entity Address, State or Province | CO |
| Entity Address, Postal Zip Code | 80222 |
| City Area Code | (866) |
| Local Phone Number | 777-8235 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, par value $0.0001 per share |
| Trading Symbol | SPRU |
| Security Exchange Name | NYSE |
| Entity Emerging Growth Company | false |
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