Item 2.02 - Results of Operations and Financial Condition.
On November 12, 2021, Smartsheet Inc. (the "Company") issued a press release
updating its financial outlook for the third quarter ended October 31, 2021. A
copy of the press release is attached as Exhibit 99.1 to this Current Report on
Form 8-K.
The updated financial outlook is based on information available to the Company
as of the date of this Current Report on Form 8-K and is subject to the
completion of the Company's financial closing procedures and review by the
Company's independent registered public accounting firm.
The information in this Item 2.02, including Exhibit 99.1 to this Current
Report, is being furnished and shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise
subject to the liabilities of that section or Sections 11 and 12(a)(2) of the
Securities Act of 1933, as amended. The information in this Item 2.02 and in the
accompanying Exhibit 99.1 shall not be incorporated by reference into any
registration statement or other document filed by the Company with the
Securities and Exchange Commission (the "SEC"), whether made before or after the
date of this Current Report, regardless of any general incorporation language in
such filing, except as shall be expressly set forth by specific reference in
such filing.
Item 5.02 - Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) On November 10, 2021, Gene Farrell, the Company's Chief Strategy & Product
Officer, notified the Company of his intent to resign from his position. Mr.
Farrell will be leaving the Company, effective December 10, 2021, to join an
early-stage financial technology company as its Chief Executive Officer. The
Company thanks Mr. Farrell for his service and wishes him success in his future
endeavors. Praerit Garg, the Company's Chief Technology Officer and Executive
Vice President of Engineering, will now oversee Smartsheet's product and
engineering organizations and assume a new title of Chief Product Officer and
Executive Vice President of Engineering.
(c) On November 12, 2021, the Company announced that it has appointed Stephen
Branstetter as Chief Operating Officer, effective immediately. Mr. Branstetter
will serve as "principal operating officer" of the Company within the meaning of
Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, effective
as of the date of his appointment.
Prior to his appointment as Chief Operating Officer, Mr. Branstetter served as
the Company's Senior Vice President of Operations from November 2019 to November
2021, as Senior Vice President of Customer and Partner Success from March 2019
to November 2019, as Vice President of Services and Customer Success from May
2016 to March 2019, as Senior Director of Customer Success from January 2015 to
May 2016, and prior to that as Director of Sales Enablement. Prior to joining
the Company, Mr. Branstetter served in management roles at The Active Network, a
software-as-a service company for activity and participant management. Mr.
Branstetter holds a B.A. in Business Administration from the University of
Washington.
Pursuant to an executive employment agreement between the Company and Mr.
Branstetter, dated November 11, 2021 (the "Agreement"), Mr. Branstetter will be
employed by the Company on a full-time basis, and will receive an annual base
salary of $325,000. In addition, Mr. Branstetter will be eligible for an annual
cash bonus targeted at 60% of base salary, contingent on achievement of Company
objectives. This annual cash bonus will be prorated for the current fiscal year,
calculated from the date of Mr. Branstetter's appointment as Chief Operating
Officer. Additionally, subject to approval by the Compensation Committee of the
Board, the Company intends to grant Mr. Branstetter an equity award in the
ordinary course of the Company's annual equity grant process, with a target
aggregate fair market value of $1.5 million in a combination of stock options
and restricted stock units, divided to deliver approximately one-third of the
intended aggregate fair market value in stock options and the remaining
two-thirds in restricted stock units, with the actual mix being an approximation
based on the share price on the date of grant. The equity award shall be granted
under the Company's 2018 Equity Incentive Plan (the "2018 Plan"), a copy of
which is attached as Exhibit 10.4 to the Company's Form S-1/A filed with the SEC
on April 16, 2018. The stock options and restricted stock units shall vest over
four years, with 25% vesting on the one year anniversary of the vesting
commencement date, and the remaining 75% vesting in equal quarterly increments
thereafter. The foregoing summary of the material terms of the Agreement does
not purport to be complete and is qualified in its entirety by reference to the
full text of the Agreement, which will be filed with the Company's Annual Report
on Form 10-K for the fiscal year ending January 31, 2022.
In connection with Mr. Branstetter's appointment as Chief Operating Officer, the
Board also approved the Company's entry into a change in control severance
agreement with Mr. Branstetter (the "Severance Agreement"), effective from the
date signed, which includes the following terms:
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The Severance Agreement provides for an initial three-year term from the date of
the agreement, unless renewed, extended, or earlier terminated, subject to
certain limitations. Mr. Branstetter will be entitled to certain severance
benefits if he is subject to a Separation (as defined in the Severance
Agreement) within three months prior to or 12 months following a Change in
Control (as defined in the Severance Agreement) as a result of the Company or
its successor terminating his employment for any reason other than Cause (as
defined in the Severance Agreement) or Mr. Branstetter voluntarily resigning his
employment for Good Reason (as defined in the Severance Agreement) (a "CIC
Qualifying Termination").
In the event of a CIC Qualifying Termination, Mr. Branstetter would be entitled
to receive severance benefits equal to six months of his then-current annual
base salary and the pro rata portion of his unpaid annual target bonus at the
then-current rate based on 100% achievement and equal to the number of actual
days worked in the then-current fiscal year in which the Separation occurs. In
addition, the shares underlying all unvested equity awards held by him
immediately prior to such termination, excluding awards that would otherwise
vest only upon satisfaction of performance criteria subject to the following
sentence, will become vested and exercisable in full as to 100% of the then
unvested shares subject to the equity award. For equity awards that would
otherwise vest only upon satisfaction of performance criteria, the vesting will
accelerate as set forth in the terms of the applicable performance-based award
agreement.
The foregoing summary of the Severance Agreement does not purport to be complete
and is subject to, and qualified in its entirety by, the form of Severance
Agreement, which was filed as Exhibit 10.13 to the Company's Form S-1 filed with
the SEC on March 26, 2018, and is incorporated by reference herein.
Mr. Branstetter and the Company have entered into an indemnification agreement
in substantially the same form as Exhibit 10.1 to the Company's Form S-1/A filed
with the SEC on April 16, 2018, which is incorporated by reference herein.
Except for the arrangements described in this Current Report on Form 8-K, there
are no existing or currently proposed transactions to which the Company or any
of its subsidiaries is a party and in which Mr. Branstetter has a direct or
indirect material interest. There are no family relationships between Mr.
Branstetter and any of the Company's directors or executive officers.
Item 8.01 - Other Events
A copy of the press release announcing the Company's updated business outlook,
Mr. Farrell's departure, and Mr. Branstetter's appointment as Chief Operating
Officer is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 - Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
99.1 Press Release dated November 12, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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