8-K: Li-Cycle Announces Executive Departures and Board Changes Amidst Restructuring
Corporate Restructuring Announcement
Li-Cycle Holdings Corp. is undergoing executive and board changes, including the departure of its Interim Non-Executive Chair, Tim Johnston, and Regional President, EMEA, Richard Storrie, as part of a corporate organizational review.
Summary
- Li-Cycle Holdings Corp. announced the departure of Tim Johnston, who served as Interim Non-Executive Chair, effective May 31, 2024, following his resignation from the Board.
- Richard Storrie, the Regional President, EMEA, also departed from the company.
- Both Johnston and Storrie entered into separation agreements with the company.
- Johnston's departure from the Board will create a vacancy that may be filled by an additional nominee from Glencore, which has the right to nominate two directors.
- Glencore gained this right after providing a $75 million senior secured convertible note to Li-Cycle on March 25, 2024.
- Johnston will receive salary continuance payments for 18 months, totaling $76,153.85 per pay cycle, and will continue to receive benefits until the end of the severance period.
- Storrie will receive monthly severance payments equal to his base salary of $40,375 plus $28,262.50 per month until May 2025.
- Both executives will receive outplacement services.
Sentiment
Score: 5
Explanation: The document details executive departures and board changes, which are generally viewed as neutral to slightly negative. The investment from Glencore is a positive, but the overall sentiment is tempered by the uncertainty surrounding the leadership transition.
Positives
- The separation agreements provide clarity on the terms of departure for both executives.
- The company is providing outplacement services to both departing executives.
- Glencore's investment and board nomination rights could bring additional expertise and stability to the company.
Negatives
- The departure of key executives may create uncertainty within the company.
- The company will incur significant severance costs for both executives.
- The company's decision not to award STIP payments for the 2022-2023 performance period may negatively impact employee morale.
Risks
- The departure of key executives could disrupt ongoing projects and strategic initiatives.
- The company may face challenges in finding suitable replacements for the departing executives.
- The company's financial performance could be impacted by the severance costs and potential restructuring expenses.
- The company's share price could be negatively affected by the executive departures.
Future Outlook
The company will need to fill the board vacancy created by Tim Johnston's departure and manage the transition of responsibilities from both departing executives. The company will also need to manage the ongoing relationship with Glencore.
Management Comments
- Mr. Johnston's decision to step down from the Board was due to his desire to pursue other business endeavors and is not the result of any dispute or disagreement with the Company or its Board.
- The Board of Directors, at its sole discretion, has determined that STIP payments will not be awarded in respect of the performance period November 2022 to December 2023 inclusive.
Industry Context
The executive departures and board changes at Li-Cycle occur within the context of the growing battery recycling industry, where companies are facing increasing pressure to scale operations and achieve profitability. The investment from Glencore highlights the strategic importance of securing partnerships and funding in this competitive landscape.
Comparison to Industry Standards
- Executive departures and restructurings are not uncommon in the rapidly evolving battery recycling industry, as companies adjust their strategies and management teams to meet market demands.
- The severance packages provided to Johnston and Storrie appear to be in line with industry standards for senior executives.
- Glencore's investment and board nomination rights are similar to other strategic investments in the sector, where large commodity traders seek to secure access to critical materials and technologies.
- Companies like Redwood Materials and Ascend Elements are also navigating similar challenges in scaling their operations and securing funding.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Executive Chair | Tim Johnston | Vacant | 2024-03-26 | Corporate organizational review |
| Regional President, EMEA | Richard Storrie | Vacant | 2024-03-26 | Corporate organizational review |
| Interim Non-Executive Chair | Tim Johnston | Vacant | 2024-05-31 | Resignation |
Stakeholder Impact
- Shareholders may experience short-term uncertainty due to the executive departures.
- Employees may be affected by the organizational changes and the departure of key leaders.
- Customers and suppliers may experience some disruption during the transition period.
- Creditors may be concerned about the company's financial stability during the restructuring.
Next Steps
- Li-Cycle will need to appoint a new director to fill the board vacancy.
- The company will need to manage the transition of responsibilities from the departing executives.
- Li-Cycle will need to continue to execute its strategic plan and manage its relationship with Glencore.
Key Dates
| Date | Description |
|---|---|
| 2021-10-28 | Date of the Director and Officer Indemnification Agreement between Richard Storrie and Li-Cycle Holdings Corp. |
| 2022-03-01 | Date of Tim Johnston's employment agreement with Li-Cycle. |
| 2023-03-31 | Effective date of Richard Storrie's employment agreement with Li-Cycle Europe AG. |
| 2024-03-25 | Date of Glencore's $75 million senior secured convertible note investment in Li-Cycle. |
| 2024-03-26 | Initial date of Tim Johnston and Richard Storrie's separation agreements and the date Li-Cycle gave notice of termination to Richard Storrie. |
| 2024-04-26 | Revised date of Richard Storrie's separation agreement. |
| 2024-04-29 | Revised date of Tim Johnston's separation agreement. |
| 2024-05-08 | Date Tim Johnston notified the board of his intention to resign. |
| 2024-05-13 | Date Tim Johnston signed the acknowledgement of his separation agreement. |
| 2024-05-23 | Date of Li-Cycle's 2024 annual and special meeting of shareholders. |
| 2024-05-31 | Effective date of Tim Johnston and Richard Storrie's employment termination. |
| 2024-06-01 | Latest date for Tim Johnston to sign and deliver the Release & Indemnity. |
| 2024-06-07 | Deadline for Tim Johnston to submit expense receipts. |
| 2025-05-31 | End date of Richard Storrie's severance payments. |
| 2025-11-30 | End date of Tim Johnston's severance payments. |
Keywords
Li-Cycle, executive departure, board changes, separation agreement, Glencore, restructuring, severance, corporate governance, directors, management
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