Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 28, 2023, the Board of Directors (the “Board”) of Semrush Holdings, Inc. (the “Company”) approved a board size increase from seven (7) to nine (9) members and appointed Anna Baird to one of the newly created seats as a Class I director, and Steven Aldrich to the other newly created seat as a Class II director, effective immediately. The term of the Company’s Class I directors, including Ms. Baird, expires at the annual meeting to be held in 2025, and the term of the Class II directors, including Mr. Aldrich, expires at the annual meeting of stockholders to be held in 2023, or in either case upon the election and qualification of successor directors. At the time of their appointments, it was not determined which Board committees Ms. Baird and Mr. Aldrich would sit on.
There are no arrangements or understandings between either Ms. Baird or Mr. Aldrich and any other person pursuant to which they were selected as a director, and neither has a family relationship with any director or executive officer of the Company. Neither Ms. Baird, nor Mr. Aldrich has any direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Each of Ms. Baird’s and Mr. Aldrich’s compensation will be consistent with that provided to all of the Company’s non-employee directors pursuant to the Company’s Non-Employee Director Compensation Policy, a copy of which policy is included as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In addition, the Board approved entering into indemnification agreements with Ms. Baird and Mr. Aldrich in connection with their appointments to the Board, in substantially the same form as that entered into with the Company’s other directors.
On March 6, 2023, the Company also announced that Brian Mulroy has been appointed the Company’s Chief Financial Officer, effective April 10, 2023.
Mr. Mulroy most recently served as SVP Finance at Microsoft Corporation since March, 2022, and before that he served as SVP Finance at Nuance Communications, Inc. from November 2019 through February 2022 and VP FP&A and Corporate Finance at Nuance from March 2016 through October 2019.
In connection with his appointment, the Company and Mr. Mulroy entered into an offer letter pursuant to which Mr. Mulroy will receive an annual base salary of $400,000 and will be eligible to participate in the Company’s senior executive incentive bonus plan (the “Bonus Plan”) beginning in fiscal year 2023, prorated based on his start date. Mr. Mulroy’s target bonus under the Bonus Plan will be 100% of his base salary, subject to Company and individual performance. The offer letter also provides that Mr. Mulroy will receive the following equity awards granted under the Company’s 2021 Stock Option and Incentive Plan: (i) an initial equity award valued at $2,500,000, comprised of 50% restricted stock units (“RSUs”) and 50% stock options, that shall vest over four years, with an initial 25% vesting on the one-year anniversary of the grant date, subject to Mr. Mulroy’s continued employment with the Company on the applicable vesting dates; and (ii) a sign-on equity award valued at $1,600,000, comprised of 100% RSUs, that shall vest in full on the one year anniversary of Mr. Mulroy’s start date, subject to Mr. Mulroy’s continued employment with the Company on the applicable vesting dates. Each such equity grant shall fully vest if Mr. Mulroy is terminated in connection with a change of control of the Company. Mr. Mulroy will also enter into the Company's standard form of indemnification agreement for its officers.
There are no family relationships between Mr. Mulroy and any director or executive officer of the Company. In addition, Mr. Mulroy has no direct or indirect material interest in any transaction or proposed transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
On March 6, 2023, the Company also announced that Evgeny Fetisov will step down as Chief Financial Officer as of April 10, 2023, and will remain with the Company in an advisory capacity to ensure a smooth transition of his duties to Mr. Mulroy. The Company expects to enter into a separation agreement with Mr. Fetisov in connection with his separation from the Company, pursuant to which he will receive six (6) months’ salary, and health and welfare benefits. We also expect to enter into an advisory services agreement with Mr. Fetisov pursuant
to which he will continue vesting in his outstanding equity awards for a period of six months following his separation.