CLSK CleanSpark Inc

 

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

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 01, 2024

 

 

CleanSpark, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Nevada			001-39187	87-0449945
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
10624 S. Eastern Ave. Suite A - 638
Henderson, Nevada				89052
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (702) 989-7692

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		CLSK		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Appointment of Brian Carson as Chief Accounting Officer

Effective October 1, 2024, Brian Carson has been appointed as the new Chief Accounting Officer of CleanSpark, Inc. (the “Company”). Mr. Carson, 50 years of age, was previously Director of Financial reporting of the Company, a position he has held since October 14, 2022. From August 2021 to October 2022, Mr. Carson served as the Financial Controller for Sahara Las Vegas. Prior to that, from August 2020 to January 2022, he held the position of Corporate Controller for Drake Automotive Group. Additionally, he worked as a Financial Consultant for Resources Global Professionals from September 2019 to March 2020. With over 30 years of accounting experience, Mr. Carson was a licensed Certified Public Accountant for more than 20 years. Early in his career, he also served as an Audit Manager with Deloitte.

Effective October 1, 2024, the Company entered into an employment agreement with Mr. Carson (the "Employment Agreement”). The Employment Agreement provides for an annual base salary of $300,000, payable according to the Company's normal payroll practices, which amount will be reviewed annually and is subject to adjustment by the Compensation Committee (the “Committee”) of the Company's Board of Directors (the “Board”). In addition, Mr. Carson will be entitled to receive (i) an annual discretionary target cash bonus up to 40% of his base salary, paid at the sole discretion of the Compensation Committee on advice from the Company's Chief Executive Officer, and (ii) 131,148 restricted stock units (“RSUs”), which will vest consistently with the description of the 2025 LTIP Awards set forth below.

 

The Employment Agreement can be terminated (i) for cause by the Company, (ii) by Mr. Carson for any reason upon 30 days’ advance prior written notice, or (iii) by the Company for any reason (other than for cause) upon 30 days’ advanced prior written notice.

Furthermore, Mr. Carson, (i) upon termination by the Company for cause or his resignation without good reason, shall be entitled to receive the accrued and unpaid portion of his base salary, any reimbursement for business travel and other expenses to which he is entitled under the Employment Agreement and such employee benefits (including equity compensation), if any, to which Mr. Carson may be entitled under the Company’s employee benefit plans as of the date of Mr. Carson’s termination; and (ii) upon termination by the Company other than for cause or Mr. Carson’s resignation for good reason, upon signing and returning an effective release of claims, shall be entitled to receive (x) severance equal to (A) the sum of one-half plus an additional one-twelfth for each annual period, rounded up, of employment at the Company, multiplied by (B) his base salary for the year in which the date of such termination occurs, which shall be paid within 10 business days following the date of his termination, (y) monthly COBRA reimbursement for Mr. Carson and his dependents until the earliest of (A) the twelve-month anniversary of the date Mr. Carson’s termination, (B) the date he is no longer eligible to receive COBRA continuation coverage and (C) the date on which Mr. Carson becomes eligible to receive substantially similar coverage from another employer or other source and (z) the treatment of any outstanding equity awards shall be determined in accordance with the terms of the Company’s 2017 Incentive Plan, as amended (the “Plan”), and Mr. Carson’s applicable award agreements.

The foregoing description of the Employment Agreement does not purport to be complete, and is qualified in its entirety by reference to the complete text of the Employment Agreement, a copy of which is filed herewith as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

There is no arrangement or understanding between Mr. Carson and any other person pursuant to which Mr. Carson was appointed as Chief Accounting Officer. There are no family relationships between Mr. Carson and any of the Company’s directors, executive officers or persons nominated or chosen by the Company to become a director or executive officer. Mr. Carson is not a participant in, nor is Mr. Carson to be a participant in, any related-person transaction or proposed related-person transaction required to be disclosed by Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in connection with his appointment.

Adoption of New Long-Term Incentive Program

On October 1, 2024, the Committee approved the establishment of the Company’s Long-Term Incentive Program (the “LTIP”) under the Plan. Awards granted pursuant to the LTIP are in addition to cash annual bonus awards and annual time-based RSU awards, if any, and are a key element of the Company’s compensation program. The Committee believes its existing compensation program, together with the LTIP, will continue to reward long-term performance and align the Company’s executive officers’ interests with the Company’s stockholders.

The Committee engaged an independent third-party compensation consultant as part of its annual review of benchmark data and a review of the Company’s compensation practices as compared to the Company’s peer companies. Based upon the data collected during this process, the Committee approved the LTIP and the 2025 LTIP Awards (as defined below),

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which are intended to align total compensation for the Company’s management team with industry best practices and certain of its peer companies. LTIP awards are issued in the form of RSUs and are granted pursuant to the Plan.

Purpose of LTIP Awards

The LTIP aligns with the Company’s pay-for-performance philosophy since the number of awards that vest is tied directly to the achievement of pre-determined performance metrics, and the awards therefore serve to reward the achievement relative to such performance metrics. The LTIP award also aligns with shareholder interest as stock price and shareholder return are key components of the vesting conditions. Further, the LTIP is designed to be retentive because, even after the LTIP awards have been earned based on performance, they continue to vest over a long-term service period. Accordingly, the issuance of the LTIP awards aligns closely with the Company’s executive compensation objectives.

Determination of Target 2025 LTIP Awards

For the Company’s fiscal year ended September 30, 2025 (“FY 2025”), each executive officer was assigned a target value for the LTIP award, which is reflected as a multiple of base salary for FY 2025. In determining the value of the 2025 LTIP awards (the “2025 LTIP Awards”), the Committee considered the following factors:

Based on this assessment, on October 2, 2024, the Committee granted 2025 LTIP Awards to the executive officers and other executives with the value to be based upon the Company’s achievement of pre-determined performance metrics relating to total growth, uptime, efficiency and stockholder return. The following table sets forth the value of the RSUs that will be earned by each named executive officer and other executives assuming the Company’s achievement of 100% of the pre-determined metrics:

 

		FY 2025 Annual LTIP
Name		Value of RSUs Assuming Achievement of 100% of Target
Zachary Bradford		$	17,575,000
S. Matthew Schultz		$	15,817,500
Gary Vecchiarelli		$	5,100,000
Scott Garrison		$	3,300,000
Taylor Monnig		$	2,460,000
Brian Carson		$	1,200,000

 

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The Company’s performance with respect to the pre-determined metrics will be expressed as a percentile relative to the performance of the Company’s peer group, and the number of 2025 LTIP Awards that will vest will be determined by reference to the percentile as indicated in the below table:

 

Percentile Relative to Peer Group (%)	Payout Relative to Target (%)
85.0+	200%
75.0 - 84.9	175%
65.0 - 74.9	150%
55.0 - 64.9	125%
45.0 - 54.9	100%
35.0 - 44.9	75%
25.0 - 34.9	50%
15.0 - 24.9	25%
00.0 - 14.9	0%

 

Accordingly, based on the Company’s performance metrics relative to the peer group, the 2025 LTIP Awards will vest between 0% and 200% of the target amount.

For illustrative purposes, the following table sets forth the number of shares to be vested and the value of the 2025 LTIP Awards at each of the 50% level, the 100% level (target), and the 200% level (maximum):

 

		Number of				Value of				Number of				Value of				Number of				Value of
		RSUs at				RSUs at				RSUs at				RSUs at				RSUs at				RSUs at
		50% of				50% of				100% of				100% of				200% of				200% of
		Target				Target				Target				Target				Target				Target
Name		(#)				($)				(#)				($)				(#)				($)
Zachary Bradford			960,383			$	8,787,500				1,920,765			$	17,575,000				3,841,530			$	35,150,000
S. Matthew Schultz			864,344			$	7,908,750				1,728,689			$	15,817,500				3,457,377			$	31,635,000
Gary Vecchiarelli			278,689			$	2,550,000				557,377			$	5,100,000				1,114,754			$	10,200,000
Scott Garrison			180,328			$	1,650,000				360,656			$	3,300,000				721,311			$	6,600,000
Taylor Monnig			134,426			$	1,230,000				268,852			$	2,460,000				537,705			$	4,920,000
Brian Carson			65,574			$	600,000				131,148			$	1,200,000				262,295			$	2,400,000

The aggregate number of RSUs granted to each executive was equal to (x) the value of the 2025 LTIP Award at 200% of target divided by (y) the 20-day moving average stock price of the Company’s common stock on the grant date, which was $9.15 per share. Notably, this per share value was higher than the closing price of the common stock on the grant date, which was $8.79. As a result, the number of 2025 LTIP RSUs granted is fewer than it would otherwise have been if the closing price on the date of grant had been used. The grant date fair value of the 2025 LTIP awards as determined under SEC rules will also be lower than the values reflected on the table.

The Committee expects to make a determination regarding the Company’s performance relative to its performance metrics in October 2025, which will establish the maximum number of shares that are subject to vesting pursuant to the 2025 LTIP Awards (the “Earned 2025 LTIP Awards”). Once that determination has been made, (i) 40% of any Earned 2025 LTIP Awards will vest on October 31, 2025, and (ii) the balance of any Earned 2025 LTIP Awards will vest equally over 12 calendar quarters, subject to the executive officer’s continued service with the Company through each vesting date. Accordingly, even following a determination that the 2025 LTIP Awards have been earned based upon the Company’s performance, the awards will continue to vest over approximately a three- year period to ensure they have a strong retentive component.

Base Salaries and Bonus Targets Adjustment

FY 2025Annual Base Salaries for Certain Executive Officers

Following its annual review of benchmark data provided by the Company's independent compensation consultant, on October 2, 2024, the Committee approved annual base salary increases for the named executive officers for the fiscal year ending September 30, 2025 (“FY 2025”). The annual base salary to be received for FY 2025 by each officer are set forth opposite such officer’s name in the table below:

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Name		FY 2025 Annual Base Salary
Zachary Bradford		$	950,000
S. Matthew Schultz		$	855,000
Gary Vecchiarelli		$	510,000
Scott Garrison		$	550,000
Taylor Monnig		$	410,000

FY 2025Annual Bonus Targets

Following its annual review of benchmark data provided by the Company’s independent compensation consultant, the Committee approved annual bonus targets for FY 2025 for each officer as set forth opposite such officer’s name in the table below:

Name		FY 2025 Annual Base Salary				FY 2025 Annual Bonus Target Percentage		FY 2025 Annual Bonus Target Amount
Zachary Bradford		$	950,000			up to 200%		$	1,900,000
S. Matthew Schultz		$	855,000			up to 200%		$	1,710,000
Gary Vecchiarelli		$	510,000			up to 150%		$	765,000
Scott Garrison		$	550,000			up to 150%		$	825,000
Taylor Monnig		$	410,000			up to 100%		$	410,000
Brian Carson		$	300,000			up to 40%		$	120,000

The annual bonuses shall be determined based on the achievement of certain performance objectives and targets for FY 2025 as established by the Committee.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.	Description
10.1	Employment Agreement by and between CleanSpark, Inc. and Brian Carson, dated October 1, 2024.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			CLEANSPARK, INC.
Date:	October 3, 2024	By:	/s/ Leighton Koehler
			Name: Leighton Koehler Title: General Counsel

 

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Employment Agreement

This Employment Agreement (the "Agreement") is made and entered into as of October 1, 2024 by and between Brian Carson (the "Executive") and CleanSpark, Inc., a Nevada domestic corporation (the "Company").

WHEREAS, the Company desires to employ the Executive on the terms and conditions set forth herein; and

WHEREAS, the Executive desires to be employed by the Company on such terms and conditions.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and obligations set forth herein, the parties agree as follows:

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Items 5.1(a)(i) through 5.1(a)(iv) are referred to herein collectively as the "Accrued Amounts."

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To terminate the Executive's employment for Good Reason, the Executive must provide written notice to the Company of the existence of the circumstances providing grounds for termination for Good Reason within 5 business days of the initial existence of such grounds and the Company must have at least 10 business days from the date on which such notice is provided to cure such circumstances. If the Executive does not terminate the Executive's employment for Good Reason within 30 days after the first occurrence of the applicable grounds, then the Executive will be deemed to have waived the Executive's right to terminate for Good Reason with respect to such grounds.

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Notwithstanding any other provision contained herein, all payments made in connection with the Executive's Disability shall be provided in a manner which is consistent with federal and state law.

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For purposes of this Section 6, "Prohibited Activity" is activity in which the Executive contributes the Executive's knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner, director, stockholder, officer, volunteer, intern, or any other similar capacity to an entity engaged in the same or similar business as the Company, including those engaged in the business of server centers or cryptocurrency mining. Prohibited Activity also includes activity that may require or inevitably requires disclosure of trade secrets, proprietary information, or Confidential Information.

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Nothing herein shall prohibit the Executive from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation.

This Section 6 does not, in any way, restrict or impede the Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Executive shall promptly provide written notice of any such order to the CEO.

The Executive further understands and acknowledges that the Company's ability to reserve these for the exclusive knowledge and use of the Company is of great competitive importance and commercial value to the Company, and that improper use or disclosure by the Executive is likely to result in unfair or unlawful competitive activity. As a condition of the Executive's employment with the Company, the Executive shall enter into and abide by the Company's confidentiality agreements, as may be requested from all executives of the Company, and which may be updated from time to time.

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If to the Company:

CleanSpark, Inc.

10624 S Eastern Ave., Ste A-638

Henderson, NV 89052 Attn: Legal

If to the Executive:

___redacted___________________________

___ redacted __________________________

___ redacted __________________________

___ redacted __________________________

 

The Executive's acceptance of employment with the Company and the performance of the Executive's duties hereunder will not conflict with or result in a violation of, a breach of, or a default under any contract, agreement, or understanding to which the Executive is a party or is otherwise bound.

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The Executive's acceptance of employment with the Company and the performance of the Executive's duties hereunder will not violate any non-solicitation, non-competition, or other similar covenant or agreement of a prior employer or third-party.

[signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

		CleanSpark, Inc.
		By__/s/ Zachary Bradford_________ Name: Zachary Bradford Title: CEO
	EXECUTIVE
	Signature: _/s/ Brian Carson__________ Print Name: Brian Carson

 

 

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Exhibit A: Base Salary, Bonus, or Other Incentive Programs (this schedule may be updated in accordance with the provisions of the Employment Agreement

 

Base Salary: $300,000 as at Effective Date

Discretionary Bonus Cap: Up to 40% of Base Salary, non-accrued and determined and paid at the sole discretion of the Compensation Committee on advice from CEO

Bonus % (if other than discretionary): None. Non-Equity Incentive Plans may be later added, with milestones and key performance indicators at sole discretion of the Compensation Committee under advice from CEO.

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v3.24.3

Document And Entity Information	Oct. 01, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 01, 2024
Entity Registrant Name	CLEANSPARK, INC.
Entity Central Index Key	0000827876
Entity Emerging Growth Company	false
Entity File Number	001-39187
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	87-0449945
Entity Address, Address Line One	10624 S. Eastern Ave.
Entity Address, Address Line Two	Suite A - 638
Entity Address, City or Town	Henderson
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89052
City Area Code	(702)
Local Phone Number	989-7692
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	CLSK
Security Exchange Name	NASDAQ

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