Business Context and Reporting Period
This Form 8-K Current Report was filed by Custom Truck One Source, Inc. on November 8, 2021, regarding events occurring on November 2, 2021. The filing discloses the execution of new employment agreements with the Company's Chief Executive Officer, Fred Ross, and Chief Financial Officer, Bradley Meader.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on executive compensation terms and employment contract details.
Material Changes and Executive Compensation
The primary material change is the formalization of employment terms for the Company's top executives, effective November 2, 2021.
Fred Ross (Chief Executive Officer)
- Term: Initial five-year term with automatic one-year renewals.
- Base Salary: $850,000 annually.
- Annual Bonus: Target of 50% of base salary based on performance metrics.
- Equity: Time- and performance-based restricted stock units under the 2019 Omnibus Incentive Plan.
- Change in Control: Eligible for a one-time cash transaction bonus equal to the value of vested equity awards granted in 2021 (if event occurs before April 1, 2023) or 2023 (if event occurs between April 1, 2023, and April 1, 2024), provided the transaction is at least 80% cash.
- Termination Benefits: Upon termination without "cause" or for "good reason," entitled to 2x base salary paid over 24 months, pro-rated bonus, and 24 months of health coverage.
- Restrictive Covenants: 24-month post-termination non-competition and non-solicitation.
Bradley Meader (Chief Financial Officer)
- Term: Initial five-year term with automatic one-year renewals.
- Base Salary: $450,000 annually.
- Annual Bonus: Target of 50% of base salary based on performance metrics.
- Equity: Time- and performance-based restricted stock units under the 2019 Omnibus Incentive Plan.
- Change in Control: Eligible for a one-time cash transaction bonus equal to the value of vested equity awards granted in 2021 (if event occurs before April 1, 2023) or 2023 (if event occurs between April 1, 2023, and April 1, 2024), provided the transaction is at least 80% cash.
- Termination Benefits: Upon termination without "cause" or for "good reason," entitled to 1x base salary paid over 12 months, pro-rated bonus, and 12 months of health coverage.
- Restrictive Covenants: 12-month post-termination non-competition and non-solicitation.
Guidance, Outlook, and Risks
The filing does not provide financial guidance, outlook, or management commentary on business operations. The primary risks disclosed relate to the potential financial impact of executive turnover or a change in control, specifically the acceleration of equity vesting and the payment of significant severance packages.
Investor Verification Checklist
- Review the full text of the employment agreements filed as Exhibits 10.1 and 10.2 for complete definitions of "cause," "good reason," and "change in control."
- Verify the specific performance metrics used to calculate the 50% target annual bonuses for both executives.
- Assess the potential dilution impact of the time- and performance-based restricted stock units to be granted under the 2019 Omnibus Incentive Plan.
- Calculate the total potential severance liability for the Company in the event of a termination without cause for both executives.