Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of President
On December 9, 2019, the Company announced the appointment of Elizabeth Spaulding as President of the Company, effective January 27, 2020. Ms. Spaulding, age 43, is currently a partner at Bain & Company, a global consulting firm, and serves on its board of directors. Since 2014, Ms. Spalding has been Global Head of Bain’s Digital practice. Ms. Spalding joined Bain in 1998.
In connection with Ms. Spaulding’s appointment, the Company and Ms. Spaulding entered into an offer letter on November 7, 2019, which provides for the following compensation and benefits:
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an annual base salary of $600,000;
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eligibility to participate in the Company’s executive bonus program, with a target bonus of 45% of base salary;
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a grant of stock options with an aggregate fair value of $7,760,000, of which 12.5% will vest upon completion of six months of employment at the Company, with the remainder vesting in equal monthly installments over the next 42 months;
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restricted stock units (“RSUs”) with an aggregate fair value of $7,760,000, of which 12.5% will vest on September 16, 2020, with the remainder vesting in 14 equal quarterly installments over the next 42 months;
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in the event of termination of Ms. Spaulding’s employment without “cause” or her resignation for “good reason” (each as defined in her offer letter, and each a “Qualifying Termination”), eligibility for severance benefits, including six months of severance pay, up to six months of COBRA coverage, and, for a Qualifying Termination within the first 18 months following Ms. Spaulding’s start date, accelerated vesting of outstanding equity awards as if Ms. Spaulding had remained employed by the Company for an additional six months;
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in the event of a Qualifying Termination that occurs during the period beginning one month prior to a change in control of the Company (as defined in the offer letter) or within 12 months following a change in control, eligibility for change-in-control severance benefits, including 12 months of severance pay, up to 12 months of COBRA coverage, and 100% acceleration of all outstanding equity awards; and
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reimbursement for up to $10,000 in legal fees incurred by Ms. Spaulding in connection with the review and negotiation of her offer letter.
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This description of the offer letter is qualified in its entirety by reference to the full text of the offer letter, which will be filed as an exhibit to the Company’s next quarterly report on Form 10-Q.
Ms. Spaulding has no family relationships with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer of the Company. Ms. Spaulding is not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
A copy of the press release announcing Ms. Spaulding’s appointment is furnished as Exhibit 99.3 to this Current Report.
Departure of Chief Financial Officer and Appointment of Interim Chief Financial Officer
On December 4, 2019, Paul Yee, the Company’s Chief Financial Officer, gave notice of his resignation, effective January 3, 2020.
In connection with Mr. Yee’s resignation, on December 8, 2019, the Board appointed Michael Smith as the Company’s interim Chief Financial Officer, effective January 3, 2020. Mr. Smith, age 49, has served as the Company’s President and Chief Operating Officer since October 2018 and has been with the Company since 2012, serving in various roles, as further described in the Company’s proxy statement for its 2019 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on November 7, 2019.