Fox Factory CEO: Six Months of Interim Pay Is About $3.2M

Fox Factory said in a Form 8-K filed Friday, Oct. 16 that CEO Mike Dennison is stepping down as CEO and from the board, though he remains employed while talks on his transition continue. Director Doug Grimm is interim CEO. The news came in a press release at 8:15 a.m. Eastern that also cut the company's 2026 outlook. MarketWatch reported the stock fell 23% to $14.30 in premarket trading. Fox Factory stock then closed at $16.04, down 13.3% from $18.50 the day before (TradeFlock's math, using Yahoo Finance prices). Grimm's employment agreement is worth about $3.2 million over six months by TradeFlock's estimate: $532,500 of salary, a $600,000 completion bonus, a $2 million restricted stock unit award and $90,000 of housing allowance. The company has not set terms for Dennison.

What Fox Factory Announced Friday

In that Form 8-K, Fox Factory said its board "approved a leadership transition plan" on Oct. 15. Dennison "is stepping down from his role as CEO" and resigned from the board effective Oct. 15, and the board shrank from seven members to six. The filing says Dennison "will remain employed by the Company" while talks continue, and that "the Board has not approved the terms" of a transition agreement and "no definitive agreement has been executed."

The press release says the board hired Heidrick & Struggles to find a permanent CEO, in a search led by Chair Jean Hlay and directors Tom Duncan and Grimm. Grimm "is not a candidate for the permanent CEO role." Dennison said, "It has been a privilege to lead FOX since 2019." The release gives no timeline for a permanent CEO.

The Numbers That Came With the Exit

The same release gave preliminary third quarter results for the quarter ended Oct. 2, which the company said were "below expectations," and lowered its 2026 outlook:

• Third quarter net sales: $336 million to $340 million, against guidance of $355 million to $380 million.
• Third quarter adjusted EBITDA: $38 million to $42 million, excluding about $12 million of tariff refunds, against guidance of $46 million to $54 million.
• 2026 net sales: $1.35 billion to $1.38 billion, against prior guidance of $1.42 billion to $1.47 billion.
• 2026 adjusted EBITDA: $140 million to $150 million, excluding about $14 million of tariff refunds, against prior guidance of $176 million to $196 million.

At the midpoints, the new 2026 adjusted EBITDA range is 22% below the old one (TradeFlock's math: $145 million against $186 million). The company blamed lower sales and margin at Marucci Sports before it was sold on Sept. 25, and the release says the lower 2026 outlook reflects that sale as well as the third quarter results, so the divestiture is part of why the EBITDA range fell.

The release also blamed a supply disruption and higher steel, aluminum and freight costs in its Powered Vehicles Group, and problems in its upfit business. Supply limits are not unique to Fox, as TradeFlock's earlier look at how Toyota's hybrid RAV4 demand outpaced early factory supply in September showed. The release says about $63 million of the full year sales cut reflects Marucci. The earnings call is set for Nov. 5.

Yahoo Finance data shows 2,659,800 shares traded on Oct. 16, about 4.4 times the 604,300 traded on Oct. 15 (TradeFlock's math).

What Interim CEO Grimm Is Paid

The employment agreement, filed as Exhibit 10.1 to the 8-K, runs from a "Start Date" of Oct. 15, while the 8-K and the release say Oct. 16. It sets these terms:

• Salary: "$1,065,000.00 per annum."
• Completion bonus: $600,000, "earned upon the earlier to occur of (i) the commencement of employment of a permanent Chief Executive Officer of the Company, or (ii) the six (6) month anniversary" of his start as Interim CEO.
• Initial restricted stock unit award: a grant date fair value of $2,000,000, granted "on the fifth (5th) calendar day following the public release of the Company's earnings for the third fiscal quarter of 2026." It vests in full on the 12 month anniversary of the Start Date "without regard to whether Executive remains employed," and is forfeited if he voluntarily resigns or is fired for Cause before then.
• Additional restricted stock unit award: up to $1,600,000, earned at one sixth for each completed month after the six month mark.
• Housing and commuting allowance: $15,000 a month, taxable.
• Legal fees: up to $35,000 reimbursed.

He gets no extra pay for board service while interim CEO. TradeFlock's estimate for six months is $3,222,500 (TradeFlock's math: $532,500 of salary plus $600,000 plus $2,000,000 plus $90,000 of housing). For a full 12 months with the maximum additional award, it is $5,445,000 (TradeFlock's math: $1,065,000 plus $600,000 plus $2,000,000 plus $1,600,000 plus $180,000). Both count stock awards at grant date fair value and leave out benefits and legal fees.

For comparison, the proxy shows Dennison's 2025 base salary rate was $1,030,000, so Grimm's rate is about 3.4% higher (TradeFlock's math: 1,065,000 divided by 1,030,000, minus 1). The proxy does not show Dennison's 2026 rate. His total pay for fiscal 2025 was $8,234,801, and the six month estimate is 39% of that, though the two measures are not like for like.

What Dennison Could Receive

The proxy statement filed March 25 says a termination without Cause or for Good Reason pays a severance equal to annual base salary, a pro rata bonus, a share of health costs and pro rated performance units if goals are met. Its table, assuming a Jan. 2, 2026 termination, showed $1,573,240 in that case: $1,069,615 of cash compensation, $450,625 of bonus and $53,000 of benefits. It showed $39,615 for a mutual agreement or voluntary exit.

The 8-K does not say which, if either, applies to Dennison, and TradeFlock does not know. The proxy figures are year-end illustrations, not his terms. Fox Factory says it will disclose any material compensatory arrangement "upon execution of a definitive agreement." Shareholders backed 2025 pay at the May 8 annual meeting, with 27,616,480 votes for and 3,675,322 against, or about 88% of those two groups (TradeFlock's math).

How Grimm Got on the Board

Fox Factory signed a cooperation agreement with Engine Capital L.P. on Feb. 8, according to an 8-K filed Feb. 9. It added Alan Bazaar to the board, called for an additional independent director "with executive-level operations experience in manufacturing" and created a Transformation Committee to oversee "profitability, cost-cutting and margin improvement."

An 8-K filed March 26 says that, "Pursuant to the terms of the previously announced Cooperation Agreement," the board appointed Grimm on March 25 and put him on the Audit and Transformation committees. TradeFlock reads this as the additional director the agreement called for. Shareholders elected him on May 8, with 31,163,229 votes for and 142,990 withheld, or 99.5% of those two groups (TradeFlock's math). He joined the board in March 2026, nearly seven months before taking the interim job.

What Comes Next at Fox Factory

Watch for the Nov. 5 earnings call, the grant of Grimm's $2 million award after Fox Factory releases third quarter results, any transition agreement for Dennison and the first signs of who the Heidrick search turns up. Fox Factory has not said how long the interim period will last. Tariffs are also part of its cost picture, since its adjusted EBITDA range leaves out about $14 million of tariff refunds, so the two month extension of the US and China trade truce to Jan. 10 is a backdrop worth tracking.

For another look at how a company has paid and structured its chief executive, read how Yext gave its CEO price-hurdle options.

Cover image: Bear Mountain Trail No. 54, by Coconino National Forest via Wikimedia Commons, CC0 1.0 (cropped).