Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On December 9, 2020, the Board of Directors (the "Board") of 8x8, Inc. (the
"Company") approved the following changes to the Company's executive management
team and Board:
8x8 Appoints David Sipes as CEO
Effective December 10, 2020, David Sipes was appointed Chief Executive Officer
(the "CEO") and a member of the Company's Board. Mr. Sipes will continue to
serve on the Board as long as he continues to be CEO of the Company. As an
employee-director, Mr. Sipes will not serve on any committees of the Board, nor
receive any additional compensation as a director.
Mr. Sipes, 53, recently completed a twelve-year tenure at RingCentral, Inc., a
provider of enterprise cloud communications and collaboration solutions, where
he served in a number of senior leadership roles including most recently chief
operating officer for the last five years. He has extensive management,
marketing and strategic experience relevant to the Company and also held a
variety of executive roles with companies such as Branders.com and Booz Allen
Hamilton. Mr. Sipes has an MBA from Northwestern University and a BS in
Administration from the University of California, Berkeley.
As part of Mr. Sipes employment agreement, he will be an at-will employee
entitled to an annual base salary of $525,000 per year and target cash bonus of
100% of his annual base salary. In addition, Mr. Sipes will receive, subject to
approval of the Board: an award of restricted stock units ("RSUs"), representing
the right to acquire shares of the Company's common stock valued at $9,000,000,
vesting over a three-year period, with one-third (1/3) of the total number of
RSUs vesting on the first anniversary of the grant date, and one-eighth (1/8) of
the remaining number of RSUs vesting on a quarterly basis thereafter; and an
award of performance share units ("PSUs"), representing the right to acquire
shares of the Company's common stock valued at $9,000,000 at 100% of the target
opportunity.
Shares subject to the PSU award will be earned according to the following:
one-half (1/2) of the target opportunity is eligible to be earned on June 15,
2022 and June 15, 2023, respectively, based on the Company's total shareholder
return (the "TSR") relative to the S&P Software & Services Index. A number of
shares equal to 100% of the target opportunity will be earned in the event that
the Company's performance matches that of the specified index during the
relevant period. A 2x multiplier will be applied for each percentage point of
positive or negative relative TSR, such that the number of shares of common
stock earned will increase or decrease by 2% of the target number of shares,
subject to a maximum of 200% of the target number of shares. In the event that
the Company's relative TSR performance is less than negative 30%, relative to
the specified index, no shares will be earned for the applicable performance
period. Vesting of shares will be subject in each case to Mr. Sipes' continued
employment or other qualifying association with the Company or any of its
subsidiaries.
For the Company's fiscal year 2021, Mr. Sipes will be granted RSUs equal to
$200,000, subject to his continued employment through the Company's regularly
scheduled fiscal year 2021 bonus payment date. The number of RSUs granted will
be determined by dividing $200,000 by the Company's closing stock price on such
payment date. Mr. Sipes will also be eligible to receive an annual equity
compensation award in fiscal year 2022 consisting of approximately $2,500,000 in
RSUs and approximately $2,500,000 in PSUs, subject to vesting and performance
metrics as approved by the Board.
The Company will also enter into its standard form of indemnification agreement
with Mr. Sipes; the form of which is filed as Exhibit 10.3 to the Company's Form
10-Q for the period ended June 30, 2015. The Company will also provide
reasonable directors' and officers' insurance coverage for Mr. Sipes on terms at
least as favorable as any coverage provided to other officers and directors of
the Company.
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Mr. Sipes will also be eligible to receive benefits under the Company's Amended
and Restated 2017 Change-in-Control and Severance Policy (the "Policy") as a
"Tier 1" participant, subject to the following modifications: in the event of a
change-in-control, to the extent any time-based equity awards would be canceled,
such equity awards will accelerate in full immediately prior to the closing of
such transaction, and any performance-based equity awards will vest or become
canceled in accordance with their terms; the definition of "Good Reason" will
include (x) a failure to be elected to the Board, (y) any failure to timely
grant the equity awards, or (z) any failure to directly report to the board of
directors of the ultimate parent of the Company, including after a
change-in-control or a corporate transaction; in the event of a constructive
termination that is not in connection with a change-in-control, all outstanding
time-based equity awards will accelerate by twenty-four (24) months; and in the
event of a constructive termination that is not in connection with a
change-in-control, Mr. Sipes will receive 50% of his base salary instead of 150%
of his base salary as set forth in the Policy.
Pursuant to his employment agreement, Mr. Sipes has agreed to maintain the
confidentiality of the Company's confidential information and be bound by the
Company's standard form of Confidentiality Information and Inventions Assignment
Agreement. Mr. Sipes does not have any family relationship with any director or
executive officer of the Company, and he has no direct or indirect material
interest in any transaction required to be disclosed pursuant to Item 404(a) of
Regulation S-K.
The foregoing description of the Mr. Sipes' employment agreement does not
purport to be complete and is qualified in its entirety by reference to the full
text of the agreement, a copy of which is attached hereto as Exhibit 10.1, and
hereby incorporated by reference herein.
Vik Verma
Effective December 10, 2020, Vik Verma, the current CEO and a member of the
Board, will leave his position as CEO of the Company and resign from the
Company's Board. Mr. Verma will remain as a non-executive employee through
April 15, 2021 (the "Termination Date"), to assist with the transition of his
duties, unless his employment is terminated earlier by either party (the
"Transition Period").
In connection with Mr. Verma's departure, the Company and Mr. Verma entered into
a Separation, Transition and General Release Agreement, dated December 9, 2020
(the "Separation Agreement"). The Separation Agreement provides that, subject to
Mr. Verma's execution of the Separation Agreement, including the general release
of claims therein, and the Confidential Information, Non-Disclosure and
Invention Assignment Agreement between 8x8 and Employee (the "IP Agreement"),
Mr. Verma will receive the severance benefits for which he is eligible under the
Policy as a "Tier I" executive as a result of a Constructive Termination.
. . .
Item 7.01 Regulation FD Disclosure.
The Company issued a press release on December 10, 2020, announcing the changes
to the Company's executive management team as described herein. The press
release making this announcement is filed as Exhibit 99.1 to this Current Report
on Form 8-K and hereby incorporated by reference.
Item 8.01 Other Events.
Appointment of Jaswinder Pal Singh as Chairman of the Board
Mr. Bryan R. Martin, who has served as the Chairman of the Board (the
"Chairman") since 2003, will transition the Chairman role to Mr. Jaswinder Pal
Singh effective as of December 10, 2020. Mr. Martin will continue to serve as a
member of the Board and continue his role as Chief Technology Officer of the
Company.
Mr. Singh, 56, has served as a Director of the Company since October 2013 and
has served as Lead Independent Director since May 2019. Mr. Singh is expected to
continue his service to the Compensation Committee and the Governance and
Nominating Committee.
Amendment to the 8x8 Amended and Restated 2017 New Employee Inducement Incentive
Plan
On December 9, 2020, the Board approved an amendment to the 8x8 Amended and
Restated 2017 New Employee Inducement Incentive Plan (the "Inducement Plan") to
increase the share reserve under the Inducement Plan by 1,400,000 shares to a
total available share reserve of 2,005,000 shares. The terms of the Inducement
Plan are substantially similar to the terms of the 2012 Plan with the exception
that incentive stock options may not be granted under the Inducement Plan. The
amendment to the Inducement Plan was adopted by the Board without stockholder
approval pursuant to New York Stock Exchange (NYSE) Listed Company Manual
Section 303A.08. In accordance with NYSE Listed Company Manual Section 303A.08,
awards under the Inducement Plan may only be made to an employee who has not
previously been an employee or member of the board of directors of the Company
or any parent or subsidiary, or following a bona fide period of non-employment
by the Company or a parent or subsidiary, if he or she is granted such award in
connection with his or her commencement of employment with the Company or a
subsidiary and such grant is an inducement material to his or her entering into
employment with the Company or such subsidiary.
A complete copy of the amendment to the Inducement Plan will be filed as an
exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ending
December 31, 2020. The above summary of the Inducement Plan does not purport to
be complete and is qualified in its entirety by reference to such exhibit.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Description
10.1 Employment Agreement dated December 9, 2020, between 8x8, Inc. and
David Sipes
10.2 Separation, Transition and General Release Agreement dated
December 9, 2020, between 8x8, Inc. and Vikram Verma
99.1 Press release dated December 10, 2020
104 Cover Page Interactive Data File, formatted in Inline XBRL.
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