DEF 14A of Microvast Holdings, Inc., Aug 29, 2024

DEF 14A of Microvast Holdings, Inc.

Filed Aug 29, 2024 · FY20230001760689-24-000033

Open on EDGAR

  1. Proposal No. 1: Election of Directors

    Proposal No. 1: Election of Directors

  2. General

    General Our Board currently consists of five directors divided into three classes designated as Class I, Class II and Class III with staggered three-year terms, as further described in the table below. The number of directors is currently fixed at seven by resolution of the Board, although two of those director positions are currently vacant. M. Stanley Whittingham resigned from the Board effective October 9, 2023, and Stephen A. Vogel resigned from the Board effective July 7, 2024. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of an equal number of directors. Any increase or decrease in the number of directors shall require the affirmative vote of the Wu Directors. See Certain Relationships and Related Party Transactions—Related Party Transactions—Stockholders Agreement for the definition of and additional details regarding the Wu Directors. Craig Webster was elected to the Board on July 23, 2021 and subsequently resigned from the Board effective July 1, 2022 in connection with his appointment as the Company’s Chief Financial Officer. Yeelong Tan Balladon was appointed to the Board to fill Mr. Webster’s vacancy effective July 1, 2022.

  3. General

    | Class | Term Expiring | # Directors In Class | Director(s) | | Class I | 2025 Annual Meeting | two (one vacant) | Wei Ying | | Class II | 2026 Annual Meeting | two (one vacant) | Arthur Wong | | Class III | 2024 Annual Meeting | three | Yang Wu, Yanzhuan Zheng, Yeelong Tan Balladon |

  4. Nominees for Class III Directors

    Nominees for Class III Directors The term of the current Class III directors expires at the 2024 Annual Meeting. Yeelong Tan Balladon and Yanzhuan Zheng, both current Class III directors, have notified the Board that they will resign from the Board effective as of the date of the 2024 Annual Meeting. Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated Yang Wu for re-election at the 2024 Annual Meeting and has nominated Isida Tushe and Yixin Pan for election at the 2024 Annual Meeting. If elected, each Class III director will serve a three-year term expiring at the 2027 Annual Meeting or until his or her successor has been appointed or elected and qualified or until the director’s earlier death, resignation or removal. The biographies for Class III director nominees Isida Tushe and Yang Wu are described under the section entitled “Our Executive Officers”. Yixin Pan is a proposed nominee for the Board as a Class III director. Ms. Pan has over 25 years of experience in tech innovation, entrepreneurship, operations, marketing, investment banking, and M&A across multiple industries and for Fortune 500 companies and small emerging technology startups. Ms. Pan currently serves as a board member, audit committee member, and the committee chair of the Nomination, Governance and Compensation Committee and the Technology Committee of VIQ Solutions (TSX:VQS), and has served as managing partner of XTVUE, LLC., a boutique investment bank and management consulting firm, since 2008. Ms. Pan earned her MBA from Cornell University and an MS in Mechanical Engineering from Northern Illinois University. Ms. Pan is qualified to serve on our Board due to her extensive leadership experience and industry knowledge. Ms. Pan is a U.S. citizen and resides in the U.S. Each of the nominees has indicated his or her willingness to serve, if elected, and have consented to being named in this Proxy Statement. If any of the nominees should become unable or unwilling to serve before the 2024 Annual Meeting, the Board may either reduce its size or designate or not designate a substitute nominee. If the Board designates a substitute nominee, the proxy holders may cast your vote for such substitute nominee. The Board unanimously recommends that stockholders vote “FOR” the election of each of Yang Wu, Isida Tushe and Yixin Pan.

  5. OUR BOARD OF DIRECTORS

    OUR BOARD OF DIRECTORS The following information is provided as of the Record Date.

  6. OUR BOARD OF DIRECTORS

    | Name | Age | Position(s) | | Yang Wu* | 58 | Chief Executive Officer and Chairman of the Board | | Arthur Wong | 64 | Director | | Yeelong Tan Balladon** | 65 | Director | | Wei Ying | 58 | Director | | Yanzhuan Zheng** | 60 | Director |

  7. OUR BOARD OF DIRECTORS

    * Mr. Wu’s biography and age are included under “Our Executive Officers” above. ** Ms. Balladon and Mr. Zheng will resign from the Board effective as of the date of the 2024 Annual Meeting. Yeelong Tan Balladon was appointed to the Board as a Class III Director effective July 1, 2022. Ms. Balladon has served as the lead independent trustee of the board of the Ashmore Funds since 2010 and as lead independent trustee since 2014. The Ashmore Funds is a registered U.S. mutual funds complex dedicated to investing in emerging markets. Ms. Balladon also served as a non-executive director of Pacnet Limited from 2008–2015 and Jasper Investments from 2011–2015. Ms. Balladon was an associate and subsequently a partner at Freshfields Bruckhaus Deringer, an international law firm, from 1982–1988 and 1994–2009. She retired from the partnership in 2009. Ms. Balladon holds an LL.B. from the National University of Singapore and is legally professionally qualified in Singapore, England & Wales and the New York Bar. Ms. Balladon is qualified to serve on our Board due to her extensive legal and financial experience in the finance, banking and M&A sectors, particularly in emerging markets. Ms. Balladon is a U.S. citizen and resides in the U.S. Yanzhuan Zheng was elected to the Board as a Class III Director on July 23, 2021. Mr. Zheng was appointed as the Company’s Chief Financial Officer on July 23, 2021 and, on April 14, 2022, Mr. Zheng transitioned from his role as Chief Financial Officer of the Company to advisor. Mr. Zheng also served as Microvast, Inc.’s Chief Financial Officer and as a director since 2010. Prior to joining Microvast, Mr. Zheng joined Quantum Energy Partners, a Houston-based private equity firm, in 2007. Mr. Zheng began his career with Arthur Anderson LLP in 1997. Mr. Zheng holds a Master of Science degree in accounting from Texas A&M University and is a Certified Public Accountant and a CFA Charter holder. Mr. Zheng is qualified to serve on our Board due to his extensive experience and knowledge of accounting and financial matters. Mr. Zheng is a U.S. citizen and resides in the U.S. Arthur Wong was elected to the Board as a Class II Director on July 23, 2021 and was re-elected on September 27, 2023. Mr. Wong currently serves as an independent director and Chairman of the audit committee of Daqo New Energy Corp. (NYSE: DQ). From March 2019 to June 2024, Mr. Wong served as an independent director of Canadian Solar Inc. (NASDAQ: CSIQ). From March 2020 to March 2022, Mr. Wong served as an independent director of Tarena International, Inc. (NASDAQ: TEDU). From 2008 to 2018, Mr. Wong served as the Chief Financial Officer for Asia New-Energy, Nobao Renewable Energy, GreenTree Inns Hotel Management Group and Beijing Radio Cultural Transmission Company Limited, sequentially. From 1982 to 2008, Mr. Wong worked for Deloitte Touche Tohmatsu in Hong Kong, San Jose and Beijing over various periods of time, with his last position as a partner in the Beijing office. Mr. Wong received a bachelor’s degree in applied economics from the University of San Francisco and a higher diploma of accountancy from Hong Kong Polytechnic University. He is a member of the American Institute of Certified Public Accountants, the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants. Mr. Wong is qualified to serve on our Board due to his extensive experience and knowledge of accounting and financial matters as well as audit functions. Mr. Wong is both a U.K. citizen and a Hong Kong citizen and resides in China. Wei Ying was elected to the Board as a Class I Director on July 23, 2021 and was re-elected on August 12, 2022. Mr. Ying has been a director of Microvast, Inc. since June 2017. Since December 2014, Mr. Ying has been a managing partner and director of CDH Shanghai Dinghui Bai Fu Investment Management Co., Ltd., a key investment manager entity under CDH Investment, and some of its affiliates. Mr. Ying has served as a director of CHTC Fong’s Industries Company Limited (HKG: 0641) since September 2011, a director of Fountain Set (Holdings) Limited (HKG: 0420) since January 2015, a director of Giant Network Group Co., Ltd. (002558.SZ) since May 2016, a director of Zhongsheng Group Holdings Limited (OTCMKTS: ZSHGY) since December 2016, a director of Beijing East Environment Energy Technology Co., Ltd. (NEEQ: 831083) since July 2017, a director of Yunji Inc. (NASDAQ: YJ) since February 2018, and a director of Sinocelltech Group Limited (688520:Shanghai) since February 2019. Mr. Ying has also served as a director of Guolian Industry Investment Fund Management (Beijing) Co., Ltd. since February 2014, a director of Huaian Yuchu Transportation Co., Ltd. since August 2016, a director of Zhejiang Liji Electronics Co., Ltd. since December 2020, a director of Ane (Cayman) Inc. and its affiliates since August 2016, a director of Ningbo Dingcheng Investment Management Co., Ltd. since March 2018, a director of Shenzhen Tajirui Biomedical Co., Ltd. since July 2018, a director of Ningbo Dingyi Asset Management Co., Ltd. since October 2015, and a director of Shanghai Jiexin VC Investment Management Co., Ltd. since January 2017. Mr. Ying received a Bachelor’s Degree in Economics from Zheijiang Gohgshang University and a Master of Business Administration from the University of San Francisco School of Management. Mr. Ying is qualified to serve on our Board due to his extensive leadership experience and industry knowledge. Mr. Ying is a Hong Kong citizen and resides in Hong Kong.

  8. Summary Compensation Table

    Summary Compensation Table The following table sets forth the compensation of our NEOs for the years ended December 31, 2022 and 2023.

  9. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Nonequity Incentive Plan Compensation ($)(3) | All other compensation ($) | Total Compensation ($) | | Yang Wu | 2023 | 550,008 | — | — | 99,000 | — | 649,008 | | Chairman and Chief Executive Officer | 2022 | 542,895 | 439,997 | — | — | — | 982,892 | | Zachariah Ward(4) | 2023 | 383,333 | 279,750 | 1,480,000 | — | — | 2,143,083 | | Former President | | | | | | | | | Craig Webster(5) | 2023 | 400,000 | 279,750 | — | 48,000 | — | 727,750 | | Former Chief Financial Officer | 2022 | 309,908 | 159,993 | 3,190,000 | — | 13,330 | 3,673,231 | | Shane Smith(6) | 2023 | 276,208 | 279,750 | — | — | 1,092,398(7) | 1,648,356 | | Former Chief Procurement Officer | | | | | | | |

  10. Summary Compensation Table

    (1)Represents the aggregate grant date fair value of stock awards granted to our named executive officers, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“FASB Topic 718”). The 2023 stock awards consist of grants of restricted stock units (“RSUs”) and performance stock units (“PSUs”) granted pursuant to the Microvast Holdings, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The terms of the 2023 RSUs and PSUs are summarized in “Elements of Executive Compensation—Long Term Incentives” below. The assumptions made when calculating the amounts reported are found in Note 22, “Share-Based Payment” to our audited consolidated financial statements included in Part II, Item 8 of the Annual Report. Assuming maximum level of performance, the aggregate grant date values of the RSUs and PSUs are as follows:

  11. Summary Compensation Table

    | Name | RSUs ($) | PSUs ($) | Total ($) | | Yang Wu | — | — | — | | Zachariah Ward | 122,250 | 236,250 | 358,500 | | Craig Webster | 122,250 | 236,250 | 358,500 | | Shane Smith | 122,250 | 236,250 | 358,500 |

  12. Summary Compensation Table

    (2) Represents the grant date fair value of stock options granted to our named executive officers, computed in accordance with FASB Topic 718. The terms of the 2023 stock options are summarized in “Elements of Executive Compensation—Ward Performance Stock Options” below. The assumptions made when calculating the amounts reported are found in Note 22, “Share-Based Payment” to our audited consolidated financial statements included in Part II, Item 8 of the Annual Report. (3) 2023 non-equity incentive plan compensation was earned pursuant to the Company’s short-term cash incentive program as described in “Elements of Executive Compensation—Short-Term Incentives” below. (4) Mr. Ward was promoted to President of the Company effective August 3, 2023. Mr. Ward was not previously an NEO of the Company. Mr. Ward resigned his employment with the Company effective February 5, 2024. (5) Effective April 10, 2024, Mr. Webster ceased to serve as the Chief Financial Officer of the Company and transitioned to the role of Special Advisor to the Company’s Chief Executive Officer. (6) Mr. Smith’s employment with the Company terminated effective September 4, 2023. Mr. Smith was previously an NEO for the year ended December 31, 2021 but was not an NEO for the year ended December 31, 2022. (7) Represents the cash severance paid and accrued for Mr. Smith during 2023 and the value of accelerated vesting of equity awards in connection with Mr. Smith’s termination of employment, as summarized in “Smith Separation Agreement” below.

  13. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table sets forth the outstanding equity awards held by each of our NEOs as of December 31, 2023.

  14. Outstanding Equity Awards at Fiscal Year-End

    | | Option Awards | | | | Stock Awards | | | | | | Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares of units of stock that have not vested ($)(1) | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)(1) | | Yang Wu | — | — | — | — | — | — | 25,902(2) | | 36,263 | | | — | — | — | — | — | — | — | — | — | | Zachariah Ward | — | 1,000,000(3) | 2.67 | 8/3/2033 | — | — | — | | — | | | 166,667 | 333,333(4) | 2.42 | 7/7/2032 | — | — | — | | — | | | — | — | — | — | 8,424(5) | 11,794 | — | | — | | | — | — | — | — | 75,000(6) | 105,000 | — | | — | | | — | — | — | — | — | — | 37,500(7) | | 52,500 | | Craig Webster | 333,333 | 666,667(8) | 5.69 | 4/14/2032 | — | — | — | | — | | | — | — | — | — | — | — | 6,279(2) | | 8,791 | | | — | — | — | — | 75,000(6) | 105,000 | — | | — | | | — | — | — | — | — | — | 37,500(7) | | 52,500 | | Shane Smith(9) | — | — | — | — | — | — | — | | — |

  15. Outstanding Equity Awards at Fiscal Year-End

    (1)The value presented in the table is equal to the product of the number of RSUs and PSUs, as applicable, that had not vested as of December 31, 2023 and the closing price of our common stock on such date, which was $1.40. (2)Represents PSUs granted under the 2021 Plan pursuant to the Company’s 2022 long-term incentive program at threshold performance. These PSUs will vest, subject to achievement of the applicable performance criteria and the NEO’s continued employment with or services to us or one of our affiliates through the vesting date, following the end of the performance period on December 31, 2024. (3)Represents stock options granted under the 2021 Plan. These stock options will vest in equal installments on each of August 3, 2024, August 3, 2025 and August 3, 2026, subject to achievement of the applicable performance criteria and the NEO’s continued employment with or services to us or one of our affiliates through the vesting date. (4)Represents stock options granted under the 2021 Plan. These stock options will vest in equal installments on each of July 7, 2024 and July 7, 2025, subject to the NEO’s continued employment with or services to us or one of our affiliates through the vesting date. (5)Represents RSUs granted under the 2021 Plan. 50% of these RSUs vested on January 31, 2024 and 50% of these RSUs will vest on January 31, 2025, subject to the NEO’s continued employment with or services to us or one of our affiliates through the vesting date. (6)Represents RSUs granted under the 2021 Plan. These RSUs will vest in equal installments on each of January 31, 2024, January 31, 2025 and January 31, 2026, subject to the NEO’s continued employment with or services to us or one of our affiliates through the vesting date. (7)Represents PSUs granted under the 2021 Plan pursuant to the 2023 LTI at threshold performance. These PSUs will vest, subject to achievement of the applicable performance criteria and the NEO’s continued employment with or services to us or one of our affiliates through the vesting date, following the end of the performance period on December 31, 2025. (8)Represents stock options granted under the 2021 Plan. These stock options will vest in equal installments on each of April 14, 2024 and April 14, 2025. (9)In connection with Mr. Smith’s termination of employment with the Company, all outstanding equity awards granted to Mr. Smith under the 2021 Plan vested in full as of Mr. Smith’s separation date, with all performance-based awards vesting at target performance and all stock options remaining exercisable for 90 days following Mr. Smith’s termination of employment. As a result, Mr. Smith did not hold any outstanding equity awards as of December 31, 2023.

  16. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION The table below sets forth information regarding non-employee director compensation for the year ended December 31, 2023.

  17. DIRECTOR COMPENSATION

    | Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($) | | Yanzhuan Zheng(3) | — | — | — | | Arthur Wong | 94,103 | 110,026 | 204,129 | | M. Stanley Whittingham(4) | 56,103 | 110,026 | 166,129 | | Stephen Vogel | 84,103 | 110,026 | 194,129 | | Ying Wei | 74,103 | 110,026 | 184,129 | | Yeelong Tan Balladon | 89,103 | 110,026 | 199,129 |

  18. DIRECTOR COMPENSATION

    (1)Reflects changes to the Company’s non-employee director compensation policy effective August 3, 2023, as summarized under “Non-Employee Director Compensation” below. Includes the portion of the non-employee director’s annual cash retainer received as Elective RSUs, as summarized in “Non-Employee Director Compensation” below, computed in accordance with FASB Topic 718, as follows: Mr. Wong—7,788; Mr. Whittingham—4,842; Mr Vogel—18,018, and Mr. Ying—30,634. (2)Represents the aggregate grant date fair value of the annual RSUs computed in accordance with FASB Topic 718. As summarized in “Non-Employee Director Compensation” below, in connection with changes to the Company’s non-employee director compensation policy during 2023, the number of annual RSUs granted to our directors in 2023 was based on the portion of the award applicable to service during the third and fourth quarters of fiscal 2023 and all of Fiscal 2024, multiplied by our closing stock price on the effective date of the Company’s 2023 non-employee director compensation policy. For each non-employee director other than Mr. Zheng, represents 53,671 RSUs, which, together with the unvested Elective RSUs described below, represent all outstanding equity awards held by our non-employee directors other than Mr. Zheng as of December 31, 2023. (3)Mr. Zheng does not receive any compensation for services provided to the Company as a director. Pursuant to the terms of a consulting agreement between Mr. Zheng and the Company, Mr. Zheng received the following as compensation for services provided to the Company as an advisor during 2023: salary and fees—$297,014; RSUs—$65,200; PSUs—$84,000 at target performance ($126,000 at maximum performance). As of December 31, 2023, Mr. Zheng had 1,122,100 stock options, 40,000 RSUs and 49,419 PSUs (at target performance) outstanding. (4)Mr. Whittingham resigned as a Board member on October 9, 2023. In connection with his resignation, Mr. Whittingham forfeited all of his unvested RSUs.

  19. Non-Employee Director Compensation

    Non-Employee Director Compensation For Fiscal 2023, our non-employee directors other than Mr. Zheng were compensated for services in accordance with our non-employee director compensation policy that was adopted by our Board on May 11, 2022 (the “2022 Director Compensation Policy”) and the non-employee director compensation policy that was adopted by our Board on August 3, 2023 (the “2023 Director Compensation Policy”). The materials terms of each of the 2022 Director Compensation Policy and 2023 Director Compensation Policy are described below. For their service to the Company during the first and second fiscal quarters of 2023 and the portion of the third fiscal quarter that preceded August 3, 2023, our non-employee directors other than Mr. Zheng received cash compensation in accordance with the 2022 Director Compensation Policy. For their service to the Company from August 3, 2023 through December 31, 2023, our non-employee directors other than Mr. Zheng received cash compensation in accordance with the 2023 Director Compensation Policy. Annual cash compensation amounts are payable in equal quarterly installments, in arrears on or about the last day of each fiscal quarter in which the service occurred. For their service to the Company during 2023, each of our non-employee directors other than Mr. Zheng received an annual award of RSUs under the 2023 Director Compensation Policy, which will vest on December 31, 2024, subject to the director’s continued service through such date. The Company does not expect to make another grant of annual RSUs to our non-employee directors during 2024. In addition, our non-employee directors other than Mr. Zheng may elect to receive all or a portion of their annual cash retainer in the form of RSUs (the “Elective RSUs”). The grant date of the Elective RSUs is the date the non-employee director makes the election to receive equity in lieu of his or her cash retainer and the value of the RSUs is equal to the amount of the non-employee director’s annual cash retainer that is foregone. The Elective RSUs vest in quarterly installments on the last day of each fiscal quarter. The number of Elective RSUs each non-employee director received in 2023 are set forth in footnote 4 to the “Director Compensation” table above. Commencing with 2024, our non-employee directors must make elections to receive equity in lieu of his or her cash retainer prior to the start of the calendar year, which elective RSUs will vest in equal installments on the last day of each fiscal quarter during the calendar year.

  20. Non-Employee Director Compensation

    | | 2022 Director Compensation Policy | 2023 Director Compensation Policy | | Board Member Retainer | $70,000 | $80,000 | | Lead Independent Director Retainer | $25,000 | $25,000 | | Audit Committee Chair Retainer | $20,000 | $20,000 | | Compensation Committee Chair Retainer | $15,000 | $15,000 | | N&GC Committee Chair Retainer | $10,000 | $10,000 | | Annual Restricted Stock Units (GDFV) | $80,000 | $95,000 |