SCHEDULE: REE Automotive CTO Boosts Stake, Unveils New Equity Plan

REE Automotive's CTO, Ahishay Sardes, has increased his beneficial ownership to 5.4% of Class A shares and 26.8% of total voting power, following shareholder approval of new equity awards tied to strategic transactions and stock performance.

Summary

• Ahishay Sardes, REE Automotive's CTO, Co-Founder, and Director, beneficially owns 1,648,352 Class A Ordinary Shares, representing 5.4% of the outstanding Class A shares.
• This ownership includes 1,390,287 Class A shares from vested options and 258,065 shares from Restricted Share Units (RSUs) vesting within 60 days of December 11, 2025.
• Sardes also holds 1,390,287 Class B Ordinary Shares, which constitute 50% of the outstanding Class B shares.
• Combined, Sardes' holdings represent approximately 26.8% of the Issuer's total voting power as of December 11, 2025.
• The filing supersedes a previously filed Schedule 13G from February 14, 2023.
• Shareholders approved a special cash bonus for 2024 and amended Sardes' employment terms effective July 1, 2025.
• New compensation includes an annual equity award of RSUs with a fair value of $1,200,000, vesting quarterly over three years, with immediate acceleration upon a change of control.
• A one-time CTO Retention Grant of RSUs, equal to 8% of the company's fully diluted share capital, was also approved.
• 60% of the CTO Retention Grant vests upon a 'Strategic Transaction,' defined as a merger, acquisition, change of control, a strategic commercial agreement generating over $30 million in annual revenue, or other board-approved strategic agreements.
• The remaining 40% of the CTO Retention Grant vests based on the company's stock price achieving and maintaining closing prices of $2, $3, $4, and $5 for 30 consecutive trading days (10% at each threshold).
• Additional RSUs will be granted to maintain the 8% ownership target if the fully diluted share capital increases before a Strategic Transaction.
• All equity awards accelerate upon a Change of Control (Merger/Sale event).

Sentiment

Score: 7

Explanation: The filing indicates strong alignment of the CTO's incentives with shareholder value through substantial equity awards tied to strategic transactions and stock price performance. This suggests a positive outlook on management's commitment and potential future growth, although the realization of these incentives depends on future performance and market conditions.

Positives

• Significant equity incentives for the CTO, aligning his interests with long-term shareholder value creation.
• The CTO Retention Grant is tied to both strategic transactions (e.g., revenue-generating agreements) and stock price performance ($2, $3, $4, $5 targets), indicating clear performance goals.
• The acceleration clauses for equity awards upon a change of control or strategic transaction provide strong incentives for management to pursue value-enhancing events.
• The maintenance of an 8% ownership target for the CTO Retention Grant ensures the CTO's stake is protected against dilution from future capital raises or share issuances.

Risks

• The vesting of a significant portion of the CTO Retention Grant (60%) is contingent on a 'Strategic Transaction,' which may or may not materialize, introducing uncertainty regarding the full realization of the award.
• The stock price performance vesting conditions ($2, $3, $4, $5) are forward-looking and subject to market volatility and company performance, which may not be achieved.
• The definition of a 'Strategic Transaction' includes board approval for 'any other similar strategic agreement or transaction,' which could introduce subjectivity.
• The company's ability to achieve revenue-generating definitive agreements, such as those from the previously announced Memorandum of Understanding, is not guaranteed.

Future Outlook

The company has established clear performance-based equity incentives for its CTO, tied to achieving strategic transactions, including revenue-generating agreements, and specific stock price targets ($2, $3, $4, $5). The Reporting Person may also acquire or dispose of additional securities based on market conditions and other factors.

Management Comments

• "The acquisition of the Class A Ordinary Shares by the Reporting Person is for investment purposes."
• "The Reporting Person reserves the right to change his plans and intentions at any time and to take any actions he may deem appropriate with respect to his investment in the Issuer."

Industry Context

This filing highlights a common practice in the technology and automotive sectors, particularly for growth-stage companies like REE Automotive, to use significant equity-based compensation to attract, retain, and incentivize key executive talent. Tying a substantial portion of executive compensation to strategic milestones (like major commercial agreements or M&A) and stock price performance is a strong signal of management's commitment to driving shareholder value and achieving specific growth objectives in a competitive industry. The focus on "Strategic Transactions" and revenue generation suggests a push towards commercialization and scaling, which is critical for companies in the electric vehicle platform space.

Comparison to Industry Standards

• The use of performance-based Restricted Share Units (RSUs) with vesting tied to both strategic transactions and stock price hurdles is a common and generally accepted practice for executive compensation in high-growth technology and automotive companies. For example, similar structures are seen in companies like Rivian or Lucid Motors, where executive incentives are often linked to production milestones, market penetration, or stock performance targets.
• The 8% fully diluted ownership target for a CTO Retention Grant is substantial and indicates a strong commitment to retaining a key co-founder and technology leader. This level of equity stake is comparable to what might be observed in early-stage or rapidly scaling tech companies where founders and key innovators are critical to long-term success.
• The stock price targets of $2, $3, $4, and $5 suggest a focus on significant share price appreciation from current levels, which is typical for companies aiming for substantial market capitalization growth. These targets are aggressive but provide clear benchmarks for performance.
• The definition of a 'Strategic Transaction' including a $30 million annual revenue threshold for commercial agreements is a specific and measurable target, aligning with industry trends of incentivizing tangible business development outcomes.

Corporate Governance

Related Party Transactions

• The filing details compensation arrangements (special cash bonus, annual equity awards, CTO Retention Grant) for Ahishay Sardes, a co-founder, CTO, and director, which were approved by shareholders.

Stakeholder Impact

• Shareholders: The new equity compensation structure for the CTO aims to align management's interests with shareholder value creation, potentially leading to increased share price and strategic growth. However, the issuance of new RSUs could lead to some dilution.
• Employees: The filing focuses on executive compensation and does not directly detail impacts on general employees, though a successful strategic transaction or stock price appreciation could indirectly benefit employees through broader company success.
• Customers/Suppliers: Achievement of 'Strategic Transactions,' particularly revenue-generating commercial agreements, could indicate expanded business operations, potentially impacting customers and suppliers through new contracts or increased demand.

Next Steps

• The company will continue its business development efforts to achieve revenue-generating definitive agreements, potentially including those from the Memorandum of Understanding dated March 18, 2025, which could trigger vesting of the CTO Retention Grant.
• The company's stock price performance will be monitored against the $2, $3, $4, and $5 thresholds for 30 consecutive trading days, which will determine further vesting of the CTO Retention Grant.
• The Reporting Person may acquire additional securities or dispose of existing ones in the future, subject to market conditions and company policies.

Key Dates

Recommendation

The filing primarily details executive compensation and beneficial ownership, which are generally expected disclosures. While the performance-based equity incentives for the CTO are positive for long-term alignment, they do not present immediate catalysts for a 'buy' or 'sell' recommendation. The stock price targets ($2-$5) are aspirational and depend on future execution and market conditions. Investors should hold and monitor the company's progress on strategic transactions and stock performance.

Keywords

REE Automotive, Schedule 13D, Beneficial Ownership, Ahishay Sardes, CTO, Equity Awards, RSUs, Stock Options, Voting Power, Strategic Transaction, Share Incentive Plan, Corporate Governance, Executive Compensation, Class A Ordinary Shares, Class B Ordinary Shares