DEF 14A of Shoals Technologies Group, Inc., Mar 22, 2024

DEF 14A of Shoals Technologies Group, Inc.

Filed Mar 22, 2024 · FY20230001140361-24-014778

Open on EDGAR

  1. PROPOSAL 1 – ELECTION OF DIRECTORS

    PROPOSAL 1 – ELECTION OF DIRECTORS Our Board recommends that the nominees below be elected as members of the Board at the Annual Meeting.

  2. PROPOSAL 1 – ELECTION OF DIRECTORS

    | Name | Class | Age* | Position | Director Since | Current Term Expires | Expiration of Term For Which Nominated | | Brad Forth | III | 59 | Chair of the Board | 2021 | 2024 | 2027 | | Robert Julian | III | 61 | Director | 2022 | 2024 | 2027 | | Brandon Moss | III | 45 | CEO and Director | 2024 | 2024 | 2027 |

  3. PROPOSAL 1 – ELECTION OF DIRECTORS

    | * Ages as of March 5, 2024. |

  4. PROPOSAL 1 – ELECTION OF DIRECTORS

    Each nominee was recommended for election by the Nominating and Corporate Governance Committee for consideration by the Board and our shareholders. On February 27, 2024, with the recommendation of the Nominating and Corporate Governance Committee, the Board appointed Brandon Moss, our Chief Executive Officer, as a director based on Mr. Moss’s skills, qualifications and contributions to the Company and the Board since he began serving as Chief Executive Officer. Mr. Moss is a Class III director and is a nominee recommended for election at the Annual Meeting. If, before the Annual Meeting, any nominee becomes unable to serve, or chooses not to serve, the Board may nominate a substitute. If that happens, the persons named as proxies on the proxy card will vote for the substitute. Alternatively, the Board may either let the vacancy stay unfilled until an appropriate candidate is identified or reduce the size of the Board to eliminate the unfilled seat. THE BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE DIRECTOR NOMINEES. Director Nominees to Serve for a Three-Year Term Expiring at the 2027 Annual Meeting. Brad Forth. Chair. Mr. Forth began serving on our Board in June 2017. Mr. Forth has more than 30 years of experience in the energy industry. Mr. Forth began his career as a design engineer at Power Measurement, Inc. in 1988, where he was responsible for pioneering research in the field of digital power metering and energy management systems. Mr. Forth remained at Power Measurement in various capacities for 18 years, and was its Chief Executive Officer from 1998 to 2005 when it was acquired by Schneider Electric. In 2006, Mr. Forth joined GFI Energy Group as a Partner until 2009. Mr. Forth was a Managing Director at Oaktree Capital Management (“Oaktree”) from 2009 to 2016, and a Senior Advisor to Oaktree’s GFI Energy Group from 2016 to 2021. In June 2022, Mr. Forth joined Neos Partners as a Senior Partner. Mr. Forth was a former board member of Xantrex Technology, The Kirlin Group and OpTerra Energy Group, and a former board chair of GT Solar Incorporated, Turbine Generator Maintenance, Cannon Technologies, GoodCents and TenK Solar. Mr. Forth is currently a board member of Array Technologies (Nasdaq: ARRY), a solar tracking and solutions company, since July 2016. Mr. Forth received a Bachelor of Electrical Engineering degree from the University of Victoria in Canada. The Board believes Mr. Forth’s deep expertise in the energy industry, plus his experience as an investor and board member of several companies in the energy industry, and his service in different executive leadership roles qualifies him to serve as a director of our Board. Robert Julian. Mr. Julian began serving on our Board in August 2022. From October 2021 through his retirement on January 31, 2024, Mr. Julian served as Chief Financial Officer of The RealReal, Inc. (the “TheRealReal”) (Nasdaq: REAL) the world’s largest online marketplace for authenticated, consigned luxury goods, where he was responsible for developing and shaping company strategy and driving profitable growth. Following Mr. Julian’s retirement from TheRealReal, Mr. Julian agreed to serve as a consultant to TheRealReal through June 2024. Mr. Julian also served as the Co-Interim Chief Executive Officer of TheRealReal from June 2022 to February 2023. Prior to TheRealReal, Mr. Julian was Executive Vice President and Chief Financial Officer at Sportsman’s Warehouse, from April 2019 to October 2021, and Executive Vice President and Chief Financial Officer and Treasurer, at Deluxe Entertainment Services Group, from July 2017 to June 2018. Mr. Julian serves on the board of directors of Rayton Solar Inc., a producer of engineered wafers that can serve as the basis for next-generation electronics. Mr. Julian has more than 30 years of experience, having held several senior positions in different public and private companies throughout his career. He holds a BA in Finance from Michigan State University and an MBA in Finance from the University of Michigan. The Board believes Mr. Julian’s expertise in developing and leading high performing finance, accounting and IT teams across a wide range of industries, including manufacturing, technology, consumer products, distribution, retail, and business services sectors, as well as his hands on experience in various public company boards matters, qualifies him to serve as a director of our Board. Brandon Moss. Mr. Moss joined the Company as Chief Executive Officer in July 2023, and began serving on our Board in February 2024. Prior to joining the Company, Mr. Moss served as President, Tools, Components & Assembled Solutions Business of Southwire Company, one of North America’s largest wire and cable developers, manufacturers and suppliers, since 2014. Prior to that, Mr. Moss served as Vice President, Retail Sales of Southwire Company from 2009 to 2013, and Director of Sales of Southwire Company from 2007 to 2009. Prior to Southwire Company, Mr. Moss served as Account Manager of Lutron Electronics, a designer and manufacturer of lighting control systems for both residential and commercial applications, from 2002 to 2007. Prior to Lutron Electronics, Mr. Moss served as a Territory Manager of Black & Decker, a global provider of hand tools, power tools, outdoor products and related accessories, from 2000 to 2002. Mr. Moss is currently on the Board of Directors of the Solar Energy Industries Association. Mr. Moss earned a Master of Business Administration from Wake Forest University and a Bachelor’s degree in Marketing from Miami University. The Board believes Mr. Moss’s extensive senior leadership experience, more than twenty years of experience in the electrical industry, M&A and business integration experience, understanding of global supply chains and efficient manufacturing processes and comprehensive knowledge of our business and perspective of our day-to-day operations qualifies him to serve as a director of our Board.

  5. Continuing Directors

    Continuing Directors Class I Directors (terms expiring in 2025) Ty Daul. Mr. Daul began serving on our Board in March 2021. Since May 2020, Mr. Daul has been Chief Executive Officer and a member of the Board of Directors of Primergy Solar, a developer, owner and operator of both distributed and utility scale solar PV and energy storage projects across North America. Prior to Primergy, from March 2017 to May 2020, Mr. Daul served as Vice President of Canadian Solar’s energy project development business throughout North and South America, and was President of Recurrent Energy Group, a wholly owned subsidiary of Canadian Solar that functions as the company’s U.S. project development arm. Prior to Canadian Solar, Mr. Daul served as Senior Vice President, Americas Power Plants of SunPower Corporation from May 2015 to March 2017. In addition, Mr. Daul served on the Board of 8point3 Energy Partners LP, the publicly traded yieldco formed by SunPower Corporation and First Solar, Inc., from June 2015 to March 2017. Prior to joining SunPower, he co-founded Element Power in 2009 and oversaw the company’s wind and solar businesses in the Americas for five years. Mr. Daul has more than three decades of experience in the power generation industry, Mr. Daul has been integrally involved in more than 11 GW of operating wind, solar and battery energy storage projects representing well over $13 billion of total investment. Mr. Daul’s energy industry experience also includes seven years at Iberdrola Renewables, Inc. (f/k/a PPM Energy Inc.), Entergy Corp. and Newport Generation Ventures, LLC. He is currently on the Board of Directors of the Solar Energy Industries Association, as well as Infinigen Renewables, a Puerto Rico based clean energy IPP. Mr. Daul also served on the Wind Solar Alliance Board for more than seven years. He earned a B.S. in mechanical engineering from the University of Washington and an MBA from Texas A&M University. The Board believes Mr. Daul’s expertise in the energy industry and his experience as a seasoned leader with an ability to execute complex transactions across diverse technologies and teams qualifies him to serve as a director of our Board. Toni Volpe. Mr. Volpe began serving on our Board in March 2021. Since March 2016, Mr. Volpe has been Chief Executive Officer and Board Member of Renantis S.p.A., a global leader in the development, construction and asset management of renewable energy plants. In January 2024, Renantis merged with Ventient Energy. Mr. Volpe has assumed the role of CEO of the new combined company that owns 4.2 GW of solar and wind assets in operations, a pipeline of projects of 20 GW and is present in ten European countries and the U.S. Prior to Renantis, Mr. Volpe served in various senior leadership positions at Enel, leading as CEO of the North American business of Enel Green Power (EGP) and contributing to its portfolio diversification in geothermal, solar, mini-hydro, wind, and biomass. At Enel, Mr. Volpe also served as CEO of Enel Romania, a regulated electricity distribution business that covers one third of the country. Mr. Volpe graduated magna cum laude in Management, Economics and Industrial Engineering, at Polytechnic of Milan and obtained his MBA from Columbia Business School. The Board believes Mr. Volpe’s broad experience in the energy industry, and his expertise as a board member and senior executive in the industry for 20 years, qualifies him to serve as a director of our Board. Peter Wilver. Mr. Wilver began serving on our Board in January 2021. From August 2015 until his retirement in March 2017, Mr. Wilver was Executive Vice President and Chief Administrative Officer of Thermo Fisher Scientific Inc. (“Thermo Fisher”), a leading provider of laboratory products and services, and had previously spent 11 years as the Chief Financial Officer of Thermo Fisher (formerly Thermo Electron) from October 2004 until July 2015. Before joining Thermo Electron in 2000, Mr. Wilver held financial leadership roles at General Electric and Grimes Aerospace Company, and at Honeywell International, where he most recently served as Vice President and Chief Financial Officer of the electronic materials business. Mr. Wilver currently serves on the Board of Directors of Baxter International (NYSE: BAX), an American multinational healthcare company, where he is a member of the Audit and Compensation and Human Capital Committees, and LivaNova PLC (NASDAQ: LIVN), a global medical device company focused on the development and delivery of important products and therapies for the benefit of patients, healthcare professionals and healthcare systems throughout the world, where he is a member of the Audit & Compliance and Compensation and Human Capital Management Committees. He has previously served as member of the board and related committees at several other public companies. Mr. Wilver is a certified public accountant. Mr. Wilver holds a Bachelor of Science in Business Administration degree (summa cum laude) in Accounting from The Ohio State University. The Board believes Mr. Wilver’s experience in strategic planning and business development as well as in leading the financial, accounting and investor relations functions of large, multi-national manufacturing companies along with corporate governance expertise from his membership at public company boards and their committees qualifies him to serve as a director of our Board. Class II Directors (terms expiring in 2026) Jeannette Mills. Ms. Mills began serving on our Board in August 2022. Since February 2020, Ms. Mills has been Executive Vice President and Chief External Relations Officer at Tennessee Valley Authority (“TVA”), a federally owned electric utility, where she is responsible for leading TVA’s External Affairs, including overall Customer Service, Government & Community Relations, Federal Affairs, Communications, and Regulatory Assurance functions to achieve organizational objectives in accordance with the policies established by TVA’s Board of Directors. Prior to joining TVA, from March 2017 to February 2020, she was Senior Vice President – Safety, Health, Environmental & Assurance of National Grid plc, a British multinational electricity and gas utility company. Prior to those positions, Ms. Mills held an executive position at the Maryland Public Service Commission, Baltimore Gas & Electric, and Medifast, Inc. (NYSE: MED), where she also served as a board member and member of the compensation committee. She holds a BS in Electrical Engineering from Virginia Tech University and an MBA from Loyola University Maryland. The Board believes Ms. Mills’s extensive experience in the utilities industry in addition to her deep expertise in business operations, risk management, strategy development, and financial management, along with governance experience through her previous work on the board and compensation committee of Medifast, Inc. qualifies her to serve as a director of our Board. Lori Sundberg. Ms. Sundberg began serving on our Board in March 2021. Since October 2021, Ms. Sundberg has served as HR Executive at Performance and Talent Solutions, a consulting firm. Ms. Sundberg was the Chief Human Resources Officer of Quanergy Systems, Inc. (NYSE: QNGY), a leading provider of LiDAR sensors and smart 3D solutions, from June 2022 to February 2023. Prior to such position, she was an Executive Vice President and Chief Human Resources Officer for Western Digital Corporation (NASDAQ: WDC), from February 2018 to October 2021, a leading key global human resources initiatives and people strategies. Ms. Sundberg has more than 30 years of experience in developing and aligning HR strategy with business needs. She has led large corporate initiatives focused on culture, organization effectiveness, diversity, leadership development, merger and acquisitions, and total rewards. Before joining Western Digital, she served as SVP, Global Human Resources at Jacobs (NYSE: J), a

  6. Continuing Directors

    global provider of technical, professional and construction services. Sundberg has also served as SVP, Human Resources and Ethics at Arizona Public Services Company, the largest electric utility in Arizona, and advanced through a series of HR leadership roles at American Express. Ms. Sundberg holds a Bachelor of Science degree in Business Management from Brigham Young University. The Board believes Ms. Sundberg’s extensive experience in managing human resources and leading complex corporate initiatives, in addition to her broad understanding of different industries from financial services to utilities, qualifies her to serve as a director of our Board.

  7. Board Meetings and Committees

    | 8. | reviewing and making recommendations to our Board with respect to director compensation; |

  8. 2023 Chief Executive Officer Transitions

    2023 Chief Executive Officer Transitions On November 30, 2022, the Company announced that its Chief Executive Officer, Jason Whitaker, had informed the Board that he intended to step down from his role as Chief Executive Officer in early 2023. On February 23, 2023, the Board made the decision to terminate Mr. Whitaker’s employment as Chief Executive Officer of the Company due to disability, effective as of March 15, 2023. Mr. Whitaker also ceased to be a Board member on that date. On February 24, 2023, the Company entered into a separation agreement with Mr. Whitaker, memorializing the terms and conditions of his termination due to disability under his employment agreement and his grant agreements governing his outstanding RSUs and PSUs. See the section titled “Jason Whitaker Separation Agreement” below for further details regarding Mr. Whitaker’s separation agreement. On February 23, 2023, the Company appointed Jeffery Tolnar as interim Chief Executive Officer, effective immediately following Mr. Whitaker’s termination of employment on March 15, 2023. From March 15, 2023, through July 17, 2023, our President, Jeffery Tolnar, served as the interim Chief Executive Officer of the Company. In addition to the compensation he received in consideration for his service as our President (as described below), Mr. Tolnar also received the following additional compensation in consideration for his service as the interim Chief Executive Officer during such period: (i) an additional $15,000 per month in base salary, with such monthly amount paid on the last payroll of the month for each month Mr. Tolnar served as interim Chief Executive Officer, and (ii) a $90,000 one-time, lump-sum cash payment, paid to Mr. Tolnar on September 1, 2023, which was conditioned upon Mr. Tolnar’s continued employment with the Company during the six-month period following his appointment as interim Chief Executive Officer. Our current Chief Executive Officer, Brandon Moss, was appointed as Chief Executive Officer on June 14, 2023, effective as of July 17, 2023. In connection with his appointment as Chief Executive Officer, Mr. Moss and the Company entered into an offer letter memorializing the terms and conditions of his employment. See the section titled “Brandon Moss Offer Letter” below for further details regarding Mr. Moss’s offer letter. This is the first time that Mr. Moss was appointed Chief Executive Officer of a publicly-traded company, and accordingly, his target total compensation level was set at below the median of our peer group. The following table outlines Mr. Moss’s initial target compensation as compared to the actual compensation he received during the 2023 Fiscal Year, as further described below in the “2023 Fiscal Year Summary Compensation Table”.

  9. 2023 Chief Executive Officer Transitions

    As shown in the table above, the compensation that Mr. Moss actually earned and received in respect of the 2023 Fiscal Year differs from the initial target total compensation level set for him in connection with his appointment as our Chief Executive Officer. This is because (i) his base salary earned in respect of the 2023 Fiscal Year reflects his partial year of service as our Chief Executive Officer during the 2023 Fiscal Year, (ii) his annual incentive plan cash award in respect of the 2023 Fiscal Year was prorated to reflect his partial year of service, and (iii) he received a one-time equity award and cash award in the 2023 Fiscal Year, each of which were intended to reimburse him for the forfeited cash and equity awards previously granted to him by his former employer.

  10. Pay for Performance

    Pay for Performance Payouts under our annual incentive plan (the “AIP”) reflect our performance against pre-set Adjusted EBITDA goals and the Compensation Committee’s assessment of goal achievements and individual performance. The selection of Adjusted EBITDA as the driving metric under the AIP supports the Compensation Committee’s view of measuring operating performance without unusual or one-time events. After careful consideration, and as consistent with our discussions with shareholders, the Compensation Committee confirmed that Adjusted EBITDA that excludes the $63.0 million charge for wire insulation shrinkback and related litigation expenses necessary to recover damages from the supplier of defective wire (as further described in “2023 Fiscal Year AIP Performance Targets and Results”) was the appropriate metric for assessing performance in the 2023 Fiscal Year AIP. As we continue to analyze all of the incoming information and remediation projections, we have determined the range of expenses communicated was still appropriate and the impact of the charge was immaterial at this time. This approach ensures consistency with the Company’s externally reported financial performance results, preempts the possibility of future unintended incentive payouts when settlements occur, and reflects alignment with long-term shareholder experience, and appropriately rewards our leadership team. Adjusted EBITDA performance resulted in a maximum score for this 75% weighted AIP factor whereas overriding the Adjusted EBITDA calculation would have resulted in a below target payout. The Compensation Committee also considered the entirety of Shoals’ overall performance in Fiscal Year 2023 that suggested some non-Adjusted EBITDA opportunities for improvement. To reflect a more holistic review of company performance, the Compensation Committee and the Board of Directors reduced each named executive’s payment for performance on Individual Goals by half (applied negative discretion). Individual Goals are weighted 25% of AIP at target. After the Compensation Committee exercised negative discretion, the final payout dollar value across the NEOs was reduced by 9% (or 16% of target) from the overall result. The 2023 Fiscal Year AIP paid out at an average of 165% of target for Mr. Bardos, Ms. Peetz, and Mr. Tolnar, each of whom were in their respective roles for the full 2023 Fiscal Year. The average payout absent the downward adjustment would have been 181% of target. The 2023 Fiscal Year AIP paid out at 168.75% of target for Mr. Moss, with such payout prorated based on Mr. Moss’s partial year of service during the 2023 Fiscal Year. Without the downward adjustment, Mr. Moss’s payout would have been 187.5% of target. The awards of performance-based restricted stock units (“PSUs”) granted to certain of our Named Executive Officers in the 2023 Fiscal Year will not provide a payout until early 2026, when the Compensation Committee approves the level of achievement against pre-set Net Revenue Growth CAGR and Average Gross Margin targets (each as further described below in the section titled “2023 Fiscal Year Long-Term Incentive Equity Compensation”). The awards of time-based restricted stock units (“RSUs”) granted to certain of our Named Executive Officers in the 2023 Fiscal Year create foundational ownership that encourages retention and ties to changes in shareholder value.

  11. Executive Compensation Best Practices

    | What We Do | | What We Don’t Do | | | ✔ | Emphasize long-term compensation to ensure alignment of pay with long-term performance | • | No hedging or pledging of company stock | | ✔ | Significant majority of pay is performance-based and not guaranteed | • | No single trigger vesting of equity awards upon a change in control | | ✔ | Stock ownership requirements require meaningful holdings | • | No tax gross-up payments in connection with severance or change in control payments | | ✔ | Double-trigger change-in-control vesting of equity awards | • | No golden parachutes | | ✔ | Assess and confirm compensation programs do not encourage material risks to shareholders | • | No excessive perquisites or personal benefits | | ✔ | Engage an independent compensation consultant | • | No repricing of stock options (currently, stock options are not part of the Company’s equity award program) |

  12. External Benchmarking

    External Benchmarking In the 2023 Fiscal Year, the Compensation Committee considered competitive market compensation data, in addition to other factors, in determining the policies and programs that address executive compensation and benefits. For the 2023 Fiscal Year, with respect to pay decisions for our Named Executive Officers, the Compensation Committee reviewed a peer group of 17 solar and related industry companies that are reasonably comparable to the Company in terms of market capitalization (the “Peer Group”), and with whom we are likely to compete for executive talent, in order to better evaluate executive compensation market practices. The Compensation Committee compared the Peer Group against a group of companies comprised of revenue-comparable companies in broad Electrical Components & Equipment and Electrical Equipment Standard & Poor’s GICS codes. Market capitalization of this group of companies was substantially lower than our market capitalization and the market capitalization of companies in solar and related industries. The Compensation Committee intends to continue to review other peer groups in the future. The Compensation Committee confirmed the current appropriateness of the Peer Group for the 2023 Fiscal Year. When making executive pay decisions, the Compensation Committee also considers other factors such as individual experience and performance, critical skills, and the general talent market for senior executives.

  13. 2023 Fiscal Year Peer Group

    2023 Fiscal Year Peer Group

  14. 2023 Fiscal Year Peer Group

    | Array Technologies, Inc. | FTC Solar, Inc. | Rogers Corporation | | Bloom Energy Corporation | Generac Holdings Inc. | SolarEdge Technologies, Inc. | | ChargePoint Holdings, Inc. | Gibraltar Industries, Inc. | SolarWinds Corporation | | Enphase Energy, Inc. | Itron, Inc. | SunPower Corporation | | ESCO Technologies Inc. | Littelfuse, Inc. | Sunrun Inc. | | First Solar, Inc. | Power Integrations, Inc. | |

  15. 2023 Fiscal Year Peer Group

    The Compensation Committee’s review of the external compensation market also included data and practices from general compensation surveys and other compensation survey information provided by our independent consultant Pay Governance LLC (“Pay Governance”).

  16. Compensation Philosophy and Objectives

    | • | Attractiveness as an employer is a function of all reward elements, including, but not limited to, base salary, short- and long-term incentives, benefits, well-being and coaching and development. |

  17. Compensation Philosophy and Objectives

    | • | Our AIP payout opportunity ranges from 0% to 200% of target and is primarily based on achievements against key measures of annual financial performance with a smaller amount based upon team or individual goals and performance. |

  18. Compensation Philosophy and Objectives

    | • | Long-term incentive awards are equity-based, granted in the form of RSUs and PSUs. The long-term incentive award mix varies by executive level, with senior executives receiving a greater percentage of long-term incentive awards in performance-based vehicles. |

  19. Named Executive Officer Compensation Elements at a Glance

    | 2023 Compensation Element | Form | Metrics and Weightings | Rationale for Providing | | Base Salary | Cash | Not applicable | Base salary is a competitive fixed pay element tied to role, experience, performance, and criticality of skills. | | AIP Award | Cash | Adjusted EBITDA (75%) Individual Goals (25%) | The AIP is designed to reward achievement of critical financial and non-financial goals that are fundamental short-term drivers of shareholder value. The AIP may payout from 0% to 200% of target, based upon achievement of pre-set Threshold, Target, and Stretch goals. | | Long-Term Incentive (“LTI”) Equity Awards | Stock | PSUs • Net Revenue Growth CAGR (50%) • Average Gross Margin (50%) • Three-year performance period RSUs • Three-year time-vesting period | The LTI plan is designed to reward performance that drives longer shareholder value through the use of awards tied to a multi-year vesting period. • PSUs (50% of the LTI mix) provide rewards linked to stock price performance (due to the denomination in Company shares) and can go up or down based upon achievement of pre-set Threshold, Target, and Stretch goals, equally weighted between Net Revenue Growth CAGR and Average Gross Margin. PSUs may payout from 0% to 200% of target. • RSUs (50% of the LTI mix) link compensation to absolute stock price performance and strengthen retention. |

  20. 2023 Fiscal Year AIP Annual Awards

    2023 Fiscal Year AIP Annual Awards

  21. 2023 Fiscal Year AIP Annual Awards

    | Named Executive Officer | Fiscal 2023 Target AIP Award as a Percentage of Base Salary | Fiscal 2023 AIP Target Amounts Based on Eligible Earnings | Fiscal 2023 AIP Awards | Fiscal 2023 AIP Awards as a Percentage of Target (paid in 2024) | | Brandon Moss | 100% | $332,292 | $560,743(1) | 168.75% | | Dominic Bardos | 75% | $339,700 | $573,243 | 168.75% | | Mehgan Peetz | 60% | $239,260 | $394,778 | 165.0% | | Jeffery Tolnar | 75% | $367,500 | $597,188 | 162.5% | | Jason Whitaker | N/A | N/A | N/A | N/A |

  22. 2023 Fiscal Year AIP Annual Awards

    | (1) Mr. Moss’s Fiscal 2023 AIP award payout was prorated based on his partial year of service with us. |

  23. 2023 Fiscal Year AIP Performance Targets and Results

    2023 Fiscal Year AIP Performance Targets and Results Adjusted EBITDA was selected as the sole financial performance measure for the 2023 Fiscal Year AIP because of its importance to value provided to shareholders. Adjusted EBITDA is defined as net income plus (i) interest expense, net, (ii) income tax expense, (iii) depreciation expense, (iv) amortization of intangibles, (v) payable pursuant to the TRA adjustment, (vi) gain on termination of TRA, (vii) loss on debt repayment, (viii) equity-based compensation, (ix) acquisition-related expenses, (x) COVID-19 expenses, (xi) non-recurring and other expenses, (xii), wire insulation shrinkback expenses, and (xiii) wire insulation shrinkback litigation expenses. Threshold, Target, and Stretch Adjusted EBITDA goals were approved by the Compensation Committee in February 2023 and were established based upon the Company’s fiscal 2023 operating plan approved by the Board. Adjusted EBITDA performance carries a weight of 75% in the final 2023 Fiscal Year AIP determination.

  24. 2023 Fiscal Year AIP Performance Targets and Results

    | AIP Metric | Threshold (50%) | Target (100%) | Stretch (200%) | 2023 Results | 2023 Payout (to be weighted 75%) | | Adjusted EBITDA | $137,900 | $153,200 | $168,500 | $173,391 | 200% of Target |

  25. 2023 Fiscal Year AIP Performance Targets and Results

    The objective of our compensation program is to align executives’ compensation with the objectives of our strategy and our operating results, attract and retain highly qualified executives, and provide incentives that drive shareholder value. Despite record quoting activity and strong orders, the charges for wire insulation shrinkback and related litigation expenses resulted in our GAAP net income of $42.7 million for the 2023 Fiscal Year. The AIP and the definition of Adjusted EBITDA exclude the charge for wire insulation and related litigation expenses. After careful consideration, and as consistent with our discussions with shareholders, the Compensation Committee confirmed that Adjusted EBITDA that excludes the $63.0 million charge for wire insulation shrinkback and related litigation expenses necessary to recover damages from the supplier of defective wire (as further described in “2023 Fiscal Year AIP Performance Targets and Results”) was the appropriate metric for assessing performance in the 2023 Fiscal Year AIP. As we continue to analyze all of the incoming information and remediation projections, we have determined the range of expenses communicated was still appropriate and the impact of the charge was immaterial at this time This approach ensures consistency with the Company’s externally reported financial performance results, preempts the possibility of future unintended incentive payouts when settlements occur, and reflects alignment with long-term shareholder experience, and appropriately rewards our leadership team. Adjusted EBITDA performance resulted in a maximum score for this 75% weighted AIP factor whereas overriding the Adjusted EBITDA calculation would have resulted in a below target payout. The Compensation Committee also considered the entirety of Shoals’ overall performance in Fiscal Year 2023 that suggested some non-Adjusted EBITDA opportunities for improvement. To reflect a more holistic review of company performance, the Compensation Committee and the Board of Directors reduced each named executive’s payment for performance on Individual Goals by half (applied negative discretion). Individual Goals are weighted 25% of AIP at target. After the Compensation Committee exercised negative discretion, the final payout dollar value across the NEOs was reduced by 9% (or 16% of target) from the overall result. The 2023 Fiscal Year AIP paid out at an average of 165% of target for Mr. Bardos, Ms. Peetz, and Mr. Tolnar, each of whom were in their respective roles for the full 2023 Fiscal Year. The average payout absent the cap would have been 181% of target. The 2023 Fiscal Year AIP paid out at 168.75% of target for Mr. Moss, with such payout prorated based on Mr. Moss’s partial year of service during the 2023 Fiscal Year. Without the downward adjustment, Mr. Moss’s payout would have been 187.5% of target. In making such determination, the Compensation Committee took specific note of the following:

  26. 2023 Fiscal Year AIP Performance Targets and Results

    | Alignment with reported results for the occurrence of an unusual event by adjusting for wire insulation shrinkback and related litigation expenses and recoveries. | In consideration of the feedback from the Audit Committee and the Board regarding unique non-recurring costs associated with wire insulation shrinkback and related litigation expenses and expected recoveries, the Compensation Committee believes that the calculation of the 2023 Fiscal Year AIP should be consistent with the presentation of non-GAAP charges in the Company’s financial statements. | | A new management team proactively addressing issues from the past. | In or around 2014 or 2015, we began purchasing red 10 AWG wire from Prysmian Cables and Systems, LLC (“Prysmian”), when none of our 2023 Named Executive Officers were employed yet by Shoals. When product problems were first reported, Shoals teams worked closely with customers to determine the underlying reasons so that wire insulation issues could be addressed. After conducting a thorough investigation into the underlying cause of the shrinkback issue, Shoals filed a lawsuit against the wire supplier, Prysmian, for recovery of damages. | | Retention of key executive talent and continuity | The Compensation Committee believes it is important for the senior management team to focus on appropriately responding to the wire insulation issue and legal recovery measures, as well as the Company’s long-term growth strategy, without concern over potential impacts on incentive awards unrelated to their own performance. |

  27. 2023 Fiscal Year AIP Performance Targets and Results

    | Alignment with our shareholder experience | The Shoals Management team and the Board have experienced stock value reductions along with other shareholders. While the Compensation Committee and the full Board support for excluding these non-GAAP expenses from the Adjusted EBITDA 2023 Fiscal Year AIP calculations, following a holistic review of overall performance, the Compensation Committee determined that Named Executive Officer AIP awards would be reduced by $35,889 to $63,694 as a result of reducing the payment for performance on Individual Goals by half. |

  28. 2023 Fiscal Year AIP Performance Targets and Results

    AIP Individual Component Considerations Mr. Whitaker’s employment was terminated due to disability, effective March 15, 2023, and as a result, he did not receive an AIP award in the 2023 Fiscal Year and, thus, was not evaluated for the AIP individual component. Each remaining Named Executive Officer had 25% of their AIP award target based upon an Individual Management by Objectives (“Individual Goals”) component. Each Named Executive Officer who participated in the 2023 Fiscal Year AIP had Individual Goals that were approved by the Compensation Committee. The Compensation Committee and Board determined that the payment for performance against Individual Goals would be reduced by half to account for non-EBITDA performance shortfalls versus the Company’s business scorecard and so to better reflect holistic performance. Performance assessment and key achievements are outlined below.

  29. 2023 Fiscal Year AIP Performance Targets and Results

    | Named Executive Officer | Adjusted Individual Goals Assessment (to be weighted 25%)(1) | | Brandon Moss | 75% of Target | | Dominic Bardos | 75% of Target | | Mehgan Peetz | 60% of Target | | Jeffery Tolnar | 50% of Target | | Jason Whitaker | N/A |

  30. 2023 Fiscal Year AIP Performance Targets and Results

    | Named Executive Officer | Key Performance Achievements | | Brandon Moss | • Championed the redefinition of three-year company strategy and spearheading its deployment, along with building refreshed company mission, vision, and values. • Established operating model to foster accountability and streamline execution. • Provided stability to the organization and established a foundation in preparation for future growth. • Build organization capacity by optimizing resources, including financial, human, and technological resources. |

  31. 2023 Fiscal Year AIP Performance Targets and Results

    | Named Executive Officer | Key Performance Achievements | | Dominic Bardos | • Provided leadership, communication, and support to the company and Board during the CEO transition. • After CEO placement, assisted in refining three-year company strategy and drove deployment, along with building refreshed company mission, vision, and values. • Enhanced internal controls over financial reporting and satisfied regulatory requirements of a large, accelerated filer. • Led company to drive enhanced working capital controls, improving operating cash flow to record levels. | | Mehgan Peetz | • Provided leadership, communication, and support to the company and Board during the CEO transition. • After CEO placement, assisted in refining three-year company strategy and drove deployment, along with building refreshed company mission, vision, and values. • Led the company's ESG initiatives and published a follow up report to the inaugural report and satisfied regulatory requirements of a large, accelerated filer. • Built IP support strategy and led the company's execution of IP litigation with the ITC. | | Jeffery Tolnar | • Provided leadership, communication, and support to the company and Board during the CEO transition. • After CEO placement, assisted in refining three-year company strategy and drove deployment, along with building refreshed company mission, vision, and values. • Led the commercial and operational function, driving record back log, sales, margin expansion and earnings. • Drove enhancements in both safety and quality systems |

  32. 2023 Fiscal Year Long-Term Incentive Equity Compensation

    2023 Fiscal Year Long-Term Incentive Equity Compensation The Company maintains the Shoals Technologies Group, Inc. 2021 Long-Term Incentive Plan (the “LTIP”), which was adopted on January 26, 2021. Each of our Named Executive Officers are eligible to participate in the LTIP, which provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, other stock-based awards or cash awards to employees and consultants of the Company and its affiliates and non-employee directors on the Board. The Compensation Committee determines the size and vesting terms of all awards made under the LTIP and administers all other aspects of the LTIP. In the 2023 Fiscal Year, the Compensation Committee approved two types of grants for the Company’s annual LTI awards under the LTIP, PSUs and RSUs, with each addressing long-term shareholder value alignment in different ways. The Compensation Committee believes that granting a combination of PSUs and RSUs provides alignment with shareholder interests, retention value, and a direct connection between pay and performance of our Company over the long-term. The 2023 LTI award grants for our Named Executive Officers were allocated 50% as PSUs and 50% as RSUs. The PSUs granted to certain of our Named Executive Officers in the 2023 Fiscal Year vest after a three-year performance period ending on December 31, 2025, with the performance criteria tied equally to Net Revenue Growth CAGR and Average Gross Margin, subject to continued employment through the date the Compensation Committee certifies achievement of such performance criteria following the end of such performance period. For purposes of such 2023 PSU awards, “Net Revenue Growth CAGR” means the Company’s compound annual growth rate, measured as of the last day of the applicable performance period, and “Average Gross Margin” means the three-year average of the Company’s gross profits during the applicable performance period, where gross profits means net sales (revenues as reported on the Company’s income statement for the applicable year) minus direct and production overhead cost (costs of goods sold as reported on the Company’s income statement for the applicable year). PSUs may pay out from 0% to 200% of target. Pre-set Threshold, Target, and Stretch goals were established by the Compensation Committee at grant but remain confidential during the performance period due to competitive harm that may occur if goals were to be made public before our 2026 proxy statement is released. The RSUs granted to certain of our Named Executive Officers in the 2023 Fiscal Year vest in three substantially equal installments on each of the first three anniversaries of the applicable vesting commencement date, subject to continued employment through each applicable vesting date. The 2023 LTIP award values were determined by taking into account base pay and annual incentive values, assessing market competitive total compensation levels, our compensation philosophy that weights variable compensation higher than fixed compensation and retention value. These values also consider each Named Executive Officers’ role, potential long-term contribution, performance, experience and skills. The target values remain within the market median for comparable positions. The following table shows the target dollar value of the 2023 LTI awards made to certain of our Named Executive Officers in the 2023 Fiscal Year.

  33. 2023 Fiscal Year Long-Term Incentive Equity Compensation

    | Named Executive Officer | PSUs (Target Award) ($) | RSUs ($) | Total(1) ($) | | Brandon Moss | $1,650,000 | $1,650,000 | $3,300,000 | | Dominic Bardos | $862,500 | $862,500 | $1,725,000 | | Mehgan Peetz | $681,000 | $681,000 | $1,362,000 | | Jeffery Tolnar | $500,000 | $500,000 | $1,000,000 | | Jason Whitaker | N/A | N/A | N/A |

  34. 2023 Fiscal Year Long-Term Incentive Equity Compensation

    | (1) The values in this table reflect the PSU and RSU target amounts approved by the Compensation Committee. Amounts reported in the “Summary Compensation Table” below reflect the aggregate grant date fair value of such awards, as computed in accordance with FASB ASC Topic 718. |

  35. 2023 Fiscal Year Long-Term Incentive Equity Compensation

    See the section titled “Narrative Description to the Summary Compensation Table and the Grant of Plan-Based Awards Table for the 2023 Fiscal Year—Long-Term Equity Compensation” below for details on the grants of RSUs and PSUs to the Named Executive Officers.

  36. 2024 PSU Awards

    2024 PSU Awards In February 2024, the Compensation Committee determined that certain of the PSU awards to be granted to our Named Executive Officers during fiscal year 2024 will be subject to a new set of performance-vesting metrics. 50% of the 2024 PSU awards will continue to be subject to performance-based vesting based upon Net Revenue Growth CAGR targets. New for 2024, this portion of the PSU award value will then be modified based upon Net Revenue Growth CAGR relative to the Company’s compensation peer group. Specifically, this portion of the PSU award will be multiplied by 1.5x for performance at the 80th percentile or above, 1.0x for performance at the 50th percentile, and 0.5x for performance at the 20th percentile or below. Interpolated payouts will be calculated for performance between the 20th percentile and 50th percentile or between the 50th percentile and 80th percentile. This modifier was implemented to acknowledge both absolute and relative growth performance. Also new for 2024, the remaining 50% of the 2024 PSU awards will be subject to performance-based vesting based upon Cumulative Adjusted Diluted EPS targets (instead of Average Gross Margin targets). For purposes of such 2024 PSU awards, “Cumulative Adjusted Diluted EPS” means Adjusted Diluted EPS measured on a cumulative basis during the applicable performance period, and “Adjusted Diluted EPS” means Adjusted Net Income (as defined above in the section titled “Business Environment and Financial Results”) divided by the diluted weighted average of Company Class A common stock outstanding for the applicable period. The Compensation Committee felt that this change was appropriate because Cumulative Adjusted Diluted EPS is a metric that many investors use to evaluate investment decisions and because it is more directly impacted by the executive leadership team.

  37. 2024 AIP

    2024 AIP In February 2024, the Compensation Committee also approved changes to the AIP metrics for fiscal year 2024. In the 2023 Fiscal Year, the AIP plan was based 75% on Adjusted EBITDA and 25% on Individual Goals. To provide greater balance across performance metrics, the AIP plan for fiscal year 2024 will be based 60% on Adjusted EBITDA, 15% on Adjusted Free Cash Flow, and 25% on Individual Goals. Additionally, given the importance of the warranty remediation discussed previously, performance in that area will be included in each NEO’s Individual Goals.

  38. Other Executive Benefits and Perquisites

    | • | short-term disability; and |

  39. The Role of the Independent Consultant

    The Role of the Independent Consultant In the 2023 Fiscal Year, the Compensation Committee continued to use the services of Pay Governance in fulfilling its obligations under its charter. Pay Governance attended all of the Compensation Committee meetings in the 2023 Fiscal Year and provided the Compensation Committee with objective expert analyses, assessments, research, and recommendations for executive compensation programs, incentives, executive benefits, and non-executive director compensation. In this capacity, Pay Governance provided services that related solely to the work performed for, and at the direction of, the Compensation Committee. The Compensation Committee selected Pay Governance to serve as its independent consultant only after assessing the firm’s independence, which concluded that no conflicts of interest existed. The Compensation Committee retains the right to modify or terminate its relationship with Pay Governance or select other outside advisors to assist the Compensation Committee in carrying out its responsibilities.

  40. AGREEMENTS WITH NAMED EXECUTIVE OFFICERS

    AGREEMENTS WITH NAMED EXECUTIVE OFFICERS We believe that a strong, experienced management team is essential to the best interests of the Company and our shareholders. We have entered into employment agreements and/or offer letters with certain of our Named Executive Officers in order to minimize employment security concerns arising in the course of negotiating and completing a significant transaction. For a description of such employment agreements and offer letters, see the section below titled “Narrative Description to the Summary Compensation Table and the Grant of Plan-Based Awards Table for the 2023 Fiscal Year - Employment Agreements and Offer Letters.” For a more complete description of our obligations under the employment agreements and offer letters in the event of a termination of employment or change in control, see the section below titled “Potential Payments Upon Termination or a Change in Control.”

  41. Risk Assessment

    Risk Assessment The Compensation Committee oversees the design and implementation of our compensation and benefits programs and policies and monitors the incentives created by these programs and policies to determine whether they encourage excessive risk-taking. The Compensation Committee also assesses the relationship between risk management policies and practices and compensation and evaluates compensation policies and practices that could mitigate any such risk. The Company has determined that any risks arising from its compensation programs and policies are not reasonably likely to have a material adverse effect on the Company. The Company’s compensation programs and policies mitigate risk by combining performance-based, long-term compensation elements with payouts that are highly correlated to the value delivered to shareholders. The combination of performance measures for annual bonuses and the equity compensation programs, share ownership and retention guidelines for our Named Executive Officers, as well as the multiyear vesting schedules for equity awards encourage employees to maintain both a short and a long-term view with respect to Company performance.

  42. Section 280G of the Internal Revenue Code

    Section 280G of the Internal Revenue Code Section 280G of the Code disallows a tax deduction with respect to “excess parachute payments” to certain executive officers of companies that undergo a change in control. In addition, Section 4999 of the Code imposes a 20% excise tax penalty on the individual receiving the “excess parachute payment.” Parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans or programs and other equity-based compensation. “Excess parachute payments” are parachute payments that exceed a threshold determined under Section 280G of the Internal Revenue Code (the “Code”) based on an executive officer’s prior compensation. In approving compensation arrangements for our Named Executive Officers, the Board considers all elements of the cost to us of providing such compensation, including the potential impact of Section 280G of the Code. However, the Board may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility of Section 280G of the Code and the imposition of excise taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract and retain executive talent. We do not provide for excise tax gross-ups to our executive officers and do not expect to do so in the future.

  43. Accounting for Stock-Based Compensation

    Accounting for Stock-Based Compensation We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC 718, for our equity-based compensation awards. ASC 718 requires companies to calculate the grant date “fair value” of their equity-based awards using a variety of assumptions. ASC 718 also requires companies to recognize the compensation cost of their equity-based awards in their income statements over the period that an associate is required to render service in exchange for the award. Future grants of stock options, restricted stock, restricted stock units and other equity-based awards under our equity incentive award plans will be accounted for under ASC 718. The Compensation Committee regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.

  44. 2023 Fiscal Year Summary Compensation Table

    | Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | | Brandon Moss(6) Chief Executive Officer | 2023 | $332,292 | $250,000 | $4,400,045 | — | $560,743 | $16,950 | $5,560,030 | | | 2022 | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — | | Dominic Bardos(7) Chief Financial Officer | 2023 | $452,933 | — | $1,771,393 | — | $573,243 | $13,016 | $2,810,585 | | | 2022 | $104,888 | $137,312 | $1,447,556 | — | — | — | $1,689,756 | | | 2021 | — | — | — | — | — | — | — | | Mehgan Peetz Chief Legal Officer, Corporate Secretary | 2023 | $398,766 | — | $1,398,644 | — | $394,778 | $21,531 | $2,213,719 | | | 2022 | $365,625 | — | $865,789 | — | 244,110 | $3,583 | $1,479,107 | | | 2021 | $350,000 | $122,525 | $2,000,014 | — | — | — | $2,472,539 | | Jeffery Tolnar President, Former Interim Chief Executive Officer | 2023 | $490,000 | $90,000 | $1,026,912 | — | $597,188 | $13,200 | $2,217,300 | | | 2022 | $286,250 | — | $687,078 | — | 201,849 | $10,983 | $1,186,160 | | | 2021 | $206,890 | $100,000 | $809,098 | — | — | $107,136 | $1,223,124 | | Jason Whitaker(8) Former Chief Executive Officer | 2023 | $116,699 | — | — | — | — | $4,361,135 | $4,477,834 | | | 2022 | $510,048 | — | $3,596,092 | — | 571,361 | $34,651 | $4,712,152 | | | 2021 | $435,000 | $149,853 | $3,000,021 | — | — | $99,868 | $3,684,742 |

  45. 2023 Fiscal Year Grants of Plan-Based Awards

    2023 Fiscal Year Grants of Plan-Based Awards The following table sets forth certain information with respect to grants of plan-based awards for the year ended December 31, 2023 with respect to our Named Executive Officers.

  46. 2023 Fiscal Year Grants of Plan-Based Awards

    | | | Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | | | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock and Option Awards ($)(4) | | Brandon Moss Chief Executive Officer | — | 166,146 | 332,292 | 664,584 | — | — | — | — | — | | | July 17, 2023 | — | — | — | 30,888 | 61,775 | 123,550 | — | 1,650,010 | | | July 17, 2023 | — | — | — | — | — | — | 61,775 | 1,650,010 | | | July 17, 2023 | — | — | — | — | — | — | 41,184 | 1,100,025 | | Dominic Bardos Chief Financial Officer | — | 169,850 | 339,700 | 679,400 | — | — | — | — | — | | | January 18, 2023 | — | — | — | 15,671 | 31,341 | 62,682 | — | 885,697 | | | January 18, 2023 | — | — | — | — | — | — | 31,341 | 885,697 | | Mehgan Peetz Chief Legal Officer, Corporate Secretary | — | 119,630 | 239,260 | 478,520 | — | — | — | — | — | | | January 18, 2023 | — | — | — | 12,373 | 24,746 | 49,492 | — | 699,322 | | | January 18, 2023 | — | — | — | — | — | — | 24,746 | 699,322 | | Jeffery Tolnar Interim President, Former Interim Chief Executive Officer | — | 183,750 | 367,500 | 735,000 | — | — | — | — | — | | | January 18, 2023 | — | — | — | 9,085 | 18,169 | 36,338 | — | 513,456 | | | January 18, 2023 | — | — | — | — | — | — | 18,169 | 513,456 |

  47. 2023 Fiscal Year Grants of Plan-Based Awards

    | (1) Amounts in this column reflect the annual performance bonuses granted to certain of our Named Executive Officers under the AIP in the 2023 Fiscal Year. |

  48. 2023 Fiscal Year Grants of Plan-Based Awards

    | (2) Amounts in this column reflect awards of PSUs granted to certain of our Named Executive Officers under the LTIP in the 2023 Fiscal Year. |

  49. 2023 Fiscal Year Grants of Plan-Based Awards

    | (3) Amounts in this column reflect awards of RSUs granted to certain of our Named Executive Officers under the LTIP in the 2023 Fiscal Year. |

  50. 2023 Fiscal Year Grants of Plan-Based Awards

    | (4) Amounts in this column reflect the fair value of the applicable awards of RSUs and PSUs, computed in accordance with FASB ASC. Topic 718. |

  51. Narrative Description to the Summary Compensation Table and the Grant of Plan-Based Awards Table for the 2023 Fiscal Year

    Narrative Description to the Summary Compensation Table and the Grant of Plan-Based Awards Table for the 2023 Fiscal Year

  52. Outstanding Equity Awards at 2023 Fiscal Year End

    Outstanding Equity Awards at 2023 Fiscal Year End The following table sets forth certain information with respect to outstanding equity awards of our Named Executive Officers as of December 31, 2023 with respect to the named executive officer.

  53. Outstanding Equity Awards at 2023 Fiscal Year End

    | | | Stock Awards | | | | | Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have not Vested (#)(1) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | Brandon Moss(3) | July 17, 2023 | 61,775 | $959,984 | — | — | | | July 17, 2023 | 41,184 | $639,999 | — | — | | | July 17, 2023 | — | — | 61,775 | $959,984 | | Dominic Bardos(4) | October 17, 2022 | 8,932 | $138,803 | — | — | | | October 17, 2022 | 14,737 | $229,013 | — | — | | | October 17, 2022 | — | — | 26,796 | $416,410 | | | January 18, 2023(5) | 20,894 | $324,693 | — | — | | | January 18, 2023(6) | — | — | 31,341 | $487,039 | | Mehgan Peetz | January 29, 2021(7) | 22,000 | $341,880 | — | — | | | November 8, 2021(8) | 5,101 | $79,270 | — | — | | | April 18, 2022(9) | 15,942 | $247,739 | — | — | | | April 18, 2022(10) | — | — | 47,826 | $743,216 | | | January 18, 2023(5) | 16,497 | $256,363 | — | — | | | January 18, 2023(6) | — | — | 24,746 | $384,553 | | Jeffery Tolnar | March 31, 2021(11) | 7,188 | $111,702 | — | — | | | November 8, 2021(8) | 5,101 | $79,270 | — | — | | | April 18, 2022(9) | 12,636 | $196,363 | — | — | | | April 18, 2022(10) | — | — | 37,908 | $589,090 | | | January 18, 2023(5) | 12,112 | $188,220 | — | — | | | January 18, 2023(6) | — | — | 18,169 | $282,346 |

  54. Outstanding Equity Awards at 2023 Fiscal Year End

    | (1) The treatment of these awards upon certain termination and change in control events is described in the “Potential Payments Upon Termination or a Change in Control” section below. |

  55. Outstanding Equity Awards at 2023 Fiscal Year End

    | (2) The values in these columns are calculated based on $15.54, the closing price of the Company’s Class A common stock on December 29, 2023, the last trading day of the 2023 Fiscal Year. |

  56. Outstanding Equity Awards at 2023 Fiscal Year End

    | (3) On July 17, 2023, Mr. Moss was granted the following equity awards: (i) an award of 61,775 RSUs, which vests in substantially equal installments on each of the first three anniversaries of the grant date, subject to continued employment through the applicable vesting date; (ii) an award of 41,184 RSUs, 100% of which vests on July 17, 2024, subject to continued employment through such vesting date; and (iii) an award of PSUs, which vests (x) fifty percent (50%) based on the Company’s compound annual revenue growth rate measured as of the last day of the three-year performance period ending on December 31, 2025 and (y) fifty percent (50%) based on the Company’s average gross profits during such performance period, in each case, subject to continued employment through the date the Compensation Committee certifies achievement of the performance criteria following the end of such performance period. Such award of PSUs can ultimately vest from 0% to 200%. The values of such award of PSUs is based on achieving target performance. |

  57. Outstanding Equity Awards at 2023 Fiscal Year End

    | (4) On October 17, 2022, Mr. Bardos was granted the following equity awards: (i) an award of 13,398 RSUs, which vests in substantially equal installments on each of the first three anniversaries of the grant date, subject to continued employment through the applicable vesting date; (ii) an award of 36,843 RSUs, 60% of which vested on July 16, 2023 and 40% of which vests on July 16, 2024, subject to continued employment through the applicable vesting date; and (iii) an award of PSUs, which vests (x) fifty percent (50%) based on the Company’s compound annual revenue growth rate measured as of the last day of the three-year performance period ending on December 31, 2024 and (y) fifty percent (50%) based on the Company’s average gross profits during such performance period, in each case, subject to continued employment through the date the Compensation Committee certifies achievement of the performance criteria following the end of such performance period. Such award of PSUs can ultimately vest from 0% to 200%. The values of such award of PSUs is based on achieving maximum performance (i.e., achievement of Stretch performance). |

  58. Outstanding Equity Awards at 2023 Fiscal Year End

    | (5) Mr. Bardos, Ms. Peetz and Mr. Tolnar were each granted an award of RSUs on January 18, 2023. Each such award vests in substantially equal installments on each of the first three anniversaries of December 4, 2022, subject to continued employment through the applicable vesting date. |

  59. Outstanding Equity Awards at 2023 Fiscal Year End

    | (6) Mr. Bardos, Ms. Peetz and Mr. Tolnar were each granted an award of PSUs on January 18, 2023. Each such award vests (i) fifty percent (50%) based on the Company’s compound annual revenue growth rate measured as of the last day of the three-year performance period ending on December 31, 2025 and (ii) fifty percent (50%) based on the Company’s average gross profits during such performance period, in each case, subject to continued employment through the date the Compensation Committee certifies achievement of the performance criteria following the end of such performance period. The awards of PSUs can ultimately vest from 0% to 200%. The values of the PSUs reported in this column are based on achieving target performance. |

  60. Outstanding Equity Awards at 2023 Fiscal Year End

    | (7) On January 29, 2021, Ms. Peetz was granted an award of RSUs in connection with the IPO, with 16,000 RSUs fully vested upon grant and the remaining 44,000 RSUs vesting 25% on each of the first four anniversaries of the grant date, subject to continued employment through the applicable vesting date. |

  61. Outstanding Equity Awards at 2023 Fiscal Year End

    | (8) On November 8, 2021, Ms. Peetz and Mr. Tolnar were each granted an award of RSUs, each of which vests in substantially equal installments on each of the first three anniversaries of September 13, 2021, subject to continued employment through the applicable vesting date. |

  62. Outstanding Equity Awards at 2023 Fiscal Year End

    | (9) Ms. Peetz and Mr. Tolnar were each granted an award of RSUs on April 18, 2022. Each such award vests in substantially equal installments on each of the first three anniversaries of March 7, 2022, subject to continued employment through the applicable vesting date. |

  63. Outstanding Equity Awards at 2023 Fiscal Year End

    | (10) Ms. Peetz and Mr. Tolnar were each granted an award of PSUs on April 18, 2022. Each such award vests (i) fifty percent (50%) based on the Company’s compound annual revenue growth rate measured as of the last day of the three-year performance period ending on December 31, 2024 and (ii) fifty percent (50%) based on the Company’s average gross profits during such performance period, in each case, subject to continued employment through the date the Compensation Committee certifies achievement of the performance criteria following the end of such performance period. The awards of PSUs can ultimately vest from 0% to 200%. The values of the PSUs reported in this column are based on achieving maximum performance (i.e., achievement of Stretch performance). |

  64. Outstanding Equity Awards at 2023 Fiscal Year End

    | (11) On March 31, 2021, Mr. Tolnar was granted an award of RSUs, which vests 25% on each of the first four anniversaries of the grant date, subject to continued employment through the applicable vesting date. |

  65. Pension Benefits

    Pension Benefits Our Named Executive Officers did not participate in or have account balances in qualified or nonqualified defined benefit plans sponsored by us. The Board or Compensation Committee may elect to adopt qualified or nonqualified benefit plans in the future if it determines that doing so is in our best interest.

  66. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation Our Named Executive Officers did not participate in or have account balances in nonqualified defined contribution plans or other nonqualified deferred compensation plans maintained by us. The Board or Compensation Committee may elect to provide our executive officers and other employees with nonqualified defined contribution or other nonqualified deferred compensation benefits in the future if it determines that doing so is in our best interest.

  67. Potential Payments Upon Termination or a Change in Control

    Potential Payments Upon Termination or a Change in Control

  68. Executive Severance Plan

    | Benefits and Payments Upon Termination(1) | Termination Due to Death or Disability | Termination by the Company Without Cause or by the Executive for Good Reason (a “Qualifying Termination”) Not Within 24 Months Following Change in Control(2) | Qualifying Termination Within 24 Months Following Change in Control | Change in Control With No Qualifying Termination | | Jason Whitaker(3) | $4,342,226 | — | — | — | | Brandon Moss | | | | | | Cash Severance Payments(4) | — | $1,450,000 | $2,900,000 | — | | Accelerated Vesting of Equity Awards:(5) | | | | | | Unvested RSUs. | $1,599,983 | $959,999 | $1,599,983 | $1,599,983 | | Unvested PSUs. | $146,309 | $146,309 | $959,984 | — | | COBRA Payments(6) | — | $39,019 | $39,019 | — | | Dominic Bardos | | | | | | Cash Severance Payments(4) | — | $475,000 | $831,250 | — | | Accelerated Vesting of Equity Awards:(5) | | | | | | Unvested RSUs. | $692,509 | $460,761 | $682,509 | $692,509 | | Unvested PSUs. | $248,624 | $248,624 | $695,244 | — | | COBRA Payments(6) | — | $13,345 | $13,345 | — | | Mehgan Peetz | | | | | | Cash Severance Payments(4) | — | $400,000 | $640,000 | — | | Accelerated Vesting of Equity Awards:(5) | | | | | | Unvested RSUs. | $925,252 | $506,153 | $583,372 | $583,372 | | Unvested PSUs. | $375,602 | $375,602 | $756,161 | — | | COBRA Payments(7) | — | — | — | — | | Jeffery Tolnar | | | | | | Cash Severance Payments(4) | — | $415,000 | $726,250 | — | | Accelerated Vesting of Equity Awards:(5) | | | | | | Unvested RSUs. | $575,555 | $271,562 | $463,853 | $463,853 | | Unvested PSUs. | $290,241 | $290,241 | $576,891 | — | | COBRA Payments(6) | — | $13,345 | $13,345 | — |

  69. Chief Executive Officer Pay Ratio

    Chief Executive Officer Pay Ratio Pursuant to Item 402(u) of Regulation S-K, we are disclosing the pay ratio comparing the median of the annual total compensation of our employees other than Mr. Moss, our Chief Executive Officer as of October 1, 2023 (the date selected to identify the median employee, as further described below), and the annual total compensation of Mr. Moss. The pay ratio is calculated in a manner consistent with Item 402(u) of Regulation S-K. For the 2023 Fiscal Year:

  70. Chief Executive Officer Pay Ratio

    | • | The annual total compensation of the median employee identified at the median of all employees (other than Mr. Moss) was $57,008; |

  71. Chief Executive Officer Pay Ratio

    | • | The annual total compensation of Mr. Moss was $6,607,219; and |

  72. Chief Executive Officer Pay Ratio

    | • | The estimated ratio of the annual total compensation of Mr. Moss to the median annual total compensation of all other employees was approximately 116 to 1. |

  73. Chief Executive Officer Pay Ratio

    We selected October 1, 2023 as the date to determine the median employee. As of October 1, 2023, we had 726 employees globally, including 723 U.S. employees and three non-U.S. employees. In determining the identity of our median employee, we excluded three contracted service providers located in Spain, which in the aggregate represents less than 5% of our workforce. To identify the median employee we used federal taxable W-2 earnings, as determined from the Company’s payroll records for the twelve-month period ended December 31, 2023. Federal taxable W-2 earnings consist of cash compensation (including base salary, hourly wages, overtime pay, and annual incentive compensation) and other taxable earnings. We annualized the compensation for any employees who commenced work in 2023 and were employed as of October 1, 2023. In accordance with the rules set forth in Item 402(u) of Regulation S-K, we calculated the median employee’s annual total compensation in the same manner as the calculation of Mr. Moss’s annual total compensation in the “Summary Compensation Table” above. Mr. Moss was serving as our Chief Executive Officer as of October 1, 2023. The annual total compensation for Mr. Moss was calculated based on the values included in the “Summary Compensation Table” above, and was then annualized for 2023, as Mr. Moss did not begin serving as our Chief Executive Officer until July 17, 2023. To annualize Mr. Moss’s 2023 annual total compensation, (i) we first started with his total compensation as reported in the “2023 Summary Compensation Table” above (i.e., $5,560,030), (ii) next, we annualized his 2023 amounts reported in the “Salary” and the “Non-Equity Incentive Plan Compensation” columns of the “2023 Summary Compensation Table” above, since these amounts as reported in the “2023 Summary Compensation Table” above reflect Mr. Moss’s partial year of service with us, and (iii) finally, we added his 2023 amounts reported in the “Bonus”, “Stock Awards” and “All Other Compensation” columns of the “2023 Summary Compensation Table” above, since these amounts reflect one-time payments. This resulted in an annualized 2023 annual total compensation value for Mr. Moss equal to $6,607,219, which was used to calculate the ratio of annual total compensation for Mr. Moss to the annual total compensation for our median employee. We believe that this pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.

  74. Pay Versus Performance

    Pay Versus Performance The following table sets forth certain information with respect to the Company’s financial performance and the compensation paid to our Named Executive Officers for the years ended on December 31, 2023 and December 31, 2022.

  75. Pay Versus Performance

    | | | | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for PEO 1(1) | Compensation Actually Paid to PEO 1(1)(2) | Summary Compensation Table Total for PEO 2(3) | Compensation Actually Paid to PEO 2(3)(2) | Summary Compensation Table Total for PEO 3(4) | Compensation Actually Paid to PEO 3(4)(2) | Average Summary Compensation Table Total for Non-PEO NEOs(5) | Average Compensation Actually Paid to Non-PEO NEOs(5)(2) | Total Shareholder Return(6) | Peer Group Total Shareholder Return(6) | Net Income(7) | Adjusted EBITDA(8) | | 2023 | $4,477,834 | $301,159(9) | $2,217,300 | $1,180,717(9) | $5,560,030 | $3,239,960(9) | $2,512,152 | $1,086,518(9) | $45.80 | $47.53 | $39,974,000 | $173,391,000 | | 2022 | $4,712,152 | $8,885,983 | — | — | — | — | $1,074,313 | $1,160,674 | $72.71 | $64.56 | $127,611,000 | $92,989,000 | | 2021 | $3,684,742 | $2,916,141 | — | — | — | — | $1,847,832 | $1,795,895 | $71.62 | $67.78 | $(327,000) | $62,857,000 |

  76. Pay Versus Performance

    | (1) The name of the Principal Executive Officer of the Company (“PEO”) that is included as PEO 1 in these columns is Jason Whitaker. On February 23, 2023, the Board made the decision to terminate Mr. Whitaker’s employment as Chief Executive Officer of the Company due to disability, effective as of March 15, 2023. |

  77. Pay Versus Performance

    | (2) In calculating the ‘compensation actually paid’ amounts reflected in these columns, the fair value or change in fair value, as applicable, of the equity award adjustments included in such calculations was computed in accordance with FASB ASC Topic 718. The valuation assumptions used to calculate such fair values did not materially differ from those disclosed at the time of grant. |

  78. Pay Versus Performance

    | (3) The name of the PEO that is included as PEO 2 in these columns is Jeffery Tolnar. On February 23, 2023, the Company appointed Jeffery Tolnar as interim Chief Executive Officer, effective immediately following Mr. Whitaker’s termination on March 15, 2023. Upon the effectiveness of Mr. Moss’s appointment as Chief Executive Officer, Jeffery Tolnar ceased serving as Interim Chief Executive Officer and resumed his position as President. Jeffery Tolnar was previously appointed as the Company’s President, effective as of December 19, 2022, and prior to serving as President was the Company’s Senior Vice President, Electric Vehicle Solutions since April 2021. |

  79. Pay Versus Performance

    | (4) The name of the PEO that is included as PEO 3 in these columns is Brandon Moss. On June 14, 2023, the Company appointed Brandon Moss as Chief Executive Officer, effective July 17, 2023. |

  80. Pay Versus Performance

    | (5) The names of each of the non-PEO Named Executive Officers reflected in these columns for each applicable fiscal year are as follows: (i) for the 2023 Fiscal Year, Dominic Bardos and Mehgan Peetz; (ii) for the 2022 Fiscal Year, Dr. Philip Garton, Kevin Hubbard, Dominic Bardos, Mehgan Peetz and Jeffery Tolnar; and (iii) for the 2021 Fiscal Year, Mehgan Peetz and Jeffery Tolnar. |

  81. Pay Versus Performance

    | (6) The Company TSR and the Company’s Peer Group TSR reflected in these columns for each applicable fiscal year is calculated based on a fixed investment of $100 at the applicable measurement point on the same cumulative basis as is used in Item 201(e) of Regulation S-K. |

  82. Pay Versus Performance

    The peer group used to determine the Company’s Peer Group TSR for each applicable fiscal year is the following published industry index, as disclosed in our 2023 Annual Report to shareholders pursuant to Item 201(e) of Regulation S-K: MAC Global Solar Energy Index (SUNIDX).

  83. Pay Versus Performance

    | (7) Represents the amount of net income attributable to Shoals Technologies Group, Inc. reflected in the Company’s audited GAAP financial statements for each applicable period. |

  84. Pay Versus Performance

    | (8) We have selected Adjusted EBITDA as our most important financial measure (that is not otherwise required to be disclosed in the table) used to link ‘compensation actually paid’ to our Named Executive Officers to company performance for the 2023 Fiscal Year. We define Adjusted EBITDA as net income plus (i) interest expense, net, (ii) income tax expense, (iii) depreciation expense, (iv) amortization of intangibles, (v) payable pursuant to the TRA adjustment, (vi) gain on termination of TRA, (vii) loss on debt repayment, (viii) equity-based compensation, (ix) acquisition-related expenses, (x) COVID-19 expenses, (xi) non-recurring and other expenses, (xii), wire insulation shrinkback expenses, and (xiii) wire insulation shrinkback litigation expenses. See Appendix A for reconciliation of net income to Adjusted EBITDA. |

  85. Pay Versus Performance

    | (9) For the 2023 Fiscal Year, the ‘compensation actually paid’ to the PEOs and the average ‘compensation actually paid’ to the non-PEO Named Executive Officers reflect each of the following adjustments made to the total compensation amounts reported in the Summary Compensation Table for the 2023 Fiscal Year, computed in accordance with Item 402(v) of Regulation S-K: |

  86. Pay Versus Performance

    | | PEO 1 | PEO 2 | PEO 3 | Average Non-PEO NEOs | | Total Compensation Reported in 2023 Summary Compensation Table | $4,477,834 | $2,217,300 | $5,560,030 | $2,512,152 | | Less, Grant Date Fair Value of Stock & Option Awards Reported in the 2023 Summary Compensation Table | — | ($1,026,912) | ($4,400,045) | ($1,585,019) | | Plus, Year-End Fair Value of Awards Granted in 2023 that are Outstanding and Unvested | — | $329,394 | $2,079,975 | $508,426 | | Plus, Change in Fair Value of Awards Granted in Prior Years that are Outstanding and Unvested (From Prior Year-End to Year-End) | — | ($413,504) | — | ($487,551) | | Plus, Vesting Date Fair Value of Awards Granted in 2023 that Vested in 2023 | — | $87,584 | — | $135,172 |

  87. Pay Versus Performance

    | | PEO 1 | PEO 2 | PEO 3 | Average Non-PEO NEOs | | Plus, Change in Fair Value of Awards Granted in Prior Years that Vested in 2023 (From Prior Year-End to Vesting Date) | ($578,025) | ($13,144) | — | $3,338 | | Less, Prior Year-End Fair Value of Awards Granted in Prior Years that Failed to Vest in 2023 | ($3,598,650) | — | — | — | | Plus, Dollar Value of Dividends, Dividend Equivalents or other Earnings Paid on Stock & Option Awards in 2023 prior to Vesting (if not reflected in the fair value of such award or included in Total Compensation for that Year) | — | — | — | — | | Total Adjustments | ($4,176,675) | ($1,036,583) | ($2,320,070) | ($1,425,634) | | Compensation Actually Paid for the 2023 Fiscal Year | $301,159 | $1,180,717 | $3,239,960 | $1,086,518 |

  88. Pay versus Performance Comparative Disclosure

    Pay versus Performance Comparative Disclosure In accordance with Item 402(v) of Regulation S-K, the Company is providing the following charts describing the relationships between the information presented in the table above. Compensation Actually Paid and Company TSR Compensation Actually Paid and Net Income

  89. Pay versus Performance Comparative Disclosure

    | (1) Fiscal Year 2022 net income includes $110.9 million non-recurring gain related to the termination of the tax receivable agreement on December 6, 2022. |

  90. Pay versus Performance Comparative Disclosure

    Compensation Actually Paid and Adjusted EBITDA Company TSR and Peer Group TSR

  91. Pay versus Performance Tabular List

    Pay versus Performance Tabular List The following table lists our most important performance measures used by us to link ‘compensation actually paid’ to our Named Executive Officers to company performance for the 2023 Fiscal Year. The performance measures included in this table are not ranked by relative importance.

  92. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION The following table summarizes the compensation awarded or paid to the members of the Board for the 2023 Fiscal Year.

  93. DIRECTOR COMPENSATION

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Brad Forth | $50,000 | $424,262 | $474,262 | | Peter Wilver | $75,000 | $150,849 | $225,849 | | Ty Daul | $75,000 | $150,849 | $225,849 | | Toni Volpe | $75,000 | $150,849 | $225,849 | | Lori Sundberg | $90,000 | $150,849 | $240,849 | | Jeannette Mills | $75,000 | $150,849 | $225,849 | | Robert Julian | $100,000 | $150,849 | $250,849 |

  94. DIRECTOR COMPENSATION

    | (1) Amounts in this column reflect the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, of stock awards that were granted to certain of our directors in the 2023 Fiscal Year. On May 4, 2023, Peter Wilver, Ty Daul, Toni Volpe, Lori Sundberg, Jeannette Mills and Robert Julian each received an award of 8,325 RSUs. Brad Forth received an award of 23,414 RSUs on May 4, 2023. Each such award of RSUs vests one-hundred percent (100%) on the date of this 2024 Annual Meeting, subject to continued service through such vesting date. |

  95. Narrative Disclosure to Director Compensation Table

    Narrative Disclosure to Director Compensation Table On January 29, 2021, the Board adopted the Amended and Restated Non-Employee Director Compensation Policy for our non-employee directors (the “Director Compensation Policy”). Pursuant to the Director Compensation Policy, our non-employee directors are eligible to receive compensation for their service on the Board consisting of an annual cash retainer (and, if applicable, committee chairperson fees) and an annual award of RSUs granted under the LTIP. On October 17, 2022, effective as of May 4, 2022, the Board amended and restated the Director Compensation Policy. During the 2023 Fiscal Year, the Director Compensation Policy provided for the following: Each non-employee director receives an annualized cash retainer of $75,000, paid in four equal quarterly installments, and prorated for any partial year of service on the Board. Each non-employee director who is a chairperson of a committee of the Board is entitled to additional cash compensation for such service, paid in four equal quarterly installments and prorated for any partial year of service, as follows: (i) $25,000 for the chairperson of the Audit Committee, (ii) $15,000 for the chairperson of the Compensation Committee, and (iii) $15,000 for the chairperson of the Nominating and Corporate Governance Committee. Each non-employee director also receives an annual award of RSUs granted under the LTIP on or about the date of our annual meeting of shareholders, which will vest on the date of the annual meeting of shareholders in the subsequent year, subject to continued service through such date. The grant date fair market value of each such annual RSU award will equal approximately $160,000. In the event a new non-employee director is elected or appointed to the Board, such director will be eligible to receive an annual RSU award for the year of election or appointment, as applicable, which will vest on the date of the first Company annual meeting of shareholders to occur immediately following the applicable grant date, subject to continued service through such date, and prorated based on the number of days served during the period commencing as of the date of the Company annual meeting of shareholders that occurred immediately prior to the applicable grant date and ending on the applicable vesting date. Brad Forth, in his capacity as Chairman of the Board, was entitled to receive the following cash and equity compensation through December 31, 2023: (i) an annualized cash retainer of $50,000 and (ii) an annual RSU award with a grant date fair market value equal to approximately $450,000. Our directors are eligible to be reimbursed for reasonable out-of-pocket expenses incurred to attend meetings or otherwise perform their duties consistent with service on the Board. Our directors are also entitled to the protection provided by the indemnification provisions in our bylaws. The Board may revise the compensation arrangements for our directors from time to time.

  96. BOARD OF DIRECTORS

    BOARD OF DIRECTORS (a) Except as otherwise provided in this Amended and Restated Certificate of Incorporation or the DGCL, the business and affairs of the Company shall be managed by or under the direction of the Board. Except as otherwise provided for or fixed pursuant to the provisions of Article IV hereof (including any certificate of designation with respect to any series of Preferred Stock) and this Article VI relating to the rights of the holders of any series of Preferred Stock to elect additional directors, the total number of directors shall be determined from time to time exclusively by resolution adopted by the Board. Prior to the date of the 2027 annual meeting of stockholders, T the directors (other than those directors elected by the holders of any series of Preferred Stock, voting separately as a series or together with one or more other such series, as the case may be) shall be divided into three classes designated Class I, Class II and Class III. Each class shall consist, as nearly as possible, of one-third of the total number of such directors. Class I directors shall initially serve for a term expiring at the first annual meeting of stockholders following the date the Common Stock is first publicly traded (the “IPO Date”), Class II directors shall initially serve for a term expiring at the second annual meeting of stockholders following the IPO Date and Class III directors shall initially serve for a term expiring at the third annual meeting of stockholders following the IPO Date. At each succeeding annual meeting, successors to the class of directors whose term expires at that annual meeting shall be elected for a term expiring at the third succeeding annual meeting of stockholders. If the number of such directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any such additional director of any class elected to fill a newly created directorship resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case shall a decrease in the number of directors remove or shorten the term of any incumbent director. Each director elected at the 2025 annual meeting of stockholders shall be elected for a term expiring at the 2026 annual meeting of stockholders. Each director elected at the 2026 annual meeting of stockholders shall be elected for a term expiring at the 2027 annual meeting of stockholders. At the 2027 annual meeting of stockholders and at each annual meeting of stockholders thereafter, all directors shall be elected for a term expiring at the next annual meeting of stockholders. Any such Each director shall hold office until the annual meeting at which his or her term expires and until his or her successor shall be elected and qualified, or his or her death, resignation, retirement, disqualification or removal from office. The Board is authorized to assign members of the Board to their respective class. (b) Subject to the rights granted to the holders of any one or more series of Preferred Stock then outstanding, any newly-created directorship on the Board that results from an increase in the number of directors and any vacancy occurring in the Board (whether by death, resignation, retirement, disqualification, removal or other cause) shall be filled by a majority of the directors then in office, even if less than a quorum, by a sole remaining director or by the stockholders; provided, however, that from and after the Trigger Event, any newly-created directorship on the Board that results from an increase in the number of directors and any vacancy occurring on the Board shall be filled only by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director (and not by the stockholders). Any director elected to fill a vacancy or newly created directorship shall hold office until, (i) prior to the date of the 2027 annual meeting of stockholders, the next election of the class for which such director shall have been chosen, and (ii) from and after the date of the 2027 annual meeting of stockholders, until the next succeeding annual meeting of stockholders, and in each case, until his or her successor shall be elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal. (c) Any or all of the directors (other than the directors elected by the holders of any series of Preferred Stock of the Company, voting separately as a series or together with one or more other such series, as the case may be) may be removed at any time (i) prior to the date of the 2027 annual meeting of stockholders, only for cause, and (ii) following the date of the 2027 annual meeting of stockholders, either with or without cause, in each case, by the affirmative vote of a majority in voting power of all outstanding shares of Common Stock entitled to vote thereon, with both Class A and Class B Common Stock holders voting together as a single class ; provided, however, that from and after the Trigger Event, any such director or all such directors may be removed only for cause and only by the affirmative vote of the holders of at least 66(2)/3% in voting power of all the then-outstanding shares of Common Stock of the Company entitled to vote thereon, with both Class A and Class B Common Stock holders voting together as a single class . (d) Elections of directors need not be by written ballot unless the Bylaws shall so provide. (e) During any period when the holders of any series of Preferred Stock, voting separately as a series or together with one or more series, have the right to elect additional directors, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Company shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, resignation, retirement, disqualification or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Company shall be reduced accordingly.