Item 8.01. Other Events.
Co-Founder Performance Awards
On
The Performance Awards will be submitted for approval of the Company's
stockholders other than the Co-Founders, other executive officers of the
Company, and certain of their respective affiliates (the "Disinterested
Stockholders") at the annual meeting or a special meeting of the Company's
stockholders in 2022 (the "Meeting"). If a majority of the voting power held by
the Disinterested Stockholders do not approve the Performance Awards by
The Performance Awards were granted under the Company's 2019 Equity Incentive Plan (the "2019 Plan") from its existing share reserve. The Company will not be seeking approval of the Company's stockholders of an increase to the share reserve under the 2019 Plan at the Meeting.
A summary of the Performance Awards is below. The Performance Awards will be described in more detail in the proxy statement to be delivered to stockholders in advance of the Meeting. The description below is qualified in its entirety by reference to the full text of the Performance Award agreement, the form of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.
Purpose
The Compensation Committee recognizes that
Performance-based Stock Options
Each Performance Award was granted under the 2019 Plan and consists of a 10-year option to purchase an aggregate of 3,960,000 shares of the Company's Class A common stock, which was equal to approximately 1.22% of the Company's outstanding shares of Class A common stock and Class B common stock combined on the day prior to the grant date.
Each Performance Award is comprised of eight separate tranches that become eligible to vest only if certain pre-established stock price targets are achieved and certain time-based vesting requirements are satisfied. Vesting of the Performance Award generally requires that the Co-Founder remain in a primary leadership position with the Company, specifically in what is referred to as "continued eligible service" (as described further below), through the date the applicable stock price target is determined to have been achieved and through the satisfaction of the time-based vesting requirements.
--------------------------------------------------------------------------------
For the first tranche to become eligible to vest,
The Compensation Committee began contemplating the Performance Awards when
The number of shares applicable to the tranches is back weighted, as shown in the table below, so that each Co-Founder receives meaningful rewards for significant stock price performance and even greater rewards for excellent stock price performance. The tranches for the Performance Awards are structured as follows: Tranche Percentage of Performance Number of Tranche Number Award Earned Shares Stock Price Targets 1 5% 198,000 Shares$156.00 2 5% 198,000 Shares$203.00 3 10% 396,000 Shares$263.00 4 10% 396,000 Shares$343.00 5 10% 396,000 Shares$446.00 6 20% 792,000 Shares$579.00 7 20% 792,000 Shares$753.00 8 20% 792,000 Shares$979.00
If none of the eight stock price targets are achieved, no shares subject to the Performance Awards will vest. In order to satisfy a stock price target, the volume weighted average closing price over a rolling 90 calendar day period (following the grant date) must equal or exceed the stock price target, except that in the event of a change in control of the Company, achievement of a stock price target instead will be measured against the change in control price per share of Class A common stock. If a Co-Founder's continued eligible service with the Company ends due to death or disability, his or her Performance Award can remain outstanding and eligible to vest based on the achievement of stock price targets for up to 18 months following the termination date of the Co-Founder's eligible service.
In addition to achievement of the performance-based target, the Performance Awards are subject to additional, time-based vesting requirements, under which 1/6th of the total shares subject to the Performance Award vest and become exercisable on each anniversary of the grant date, subject to the Co-Founder's continued eligible service. The time-based vesting requirements apply in the same order as the tranches, so that Tranche 1 will be the first, and Tranche 8 will be the last, to satisfy these vesting requirements. The time-based vesting requirements are waived upon a change in control of the Company.
"Continued eligible service" means that, during the first four years following
the Performance Award grant date,
--------------------------------------------------------------------------------
The exercise price per share subject to the Performance Awards is
Other Information
The Company plans to file with the
Participants in the Solicitation
The directors and executive officers of the Company may be deemed to be participants in the solicitation of proxies from the stockholders of the Company in connection with the Performance Awards. The information regarding the interests of participants in the solicitation of proxies in respect of the Meeting will be included in the Proxy Statement.
Forward-Looking Statements
Certain information in this Current Report on Form 8-K may be considered "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements regarding future stock price performance.
The stock price targets described above are intentionally ambitious and there
are significant risks and uncertainties in achieving such results. Many of the
obstacles to achieving the stock price targets are described in the "Risk
Factors" section in the Company's Quarterly Report on Form 10-Q filed with the
Except as otherwise required by applicable law, the Company disclaims any duty to update any forward-looking statements to reflect events or circumstances after the date of this report. Should underlying assumptions prove incorrect, actual results and projections could different materially from those expressed in any forward-looking statements.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description 10.1 Form of Performance Stock Option Agreement 104 Cover Page Interactive Data File (formatted as Inline XBRL)
--------------------------------------------------------------------------------
© Edgar Online, source