SERVICENOW, INC. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On
•The award is 100% performance-based, dependent on pre-determined, quantitative
goals for stock price ("Stock Price Metric") and subscription-based revenue
("Subscription Revenue Metric") achievements;
•Each of the eight tranches vests if, and only if, both a specified Stock Price
Metric and a specified Subscription Revenue Metric for such tranche are achieved
(together, the "Performance Metrics");
•Notwithstanding any earlier achievement of the Performance Metrics, no portion
of the Performance Option Award will vest prior to the two-year anniversary of
the date of grant (the "Two-Year Cliff");
•The Performance Metrics must be achieved within the period starting on the
Grant Date and ending on September 30, 2026 (the "Performance Period);
•Mr. McDermott may not sell any shares issued upon the exercise of the
Performance Option Award until after the Performance Period ends, except for
sales to satisfy a cashless exercise (cost of exercise and taxes);
•In the event the Company conducts material acquisitions or divestitures during
the Performance Period, the Subscription Revenue Metric would be adjusted
proportionally if the Board or Compensation Committee determines that such
adjustment is necessary;
•For any tranche of the Performance Option Award to vest, Mr. McDermott must
remain in service as the Company's CEO or Executive Chairman to ensure that all
compensation must be earned through creation of shareholder value; and
•The Performance Option Award is subject to applicable clawback provisions.
Each of the eight tranches vests only when both the applicable Subscription
Revenue Metric and Stock Price Metric for such tranche are certified by the
Compensation Committee as having been met. In addition,
The Compensation Committee designed the Performance Option Award to incentivize
significant outperformance and to drive the Company's strategic direction and
value creation over the long-term, with performance goals that are incrementally
aggressive relative to the Company's plan. The Performance Option Award is also
intended to ensure leadership continuity over the next five years in the next
phase of
The Performance Option Award aligns
The Subscription Revenue Metric and Stock Price Metric for a particular tranche may be achieved at different points in time and in any order, and multiple Performance Metrics may be achieved simultaneously; provided that each tranche of options will become eligible to vest, upon the later of the applicable Subscription Revenue Metric and Stock Price Metric to be achieved and certified. Subject to any applicable clawback provisions, policies or other recoupment and forfeiture terms described in the Performance Option Agreement (as defined below), once a goal is achieved, it is forever deemed achieved for determining the vesting of a tranche.
There is no automatic full acceleration of vesting of the Performance Option
Award upon a "change in control." Rather, in connection with a change in
control, the Subscription Revenue Metric will be disregarded and achievement of
the Stock Price Metric will be measured using the per share common stock price
(plus the per share of common stock value of any other consideration) received
by the shareholders in the change in control. Any such resulting "achieved"
shares and, in the case of a change in control prior to the Two-Year Cliff, any
previously achieved shares, will vest on the change in control. The Two-Year
Cliff will not apply to previously achieved shares in the event of
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In the event the Company conducts material acquisitions or divestitures during the Performance Period and if the Board or Compensation Committee determines that an adjustment is necessary, the Subscription Revenue Metric would be increased in proportion to the relevant revenue of such material acquired companies and the Subscription Revenue Metric would be reduced in proportion to the relevant revenue of such material spun-off/out or divested entities, as applicable. Similarly, if the Board or Compensation Committee determines that such adjustment is necessary, the Stock Price Metric would be adjusted for stock repurchases, stock dividends, stock splits and any similar transaction(s).
The Performance Option Award is being granted under the Company's 2021 Equity
Incentive Plan, and is memorialized in a Notice of Global Performance Stock
Option Grant to
The foregoing summary of the terms and conditions of the Performance Option
Award set forth above do not purport to be complete and are qualified by
reference to the provisions of the Company's 2021 Equity Incentive Plan and form
of Notice of Global Performance Stock Option Grant & Global Performance Stock
Option Agreement previously filed with the
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