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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (date of earliest event reported):
December 14, 2022
WORKDAY, INC.
(Exact name of Registrant as specified in its charter)
Delaware |
|
001-35680 |
|
20-2480422 |
(State or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(I.
R. S. Employer
Identification
No.) |
6110 Stoneridge Mall Road
Pleasanton,
California
94588
(Address of principal executive offices)
Registrant’s telephone number, including area code: (925)
951-9000
N/A
(Former name or former address, if changed since last
report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
¨ |
Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
¨ |
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each
class |
|
Trading Symbol(s) |
|
Name of each exchange
on which registered |
Class A Common Stock, par value $0.001 |
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WDAY |
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The Nasdaq Stock Market LLC
(Nasdaq Global Select
Market)
|
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Item 5.02 - Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers
On December 14, 2022, the Board of Directors (the “Board”) of
Workday, Inc. (“Workday”) appointed Carl M. Eschenbach as co-Chief
Executive Officer (“co-CEO”) of Workday, effective December 20,
2022 (the “Effective Date”). Mr. Eschenbach will remain a member of
the Board and continue to sit on the Investment Committee of the
Board. He resigned from the Compensation Committee, effective as of
the Effective Date. Mr. Eschenbach will serve as co-CEO alongside
Aneel Bhusri, Workday’s co-CEO, co-founder, and chair, through
January 2024, Workday's fiscal year end. At that time, Mr. Bhusri
and the Board expect that Mr. Eschenbach will assume sole CEO
responsibilities, with Mr. Bhusri assuming a full-time role as
executive chair and continuing as chair of the Board.
On December 14, 2022, Luciano G. Fernandez informed the Board of
his intention to resign from his position as Workday’s co-CEO and a
member of the Board, effective as of the Effective Date. Mr.
Fernandez’s decision to resign as a director was not due to any
disagreements with Workday on any matter relating to Workday’s
operations, policies, or practices. Mr. Fernandez is expected to
remain active with the company through April 2023, at which point
he will transition towards retiring from Workday.
Mr. Eschenbach, 52, has served as a member of the Board since
February 2018. Mr. Eschenbach served as a general partner at
Sequoia Capital Operations, LLC, a venture capital firm, from April
2016 to December 2022, where he will continue in a venture partner
capacity. Prior to that, Mr. Eschenbach spent 14 years at VMware,
Inc., a leading innovator in enterprise software, where he held a
number of leadership roles in operations, most recently as its
President and Chief Operating Officer. Prior to that, Mr.
Eschenbach held various sales management positions with Inktomi
Corporation, 3Com Corporation, Lucent Technologies, Inc., and EMC
Corporation. He has served as a director of Aurora Innovation, Inc.
since March 2019, UiPath, Inc. since December 2020, Snowflake Inc.
since May 2019, Zoom Video Communications, Inc. since November
2016, and Palo Alto Networks, Inc. since May 2013, and is also a
director of several private companies. After a transition period,
Mr. Eschenbach is expected to resign as a member of all outside
for-profit boards of directors, except for two public company
boards. Mr. Eschenbach received an electronics technician diploma
from DeVry University.
Mr. Eschenbach is not a party to any transaction required to be
disclosed pursuant to Item 404(a) of Regulation S-K.
In connection with his appointment, Mr. Eschenbach entered into an
employment agreement with Workday dated December 20, 2022 (the
“Employment Agreement”).
The Employment Agreement provides for, among other things, (i) an
initial annual base salary of $1,000,000, (ii) eligibility for an
annual target cash bonus up to 150% of the amount of his
then-current base salary beginning in Workday’s fiscal year 2024,
and (iii) certain equity awards as described below.
Pursuant to the Employment Agreement, Mr. Eschenbach will be
granted the equity awards described below under Workday’s 2022
Equity Incentive Plan. He will not be eligible for additional
equity awards until April 2024.
|
● |
A restricted stock unit award to
acquire a number of shares of Workday’s Class A Common Stock equal
to $50,000,000, divided by the trailing simple moving average stock
price of Workday’s Class A Common Stock on The Nasdaq Global Select
Market for the twenty (20) trading days ending on December 20,
2022, the day that the Employment Agreement was signed (such
average, the “20-day Average”), rounded up to the nearest whole
share (the “New Hire RSU”). The New Hire RSU will be granted on the
fifth trading day following the public announcement of his
appointment (the “Grant Date”). The New Hire RSU will vest as to
1/16th of the shares underlying the New Hire RSU on each quarterly
anniversary of the 5th day of the month during which the Grant Date
occurs (the “Vesting Start Date”), subject to Mr. Eschenbach’s
continued service on each time-based vesting date. |
|
● |
A performance-based restricted stock
unit award to acquire such number of shares of Workday’s Class A
Common Stock equal to the same number of shares as are subject to
the New Hire RSU (the “PVU Award”), which will be divided into
three equal tranches (each, a “Tranche”) each of which will require
achievement of a stock price target (each a “Price Hurdle”) as
described below during such Tranche’s specific performance period,
as well as Mr. Eschenbach’s continued service on each time-based
vesting date of the PVU Award. |
The PVU Award performance metrics are subject to an overall five
(5) year performance period commencing on the Grant Date. Tranche 1
requires a 25% increase from the Baseline Price (as defined below)
during years 1 through 3; Tranche 2 requires a 50% increase from
the Baseline Price during years 2 through 4; and Tranche 3 requires
a 75% increase from the Baseline Price during years 3 through
5.
Testing for achievement of each Price Hurdle will be measured
monthly by calculating the percentage increase of (i) the trailing
simple moving average stock price of Workday’s Class A Common Stock
over the 45 consecutive trading days (the “45-day Average Stock
Price”) ending on the 20th of each month over (ii) the 45-day
Average Stock Price ending on December 20, 2022, the day that the
Employment Agreement was signed (the “Baseline Price”).
A Tranche’s Price Hurdle may not be achieved prior to such
Tranche’s performance period, other than as a result of a change in
control transaction as described below. If unachieved during its
applicable performance period, Tranche 1 and/or Tranche 2 may be
earned in a later performance period, but only if the higher Price
Hurdle for such later performance period is also achieved.
If a Tranche’s Price Hurdle is achieved during such Tranche’s
performance period, 1/60th of such Tranche’s PVU shares
will vest on each of the monthly anniversaries of the Vesting Start
Date, subject to Mr. Eschenbach’s continued service to Workday.
|
● |
A restricted stock unit award to
acquire such number of shares of Workday’s Class A Common Stock
equal to $10,000,000, divided by the 20-day Average, rounded up to
the nearest whole share (the “Special RSU”), which will vest and
settle over one (1) year in equal installments on each quarterly
anniversary of the Vesting Start Date, subject to Mr. Eschenbach’s
continued service to Workday. Notwithstanding the foregoing, if Mr.
Eschenbach is terminated by Workday for Cause (as defined in the
Employment Agreement) or resigns without Good Reason (as defined in
Workday’s Change in Control Policy) prior to the second anniversary
of the Effective Date, he will be required to repay to Workday a
cash amount equal to the grant date value of the Special RSU. |
|
● |
A restricted stock unit award to
acquire such number of shares of Workday’s Class A Common Stock
equal to $5,000,000 divided by the 20-day Average, rounded up to
the nearest whole share (the “Additional Special RSU”); provided,
however, that such Additional Special RSU will not vest unless Mr.
Eschenbach purchases $2,000,000 worth of shares of Workday’s Class
A Common Stock on the public market within twelve (12) months
following the Effective Date (the “Stock Purchase Requirement”).
The Additional Special RSU will vest over one (1) year in equal
installments on each quarterly anniversary of the Vesting Start
Date (each, a “Quarterly Vest Date”); provided that (i) no portion
of the Additional Special RSU will vest until after the completion
of the Stock Purchase Requirement; and (ii) continual vesting will
be subject to Mr. Eschenbach’s continued service to Workday on the
applicable Quarterly Vesting Date. Notwithstanding the foregoing,
if Mr. Eschenbach is terminated by Workday for Cause or resigns
without Good Reason prior to the second anniversary of the
Effective Date, he will be required to repay to Workday a cash
amount equal to the grant date value of the Additional Special
RSU. |
If Mr. Eschenbach’s employment is terminated without Cause within
two years following the Effective Date, other than in connection
with a Change in Control (as defined in the Change in Control
Policy), and Mr. Eschenbach delivers a release of claims in favor
of Workday, he will be entitled to receive: (i) 12 months of his
base salary; (ii) a cash incentive plan payout equal to 150% of his
base salary; and (iii) accelerated vesting of such number of shares
subject to each of the New Hire RSU, the PVU Award (provided that
the PVU Award will accelerate only to the extent an applicable
Price Hurdle has previously been achieved or is achieved as of the
date of his termination), the Special RSU, the Additional Special
RSU (if the Stock Purchase Requirement has been satisfied), and any
future annual RSUs, if any, that would have vested in the 12 months
following such termination.
In addition, Mr. Eschenbach will participate in Workday’s Change in
Control Policy, as modified by the Employment Agreement, such that
in the event that Mr. Eschenbach’s employment is terminated without
Cause or he resigns for Good Reason in connection with a Change in
Control, and Mr. Eschenbach delivers a release of claims in favor
of Workday, he will be entitled to receive: (i) 12 months of his
base salary; (ii) full acceleration of all then-outstanding equity
incentive awards that are subject to time-based vesting (and for
the PVU Award, provided that the PVU Award will accelerate only to
the extent that any previously unachieved Price Hurdles are
achieved based on the price per share paid in such Change in
Control and for the Additional Special RSU, provided that the Stock
Purchase Requirement has been satisfied), and (iii) a cash payment
in an amount equal to an estimate of the aggregate premiums for
continuation “COBRA” coverage for 12 months. In addition, in the
event of a Change in Control and Mr. Eschenbach’s employment
terminates such that he becomes entitled to the acceleration
benefits described above, then if requested by Workday, he will
enter into a non-competition agreement of reasonable scope and
duration upon the closing of a Change in Control, as a condition to
the receipt of such acceleration.
If the New Hire RSU, the PVU Award, the Special RSU, and/or the
Additional Special RSU (if the Stock Purchase Requirement has been
satisfied) are not assumed in a Change in Control (as defined in
the Employment Agreement), then the vesting of each such award will
accelerate in full; provided that the PVU Award will accelerate to
the extent that any previously unachieved Price Hurdles are
achieved based on the price per share paid in such Change in
Control.
The foregoing description of the Employment Agreement is qualified
in its entirety by reference to the full text of the Employment
Agreement, which will be filed as an exhibit to Workday’s Annual
Report on Form 10-K for the fiscal year ending January 31,
2023.
Mr. Eschenbach has entered into Workday’s standard form of
indemnity agreement filed as Exhibit 10.1 to Workday’s Registration
Statement on Form S-1 (File No. 333-183640) filed with the
Securities and Exchange Commission on August 30, 2012.
Item 7.01 Regulation FD Disclosure
A copy of the press release announcing Mr. Eschenbach’s appointment
is attached hereto as Exhibit 99.1. The information in the press
release attached hereto shall not be deemed “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933, as amended, or the
Exchange Act.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
Dated: December 20, 2022
|
Workday,
Inc. |
|
|
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/s/ Richard H. Sauer
|
|
Richard H. Sauer |
|
Chief Legal Officer, Head of
Corporate Affairs, and Corporate Secretary |
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