Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
(b) Departure of Chief Operating Officer
On January 12, 2020, Dave Sipes notified RingCentral, Inc. (the "Company") of
his resignation from his position as the Company's Chief Operating Officer
effective as of January 13, 2020. Mr. Sipes is expected to remain employed in a
non-executive role until the end of the second fiscal quarter of 2020 in order
to, among other things, assist in the transition of his responsibilities.
(c) Appointment of New President and Chief Operating Officer
Effective on January 13, 2020, Anand Eswaran was appointed as the President and
Chief Operating Officer of the Company.
Mr. Eswaran, age 46, served as Corporate Vice President, Microsoft Enterprise at
Microsoft Corporation, a multinational technology company, from May 2018 to May
2019, and previously as Corporate Vice President: Customer Success, Digital &
Industry Solutions, Global Services & Support, from January 2015 to May 2018.
From January 2012 to December 2014, Mr. Eswaran served as Executive Vice
President, Global Services at SAP, a multinational software company. From
February 2007 to January 2012, he served as Vice President, HP Software Global
Services at The Hewlett-Packard Company, a multinational information technology
company. Since January 2007, Mr. Eswaran has served as a Founding Advisory Board
Member of Technology Services Industry Association, a technology research and
advisory firm.
In connection with his appointment as President and Chief Operating Officer, Mr.
Eswaran signed an offer letter (the "Offer Letter") that provides for a starting
annual base salary of $600,000 and a quarterly management-by-objective ("MBO")
bonus opportunity equal to 100% of Mr. Eswaran's quarterly base salary, subject
to the terms of the Company's Executive Incentive Plan. As a member of the
Company's executive team, the achieved portion of Mr. Eswaran's MBO bonus will
be paid on a quarterly basis in the form of fully-vested restricted stock units
covering shares of the Company's Class A common stock ("RSUs") in accordance
with the Company's Key Employee Equity Bonus Plan.
The Offer Letter provides for an initial grant of RSUs having an aggregate fair
value of $16,000,000 (the "Initial Equity Grant"). The Initial Equity Grant will
vest as to 1/16th of the RSUs on February 20, May 20, August 20, and November 20
of each year (each a "Quarterly Vesting Date") over a 4-year period beginning on
February 20, 2020, provided Mr. Eswaran remains a service provider of the
Company through the applicable Quarterly Vesting Date. The value of the Initial
Equity Grant will be converted into a number of RSUs based upon the monthly
average closing price of a share of the Company's Class A common stock (as
quoted on the New York Stock Exchange) during the month of January 2020.
Beginning in 2021, Mr. Eswaran will be eligible to receive annual equity award
grants commensurate with his position, and subject to the Board's approval, Mr.
Eswaran's performance, and any terms and conditions approved by the Board (each,
an "Additional Equity Award"). It is anticipated that such Additional Equity
Award may have a target value of approximately 50% of the Initial Equity Grant
and 1/16th of the RSUs will vest on Quarterly Vesting Dates over a 4-year period
beginning on February 20, 2021, provided Mr. Eswaran remains a service provider
of the Company through the applicable Quarterly Vesting Date. If the Company
introduces and implements performance-based RSUs as part of the Company's 2021
executive compensation, some or all of the Additional Equity Award will be
subject to performance-based vesting on substantially similar terms and
conditions as the performance-based vesting terms of other similarly-situated
Company executives.
Mr. Eswaran will become eligible to participate in the Company's Equity
Acceleration Policy, as amended ("EAP"), under which Mr. Eswaran will be
entitled to 100% acceleration of his then-outstanding unvested RSUs if he
experiences a "qualified termination" (as defined in the EAP).
Mr. Eswaran is also entitled to reimbursement by the Company for: expenses
reasonably incurred on or before September 8, 2020 by Mr. Eswaran, (i) for
temporary housing, air travel and ground transportation in the San Francisco Bay
as well as two-round trip visits for him and his family before April 30, 2020
and (ii) other moving-related expenses up to a maximum of $45,000 for moving
expenses (but excluding any costs or other expenses to the sale or purchase of
his permanent residence) in connection with the permanent relocation of Mr.
Eswaran and his family to the San Francisco Bay Area. The reimbursement for
expenses incurred under (i) and (ii) above will be repayable by Mr. Eswaran to
the Company if, within one year from his start date, Mr. Eswaran voluntarily
terminates his employment, other than for "good reason," (as defined in the EAP)
or is terminated for "cause" (as defined in the Offer Letter). Mr. Eswaran also
is entitled to reimbursement of legal expenses related to the Offer Letter and
affiliated documents up to a maximum amount of $5,000.
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If Mr. Eswaran's employment is terminated by the Company without cause (and
other than for death or "disability" (as defined in the EAP)) or he terminates
his employment for "good reason," then Mr. Eswaran will be eligible to receive
the following payments and benefits, subject to his timely execution and
non-revocation of a release of claims:
• Cash severance equal to 12 months of Mr. Eswaran's then-current base
salary, payable in semi-monthly installments;
• Reimbursement of COBRA premiums through the earliest of (i) the 12-month
anniversary of the date of the termination of employment, (ii) the date on
which Mr. Eswaran or his eligible dependents become covered under similar
plans, or (iii) the date on which Mr. Eswaran or his eligible dependents,
as applicable, cease to be eligible under COBRA; provided, however, that
if we determine that we cannot make these COBRA reimbursements without
potentially violating applicable law, Mr. Eswaran will receive a lump sum
payment of $30,000, less applicable withholding, in lieu of such COBRA
reimbursement;
• Equity award vesting acceleration benefits as follows:
• If such termination occurs within the "Change in Control Period" (as
defined in the EAP, as amended to begin 90 days prior to a "Change
in Control" (as defined in the EAP)), 100% acceleration of vesting
of any then-outstanding and unvested Company equity awards subject
to time-based vesting conditions, or
• If such termination occurs outside of the Change in Control Period,
acceleration of vesting of the portion of any then-outstanding and
unvested Company equity awards subject to time-based vesting
conditions that would have vested if Mr. Eswaran had remained
employed with the Company through the date that is 12 months
following Mr. Eswaran's effective last day with the Company.
The foregoing description of Mr. Eswaran's compensation, terms and conditions of
his employment and treatment of Mr. Eswaran upon certain terminations of
employment is qualified in its entirety by (i) the full text of the Offer
Letter, which will be filed with the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2019, and (ii) the EAP, which was filed as
Exhibit 10.5 to the Company's Annual Report on Form 10-K filed on February 27,
2019 (to be updated for any amendments described herein), which is incorporated
herein by reference.
The Company will enter into its standard form of indemnification agreement with
Mr. Eswaran, a copy of which was filed as Exhibit 10.3 of the Company's
Quarterly Report on Form 10-Q filed on August 7, 2017.
Other than the indemnification agreement described in the preceding sentence,
Mr. Eswaran has no direct or indirect material interest in any transaction
required to be disclosed pursuant to Item 404(a) of Regulation S-K promulgated
under the Securities Exchange Act of 1934, as amended, nor are any such
transactions currently proposed. There are no arrangements or understandings
between Mr. Eswaran and any other persons pursuant to which Mr. Eswaran was
appointed as President and Chief Operating Officer, and there are no family
relationships between Mr. Eswaran and any director or executive officer of the
Company.
A copy of the news release issued by the Company on January 13, 2020 announcing
Mr. Sipes' resignation and Mr. Eswaran's appointment as President and Chief
Operating Officer is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
99.1 News release of RingCentral, Inc. dated January 13, 2020 announcing
the resignation of Mr. Sipes and the appointment of Mr. Eswaran as
President and Chief Operating Officer.
104 Cover Page Interactive Data File (formatted as inline XBRL).
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