Power Solutions International Appoints New Chief Executive Officer Effective August 2026

Executive Leadership Transition and Background of New CEO

Power Solutions International's Board of Directors selected Nan (Richard) Hu through a structured succession planning and search process that included assistance from Spencer Stuart, a recognized global executive search and leadership advisory firm. Mr. Hu's appointment marks the conclusion of this deliberate planning effort to identify the next principal executive officer for the Company. The filing indicates that Mr. Hu's commencement of employment remains subject to the satisfaction of customary pre-employment conditions set forth in his Employment Agreement.

Mr. Hu brings substantial experience in the automotive and powertrain sectors. During his six-year tenure at BorgWarner, Inc., from 2020 to 2026, he served as Vice President and General Manager of the Americas Region for the Turbo & Thermal Technology business unit, holding full P&L accountability for a multi-billion-dollar operation. This role encompassed multiple manufacturing plants and technical centers across the United States, Mexico, and Brazil, where he led a global team of approximately 3,900 employees. Prior to BorgWarner, Mr. Hu served as Senior Vice President and General Manager of Delphi Technologies' Global Powertrain business unit and participated in navigating that company's acquisition by BorgWarner in 2020.

Extended Career History and Operational Experience

Mr. Hu's professional background extends across multiple continents and companies within the automotive components and powertrain industries. The disclosure indicates that he held senior executive roles at Eberspächer as Vice President and Managing Director for Asia Pacific, and at Magna Steyr as General Manager for China and Korea. His career also includes significant positions at Magneti Marelli, further demonstrating extensive experience within global automotive supply chains and manufacturing operations.

With more than 25 years of global leadership experience spanning Asia, Europe, and the Americas, Mr. Hu's background encompasses operations management, regional leadership, and multi-billion-dollar P&L responsibility. The Board's selection of Mr. Hu through a formal search process suggests the organization identified candidates with substantial automotive sector expertise and demonstrated success in leading large, geographically dispersed operations—attributes the Board determined relevant to Power Solutions International's strategic direction.

Compensation Structure and Base Salary Arrangements

Under the Employment Agreement dated July 27, 2026, Mr. Hu will receive an annualized base salary of $658,000, subject to annual review by the Compensation Committee. This base compensation establishes the foundation for his total compensation package and is structured to be subject to periodic review by the Company's compensation governance process. The base salary figure will serve as the reference point for calculating his performance-based bonus and long-term incentive awards.

In addition to base salary, Mr. Hu is eligible for an annual performance-based cash bonus with a target of 70% of base salary and a maximum of 140% of base salary. These bonus targets will be based on financial and strategic performance metrics established annually by the Compensation Committee. The disclosure indicates that Mr. Hu's 2026 annual KPI bonus will be prorated based on the number of days he is employed during the year, reflecting his mid-year start date of August 17, 2026.

Sign-On Bonus and Retention Provisions

Mr. Hu will receive a one-time cash sign-on bonus of $540,500, payable in two equal installments. The filing discloses that the first installment will be paid within 30 days following his start date, and the second installment will be paid within 30 days following the six-month anniversary of August 17, 2026. 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. Specifically, 100% of installments received must be repaid if such a termination occurs within 12 months of the start date, and 50% must be repaid if termination occurs between 12 and 24 months after the start date.

Additionally, Mr. Hu will receive a one-time cash-settled sign-on phantom stock grant with a grant date value of $1,129,326. This grant will be issued on the date of the March 2027 Board meeting and will vest ratably over three years. The structure of the sign-on bonus with staggered payments and the equity grant delayed to March 2027 creates retention incentives aligned with the Company's interest in ensuring continuity of leadership during Mr. Hu's initial tenure.

Long-Term Incentive Program and Annual Equity Awards

Beginning in 2027, Mr. Hu will receive annual long-term incentive awards structured in two components. First, he will receive an annual cash-settled phantom stock grant to be made at the Company's March Board meeting each year. The grant date value of these annual phantom stock awards will equal 80% of his base salary and will vest ratably over three years. Second, Mr. Hu will receive 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 to be established by the Compensation Committee.

For the 2026 partial year, Mr. Hu will receive a prorated first-year phantom stock grant and cash LTI award for the period from August 17, 2026, through December 31, 2026. The filing indicates that the prorated phantom stock grant will be made on the start date itself. This approach ensures that Mr. Hu participates in the long-term incentive structure from the beginning of his tenure while maintaining alignment with the Company's standard annual grant timing for ongoing awards.

Benefits, Relocation Assistance, and Executive 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 of the Company. The disclosure indicates that he will also receive a $1,000 monthly automobile allowance, reflecting standard executive compensation practices. To facilitate his transition from the Detroit metropolitan area to the Chicago metropolitan area, where the Company's principal executive offices are located in Wood Dale, Illinois, Mr. Hu will be provided with up to $50,000 in relocation assistance.

The Employment Agreement specifies that the relocation assistance is subject to pro rata repayment in certain circumstances, similar to the sign-on bonus structure. The combination of standard executive benefits, automobile allowance, and relocation support demonstrates the Company's approach to attracting and retaining experienced leadership while managing transition logistics for an executive relocating from Michigan to Illinois.

Severance and Termination Protections

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 severance protections. These include 12 months of base salary continuation, a pro rata annual KPI bonus based on actual performance for the year of termination, and 12 months of Company-subsidized COBRA continuation coverage for health insurance. These severance rights are conditioned upon his execution and non-revocation of a general release of claims and his continued compliance with restrictive covenant and cooperation obligations.

In the event of a Change in Control as defined in the Employment Agreement, if Mr. Hu's employment is terminated without Cause or he resigns for Good Reason within 24 months following such a change in control, the severance package is enhanced. He will be entitled to a lump sum payment of 12 months of base salary, a lump sum payment equal to his target annual KPI bonus and target annual Cash LTI each prorated based on days employed during the termination year, and 12 months of Company-subsidized COBRA continuation coverage. The filing specifies that no excise tax gross-up will be provided and that a best-of-net cutback applies, limiting the total payments to the applicable threshold under Section 280G of the Internal Revenue Code.

Restrictive Covenants and Governance Provisions

The Employment Agreement includes comprehensive restrictive covenants protecting the Company's competitive interests and confidential information. Mr. Hu is subject to 12-month post-termination non-competition and non-solicitation covenants, which restrict his ability to compete with or solicit employees or customers of the Company following separation. Additionally, he is bound by perpetual confidentiality and non-disparagement obligations, which extend indefinitely beyond his employment with the Company.

All incentive-based compensation payable to Mr. Hu is subject to the Company's clawback and recoupment policies as in effect from time to time. This includes the Company's incentive compensation recoupment policy adopted pursuant to Rule 10D-1 under the Securities Exchange Act of 1934 and the listing standards of The Nasdaq Stock Market. In connection with his appointment, the Company and Mr. Hu will enter into an indemnification agreement on terms no less favorable than those provided to any other current or former director or officer of the Company. The Company will maintain directors and officers liability insurance coverage for Mr. Hu throughout his employment and for the applicable period thereafter as provided in the Employment Agreement.

Transition of Interim CEO to Chief Financial Officer Role

Xun (Kenneth) Li will cease serving as Interim Chief Executive Officer of Power Solutions International effective upon Mr. Hu's start date of August 17, 2026. However, the disclosure indicates that Mr. Li will continue to serve as the Company's Chief Financial Officer following this transition. This arrangement ensures continuity in the financial leadership of the organization while enabling the appointment of Mr. Hu as the principal executive officer.

On July 23, 2026, the same date as Mr. Hu's appointment announcement, the Board approved cash compensation for Mr. Li at a specified rate effective as of May 12, 2026. The filing states compensation details for Mr. Li's interim CEO service but the specific rate appears to be incomplete in the disclosed document excerpt. This interim compensation arrangement reflects the Board's recognition of Mr. Li's service during the succession planning period prior to Mr. Hu's appointment.

Governance and At-Will Employment Status

Mr. Hu's employment with Power Solutions International is established as at-will employment with no fixed term. This means the Company retains the flexibility to terminate his employment as permitted under applicable law and the Employment Agreement, subject to the severance and other protections outlined in the agreement. Mr. Hu will report directly to the Board of Directors, positioning him as the principal executive officer accountable to the Board for the Company's strategic direction and operational performance.

The Board confirmed that there are no family relationships between Mr. Hu and any director or executive officer of the Company. Additionally, the filing discloses that there are no related person transactions between Mr. Hu and the Company that would require disclosure under Item 404(a) of Regulation S-K. The Board also confirmed that there is no arrangement or understanding between Mr. Hu and any other person pursuant to which he was appointed as an officer of the Company, indicating that his selection resulted from the independent search and selection process conducted with Spencer Stuart's assistance.