Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) Transition and Separation of Cynthia Gaylor, Chief Financial Officer
On March 8, 2023, Cynthia Gaylor, the Company's Chief Financial Officer and
principal accounting and financial officer, notified the Company of her
intention to resign. Ms. Gaylor's planned departure is not a result of any
disagreement regarding the Company's financial statements or disclosures. The
effective date of Ms. Gaylor's resignation will be June 15, 2023, or such
earlier date as determined by the Company or Ms. Gaylor (the "Separation Date").
Ms. Gaylor will continue to provide services to the Company in her current
capacities to provide for the orderly transition of her duties through the
Separation Date (the "Transition Period"). If mutually agreed, the Company may
retain Ms. Gaylor for additional transition services after June 15, 2023.
On March 9, 2023, the Company entered into a transition services and separation
agreement with Ms. Gaylor (the "Transition Agreement"), which provides for,
among other things, the severance and vesting benefits contemplated in the
Executive Severance and Change in Control Agreement, dated as of March 12, 2021,
between the Company and Ms. Gaylor (the "Gaylor Severance Agreement"), as
amended by that certain severance and acceleration enhancement letter with the
Company, dated as of June 21, 2022, between the Company and Ms. Gaylor (the
"First Amendment Letter"), as further amended by the Expanded Severance Letter
as described and defined below (together with the First Amendment Letter, the
"Amended Letters"). The Gaylor Severance Agreement was filed as Exhibit 10.29 to
the Company's Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission (the "SEC") on March 31, 2021, and is incorporated by
reference herein. The First Amendment Letter was filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K as filed with the SEC on June 22, 2022, and
is incorporated by reference herein. The Form of the Expanded Severance Letter
is filed herewith as Exhibit 10.3, and is incorporated by reference herein.
The Transition Agreement provides for the following benefits in consideration of
her continued services during the Transition Period: (i) payment of Ms. Gaylor's
current base salary during the Transition Period, at the rate of $500,000 per
year (the "Transition Salary"); (ii) continuation of health benefits; (iii) a
restricted stock unit award, valued at $3.0 million as of the date of grant,
with 100% of the shares underlying such award to vest on June 15, 2023 (the
"Retention Grant"); (iv) a cash bonus of $1.0 million to become earned on June
15, 2023 (the "Retention Bonus"); and (v) continued vesting of Ms. Gaylor's
outstanding equity awards during the Transition Period, pursuant to the
Transition Agreement, which includes a general release of claims in favor of the
Company.
The Transition Agreement also provides that, following the termination of the
Transition Period, and in exchange for Ms. Gaylor's second general release of
claims in favor of the Company, the Company will provide Ms. Gaylor the
following benefits, in satisfaction of the Gaylor Severance Agreement and the
Amendment Letters (collectively, the "Severance Benefits"): (i) a payment of
$500,000 as cash severance, which amount represents 12 months of Ms. Gaylor's
base salary at the time of her resignation; (ii) a payment of $500,000 as bonus
severance, which represents 100% of Ms. Gaylor's target annual bonus amount for
fiscal 2024; (iii) an additional bonus payment of up to approximately $150,000,
which represents Ms. Gaylor's target bonus for the performance period of
February 1st through July 31st under the Company's incentive plan for fiscal
2024, prorated for Ms. Gaylor's days of service during that period (the
"Prorated Bonus"); (iv) up to 12 months of COBRA coverage; and (v) vesting
acceleration of Ms. Gaylor's time-based equity awards as if she had remained
employed through June 15, 2024.
The Transition Agreement further provides that, in the event that Ms. Gaylor is
terminated without "Cause" or resigns for "Good Reason" (as such terms are
defined in the Transition Agreement) on or prior to June 15, 2023, in addition
to the Severance Benefits, the Company shall provide Ms. Gaylor with the
following benefits subject to Ms. Gaylor's execution of a second general release
of claims in favor of the Company: (i) payment of the remainder of the
Transition Salary, payment of the Prorated Bonus and payment of the Retention
Bonus, in each case as if Ms. Gaylor had remained employed through June 15,
2023; (ii) acceleration of vesting of Ms. Gaylor's time-based equity awards as
if she had remained employed through June 15, 2024; and (iii) full acceleration
of vesting of the Retention Grant.
As required by the Gaylor PSUs (as defined below), Ms. Gaylor also remains
eligible to vest in a portion of her outstanding performance-based restricted
stock units (the "Gaylor PSUs"), to the extent that the Company achieves the
applicable performance goals at the end of the applicable performance period,
with the portion of shares achieved prorated based on the length of her
employment, as though she remained employed through June 15, 2023, during the
performance period. The Company's Forms of PSU Agreement (the "PSU Agreements"),
pursuant to which the Gaylor PSUs were granted, were filed as Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q, as filed with the SEC on September
6, 2019 and Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q, as
filed with the SEC on June 9, 2022, and are each incorporated by reference
herein.
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Additionally, as agreed in the Gaylor Severance Agreement and further reflected
in the Transition Agreement, in the event that the Company is subject to a
"Change in Control" (as such term is defined in the Gaylor Severance Agreement)
on or prior to September 15, 2023, the Company shall provide Ms. Gaylor with the
following benefits subject to Ms. Gaylor executing a general release of claims
in favor of the Company: (i) 100% acceleration of vesting of Ms. Gaylor's
remaining unvested time-based equity awards and (ii) the Gaylor PSUs shall vest
in accordance with the PSU Agreements, as though she remained employed through
June 15, 2023.
The foregoing description of the Transition Agreement is not complete and is
qualified in its entirety by reference to the full text of the Transition
Agreement, which is filed as Exhibit 10.1 hereto.
(c) Robert Chatwani, President and General Manager, Growth
On March 7, 2023, the board of directors (the "Board") of the Company designated
Robert Chatwani, the Company's President and General Manager, Growth, as an
"officer" within the meaning of Section 16 of, and Rule 16a-1(f) of the rules
promulgated under, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), effective immediately.
Mr. Chatwani, age 47, has served as our President and General Manager, Growth
since February 22, 2023. From March 2017 to February 2023, he served as Chief
Marketing Officer at Atlassian, Inc., a SaaS company. Prior to Atlassian, he
served as Chief Revenue & Marketing Officer for social e-commerce platform
Spring. He also previously served in various roles of increasing responsibility
at eBay Inc., including most recently as Chief Marketing Officer of North
America. Mr. Chatwani holds a B.S. in marketing from DePaul University and an
MBA from UC Berkeley Haas School of Business.
Mr. Chatwani does not have any family relationships with any of the Company's
directors or executive officers and, since the beginning of the Company's last
fiscal year, there have been no transactions between the Company and Mr.
Chatwani or any member of his immediate family that would require disclosure
pursuant to Item 404(a) of Regulation S-K of the Securities Act of 1933, as
amended (the "Securities Act"), except for the arrangements described in this
Current Report on Form 8-K.
Pursuant to his offer letter (the "Chatwani Offer Letter"), Mr. Chatwani will
(i) receive an annual base salary of $510,000; (ii) be eligible to receive a
cash bonus of up to 100% of his annual base salary, subject to the achievement
of certain performance criteria; (iii) receive a one-time signing bonus of
$1,000,000, subject to his continued employment or service with the Company on
the one-year anniversary of his start date; (iv) be eligible to receive an
initial award of restricted stock units with a target value of $20,000,000 (the
"Chatwani New Hire RSUs"), and which shall vest over four years, subject to his
continued employment or service with the Company on each vesting date; and (v)
be eligible to receive an additional award of restricted stock units with a
target value of $5,000,000 (the "Chatwani Additional RSUs"), which shall vest in
equal quarterly installments over two years, subject to his continued employment
or service with the Company on such date. The foregoing description of the
Chatwani Offer Letter is not complete and is qualified in its entirety by
reference to the full text of the Chatwani Offer Letter, which is filed as
Exhibit 10.2 hereto.
Additionally, the Company has entered into an executive severance and change in
control agreement (the "Chatwani Severance Agreement") with Mr. Chatwani,
substantially in the form of executive severance and change in control
agreements entered into with the Company's other executive officers.
If Mr. Chatwani experiences a Qualifying Termination (as defined in the Chatwani
Severance Agreement), subject to certain conditions, including Mr. Chatwani
delivering a release of all employment related obligations of and claims and
causes of action against the Company, and depending on whether the Qualifying
Termination occurs during a Control Period (as defined in the Chatwani Severance
Agreement), the Company shall provide Mr. Chatwani with certain severance
benefits, including: (i) severance pay consisting of Mr. Chatwani's salary and
up to 50% of Mr. Chatwani's target annual bonus, (ii) payment of Mr. Chatwani's
COBRA premiums of up to six months, and (iii) partial vesting acceleration of
outstanding non-performance equity compensation awards.
The foregoing description of the Chatwani Severance Agreement is not complete
and is qualified in its entirety by reference to the full text of the Chatwani
Severance Agreement, which is filed as Exhibit 10.3 hereto.
The Company has entered into its standard form of Indemnification Agreement with
Mr. Chatwani. The form of the indemnification agreement was previously filed by
the Company as Exhibit 10.1 on Form 8-K filed with the SEC on December 3, 2020
and incorporated by reference herein.
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(e) Enhanced Severance Benefits
Previously, the Company entered into amendments (each, a "Severance Agreement
Amendment") to the existing Executive Severance and Change in Control Agreements
with each of Cynthia Gaylor, the Company's Chief Financial Officer; Stephen
Shute, the Company's President, Worldwide Field Operations; Inhi Cho Suh, the
Company's President of Product and Technology; and James Shaughnessy, the
Company's Chief Legal Officer (the "Covered Officers"), pursuant to which the
Company will provide certain enhanced benefits (the "Enhanced Severance
Benefits") to each of the Covered Officers in the event of their termination
without "Cause" (as defined in their existing Executive Severance and Change in
Control Agreements).
The Enhanced Severance Benefits for Ms. Gaylor, Mr. Shaughnessy and Mr. Shute
are described in the Company's Form 8-K filed with the SEC on June 22, 2022, and
are qualified in their entirety by reference to the full text of the applicable
Severance Agreement Amendment, which were filed as Exhibits 10.2, 10.3, and 10.4
thereto, respectively. The Enhanced Severance Benefits for Ms. Suh are described
in the Company's Form 8-K filed with the SEC on September 8, 2022, and are
qualified in its entirety by reference to the full text of the applicable
Severance Agreement Amendment, which was filed as Exhibit 10.3.
On March 7, 2023, the Board approved amendments to the Severance Agreement
Amendments with each of the Covered Officers (each, an "Expanded Severance
Letter") to extend the period of time during which the Company will provide the
Enhanced Severance Benefits to December 31, 2023 (instead of June 21, 2023). All
other terms and conditions of the existing Executive Severance and Change in
Control Agreements and Severance Agreement Amendments remain unchanged.
The Board also approved amendments to Mr. Chatwani's Severance Agreement (the
"Chatwani Severance Agreement Amendment") to provide substantially the same
enhanced benefits in the event of his termination without "Cause" (as defined in
the Chatwani Severance Agreement) until December 31, 2023, such that he would
receive (i) 12 months of base salary severance, (ii) a payment equal to 100% of
his target bonus, (iii) 12 months of COBRA coverage and (iv) 12 months of
vesting acceleration under the time-based restricted stock unit awards granted
under the Chatwani Offer Letter. All other terms and conditions of the
Chatwani's Severance Agreement remain unchanged.
The foregoing descriptions of the Expanded Severance Letters are not complete
and are qualified in their entirety by reference to the full text of the form of
Expanded Severance Letter, which is filed as Exhibit 10.4 hereto.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No. Description
Transition Services and Separation Agreement, dated March 9 , 2023, by
10.1 and between Cynthia Gaylor and DocuSign, Inc.
Offer Letter, dated as of January 3, 2023, by and between the Registrant and
10.2 Robert Chatwani.
Executive Severance and Change in Control Agreement, dated as of January 3,
10.3 2023, by and between the Registrant and Robert Chatwani.
10.4 Form of Expanded Severance Letter.
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