| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(b) Cessation of Service as Interim Chief Executive Officer
In connection with the appointment of Mr. Hu described below, Xun (Kenneth) Li will cease serving as Interim Chief Executive Officer of the Company, effective as of the Start Date (as defined below). Mr. Li will continue to serve as the Company’s Chief Financial Officer.
(c) Appointment of Chief Executive Officer
On July 23, 2026, the Board of Directors (the “Board”) of Power Solutions International, Inc. (the “Company”) appointed Nan (Richard) Hu, age 52, as Chief Executive Officer of the Company, effective upon the commencement of his employment on August 17, 2026 (the “Start Date”), at which time Mr. Hu will become the Company’s principal executive officer. Mr. Hu was identified through the Board’s previously disclosed Chief Executive Officer succession planning and search process, conducted with the assistance of Spencer Stuart, a global executive search and leadership advisory firm. Mr. Hu’s commencement of employment remains subject to the satisfaction of customary pre-employment conditions set forth in the Employment Agreement described below. Mr. Hu will report directly to the Board.
Mr. Hu brings more than 25 years of global leadership experience spanning Asia, Europe, and the Americas. Prior to joining the Company, Mr. Hu spent six years at BorgWarner, Inc. from 2020 to 2026, most recently serving as Vice President and General Manager of the Americas Region for the Turbo & Thermal Technology business unit, where he held full P&L accountability for a multi-billion-dollar operation encompassing multiple manufacturing plants and technical centers across the United States, Mexico, and Brazil, leading a global team of approximately 3,900 employees. Previously, Mr. Hu served as Senior Vice President and General Manager of Delphi Technologies’ Global Powertrain business unit, where he helped navigate the company through its acquisition by BorgWarner in 2020. His career also includes senior executive roles at Eberspächer (Vice President and Managing Director, Asia Pacific), Magna Steyr (General Manager, China and Korea), and Magneti Marelli.
There are no family relationships between Mr. Hu and any director or executive officer of the Company, and there are no related person transactions between Mr. Hu and the Company that would require disclosure under Item 404(a) of Regulation S-K. There is no arrangement or understanding between Mr. Hu and any other person pursuant to which Mr. Hu was appointed as an officer of the Company.
Employment Agreement with Mr. Hu
In connection with Mr. Hu’s appointment, on July 27, 2026, the Company entered into an Employment Agreement with Mr. Hu (the “Employment Agreement”), the material terms of which are summarized below.
Base Salary. Mr. Hu will receive an annualized base salary of $658,000, subject to annual review by the Compensation Committee.
Annual KPI Bonus. Mr. Hu will be eligible for an annual performance-based cash bonus with a target of 70% of base salary and a maximum of 140% of base salary, based on financial and strategic performance metrics established annually by the Compensation Committee. The Annual KPI Bonus for 2026 will be prorated based on the number of days Mr. Hu is employed during the year.
Long-Term Incentive Awards. Beginning in 2027, Mr. Hu will receive (i) an annual cash-settled phantom stock grant, to be made at the Company’s March Board meeting each year, with a grant date value equal to 80% of base salary, vesting ratably over three years, and (ii) an annual cash long-term incentive award with a target of 40% of base salary, capped at 1.5 times the target amount, subject to performance metrics, performance periods, and vesting conditions established by the Compensation Committee. Mr. Hu will also receive a prorated first-year phantom stock grant and Cash LTI award for the period from the Start Date through December 31, 2026, with the prorated phantom stock grant made on the Start Date.
Sign-On Program. Mr. Hu will receive (i) a one-time cash sign-on bonus of $540,500, payable in two equal installments (the first within 30 days following the Start Date and the second within 30 days following the six-month anniversary of the Start Date), and (ii) a one-time cash-settled sign-on phantom stock grant with a grant date value of $1,129,326, to be granted on the date of the March 2027 Board meeting, vesting ratably over three years. The sign-on bonus is subject to repayment if Mr. Hu voluntarily resigns without Good Reason or is terminated for Cause within 24 months of the Start Date (100% of installments received if such a termination occurs within 12 months of the Start Date, and 50% if it occurs between 12 and 24 months after the Start Date).
Benefits and Perquisites. Mr. Hu will be eligible to participate in all health, welfare, retirement, and executive benefit plans on terms no less favorable than those provided to other senior executives. Mr. Hu will also receive a $1,000 monthly automobile allowance and up to $50,000 in relocation assistance, subject to pro rata repayment in certain circumstances, for his relocation from the Detroit metropolitan area to the Chicago metropolitan area.
Severance. If the Company terminates Mr. Hu’s employment without Cause, or if Mr. Hu resigns for Good Reason (as defined in the Employment Agreement), he will be entitled to (i) 12 months of base salary continuation, (ii) a pro rata annual KPI bonus based on actual performance for the year of termination, and (iii) 12 months of Company-subsidized COBRA continuation coverage, subject to his execution and non-revocation of a general release of claims and his continued compliance with his restrictive covenant and cooperation obligations.
Change in Control. If Mr. Hu’s employment is terminated without Cause or he resigns for Good Reason within 24 months following a Change in Control (as defined in the Employment Agreement), he will be entitled to (i) a lump sum payment of 12 months of base salary, (ii) a lump sum payment equal to his target annual KPI bonus and target annual Cash LTI, each prorated based on the number of days he was employed during the year of termination, and (iii) 12 months of Company-subsidized COBRA continuation coverage, in lieu of the standard severance described above. No excise tax gross-up will be provided; a best-of-net cutback applies.
