Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers; Compensatory Arrangements of Certain
Officers.
(b) and (c) On June 8, 2020, Vonage Holdings Corp. ("Vonage" or the "Company")
announced that the Board of Directors (the "Board") of the Company has appointed
Rory Read as President and Chief Executive Officer ("CEO") of the Company and as
a member of the Board. Mr. Read will assume his new roles on July 1, 2020. Mr.
Read succeeds Alan Masarek, who will be stepping down as CEO and as a director
of the Company. Mr. Masarek will remain in his positions until July 1, 2020 to
assist in the transition.
Mr. Read, age 58, joins Vonage from Dell Technologies Inc. ("Dell"), where he
has served as its Chief Operating Executive since October 2015 and as President
of its Virtustream subsidiary since May 2018. Mr. Read also has served as
Executive Vice President of Dell Technologies Boomi, a SaaS integration platform
provider. From March 2015 to October 2015, Mr. Read served as Chief Operating
Officer and President of Worldwide Commercial Sales for Dell. Prior to joining
Dell, Mr. Read served as President and Chief Executive Officer of Advanced Micro
Devices, Inc., a high-performance computing, graphics, and visualization
technology company, from August 2011 to October 2014, where he also served as a
member of the board of directors. Before that, he spent over five years as
President and Chief Operating Officer of Lenovo Group Ltd., a computer
technology company. Mr. Read also spent 23 years at International Business
Machines Corporation, a technology and consulting company, serving in various
leadership roles in the Asia-Pacific region and globally.
There are no arrangements or understandings between Mr. Read and any other
person pursuant to which he was selected as a director. 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 Company entered into an employment agreement, dated June 5, 2020, with
Mr. Read (the "Employment Agreement"), as summarized below.
The Employment Agreement provides for Mr. Read's employment for a three-year
term (the "Term") commencing July 1, 2020 (the "Commencement Date") to serve as
President and Chief Executive Officer of the Company, reporting directly to the
Board. Mr. Read will be paid an annual base salary of $850,000, which is to be
reviewed annually by the Compensation Committee of the Board and may be
increased but may not be decreased, without Mr. Read's consent, during the Term.
In addition, Mr. Read will be eligible for an annual cash bonus in accordance
with the Company's annual bonus program for senior executives, with a target
bonus of 125% of his base salary. For 2020, Mr. Read will receive a minimum
annual cash bonus equal to 125% of his annual base salary.
Following the Commencement Date, Mr. Read will receive a one-time, sign-on cash
bonus of $3,000,000. In the event Mr. Read's employment is terminated by the
Company for "Cause" or he resigns from the Company without "Good Reason," (each
as defined in the Employment Agreement) within two years following the
Commencement Date, Mr. Read will be required to repay the pro-rated, pre-tax
amount of such bonus. Mr. Read has committed to purchase shares of the Company's
common stock in the open market having a market value of approximately $400,000.
Effective as of the Commencement Date, Mr. Read has received the following
equity grants under the Company's Amended and Restated 2015 Incentive Plan (the
"Plan"):
• A one-time, sign-on award of restricted stock units with respect to
1,000,000 shares of the Company's common stock (the "Sign-On RSUs"), which
will vest in three equal installments on the first, second and third
anniversaries of the Commencement Date, subject to Mr. Read's continued
employment on such dates.
• In respect of the Company's 2020 and 2021 annual grant cycles:
• an award of restricted stock units with respect to 520,000 shares of
the Company's common stock (the "Annual RSUs"), which will vest in
three equal installments on the first, second and third
anniversaries of March 15, 2020 (the date on which the 2020 annual
grants of RSUs were made to other senior executives), subject to Mr.
Read's continued employment on such dates; and
• an award of performance-based restricted stock units with a target
of 780,000 shares of the Company's common stock (the "PSUs"), which
will be subject to the same performance criteria as the PSUs granted
to the senior executives of the Company with respect to the 2020 -
2022 performance cycle.
Mr. Read will not be eligible to receive any additional annual equity awards
until the 2022 annual grant cycle.
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If Mr. Read's employment is terminated by the Company without "Cause," by
Mr. Read for "Good Reason" or due to his death or disability (i) the Sign-On
RSUs will immediately vest and be settled, (ii) the Annual RSUs will continue to
vest and be settled in accordance with the existing vesting schedule (except
that, in the event of death, the Annual RSUs will immediately vest and be
settled, and (iii) the PSUs will be eligible to vest at the end of the
performance period based on the actual level of performance achieved through the
end of the full performance period (except that, in the event of death, vesting
will occur on the date of termination and be based on target performance). In
the event of a Change of Control (as defined in the Plan), the Sign-On RSUs,
Annual RSUs and PSUs will be subject to double-trigger vesting in accordance
with the terms of the Company's form of award agreements used for awards to
other senior executives.
In the event Mr. Read's employment is terminated by the Company without Cause or
he resigns with Good Reason, he is entitled to the following severance benefits,
subject to his execution and non-revocation of a general release of claims: (i)
twelve (12) months base salary plus his target bonus amount for the year in
which his employment terminates, payable over the twelve (12) month period
following termination of employment, (ii) an annual bonus for the year of
termination, based on actual performance for such year and pro-rated for the
period he is employed during such year, (iii) any earned but unpaid bonus for a
previously completed fiscal year, and (iv) continued participation in medical,
dental and vision plans at the same cost to Mr. Read as other executives of the
Company.
If Mr. Read's employment is terminated due to his death or disability, he (or
his estate) is entitled to (i) an annual bonus for the year of termination,
based on actual performance for such year and pro-rated for the period he is
employed during such year and (ii) any earned but unpaid bonus for a previously
completed fiscal year.
If Mr. Read's employment is terminated for Cause or he resigns without Good
Reason, he will be entitled only to accrued but unpaid compensation and benefits
due to him in accordance with the Company's benefit plans ("Accrued Rights").
Mr. Read will also be entitled to the Accrued Rights in the event of a
termination of employment for any other reason.
The Company will provide or reimburse Mr. Read for reasonable corporate housing
located near the Company's headquarters for up to twelve (12) months in an
amount not to exceed $5,000 per month, other relocation benefits in accordance
with Company policy, and reasonable legal fees in connection with the
negotiation and documentation of his employment arrangements.
Mr. Read will participate in the Company's employee benefit plans on the same
basis as available to other senior executives from time to time and will be
entitled to an annual medical exam with a specified executive health program.
Mr. Read will be subject to non-solicitation and non-hire restrictions, which
will be in effect during his employment and for twelve (12) months thereafter.
Mr. Read will be subject to non-disparagement and confidentiality restrictions
during his employment and perpetually thereafter. Additionally, Mr. Read has
executed the Company's Employment Covenants Agreement, Non-Compete Agreement and
Indemnification Agreement.
The severance provisions of the Employment Agreement and restrictive covenants
will continue in effect in the event Mr. Read's employment continues after the
Term.
The above summary of Mr. Read's employment agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of Mr.
Read's employment agreement, a copy of which is attached hereto as Exhibit 10.1
and is incorporated by reference in this Current Report on Form 8-K
The Company issued a press release announcing Mr. Read's appointment as
President and Chief Executive Officer. A copy of the press release is attached
as Exhibit 99.1 and is incorporated in this Current Report on Form 8-K in its
entirety by reference.
(e) The compensation arrangements for Mr. Masarek in connection with his
departure have not been finalized and will be disclosed in a further Current
Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
See accompanying Exhibit Index for a list of the exhibits filed with this
Current Report on Form 8-K, incorporated herein by reference.
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