Michael S. Bishop

About Michael S. Bishop

Executive Vice President, Chief Financial Officer and Treasurer of FuelCell Energy; age 57, CFO since June 2011 (EVP since June 2019; Treasurer 2011–2022 and reappointed Aug 2023). He is a certified public accountant; earlier career at TranSwitch, Cyberian Outpost, United Technologies, and began at McGladrey & Pullen after four years in the U.S. Marine Corps . Company context for pay-for-performance: FY2024 revenue was $112.1 million with net loss of $156.8 million; the company’s “compensation actually paid” vs TSR shows a steep multi‑year drawdown (value of initial $100: $400 in 2021 → $17 in 2024), framing significant shareholder value volatility during the period Mr. Bishop has served as CFO . Say‑on‑pay support fell to ~48% in 2024; the board tightened design (reduced LTI targets for 2025, no discretion in 2024 MIP) .

Past Roles

External Roles

Fixed Compensation

Multi-year reported compensation (grant-date fair values under ASC 718). Amounts USD.

Selected 2024 fixed/pay elements:

• Target annual bonus opportunity: 70% of base salary (unchanged from 2023) .
• 401(k) match $10,579; executive health program $5,000; memberships/tax preparation $1,738 .
• No discretionary bonus in 2024; company has no defined-benefit pension or nonqualified deferred comp (NEOs participate in 401(k) with match) .

Performance Compensation

Annual Incentive (MIP) – FY2024

• Structure: 75% Operational Milestones and 25% Strategic Enablers; no year‑end discretion used in 2024 .
• Result: Blended achievement = 80% of target (Operational 88% weighted; Strategic 56% weighted) → Bishop cash payout $249,750 (80% of his $546,328 target) .

Detailed FY2024 metrics and outcomes:

MIP target/threshold for Bishop:

• Threshold $312,187; Target $546,328 (payout = 80% of target) .

Long-Term Incentive (LTI) – 2024 Grants

• Mix: 50% Relative TSR PSUs (vs Russell 2000); 50% time-based RSUs vesting ratably over 3 years .
• 2024 grant (12/11/2023): RSUs 13,774 units (grant-date fair value $499,996); PSUs target 13,774 (max 27,548) (grant-date fair value $673,549) .
• TSR PSU design: Payouts scale by 0.5x relative spread vs index; capped at 200%; if absolute TSR negative, cap at 100%; earned PSUs remain subject to service vesting until 3rd anniversary of grant date (i.e., 12/11/2026 for 2024 grant) .

Equity Ownership & Alignment

• Beneficial ownership (2/12/2025): 9,081 shares; <1% of outstanding shares .
• Anti‑hedging/anti‑pledging: Directors and officers are prohibited from hedging or pledging company securities .
• Stock ownership guidelines (updated Feb 2025 post-reverse split): Section 16 executive officers must hold the lesser of 1x base salary or at least 20,000 shares; compliance within 5 years from Feb 2025 (i.e., by Feb 2030); must retain 50% of shares from equity awards until compliant .
• Compliance status: As of Oct 31, 2024, each executive officer had either satisfied guidelines or had time remaining to do so per the prior policy .

Outstanding equity (FY2024 year‑end):

Vesting cadence and potential selling windows:

• RSUs vest ratably over 3 years from grant (e.g., 12/11 of 2024–2026 for 2023 grant); PSUs earn over 3‑year performance period then remain subject to continued service until 3rd anniversary of grant (target vest date 12/11/2026 for 2023 grant) .

Employment Terms

• Employment agreements: Original CFO agreement effective Jan 1, 2012; Amended & Restated Employment Agreement executed June 4, 2025 (acknowledged in Q3’25 exhibit list) .
• Severance (pre‑June 2025 terms per 2025 Proxy):
  • Without Cause / Good Reason: 6 months base salary + 6 months health insurance premiums .
  • Change‑in‑Control (double‑trigger): 12 months base salary + average bonus since appointment as executive + 12 months health insurance premiums; equity (stock and RSUs/PSUs) accelerates .
• Estimated amounts (as of 10/31/2024):
  • Termination without Cause/Good Reason: $222,991 severance; $11,645 health; total $234,636 .
  • Following Change in Control: $445,982 severance; $121,803 bonus (average); $23,291 health; $340,643 accelerated equity; total $931,718 .
• Clawbacks: Two recovery policies adopted in 2023—(1) mandatory recoupment after an accounting restatement; (2) misconduct-based recoupment for actions causing significant reputational/financial harm, breaches, or specified felonies .
• Other governance protections: No excise tax gross‑ups; no stock option repricing without shareholder approval .

Director/Committee Governance Touchpoints

• Compensation Committee independence and use of Meridian Compensation Partners; peer group covers clean energy/industrial tech (e.g., Bloom, Plug, Shoals, Ballard, Stem, Sunnova, Altus Power, Energy Recovery, Montauk, Vicor), revised to better match scale in 2024 .
• 2024 Say‑on‑Pay support ~48%; 2025 responses included salary freeze and reduced 2025 LTI targets (≤45% of prior year) .

Compensation Structure Details (Design)

• Annual mix emphasizes at‑risk pay; MIP metrics linked to: total revenue/order bookings (shifted to dollar backlog), unrestricted cash, Adjusted EBITDA to budget, and safety (TRIR); Strategic Enablers prioritized SO platform, carbon recovery, and carbon capture commercialization .
• LTI mix: 50% TSR PSUs vs Russell 2000 with asymmetry and absolute TSR governor; 50% RSUs with 3‑year ratable vesting; 2022 TSR PSUs certified at 52.665% of target, vesting Dec 10, 2024 (not CFO‑specific but programwide) .

Equity Award Grants (FY2024 for Bishop)

Equity Ownership Table (Beneficial, as of 2/12/2025)

Risk Indicators & Red Flags

• No pledging/hedging permitted (mitigates alignment risk) .
• Clawbacks in place (restatement and misconduct-based) .
• Vesting events concentrated around December grant anniversaries (potential trading windows post‑vest subject to insider trading policy) .
• 2024 Say‑on‑Pay below majority indicates shareholder scrutiny; committee implemented corrective actions (reduced LTI targets, no MIP discretion) .

Investment Implications

• Pay-for-performance alignment improved in 2024: MIP used formulaic outcomes (80% payout) with clear link to cash/liquidity, EBITDA discipline, and safety; however, backlog shortfall drove a zero payout on that metric, signaling tighter accountability .
• Equity leverage remains significant via TSR PSUs; absolute TSR governor caps payouts when shareholder returns are negative, mitigating windfall risk in down markets .
• Ownership alignment: low direct shareholdings (<1%), but strengthened by formal ownership guidelines (minimum 20,000 shares or 1x salary requirement) and anti‑pledging/hedging restrictions, with compliance due by Feb 2030 .
• Retention/exit economics are moderate: 6‑month severance normally; 1x salary + average bonus and equity vesting on double‑trigger CIC—neither excessive nor entrenching, but meaningful enough to maintain continuity through strategic transitions .
• Shareholder scrutiny persists (48% 2024 SOP), increasing pressure on execution (order intake, EBITDA trajectory) that also drives Mr. Bishop’s incentives; future MIP outcomes and TSR PSU vesting will be sensitive to backlog conversion and cost discipline .