UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.      )

FuelCell Energy, Inc.

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

DEAR FELLOW FUELCELL ENERGY STOCKHOLDER

DEAR FELLOW FUELCELL ENERGY STOCKHOLDER

JASON FEW​
PRESIDENT & CHIEF EXECUTIVE OFFICER
February 24, 2020​

We are pleased to invite you to FuelCell Energy, Inc.’s Annual Meeting of Stockholders to be held on Thursday, April 9, 2020 at 10:00 a.m. Eastern Daylight Time. We are pleased to announce that this year’s Annual Meeting will be a completely “virtual meeting”, conducted via live audio webcast on the Internet. This booklet includes the Notice of Annual Meeting and the Proxy Statement.

The Proxy Statement fully describes the business we will conduct at the Annual Meeting and provides information about the Company that you should consider when voting your shares.

Your vote is very important and we request that you vote your shares as promptly as possible. We encourage you to vote your shares by proxy even if you do not plan to attend the Annual Meeting. The Board of Directors recommends the approval of the proposals being presented at the Annual Meeting as being in the best interest of the Company and its stockholders.

Sincerely,

“YOUR VOTE IS VERY IMPORTANT. WE ENCOURAGE YOU TO
VOTE YOUR SHARES BY PROXY EVEN IF YOU DO NOT
PLAN TO ATTEND THE MEETING.”

NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on April 9, 2020: The Notice of Annual Meeting, Proxy Statement and Annual Report to Stockholders for the fiscal year ended October 31, 2019 are available at www.fuelcellenergy.com.

If you need assistance in completing your proxy card or have questions regarding the Annual Meeting, please contact MacKenzie Partners, Inc., the proxy solicitation agent for FuelCell Energy, Inc., by telephone at (800) 322-2885 (toll free) or (212) 929-5500 (collect), or by email at proxy@mackenziepartners.com.

TABLE OF CONTENTS​

FUELCELL ENERGY, INC.   3

TABLE OF CONTENTS

4   FUELCELL ENERGY, INC.

PROXY SUMMARY

This summary highlights selected information contained throughout this Proxy Statement. Please read the entire Proxy Statement before casting your vote. For information regarding FuelCell Energy’s fiscal year 2019 performance, please review our Annual Report to Stockholders for the fiscal year ended October 31, 2019. We are making this Proxy Statement available on February 24, 2020.

MEETING INFORMATION

MEETING ATTENDANCE

This year’s Annual Meeting will be held entirely online to allow greater participation. Stockholders may participate in the Annual Meeting by visiting the following website www.virtualshareholdermeeting.com/FCEL2020. To participate in the Annual Meeting, you will need the 16-digit control number included on your notice, on your proxy card or on the instructions that accompanied your proxy materials. Shares held in your name as the stockholder of record may be voted electronically during the Annual Meeting. Shares for which you are the beneficial owner but not the stockholder of record may also be voted electronically during the Annual Meeting. However, even if you plan to attend the virtual Annual Meeting, the Company recommends that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the Annual Meeting.

You are entitled to attend the virtual Annual Meeting only if you were a stockholder of record as of the record date for the Annual Meeting, which was February 14, 2020, or you hold a valid proxy for the Annual Meeting. You may attend the Annual Meeting, vote and submit a question during the Annual Meeting by visiting www.virtualshareholdermeeting.com/FCEL2020 and using your 16-digit control number to enter the Annual Meeting. If you are not a stockholder of record but hold shares as a beneficial owner in street name, you may be required to provide proof of beneficial ownership, such as your most recent account statement as of the record date, a copy of the voting instruction form provided by your broker, bank, trustee, or nominee, or other similar evidence of ownership. If you do not comply with the procedures outlined above, you will not be admitted to the virtual Annual Meeting.

FUELCELL ENERGY, INC.   5

PROXY SUMMARY

COMPANY PROFILE

FuelCell Energy was founded more than 50 years ago in 1969. We began selling stationary fuel cell power plants commercially in 2003. With more than 9.5 million megawatt hours of clean electricity produced, FuelCell Energy is now a global leader in delivering environmentally-responsible distributed baseload power solutions through our proprietary fuel cell technology. Today, we develop turn-key distributed power generation solutions and operate and provide comprehensive service for the life of the power plant. We are working to expand the proprietary technologies that we have developed over the past five decades into new products, markets and geographies. Our mission and purpose is to utilize our proprietary, state-of-the-art fuel cell power plants to reduce the global environmental footprint of baseload power generation by providing environmentally responsible solutions for reliable electrical power, hot water, steam, chilling, hydrogen, microgrid applications, energy storage and carbon capture and, in so doing, drive demand for our products and services, thus realizing positive stockholder returns. Visit us online at www.fuelcellenergy.com and follow us on Twitter @FuelCell_Energy.

6   FUELCELL ENERGY, INC.

Proxy Statement

FuelCell Energy, Inc. (referred to in this Proxy Statement as “we,” “FuelCell”, “FuelCell Energy” or the “Company”) is sending you this Proxy Statement in connection with the solicitation by FuelCell’s Board of Directors (the “Board”) of proxies to be voted at FuelCell’s 2020 Annual Meeting of Stockholders (the “Annual Meeting”) and at any adjournment thereof. This year’s Annual Meeting will be a completely “virtual meeting” of stockholders to be held on Thursday, April 9, 2020 at 10:00 a.m. Eastern Daylight Time. You will be able to attend the Annual Meeting as well as vote and submit your questions during the live audio webcast of the meeting by visiting www.virtualshareholdermeeting.com/FCEL2020 and entering the 16-digit control number included in our notice of internet availability of the proxy materials, on your proxy card or in the instructions that accompanied your proxy materials. The Company is a Delaware corporation. The address of our principal executive office is 3 Great Pasture Road, Danbury, CT 06810.

The Board has set the close of business on February 14, 2020 as the record date for the determination of holders of the Company’s common stock, par value $0.0001 per share, who are entitled to notice of, and to vote at, the Annual Meeting.

As of February 14, 2020, there were 210,968,053 shares of common stock outstanding and entitled to vote at the Annual Meeting. Holders of common stock outstanding at the close of business on the record date will be entitled to one vote for each share held on the record date.

We are providing access to our proxy materials online under the U.S. Securities and Exchange Commission’s “notice and access” rules. As a result, we are mailing to many of our stockholders a notice instead of a paper copy of this Proxy Statement and our Annual Report. The notice contains instructions on how to access documents online. The notice also contains instructions on how stockholders can receive a paper copy of our materials, including this Proxy Statement, our Annual Report, and a form of proxy card or voting instruction card. Those who do not receive a notice, including stockholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy by mail unless they have previously requested delivery of materials electronically.

This Notice of Annual Meeting, Proxy Statement and proxy card are being distributed and made available to our stockholders on February 24, 2020.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on April 9, 2020: The Notice of Annual Meeting, Proxy Statement and Annual Report to Stockholders for the fiscal year ended October 31, 2019 are available at www.fuelcellenergy.com.

FUELCELL ENERGY, INC. | PROXY STATEMENT   7

PROXY STATEMENT

PROXY STATEMENT​

PROXY STATEMENT

10   FUELCELL ENERGY, INC. | PROXY STATEMENT

PROXY STATEMENT​

A summary of the attributes of each of our Director nominees follows.

FUELCELL ENERGY, INC. | PROXY STATEMENT   11

Corporate Governance

THE ROLE OF THE BOARD

The business affairs of the Company are managed by and under the direction of the Board. The Board and committees of the Board regularly engage with senior management to ensure management accountability, review management succession planning, review and approve the Company’s strategy and mission, execute the Company’s financial and strategic goals, oversee risk management and review and approve executive compensation.

BOARD LEADERSHIP STRUCTURE

The Board regularly evaluates its leadership structure in order to ensure that the Company effectively represents the interests of its stockholders. Our amended and restated by-laws provide the Board flexibility in determining its leadership structure. Currently, the Board maintains separate roles for the CEO and the Chairman of the Board. The Company’s President and CEO (Mr. Jason Few) is responsible for the general supervision of the affairs of the Company and is accountable for achieving the Company’s strategic goals. Mr. Few’s responsibilities include:

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Providing strong ethical leadership;

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Executing on the Company’s corporate strategy, and reinforcing the Company’s mission, culture and core values;

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Ensuring complete and accurate disclosure of financial, operational and management matters to the Board;

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Ensuring compliance and integrity of all financial and regulatory filings and other Company communications; and

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Communicating with the Board so that it is fully informed with respect to Company, industry and corporate governance matters.

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The Board’s independent Chairman (Mr. James H. England) serves as the principal representative of the Board and as such, presides at all Board meetings. The Board believes that this leadership structure, which separates the Chairman and Chief Executive Officer roles, is optimal at this time because it allows Mr. Few to focus on operating and managing our company, while Mr. England focuses on the leadership of the Board and other strategic business activities. We believe that our governance practices ensure that skilled and experienced independent directors provide independent leadership. Our Board also periodically evaluates our leadership structure to determine if it remains in our best interests based on circumstances existing at the time. In evaluating our leadership structure, our Board seeks to implement a leadership structure that will allow the Board to effectively carry out its responsibilities and best represent our stockholders’ interests, and considers various factors, including our specific business needs, our operating and financial performance, industry conditions, the economic and regulatory environment, Board and committee annual self-evaluations, advantages and disadvantages of alternative leadership structures and our corporate governance practices.

BOARD REFRESHMENT AND COMPOSITION

The Board understands the importance of adding diverse, experienced talent to the Board in order to establish an array of experience and strategic views. The Nominating and Corporate Governance Committee adheres to vigorous board refreshment efforts by thoroughly evaluating the backgrounds of potential Board candidates in addition to regularly assessing the contributions and qualifications of current Directors, to ensure that the composition of the Board and each of its committees encompasses a wide range of perspectives and knowledge. The Nominating and Corporate Governance Committee routinely looks for candidates with skill sets that are relevant to the Company and align with our business strategy and goals.

Since 2015, we have added four new, currently serving, Directors to the Board, bringing an expansive mix of expertise, diversity and insight to the Board and its committees. We believe that this is a healthy level of turnover to ensure fresh views and new perspective balanced with the continuity and stability of our experienced Directors. We believe we have a healthy mix of longer-serving Directors and those that are newer to our Board. Our five Director nominees will have an average of 4.6 years of service on our Board as of the date of the Annual Meeting.

One-fifth of our Director nominees are women and forty percent of our Director nominees are ethnically diverse.

As part of the Company’s commitment to good corporate governance practices and principles and in furtherance of Board refreshment initiatives, in 2018, the Board adopted a mandatory director retirement age of 75 and set a director term limit of 12 years, subject to certain exceptions to allow for terms of up to no more than 15 years as necessary to ensure an orderly transition of Board members and leadership positions.

DIRECTOR ORIENTATION

As part of our Director orientation process, each new Director is provided with orientation materials and a tour of the Company’s manufacturing facility.

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Corporate Governance​

MAJORITY VOTING STANDARD IN DIRECTOR ELECTIONS

In 2016, the Board approved an amendment to the Company’s by-laws to, among other changes, adopt a majority voting standard in uncontested Director elections, providing that each Director shall be elected by a majority of votes cast. Under our amended and restated by-laws, a majority of the votes cast standard requires that the number of shares voted “for” a Director must exceed the number of votes cast “against” that Director’s election. “Abstentions” and “broker non-votes” are not counted as votes cast with respect to a Director’s election.

In addition, following certification of the stockholder vote in an uncontested election, if any incumbent Director receives a greater number of votes “against” his or her election than votes “for” his or her election, the Director shall promptly tender his or her resignation to the Chairman of the Board. The Nominating and Corporate Governance Committee shall promptly consider such resignation and recommend to the Board whether to accept the tendered resignation or reject it. In deciding upon its recommendation, the Nominating and Corporate Governance Committee shall consider all relevant factors including, without limitation, the length of service and qualifications of the Director and the Director’s contributions to the Company and the Board.

CONTINUING EDUCATION AND SELF-EVALUATION

The Board believes that continuing education by the Board and management is critical to supporting the Company’s commitment to enhancing its corporate governance practices. The Board and management are therefore regularly updated on corporate governance matters, including industry and regulatory developments, strategies, operations and external trends and other topics of importance. In addition, in 2018, the Board adopted a policy requiring mandatory participation in an accredited director education program. New directors are required to complete a minimum of four hours of accredited director education within the first 180 days of election to the Board and all directors are required to complete four hours of accredited director education per fiscal year. All of our Directors and all of our currently serving named executive officers (i.e., those executive officers named in the Fiscal 2019 Summary Compensation Table that continue to serve as executive officers of the Company) are members of the National Association of Corporate Directors.

As part of the Board’s commitment to improve its performance and effectiveness, self-assessments of the Board and each of its committees are conducted annually. Results of these self-assessments are reviewed by the Nominating and Corporate Governance Committee and the full Board. In 2016, the Board added individual Director self-assessments to the self-assessment process in an effort to assess individual Director effectiveness and his or her contribution to the Board. Results of these individual Director self-assessments are also reviewed by the Nominating and Corporate Governance Committee and the full Board.

CORPORATE GOVERNANCE PRINCIPLES

The Board has adopted Corporate Governance Principles (the “Principles”) which provide the structure for the governance and best practices of the Company, in accordance with applicable statutory and regulatory requirements. The Company is committed to the highest standards of business conduct and integrity in its relationships with employees, customers, suppliers and stockholders. The Principles are reviewed annually by the Nominating and Corporate Governance Committee and updated as needed. The Corporate Governance Principles can be found in the Corporate Governance sub-section of the section entitled “Investors” on our website at www.fuelcellenergy.com.

CODE OF ETHICS

The Company is committed to high standards of ethical, moral and legal business conduct and to the timely identification and resolution of all such issues that may adversely affect the Company or its clients, employees or stockholders.

The Board has adopted a Code of Ethics (the “Code of Ethics”), which applies to the Board, our currently serving named executive officers (including our principal executive officer and our principal financial and accounting officer), and all of our other employees. The Code of Ethics provides a statement of certain fundamental principles and key policies and procedures that govern the conduct of the Company’s business. The Code of Ethics covers all major areas of professional conduct, including employment policies, conflicts of interest, intellectual property and the protection of confidential information, as well as strict adherence to all laws and regulations applicable to the conduct of our business. As required by the Sarbanes-Oxley Act of 2002, our Audit and Finance Committee has procedures to receive, retain, investigate and resolve complaints received regarding our accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The Code of Ethics can be found in the Corporate Governance sub-section of the section entitled “Investors” on our website at www.fuelcellenergy.com.

FUELCELL ENERGY, INC. | PROXY STATEMENT   13

Corporate Governance

WHISTLEBLOWER POLICY

The Company’s Whistleblower Policy covers reporting of suspected misconduct, illegal activities or fraud, including questionable accounting, financial control and auditing matters, federal securities violations or other violations of federal and state laws or of the Company’s Code of Ethics.

We have established a written protocol with a third party vendor to ensure that all complaints received will be reported directly to the Company’s General Counsel, who investigates and reports as necessary directly to the Audit and Finance Committee of the Board.

The third party vendor offers anonymity to whistleblowers and assures those who identify themselves that their confidentiality will be maintained, to the extent possible, within the limits proscribed by law. No attempt will be made to identify a whistleblower who requests anonymity.

ANTI-HEDGING POLICY

Under the terms of the Company’s Insider Trading Policy, all Directors, officers (including, but not limited to, all currently serving named executive officers), and employees, are prohibited from engaging in any hedging transaction involving shares of the Company’s securities or the securities of the Company’s competitors, such as a put, call or short sale.

COMPENSATION RECOVERY POLICY

The Company has adopted an Executive Compensation Recovery Policy that allows the Board to seek recovery of any erroneously paid incentive compensation made to any current or former executive officer of the Company in the event of an accounting restatement that results in a recalculation of a financial metric applicable to an award if, in the opinion of the Board, such restatement is due to the misconduct by one or more of any current or former executive officers. The amount subject to recoupment will, at a minimum, be equal to the difference between what the executive received and what he or she would have received under the corrected financial metrics over the three-year period prior to the restatement. Under the policy, the Board will review all performance-based compensation awarded to or earned by the executive officer on the basis of performance during fiscal periods materially affected by the restatement. If, in the opinion of the Board, the Company’s financial results require restatement due to the misconduct by one or more of any current or former executive officers, the Board may seek recovery of all performance-based compensation awarded to or earned by the executive officer during fiscal periods materially affected by the restatement, to the extent permitted by applicable law.

The Executive Compensation Recovery Policy can be found in the Corporate Governance sub-section of the section entitled “Investors” on our website at www.fuelcellenergy.com.

STOCK OWNERSHIP GUIDELINES AND HOLDING REQUIREMENTS

In 2018, the Company increased its minimum stock ownership guidelines applicable to each of its non-employee independent Directors and its executive officers. The increase represented a 6-fold increase in the prior minimum stock ownership guidelines. However, subsequent to the adoption of the increased minimum stock ownership guidelines, on May 8, 2019, the Company effected a 1-for-12 reverse stock split of the shares of the Company’s common stock, and the minimum stock ownership guidelines were adjusted to reflect the implementation of that reverse stock split. The Company increased the minimum stock ownership guidelines again in February 2020. Our current stock ownership guidelines are shown in the table below:

14   FUELCELL ENERGY, INC. | PROXY STATEMENT

Corporate Governance​

Executives subject to the guidelines must meet the ownership requirement within the later of: five years from the date they are appointed to a Section 16 Executive Officer position, or five years from the date of any change in the minimum stock ownership guidelines (in the case of the most recent change, February 2025). The non-employee independent Directors are expected to achieve target ownership levels within the later of: five years from the date of commencement of service as a Director, or five years from the date of any change in the minimum stock ownership guidelines (in the case of the most recent change, February 2025). For purposes of meeting the applicable ownership guidelines, the following shares and awards may be counted:

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FuelCell Energy common stock owned (i) directly by the executive officer or Director or his or her spouse, (ii) jointly by the executive officer or Director and his or her spouse, and (iii) indirectly by a trust, partnership, limited liability company or other entity for the benefit of the executive officer or Director or his or her spouse;

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100% of restricted stock and restricted stock unit awards (vested and unvested) issued under the Company’s equity incentive plans;

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100% of common stock issued under the Company’s Employee Stock Purchase Plan;

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100% of unexercised Stock Options (vested and unvested) issued under the Company’s equity incentive plans; and

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100% of deferred stock units issued under the Company’s Directors Deferred Compensation Plan.

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Executive officers and Directors must maintain at least 50% of the stock received from equity awards (on a shares issued basis) until the specified minimum ownership requirement level is achieved.

Once the stock ownership guideline has been achieved, executive officers will be required to maintain stock holding requirements for the duration of their employment with the Company and for Directors, until their cessation of service on the Board.

RISK OVERSIGHT

The Board has overall responsibility for the oversight of risk management at our Company. Day to day risk management is the responsibility of management, which has implemented processes to identify, assess, manage and monitor risks that face our Company. Our Board, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our Company, and the steps we take to monitor and control such exposures.

While our Board has general oversight responsibility for risk at our Company, the Board has delegated some of its risk oversight duties to the various Board committees. The Nominating and Corporate Governance Committee oversees risks related to corporate governance. The Audit and Finance Committee is responsible for generally reviewing and discussing the Company’s policies and guidelines with respect to risk assessment and enterprise risk management. The Audit and Finance Committee oversees the risk assessment and review of the financial internal controls environment and financial statement reporting compliance. The Audit and Finance Committee also considers financial risk management including risks relating to liquidity, access to capital and macroeconomic trends and risks. The Compensation Committee assists our Board in overseeing the management of risks arising from our compensation policies, and programs related to assessment, selection, succession planning, training and development of executives of the Company. Each of the Board committees reviews these risks and then discusses the process and results with the full Board.

COMMUNICATING WITH DIRECTORS

The Company has established a process by which stockholders or other interested parties can communicate with the Board or any of the Company’s individual Directors, by sending their communications to the following address:

FuelCell Energy, Inc. Board of Directors
c/o Corporate Secretary
3 Great Pasture Road
Danbury, CT 06810

Alternatively, communications can be submitted electronically via the Company website at www.fuelcellenergy.com.

Stockholder communications received by the Company’s Corporate Secretary will be delivered to one or more members of the Board or, in the case of communications sent to an individual Director, to such Director.

FUELCELL ENERGY, INC. | PROXY STATEMENT   15

Corporate Governance

BOARD OF DIRECTORS AND COMMITTEES

INDEPENDENT DIRECTORS AND MEETING ATTENDANCE

The Board currently consists of five directors — James H. England, Jason Few, Chris Groobey, Matthew F. Hilzinger, and Natica von Althann — each of whom will stand for election at the Annual Meeting.

The Board has determined that the following four of the five Director nominees are independent Directors, in accordance with the director independence standards of the Securities and Exchange Commission (“SEC”) and the Nasdaq Stock Market, including Nasdaq Rule 5605(a)(2): James H. England, Chris Groobey, Matthew F. Hilzinger, and Natica von Althann. The Board had previously determined that Jason Few, who served as a non-employee Director prior to his appointment as our President and CEO, was an independent Director prior to his appointment as our President and CEO in accordance with the director independence standards of the SEC and the Nasdaq Stock Market, including Nasdaq Rule 5606(a)(2). However, the Board determined that Mr. Few ceased to be independent upon his appointment as President and CEO of the Company on August 26, 2019.

There were four other individuals who served as Directors of the Company during fiscal 2019 — John A. Rolls, Christopher S. Sotos, Christina Lampe-Onnerud, and Arthur A. Bottone. Mr. Rolls elected to retire from the Board and therefore did not stand for re-election at the 2019 Annual Meeting, and Mr. Sotos elected not to stand for re-election at the 2019 Annual Meeting. Accordingly, their terms as Directors ended on the date of the 2019 Annual Meeting. Dr. Lampe-Onnerud resigned from the Board on March 19, 2019 and therefore did not stand for election at the 2019 Annual Meeting. Finally, Mr. Bottone resigned as a Director of the Company on June 5, 2019. The Board previously determined that, during their time as Directors in fiscal 2019, Mr. Rolls and Dr. Lampe-Onnerud were independent Directors in accordance with the director independence standards of the SEC and the Nasdaq Stock Market, including Nasdaq Rule 5605(a)(2). In addition, the Board previously determined that, during their time as Directors in fiscal 2019, Mr. Sotos and Mr. Bottone were not independent Directors under the independence standards of the SEC and the Nasdaq Stock Market.

The Board and its committees meet regularly to review and discuss the Company’s progress, strategy and business. The Board meets regularly with management and outside advisors. The independent Directors also hold regular executive sessions without Mr. Few or other members of management. Board members are also kept apprised of Company progress and issues that arise between Board meetings.

All Directors serving at the time of the Company’s 2019 Annual Meeting were in attendance at the meeting. Regular attendance at Board meetings and annual stockholder meetings by each Board member is expected. The Board held 56 meetings in fiscal 2019. Each incumbent Director serving during fiscal 2019 attended more than 75% of the total number of Board and, if a Director served on a committee, committee meetings held during fiscal 2019, with the exception of Mr. Few who was excused from those Compensation Committee meetings prior to his appointment as President and CEO during which his proposed compensation as President and CEO was discussed. Mr. Few attended all other Compensation Committee meetings while he was a non-employee director, other than those from which he was excused.

16   FUELCELL ENERGY, INC. | PROXY STATEMENT

Corporate Governance​

The Board believes it is more effective for the Board, as a whole, to monitor and oversee the Company’s government affairs strategy and initiatives, including federal and state legislative and regulatory proceedings, in addition to monitoring the Company’s ongoing relations with government agencies.

FUELCELL ENERGY, INC. | PROXY STATEMENT   17

Corporate Governance

18   FUELCELL ENERGY, INC. | PROXY STATEMENT

Corporate Governance​

FUELCELL ENERGY, INC. | PROXY STATEMENT   19

Corporate Governance

NASDAQ LISTING RULES — COMPENSATION COMMITTEE MEMBERS

Upon assessing the independence of the Compensation Committee members in accordance with the Nasdaq Listing Rules, the Board has determined that each Compensation Committee member satisfies the following independence criteria, in addition to qualifying as an independent director under Nasdaq Rule 5605(a)(2):

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No Compensation Committee member has received compensation from the Company for any consulting or advisory services nor has any Compensation Committee member received any other compensatory fees paid by the Company (other than Directors’ fees) during the time such member served on the Compensation Committee; and

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No Compensation Committee member has an affiliate relationship with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company.

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NASDAQ LISTING RULES — COMPENSATION COMMITTEE ADVISOR

Upon assessing the independence of, and any potential conflicts of interest of, the Company’s Compensation Advisors, Compensia, Inc. and Meridian Compensation Partners, LLC (the “Advisors”), in accordance with the Nasdaq Listing Rules, the Compensation Committee has determined that the Advisors satisfy the following independence criteria:

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Neither Advisor has provided, in the last completed fiscal year ended October 31, 2019 or any subsequent interim period, any services to the Company or its affiliated companies, other than the Advisor’s work as a compensation advisor to the Company’s Compensation Committee;

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Less than 1% of each Advisor’s total revenue was derived from fees paid by the Company in the last completed fiscal year ended October 31, 2019 and any subsequent interim period for work on behalf of the Company’s Compensation Committee;

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Each Advisor has implemented policies and procedures designed to prevent conflicts of interest;

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Neither Advisor nor any of their respective employees or their spouses has any business or personal relationships with any members of the Company’s Compensation Committee or any of the Company’s executive officers;

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Neither Advisor nor any of their respective employees or their immediate family members currently owns any Company securities (other than through a mutual fund or similar externally-managed investment vehicle); and

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Neither Advisor is aware of any relationship not identified in the statements above that could create an actual or potential conflict of interest with the Company or its affiliated entities, any members of the Company’s Compensation Committee or any of the Company’s executive officers.

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Corporate Governance​

EXECUTIVE COMPENSATION

22   FUELCELL ENERGY, INC. | PROXY STATEMENT

Executive Compensation

Mr. Few is eligible for 5 weeks of vacation annually and to participate in the Company’s other employee benefit plans in accordance with the terms of such plans and be reimbursed for other reasonable fees and expenses, including business expenses, specified organization membership fees of up to $10,000 annually and tax preparation and planning fees of up to $10,000 annually. The Company also reimbursed Mr. Few $25,000 in attorney’s fees incurred by Mr. Few to negotiate the CEO Employment Agreement.

THE 2019 SAY-ON-PAY VOTE AND COMPENSATION HIGHLIGHTS

Our Compensation Committee pays close attention to the views of our stockholders when making determinations regarding executive compensation. At our 2019 Annual Meeting, only 49.95% of the votes cast on the advisory proposal regarding the compensation of our named executive officers were voted in favor of our 2018 executive compensation program. We are concerned with the lack of stockholder support for our executive compensation program. Following the 2019 Annual Meeting, we began an evaluation of our executive compensation programs and practices and considered how they could be modified to better align with our business goals and the interests of our stockholders.

We believe that our new “Powerhouse” business strategy to transform, strengthen and grow our business positions us to achieve our core business goals of executing on our backlog and new project awards, growing our generation portfolio, competing for and winning new business around the world, and developing and commercializing our advanced technologies platform of products. Nevertheless, we understand stockholder discontent regarding the performance of our stock over the long term and our financial performance.

We will again endeavor in this year’s Proxy Statement to clarify certain elements of our executive compensation program so that our stockholders can better understand how our current compensation program is structured, and why our compensation program is appropriate for our Company. The Compensation Committee hopes that our stockholders will consider the positive momentum of our business and the attributes of our compensation program, when casting “say-on-pay” votes at the Annual Meeting. Our evaluation of our executive compensation program is not yet complete, but we will describe some of the changes that are expected to be made in fiscal 2020 as well as certain changes that have already been made with respect to our fiscal 2020 compensation program.

The Compensation Committee will continue to consider the results of annual stockholder advisory votes on executive compensation in its ongoing evaluation of our programs and practices. In response to our stockholders’ dissatisfaction with our executive compensation programs and practices as evidenced by the “say-on-pay” vote at the 2019 Annual Meeting, the Compensation Committee has already made multiple changes for fiscal 2020, including:

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Engaging a new compensation consultant;

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Establishing a new peer group; and

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Evaluating the implementation of performance-based long-term incentive compensation for fiscal 2020.

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During fiscal 2019, we maintained the following compensation-related governance policies and practices, including both policies and practices we have implemented to drive performance and policies and practices that either prohibit or minimize behaviors that we do not believe serve our stockholders’ long-term interests.

What We Do:

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Maintain an Independent Compensation Committee – Our Compensation Committee consists solely of independent directors who establish our compensation practices.

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Retain an Independent Compensation Advisor – Our Compensation Committee has engaged its own compensation consultant to provide information, analysis, and other advice on executive compensation independent of management. We have recently changed our compensation consultant to take a fresh look at our compensation practices.

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Annual Executive Compensation Review – At least once a year, our Board conducts a review of our compensation strategy.

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Compensation At-Risk – Our executive compensation program is designed so that a significant portion of the compensation of our executive officers is “at risk” based on corporate performance, to align the interests of our executive officers and stockholders.

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Stock Ownership Guidelines – We maintain minimum stock ownership guidelines and stock holding requirements applicable to our executive officers and the non-employee independent members of our Board. In December 2018, our Board approved a six-fold increase in these minimum stock ownership guidelines, however, the minimum stock ownership guidelines were then reduced in connection with the one-for-twelve reverse stock split effected in May 2019. Accordingly, we have again increased our minimum stock ownership guidelines. As of October 31, 2019, each of our executive officers (i.e., our active NEOs) satisfied the minimum stock ownership requirements then in effect.

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■

Compensation Recovery (“Clawback”) Policy – We maintain an Executive Compensation Recovery Policy that enables our Board to seek recovery of any erroneously paid incentive compensation received by any current or former executive officer of the Company (who was actively employed as an executive officer of the Company on or after December 18, 2014, the date this policy was first adopted) in the event of an accounting restatement.

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■

Conduct an Annual Stockholder Advisory Vote on NEO Compensation – We conduct an annual stockholder advisory vote on the compensation of our NEOs. Our Board considers the results of this advisory vote during the course of its deliberations on exeutive compensation.

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24   FUELCELL ENERGY, INC. | PROXY STATEMENT

Executive Compensation​

■

Compensation-Related Risk Assessment – We conduct regular risk assessments of our compensation programs and practices.

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■

“Double-Trigger” Change in Control Arrangements – We have established “double-trigger” change-in-control severance agreements with each of the active NEOs, with a payment equal to two times base salary, plus the target annual bonus, plus the pro-rata amount of the bonus that would have been paid during the year of termination, pro-rated for the number of days during the year employed (for Mr. Few) and payments of one times base salary plus the average of the bonuses paid since their appointment as executive officers of the Company (for Messrs. Bishop, Lisowski and Leo and Ms. Arasimowicz).

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What We Do Not Do:

■

No Guaranteed Bonuses – Other than the one-time signing bonus paid to Mr. Few, we do not provide guaranteed annual bonuses to our executive officers.

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■

No Defined Benefit Retirement Plans – We do not currently offer, nor do we have plans to offer, defined benefit pension plans or any non-qualified deferred compensation plans or arrangements to our NEOs other than arrangements that are available generally to all employees. Our active NEOs are eligible to participate in our 401(k) retirement plan on the same basis as our other employees.

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■

Prohibition on Hedging and Pledging – We maintain a policy that prohibits our employees, including our active NEOs, and members of the Board, from hedging or pledging any Company securities.

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■

No Tax Gross-Ups – We do not offer our NEOs any tax “gross-ups.”

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■

No Stock Option Re-pricing – We do not permit options to purchase shares of our common stock to be repriced to a lower exercise price without the approval of our stockholders.

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COMPENSATION PHILOSOPHY AND OBJECTIVES

The Compensation Committee is responsible for developing and reviewing executive compensation plans, policies and practices consistent with our compensation philosophy. Our compensation philosophy is designed around certain key objectives:

■

Attract and Retain Top Executive Talent – We have designed our compensation program to be competitive and cost-effective, while allowing us to attract and retain executives critical to our long-term success.

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■

Pay for Performance – Our compensation program aligns compensation with Company and individual performance on both a short-term and long-term basis.

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■

Significant Portion of Pay is in the Form of Variable Compensation – We have aligned NEO compensation with stockholder interests by tying a significant portion of total direct compensation to the achievement of performance goals or stock price appreciation. With variable compensation, the NEO will not realize value unless performance goals are met or our stock price appreciates.

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To achieve these objectives, our executive compensation program:

■

must be competitive with compensation paid by companies in the same or similar markets for executive talent;

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■

rewards performance by linking compensation to Company performance and achievment of individual performance goals;

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■

aligns realized compensation with long-term stockholder returns by delivering a significant portion of NEO compensation in the form of equity compensation, the value of which is directly linked to our stock price;

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■

aligns NEO and stockholder interests by requiring NEOs to own and hold our stock for a specified period of time;

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■

is comprised of a “fixed” component, which consists of base salary, health and welfare benefits and contributions to the Company’s Section 401(k) Retirement Savings plan (the “401(k) Plan”), which benefits and contributions are the same as those offered to all other employees; and

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■

has a “variable” component, which consists of an annual performance-based incentive award (the target amount of which is expressed as a percentage of base salary) and a long-term incentive award linked to individual and Company performance.

​

Executive Compensation

COMPENSATION OVERVIEW

The following table presents a summary of the key components of our executive compensation program and the purpose of each such component.

In addition, all of our executives are entitled to participate in the Company’s benefit programs to the same extent as our other employees and as discussed further under the “Benefits, Signing Bonuses and Perquisites” section on page 28 of this Proxy Statement. Historically, the Company has not provided perquisites to our executives. However, certain limited perquisites were granted to Mr. Few to induce him to join the Company as our President and CEO, as discussed in the “Benefits, Signing Bonuses and Perquisites” section on page 28 of this Proxy Statement.

COMPENSATION-SETTING PROCESS

The Compensation Committee reviews the base salary, target annual incentive award, long-term incentive award and target total direct compensation opportunity (which represents the sum of these three elements) for each of the NEOs annually. The CEO makes recommendations to the Compensation Committee for annual increases in base salary, the annual incentive award payments and long-term incentive awards for each of the NEOs (other than with respect to his own compensation). The Compensation Committee has the final authority to approve annual increases in base salary, annual incentive award payments and long-term equity incentive awards for the NEOs other than the CEO, whose compensation is approved by the independent members of our Board.

Prior to the start of each fiscal year, the CEO develops operational milestones and strategic initiatives for the year for our salaried employees, including the NEOs. These operational milestones and strategic initiatives represent key performance objectives which are incorporated into the management incentive plan, which is then submitted to the Compensation Committee for consideration and approval. After our fiscal year-end financial results are available, the annual incentive award pool for employees and individual annual incentive award payments for the NEOs for the just-completed fiscal year are approved by the Compensation Committee, except with respect to the CEO, whose annual incentive award payment is approved by the independent members of our Board.

The Compensation Committee formulates its compensation decisions for the NEOs with input from the CEO (other than with respect to his own compensation), considering such factors as each NEO’s professional experience, job scope, past performance, tenure and retention risk. The Compensation Committee also considers prior fiscal year adjustments to compensation, historical annual incentive award payments and long-term incentive awards. Finally, the Compensation Committee considers current market practices, based on its review of executive compensation data for comparable companies, as well as current compensation trends, to ensure that the compensation of the NEOs is both competitive and reasonable, while also maintaining compensation levels commensurate with our financial and stock performance.

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Executive Compensation​

From 2010 through fiscal 2019, the Compensation Committee engaged Compensia, Inc., a national compensation consulting firm (“Compensia”), to support its compensation planning activities. Subsequent to the end of fiscal year 2019, the Compensation Committee retained Meridian to conduct a wholesale review of the Company’s executive compensation practices and suggest modifications.

In fiscal 2019, neither Compensia nor Meridian provided any other services to the Company and Compensia and Meridian worked with management only on matters for which the Compensation Committee is responsible.

Based on its consideration of the various factors set forth in the rules promulgated by the SEC and the Nasdaq Marketplace Rules, the Compensation Committee has determined that the work performed by Compensia and Meridian has not raised any conflict of interest.

COMPETITIVE POSITIONING

We periodically perform a competitive market analysis of our executive and Director compensation programs to ensure that the total compensation packages of our executive officers and the non-employee members of our Board are within a reasonably competitive range. In connection with its fiscal 2019 compensation actions and decisions, the Compensation Committee considered the competitive market analysis that was prepared by Compensia in 2018, as described below. For fiscal 2020 compensation planning, the Company had Meridian perform a new competitive market analysis that has informed and will continue to inform changes the Company has made and may make in the future to its 2020 compensation plan. However, in sum, the Meridian analysis demonstrated that the Company’s overall compensation programs were generally aligned with typical market practices.

COMPETITIVE MARKET ANALYSIS

In March 2018, Compensia conducted a competitive market analysis that was used by the Compensation Committee in connection with its executive and non-employee Director compensation decisions for fiscal 2018 and fiscal 2019. To develop an understanding of the competitive marketplace, the Compensation Committee reviewed the executive compensation practices of a group of publicly-traded companies (the “Peer Group”) based on compensation data gathered from publicly-available filings and as supplemented with additional data drawn from the Radford Global Technology Survey, based on data cuts for technology companies of similar size and complexity to us.

Compensia worked with the Compensation Committee to develop the Peer Group by screening an initial list of publicly-traded companies on the basis of industry focus, revenue, market capitalization, geographical location and revenue to market capitalization ratio. These companies were then narrowed by identifying companies whose revenue at the time ranged from approximately $35 million to $375 million compared to our trailing four fiscal quarters’ revenue of $96 million, and whose market capitalization ranged from approximately 0.2 to 5.8 times ($40 million to $650 million) our then-market capitalization of $123 million. The list was further refined by focusing on companies in the electrical equipment and components sectors and eliminating companies with headquarters outside of North America, as pay practices and disclosure requirements may vary significantly from those found in the United States.

The Compensation Committee and Compensia also reviewed and considered other factors such as revenue growth, profitability, valuation (for example, market capitalization as a multiple of sales) and business model. The Peer Group was selected based on the subjective evaluation of all of these factors, and consisted of the following 20 companies (almost half of which are different than the peer companies that we had benchmarked in fiscal 2017):

To complete the competitive market analysis of the executive compensation program, Compensia then blended the Peer Group data with the Radford Global Technology Survey data (weighted equally) to compare the various market compensation levels for each of the NEO positions. Based on the foregoing approach, the analysis indicated the fiscal 2017 target total direct compensation opportunities of the fiscal 2017 NEOs approximated the 45th percentile of the competitive market, with significant variation for cash compensation among executives. In addition, the analysis showed that the fiscal 2017 equity awards granted to the fiscal 2017 NEOs approximated the 25th percentile of the competitive market, with only one executive near the median, and with little retention hold as most outstanding equity awards were substantially vested.

FUELCELL ENERGY, INC. | PROXY STATEMENT   27

Executive Compensation

We did not perform a new competitive market analysis or conduct any in-depth review of our compensation practices in fiscal 2019, largely due to the Company’s liquidity challenges and the restructuring undertaken by the Company in fiscal 2019. Subsequent to the end of fiscal 2019, we engaged Meridian to conduct a new competitive market analysis to be used by the Compensation Committee in conjunction with planning for executive and non-employee Director compensation decisions for fiscal 2020. As part of that competitive market analysis, Meridian has suggested certain changes to our peer group, including retaining 15 of our current 20 peers, with removals representing acquisitions (Hydrogenics, Maxwell), financially distressed companies (Revolution Lighting), or companies that are now much larger than our Company with respect to size and value (Enphase Energy, Vivint Solar). Meridian recommended the addition of two new peer companies that are both business model and size relevant (Ultralife Corporation and Orion Energy Systems, Inc.1). Based on this new peer group that we will use for our fiscal 2020 compensation planning, our current executive cash compensation opportunities average in the 60th percentile of our peers, which we believe is appropriate to continue to attract and retain qualified executives, especially as we transition from the restructuring phase of our business plan to the phase in which we focus on future growth.

The Compensation Committee uses the market analysis as a reference point to ensure that our executive compensation program is competitive with market practice. In the case of each executive officer, the Compensation Committee compares the overall compensation of each individual against the compensation data developed through the market analysis, if his or her position is sufficiently similar to the positions identified in the data to make the comparison meaningful. However, the Compensation Committee does not target a particular percentile of the competitive market with respect to any portion of the executives’ pay. Ultimately, the Compensation Committee’s decisions with respect to each executive’s total compensation, and each individual compensation element, are based in large part on its assessment of Company and individual performance as well as other factors, such as internal equity.

FIXED COMPENSATION

BASE SALARY

The purpose of base salary, from the perspective of the Compensation Committee, is to fairly and competitively compensate our NEOs with a fixed amount of cash for the jobs they perform. In addition, base salaries are used to recognize the experience, skills, knowledge and responsibilities required of our NEOs. Accordingly, we seek to ensure that base salary levels are competitive and consistent with industry practices.

FISCAL 2019 BASE SALARIES

During fiscal 2019, our focus was primarily on restructuring the Company and its operations. We also restructured our management team to better support our planned growth and operations following our restructuring. In April 2019, our Chief Operating Officer, Anthony F. Rauseo, retired. In June 2019, we terminated our President and Chief Executive Officer, Arthur A. Bottone, and appointed our General Counsel, Jennifer D. Arasimowicz, as Interim President and Chief Commercial Officer. In June 2019, we also appointed a new Chief Operating Officer, Michael J. Lisowski, and a new Chief Technology Officer, Anthony J. Leo. Finally, in August 2019, we appointed a new President and Chief Executive Officer, Jason Few, and in September 2019, Mr. Few became our Chief Commercial Officer in addition to serving as President and Chief Executive Officer, while Ms. Arasimowicz became our Chief Administrative Officer in addition to serving as General Counsel and Corporate Secretary. Throughout each of these management adjustments, the Compensation Committee reviewed the base salaries of the executive officers, taking into consideration their qualifications, past performance and expected future contributions, their ongoing roles and responsibilities and the challenges facing the Company. After considering the foregoing factors and certain additional information, including the roles each of our executive officers played in the Company’s restructuring, the Compensation Committee approved (i) in connection with his appointment as an executive officer of the Company, a base salary of $325,000 for Mr. Lisowski, (ii) in connection with his appointment as an executive officer of the Company, a base salary of $275,000 for Mr. Leo, (iii) an increase in base salary from $350,000 to $385,000 for Mr. Bishop, and (iv) an increase in base salary from $330,000 to $365,000 for Ms. Arasimowicz. The Compensation Committee determined that these base salaries and base salary increases (as applicable) were warranted to recognize the promotion of Mr. Lisowski and Mr. Leo to serve as executive officers, to recognize the contributions that each individual had made during the preceding 12 months, to address the Company’s retention objectives, and to ensure parity in the base salary levels of the executive officers after taking into consideration their relative time in their positions and their anticipated future contributions to the Company. With respect to the new CEO, Jason Few, after considering his contributions to the Board prior to becoming CEO, his qualifications and abilities to achieve the Company’s longer-term initiatives and his strong leadership skills, the Compensation Committee recommended to the independent members of our Board an initial base salary of $475,000 (which recommendation was approved by the independent members of the Board). As their service to the Company ended in mid-fiscal 2019, neither Mr. Bottone nor Mr. Rauseo received a base salary increase in fiscal 2019, and as such Mr. Bottone’s annual base salary remained at $475,000 and Mr. Rauseo’s annual base salary remained at $360,000.

BENEFITS, SIGNING BONUSES AND PERQUISITES

We offer medical and dental insurance to our executive officers, and pay a portion of the premiums for these benefits consistent with the arrangements for non-executive employees. We also provide our executive officers and other eligible employees, at our expense, with group life and accidental death and dismemberment insurance benefits; short-term and long-term disability insurance benefits; paid time

1

Orion Energy Systems, Inc. is unrelated to the parties to our senior secured credit facility, Orion Energy Partners Investment Agent, LLC and its affiliated lenders.

​

28   FUELCELL ENERGY, INC. | PROXY STATEMENT

Executive Compensation​

off benefits; and other ancillary benefits (for example, flexible spending accounts and an employee assistance program). Further, we offer participation in the 401(k) Plan to our employees, including our executive officers, subject to the terms of the 401(k) Plan.

Contributions to the 401(k) Plan are limited to an annual maximum amount as determined by the Internal Revenue Service. For Plan Year 2019, the Compensation Committee approved a matching contribution equal to 25% of the first 8% of elective salary deferrals, not to exceed 2% of eligible earnings. These contributions to the retirement savings accounts of our employees are subject to a five year graded vesting schedule. Participants are not permitted to receive or purchase shares of our common stock through the 401(k) Plan. Our contributions to the retirement savings accounts of the NEOs for fiscal 2019 are set forth in the Fiscal 2019 Summary Compensation Table on page 34 of this Proxy Statement.

Mr. Few received a one-time signing bonus of $500,000, 50% of which was paid effective upon Mr. Few’s commencement of employment in August 2019 and the other 50% of which was paid on January 6, 2020. Mr. Few also receives $13,000 per month in commuting expenses, which will continue to be paid until the earlier of such time as Mr. Few relocates to Connecticut or August 26, 2020. In addition, the Company pays Mr. Few’s rent for his Connecticut apartment in an amount equal to $2,361 per month, which will continue to be paid until the earlier of Mr. Few’s relocation to Connecticut or August 26, 2020. Mr. Few is also entitled to up to $10,000 annually in tax preparation fees and $10,000 annually in organization and membership dues. In connection with the negotiation of his employment agreement with the Company, we reimbursed Mr. Few $25,000 in legal fees. Finally, in the event that Mr. Few relocates to Connecticut on or before August 26, 2020, Mr. Few will be entitled to a lump sum gross payment of $200,000.

Our executive compensation program does not include any of the following pay practices:

■

Supplemental executive retirement benefits; or

​

■

Supplemental health or insurance benefits.

​

VARIABLE COMPENSATION

ANNUAL INCENTIVE COMPENSATION

All salaried exempt employees, including our executive officers, are eligible to participate in our annual cash bonus plan, which we refer to as the Management Incentive Plan (the “MIP”). The MIP is intended to motivate employee performance in, and align compensation levels with, the achievement of our annual business objectives.

The Compensation Committee periodically reviews and determines the target annual incentive award opportunities (expressed as a percentage of base salary) that each of the executive officers may earn under the MIP. The target annual incentive award opportunities for each NEO (expressed as a percentage of base salary) were established in each of their respective employment agreements, at 90% for Mr. Few (established in 2019) and for Mr. Bottone (established in 2011), and at 50% for each of the other NEOs (established in 2011 for Mr. Bishop and Mr. Rauseo, in 2017 for Ms. Arasimowicz and in 2019 for Mr. Leo and Mr. Lisowski).

The actual amount of annual cash compensation earned under the MIP each year by our NEOs may be more or less than the target amount depending on our performance against a set of pre-established Company operational milestones (which represent 75% of their target annual incentive award opportunity) and a set of pre-established Company strategic initiatives (which represent the remaining 25% of their target annual incentive award opportunity). In addition, the Compensation Committee retains the right to exercise its discretion to adjust the size of potential award payments as it deems appropriate to take into account factors that enhance or detract from results achieved relative to the Company operational milestones and strategic initiatives. In this way, the Compensation Committee does not confine itself to a purely quantitative approach and retains discretion in determining award payments based on its review and assessment of other results for the fiscal year. The Compensation Committee believes that linking the annual incentive awards for the NEOs to Company operational milestones and strategic initiatives creates a performance-based compensation opportunity that furthers stockholder interests, but by retaining some discretion, reduces the risk that executives will overemphasize performance on the pre-established objectives to the detriment of the Company’s overall performance.

The operational milestones and strategic initiatives on which the 2019 MIP awards were based, as well as our performance with respect to such milestones and initiatives, are discussed below.

FISCAL 2019 OPERATIONAL MILESTONES

The pre-established Company operational milestones for fiscal 2019 were established in fiscal 2018 prior to the onset of the Company’s liquidity challenges. The fiscal 2019 operational milestones (and their respective weighting) involved:

(1)

achieving a specified level of total revenue for the fiscal year (20%);

​

(2)

securing new orders (40%);

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(3)

achieving a specified gross margin for the fiscal year (20%);

​

(4)

controlling operating expenses (10%); and

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FUELCELL ENERGY, INC. | PROXY STATEMENT   29

Executive Compensation

(5)

enhancing fleet performance (10%).

​

The Compensation Committee developed target performance levels for each of these milestones that were consistent with our annual operating plan for fiscal 2019.

FISCAL 2019 STRATEGIC INITIATIVES

The pre-established Company strategic initiatives for fiscal 2019 were established in fiscal 2018 prior to the onset of the Company’s liquidity challenges. The fiscal 2019 strategic initiatives (which were equally weighted) involved:

(a)

developing a new strategic partner;

​

(b)

executing on specified regulatory initiatives;

​

(c)

growing the Advanced Technology business;

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(d)

developing project finance partners to support growth; and

​

(e)

transforming the commercial development team.

​

Under the 2019 MIP, performance against each of the Company operational milestones was evaluated based on a range of pre-established performance levels to obtain scores ranging from 0% to a maximum of 125%.

PERFORMANCE RESULTS AND ANNUAL INCENTIVE AWARD PAYMENTS FOR FISCAL 2019

After the end of fiscal 2019, the Compensation Committee reviewed the Company’s actual performance as measured against the Company operational milestones and strategic initiatives, which resulted in an annual incentive award achievement percentage of 23.5% of the target award levels, determined as follows. Comparing the Company’s actual performance against the range of pre-established target levels for these operational milestones, the Compensation Committee calculated a weighted score for each milestone, the sum of which yielded a total weighted score. The Company’s overall performance with respect to the operational milestones for fiscal 2019 resulted in a calculated aggregate weighted score of 17.5%, as the Company met 125% of its operational milestone of controlling operating expenses and 50% of its operational milestone of enhancing fleet performance. None of the other operational milestones were achieved.

With respect to the fiscal 2019 Company strategic initiatives, the Compensation Committee compared the Company’s actual performance against the pre-established target objectives for these initiatives, and calculated a weighted score for each strategic initiative, the sum of which yielded a total weighted score. Our overall performance with respect to the strategic initiatives for fiscal 2019 resulted in a calculated weighted score of 41.67%. The Company achieved: (i) one quarter of the strategic initiative of developing a new strategic partner with the closing of the $200 million credit facility with Orion Energy Partners, (ii) one third of the strategic initiative related to executing on specified regulatory initiatives, (iii) one half of the strategic initiative related to growing the Advanced Technology business, and (iv) all aspects of the strategic initiative of transforming the commercial development team.

Applying the relative weighting of each performance category (75% for the operational milestones and 25% for the strategic initiatives), the Compensation Committee determined that the blended annual incentive award achievement percentage was equal to 23.5% of the target award levels.

In determining the annual incentive award payments to be made for fiscal 2019, the Compensation Committee also considered the progress made by the Company over approximately the last six months of fiscal 2019, including but not limited to: (a) the closing of a new $200 million credit facility with Orion Energy Partners, (b) the execution of a Joint Development Agreement with EMRE, (c) the restructuring of our business to realize annualized operating savings of approximately $15 million, (d) the repayment in full of the loans from Hercules Capital, Inc., NRG Energy, Inc., and Generate Lending, LLC, (e) the substantial paydown of vendors and successful negotiation of forbearance arrangements and payment plans, (f) the progress made in constructing certain projects in our backlog, (g) the relaunch of our sub-megawatt product in Europe, (h) the execution of a strategic relationship with E.On Business Solutions, (i) the amicable resolution of the arbitration in Korea with POSCO Energy Co., Ltd., (j) the retirement of the Company’s Series C and Series D convertible preferred instruments, (k) the successful emergence of the Company from its restructuring phase, and (l) the recent increase in the Company’s stock price by a factor of more than four.

Based on all of the foregoing factors and considerations, the fact that no annual incentive award payments or long-term equity incentive awards were made in fiscal 2018, and the fact that no long-term equity incentives were being awarded in fiscal 2019 (other than the Initial RSU Award granted to Mr. Few in connection with his employment agreement), the Compensation Committee and the Board determined that an upward adjustment of the annual award payment percentages was warranted.

After reviewing the blended annual incentive award achievement percentage, evaluating the Company’s performance, financial position and stock performance, and considering the recommendations of the CEO (with respect to all other currently serving NEOs), the Compensation Committee determined to adjust the annual incentive award payment percentage for fiscal 2019 for all participants in the Company (other than the NEOs) to a range of 50% to 79% of targeted awards and for each of the currently serving NEOs to 76% for Mr. Bishop, 77% for Ms. Arasimowicz, 78% for Mr. Lisowski and 79% for Mr. Leo, with the specific cash amounts paid to each NEO as

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Executive Compensation​

set forth in the Fiscal 2019 Summary Compensation Table on page 34 of this Proxy Statement. The Compensation Committee also recommended, and the independent members of the Board agreed, that an annual incentive award payment of $68,475 be made to Jason Few, our current CEO, representing 50% of his target bonus award, pro-rated based on the number of days he was employed by the Company as CEO during fiscal year 2019, plus $30,000. No awards were made to Mr. Bottone or Mr. Rauseo.

FISCAL 2020 OPERATIONAL MILESTONES AND STRATEGIC INITIATIVES UNDER THE MIP

For fiscal 2020, the pre-established Company operational milestones and strategic initiatives have been updated to further advance our business objectives. The operational milestones for fiscal 2020 are consistent with our fiscal 2020 annual operating plan and were set in consideration of the Company’s prior performance and fiscal 2020 budget. The operational milestones (and their respective weighting) are: (1) achieve a specified level of total revenue for the fiscal year (20%); (2) secure new orders (25%), (3) achieve a specified gross margin (20%); (4) control operating expenses (20%); and (5) achieve a specified level of target fleet performance (15%).

The Compensation Committee has also established strategic initiatives for fiscal 2020 applicable to all participants including the active NEOs. The pre-established Company strategic initiatives for fiscal 2020 (which are equally weighted) are as follows: (a) develop new strategic partners and investors; (b) advance policy initiatives in target markets; (c) grow the Advanced Technology business; (d) develop the commercial business; and (e) achieve certain operational targets.

LONG-TERM INCENTIVE COMPENSATION

ANNUAL RESTRICTED STOCK UNIT (RSU) GRANTS

Each of the NEOs was eligible to receive long-term incentive compensation in the form of restricted stock units (“RSUs”) under the Company’s 2018 Omnibus Incentive Plan and, assuming that the stockholders approve the amendment and restatement of the 2018 Omnibus Incentive Plan (as amended and restated, the “Amended and Restated Plan”), as described in Proposal 5 beginning on page 53 of this Proxy Statement, each of the currently serving and future NEOs will be eligible to receive long-term incentive compensation in the form of RSUs in the future under the Amended and Restated Plan. These awards are intended to align a significant portion of the NEOs’ compensation with stockholders’ interests and the long-term success of the Company by providing a direct link between an NEO’s future earnings potential and the market value of our common stock. Our annual RSU grants typically vest over three years at a rate of 33.3% per year.

The Compensation Committee, in determining the value of equity awards to be granted to our employees, including our executive officers, considers relevant competitive market data as well as the recommendations of the CEO and other factors, including the individual’s job scope, past performance, expected future contributions, tenure and retention risk. The Compensation Committee approves all equity awards for the NEOs, except in the case of the CEO, whose award is approved by the independent members of our Board.

If actual performance falls below the threshold level of 50%, payment of an award is at the discretion of the Compensation Committee and the amount of the award could be zero, as it was for fiscal 2018. In fiscal 2019, in recognition of the performance challenges of the Company, the need to restructure, and the very limited number of shares remaining available for issuance under the 2018 Omnibus Incentive Plan, the Compensation Committee determined not to grant equity awards to the NEOs (other than the Initial RSU Award granted to Mr. Few in connection with his employment agreement, which is described in further detail under the heading “Transition to a New CEO”).

Subsequent to the end of fiscal 2019, the Compensation Committee retained Meridian to evaluate our long-term incentive compensation for fiscal year 2020 in order to better align our long-term incentive compensation program with the interests of our stockholders and market practices.

COMPENSATION POLICIES

PROHIBITION ON OPTION RE-PRICING AND BACKDATING

The Compensation Committee does not re-price and has not re-priced options to purchase shares of our common stock, consistent with the 2018 Omnibus Incentive Plan, which prohibits re-pricing of equity awards without stockholder approval. The grant date for each equity award is based on the date the award is approved by the Compensation Committee or the independent members of our Board, as applicable. Options to purchase shares of our common stock are granted with an exercise price equal to the closing market price of our common stock on the date of grant.

EQUITY AWARD GRANT POLICY

We maintain an Equity Award Grant Policy, which was most recently amended in December 2018. This policy includes the following key provisions: (a) all equity awards of more than 40,000 shares must be submitted to the Compensation Committee for approval; (b) all equity awards granted to executives at the level of vice president (or above) must be submitted to the Compensation Committee for approval; and (c) the Compensation Committee has authorized a pool of up to 100,000 shares from which the CEO may approve equity awards for special

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Executive Compensation

recognition or retention purposes, provided that such grants are limited to a grant date fair value of $40,000 or less, and further provided that no grants may be made from this pool to employees at the level of vice president or above.

COMPENSATION RECOVERY POLICY

We maintain an Executive Compensation Recovery Policy. A description of this policy can be found on page 14 of this Proxy Statement under “Corporate Governance.”

ANTI-HEDGING POLICY

A description of our anti-hedging policy can be found on page 14 of this Proxy Statement under “Corporate Governance.”

STOCK OWNERSHIP GUIDELINES

We maintain minimum stock ownership guidelines which were updated in December 2018, and, after being adjusted for the one-for-twelve reverse stock split effected by the Company in May 2019, amended again in February 2020. A description of these guidelines can be found on page 14 of this Proxy Statement under “Corporate Governance.”

TAX AND ACCOUNTING CONSIDERATIONS

Section 162(m) of the Internal Revenue Code, as amended by the Tax Cuts and Jobs Act of 2017, restricts deductibility for federal income tax purposes of annual individual compensation in excess of $1 million to each NEO, effective for tax years beginning after 2017, subject to a transition rule for certain written binding contracts which were in effect on November 2, 2017, and which were not modified in any material respect on or after such date. In the past, Section 162(m)’s deductibility limitation was subject to an exception for compensation that qualified as ‘performance-based’. Our compensation programs were designed to permit the Company to qualify for the performance-based exception, although the Company reserved the right to pay compensation that did not qualify as ‘performance-based’. While the Committee will continue to consider the deductibility of compensation as a factor in making compensation decisions, it retains the flexibility to provide compensation that is consistent with the Company’s goals for its executive compensation program, even if such compensation would not be fully tax-deductible.

We follow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 for all stock-based awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options and full value stock awards, based on the aggregate grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables on pages 34 and 43 of this Proxy Statement. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based compensation awards in their income statements over the period that an executive officer is required to render service in exchange for the option or other award.

COMPENSATION RISK ASSESSMENT

In connection with its annual review of the executive compensation program, the Compensation Committee considers and assesses whether any aspects of the program encourage unnecessary or excessive risk-taking. This assessment examines the various compensation programs for all of our employees, including, but not limited to, the NEOs.

Based on its most recent review, the Compensation Committee has determined that the executive compensation program does not create risks that are reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the Compensation Committee considered the following:

■

Base salaries, which represent fixed compensation, do not encourage excessive risk-taking.

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■

Annual incentive awards are capped at 125% of the target award opportunities, and if actual performance falls below the threshold level of 50%, payment of an award is at the discretion of the Compensation Committee and the amount of the award could be zero, as it was for fiscal 2018. The Compensation Committee believes that the annual incentive award program is based on balanced, quantitative performance measures that promote disciplined progress towards longer-term goals and, as such, are well-aligned with the business strategy and stockholder interests.

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■

The long-term incentive compensation in the form of equity awards granted to our executives helps to align their interests with those of our stockholders. The Compensation Committee has identified a number of factors that discourage excessive risk-taking including: (i) the relative size of the awards as compared to each executive’s target total direct compensation opportunity; (ii) the minimum vesting requirements for awards; and (iii) our policy which prohibits hedging transactions involving shares of our common stock and prevents our executives from insulating themselves from the effects of poor stock price performance. The Compensation Committee also noted that these awards do not encourage excessive-risk taking since their ultimate value is tied to our stock price, and they are granted on a staggered basis, subject to long-term vesting schedules, which help ensure that our executives have significant value tied to long-term stock price performance. No long-term incentive awards were granted in fiscal 2018 or fiscal 2019 (other than the Initial RSU Award granted to Mr. Few in connection with his employment agreement).

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We have also historically granted equity awards to certain of our non-executive employees. Like the equity awards granted to our executives, the relative size of these awards is modest compared to each employee’s target total compensation opportunity. All awards are subject to minimum vesting requirements and our policy prohibiting hedging transactions involving shares of our common stock is applicable to all grantees.

Further, the 2018 Omnibus Incentive Plan, which governs the terms of equity awards granted since its adoption in April 2018, includes several provisions designed to mitigate risk and protect stockholder interests, including, but not limited to, the following:

■

Options to purchase shares of our common stock and stock appreciation rights for shares of our common stock may not have an exercise or strike price that is less than the fair market value of our common stock on the date of grant;

​

■

With limited exceptions, no portion of any award granted under the 2018 Omnibus Incentive Plan may vest prior to the first anniversary of the award’s grant date;

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■

The 2018 Omnibus Incentive Plan was approved by stockholders at the 2018 Annual Meeting of Stockholders, and material amendments of the 2018 Omnibus Incentive Plan, including an increase in the number of shares available thereunder or an amendment and restatement of the 2018 Omnibus Incentive Plan as proposed in Proposal 5 of this Proxy Statement, require stockholder approval; and

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■

The 2018 Omnibus Incentive Plan is administered by an independent committee of our Board.

​

The Compensation Committee has reviewed the compensation programs for our employees generally and has determined that these programs do not create risks that are reasonably likely to have a material adverse effect on the Company.

Executive Compensation

FISCAL 2019 SUMMARY COMPENSATION TABLE

The following table presents summary information regarding the total compensation awarded to, earned by or paid to the NEOs for the fiscal years ended October 31, 2019, 2018, and 2017 (except for Messrs. Few, Lisowski and Leo for whom information is provided only with respect to the fiscal year ended October 31, 2019 as they were not NEOs prior to such fiscal year).

(1)

In June 2019 the Company adjusted its payroll practices from paying one week in arrears to paying one week in advance.

​

(2)

The amounts reported in the “Bonus” column represent, for Mr. Few, the one-time signing bonus pursuant to his employment agreement, which was paid 50% during fiscal year 2019 and 50% during fiscal year 2020, and for Messrs. Bishop, Lisowski and Leo and Ms. Arasimowicz, the payments made pursuant to the cash incentive plan adopted by the Board on July 15, 2019 to retain certain key executives, of which the first two payments (totaling $27,778 for each of Mr. Bishop and Ms. Arasimowicz and $16,667 for each of Messrs. Lisowski and Leo) were paid in fiscal year 2019 and the second two payments (totaling $22,222 for each of Mr. Bishop and Ms. Arasimowicz and $13,333 for each of Messrs. Lisowski and Leo) were paid in fiscal year 2020.

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(3)

Other than the amount reported for Mr. Rauseo in the “Stock Awards” column for 2019, which is discussed in footnote (10) below, the amounts reported in the “Stock Awards” column reflect the aggregate grant date fair value of stock awards granted during each of the fiscal years 2019, 2018, and 2017, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (“ASC Topic 718”). These values have been determined under the principles used to calculate the grant date fair value of equity awards for purposes of our financial statements. For a discussion of the assumptions and methodologies used to value the awards reported in this column, please see the discussion of stock awards contained in Note 17 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended October 31, 2019.

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(4)

The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent the value of the annual incentive award payment earned by each NEO for fiscal years 2019, 2018, and 2017 under our Management Incentive Plan. The amounts reported for fiscal years 2019, 2018, and 2017 were paid in cash.

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(5)

Mr. Few was appointed as our President and Chief Executive Officer effective as of August 26, 2019, and as our Chief Commercial Officer on September 12, 2019.The compensation reported in this table does not include the compensation paid to Mr. Few as a member of the Board of Directors prior to his appointment as President and Chief Executive Officer, which compensation is included in the Fiscal 2019 Non-Employee Director Compensation table on page 43 of this Proxy Statement.

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(6)

The amount reported under “All Other Compensation” for Mr. Few includes $4,740 in apartment rental expense, $28,517 in commuting expenses, and $25,000 in reimbursement of legal fees to Mr. Few for negotiation of his employment agreement with the Company.

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(7)

Mr. Lisowski was appointed our Executive Vice President and Chief Operating Officer on June 4, 2019.

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(8)

Mr. Leo was appointed our Executive Vice President and Chief Technology Officer on June 4, 2019.

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(9)

Mr. Bottone’s employment as President and Chief Executive Officer was terminated on June 5, 2019. The amount reported in the “All Other Compensation” column for Mr. Bottone for 2019 includes $23,750 in accrued vacation paid to Mr. Bottone upon the termination of his employment.

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(10)

Mr. Rauseo retired from his position as Senior Vice President and Chief Operating Officer on April 12, 2019. The amount reported in the “Stock Awards” column for 2019 for Mr. Rauseo reflects the incremental fair value, computed as of April 12, 2019 in accordance with ASC Topic 718, of Mr. Rauseo’s unvested equity awards as of April 12, 2019, which awards were modified such that they immediately vested upon his retirement, resulting in the issuance of 184,281 shares of the Company’s common stock, pursuant to a decision of the Board of Directors to accelerate the vesting of all unvested equity awards for all employees affected by the April 12, 2019 reduction in workforce or selecting voluntary retirement at that time. The fair value of the stock on the date of vesting was $0.28 per share, or a total of $51,596. The amount reported in the “All Other Compensation” column for Mr. Rauseo for 2019 includes $11,077 in accrued vacation paid to Mr. Rauseo upon his retirement.

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Executive Compensation​

FISCAL 2019 GRANTS OF PLAN-BASED AWARDS

No long-term equity incentive awards were made to the NEOs under the Management Incentive Plan for fiscal year 2019. The only equity award granted was the Initial RSU Award granted to Mr. Few in connection with the CEO Employment Agreement, which award is contingent on stockholder approval of a sufficient number of additional shares under the Company’s 2018 Omnibus Incentive Plan. Please see the sections above entitled “Transition to a New CEO” and “Fiscal 2019 Summary Compensation Table” and the section below entitled “Outstanding Equity Awards at 2019 Fiscal Year-End Table” for additional information regarding the Initial RSU Award.

(1)

In 2016, we granted restricted stock awards which vest at a rate of 25% per year beginning on the first anniversary of the date of grant; the restricted stock unit awards granted to Mr. Bishop and Ms. Arasimowicz in 2017 and 2018 vest at the rate of 33.3% per year beginning on the first anniversary of the date of grant except for certain special awards consisting of 8,333 restricted stock units, which vest 100% on the third anniversary of the grant date.

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(2)

The fair market value of unvested restricted stock and restricted stock unit awards is based on the per share closing price of our common stock on October 31, 2019, which was $0.24.

​

(3)

The shares granted to Mr. Few on April 4, 2019 were granted as compensation for his service on our Board of Directors prior to his appointment, effective as of August 26, 2019, as our President and Chief Executive Officer. The restricted stock units granted on August 26, 2019 are referred to elsewhere herein as the Initial RSU Award, which is contingent on stockholder approval of a sufficient number of additional shares under the Company’s 2018 Omnibus Incentive Plan and which was granted in connection with Mr. Few’s employment agreement.

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FISCAL 2019 OPTION EXERCISES AND STOCK VESTED TABLE

The following table presents, for each of the NEOs, the number of shares of our common stock acquired upon the vesting of restricted stock awards and restricted stock units during fiscal 2019, and the aggregate value realized upon the vesting of such awards. Our NEOs did not exercise any options to purchase shares of our common stock during fiscal 2019. For purposes of this table, the value realized is based upon the fair market value of our common stock on each vesting date. The number of shares included in the following table has been adjusted to reflect the one-for-twelve reverse stock split effected by the Company in May 2019.

Executive Compensation

(1)

Represents the gross number of shares acquired and value received on the vesting of restricted stock and restricted stock unit awards, without reduction for the number of shares withheld to pay applicable withholding taxes. Shares and value net of withholding are discussed in the following footnotes.

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(2)

The amount reported in the “Value Realized on Vesting” column is computed by multiplying the number of shares of our common stock that vested by the closing market price of our common stock on the applicable vesting date.

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(3)

Represents the vesting of 100% of Mr. Few’s November 8, 2018 award of 1,529 shares of restricted stock units, in accordance with the terms of the award.

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(4)

Represents the vesting of the first tranche (33%) of Mr. Bishop’s April 5, 2018 award of 14,044 restricted stock units; the vesting of the second tranche (33%) of his April 6, 2017 award of 14,583 restricted stock units; the vesting of the third tranche (25%) of his April 7, 2016 award of 4,529 shares of restricted stock; and the vesting of the fourth tranche (25%) of his April 2, 2015 award of 1,367 shares of restricted stock, in each case in accordance with the terms of the applicable award.

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(5)

Represents the vesting of the first tranche (33%) of Ms. Arasimowicz’s April 5, 2018 award of 14,044 restricted stock units; the vesting of the second tranche (25%) of her April 6, 2017 award of 16,666 restricted stock units; and the vesting of the third tranche (25%) of her April 7, 2016 award of 789 shares of restricted stock, in each case in accordance with the terms of the applicable award.

​

(6)

Represents the vesting of the first tranche (33%) of Mr. Liswoski’s January 31, 2018 award of 4,990 restricted stock units, the second tranche (33%) of his April 6, 2017 award of 2,625 shares of restricted stock, and the third tranche (25%) of his April 7, 2016 award of 789 shares of restricted stock, in each case in accordance with the terms of the applicable award.

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(7)

Represents the vesting of the first tranche (33%) of Mr. Leo’s April 5, 2018 award of 5,103 restricted stock units, the second tranche (33%) of his April 6, 2017 award of 6,875 shares of restricted stock, and the third tranche (25%) of his April 7, 2016 award of 1,746 shares of restricted stock, in each case in accordance with the terms of the applicable award.

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(8)

Represents the vesting of the second tranche (33%) of Mr. Bottone’s April 5, 2018 award of 25,749 restricted stock units; the vesting of the second tranche (33%) of his April 6, 2017 award of 27,541 restricted stock units; the vesting of the third tranche (25%) of his April 7, 2016 award of 8,553 shares of restricted stock; and the vesting of the fourth tranche (25%) of his April 2, 2015 award of 3,614 shares of restricted stock, in each case in accordance with the terms of the applicable award.

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(9)

Represents the accelerated vesting of Mr. Rauseo’s April 5, 2018 award of 14,044 restricted stock units; the accelerated vesting of his April 6, 2017 award of 14,583 restricted stock units; and the accelerated vesting of his April 7, 2016 award of 4,529 shares of restricted stock, all of which were accelerated pursuant to a decision of the Board of Directors to accelerate vesting of stock for all employees affected by the April 12, 2019 reduction in workforce or selecting voluntary retirement; and the vesting of the fourth tranche (25%) of his April 2, 2015 award of 1,367 shares of restricted stock, in accordance with the terms of that award.

​

EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL AND SEVERANCE

Each of the NEOs has (or had, as applicable) an employment agreement with the Company, under which such NEO is (or was, as applicable) eligible to receive certain severance payments and benefits in connection with a termination of employment under various circumstances, including following a change of control of the Company.

Mr. Rauseo retired on April 12, 2019 and received no severance payment. Mr. Rauseo’s retirement coincided with a reduction in workforce undertaken by the Company on the same day. On the date of his departure, Mr. Rauseo was paid $11,077 for accrued vacation time and his then-outstanding unvested equity awards immediately vested, resulting in the issuance of 184,281 shares of the Company’s common stock, pursuant to a decision of the Board of Directors to accelerate the vesting of all unvested equity awards for all employees affected by the April 12, 2019 reduction in workforce or selecting voluntary retirement at that time. The fair value of the stock on the date of vesting was $0.28 per share, or a total of $51,596.

Mr. Bottone’s employment as our President and Chief Executive Officer was terminated on June 5, 2019. No severance was paid to Mr. Bottone and the vesting of his outstanding unvested equity awards was not accelerated. At the time of his termination, Mr. Bottone was paid $23,750 in accrued vacation time.

In reporting the estimated potential payments and benefits payable to each NEO (other than Mr. Rauseo and Mr. Bottone) in the event of termination of employment as of October 31, 2019, we assumed that the terms of such NEOs’ employment agreements were applicable. The actual amounts that would be paid or distributed to the NEOs as a result of one of the termination events occurring in the future may be different than those presented below as many factors will affect the amount of any payments and benefits upon a termination of employment. For example, some of the factors that could affect the amounts payable include the NEO’s base salary and the market price of our common stock at the time of termination. In addition, although we have entered into written arrangements to provide severance payments and benefits to the NEOs in connection with a termination of employment under particular circumstances, we may mutually agree with the NEOs on severance terms that vary from those provided in these pre-existing agreements. Finally, in addition to the amounts presented below, each NEO would also be able to exercise any previously-vested options to purchase shares of our common stock that s/he

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held (if applicable). For more information about the NEOs’ outstanding equity awards as of October 31, 2019, see the Outstanding Equity Awards at 2019 Fiscal Year-End Table above.

In addition to the severance payments and benefits described in each NEO’s individual employment agreement, the NEOs are eligible to receive any benefits accrued under our broad-based benefit plans, such as accrued vacation pay, in accordance with those plans.

MR. FEW

Effective as of August 26, 2019, we entered into an employment agreement with Mr. Few in connection with his appointment as the President and Chief Executive Officer of the Company (the “CEO Employment Agreement”). The CEO Employment Agreement specifies the reasons pursuant to which his employment may be terminated by our Board and provides him with certain compensation and benefits upon termination of employment (including in connection with a change in control of the Company). We believe that these provisions help ensure the Company’s long-term success. The CEO Employment Agreement also sets forth the terms and conditions of employment for Mr. Few including his initial base salary, which is to be reviewed at least annually by our Board, and target annual incentive award opportunity. Mr. Few is also eligible to participate in the insurance plans and other employee benefits generally available to our other employees. The CEO Employment Agreement contains non-disclosure provisions that apply indefinitely and prohibit Mr. Few from competing with the Company and from soliciting our employees, in each case, during the term of his employment and for a period of two years thereafter.

In the event Mr. Few’s employment is terminated by the Company without cause or he resigns for good reason (as defined in the CEO Employment Agreement), subject to his execution of a general release of claims against the Company, he is eligible to receive a severance payment in an amount equal to (i) his then-current annual base salary as of the date of termination plus (ii) his target bonus for the year of termination plus (iii) a pro-rata portion of the annual bonus amount that would have been paid but for the termination, pro-rated based on the number of days in such fiscal year that Mr. Few was actually employed by the Company plus (iv) reasonable relocation expenses back to Houston, Texas (or such other city in Mr. Few’s discretion, provided that the expense shall not exceed the expense of relocating to Houston, Texas) in an amount not to exceed $200,000, as well as accelerated vesting of all outstanding equity awards and payment for continued health insurance for 12 months. In the event of termination of Mr. Few’s employment by the Company for any other reason (including death or disability), we will only pay Mr. Few any base salary and vacation accrued but as yet unpaid on the effective date of such termination, any earned but unpaid annual bonus with respect to any completed fiscal year immediately preceding the effective date of termination, and reimbursement for unreimbursed business expenses properly incurred. In the event that the termination of Mr. Few’s employment is within the 3 months prior to or the 18 months following a change in control of the Company, Mr. Few is eligible to receive a severance payment in an amount equal to (i) 2 times the sum of his then-current annual base salary plus his target bonus for the year of termination plus (ii) a pro-rata portion of the annual bonus amount that would have been paid but for the termination, pro-rated based on the number of days in such fiscal year that Mr. Few was actually employed by the Company plus (iii) reasonable relocation expenses to Houston, Texas (or such other city in Mr. Few’s discretion, provided that the expense shall not exceed the expense of relocating to Houston, Texas) in an amount not to exceed $200,000, as well as accelerated vesting of all outstanding equity awards and payment for continued health insurance for 24 months.

The CEO Employment Agreement further provides that, if Mr. Few receives any payments in connection with a change of control of the Company that would constitute excess parachute payments that are subject to excise taxes under Section 4999 of the Code, then the total severance payment shall be delivered either (a) in full or (b) in an amount such that the value of the aggregate total payments are $1.00 less than the maximum amount Mr. Few may receive without being subject to the tax, whichever results in Mr. Few receiving the greatest after-tax benefit.

The following table sets forth the potential (estimated) payments and benefits that Mr. Few would be eligible to receive upon termination of employment (including in connection with a change in control of the Company), as specified under the CEO Employment Agreement, assuming that the triggering event described below occurred on October 31, 2019.

Executive Compensation

POTENTIAL PAYMENTS AND BENEFITS UPON A TERMINATION OF EMPLOYMENT OR A CHANGE IN CONTROL OF THE COMPANY FOR MR. FEW

(1)

For purposes of this analysis, we have assumed that Mr. Few’s base salary is equal to $475,000, Mr. Few’s target annual bonus is $427,500, the total amount of the annual bonus for fiscal year 2019 (in an amount of $427,500) would have been earned, Mr. Few would have received relocation expenses of $200,000, and that Mr. Few had outstanding restricted stock and stock unit awards as reflected in the Outstanding Equity Awards at 2019 Fiscal Year-End Table, on page 35 of this Proxy Statement. These amounts reflect the terms of his compensation arrangements as approved by the independent members of our Board, effective August 26, 2019.

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(2)

Assumes Mr. Few’s date of termination of employment was October 31, 2019. The market price of our common stock on October 31, 2019 was $0.24 per share. In addition, we have assumed that the total payments and benefits to Mr. Few in connection with a change in control of the Company would not trigger any excise taxes under Section 4999 of the Code.

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(3)

The CEO Employment Agreement provides for accelerated vesting of Mr. Few’s outstanding and unvested restricted stock and restricted stock unit awards upon a change in control of the Company. Assuming a change in control occurred on October 31, 2019, Mr. Few would receive accelerated vesting of 5,629 shares of restricted stock and 500,000 restricted stock units. As of October 31, 2019, Mr. Few had no options to purchase shares of our common stock outstanding.

​

(4)

The value of the restricted stock and restricted stock unit awards on October 31, 2019 is based on 5,629 shares of restricted stock and 500,000 restricted stock units outstanding at $0.24 per share that had not vested.

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(5)

Mr. Few is eligible to receive payment of continued health insurance for a period of 12 months upon termination of employment without cause or resignation for good reason and 24 months if termination of employment without cause or resignation for good reason occurs in connection with a change in control of the Company. The value of continued health insurance is based on the medical and dental insurance rates in effect for all employees of the Company as of October 31, 2019.

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MR. BISHOP, MS. ARASIMOWICZ, MR. LISOWSKI AND MR. LEO

We entered into employment agreements (the “Other NEO Agreements”) with Mr. Bishop (effective January 1, 2012), with Ms. Arasimowicz (effective April 6, 2017), and with Mr. Lisowski and Mr. Leo (effective August 1, 2019) which specify the reasons pursuant to which their employment may be terminated and provide them with certain compensation and benefits upon termination of employment (including in connection with a change in control of the Company). We believe that these provisions help ensure the Company’s long-term success. The Other NEO Agreements set forth the terms and conditions of their employment including the initial annual base salary and target annual incentive award opportunity, which is equal to 50% of base salary and payable in accordance with the terms of the Management Incentive Plan described on page 29 of this Proxy Statement. Our active NEOs are also eligible to participate in insurance plans and other employee benefits generally available to our other employees.

In the event that the employment of Ms. Arasimowicz or Messrs. Bishop, Lisowski or Leo is terminated by the Company without cause, or any of them resigns for “good reason” (as defined in his/her applicable agreement), he/she is eligible to receive a severance payment in an amount equal to six months of his/her then-current annual base salary as of the date of termination, as well as payment for continued health insurance for six months. In the event that Mr. Bishop, Ms. Arasimowicz, Mr. Lisowski or Mr. Leo is terminated by the Company without cause or resigns for good reason in connection with a change in control of the Company, his/her outstanding and unvested options to purchase shares of our common stock and restricted stock and restricted stock unit awards accelerate and immediately vest. In addition, each of them is eligible to receive a severance payment in an amount equal to one year of his/her base salary as of the date of termination plus the average of the bonuses paid to him/her since his/her appointment as an executive officer of the Company as well as payment for continued health insurance for 12 months. In the event of termination of employment by the Company for any other reason (including death or disability), we will only be required to pay him/her any base salary and vacation accrued but unpaid as of the effective date of such termination.

The following tables set forth the potential (estimated) payments and benefits which Ms. Arasimowicz and Messrs. Bishop, Lisowski and Leo would be eligible to receive upon termination of employment (including in connection with a change in control of the Company), as specified under the applicable Other NEO Agreements, assuming that the triggering event described below occurred on October 31, 2019.

Executive Compensation​