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Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ¨
Indicate by check mark
whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Based on the closing price
as reported on the Nasdaq Global Select Market, the aggregate market value of the registrant’s Common Stock held by non-affiliates
on June 30, 2022 (the last business day of the registrant’s most recently completed second fiscal quarter) was approximately $286,376,886.
The number of outstanding
shares of the registrant’s Common Stock as of April 14, 2023 was 476,588,034.
On March 30, 2023,
Canoo Inc. (the “Company,” “we,” “us” or “our”) filed its Annual Report on Form 10-K
for the fiscal year ended December 31, 2022 (the “Original Form 10-K”). The Original Form 10-K omitted Part III, Items
10 (Directors, Executive Officers and Corporate Governance), 11 (Executive Compensation), 12 (Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder Matters), 13 (Certain Relationships and Related Transactions,
and Director Independence) and 14 (Principal Accounting Fees and Services) in reliance on General Instruction G(3) to
Form 10-K, which provides that such information may be either incorporated by reference from the registrant’s definitive proxy
statement or included in an amendment to Form 10-K, in either case filed with the Securities and Exchange Commission (the “SEC”)
not later than 120 days after the end of the fiscal year.
We currently expect that
our definitive proxy statement for our 2022 Annual Meeting of Stockholders will be filed later than the 120th day after the end of our
last fiscal year. Accordingly, this Amendment No. 1 to Form 10-K (this “Amendment”) is being filed solely to:
Because no financial statements
have been included in this Amendment and this Amendment does not contain or amend any disclosure with respect to Items 307 and 308 of
Regulation S-K, paragraphs 3, 4 and 5 of the certifications have been omitted. We are not including the certifications under Section 906
of the Sarbanes-Oxley Act of 2002 as no financial statements are being filed with this Amendment.
Except as described above,
this Amendment does not modify or update disclosure in, or exhibits to, the Original Form 10-K. Furthermore, this Amendment does
not change any previously reported financial results, nor does it reflect events occurring after the date of the Original Form 10-K.
Information not affected by this Amendment remains unchanged and reflects the disclosures made at the time the Original Form 10-K
was filed. Accordingly, this Amendment should be read in conjunction with the Original Form 10-K and our other filings with the
SEC.
This Annual Report on Form 10-K,
including, without limitation, contains forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
We have based these forward-looking statements on our current expectations and projections about future events. All statements, other
than statements of present or historical fact included in this Annual Report on Form 10-K are forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,”
“possible,” “potential,” “predict,” “project,” “should,” “will,”
“would” or the negative of such terms or other similar expressions. These forward-looking statements are subject to known
and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking
statements.
These statements are subject
to known and unknown risks, uncertainties and assumptions, many of which are difficult to predict and are beyond our control and could
cause actual results to differ materially from those projected or otherwise implied by the forward-looking statements. Below is a summary
of certain material factors that may make an investment in our common stock speculative or risky.
These statements are subject
to known and unknown risks, uncertainties and assumptions that could cause actual results to differ materially from those projected or
otherwise implied by the forward-looking statements including those described under the section entitled “Summary of Risk Factors”
and Part I, Item 1A “Risk Factors” in the Annual Report on Form 10-K.
Given these risks and uncertainties, you should
not place undue reliance on these forward-looking statements.
Should one or more of these
risks or uncertainties described in the Annual Report on Form 10-K materialize, or should underlying assumptions prove incorrect,
actual results and plans could differ materially from those expressed in any forward-looking statements. Additional information concerning
these and other factors that may impact the forward-looking statements discussed can be found in the sections entitled “Risk
Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations.” We undertake
no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws. These risks and others described in the Annual Report on Form 10-K
may not be exhaustive.
By their nature, forward-looking
statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the
future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations,
financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested
by the forward-looking statements contained in the Annual Report on Form 10-K. In addition, even if our results or operations,
financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements
contained in the Annual Report on Form 10-K, those results or developments may not be indicative of results or developments in
subsequent periods.
PART III
ITEM 10. DIRECTORS, EXECUTIVE
OFFICERS, AND CORPORATE GOVERNANCE
Directors
Our business and affairs
are managed under the direction of our Board, which is composed of nine directors. Our Second Amended and Restated Certificate of
Incorporation, as amended from time to time (our “Certificate”) provides that the authorized number of directors may be
changed only by resolution of our Board. Our Certificate also provides that our Board will be divided into three classes of
directors. At each annual meeting of shareholders, a class of directors will be elected for a three-year term to succeed the class
whose term is then expiring.
The following table sets
forth the director class, name, age as of April 14, 2023, and other information for each member of our Board:
Name | |
Class | |
Age | |
Position | |
Director Since | |
Current Term Expires |
Tony Aquila | |
III | |
58 | |
Chief Executive Officer
and Executive Chair of the Board | |
2020 | |
2023 |
Josette Sheeran | |
III | |
68 | |
President and Director | |
2020 | |
2023 |
Thomas Dattilo | |
II | |
71 | |
Lead Independent Director | |
2020 | |
2025 |
Foster Chiang | |
I | |
40 | |
Director | |
2020 | |
2024 |
Greg Ethridge | |
I | |
46 | |
Director | |
2020 | |
2024 |
Arthur Kingsbury | |
II | |
74 | |
Director | |
2021 | |
2025 |
Claudia Romo Edelman | |
II | |
52 | |
Director | |
2021 | |
2025 |
Rainer Schmueckle | |
II | |
63 | |
Director | |
2020 | |
2025 |
Debra von Storch | |
I | |
63 | |
Director | |
2021 | |
2024 |
Tony
Aquila. Mr. Aquila has served as the Chief Executive Officer of the Company since April 2021, and as the Executive
Chair of the Board since December 2020. Prior to this, Mr. Aquila served as Executive Chairman of the board of directors of
Legacy Canoo from October 2020 to December 2020. Mr. Aquila also serves as a member of the Arkansas Council on Future
Mobility since February 2022. In June 2019, Mr. Aquila founded AFV Partners, an affirmative low-leverage capital vehicle
that invests in long-term mission critical software, data and technology businesses and serves as its Chairman and CEO since its founding.
In 2005, Mr. Aquila founded Solera Holdings Inc., and led it as Chairman and CEO to a $1 billion initial public offering in 2007,
and in the following years sourced and executed over 50 acquisitions significantly expanding Solera’s total addressable market.
Mr. Aquila oversaw Solera’s $6.5 billion transaction from a public-to-private business in 2016. During his tenure, Mr. Aquila
established Solera as a global technology company that provides software and data to global insurance companies, global OEMs and maintenance,
repair and overhaul networks. Mr. Aquila currently serves as a member of the board of directors and chair of the compensation committee
of WM Technology, Inc. (NASDAQ: MAPS), a leading technology and software infrastructure provider to the cannabis industry, since
June 2021. Furthermore, Mr. Aquila currently serves as the Chairman for Aircraft Performance Group, LLC, a global provider
of mission critical flight operations software, since January 2020, and director of RocketRoute Limited, global aviation services
company, since March 2020 and APG Avionics LLC, an aviation data and software company for the general aviation market since September 2020.
Mr. Aquila served as a member of the board of directors of The Lost Explorer Mezcal Company (“Lost Explorer”), a sustainable
producer and distributor of handcrafted Mezcal, from May 2021 to April 2023, and continues to be a lead investor of Lost Explorer.
From November 2018 to July 2020, Mr. Aquila served as the Global Chairman of Sportradar Group AG (NASDAQ: SRAD), a sports
data and content company.
Mr. Aquila is qualified
to serve as the Company’s Chief Executive Officer and Executive Chair of the Board based on his significant business experience
as a founder, inventor, chief executive officer and director of a publicly-listed company and his investing experience. As Chief Executive
Officer, Mr. Aquila has direct responsibility for our strategy and operations.
Josette
Sheeran. Ms. Sheeran has served as a member of the Board since December 2020 and as President of the Company since
August 2021. Ms. Sheeran served as Deputy US Trade Representative and as US Undersecretary of State for Economics, Energy,
Transportation and Agriculture, being unanimously confirmed by Congress with the rank of Ambassador. From June 2013 to February 2021,
Ms. Sheeran served as the President and CEO of the Asia Society, a global non-profit focused on policy, sustainability, conflict
resolution, culture, and education. From July 2017 to February 2021, Ms. Sheeran also served as the United Nations Special
Envoy for Haiti, and prior, Ms. Sheeran served as Executive Director of the UN World Food Programme, a humanitarian agency, leading
operations and supply chains in more than 100 nations, and as the Vice Chair of the World Economic Forum, an NGO. Ms. Sheeran currently
serves as a director for Capital Group, a global financial services company, since December 2016, and as a director of Vestergaard
Frandsen Inc., a manufacturer of public health products, since March 2019. Ms. Sheeran has served on the non-profit board of
the McCain Institute for International Leadership, a think tank and public service institute affiliated with Arizona State University.
Previously, Ms. Sheeran was also a Fisher Fellow at Harvard Kennedy School. Ms. Sheeran holds a Bachelor of Arts in Journalism
and Communications from the University of Colorado at Boulder. She holds honorary doctorates from the University of Colorado, Michigan
State University, and John Cabot University.
Ms. Sheeran is qualified
to serve on the Board based on her leadership experience in the public sector and global operations and knowledge of international relations,
and her business experience as the director of a large financial services company.
Thomas
Dattilo. Mr. Dattilo has served as a member of the Board since December 2020. Mr. Dattilo is an advisor to
various private investment firms. He served as Chairman and Senior Advisor to Portfolio Group, a privately held provider of outsourced
financial services to automobile dealerships specializing in aftermarket extended warranty and vehicle service contract programs, from
2013 to 2016, and as senior advisor to Cerberus Operations and Advisory Company, LLC, from 2007 to 2009. Previously, Mr. Dattilo
held executive roles at a number of automotive industry companies, including Chief Executive Officer of Viper Motor Car Company, a Chrysler
company, Chairman, President and Chief Executive Officer of Cooper Tire & Rubber Company, and various senior positions with
Dana Corporation. Since 2001, Mr. Dattilo has served as a director of L3 Harris Technologies, Inc. (NYSE: LHX) or a predecessor
company of L3 Harris Technologies, Inc., a technology company, defense contractor and information technology services provider and
served as the Chairman of Harris Corporation, a predecessor company of L3 Harris Technologies, Inc. from 2012 to 2014. Since 2010,
Mr. Dattilo has also served as a director of Haworth Inc., a privately held, family-owned office furniture manufacturer, and previously
served as a director of Solera Holdings, Inc. from 2013 to 2016, Alberto Culver Company from 2006 to 2011, and Cooper Tire &
Rubber Company from 1999 to 2006.
Mr. Dattilo is qualified
to serve on the Board based on his experience as a director to private and public companies and his experience in the automotive industry.
Foster
Chiang. Mr. Chiang has served as a member of the Board since December 2020, and prior to this, served as a director
of Legacy Canoo from December 2017 to December 2020. From May 2016 to August 2020, Mr. Chiang served as the
Vice Chairman of TPK Holding Co. Ltd., a leading touch solution provider listed on the Taiwan Stock Exchange (TWSE 3673), and as its
Director of Business Strategy and Development from March 2013 to April 2016. Mr. Chiang has served as a director of TES
Touch Embedded Solutions (Xiamen) Co., Ltd. (SHE 003019), a leading company in interactive monitor and computer industry, since
March 2013, and as a member of the Board of Trustees of the Taft School, a private college-preparatory school, since September 2017.
Mr. Chiang holds a Bachelor of Science in Economics — Finance and Accounting, a Bachelor of Science in International Studies,
a Master of Arts in International Studies and a Master of Business Administration, all from The Wharton School of the University of Pennsylvania.
Mr. Chiang is qualified
to serve on the Board based on his business experience as a vice chairman of a publicly listed company, his investing experience and
his long-standing relationship with us.
Greg
Ethridge. Mr. Ethridge has served as a member of the Board since December 2020, and prior to this, served as President,
Chief Operating Officer and a director of Hennessy Capital Acquisition Corp. IV from February 2019 to December 2020. Mr. Ethridge
has served as the President, Chief Operating Officer and a director of Hennessy Capital Investment Corp. VI (NASDAQ: HCVIU), a blank
check company, from October 2021. Since June 2019, Mr. Ethridge has also served as Chairman of Motorsports Aftermarket
Group, a designer, manufacturer, marketer and distributor of aftermarket parts, apparel and accessories for the motorcycle and power
sports industry. He previously served as President of Matlin & Partners Acquisition Corporation from January 2017 to November 2018,
at which time it merged with USWS Holdings LLC, a growth- and technology-oriented oilfield service company focused exclusively on hydraulic
fracturing for oil and natural gas exploration and production companies and was known as U.S. Well Services, Inc. (USWS). USWS merged
with ProFrac Holding Corp. (NASDAQ: PFHC) in a stock for stock transaction which closed in November 2022. He served as Senior Partner
of MatlinPatterson Global Advisers LLC (“MatlinPatterson”) from 2009 to 2020 and prior to joining MatlinPatterson in 2009,
Mr. Ethridge was a principal in the Recapitalization and Restructuring group at Gleacher and Company (f/k/a Broadpoint Capital, Inc.)
where he moved his team from Imperial Capital LLC, from 2008 to 2009. In 2006, Mr. Ethridge was a founding member of the corporate
finance advisory practice for Imperial Capital LLC in New York. From 2005 to 2006, Mr. Ethridge was a principal investor at Parallel
Investment Partners LP (formerly part of Saunders, Karp and Megrue), executing recapitalizations, buyouts and growth equity investments
for middle market companies. From 2001 to 2005, Mr. Ethridge was an associate in the Recapitalization and Restructuring Group at
Jefferies and Company, Inc. where he executed corporate restructurings and leveraged finance transactions and was a crisis manager
at Conway, Del Genio, Gries & Co. in New York from 2000 to 2001. Mr. Ethridge served a director of Palmetto Bluff Company,
LLC, formerly a multi-asset class real estate developer known as Crescent Communities, LLC, a multi-class real estate developer, from
2010 to 2020. From 2009 until 2017, Mr. Ethridge served on the board of directors of FXI Holdings Inc., a foam and foam products
manufacturer and served as its chairman from February 2012 until 2017. Mr. Ethridge has also served on the board of directors
of Advantix Systems Ltd. and Advantix Systems, Inc., HVAC equipment manufacturers, from August 2013 until 2015 (for Advantix
Systems, Inc.) and until 2018 (for Advantix Systems Ltd.). Mr. Ethridge holds a BBA and a Masters in Accounting from The University
of Texas at Austin.
Mr. Ethridge is qualified
to serve on the Board due to his experience in private equity, as well as his financial and capital markets expertise.
Arthur
Kingsbury. Mr. Kingsbury has served as a member of the Board since March 2021. Mr. Kingsbury has been a private
investor since 1996. Mr. Kingsbury has nearly five decades of business, finance and corporate governance experience including financial,
senior executive and director positions at companies engaged in newspaper publishing, radio broadcasting, database publishing, cable
television, cellular telephone communications, and software and services. Specific positions include President and Chief Operating Officer
of VNU-USA, Vice Chairman and Chief Operating Officer of BPI Communications, and Executive Vice President and Chief Financial Officer
of Affiliated Publications, Inc. Mr. Kingsbury has served on the Boards of six public companies, including Solera Holdings,
Dolan Media Co., Remark Holdings, Inc. (NASDAQ: MARK), NetRatings, Inc., Affiliated Publications, Inc. and McCaw Cellular
Communications, Inc. Mr. Kingsbury holds a Bachelor of Science in Business Administration in Accounting from Babson College.
Mr. Kingsbury is qualified
to serve on the Board based on his experience as a director to numerous private and public companies, including committee service on
audit, compensation, governance and special committees of independent directors, his extensive experience in finance and accounting matters,
and his management experience and educational background.
Claudia
Romo Edelman (Gonzales Romo). Ms. Romo Edelman has served as a member of the Board since March 2021. Ms. Romo
Edelman is a social entrepreneur, a catalyst for change and a global mobilization expert with more than 25 years of experience leading
marketing and advocacy for global organizations including the United Nations, UNICEF, the Global Fund to Fight AIDS, TB and Malaria,
the United Nations High Commissioner for Refugees (UNHCR), and the World Economic Forum. Since 2017, Ms. Romo Edelman has served
as the Founder and CEO of the We Are All Human Foundation, a New York-based global non-profit organization devoted to advancing the agenda
of diversity, inclusion, and equity, focused on unifying the U.S. Hispanic community and promoting sustainability and purpose-driven
activities. From 2014 to 2017, Ms. Romo Edelman served as the Chief of Public Advocacy for the United Nations Children’s Fund
(UNICEF). Due to her expertise, Ms. Romo Edelman was seconded several times to various organizations to launch global mobilization
campaigns. From May 2016 to January 2017, she was seconded to the Executive Office of the Secretary General of the United Nations
to lead communications for the Special Adviser on the 2030 Agenda for Sustainable Development and Climate Change. Ms. Romo Edelman
served as a Special Advisor to the United Nations on International Migration from January 2018 to June 2018 and from April 2017
to March 2018, Ms. Romo Edelman served as a Special Advisor to the United Nations Children’s Fund (UNICEF). Ms. Romo
Edelman has also held positions as Head of Marketing at The Global Fund to fight AIDS, TB and Malaria, and as the head of Public Relations
at the World Economic Forum. Ms. Romo Edelman holds a Degree in Communication from the Universidad Intercontinental and a Masters
of Political Communications from the London School of Economics.
Ms. Romo Edelman is
part of the Board of the American Latino Museum; the Hispanic Society of America; and KIND (Kids in Need of Defense). Ms. Romo is
the Editor-at-large Thrive Latina, part of Arianna Huffington’s Thrive Global platform. She is a frequent columnist and publishes
articles for various media organizations including The Guardian, Ad Age, Ad Week, Al Dia and Forbes.
Ms. Romo Edelman is
the recipient of numerous awards, including in 2019-2020: People Magazine’s 25 Most Influential Latinas, ALPFA’s 50 Most
Powerful Latinas 2019 and 2020, Ellis Island Medal of Honor 2019, Citizen’s Union Gotham Greats 2020, Hispanic PR Association Bravo
Awards- 2019 President’s Award, Multicultural Leadership Award Jesse Jackson’s Rainbow PUSH Coalition, Humanitarian Award
(Joseph L.Unanue Latino Institute), Latina Women of the Year 2020 of Solo Mujeres Magazine.
Ms. Romo Edelman is
qualified to serve on the Board based on her deep expertise in marketing, her management experience, and her track record in creating
growth and leading successful movements for societal change and in high-profile global roles.
Rainer
Schmueckle. Mr. Schmueckle has served as a member of the Board since December 2020. Since February 2020, Mr. Schmueckle
has served as chairman of the board of directors at STIGA S.p.A, a manufacturer and distributor of garden equipment; since August 2020
as a member of the supervisory board of ACPS GmbH, a supplier to the automotive industry; between March 2019 and November 2020
as member of the supervisory board of MAN Truck & Bus SE, a provider of commercial vehicles and transport solutions around the
world; since February 2017, as a member of the board of directors of Kunstoff Schwanden AG, a company supplying components for plastic
injection moulding; between April 2011 and March 2023, as vice chairman of the board of directors of Autoneum Holding AG (SIX
Swiss Exchange: AUTN), a publicly-traded company that is a leader in acoustic and thermal management for vehicles; and, since April 2011,
as a member of the board of directors of Dometic Group (STO: DOM), a publicly-traded company focusing on branded solutions for mobile
living.
From November 2014 to
June 2015 Mr. Schmueckle served as the Chief Executive Officer at MAG IAS, a multinational tool company. Prior to his time
at MAG IAS, Mr. Schmueckle served as the President of Seating Components and Chief Operating Officer of Automotive Seating at Johnson
Controls International plc (“Johnson Controls”) (NYSE: JCI), a publicly-traded multinational company that provides security
equipment for buildings from November 2011 to October 2014. Before joining Johnson Controls, Mr. Schmueckle served as
the Chief Operating Officer of the Mercedes Car Group at Daimler AG (FWB: DAI), a publicly-traded multinational automotive company from
May 2005 to January 2010. Before that Mr. Schmueckle served as Chief Executive Officer of Freightliner Inc, the leading
heavy-truck manufacturer in North America from May 2001 to May 2005. Mr. Schmueckle holds a graduate degree in industrial
engineering from University Fredericiana of Karlsruhe, Germany.
Mr. Schmueckle is qualified
to serve on the Board based on his experience as a director to private and public companies, knowledge of the automotive industry, management
experience and educational background.
Debra
von Storch. Ms. von Storch has served as a member of the Board since January 2021. From 2020 through 2022, Ms. von
Storch served as a director of CSW Industrials (NASDAQ: CSWI), an industrial products and specialty chemicals company. Since June 2021,
Ms. von Storch has served as a board member of the NACD North Texas chapter, and she also serves as a member of the advisory board
for Varidesk, LLC. From 1982 to July 2020, Ms. von Storch served in various roles including Partner and Southwest Region Growth
Markets Leader at Ernst & Young LLP, a multinational professional services firm. Ms. von Storch holds a Bachelor of Business
Administration in Finance and Accounting from the University of North Texas.
Ms. von Storch is qualified
to serve on the Board based on her extensive leadership experience, information security and risk management expertise, and strong strategic
and financial acumen, having served as a partner at a leading global accounting and advisory firm. Ms. von Storch also brings to
her role experience successfully advising a broad range of high-growth enterprises across all stages of a company’s lifecycle,
positioning her well to advise and support the execution of the Company’s growth strategy and capital allocation plans.
Executive Officers
Below is a list of the names,
ages, positions, and a brief account of the business experience of the individuals who serve as executive officers of the Company as
of April 14, 2023:
Name |
|
Age |
|
Position |
Tony Aquila |
|
58 |
|
Chief Executive Officer and Executive Chair of the
Board |
Josette Sheeran |
|
68 |
|
President and Director |
Ken Manget |
|
64 |
|
Chief Financial Officer |
Ramesh Murthy |
|
44 |
|
Senior Vice President, Chief Accounting Officer |
Hector Ruiz |
|
42 |
|
General Counsel and Corporate Secretary |
Tony
Aquila. Mr. Aquila has served as the Chief Executive Officer of the Company since April 2021, and as the Executive
Chair of the Board since December 2020. Prior to this, Mr. Aquila served as Executive Chairman of the board of directors of
Legacy Canoo from October 2020 to December 2020. Mr. Aquila also serves as a member of the Arkansas Council on Future
Mobility since February 2022. In June 2019, Mr. Aquila founded AFV Partners, an affirmative low-leverage capital vehicle
that invests in long-term mission critical software, data and technology businesses and serves as its Chairman and CEO since its founding.
In 2005, Mr. Aquila founded Solera Holdings Inc., and led it as Chairman and CEO to a $1 billion initial public offering in 2007,
and in the following years sourced and executed over 50 acquisitions significantly expanding Solera’s total addressable market.
Mr. Aquila oversaw Solera’s $6.5 billion transaction from a public-to-private business in 2016. During his tenure, Mr. Aquila
established Solera as a global technology company that provides software and data to global insurance companies, global OEMs and maintenance,
repair and overhaul networks. Mr. Aquila currently serves as a member of the board of directors and chair of the compensation committee
of WM Technology, Inc. (NASDAQ: MAPS), a leading technology and software infrastructure provider to the cannabis industry, since
June 2021. Furthermore, Mr. Aquila currently serves as the Chairman for Aircraft Performance Group, LLC, a global provider
of mission critical flight operations software, since January 2020, and director of RocketRoute Limited, global aviation services
company, since March 2020 and APG Avionics LLC, an aviation data and software company for the general aviation market since September 2020.
Mr. Aquila is also a member of the board of directors of The Lost Explorer Mezcal Company, a sustainable producer and distributor
of handcrafted Mezcal, since May 2021. From November 2018 to July 2020, Mr. Aquila served as the Global Chairman
of Sportradar Group AG (NASDAQ: SRAD), a sports data and content company.
Mr. Aquila is qualified
to serve as the Company’s Chief Executive Officer and Executive Chair of the Board based on his significant business experience
as a founder, inventor, chief executive officer and director of a publicly-listed company and his investing experience. As Chief Executive
Officer, Mr. Aquila has direct responsibility for our strategy and operations.
Josette
Sheeran. Ms. Sheeran has served as a member of the Board since December 2020 and as President of the Company since
August 2021. Since February 2021, Ms. Sheeran has served as Executive Chair of the McCain Institute for International
Leadership, a think tank and public service organization affiliated with Arizona State University that addresses global challenges in
areas of leadership, humanitarian support, human rights, democracy, international security and rule of law. Under the George W.
Bush administration, Ms. Sheeran served as Deputy US Trade Representative and as US Undersecretary of State for Economics, Energy,
Transportation and Agriculture, being unanimously confirmed by Congress with the rank of Ambassador. From June 2013 to February 2021,
Ms. Sheeran served as the President and CEO of the Asia Society, a global non-profit focused on policy, sustainability, conflict
resolution, culture, and education. From July 2017 to February 2021, Ms. Sheeran also served as the United Nations Special
Envoy for Haiti, and prior, Ms. Sheeran served as Executive Director of the UN World Food Programme, a humanitarian agency, leading
operations and supply chains in more than 100 nations, and as the Vice Chair of the World Economic Forum, an NGO. Ms. Sheeran currently
serves as a director for Capital Group, a global financial services company, since December 2016, and as a director of Vestergaard
Frandsen Inc., a manufacturer of public health products, since March 2019. Previously, Ms. Sheeran was also a Fisher Fellow
at Harvard Kennedy School. Ms. Sheeran holds a Bachelor of Arts in Journalism and Communications from the University of Colorado
at Boulder. She holds honorary doctorates from the University of Colorado, Michigan State University, and John Cabot University.
Ms. Sheeran is qualified
to serve on the Board based on her leadership experience in the public sector and global operations and knowledge of international relations,
and her business experience as the director of a large financial services company.
Ken
Manget. On January 26, 2023, the Company announced that Mr. Manget was appointed as the Company’s Chief Financial
Officer. Prior to his appointment as Chief Financial Officer of the Company, Mr. Manget, served as Chief Financial Officer of Northern
Genesis Acquisition Corp. III (NYSE: NGC) from March 2021 to January 2023, as Chief Financial Officer of Northern Genesis Acquisition
Corp. II from October 2020 to November 2021, and as Chief Financial Officer of Northern Genesis Acquisition Corp. from June 2020
to December 2020. Mr. Manget also served as a consultant to AFV Partners LLC, an affiliate of the Company, from June 2020
to January 2023. From 2014 to 2019, Mr. Manget served as Global Head, Relationship Investing at the Ontario Teachers’
Pension Plan. Mr. Manget currently serves on the board of directors of Organigram Holdings Inc. (NASDAQ: OIG), where he is a member
of the audit, compensation and investment committees, and previously served on the board of directors of Northern Genesis Acquisition
Corp. from June 2020 to December 2020. Mr. Manget holds a Mechanical Engineering degree from the University of Toronto,
an M.B.A. from Harvard Business School, and an ICD.D designation granted by the Institute of Corporate Directors at the University of
Toronto.
Ramesh
Murthy. Mr. Murthy has served as SVP, Finance and Chief Accounting Officer since March 2021 and Interim Chief Financial
Officer since December 2021. Mr. Murthy first joined Canoo in March 2021 serving as the Company’s Chief Accounting
Officer and then, from July 2021, as SVP, Finance and Chief Accounting Officer. Mr. Murthy brings to his position more than
20 years of experience in finance and public accounting serving the automotive technology, software, telecom and advanced manufacturing
industries. Prior to joining the Company, Mr. Murthy was a member of the Financial Accounting Advisory Services group of Ernst &
Young LLP, serving as Managing Director from July 2019 until March 2021, and as Senior Manager from November 2015 to July 2019.
Mr. Murthy also enjoyed a long career in the Audit Practice of Deloitte & Touche LLP from 2004 to 2015. Mr. Murthy
holds a Master of Business Administration, Finance from Texas A&M International University and a Bachelor of Commerce, Accounting
from University of Madras, India.
Hector
Ruiz. Mr. Ruiz has served as the General Counsel and Corporate Secretary of the Company since April 2021, and prior
to this, served as our Vice President - Global Strategy, Tax Counsel & Treasury from January 2021 to April 2021. Mr. Ruiz
has an extensive background in legal and tax matters. From January 2012 to January 2021, Mr. Ruiz served in a variety
of senior tax and tax planning roles at Solera Holdings, Inc., including as Vice President of Global Tax from November 2015
to January 2021, responsible for all areas of taxation, including mergers and acquisitions transactions, tax planning, controversy,
risk management, financial reporting and compliance. Prior to Solera, Mr. Ruiz worked in tax and accounting related roles at Caris
Life Sciences and PricewaterhouseCoopers LLP. Mr. Ruiz has a Bachelor of Business Administration from Southern Methodist University
and a Juris Doctor degree from Baylor University School of Law.
Audit Committee
Our Audit Committee currently
consists of Arthur Kingsbury, Rainer Schmueckle, Thomas Dattilo and Debra von Storch. The Board has determined that each of the members
of the Audit Committee satisfy the independence requirements of Nasdaq and Rule 10A-3 under the Exchange Act. Each member of the
Audit Committee can read and understand fundamental financial statements in accordance with Nasdaq audit committee requirements. In arriving
at this determination, the Board examined each Audit Committee member’s scope of experience and the nature of their prior and/or
current employment. Arthur Kingsbury serves as the chair of the Audit Committee.
In addition, our Board has
determined that Mr. Kingsbury qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of
Regulation S-K promulgated under the Securities Act. In making this determination, the Board considered Mr. Kingsbury's formal education
and previous experience in financial roles. This designation does not impose on Mr. Kingsbury any duties, obligations or liabilities
that are greater than are generally imposed on members of our Audit Committee and our Board.
Family Relationships
There are no family relationships
among our directors or executive officers.
Code of Conduct
The Board has adopted a Code
of Conduct (the “Code of Conduct”), applicable to all of the Company’s employees, executive officers and directors.
The Code of Conduct is available on the Corporate Governance section of the Company’s website at investors.canoo.com. The Company’s
website is not a part of this Annual Report and is not incorporated herein by reference. The Nominating and Corporate Governance Committee
of the Board is responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive
officers and directors. If the Company makes any amendments to the Code of Conduct, or grants any waivers of its requirements, the Company
will promptly disclose the amendment or waiver on its website.
Process for Stockholder Nominations
There have been no material
changes to the procedures by which stockholders may recommend nominees to our Board since we last provided disclosure of such procedures.
ITEM 11. EXECUTIVE COMPENSATION
AND DIRECTOR COMPENSATION
The following section provides
compensation information pursuant to the scaled disclosure rules applicable to “smaller reporting companies” under the
rules of the SEC and may contain statements regarding future individual and company performance targets and goals. These targets
and goals should not be understood to be statements of management’s expectations or estimates of results or other guidance. We
specifically caution investors not to apply these statements to other contexts. We are required to provide a Summary Compensation Table
and an Outstanding Equity Awards at Fiscal Year-End Table, as well as limited narrative disclosures regarding executive compensation
for our last completed fiscal year.
Our named executive officers
for the year ended December 31, 2022, consisting of our principal executive officer, and our two other most highly compensated executive
officers as of December 31, 2022 who were serving as executive officers as of such date, were:
| · | Tony Aquila —
Executive Chair and Chief Executive Officer (“CEO”) |
| · | Josette Sheeran
— President, Board Member |
| · | Ramesh Murthy —
Senior Vice President, Interim Chief Financial Officer and Chief Accounting Officer
(1) |
(1) Mr. Murthy is our SVP, Chief Accounting
Officer. He also served as Interim CFO from December 20, 2021 until January 26, 2023.
Mr. Aquila has been
a substantial investor in Canoo since August 2020 through his sustainable investment fund, AFV Partners. Based on his extensive
experience in growing companies and achieving significantly positive shareholder value outcomes, Mr. Aquila was appointed Executive
Chair of the Board in November 2020. In April 2021, the Board determined that Canoo’s business and shareholder success
would be best served by placing Tony Aquila in the full-time CEO role for the company.
Ms. Sheeran joined Canoo
originally as a Board member in December 2020. Her extensive experience in achieving meaningful business results with key government
and business partners was evident from her earliest days. Given her key strategic importance and extensive efforts in enabling Canoo
in establishing key foundations for manufacturing and R&D excellence, Ms. Sheeran transitioned from being a non-employee member
of the Board to President of the Company and Board member on July 26, 2021.
Mr. Murthy joined Canoo
as Chief Accounting Officer in March 2021, bringing more than 20 years of experience in finance and public accounting serving the
automotive technology, software, telecom and advanced manufacturing industries. In July 2021 he was named Senior Vice President,
Finance and Chief Accounting Officer. Mr. Murthy was appointed Interim Chief Financial Officer on December 20, 2021 and served
in that role during fiscal year 2022, until January 26, 2023. He is currently our Senior Vice President, Finance and Chief Accounting
Officer.
Executive Compensation Philosophy
Our Compensation Committee
is responsible for reviewing, overseeing, and approving Canoo’s overall compensation strategy. Canoo continues to invest heavily
in attracting, retaining and motivating an experienced and highly driven leadership team. Our current executive compensation philosophy
is focused on a two-pronged approach:
| · | Developing
compensation practices that support long-term business success: |
| o | Attracting
and motivating top tier talent that can deliver on highly aggressive performance goals; |
| o | Managing
executive compensation-related cash outlays responsibly; and |
| o | Encouraging
achievement of near-term milestones that set the stage for future shareholder success. |
| · | Incentivizing
long-term positive business outcomes that deliver outstanding shareholder value: |
| o | Aligning
long-term executive pay with shareholder outcomes through equity awards; and |
| o | Establishing
aggressive performance objectives for the CEO. |
In keeping with our compensation
philosophy, Canoo makes targeted investments in key talent and aligns senior executives with shareholder growth objectives through equity
awards tied to Canoo’s transformational mission. When Canoo achieves its mission, it will create a win-win opportunity for both
shareholders and the Canoo leadership team.
Compensation Elements
Outlined below are descriptions
of the compensation elements provided to our named executive officers.
Base Salary
Base salary is set at a level
that is intended to reflect the executive’s duties, authorities, contributions, prior experience, and performance. In keeping with
our objective to limit cash outlays, no increases were made to the base salaries of our named executive officers in 2022.
Bonus
Mr. Aquila is not eligible
to receive an annual bonus award and we do not have a formal arrangement with our other named executive officers providing for annual
cash bonus awards. No bonuses were paid to our name executive officers in 2022, which reflects our objectives of responsibly managing
cash outlays and aligning pay with shareholder outcomes.
Stock Awards
The Compensation Committee
is focused on aligning the majority of our named executive officers’ compensation directly with shareholder value through equity
awards. These awards include performance-based restricted stock units (“PSUs”) that vest based on the achievement of operational
performance milestones for Mr. Aquila and Mr. Murthy, PSUs that vest based on stock price hurdles for Mr. Aquila, and
restricted stock units that vest over time (“RSUs”) for all of our named executive officers. We believe these awards advance
our business strategy as follows:
| · | PSUs
with operational milestones are aligned with the nearer-term mission. Vesting contingent
on operational milestones rewards the named executive officers only if the mission is completed
within a set timeframe. |
| · | PSUs
with stock price hurdles and RSUs reward creation of shareholder value. These awards
are aligned with shareholders in that the value of PSUs and RSUs increase or decrease in
value based on Canoo’s stock price. |
| · | PSUs
and RSUs encourage favorable long-term shareholder outcomes. Standard RSU vesting terms
are 25% vest one-year after vesting commencement date and then 6.25% quarterly thereafter.
PSUs are also subject to time-based vesting conditions even after performance objectives
have been achieved. |
The equity awards granted to named executive
officers in 2022 and in prior years reflect our objectives of supporting long-term business success and aligning pay with shareholder
outcomes.
Benefits and Perquisites
We provide benefits to our
named executive officers on the same basis as provided to all of our employees, including health, dental and vision insurance; life insurance;
accidental death and dismemberment insurance; disability insurance; and a tax-qualified Section 401(k) plan for which no match
by us is provided. We do not maintain any executive-specific benefit or executive perquisite programs.
Retirement Benefits
We provide a tax-qualified
Section 401(k) plan for all employees, including our named executive officers. We do not provide a match for participants’
elective contributions to the 401(k) plan, nor do we provide to employees, including our named executive officers, any other retirement
benefits, including but not limited to tax-qualified defined benefit plans, supplemental executive retirement plans and nonqualified
defined contribution plans.
Policies against Hedging/Pledging Shares
As part of our insider trading
policy, all Company directors, officers, employees and certain designated independent contractors and consultants are prohibited from
engaging in short sales of our securities, establishing margin accounts, pledging our securities as collateral for a loan, trading in
derivative securities, including buying or selling puts or calls on our securities, or otherwise engaging in any form of hedging or monetization
transactions (such as prepaid variable forwards, equity swaps, collars and exchange funds) involving our securities.
Ownership Guidelines
We intend to adopt stock
ownership guidelines that require all of our named executive officers and other members of our executive team to hold a minimum number
of shares of our common stock while serving in their leadership positions.
2022 Summary Compensation Table
The following table sets
forth information concerning the compensation of our named executive officers for the years ended December 31, 2022 and December 31,
2021.
Name | |
Year(1) | | |
Salary
($) | | |
Bonus ($) | | |
Stock
Awards
($)(2) | | |
Non-Equity
Incentive Plan
Compensation
($) | | |
All Other
Compensation
($) | | |
Total ($) | |
Tony Aquila | |
| 2022 | | |
| 500,000 | (3) | |
| — | | |
| 3,424,000 | | |
| — | | |
| — | | |
| 3,924,000 | |
Executive
Chair and CEO | |
| 2021 | | |
| 500,000 | (3) | |
| — | | |
| 43,924,666 | | |
| — | | |
| 189,292 | (4) | |
| 44,613,958 | |
Josette
Sheeran(5) | |
| 2022 | | |
| 490,000 | | |
| — | | |
| | | |
| — | | |
| — | | |
| 490,000 | |
President,
Board Member | |
| 2021 | | |
| 226,008 | | |
| — | | |
| 10,240,044 | | |
| — | | |
| 234,904 | (4) | |
| 10,700,956 | |
Ramesh Murthy
Senior Vice President, Interim Chief Financial Officer and Chief Accounting Officer | |
| 2022 | | |
| 350,000 | | |
| — | | |
| 1,749,998 | | |
| — | | |
| — | | |
| 2,099,998 | |
(1) Mr. Murthy was not a named executive officer in 2021; accordingly,
the Summary Compensation Table includes only fiscal year 2022 compensation with respect to Mr. Murthy.
(2) The amount disclosed represents the aggregate
grant date fair value of stock awards, which include time and, with respect to Mr. Aquila, PSUs, computed in accordance with ASC
Topic 718. This amount does not reflect the actual economic value that may be realized by the named executive officer, which will depend
on factors including the continued service of the named executive officer and the future value of our stock. For the RSUs, the grant
date fair value is based on the closing price of our common stock on the date of grant. For Mr. Aquila’s PSUs (other than
300,000 PSUs granted on May 14, 2021 that vest based on specified operational milestones and were valued based on the Company’s
closing stock price as of the date of grant), the grant date fair value is based on a Monte Carlo simulation model as of the date of
grant. The probable outcome for the PSUs awarded to Mr. Aquila in 2021 was estimated at the target payout level. The grant date
fair value of the PSUs awarded to Mr. Aquila in 2021 assuming the maximum level of performance is achieved is $40,274,666. The grant
date fair values do not take into account any estimated forfeitures related to service-vesting conditions. The assumptions used in calculating
the grant date fair value of such RSUs and PSUs granted in 2022 are set forth in the notes to our audited consolidated financial statements
included in this Annual Report on Form 10-K for the year ended December 31, 2022.
(3) Mr. Aquila receives a base salary
of $500,000, defined as part of his Executive Chair compensation package approved by the board of Legacy Canoo in November 2020
prior to the IPO (with no adjustment made upon his transition to the CEO role), and no other cash compensation.
(4) Amounts shown represent:
| · | For
Mr. Aquila, $189,292 for reimbursement of temporary housing expenses for Mr. Aquila
while he was based in Los Angeles, California. |
| · | For
Ms. Sheeran, (i) $150,000 paid as compensation for consulting services in connection
with the site selection of our manufacturing operations prior to Ms. Sheeran's appointment
as President (ii) $64,904 in fees earned for services as a non-executive director on
our Board, and (iii) $20,000 paid pursuant to the Company's non-executive director compensation
policy to cover tax and legal services incurred in connection with Ms. Sheeran's appointment
to the Board. |
(5) Ms. Sheeran was appointed as President
of the Company on July 26, 2021. Prior to her appointment, Ms. Sheeran served as a director on our Board, and she continues
to serve on the Board following her appointment.
Narrative Disclosure to Summary Compensation Table
For 2022, the compensation
programs for our named executive officers consisted of base salary and incentive compensation delivered in the form of equity awards,
which consisted of a combination of RSUs and PSUs.
Base Salary
Mr. Aquila receives
a limited base salary of $500,000, defined as part of his Executive Chair compensation package approved by the board of Legacy Canoo
in November 2020 prior to the IPO (with no adjustment made upon his transition to the CEO role). Ms. Sheeran receives a base
salary of $490,000. Mr. Murthy receives a base salary of $350,000. We did not make any increases to the named executive officer
base salaries in 2022.
Cash Bonus
We did not have a formal
arrangement with our other named executive officers providing for annual cash bonus awards. However, we have at times provided cash bonuses
to certain members of our executive team on an ad hoc basis as deemed appropriate, in the form of spot bonuses or for achievement of
certain milestones. We did not pay any cash bonuses to our named executive officers in 2022.
Stock Awards
Tony Aquila
On
August 12, 2022, the Board granted Mr. Aquila an award of 800,000 RSUs, comprised of (i) a bonus award of 400,000 RSUs
for his role in procuring the Walmart EV Fleet Purchase Agreement , and (ii) 400,000 RSUs for compensation for fiscal year
2022. These awards vested on January 2, 2023. In addition, 150,000 of the PSUs granted to Mr. Aquila in May 2021 that
are contingent on a start of production operational milestone vested on November 17, 2022.
For information regarding
Mr. Aquila’s outstanding equity awards, most of which are eligible to vest contingent on achieving operational milestones
or stock price goals, see “Outstanding Equity Awards at 2022 Year End” and “Agreements with our Named Executive Officers
and Potential Payments upon Termination of Employment or Change in Control—Tony Aquila” below.
Josette Sheeran
Ms. Sheeran did not
receive a stock award in 2022.
For information regarding
Ms. Sheeran’s outstanding equity awards, see “Outstanding Equity Awards at 2022 Year End” and “Agreements
with our Named Executive Officers and Potential Payments upon Termination of Employment or Change in Control—Josette Sheeran”
below.
Ramesh Murthy
On April 14, 2022, Mr. Murthy
was granted an award comprised of 175,351 PSUs and 175,350 RSUs. The PSUs vest based on the following operational milestones:
| · | 50%
upon start of production |
| · | 50%
when the Company has produced its 5,000th vehicle after start of production |
Half of the start of production
PSUs (43,838 PSUs) vested on Nov 17, 2022 when the Company achieved start of production in Michigan. The RSUs vest 25% one-year after
the vesting commencement date of January 1, 2022 and then 6.25% quarterly thereafter.
For information regarding
Mr. Murthy’s outstanding equity awards, see “Outstanding Equity Awards at 2022 Year End” and “Agreements
with our Named Executive Officers and Potential Payments upon Termination of Employment or Change in Control—Ramesh Murthy”
below.
Agreements with our Named Executive Officers
and Potential Payments upon Termination of Employment or Change in Control
We currently maintain agreements
with Mr. Aquila, Ms. Sheeran, and Mr. Murthy, each as summarized below.
Tony Aquila
In November 2020, Legacy
Canoo entered into an agreement with Mr. Aquila (the “Aquila Agreement”), as may be amended from time to time, pursuant
to which he serves as the Executive Chair of the Board. The term of the Aquila Agreement commenced on December 21, 2020 and will
end on December 31, 2023, or, earlier, upon his voluntary resignation from our Board upon at least thirty days’ notice, his
failure to be re-elected to the Board by our stockholders at the third annual stockholder meeting following the consummation of the Business
Combination, or a vote of no-confidence by a majority of the Board. Mr. Aquila is paid a $500,000 annual fee in equal quarterly
installments and is entitled to any benefits and perquisites generally available to members of our Board. He is reimbursed for business
expenses, including air travel expenses for either, at our option, first class airfare or the business use of his private jet (at a fixed
rate per hour, as set forth in the Aquila Agreement), executive housing on a tax grossed-up basis and business expenses associated with
the office of the Executive Chair.
In addition, Mr. Aquila
was granted 809,908 PSUs (which were converted into PSUs covering 1,003,828 shares of Common Stock upon the closing of the Business Combination),
which vest in 33.3% increments upon the achievement of per-share milestones of $18, $25 and $30, and 809,908 RSUs (which were converted
into RSUs covering 1,003,828 shares of Common Stock upon the closing of the Business Combination), which vest in equal annual installments
over a period of three years (as of fiscal year end 2022, 669,219 shares from this allotment of RSUs were vested). Upon the consummation
of the Business Combination, Mr. Aquila received a target grant of 500,000 PSUs, which vest based on the Company’s achievement
of specified operational and stock price milestones over a three-year performance period, subject to Mr. Aquila’s continued
service with the Company through the applicable vesting dates (as of fiscal year end 2022, 150,000 shares from this allotment of PSUs
were vested). Up to an additional 200,000 PSUs will vest based on maximum achievement of the stock price milestones, and an additional
1,303,828 PSUs will vest upon the achievement of a $20 per-share milestone. He also received a grant of 500,000 RSUs, which will vest
in equal annual installments over a period of three years (as of fiscal year end 2022, 333,334 shares from this allotment of RSUs were
vested). If awards are not assumed in connection with a sale event or corporate transaction (each as defined in the underlying equity
plan), then vesting will be accelerated, with the PSUs vesting based on target performance. In the event that Mr. Aquila is terminated
by us without Cause or he resigns for Good Reason (each as defined in the Aquila Agreement), or his service terminates due to his death
or disability, the PSUs will remain outstanding and eligible to vest at the end of the applicable performance period based on actual
performance achievement, and the unvested RSUs that would have vested had service continued through the end of the fiscal year in which
the termination occurred will accelerate and vest as of the date of such termination. Upon any other termination of service, all unvested
awards will be forfeited.
In connection with his appointment
as CEO in April 2021, the Board also granted Mr. Aquila 2,000,000 PSUs that vest upon the satisfaction of a combination of
performance and time-based conditions. The PSUs will vest based on performance in one-third increments upon the achievement of each of
the following price hurdles during the five-year period beginning October 19, 2020: (i) the stock price equals or exceeds $20,
(ii) the stock price equals or exceeds $25; and (iii) the stock price equals or exceeds $30. In addition, the PSUs will vest
based on time upon the completion of three years of continuous service beginning on October 19, 2020. In the event that Mr. Aquila
is terminated by us without Cause or he resigns for Good Reason (each as defined in the Aquila Agreement), or his service terminates
due to his death or disability, the time and service-based requirement will be deemed satisfied and the PSUs will remain outstanding
and will vest upon the satisfaction of the performance-based requirements.
On November 4, 2021,
Mr. Aquila received an award of 6,000,000 PSUs based on the Company’s achievement of specified stock price milestones over
a five-year performance period ending November 4, 2026, subject to his continued service with the Company through the applicable
vesting date. In the event that Mr. Aquila is terminated by us without Cause or he resigns for Good Reason, or his service terminates
due to his death or disability, the service-based requirement will be deemed satisfied and the PSUs will remain outstanding and will
vest upon the satisfaction of the performance-based requirements. In the event a Corporate Transaction (as defined in the Canoo Inc.
2020 Equity Incentive Plan (the “2020 Equity Plan”)) occurs during Mr. Aquila’s service with the Company and the
PSUs are not assumed by the surviving or acquiring corporation, the service-based requirement will be deemed satisfied and the PSUs will
fully vest upon the consummation of such Corporation Transaction based on satisfaction of the performance requirements, which will be
determined based on the Per Share Transaction Price (as defined in the award agreement). Any PSUs that do not satisfy the performance
requirements based on the Per Share Transaction Price will be forfeited. If, in connection with a Corporate Transaction, the PSUs are
assumed by the surviving corporation or acquiring corporation, any unvested PSUs will (A) be eligible to performance vest upon the
consummation of such Corporate Transaction based on the satisfaction of the performance requirements, which will be determined based
on the Per Share Transaction Price, and (B) remain outstanding until the applicable service requirements are satisfied. Any PSUs
that do not satisfy the performance requirements in connection with such Corporate Transaction will remain outstanding and eligible to
vest in accordance with the applicable service requirements and the performance requirements; provided that the Board may equitably adjust
the performance requirements applicable to any PSUs that did not performance vest upon such Corporate Transaction to appropriately reflect
the structure of the Company following such Corporate Transaction. If, (A) in connection with a Corporate Transaction, the PSUs
are assumed by the surviving corporation or acquiring corporation, and (B) the Mr. Aquila’s service terminates following
the Corporate Transaction due to a termination by the Company without Cause, a resignation by Mr. Aquila for Good Reason or due
to his death or disability, then the service requirements will be deemed satisfied upon such termination, and any unvested portion of
the assumed PSUs will fully vest based on target performance achievement.
On
August 12, 2022, Mr. Aquila received an award of 800,000 RSUs, comprised of (i) a bonus award of 400,000 RSUs for his
role in procuring the Walmart EV Fleet Purchase Agreement, and (ii) 400,000 RSUs for compensation for fiscal year 2022. These
awards vested on January 2, 2023.
Mr. Aquila does not
receive additional cash compensation in connection with his role as CEO.
Josette Sheeran
In July 2021, Canoo
Technologies entered into an agreement with Ms. Sheeran pursuant to which Ms. Sheeran serves as President of the Company (the
“Sheeran Agreement”). The Sheeran Agreement has no specific term and provides that Ms. Sheeran’s employment is
at-will. The Sheeran Agreement provides a base salary of $490,000, and she is eligible to participate in the benefits plans offered to
similarly situated employees of the Company. Ms. Sheeran is also eligible to receive an annual bonus award of up to 100% of her
annual salary, with the possibility of up to a two times multiplier, in either case upon successfully achieving performance goals outlined
by the Company and remaining an employee in good standing through applicable milestone dates. In addition, pursuant to the Sheeran Agreement,
the Company will covered 100% of Ms. Sheeran’s moving expenses and provided a relocation allowance of up to $150,000 in temporary
housing and living expenses for six months. In the event Ms. Sheeran had terminated employment within twelve months of her moving
date, she would have been required to reimburse the Company for the moving expenses and relocation allowance.
In the event that Ms. Sheeran
is terminated by us without cause, the Sheeran Agreement provides that she will be eligible for twelve months of severance, continued
healthcare benefits and continued vesting of any RSUs through the severance period.
The Sheeran Agreement provides
Ms. Sheeran with a long term incentive award under the Company’s incentive plan, consisting of a grant of 1,468,429 RSUs.
Twenty-five percent of the RSUs vested on August 15, 2022, and the remainder of the award will vest in equal increments each quarter
thereafter on the fifteenth day of the month, subject to Ms. Sheeran’s continuous service through each such date. Any RSUs
that remain unvested upon a termination of service will be forfeited.
Ms. Sheeran is subject
to our standard confidential information and inventions assignment agreement, which includes a perpetual confidentiality covenant and
a non-competition covenant that applies during the period of employment.
Ms. Sheeran will continue
to serve as a member of the Company’s Board but will not receive any additional board compensation.
Ramesh Murthy
In February 2021, Canoo
Technologies extended an offer of employment to Mr. Murthy as Chief Accounting Officer and, in July 2021, Mr. Murthy was
promoted to SVP, Finance and Chief Accounting Officer of the Company (the “Murthy Agreements”). The Murthy Agreements have
no specific term and provide that Mr. Murthy’s employment is at-will. The Murthy Agreements provide a base salary of $350,000,
and he is eligible to participate in the benefits plans offered to similarly situated employees of the Company. Mr. Murthy is also
eligible to receive an annual bonus award of up to 40% of his annual salary upon successfully achieving performance goals outlined by
the Company and remaining an employee in good standing through applicable milestone dates. In the event that Mr. Murthy is terminated
by us without cause or by Mr. Murthy for good reason, the Murthy Agreements provide that he will be eligible for severance equal
to five months of his annual base salary.
The February offer letter
provides Mr. Murthy with a long term incentive award under the Company’s incentive plan, consisting of a grant of 32,887 RSUs.
The July promotion letter provides Mr. Murthy with an additional award, consisting of 63,143 RSUs. Twenty-five percent of the
February RSUs vested on February 15, 2022 and twenty-five percent of the July RSUs vested on July 16, 2022, and the
remainder of the RSUs will vest in equal increments each quarter thereafter on the fifteenth day of the month, subject to Mr. Murthy’s
continuous service through each such date. Any RSUs that remain unvested upon a termination of service will be forfeited.
In addition, as described
above, in April 2022, Mr. Murthy was granted an award consisting of 175,351 PSUs and 175,350 RSUs. 43,838 PSUs vested on Nov
17, 2022, and the remainder of the PSUs will vest upon the completion of additional operational milestones. Twenty-five percent of the
RSUs vested in January 2023 and the remainder of the RSUs will vest in equal increments each quarter thereafter, subject to Mr. Murthy’s
continuous service through each such date. Any RSUs or PSUs that remain unvested upon a termination of service will be forfeited.
If Mr. Murthy remains
in continuous service as of the effective time of a change in control, any shares that remain outstanding and that are not assumed or
substituted by the surviving corporation or acquiring corporation will become fully vested immediately prior to such change in control.
Mr. Murthy is subject
to our standard confidential information and inventions assignment agreement, which includes a perpetual confidentiality covenant and
a non-competition covenant that applies during the period of employment.
Outstanding
Equity Awards at 2022 Year End
The following table presents
information regarding outstanding equity awards held by our named executive officers as of December 31, 2022.
| |
Stock
Awards | |
Name | |
Number
of Shares or Units of Stock that Have Not Vested (#) | | |
Market
Value of Shares or Units of Stock that Have Not Vested ($) | | |
Equity
incentive plan awards: number of unearned shares, units or other rights that have not vested ($) | | |
Market
Value of Shares or Units of Stock that Have Not Vested ($) | |
Tony Aquila | |
| — | | |
| — | | |
| 1,003,828 | (1) | |
| 1,234,708 | |
| |
| 334,609 | (2) | |
| 411,569 | | |
| — | | |
| — | |
| |
| 166,666 | (3) | |
| 204,999 | | |
| — | | |
| — | |
| |
| — | | |
| — | | |
| 2,000,000 | (4) | |
| 2,460,000 | |
| |
| — | | |
| — | | |
| 1,853,828 | (5) | |
| 2,280,208 | |
| |
| — | | |
| — | | |
| 6,000,000 | (6) | |
| 7,380,000 | |
| |
| 800,000 | (7) | |
| 984,000 | | |
| — | | |
| — | |
Josette Sheeran | |
| 1,009,546 | (8) | |
| 1,241,742 | | |
| — | | |
| — | |
Ramesh Murthy | |
| 18,500 | (9) | |
| 22,755 | | |
| — | | |
| — | |
| |
| 6,619 | (9) | |
| 8,141 | | |
| — | | |
| — | |
| |
| 43,412 | (9) | |
| 53,397 | | |
| — | | |
| — | |
| |
| 131,513 | (9) | |
| 161,761 | | |
| — | | |
| — | |
| |
| — | | |
| — | | |
| 131,513 | (10) | |
| 161,171 | |
(1) 33.3% of the total PSUs subject to the
award will vest upon the first October 19 to occur on or following the date upon which the Common Stock achieves $18 per share (the
“$18 Vesting Date”), subject to Mr. Aquila’s continued service through the $18 Vesting Date; (b) an additional
33.3% of the total PSUs will vest upon the first October 19 to occur on or following the date upon which the Common Stock achieves
$25 per share (the “$25 Vesting Date”), subject to Mr. Aquila’s continued service through the $25 Vesting Date;
and (c) the remaining 33.3% of the total PSUs will vest upon the first October 19 to occur on or following the date upon which
the Common Stock achieves $30 per share (the “$30 Vesting Date”), subject to Mr. Aquila’s continued service through
the $30 Vesting Date. Any PSUs that have not satisfied their performance-based vesting conditions satisfied by October 19, 2023
will be forfeited.
(2) 50% of the RSUs subject to the award
will vest on October 19, 2022 and the remaining 50% will vest on October 19, 2023, subject to continued service through the
applicable vesting date.
(3) 50% of the RSUs subject to the award
will vest on December 21, 2022 and the remaining 50% will vest on December 21, 2023, subject to continued service through the
applicable vesting date.
(4) The PSUs will vest based on (A) performance
in one-third increments upon the achievement of each of the following price hurdles during the five-year period beginning October 19,
2020: (i) the stock price equals or exceeds $20, (ii) the stock price equals or exceeds $25, and (iii) the stock price
equals or exceeds $30; and (B) on continuous service through October 19, 2023. Both (A) and (B) must be satisfied
on or before October 19, 2025 in order for the PSUs to vest.
(5) 400,000 of the PSUs subject to the award
will vest based on achievement of stock price milestones over a performance period beginning May 14, 2021 and ending on May 14,
2024, subject to continued service through the applicable vesting dates. 150,000 of the PSUs subject to the award will vest based on
achievement of operational milestones over a performance period beginning May 14, 2021 and ending on May 14, 2024, subject
to continued service through the applicable vesting dates. 1,303,828 of the PSUs subject to the award will vest upon the achievement
of a $20 per-share price prior to May 14, 2024. The number reflected above represents the maximum number of PSUs that could pay
out pursuant to the award based on achieving the applicable performance goals.
(6) The PSUs subject to the award will vest
upon achievement of specified stock price milestones over a five-year performance period ending November 4, 2026, subject to continued
service through the applicable vesting date.
(7) 100% of the RSUs subject to the award
will vest on January 2, 2023.
(8) Twenty-five percent of the RSUs will
vest on August 15, 2022, and the remainder of the award will vest in equal increments each quarter thereafter on the fifteenth day
of the month, subject to continued service through each such date.
(9) Twenty-five percent of each of the RSUs will vest on the one-year anniversary of the grant date and the remainder of each of the RSUs
will vest in equal increments each quarter thereafter on the fifteenth day of the month, subject to continued service through each such
date.
(10) The PSUs subject to the award will
vest upon achievement of specified performance milestones, subject to continued service through the applicable vesting date.
2022 Director Compensation
The following table contains
information concerning the compensation of our non-employee directors in fiscal year 2022.
Name | |
Fees Earned
or Paid
in Cash ($) | | |
Stock
Awards ($)(1) | | |
All Other
Compensation ($) | |
Total ($) | |
Foster Chiang | |
| 85,000 | | |
| 200,000 | | |
___---- | |
| 285,000 | |
Thomas Dattilo | |
| 195,000 | | |
| 200,000 | | |
---- | |
| 395,000 | |
Greg Ethridge | |
| 85,000 | | |
| 200,000 | | |
---- | |
| 285,000 | |
Claudia Romo Edelman | |
| 85,000 | | |
| 200,000 | | |
---- | |
| 285,000 | |
Arthur Kingsbury | |
| 115,000 | | |
| 200,000 | | |
---- | |
| 315,000 | |
Rainer Schmueckle | |
| 115,000 | | |
| 200,000 | | |
---- | |
| 315,000 | |
Debra von Storch | |
| 130,000 | | |
| 200,000 | | |
---- | |
| 330,000 | |
(1) In
July 2022, pursuant to our non-employee director compensation policy, each non-employee director received grants in connection with
Board service of 55,096 RSUs, with an aggregate value per director of $200,000 based on the closing price for our Common Stock, as reported
on Nasdaq on the applicable grant date.
Non-Employee Director Compensation Policy
Our policy is to reimburse
directors for reasonable and necessary out-of-pocket expenses incurred in connection with attending Board and committee meetings or performing
other services in their capacities as directors.
In March 2021, and subsequently
amended in November 2021 to, among other things, add an annual cash retainer for services in the role of lead independent direct,
our Board approved the following cash and equity compensation for each of our current non-employee directors:
| · | an
annual cash retainer equal to $85,000, paid in four equal quarterly installments at the end
of each quarter; |
| · | an
annual cash retainer for committee member service equal to $15,000 and an additional $15,000
paid to the chairperson of each committee, each paid in four equal quarterly installments
at the end of each quarter; |
| · | an
annual cash retainer for service as the lead independent director of the Board equal to $50,000,
paid in four equal quarterly installments at the end of each quarter; |
| · | an
initial equity award with a value of $275,000 in the aggregate, comprised of 100% RSUs, vesting
in full on the first anniversary of a specified vesting commencement date, which shall be
the fifteenth day of the calendar month that occurs prior to the beginning of the non-employee
director’s service on the Board (or if such date is not a business day, the first business
day thereafter), subject to the non-employee director’s continued service with us through
such vesting date, except if the non-employee director remains in continued service as of,
or immediately prior to, a change in control, the shares subject to his or her then-outstanding
equity awards that were granted pursuant to this policy will become fully vested immediately
prior to such change in control; and |
| · | an annual equity award with a value
of $200,000 in the aggregate, payable following each annual meeting of the stockholders,
comprised of 100% RSUs, vesting in full on the earlier of (i) the fifteenth day of the
calendar month that occurs prior the first anniversary of the applicable grant date (or if
such date is not a business day, the first business day thereafter) and (ii) the fifteenth
day of the calendar month that occurs prior to the first annual meeting of the Company's
stockholders that occurs after the applicable grant date (or if such date is not a business
day, the first business day thereafter), subject to the non-employee director’s continued
service with us through the applicable vesting date, except if the non-employee director
remains in continued service as of, or immediately prior to, a change in control, the shares
subject to his or her then-outstanding equity awards that were granted pursuant to this policy
will become fully vested immediately prior to such change in control. |
Upon joining the Board, each
of our non-employee directors are also paid a cash payment of $20,000 to cover expenses for tax and legal services incurred in connection
therewith.
The Board reviews director
compensation periodically to ensure that director compensation remains competitive, such that we are able to recruit and retain qualified
directors. We believe our compensation program is designed to align compensation with our business objectives and the creation of stockholder
value, while enabling us to attract, retain, incentivize and reward directors who contribute to our long-term success.
ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets
forth information regarding the beneficial ownership of the Common Stock as of April 14, 2023 for:
| · | each person who is known by us to
be the beneficial owner of more than 5% of the outstanding shares of the Common Stock; |
| · | each current named executive officer
and director of the Company; and |
| · | all current executive officers and
directors of the Company, as a group. |
Beneficial ownership is determined
according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it
possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable
or exercisable within 60 days.
The percentages of beneficial
ownership are based on 476,588,034 shares of common stock outstanding as of April 14, 2023.
Common stock subject to options
or restricted stock units (“RSUs”) that are currently exercisable or will vest within 60 days of April 14, 2023 are
deemed to be outstanding and beneficially owned by the person holding the options or RSUs. These shares, however, are not deemed outstanding
for the purposes of computing the percentage ownership of any other person. Except as disclosed in the footnotes to this table and subject
to applicable community property laws, we believe that each shareholder identified in the table possesses sole voting and investment
power over all common stock shown as beneficially owned by the shareholder.
Name
and Address of Beneficial Owner((1) | |
Number
of Shares of Common Stock Beneficially Owned | | |
Percentage
of Outstanding Common Stock % | |
Directors and Named Executive
Officers: | |
| | | |
| | |
Tony
Aquila(2) | |
| 62,479,217 | | |
| 13.1 | % |
Foster Chiang | |
| 38,163 | | |
| * | |
Thomas Dattilo | |
| 128,163 | | |
| * | |
Greg Ethridge | |
| 392,323 | | |
| * | |
Arthur Kingsbury | |
| 38,163 | | |
| * | |
Claudia Romo Edelman | |
| 38,163 | | |
| * | |
Rainer Schmueckle | |
| 38,163 | | |
| * | |
Josette Sheeran | |
| 535,519 | | |
| * | |
Debra von Storch | |
| 38,163 | | |
| * | |
All Directors and Executive Officers
of the Company as a Group (11 Individuals) | |
| 63,959,649 | | |
| 13.4 | % |
Five Percent Holders: | |
| | | |
| | |
Entities
affiliated with Champ Key Limited(3) | |
| 26,882,981 | | |
| 5.6 | % |
Remarkable
Views Consultants Ltd.(4) | |
| 30,216,491 | | |
| 6.3 | % |
Entities
affiliated with AFV Management Advisors LLC(5) | |
| 55,737,160 | | |
| 11.7 | % |
*
Less than one percent.
(1) Unless otherwise noted, the business
address of those listed in the table above is 19951 Mariner Avenue, Torrance, California 90503.
(2) Consists of (i) 5,775,390 shares
of Common Stock held by Tony Aquila and 966,667 shares of Common Stock that will vest within 60 days, (ii) 12,509,387 shares of
Common Stock held by AFV Partners SPV-4 LLC, a Delaware limited liability company (“AFV-4”), (iii) 35,273,268 shares
of Common Stock held by AFV Partners SPV-7 LLC, a Delaware limited liability company (“AFV-7”) and (iv) 3,450,000 shares
of Common Stock held by AFV Partners SPV-7/A LLC, a Delaware limited liability company (“AFV-7/A”), and (v) 4,504,505
shares of Common Stock held by AFV-10. AFV Management Advisors LLC, a Delaware limited liability company (“AFV”) is the sole
manager and controlling member of AFV-4, AFV-7, AFV-7/A and AFV-10. Mr. Aquila is the managing member of AFV, which exercises ultimate
voting and investment power with respect to the shares held by AFV-4, AFV-7, AFV-7/A and AFV-10. Mr. Aquila may be deemed to hold
voting and dispositive power with respect to the securities held indirectly by AFV, and held of record by AFV-4, AFV-7, AFV-7/A and AFV-10.
(3) Consists of (i) 9,693,771 shares
of Common Stock held by DD Global Holdings Limited, an exempted company incorporated under the laws of the Cayman Islands (“DD
Global”) and (ii) 17,189,210 shares of Common Stock held by Champ Key Limited, a company incorporated under the laws of the
British Virgin Islands (“Champ Key”), per the Schedule 13D/A filed on July 22, 2022. DD Global is wholly owned by Champ
Key. Champ Key is wholly owned by DE Capital Limited (“DE Capital”). DE Capital is wholly owned by Pak Tam Li, a citizen
of Hong Kong. Mr. Li may be deemed to have sole voting and dispositive control over the shares held indirectly by DE Capital and
held of record by DD Global and Champ Key. The business address of DD Global is PO Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay
Road, Grand Cayman, E9, KY1-1205 Cayman Islands. The business address of each of Champ Key and Mr. Li is Vistra Corporate Services
Centre, PO Box 957, Road Town, Tortola, D8, VG1110, British Virgin Islands. The business address of DE Capital is Fourth Floor, One Capital
Place, PO Box 847, Grand Cayman, E9, KY1-1103, Cayman Islands.
(4) The shares reported herein are directly
owned by Remarkable Views Consultants Ltd. (“Remarkable Views”). The board of directors of Remarkable Views, of which Victor
Chu is the sole director, has the power to dispose of and the power to vote the shares of Common Stock beneficially owned by Remarkable
Views. The business address of the reporting person is 4F, No.13-19, Sec. 6, Minquan E. Road, Neihu Dist., 114 Taipei, Taiwan
(5) Consists of (i) 12,359,387 shares
of Common Stock held by AFV-4, (ii) 35,273,268 shares of Common Stock held by AFV-7 and (iii) 3,600,000 shares of Common Stock
held by AFV Partners LLC. AFV is the sole manager and controlling member of AFV-4 and AFV-7. Mr. Aquila is the managing member of
AFV, which exercises ultimate voting and investment power with respect to the shares held by (i) AFV-4 and (ii) AFV-7 and is
the sole member and manager of AFV Partners. Mr. Aquila may be deemed to hold voting and dispositive power with respect to the securities
held indirectly by AFV and held of record by (i) AFV-4 and (ii) AFV-7, and those held directly by AFV Partners. The business
address of AFV-4, AFV-7, AFV and AFV Partners is 2126 Hamilton Road Suite 260, Argyle, Texas 76226.
Equity Compensation Plan Information
The following table provides
certain information with respect to all of the Company’s equity compensation plans in effect as of December 31, 2022.
Plan
Category |
|
Number
of securities to be issued upon exercise of outstanding options, warrants and rights |
|
Weighted-
average exercise price of outstanding options, warrants and rights(1) |
|
Number
of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|
|
(a) |
|
|
|
(b) |
|
(c) |
|
Equity
compensation plans approved by security holders(2) |
|
31,642,836 |
(3) |
|
$ |
0.015 |
|
24,337,344 |
(4)(5) |
Equity
compensation plans not approved by security holders |
|
— |
|
|
|
— |
|
— |
|
Total |
|
31,642,836 |
|
|
$ |
0.015 |
|
24,337,344 |
|
(1) The weighted average exercise price
is calculated based solely on outstanding stock options. It does not take into account the 31,569,132 shares issuable upon vesting of
outstanding restricted stock unit awards without any cash consideration payable for those shares.
(2) Consists of the 2020 Equity Plan and
the Canoo Inc. 2020 Employee Stock Purchase Plan (the “2020 ESPP”).
(3) Consists of 29,157,907 shares of Common
Stock underlying outstanding restricted stock unit awards granted under the 2020 Equity Plan and 2,484,929 shares of Common Stock underlying
outstanding stock options and restricted stock unit awards previously granted under the Legacy Canoo 2018 Share Option and Grant Plan,
as assumed by the Company on December 21, 2020 in connection with the Business Combination (the “2018 Equity Plan”).
No additional awards may be granted under the 2018 Equity Plan.
(4) Consists of 17,043,032 shares of Common
Stock remaining available for issuance under the 2020 Equity Plan and 7,294,312 shares of Common Stock remaining available for issuance
under the 2020 ESPP.
(5) The number of shares of Common Stock
reserved for issuance under the 2020 Equity Plan automatically increases on January 1 of each year, continuing through January 1,
2030, in an amount equal to (i) 5% of the total number of shares of Common Stock outstanding on December 31 of the preceding
year, or (ii) a lesser number of shares of Common Stock determined by the Board prior to the date of the increase. The number of
shares of Common Stock reserved for issuance under the 2020 ESPP automatically increases on January 1 of each year, continuing through
January 1, 2030, in an amount equal to the lesser of (i) 1% of the total number of shares of Common Stock outstanding on December 31
of the preceding year, (ii) 8,069,566 shares of Common Stock, or (iii) a lesser number of shares of Common Stock determined
by the Board prior to the date of the increase.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Transactions with Related Parties
The following is a summary
of transactions for fiscal year 2021 and 2022 which we have been a party, in which the amount involved exceeded or will exceed the lesser
of (x) $120,000 or (y) 1% of the average of our total assets at December 31, 2021 and 2022, and in which any of our directors,
executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate family member thereof, had or will have
a direct or indirect material interest other than compensation and other arrangements that are described in Item 11 “Executive
Compensation and Director Compensation.” We also describe below certain other transactions with our directors, former directors,
executive officers and stockholders.
A&R Registration Rights Agreement
In connection with the closing
of the Business Combination, we entered into an Amended and Restated Registration Rights Agreement on December 21, 2020 with HCAC,
Hennessy Capital Partners IV LLC (“HCAC Sponsor”) and certain of our stockholders (the “A&R Registration Rights
Agreement”), pursuant to which the such stockholders of Registrable Securities (as defined therein), subject to certain conditions,
will be entitled to registration rights. Pursuant to the A&R Registration Rights Agreement, we agreed that, within 15 business days
after the closing of the Business Combination, we would file with the SEC (at our sole cost and expense) a registration statement registering
the resale of such registrable securities, and we agreed to use our reasonable best efforts to have such registration statement declared
effective by the SEC as soon as reasonably practicable after the filing thereof. Such registration statement was originally declared
effective by the SEC on January 25, 2021. Certain stockholders party to the A&R Registration Rights Agreement have been granted
demand underwritten offering registration rights and all of such stockholders will be granted piggyback registration rights. The A&R
Registration Rights Agreement does not provide for the payment of any cash penalties by us if we fail to satisfy any of our obligations
under the A&R Registration Rights Agreement. The A&R Registration Rights Agreement will terminate upon the earlier of (a) ten
years following the closing of the Business Combination or (b) the date as of which such stockholders cease to hold any Registrable
Securities.
Subscription Agreements
On
May 10, 2022, the Company entered into Common Stock Subscription Agreement providing for the purchase of an aggregate of 13.7 million
shares of Common Stock at a price of $3.65 per share for an aggregate purchase price of $50.0 million (the "May 2022
PIPE"). The purchasers of the shares are special purpose vehicles managed by entities affiliated with Mr. Aquila. The closing
of the May 2022 PIPE occurred on May 20, 2022.
On
November 9, 2022, the Company entered into Common Stock Subscription Agreement providing for the purchase of an aggregate of 9.0 million
shares of Common Stock at a price of $1.11 per share for an aggregate purchase price of $10.0 million (the “November 2022
PIPE”). The purchasers of the shares are Mr. Aquila and a special purpose vehicle managed by entities affiliated with Mr. Aquila.
The closing of the November 2022 PIPE occurred on November 18, 2022.
Related Party Leases
In February 2018, Canoo
Technologies entered into a lease for an office facility in Torrance, California, with Remarkable Views, which lease was assigned to
Remarkable Views Torrance, LLC, a wholly-owned subsidiary of Remarkable Views, on April 30, 2018. The lease term is 15 years, commencing
on April 30, 2018. The lease had an initial monthly base rent of $116,080 and contains a 3% per annum escalation clause, which updates
every twelve months. Canoo Technologies is also required to pay the property taxes on the facility. The lease contains the option to
extend the term of the lease for two additional 60-month periods commencing when the prior term expires. In June 2021, the Torrance
lease property was sold to a non-related party lessor. The change in lessor did not impact the terms and conditions of the Torrance lease.
Lease expense related to this operating lease was $0.9 million for the years ended December 31, 2021. During 2021,
we made rent payments in the amount of $0.7 million.
In March 2021, Canoo
Technologies entered into a lease for an office facility in Justin, Texas with 15520 HWY 114 LLC, an entity owned by Tony Aquila, our
Executive Chair. The lease term is five years, commencing on January 1, 2021. The lease has a monthly base rent of $21,875 and contains
a 3% per annum escalation clause which updates on January 1st of each year. Canoo Technologies is also required to pay a portion
of the property taxes and certain recurring expenses on the leased space. Effective July 30, 2021, the Company amended its Justin
lease to extend the leased square footage which increased the monthly base rent to $34,168 for the duration of the arrangement term.
The lease contains the option to extend the term of the lease for one additional five-year period. Lease expense related to this operating
lease was $0.5 million and $1.3 million for the years ended December 31, 2022 and December 31, 2021. During 2022 and 2021,
we made payments to 15520 HWY 114 LLC in the amount of $0.4 million and $1.5 million, respectively.
On
January 31, 2023, the Company entered into a real estate lease for an approximately 8,000 square foot facility
in Justin, Texas with an entity owned by the Executive Chair and Chief Executive Officer of the Company. The initial lease term is three
years five months, commencing on November 1, 2022 and terminating on March 31, 2026, with one option to extend the
term of the lease for an additional five-year period.
On April 7, 2023, the
Company executed a ten year lease agreement with a five year renewal option for the leaseback of approximately 500,000 square feet of
the vehicle manufacturing facility in Oklahoma City, Oklahoma (the “OKC Facility”) from I-40 OKC Partners LLC, a special
purpose vehicle managed by entities affiliated with Mr. Tony Aquila, the Company’s Executive Chairman and Chief Executive
Officer (“I-40 Partners”). The Company previously entered into that certain Purchase and Sale Agreement on November 9,
2022 (the “PSA”) to acquire the OKC Facility for $34.2 million from Terex USA, LLC (“Terex”) and,
in connection with the lease, the Company entered into an Assignment of Real Estate Purchase Agreement (“AREPA”) with
I-40 Partners relating to the sale of the OKC Facility. The lease includes a $6.7 million tenant improvement fund and a separate $1.6
million remediation fund for facility repairs. As required under the terms of the PSA, I-40 Partners leased the remaining approximately
150,000 square feet of the OKC Facility to Terex who will continue operating in a designated area within the OKC Facility (the “Terex
Lease”). Upon termination or expiration of the Terex Lease, the Company shall lease the designated area within the OKC Facility
allocated to the Terex Lease at the then-current rate provided under the Terex Lease. The Company also maintains an option to purchase
the OKC Facility from I-40 Partners commencing in Year 3 of the lease and ending prior to Year 4. Lease rates on the lease will increase
over its term, commencing at $7.11 per square foot in Year 1 of the lease and ending in Year 10 at $10.94.
Employment and Other Compensation Arrangements,
Equity Plan Awards
We have entered into employment
agreements and consulting agreements with certain of our executive officers in connection with their employment or provision of services
to us. We also have established certain equity plans, pursuant to which we grant equity awards to our employees and directors. For more
information regarding the executives’ arrangements and our equity plans, see the section titled “Executive Compensation —
Agreements with our Named Executive Officers and Potential Payments Upon Termination of Employment or Change in Control.”
Other Transactions
Mr. Aquila, through
an entity owned and controlled by him (Aquila Family Ventures, LLC (“AFV”)), owns a personal aircraft that was acquired without
our resources, which aircraft he uses for business travel. We reimburse Mr. Aquila for certain costs and third-party payments associated
with the use of his personal aircraft for Company-related business travel, excluding certain incidental fees and expenses. We incurred
approximately $1.3 million and $1.8 million for such reimbursements for the years ended December 31, 2022 and 2021, respectively.
In addition, during 2021 certain AFV staff provides the Company with shared services support in its Justin, Texas corporate office facility.
For the year ended December 31, 2022 and 2021, the Company paid AFV approximately $1.1 million and $0.5 million for these services.
During the year ended December 31,
2021, the Company compensated its President, Josette Sheeran, $0.2 million primarily for consulting services in connection with
the site selection of our manufacturing operations prior to Ms. Sheeran's appointment as an executive officer. The Company incurred
no expenses related to consulting services with Josette Sheeran during the year ended December 31, 2022.
During
the year ended December 31, 2022, the Company incurred approximately $0.8 million for the usage and purchase of certain transport
trucks and trailers with an entity controlled by the Executive Chair and Chief Executive Officer of the Company.
Related-Person Transactions Policy
The Board has adopted a written
Related-Person Transactions Policy that sets forth our policies and procedures regarding the identification, review, consideration and
oversight of related-person transactions. For purposes of our policy, a related-person transaction is a transaction, arrangement or relationship
(or any series of similar transactions, arrangements or relationships) in which we and any related person are, were or will be participants,
in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to us as an employee, consultant
or director will not be considered related-person transactions under this policy.
Under the policy, a related
person is any executive officer, director, nominee to become a director or a security holder known by us to beneficially own more than
5% of any class of our voting securities (a “significant stockholder”), including any of their immediate family members and
affiliates, including entities controlled by such persons or such person has a 5% or greater beneficial ownership interest.
Each director and executive
officer shall identify, and we shall request each significant stockholder to identify, any related-person transaction involving such
director, executive officer or significant stockholder or his, her or its immediate family members and inform our audit committee pursuant
to this policy before such related person may engage in the transaction.
In considering related-person
transactions, our audit committee takes into account the relevant available facts and circumstances, which may include, but are not limited
to:
| · | the risk, cost and benefits to us; |
| · | the impact on a director’s independence
in the event the related person is a director, immediate family member of a director or an
entity with which a director is affiliated; |
| · | the terms of the transaction; and |
| · | the availability of other sources
for comparable services or products. |
Our Audit Committee shall
approve only those related-party transactions that, in light of known circumstances, are in, or are not inconsistent with, the best interests
of the Company and our stockholders, as our Audit Committee determines in the good faith exercise of its discretion.
Indemnification
Our Certificate of Incorporation
eliminates our directors’ liability for monetary damages to the fullest extent permitted by applicable law. The DGCL provides that
directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except
for liability:
| · | for any transaction from which the
director derives an improper personal benefit; |
| · | for any act or omission not in good
faith or that involves intentional misconduct or a knowing violation of law; |
| · | or any unlawful payment of dividends
or redemption of shares; or |
| · | for any breach of a director’s
duty of loyalty to the corporation or its stockholders. |
If the DGCL is amended to
authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of our directors will
be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
The Certificate of Incorporation
requires us to indemnify and advance expenses to, to the fullest extent permitted by applicable law, our directors, officers and agents.
We maintain a directors’ and officers’ insurance policy, pursuant to which our directors and officers are insured against
liability for actions taken in their capacities as directors and officers. Finally, the Certificate of Incorporation prohibits any retroactive
changes to the rights or protections or increase the liability of any director in effect at the time of the alleged occurrence of any
act or omission to act giving rise to liability or indemnification.
In addition, we have entered
into separate indemnification agreements with each of our directors and officers. These agreements, among other things, require us to
indemnify our directors and officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred
by a director or officer in any action or proceeding arising out of their services as one of our directors or officers or any other company
or enterprise to which the person provides services at our request.
Independence of the Board of Directors
As required under the Nasdaq
listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,”
as affirmatively determined by the board. Our Board consults with our counsel to ensure that its determinations are consistent with relevant
securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent
listing standards of Nasdaq, as in effect from time to time.
Consistent with these considerations,
after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and
us, our senior management and our independent auditors, our Board has affirmatively determined that each of the directors on the Board
other than Tony Aquila, Josette Sheeran and Greg Ethridge are independent directors within the meaning of the applicable Nasdaq listing
standards. In making this determination, our Board found that none of these directors had a material or other disqualifying relationship
with our company.
In making those independence
determinations, our Board took into account certain relationships and transactions that occurred in the ordinary course of business between
us and entities with which some of our directors are or have been affiliated, including the relationships and transactions described
in “Transactions with Related,” and all other facts and circumstances that the Board deemed relevant in determining their
independence, including the beneficial ownership of our capital stock by each director.
ITEM 14. PRINCIPAL ACCOUNTING
FEES AND SERVICES
Fees and Services
The following table summarizes
the aggregate fees for professional audit services and other services rendered by Deloitte & Touche LLP for the years ended
December 31, 2022 and 2021.
| |
| 2022(4) | | |
| 2021(5) | |
Audit
Fees(1) | |
$ | 1,806,630 | | |
$ | 1,188,105 | |
Audit-Related
Fees(2) | |
| — | | |
| — | |
Tax
Fees(3) | |
| — | | |
| — | |
All Other Fees | |
| 3,790 | | |
| 1,895 | |
Total | |
$ | 1,810,420 | | |
$ | 1,190,000 | |
(1) Audit fees include fees for services
performed to comply with the standards established by the Public Company Accounting Oversight Board, including the audit of our consolidated
financial statements. This category also includes fees for audits provided in connection with statutory filings or services that generally
only the principal independent auditor reasonably can provide, such as consent and assistance with and review of our SEC filings.
(2) Audit-related fees include, in general,
fees such as assurances and related services (i.e., due diligence services), accounting consultations and audits in connection with acquisitions,
internal control reviews, attest services that are not required by statute or regulation, and consultation regarding financial accounting
and reporting standards, which are traditionally performed by the independent accountant but are not considered audit fees.
(3) Tax fees include fees for services performed
by professional staff of in the respective accountant’s tax division (except those relating to audit or audit-related services),
including fees for tax compliance, planning and advice.
(4) Represent fees billed by Deloitte for
professional services rendered for the review of the financial information included in our Forms 10-Q for the respective periods, the
audit of our consolidated financial statements for the year ended December 31, 2022 and other required filings with the SEC through
December 31, 2022.
(5) Represent fees billed by Deloitte for
professional services rendered for the review of the financial information included in our Forms 10-Q for the respective periods, the
audit of our consolidated financial statements for the year ended December 31, 2021 and other required filings with the SEC through
December 31, 2021.
Pre-Approval Policies and Procedures
The charter of the Audit
Committee provides that the Committee will approve all audit and non-audit related services that the Company’s independent registered
public accounting firm provides to the Company before the engagement begins, unless applicable law and stock exchange listing requirements
allow otherwise. The charter also provides that the Committee may establish pre-approval policies and procedures or delegate pre-approval
authority to one or more Committee members as permitted by applicable law and stock exchange listing requirements.