UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

SCHEDULE 14A

(Rule 14a-101)
Information Required in Proxy Statement

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

___________________________

WORKHORSE GROUP INC.

(Name of registrant as specified in its charter)

(Name of person(s) filing proxy statement, if other than the registrant)

Notice of Annual Meeting of
Stockholders to be held
on May 14, 2024

The 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Workhorse Group Inc. (“Workhorse,” the “Company” or “we”) will be held on May 14, 2024, at 9:00 a.m. Eastern Time. The Annual Meeting will be held in a virtual meeting format at www.virtualshareholdermeeting.com/WKHS2024.

AT THE ANNUAL MEETING, YOU WILL BE ASKED:

Because of the significance of these proposals to the Company and its stockholders, it is vital that every stockholder vote at the Annual Meeting.

These proposals are fully set forth in the accompanying Proxy Statement which you are urged to read thoroughly. For the reasons set forth in the Proxy Statement, your Board of Directors recommends a vote “FOR” each of the director nominees under Proposal 1, “FOR” Proposals 2, 4, 5, 6 and 7; and FOR annual frequency on Proposal 3. After reading the enclosed Proxy Statement, please sign, date, and return promptly the enclosed Proxy in the

accompanying postpaid envelope we have provided for your convenience or vote via the Internet as instructed herein to ensure that your shares will be represented. You may wish to provide your response electronically through the Internet by following the instructions set out on the enclosed proxy card.

To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/WKHS2024, you must have your control number available and follow the instructions found on your proxy card or voting instruction form. You may vote during the Annual Meeting, but we suggest you vote beforehand by following the instructions available on the meeting website during the meeting. Please allow sufficient time before the Annual Meeting to complete the online check-in process. Your vote is very important.

Proxy materials or a Notice of Internet Availability of Proxy Materials (the “Notice”) are being first released or mailed on or about April     , 2024 to all stockholders entitled to vote at the Annual Meeting. In accordance with rules and regulations adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each record stockholder, we may furnish proxy materials by providing internet access to those documents. The Notice contains instructions on how to access our proxy materials and vote online, or in the alternative, request a paper copy of the proxy materials and a proxy card.

By Order of the Board of Directors

Raymond J. Chess
Chairman of the Board of Directors

April     , 2024

Dear Fellow Workhorse Stockholders,

Over the last year, the Workhorse team made significant progress electrifying last mile delivery by bringing our commercial EV trucks to customers.

Executing on a Clear Strategy

We ended 2023 with important momentum advancing our commercial EV product roadmap, including:

•        Rolling out our first W56 step van, securing our first W56 fleet customers and receiving HVIP certification approval for these vehicles

•        Increasing our production capabilities for our W4 CC and W750 vehicles.

•        Expanding our commercial network, adding key dealers and partners in multiple states with 11 dealers nationwide.

•        Completing the revamp of our manufacturing complex in Union City, Indiana

Our Stables by Workhorse continued electrifying the fleet of delivery vehicles it uses on a series of FedEx Ground delivery routes in the greater Cincinnati, Ohio area. We expect this entire fleet to be electrified by the end of 2024. We put our first W56 step van into service during Q1 2024.

For our Aero business, we made the strategic decision to move away from design and manufacturing and exclusively focus on a less capital-intensive ‘Drones as a Service’ (“Daas”) model. This model gives the Company the chance to build on its strong relationships with government agencies and generate revenues providing DaaS services. We are continuing a strategic review to determine the best path forward for our Aero business.

Strengthening our Financial Position

While we advance our roadmap, we have taken critical steps to help secure the runway to achieve our goals. We recently closed a financing transaction that is intended to provide short- and long-term liquidity. We have also taken aggressive cost reduction actions across the organization. Together, these actions can provide the resources to execute our plans for 2024.

I’m incredibly proud of the Workhorse team and grateful for the contributions of all our employees, including those whose jobs were impacted by the difficult but necessary actions we took recently.

Building on a Foundation Based on Sustainability

Sustainability is inherent in everything we are doing, from our zero emissions vehicles to our investments in our employees and communities. We are designing and manufacturing commercial vehicles that can play a key role in the low-carbon revolution now underway. Our products enable more efficient, safer and healthier transportation for our customers and communities.

Our Board of Directors has extensive experience in the automotive industry, as well as aviation and drones, which provides the insight and guidance to help Workhorse achieve its ambitious growth goals.

Looking Ahead

I remain optimistic about the future of Workhorse. The transition to commercial EV powered vehicles is not going to happen overnight, and this year we navigated challenges that slowed, but never stopped, our progress.

We are committed to our mission and will continue taking decisive steps to succeed in the market and drive value for our stockholders. We believe our products and technologies can be an important part of this once-in-a-generation powertrain technology transition, and we are committed to meeting the needs of our customers. We are prepared for the transition — we have the people, products, processes, and business partners to meet the needs of the market when this EV transition hits full stride. We need our customers to start and ramp up their own transition to EV powered vehicles and believe that 2 or 3 of the largest fleets in North America will be ready to do so soon.

Thank you for your investment in Workhorse.

Best Regards.

Sincerely,

Richard F. Dauch
Chief Executive Officer

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Workhorse Group Inc. (“Workhorse” or the “Company”) to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”), which will be held on May 14, 2024, at 9:00 a.m. Eastern Time and at any postponements or adjournments thereof. The proxy materials will be furnished to stockholders on or about April     , 2024. The Annual Meeting will be held as a virtual meeting. Stockholders attending the virtual meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. You will be able to attend and participate in the Annual Meeting online via a live webcast by visiting www.virtualshareholdermeeting.com/WKHS2024. In addition to voting by submitting your proxy prior to the Annual Meeting, you also will be able to vote your shares electronically during the Annual Meeting.

Any stockholder executing a proxy that is solicited hereby has the power to revoke it prior to the voting of the proxy. Revocation may be made by attending the Annual Meeting and voting the shares of stock in person, or by delivering to the General Counsel of the Company at the principal office of the Company prior to the Annual Meeting a written notice of revocation or a later-dated, properly executed proxy. Solicitation of proxies may be made by directors, officers and other employees of the Company by personal interview, telephone, facsimile transmittal or electronic communications. No additional compensation will be paid for any such services. This solicitation of proxies is being made by the Company, which will bear all costs associated with the mailing of this Proxy Statement and the solicitation of proxies.

Stockholders of record at the close of business on March 15, 2024, will be entitled to receive notice of, attend and vote at the Annual Meeting.

why am i receiving these materials?

The Company has furnished these materials to you, in connection with the Company’s solicitation of proxies for use at the Annual Meeting of Stockholders to be held on May 14, 2024, at 9:00 a.m. Eastern Time. The Annual Meeting will be held as a virtual meeting. Stockholders attending the virtual meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. You will be able to attend and participate in the Annual Meeting online via a live webcast by visiting www.virtualshareholdermeeting.com/WKHS2024. These materials have also been made available to you on the Internet. These materials describe the proposals on which the Company would like you to vote and also give you information on these proposals so that you can make an informed decision. We are furnishing our proxy materials on or about April     , 2024 to all stockholders of record entitled to vote at the Annual Meeting.

Notice of Internet Availability (Notice and Access)

Instead of mailing a printed copy of our proxy materials to each stockholder, we are furnishing proxy materials via the Internet. This reduces both the costs and the environmental impact of sending our proxy materials to our stockholders. If you received a “Notice of Internet Availability,” you will not receive a printed copy of the proxy materials unless you specifically request a printed copy. The Notice of Internet Availability will instruct you how to access and review the important information contained in the proxy materials. The Notice of Internet Availability also instructs you how to submit your proxy on the Internet and how to vote by telephone.

If you would like to receive a printed or emailed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice of Internet Availability. In addition, if you received paper copies of our proxy materials and wish to receive all future proxy materials, proxy cards and annual reports electronically, please follow the electronic delivery instructions on www.proxyvote.com. We encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the cost and environmental impact of our annual stockholder meetings.

The Notice of Internet Availability is first being sent to stockholders on or about April     , 2024. Also on or about April     , 2024, we will first make available to our stockholders this Proxy Statement and the form of proxy relating to the 2024 Annual Meeting filed with the SEC on April     , 2024.

What is included in these materials?

These materials include:

•        this Proxy Statement for the Annual Meeting; and

•        the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

What is the proxy card?

The proxy card enables you to appoint Richard F. Dauch, our Chief Executive Officer, and James D. Harrington, our General Counsel, Chief Compliance Officer, and Secretary, as your representatives at the Annual Meeting. By completing and returning a proxy card, you are authorizing these individuals to vote your shares at the Annual Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted whether or not you attend the Annual Meeting.

What is the purpose of the Annual Meeting?

At our Annual Meeting, stockholders will act upon the matters outlined in the Notice of Annual Meeting on the cover page of this Proxy Statement, including the following:

(i)    the election of the seven persons named herein as nominees for directors of the Company, to hold office subject to the provisions of the bylaws of the Company, until the next annual meeting of stockholders or until their successors are duly elected and qualified;

(ii)   the approval, on an advisory basis, of the compensation of the Company’s named executive officers;

(iii)  the approval, on an advisory basis, of the frequency of voting on named executive officer compensation;

(iv)  the approval of, pursuant to Nevada Revised Statutes 78.2055, a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-10 and 1-for-20, at any time prior to August 30, 2024, to be determined at the discretion of the Board of Directors, for the purpose of complying with the Nasdaq Listing Rules, subject to the Board’s discretion to abandon such reverse stock split;

(v)   the approval of, for the purposes of Nasdaq Listing Rule 5635(D), the proposed issuance of the maximum number of shares of our common stock underlying our (A) senior secured convertible notes and (B) warrants to purchase common stock; and

(vi)  the ratification of the appointment of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending December 31, 2024.

In addition, management will report on the performance of the Company during fiscal year 2023 and respond to questions from stockholders.

VOTE REQUIRED; QUORUM; BROKER NON-VOTES

The presence at the meeting, in person or by proxy, of the holders of a majority of the number of shares of common stock issued and outstanding on the record date will constitute a quorum permitting the meeting to conduct its business. As of the record date, there were 314,606,266 shares of Workhorse common stock issued and outstanding. Thus, the presence of the holders of common stock representing at least 157,303,134 votes will be required to establish a quorum. Stockholders are entitled to one vote for each share of common stock held by them.

For purposes of the quorum and the discussion below regarding the vote necessary to take stockholder action, stockholders of record who are present at the virtual Annual Meeting or by proxy and who abstain, including brokers holding customers’ shares of record who cause abstentions to be recorded at the meeting, are considered stockholders who are present and entitled to vote and are counted towards the quorum.

Brokers holding shares of record for customers generally are not entitled to vote on “non-routine” matters, unless they receive voting instructions from their customers. As used herein, “uninstructed shares” means shares held by a broker who has not received such instructions from its customers on a proposal. A “broker non-vote” occurs when a nominee holding uninstructed shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that non-routine matter. It is important that you provide voting instructions to your bank, broker or other nominee, if you wish to determine the voting of your shares.

We anticipate that only Proposal No. 4, the proposal to authorize the Board to effect a reverse stock split, and Proposal No. 6, the proposal to ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm, are routine matters that brokers are entitled to vote shares on without receiving instructions.

For the election of directors, the nominees receiving the most “For” votes at the Annual Meeting or by proxy will be elected. For the Say-on-Frequency proposal, the frequency that receives the highest number of votes will be deemed to be the frequency selected by our stockholders. Approval of all other matters requires the affirmative vote

of a majority of the votes cast on the applicable matter via attendance at the virtual Annual Meeting or by proxy. Abstentions, broker non-votes and directions to withhold authority will not be counted as votes cast and accordingly will have no effect on the outcome of any proposal.

What is the difference between a stockholder of record and a beneficial owner of shares held in street name?

Most of our stockholders hold their shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share certificates in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially in street name.

Stockholder of Record

If, on March 15, 2024, your shares were registered directly in your name with our transfer agent, Empire Stock Transfer, Inc., you are considered a stockholder of record with respect to those shares, and the Notice of Annual Meeting and Proxy Statement was sent directly to you by the Company. As the stockholder of record, you have the right to direct the voting of your shares by returning the proxy card to us. Whether or not you plan to attend the Annual Meeting, if you do not vote over the Internet, please complete, date, sign and return a proxy card to ensure that your vote is counted.

Beneficial Owner of Shares Held in Street Name

If, on March 15, 2024, your shares were held in an account at a brokerage firm, bank, broker-dealer, or other nominee holder, then you are considered the beneficial owner of shares held in “street name,” and the Notice of Annual Meeting & Proxy statement was forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you receive a valid proxy from the organization.

How do I vote?

Stockholders of Record. If you are a stockholder of record, you may vote by any of the following methods:

Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name, you may vote by any of the following methods:

The following table shows the number of shares of common stock beneficially owned as of the Record Date by (i) each director and nominee for director, by each current executive officer, and by all current directors and executive officers as a group and (ii) all the persons who were known to be beneficial owners of five percent or more of our common stock, our only voting securities, on March 15, 2024. Applicable percentage ownership is based on 314,606,266 shares of common stock outstanding as of March 15, 2024.

*       Less than one percent.

1.    Except as otherwise indicated, the address of each beneficial owner is c/o Workhorse Group Inc., 3600 Park 42 Drive, Suite 160E, Sharonville, Ohio 45241.

2.    Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Stock options to purchase shares of common stock that are currently exercisable or exercisable within 60 days of March 15, 2024 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

3.    Excludes 394,322 Restricted Stock Units that vest August 21, 2024.

4.    Includes (i) 1,541,812 shares of restricted stock that vest as follows: 41,666 vest on each of April 30, 2024 and October 31, 2024; 83,334 vest on September 1, 2024; 385,039 vest on February 23, 2025; and 495,053 vest on each of February 22, 2025 and February 22, 2026; and (ii) options to purchase 247,024 shares of common stock at an exercise price of $10.27, all of which options are currently exercisable. Excludes (i) 745,050 Performance Units for the performance period of January 1, 2022 to December 31, 2024; 990,100 Performance Units for the performance period of January 1, 2023 to December 31, 2025; and 5,725,552 Performance Units for the performance period of January 1, 2024 to December 31, 2026; (ii) 5,725,552 Restricted Stock Units that vest ratably on February 21, 2025, February 21, 2026 and February 21, 2027; and (iii) 49,405 options that vest on September 1, 2024.

5.    Excludes 315,457 Restricted Stock Units that vest on August 21, 2024.

6.    Includes 118,220 shares of restricted stock held by Mr. Anderson that vest as follows: 16,666 vest on each of April 20, 2024 and October 20, 2024; 23,104 vest on February 23, 2025; and 30,892 vest on each of February 22, 2025 and February 22, 2026, Excludes (i) 29,703 Performance Units for the performance period of January 1, 2022 to December 31, 2024; 61,784 Performance Units for the performance period of January 1, 2023 to December 31, 2025; and 492,114 Performance Units for the performance period of January 1, 2024 to December 31, 2026; and (ii) 492,114 Restricted Stock Units that vest ratably on February 21, 2025, February 21, 2026 and February 21, 2027.

7.    Includes 145,514 shares of restricted stock held by Mr. Gaul that vest as follows: 6,020 vest on April 22, 2024; 38,504 vest on February 23, 2025; and 50,495 vest on each of February 22, 2025 and February 22, 2026. Excludes (i) 49,505 Performance Units for the performance period of January 1, 2022 to December 31, 2024; 100,992 Performance Units for the performance period of January 1, 2023 to December 31, 2025; and 804,416 Performance Units for the performance period of January 1, 2024 to December 31, 2026; and (ii) 804,416 Restricted Stock Units that vest ratably on February 21, 2025, February 21, 2026 and February 21, 2027.

8.    Includes 198,351 shares of restricted stock held by Mr. Ginnan that vest as follows: 16,667 vest on each of July 4, 2024 and January 4, 2025; 46,205 vest on February 23, 2025; and 59,406 vest on each of February 22, 2025 and February 22, 2026. Excludes (i) 59,406 Performance Units for the performance period of January 1, 2022 to December 31, 2024; 118,812 Performance Units for the performance period of January 1, 2023 to December 31, 2025; and 946,372 Performance Units for the performance period of January 1, 2024 to December 31, 2026; and (ii) 946,372 Restricted Stock Units that vest ratably on February 21, 2025, February 21, 2026 and February 21, 2027.

9.    Includes 135,221 shares of restricted stock held by Mr. Graber that vest as follows: 6,111 vest on April 20, 2024; 34,654 vest on February 23, 2025; and 47,228 vest on each of February 22, 2025 and February 22, 2026. Excludes (i) 44,555 Performance Units for the performance period of January 1, 2022 to December 31, 2024; 94,456 Performance Units for the performance period of January 1, 2023 to December 31, 2025; and 473,186 Performance Units for the performance period of January 1, 2024 to December 31, 2026; and (ii) 473,186 Restricted Stock Units that vest ratably on February 21, 2025, February 21, 2026 and February 21, 2027.

10.    Includes 183,436 shares of restricted stock held by Mr. Harrington that vest as follows: 16,666 vest on September 15, 2024; 6,033 vest on each of June 27, 2024 and December 27, 2024; 43,318 vest on February 23, 2025; and 55,693 vest on each of February 22, 2025 and February 22, 2026. Excludes (i) 44,555 Performance Units for the performance period of January 1, 2022 to December 31, 2024; 94,456 Performance Units for the performance period of January 1, 2023 to December 31, 2025; and 887,224 Performance Units for the performance period of January 1, 2024 to December 31, 2026; and (ii) 887,224 Restricted Stock Units that vest ratably on February 21, 2025, February 21, 2026 and February 21, 2027.

11.    Includes 96,095 shares of restricted stock held by Mr. March that vest as follows: 8,333 vest on each of May 15, 2024 and November 15, 2024; 20,023 vest on February 23, 2025; and 29,703 vest on each of February 22, 2025 and February 22, 2026. Excludes (i) 45,743 Performance Units for the performance period of January 1, 2022 to December 31, 2024; 59,406 Performance Units for the performance period of January 1, 2023 to December 31, 2025; and 473,186 Performance Units for the performance period of January 1, 2024 to December 31, 2026; and (ii) 473,186 Restricted Stock Units that vest ratably on February 21, 2025, February 21, 2026 and February 21, 2027.

12.    Includes 79,072 shares of restricted stock held by Mr. Peters that vest as follows: 4,167 vest on each of April 1, 2024 and October 1, 2024; 19,252 vest on February 23, 2025; and 25,743 vest on each of February 22, 2025 and February 22, 2026. Excludes (i) 24,752 Performance Units for the performance period of January 1, 2022 to December 31, 2024; 51,486 Performance Units for the performance period of January 1, 2023 to December 31, 2025; and 410,095 Performance Units for the performance period of January 1, 2024 to December 31, 2026; and (ii) 410,095 Restricted Stock Units that vest ratably on February 21, 2025, February 21, 2026 and February 21, 2027.

13.    Includes 96,427 shares of restricted stock held by Ms. Roraff that vest as follows: 8,334 vest on each of August 21, 2024 and February 21, 2024; 22,333 vest on February 23, 2025; and 28,713 vest on each of February 22, 2025 and February 22, 2026. Excludes (i) 28,713 Performance Units for the performance period of January 1, 2022 to December 31, 2024; 57,426 Performance Units for the performance period of January 1, 2023 to December 31, 2025; and 474,763 Performance Units for the performance period of January 1, 2024 to December 31, 2026; and (ii) 474,763 Restricted Stock Units that vest ratably on February 21, 2025, February 21, 2026 and February 21, 2027.

The Board oversees our business and affairs and monitors the performance of management. Currently, seven of our eight directors are independent. Biographical information about our directors is provided in “Proposal No. 1 — Proposal for the Election of Seven Directors” on page 19. Except as set forth in this Proxy Statement, none of our directors held directorships in other reporting companies or registered investment companies at any time during the past five years. Our Board currently consists of the following eight persons, seven of whom have been nominated by the Company to stand for re-election. Immediately following this year’s Annual Meeting, our Board will be reduced to seven directors.

1.    Audit Committee

2.    Nominating and Corporate Governance Committee

3.    Human Resource Management and Compensation Committee

*       Committee Chair

Board meetings during the 2023 fiscal year

During 2023, the Board held 15 meetings. Each director attended at least 75% of the meetings of the Board and committees on which such director served in 2023. The Board also approved certain actions by unanimous written consent. Directors are not required to attend the Annual Meeting, but all directors attended the 2023 Annual Meeting.

Committees established by the Board

The Board has standing Audit, Human Resource Management and Compensation, and Nominating and Corporate Governance Committees. Information concerning the function of each Board committee follows.

Audit Committee

The Board has established an Audit Committee in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), consisting of William G. Quigley III (Chair), Jacqueline A. Dedo and Dr. Jean Botti. Our Board has determined that the members are all “independent directors” as defined by the rules of the Nasdaq Capital Market (“Nasdaq”) applicable to members of an audit committee and Rule 10A-3(b)(i) under the Exchange Act. In addition, Mr. Quigley is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K and demonstrates “financial sophistication” as defined by the rules of Nasdaq. The Audit Committee assists the Board in monitoring (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, and (3) the independence and performance of our internal and external auditors. The Audit Committee’s principal functions include:

•     reviewing our annual audited consolidated financial statements with management and our independent auditors, including major issues regarding accounting and auditing principles and practices and financial reporting that could significantly affect our consolidated financial statements;

•     reviewing our quarterly consolidated financial statements with management and our independent auditors prior to the filing of our Quarterly Reports on Form 10-Q, including the results of the independent auditors’ reviews of the quarterly consolidated financial statements;

•        recommending to the Board the appointment of, and continued evaluation of the performance of, our independent auditors;

•        approving the fees to be paid to our independent auditors for audit services and approving the retention of our independent auditors for non-audit services and all fees for such services;

•        reviewing periodic reports from our independent auditors regarding our independent auditors’ independence, including discussion of such reports with the independent auditors;

•        reviewing the adequacy of our overall control environment, including internal financial controls and disclosure controls and procedures;

•        reviewing with our management and legal counsel legal matters that may have a material impact on our consolidated financial statements or our compliance policies and any material reports or inquiries received from regulators or governmental agencies;

•        reviewing proposed related party transactions;

•        overseeing our internal audit function;

•        overseeing our risk management policies and risk management framework, including our enterprise risk management program;

•        overseeing our cybersecurity, data and privacy risks and the Company’s cybersecurity risk management program; and

•        reviewing the overall adequacy and effectiveness our regulatory and ethics and compliance programs.

During 2023, the Audit Committee met seven times. A copy of the Audit Committee’s charter is posted on the Company’s website at www.workhorse.com in the “Investors” section of the website.

human resource MANAGEMENT AND COMPENSATION COMMITTEE

Our Human Resource Management and Compensation Committee consists of Pamela S. Mader (Chair), Raymond Chess, Brandon Torres Declet and Austin Scott Miller. Our Board has determined that each of the members is an “independent director” as defined by the Nasdaq rules applicable to members of a compensation committee. The Human Resource Management and Compensation Committee is responsible for establishing the compensation of our senior management, including salaries, bonuses, termination arrangements, and other executive officer benefits as well as director compensation. The Human Resource Management and Compensation Committee also administers our equity incentive plans. The Human Resource Management and Compensation Committee works with our Chairman and Chief Executive Officer and reviews and recommends to the Board compensation decisions regarding senior management including compensation levels and equity incentive awards. The Human Resource Management and Compensation Committee also approves employment and compensation agreements with our key personnel and directors. The Human Resource Management and Compensation Committee has the power and authority to conduct or authorize studies, retain independent consultants, accountants or others, and obtain unrestricted access to management, our internal auditors, human resources and accounting employees and all information relevant to its responsibilities. The Human Resource Management and Compensation Committee is responsible for developing our executive compensation philosophy and reviewing and recommending to the Board for approval all compensation policies and compensation programs for the executive team.

The responsibilities of the Human Resource Management and Compensation Committee, as stated in its charter, include the following:

•        assisting the Board in its oversight of our policies and strategies relating to culture, diversity and inclusion, and talent development programs;

•     overseeing our ESG program relating to human resources matters;

•     reviewing and approving the Company’s compensation guidelines and structure;

•        reviewing and recommending to the Board on an annual basis the corporate goals and objectives with respect to compensation for the Chief Executive Officer;

•        overseeing an annual review by the Board on succession planning for our executive officers other than our CEO;

•        reviewing on an annual basis the potential risk to us from our compensation programs and policies, including any incentive plans, and whether such programs and policies incentivize unnecessary and excessive risk taking; and

•        periodically reviewing and making recommendations to the Board regarding the compensation of non-employee directors.

During 2023, the Human Resource Management and Compensation Committee met four times. The Human Resource Management and Compensation Committee is governed by a written charter approved by the Board. A copy of the charter is posted on the Company’s website at www.workhorse.com in the “Investors” section of the website.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee consists of Jacqueline A. Dedo (Chair), Raymond J. Chess, Pamela S. Mader and William G. Quigley III. Our Board has determined that each of the members of the Nominating and Corporate Governance Committee is an “independent director” as defined by the rules of Nasdaq. The Nominating and Corporate Governance Committee is generally responsible for recommending to the Board policies, procedures, and practices designed to help ensure that our corporate governance policies, procedures, and practices continue to assist the Board and our management in effectively and efficiently promoting the best interests of our stockholders. The Nominating and Corporate Governance Committee is also responsible for selecting and recommending for approval by our Board a slate of director nominees for election at each of our annual meetings of stockholders; recommending to the Board the composition and chairs of our Board committees; and recommending to the Board director nominees to fill vacancies or new positions on the Board or its committees that may occur or be created from time to time, all in accordance with our bylaws and applicable law. The Nominating and Corporate Governance Committee’s principal functions include:

•        developing and maintaining our Corporate Governance Guidelines;

•        evaluating the performance of the Board and its committees;

•        overseeing an annual review by the Board on succession planning for our CEO and members of the Board;

•        overseeing our ESG program, except relating to human resources policies and procedures;

•        periodically reviewing and evaluating our policies on insider trading and internal controls related thereto; and

•        selecting and recommending a slate of director nominees for election at each of our annual meetings of the stockholders and recommending to the Board director nominees to fill vacancies or new positions on the Board or its committees that may occur from time to time.

During 2023, the Nominating and Corporate Governance Committee met four times. The Nominating and Corporate Governance Committee is governed by a written charter approved by our Board. A copy of the Nominating and Corporate Governance Committee’s charter is posted on the Company’s website at www.workhorse.com in the “Investors” section of the website.

In identifying potential independent candidates for the Board with significant senior-level professional experience, the Nominating and Corporate Governance Committee solicits candidates from the Board, senior management and others and may engage a search firm in the process. The Nominating and Corporate Governance Committee reviews and narrows the list of candidates and interviews potential nominees. The final candidate is also introduced and interviewed by the Board and the Chairman. In general, in considering whether to recommend a particular candidate for inclusion in our Board slate of recommended director nominees, the Nominating and Corporate Governance

Committee will apply the criteria set forth in our Corporate Governance Guidelines. Further, specific consideration is given to, among other things, diversity of background and experience that a candidate would bring to our Board. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for each prospective nominee. We believe that the backgrounds and qualifications of our directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow our Board to fulfill its responsibilities. Stockholders may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials to our Nominating and Corporate Governance Committee. Assuming that appropriate biographical and background material has been provided on a timely basis, the Nominating and Corporate Governance Committee will evaluate stockholder recommended candidates by following substantially the same process and applying substantially the same criteria, as it follows for candidates submitted by others.

Nomination of Directors

As provided in its charter and as described above, the Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become directors. In evaluating potential candidates for director, the Nominating and Corporate Governance Committee considers the entirety of each candidate’s credentials.

Qualifications for consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement to the existing composition of the Board. However, at a minimum, candidates for director must possess:

•        high personal and professional ethics and integrity;

•        the ability to exercise sound judgment;

•        the ability to make independent analytical inquiries;

•        a willingness and ability to devote adequate time and resources to diligently perform Board and committee duties; and

•        the appropriate and relevant business experience and acumen.

The Nominating and Corporate Governance Committee will consider nominees recommended by stockholders if such recommendations are made in writing to the committee. The Nominating and Corporate Governance Committee does not plan to change the manner in which the committee evaluates nominees for election as a director based on whether the nominee has been recommended by a stockholder or otherwise.

The Nominating and Corporate Governance Committee does not have a formal policy relating to diversity among directors. In considering new nominees and whether to re-nominate existing members of the Board, the committee seeks to achieve a Board with strengths in its collective knowledge and a broad diversity of perspectives, skills and business and professional experience. Among other items, the committee looks for a range of experience in strategic planning, sales, operations, finance, executive leadership, industry and similar attributes. The diversity of our Board members satisfies Nasdaq’s board diversity objective.

At least a majority of the directors on the Board must be “independent directors” as defined by Nasdaq rules. Under our Corporate Governance Guidelines, at least three-quarters (75%) of our directors must meet Nasdaq’s independence standards as well as the SEC’s enhanced independence standards for audit committee members.

Board Leadership Structure and Role in Risk Oversight

The Company has separated the positions of Chairman and Chief Executive Officer. Given the demanding nature of these positions, the Board believes it is appropriate to separate the positions of Chairman and Chief Executive Officer. Our Chairman presides over all meetings of the Board, including executive sessions when held. He briefs the Chief Executive Officer on issues arising in executive sessions and communicates frequently with him on matters of importance. He has responsibility for shaping the Board’s agenda and consults with all directors to ensure the Board agendas and Board materials provide the Board with the information needed to fulfill its responsibilities. From time to time, he may also represent the Company in interactions with external stakeholders at the discretion of the Board.

The Board has determined that each of our current directors, except for Mr. Dauch, is an “independent director” as that term is defined in the Nasdaq listing standards. The Board has also determined that each member of the Audit Committee, Human Resource Management and Compensation Committee and Nominating and Corporate Governance Committee meets the independence standards applicable to those committees prescribed by Nasdaq and the SEC. In making these determinations, the Board considered all relationships between the Company and the directors. The Board determined each such relationship, and the aggregate of such relationships, to be immaterial to the applicable director’s ability to exercise independent judgment.

Our Board has overall responsibility for risk oversight, including cybersecurity risks. The oversight is conducted primarily through committees of the Board, as disclosed in each of the descriptions of each of the committees above and in the charters of each of the committees, but the full Board has retained responsibility for general oversight of risks as well as the Company’s overall strategy.

Board Oversight of Cybersecurity

Cybersecurity risk management is a critical component of our overall enterprise risk management program. We utilize an internal cross-departmental approach to addressing cybersecurity risk, including input from employees, Senior Management, and our Board. A cross functional Senior Management Cybersecurity Steering Committee devotes resources to cybersecurity and risk management to adapt to the changing cybersecurity landscape and respond to emerging threats in a timely and effective manner. Our Board delegates to the Audit Committee the responsibility to review with management our cybersecurity, data and privacy related risks, and the steps management has taken to mitigate such exposures, including the structure, design, adoption and implementation of risk management policies and internal control systems. The Audit Committee also reviews with management other information technology risks and management’s operation of our cybersecurity risk management program.

The Audit Committee and the Board actively participate in discussions with management and among themselves regarding cybersecurity risks. The Audit Committee’s semi-annual cybersecurity review also includes review of recent enhancements to the Company’s defenses and management’s progress on its cybersecurity strategic roadmap. In addition, the Cybersecurity Steering Committee receives quarterly cybersecurity reports, which include a review of key performance indicators, test results and related remediation, and may discuss recent threats and how the Company is managing those threats.

Our information technology team reviews enterprise risk management-level cybersecurity risks annually, and risks are incorporated into the Enterprise Risk Management Committee framework. Our Director of Cybersecurity in cooperation with the Chief Information Officer is responsible for developing and implementing our information security program and reporting on cybersecurity matters to the Company’s internal Cybersecurity Steering Committee.

Stockholder Communications

Stockholders requesting communication with directors can do so by writing to Workhorse Group Inc., c/o General Counsel, 3600 Park 42 Drive, Suite 160E, Sharonville, Ohio 45241 or by emailing [email protected]. At this time we do not screen communications received and would forward any requests directly to the named director. If no director was named in a general inquiry, the General Counsel would contact either the Chairman or the chairperson of a particular committee, as appropriate. We do not provide the physical address, email address, or phone numbers of directors to outside parties without a director’s permission.

Our non-employee directors are generally eligible to receive compensation for services they provide to us consisting of retainers and equity compensation as described below. During 2023, each non-employee director was eligible to receive an annual Board retainer of $75,000. The Chairman received an additional retainer of $25,000.

In addition to cash compensation, our non-employee directors are eligible to receive annual equity-based compensation consisting of restricted stock awards with an aggregate grant date value equal to $100,000 or, in the case of the Chairman, $125,000. Generally, the forfeiture restrictions applicable to the restricted stock awards lapse on the six-month anniversary of the date of grant of such awards. The restricted stock awards granted to our non-employee directors are subject to the terms and conditions of our equity plans and the award agreements pursuant to which such awards are granted. Each non-employee director is also reimbursed for travel and miscellaneous expenses to attend meetings and activities of the Board or its committees. In the second quarter of 2024, all non-employee directors have elected to defer their monthly retainers for 3 months as part of the company’s overall cost-savings initiatives.

1.    The amounts reflected in the “Stock Awards” column represent the grant date fair value of restricted stock awards granted to our non-employee directors, as computed in accordance with FASB ASC Topic 718.

Directors’ and Officers’ Insurance

The Company has purchased directors’ and officers’ liability insurance (“D&O Insurance”) for the benefit of its directors and officers, and the directors and officers of its subsidiaries, against liability incurred by them in the performance of their duties as directors and officers of the Company, or its subsidiaries, as the case may be. The primary policy also provides coverage to the corporate entity for securities claims.

At this year’s Annual Meeting, the Board proposes that the nominees listed below be elected to hold office until the next annual meeting of stockholders or until their successors are duly elected and qualified. All of the nominees are currently serving as directors. All nominees have consented to being named in this Proxy Statement and to serve if elected.

Assuming a quorum is present, the seven nominees receiving the highest number of affirmative votes of shares entitled to be voted will be elected as directors of the Company to hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. Unless marked otherwise, proxies received will be voted “FOR” the election of the nominees named below. In the event additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them in such a manner as will ensure the election of the nominees listed below, and, in such event, the specific nominees to be voted for will be determined by the proxy holders.

Immediately following this year’s Annual Meeting, our Board will be reduced to seven directors.

INFORMATION WITH RESPECT TO DIRECTOR NOMINEES

Listed below are the nominees for election to our Board with information showing the principal occupation or employment of the nominees for director, the principal business of the corporation or other organization in which such occupation or employment is carried on, and such nominees’ business experience during the past five years. Such information has been furnished to the Company by the director nominees.

CURRENT DIRECTOR NOMINEES

Congress has enacted requirements commonly referred to as “say on pay” rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. As required by these rules and related SEC rules under Section 14A of the Exchange Act, we are seeking a non-binding advisory vote from our stockholders to approve the compensation of our NEOs as described in the “Compensation Discussion and Analysis” and the “Executive Compensation” sections of this Proxy Statement. Consistent with the requirements of Section 14A of the Exchange Act, the vote on this proposal is not intended to address any specific element of compensation but, rather, the overall compensation of our NEOs and the philosophy, policies, and practices described in this Proxy Statement. Accordingly, the Board recommends that stockholders vote in favor of the following resolution:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Proxy Statement for the 2024 Annual Meeting of Stockholders, pursuant to the compensation disclosure rules of the Securities and Exchange Commission.”

While this vote is advisory, and not binding on the Company, it provides valuable information to our Human Resource Management and Compensation Committee. Our Board and the Human Resource Management and Compensation Committee value the opinions of our stockholders.

Our Human Resource Management and Compensation Committee believes that its 2023 executive compensation program aligns the interests of stockholders and executives by emphasizing variable, at-risk compensation largely tied to measurable performance goals utilizing an appropriate balance of short-term and long-term objectives, while at the same time avoiding unnecessary or excessive risk taking. Our Board, Chairman, CEO, and Chief Human Resources Officer engage in a rigorous talent review process annually to address succession and executive development for our CEO and other key executives. We closely monitor the compensation program and pay levels of executives from other companies that we believe to be similar to the Company in business characteristics and economics.

REQUIRED VOTE

The approval, on an advisory basis, of the compensation of our NEOs requires the affirmative vote of a majority of the shares of the Company’s common stock present in person or represented by Proxy at the Annual Meeting.

Recommendation

INTRODUCTION

This CD&A conveys our compensation philosophy, objectives, programs, policies, and critical factors behind recent executive compensation decisions. It discusses the Human Resource Management and Compensation Committee’s (the “Committee” in this CD&A) determination of how and why, in addition to what, compensation actions were taken during 2023 and early 2024 for our Chief Executive Officer and our next two highest paid executive officers (the “Named Executive Officers” or “NEOs”). Our 2023 NEOs are:

•        Richard F. Dauch, Chief Executive Officer and Director

•        Robert M. Ginnan, Chief Financial Officer

•        James D. Harrington, General Counsel, Chief Compliance Officer and Secretary

OVERVIEW

Our mission at Workhorse is to pioneer the transition to zero-emission commercial vehicles. While this mission remains our long-term goal, we have made significant progress over the course of 2023. We successfully completed the upgrade and expansion of our manufacturing plant in Union City, Indiana to become a best-in-class EV production facility with the capacity to build up to 5,000 units per year on one shift. We designed, built, and tested three class 4-6 commercial vehicle product lines and launched a ground up design into serial production in less than 22 months. We made solid progress building out our dealer network by adding eight certified partnerships and providing W56 field demonstration vehicles to several large, packaged goods and food service last mile delivery companies. All of this was accomplished in parallel with a successful Phase one company-wide ERP implementation.

As an emerging EV growth company, the Human Resource Management & Compensation Committee continued to utilize a formulaic approach for the 2023 compensation program utilizing a mix of various compensation elements to best support the Company’s objectives of attracting, retaining, and motivating executives while also further aligning the program to performance tied directly to the Company’s achievement of specific performance objectives. Specifically in 2023, the weighting of the financial component of the short-term incentive increased to 80% and the strategic component was weighted at 20%, while for the long-term incentives the vehicle mix shifted to 60% time-vested and 40% performance.

In early 2024, the Committee approved a Long-Term Incentive award for the CEO and NEOs as evenly weighted with 50% time-vesting and 50% performance vesting. The Committee maintains its compensation philosophy is market-driven and enables Workhorse the ability to attract, retain and incentivize key individuals who are responsible for driving Workhorse’s long-term strategic and operational objectives.

ELEMENTS OF OUR EXECUTIVE COMPENSATION PROGRAM FOR 2023:

Workhorse’s executive compensation program for 2023 was composed of base salary, a short-term incentive, and long-term incentives as described below:

Target NEO Compensation

We emphasized allocating a significant portion of our NEOs’ compensation to at-risk and variable pay. In 2023, approximately 86% of our CEO’s and 67% of our other two NEOs’ target total compensation qualifies as at-risk or variable in nature. The graphs below illustrate the allocation of our NEOs’ pay under our latest programs and awards:

NAMED EXECUTIVE OFFICERS

Our Named Executive Officers, along with other select members of the senior management team, participate in the compensation plans and programs described in this CD&A. While different in some respects, the compensation programs for the broader employee population at Workhorse are driven by consistent principles, which seek to compete effectively for talent in our industry and reward strong corporate and individual performance.

WORKHORSE’S EXECUTIVE COMPENSATION OBJECTIVES & PRACTICES

To ensure that our executive compensation program is consistent with our business strategy, we have developed the following objectives:

•        to attract, motivate, retain, and reward a knowledgeable and driven management team and to encourage them to exceed performance expectations within an acceptable risk tolerance; and

•     to reward each executive based on individual and corporate performance and to incentivize executives to drive growth and generate value for our stockholders.

The peer group is also used to benchmark industry practices regarding the structure and mechanics of annual and long-term incentive plans, employment agreements, severance and change in control policies and employee benefits. The composition of the peer group is reviewed by the Committee on an annual basis to ensure we have and maintain an appropriate group of comparator companies.

In September 2022, with the assistance of CAP, the Committee reviewed the peer group for potential changes and ultimately approved the group of companies listed below for use as a source of executive compensation and practices data. Selected peer companies should reflect an optimum mix of the criteria listed below in their relative order of importance:

Competitive market:

•        Competitors—companies in the same or similar industry sector; and

•        Competing Industry—companies in the same general industry sector having similar talent pools.

Size and demographics:

•        Companies that are generally similar in revenue and/or market cap size and whose median revenue for the group approximates our revenue;

•        Firms with a competitive posture and comparable area of operations; and

•        Companies within our corporate headquarters region.

The Committee, based on CAP’s analysis and our internal analysis, determined to use the following peer group of 16 companies to evaluate and compare our compensation practices in 2023;

In September 2023, with the assistance of ClearBridge, using similar competitive market & size and demographics criteria as used in past peer groups, the Committee reviewed the peer group for potential changes, and approved the companies listed below for use as a source of executive compensation and practices data. The Committee, with the help of ClearBridge, determined to use the following peer group of 14 companies to evaluate and compare our compensation practices in 2024:

We will continue to monitor this group each year to determine the best mix of companies and industries to use as comparators for compensation-related purposes.

COMPENSATION ELEMENTS AND RATIONALE

There are three basic components to our executive compensation program: base salary, short-term incentive program (annual bonus), and long-term incentive equity compensation. The Committee actively evaluates our executive compensation program design against best market practices given our growth profile and financial condition.

In the first quarter of 2023, the Committee assessed the overall compensation program, looking at both the STIP and LTIP specifically. To ensure that the compensation program remained aligned with the financial and strategic goals of the Company, the Committee decided to adjust the specific metric weightings used in the 2023 STIP. Company Revenue and Net Cash Flow were each adjusted to 40% of the STIP, with Individual Strategic Initiatives comprising the remaining 20%. Additionally in 2023, the Committee decided to increase the performance-based allocation of the total target LTIP award, allocating 40% of the award value to performance-based awards and 60% to time-based restricted stock, compared to the 30% performance-based, 70% time-based allocation of 2022. The LTIP metrics used to determine the performance-based award payouts for awards granted in 2023 were unchanged from 2022 (i.e., Relative Total Shareholder Return (rTSR) and EBITDA).

In addition to the changes in our program design, there were adjustments to our CEO’s total compensation. During 2023, Mr. Dauch elected to reduce his target salary from $1,000,000 to $780,000. This voluntary reduction in pay reflects Mr. Dauch’s commitment to reducing costs, which remains a priority to the company given the current business environment, and to align his compensation with the actions that the Company has taken for the benefit of employees, customers, and stockholders.

FORWARD-LOOKING 2024 COMPENSATION DECISIONS

As the Committee reviewed the compensation program for fiscal year 2024, the Committee evaluated the STIP and LTIP design to ensure that the program remains aligned with current business priorities. For 2024, the Committee elected not to make any changes to the STIP metrics or weightings, and the Committee elected to shift the LTIP vehicle mix to 50% time-based, 50% performance-based, with the PSUs tied to 3-year revenue goals.

Building on the voluntary salary reduction taken by our CEO in 2023, the Committee, taking into consideration recommendations from Mr. Dauch and his commitment to reduce costs and align his compensation with the goals of the Company, determined that his 2024 LTIP target opportunity would be reduced from $5,000,000 to $3,630,000. Additionally, his target STIP was reduced from 125% of his base salary to 100% of his base salary. In addition, in March 2024, the executive officers voluntarily elected to take a three-month 20% base salary pay deferral to support the company’s cost savings initiatives.

BASE SALARY

Base salary is the foundation of our compensation program. As previously mentioned, we benchmark and review base salaries with the assistance of our compensation consultant and adjust, when necessary, in order to be competitive within the talent marketplace. The table below sets forth the annualized 2023 salaries for our NEOs.

1       Mr. Dauch voluntarily reduced his annual salary by 22% from $1,000,000 to $780,000 resulting in a prorated salary of $974,615 in 2023.

SHORT-TERM INCENTIVE PROGRAM (ANNUAL BONUS)

The STIP provides an opportunity for our NEOs to earn a cash bonus based upon achievement against key metrics. The STIP requires management to annually review the metrics and weightings to reflect critical business objectives and to obtain approval of the proposed framework from the Committee.

During the first quarter of 2023, the Committee established the 2023 STIP based on continued employment and achievement of the quantitative and qualitative performance metrics detailed below:

For 2023 the STIP weighting shifted to 40% Net Cash Flow and 40% Revenue recognizing the equal importance to the company.

Net cash flow is a non-GAAP financial measure defined as the change in cash, cash equivalents and restricted cash as disclosed in our Statement of Cash Flows (included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 12, 2024), adjusted to exclude certain items related to cash flows from investing activities and items of unusual and non-recurring nature. Below is a reconciliation from our GAAP financial measures to 2023 Net Cash Flow:

For 2023, our NEOs’ STIP opportunities were based on market norms for their roles and their employment agreements. We tie our executive compensation to performance against defined metrics driven by strategic initiatives. The strategic metrics used in our NEOs’ awards under the STIP support building and selling commercial trucks and drones. The table below reflects 2023 STIP payout amounts.

Short-Term Incentive Plan Payouts = (((Net Cash Flow Achievement x Weight) + (Revenue Achievement x Weight) + (Individual Goal Achievement x Weight)) x Bonus Target) x Base Salary

2023 Short-Term Incentive Program Payouts

After the level of performance is determined by the Committee, the payout percentage for each individual metric is multiplied by its weight and added together to calculate the total payout percentage for each NEO. There was no bonus paid out for 2023 because the company did not meet its financial goals and minimum cash gate. As a result, the Committee made the determination to not fund the 20% individual strategic component of the STIP.

LONG-TERM INCENTIVE PROGRAM (EQUITY)

Our LTIP uses performance share units, restricted stock/restricted stock units, and option awards to both motivate and retain executives and to align their performance with stockholder value creation. In awarding long-term incentives, with the guidance of our compensation consultant, the Committee compares our long-term incentive program to those of comparable companies in our compensation peer group and evaluates factors such as: the value of awards granted to each executive position within the market; the number of shares available under our equity plans; and the number of outstanding award shares and proposed award shares relative to our total shares outstanding.

Each long-term incentive grant is based on the executive’s employment agreement, position level, and overall market competitiveness. The Committee also takes into consideration previous equity grants, as well as overall share usage and availability within our LTIP plan.

Each of the NEOs has a target LTIP value expressed as a percentage of base salary. These targets are reviewed on an annual basis and serve as a guide to the Committee in establishing grant values each year. Our 2023 LTIP award targets are shown in the table below.

1       Mr. Dauch 2023 LTIP grant was issued on his base salary at the beginning of the year.

2023 ANNUAL LTIP AWARDS

Our NEOs were awarded restricted shares in accordance with our annual target award values described above. The annual target award values and shares were approved by the Committee on February 22, 2023, though some of the grants were contingent on stockholder approval of the Workhorse Group Inc. 2023 Long-Term Incentive Plan, which occurred on May 2, 2023. Therefore, some of the grant date fair values of equity awards in the Summary Compensation Table and the Grants of Plan-Based Awards Table differ from the intended target values shown above. These shares vest ratably over a 3-year period from the date of grant. Details on the grant date value and number of shares awarded to each NEO are listed in the Grants of Plan-Based Awards table.

2023 AND 2024 EXECUTIVE OFFICER LTIP AWARDS

We have gradually increased the LTIP award mix for our NEOs with a greater percentage of performance stock units year over year. In 2023, the total LTIP award value consisted of 40% performance-based awards and 60% to time-based restricted stock with an evenly weighted 50% performance-based, 50% time-based mix in 2024. Our 2023 performance-based award payouts will be determined based on our Relative Total Shareholder Return (rTSR) and EBITDA performance throughout the 3-year performance period. We believe that performance awards provide balance to our award mix. Our restricted stock awards provide for retention of our executive talent while the performance-based awards will incentivize strong performance over the longer term. Both vehicles directly tie our executive interests to those of our shareholders through equity ownership. In 2024, the LTIP mix moves to 50% performance-based, 50% time-based. The performance-based award payouts will be determined on 3-year Company Revenue.

The Committee reviewed the performance peer group again in early 2023 and approved the following group for 2023 performance awards. Certain changes to the composition of the group were made to filter out a handful of companies in distress and to add a couple of drone companies into the overall mix of peers. The list shown in the table below will be used to determine relative performance for our 2023 awards.

NON-CASH COMPENSATION

The Company provides standard health benefits to its executives including medical, dental, vision, 401k match, and disability insurance that is competitive with comparable companies in our industry.

The Company provided a housing and travel allowance, grossed up for taxes, for Mr. Dauch and Mr. Harrington. In 2024, the housing and travel allowance ended for Mr. Harrington.

REALIZABLE PAY

As outlined throughout our CD&A, a significant majority of our CEO’s and other NEOs’ target compensation is performance-based and tied to specific company objectives and/or our stock price. The performance-based nature of the program can result in realizable pay for our NEOs differing from the target pay, and the chart below demonstrates the relationship between our CEO’s target and realizable total direct compensation (“TDC”). Our Committee has demonstrated a commitment to linking our CEO’s pay with performance, and realizable pay for fiscal year 2022 and 2023 was aligned with company performance.

Note: Table begins with fiscal year 2022 given Mr. Dauch joined the company on August 2, 2021.

Target TDC: Target TDC is the sum of our CEO’s base salary, target short-term incentive opportunity, and target long-term incentive opportunity, as disclosed in the CD&A (of this proxy and relevant past proxies).

Realizable TDC: Realizable TDC is the sum of our CEO’s actual earned base salary, actual short-term incentive earned, and equity award values based on the number of shares granted multiplied by the closing stock price per share on the last day of fiscal year 2023 (note: given the performance periods for PSUs granted in fiscal years 2022 and 2023 are not yet complete, the target amount of PSUs are used to calculate PSU award values).

COMPENSATION AND RISK

We do not believe that our compensation policies and practices are reasonably likely to have a material adverse effect. We have taken steps to ensure our executive compensation program does not incentivize risk inconsistent with the Company’s risk appetite. There are several ways we currently manage compensation risks:

•        appoint a Committee composed entirely of independent directors to oversee the executive compensation program;

•        award a mix of deferred equity compensation encouraging a focus on long-term performance versus short-term results and retention of key executive talent; and

•        disclose executive compensation to stakeholders.

CONSIDERATION OF MOST RECENT STOCKHOLDER ADVISORY VOTE ON EXECUTIVE COMPENSATION

As required by Section 14A of the Exchange Act, at our 2021 Annual Meeting of Stockholders our stockholders voted, in an advisory manner, on a proposal to approve our named executive officer compensation. This was our most recent stockholder advisory vote to approve named executive officer compensation. The proposal was approved by our stockholders, receiving approximately 84.53% of the vote of the stockholders who voted on this item. Proposal

number 3 in this proxy statement is an advisory vote on the frequency of voting on the NEO’s compensation. The Board recommends an annual say-on-pay vote, consistent with market practice. We also engage in off-season outreach to our stockholders.

HUMAN RESOURCE MANAGEMENT AND COMPENSATION COMMITTEE REPORT

The Committee has reviewed and discussed the foregoing compensation discussion and analysis with Company management. Based on that review and those discussions, the Committee recommended to the Board that the compensation discussion and analysis be included in the Company’s Form 10-K for the year ended December 31, 2023, and this proxy statement.

Respectfully submitted by the Human Resource Management and Compensation Committee,

Pamela S. Mader, Chair
Austin Scott Miller
Raymond Chess
Brandon Torres Declet

SUMMARY COMPENSATION TABLE

The following summary compensation table sets out details of compensation paid to (a) our principal executive officer; (b) each of our two most highly compensated executive officers who served as executive officers during the fiscal year ended December 31, 2023; and (c) up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the year ended December 31, 2023.

1.    The amounts shown for 2022 for Mr. Ginnan and Mr. Harrington reflect a discretionary bonus for exceptional performance awarded in 2023 for work done in 2022.

2.    The amounts shown represent the aggregate grant date fair value of the award computed in accordance with FASB ASC Topic 718 to each of our Named Executive Officers. Additional information regarding the award can be found in “Compensation Discussion and Analysis — Long-Term Incentive Plan (Equity)” on page 39. Due to clerical error in the prior year proxy statement, this amount has been corrected in this Proxy Statement.

3.    The amounts shown for 2022 represent the payout received in 2023 for performance in 2022 for our Short-Term Incentive Plan.

4.    The following table summarizes the amounts shown in the All Other Compensation Column.

i.       Amounts reflect the dollar value of premiums paid by the Company for life insurance in an amount equal to $100,000. Employees may purchase additional life insurance at the employee’s expense. Any additional life insurance the employee may purchase through the Company is payroll deducted.

ii.      We provide tax benefits to employees who relocate or spend a significant amount of time at one of our Company’s offices away from their typical work location.

GRANTS OF PLAN-BASED AWARDS

The following table provides information regarding grants of share-based awards to the Named Executive Officers in 2023:

1.    Represents the aggregate grant date fair value of the award computed in accordance with FASB ASC Topic 718.

2.    The awards were granted on February 22, 2023 conditional upon shareholder approval of the 2023 Long-Term Incentive Plan. In accordance with FASB ASC Topic 718, the grant date reflected in the table above represents the date the shareholder approval was obtained.

3.    In accordance with FASB ASC Topic 718, the grant date for the EBITDA Performance Share Units has not occurred until the three-year cumulative adjusted EBITDA target condition is known. As such, no grant date fair value has been determined.

4.    On November 13, 2023, Mr. Dauch voluntarily entered into an amendment to his employment agreement, which reduced his (1) base salary from $1,000,000 to $780,000, and (2) target cash bonus range from 125% to 200% of his base salary to 100% to 200% of his base salary.

OUTSTANDING EQUITY AWARDS

The following table sets forth information with respect to the outstanding equity awards of our Named Executive Officers as of December 31, 2023:

1.    The market value of unvested restricted stock is computed based on the $0.36 closing price per share of our common stock on December 29, 2023. Assumes outstanding performance share units are earned at target (100%). The performance share units can be earned between 0% and 200%.

EMPLOYMENT AGREEMENTS AND POTENTIAL PAYMENTS ON CHANGE OF CONTROL AND TERMINATION

The Company has entered into employment agreements with each of its current named executive officers. These agreements define the position held by each named executive officer, as well as base salary level, eligibility to participate in the Company’s short- and long-term incentive programs and potential payments upon termination, including upon a Change of Control (as defined below). The Company’s entry into these agreements was conditioned upon each executive’s entry into a non-compete agreement and an assignment of intellectual property and confidentiality agreement in favor of the Company.

Under the terms of the employment agreements, each current named executive officer is entitled to certain payments in the event of a (1) Change of Control and (2) either (A) the Company’s termination of such named executive officer (except for Cause (as defined below)) or (B) the named executive officer’s departure for Good Reason (as such term is defined below). In such event, the Company has agreed to provide to each such named executive officer (1) a cash severance payment equal to (A) such named executive officer’s base salary for a period of 24 to 36 months, depending on the named executive officer, and (B) a cash bonus for the current year, which may be a prorated portion of such executive’s expected bonus amount for such year or a multiplier of up to 3 times such bonus amount, depending on the named executive officer, (2) acceleration of all such executive’s unvested, outstanding equity awards and (3) D&O Insurance coverage for 24 months.

In addition, each current named executive officer is entitled to certain payments in the event of an involuntary termination, which includes termination of such named executive officer by the Company without Cause or termination by such named executive officer for Good Reason, in either case when no Change of Control has occurred. In such an event, the Company has agreed to provide to each such named executive officer (1) a cash severance payment equal to (A) such named executive officer’s base salary for a period of 12 to 24 months, depending on the named executive officer and (B) a cash bonus for the current year, which may be a prorated portion of such executive’s expected bonus amount for such year or a multiplier of up to 1.5 times of such bonus amount, depending on the named executive officer, (2) prorated acceleration of such executive’s unvested, outstanding equity awards to the date of such triggering event, including a good faith determination by the Board of performance vesting conditions, and (3) D&O Insurance coverage for 24 months.

In the event of either a termination upon a Change of Control, without Cause or with Good Reason, cash payments are due from the Company in a lump sum within 30 days of the triggering event. In addition, Mr. Dauch is eligible for healthcare and life insurance benefits in a lump sum of $54,000.

In the event a named executive officer is terminated for Cause, the Company is required to pay all accrued amounts of base salary and previously granted and unpaid bonus, to the extent all conditions have been met. In addition, all equity vesting shall terminate immediately in connection with such event.

Each employment agreement defines a “Change of Control” as any of the following:

(a)     any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing fifty (50%) percent or more of (i) the outstanding shares of common stock of the Company, or (ii) the combined voting power of the Company’s outstanding securities;

(b)     the Company is party to a merger or consolidation, or series of related transactions, which results in the voting securities of the Company outstanding immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), directly or indirectly, more than fifty (50%) percent of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or

(c)     the sale or disposition of all or substantially all of the Company’s assets, or consummation of any transaction, or series of related transactions, having similar effect (other than to a subsidiary of the Company).

Each employment agreement defines as “Cause” as any of the following:

(a)     the officer substantially failed to perform his duties or to follow the lawful written directions of the Board (other than any such failure resulting from incapacity due to physical or mental illness);

PAY RATIO DISCLOSURE

The fiscal year 2023 total annual compensation of our Chief Executive Officer, Richard F. Dauch, was $3,388,174. The annual total compensation of our median compensated employee (other than our Chief Executive Officer) was $72,897. This resulted in a ratio of 46 to 1. To identify the median employee, we took into account the total taxable income earned by our employees in 2023, excluding Mr. Dauch, as of December 31, 2023. We annualized compensation for employees who did not work the entire year. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with the SEC rules based on our internal records and the methodology described below. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s total taxable income allows companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

SEC rules provide that we may use the same median employee for three years before identifying a new median employee provided that during our last completed fiscal year there has been no change in our employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our pay ratio disclosure. We do believe there has been significant amount of change in the past fiscal year to warrant recalculating and identifying a new median employee.

•        We used December 31, 2023 as the date to determine our workforce for purposes of determining the median compensated employee. As of December 31, 2023, our workforce consisted of approximately 295 employees all inside the United States.

•        In determining the median employee compensation (other than our CEO’s compensation), we used total taxable income of each employee as of December 31, 2023.

•        The total taxable income for employees who were on leave and received compensation in 2023 and employees who did not work the full fiscal year was annualized.

PAY VERSUS PERFORMANCE TABLE

*       Note: Per disclosure in Summary Compensation Table section of this proxy statement, Summary Compensation Table values for 2022 and 2021 were updated. See Summary Compensation Table for further information.

1.       Our CEO, Richard Dauch, served as our Principal Executive Officer in 2023, 2022, and for 5 months in 2021. Duane Hughes served as Principal Executive Officer for 7 months and as non-CEO contractor for two additional months in 2021. Our other NEOs (“Non-CEO NEOs”) included:

a.      For 2023 and 2022, Robert Ginnan (who joined the Company as of January 4, 2022) and James Harrington

b.      For 2021, Greg Ackerson, James Harrington (who served 4.5 months in 2021), John Graber, Joshua Anderson (who served 3.5 months in 2021) and Steve Schrader (who served for 9 months in 2021)