Item 5. Other Information
Item 5. OTHER INFORMATION
On September 1, 2021, the Company entered into a change in control and severance agreement with George Kurtz, the Company’s President and Chief Executive Officer (the “Change in Control and Severance Agreement”). Under the Change in Control and Severance Agreement, in the event Mr. Kurtz’s employment is terminated by the Company without “cause” or by Mr. Kurtz for “good reason” (as defined in the Change in Control and Severance Agreement), Mr. Kurtz will be entitled to receive (i) a cash severance payment equal to 1.5 times Mr. Kurtz’s then-current base salary, (ii) a cash payment in an amount equal to 18 months of estimated COBRA premiums (less active employee rates), (iii) payment of any earned but unpaid bonus in respect of the most-recent bonus performance period ended prior to his termination date and (iv) accelerated vesting of Mr. Kurtz’s then-outstanding equity awards that would otherwise have vested during the 12-month period following his termination date, subject to actual achievement of any applicable performance conditions as of the end of the applicable performance period (as determined by the Compensation Committee of the Board of Directors of the Company (the “Board”)), unless the terms of the applicable equity award agreement provide that such treatment does not apply.
If such termination of Mr. Kurtz’s employment occurs during the 3-month period before, or the 24-month period after, the occurrence of a “change in control” (as defined in the Company’s 2019 Equity Incentive Plan (the “EIP”)) (referred to as a “Change in Control Related Termination”), then, in addition to the payments and benefits described above, Mr. Kurtz will also be entitled to receive a cash payment equal to 1.5 times Mr. Kurtz’s annual target bonus for the performance period during which his termination date occurs, prorated for the number of calendar days elapsed during such performance period prior to his termination date. In addition, in lieu of the equity award treatment described in clause (iv) above, Mr. Kurtz will be entitled to receive full accelerated vesting of his then-outstanding equity awards (to the extent not otherwise already accelerated in connection with such change in control), with any applicable performance conditions being deemed earned at the target performance level, unless the terms of the applicable equity award agreement provide that such treatment does not apply.
The above severance payments and benefits under the Change in Control and Severance Agreement are subject to Mr. Kurtz’s execution and non-revocation of a general waiver and release of claims and continued compliance with the terms of any applicable non-compete, non-solicit or other restrictive covenant obligations to the Company. The terms of the Change in Control and Severance Agreement supersede and replace the severance pay and benefits provided under Mr. Kurtz’s existing employment agreement with CrowdStrike, Inc., dated as of November 11, 2018; however, Mr. Kurtz’s existing employment agreement otherwise remains in effect in accordance with its terms.
In addition, recognizing the significant potential impact Mr. Kurtz is anticipated to make toward achieving the Company’s strategic and business goals going forward, as well as his instrumental role in the Company’s achievements to date, on August 28, 2021, the Board granted Mr. Kurtz a special award of 540,000 performance stock units (“PSUs”) under the EIP (which grant was amended and restated on September 1, 2021) (the “Special PSU Award”). The Special PSU Award is designed to provide both multi-year retention incentives and to align Company strategy and achievement of business and operating objectives with long-term stockholder value creation. We believe that a payout of the Special PSU Award at or above the threshold
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performance level would result in significant value realized by our stockholders over the performance period due to the rigorous stock price hurdles applicable to the Special PSU Award, as described below.
The Special PSU Award is comprised of four equal tranches of PSUs, each of which will be earned and will vest upon the satisfaction of both a performance-based vesting condition and a service-based vesting condition. The performance condition applicable to the PSUs will be earned based on the Company’s achievement of specified stock price hurdles, as set forth in the table below and subject to anti-dilution adjustments, during the performance period beginning on the date of grant and ending on January 31, 2027. Achievement of the applicable stock price hurdle for any PSU tranche will occur on the date that the Company certifies that the average closing price per share of the Company’s Class A common stock during any 45 consecutive trading days during the performance period exceeded the applicable stock price hurdle for such tranche. Such achievement will be reviewed, and any certifications will be made, within 30 days after the end of each fiscal quarter of the Company. Any PSUs for which the applicable stock price hurdle is not achieved prior to the end of the performance period will be forfeited in their entirety.
The service condition applicable to each tranche of PSUs will be satisfied in installments as follows, subject to Mr. Kurtz’s continued employment with the Company through each applicable vesting date: (i) 50% of the PSUs underlying the applicable tranche will service vest on the first anniversary of the vesting commencement date applicable to such tranche of PSUs, as set forth in the table below; and (ii) the remaining PSUs with respect to such tranche will thereafter service vest in four equal quarterly installments of 12.5%.
Tranche Stock Price Hurdle (per share) Service Vesting Commencement Date
1 $320.00 February 1, 2022
2 $370.00 February 1, 2023
3 $425.00 February 1, 2024
4 $490.00 February 1, 2025
In the event of a “change in control” (as defined in the EIP), any tranche of PSUs for which the stock price hurdle has not previously been satisfied will be deemed earned to the extent the price per share (plus the value of any other consideration received by the Company’s stockholders) pursuant to such change in control transaction equals or exceeds the stock price hurdle applicable to such tranche of PSUs. If the transaction price falls between any two price hurdles, a pro rata portion of the tranche of PSUs that is subject to the higher of such two price hurdles will be deemed earned using linear interpolation, and any other PSUs for which the applicable stock price hurdle is not achieved will be forfeited in their entirety. To the extent any of the earned PSUs have not yet satisfied the service condition as of the date of the change in control, such PSUs will remain outstanding and eligible to service vest based on Mr. Kurtz’s continued employment following the date of the change in control, subject to the terms of the Change in Control and Severance Agreement regarding the treatment of the service condition upon a Change in Control Related Termination (but the terms of the Change in Control and Severance Agreement will not apply to the treatment of the performance condition).
In the event Mr. Kurtz’s employment is terminated for any reason, any unvested portion of the Special PSU Award will be forfeited in its entirety (and the terms of the Change in Control and Severance Agreement will not apply to the Special PSU Award, except in connection with a Change in Control Related Termination as described above). In addition, in the event that Mr. Kurtz ceases to serve as the Company’s President and Chief Executive Officer for any reason, any unvested portion of the Special PSU Award will also be forfeited in its entirety, unless Mr. Kurtz thereafter continues to serve as an executive officer of the Company or as Executive Chairman of the Company, in which case, 33.33% of the then-outstanding and unvested potion of the Special PSU Award will remain outstanding and eligible to vest in accordance with its terms (and the remaining 67.67% of the PSUs will be automatically forfeited).
The foregoing summaries of the Change in Control and Severance Agreement and the Special PSU Award are qualified in their entirety by the terms of the Change in Control and Severance Agreement and the Special PSU award agreement, which are filed as Exhibits 10.3 and 10.4, respectively, to this Form 10-Q and incorporated herein by reference.
On August 28, 2021, the Company and Colin Black, the Company’s current Chief Operating Officer, mutually determined that, in light of personal health reasons, Mr. Black will cease serving in his current role and will transition to a part-time role with the Company, effective as of October 1, 2021.
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Item 6. Exhibits
We have filed the exhibits listed on the accompanying Exhibit Index, which is incorporated herein by reference.
Index to Exhibits
Incorporated by Reference
Exhibit
Number Exhibit Description Form File No. Exhibit Filing
Date Filed
Herewith
3.1
Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect.
8-K 001-38933 3.1 06/14/19
3.2
Bylaws of the Registrant, as currently in effect.
8-K 001-38933 3.2 06/14/19
10.1†
O utside Director Compensation Policy, as amended on June 30, 2021
8-K 001-38933 10.1 07/02/21
10.2†
Amended and Restated 2019 Employee Stock Purchase Plan and related form agreements.
X
10.3†
Change in Control and Severance Agreement, dated as of September 1, 2021, by and between CrowdStrike Holdings, Inc. and George Kurtz
X
10.4†
Amended and Restated Performance Unit Agreement with George Kurtz, dated September 1, 2021 under the CrowdStrike Holdings, Inc. 2019 Equity Incentive Plan
X
22.1
List of Subsidiary Guarantors
S-3ASR 333-252007 22.1 01/11/21
31.1
Certification of the Principal Executive Officer pursuant to Exchange Act Rules 13a14(a) and 15d14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2
Certification of the Principal Financial Officer pursuant to Exchange Act Rules 13a14(a) and 15d14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1*
Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
101.INS Inline XBRL Instance Document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline Instance XBRL document
_______________________________________
† Indicates management contract or compensatory plan, contract or agreement.
* The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” or purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any of CrowdStrike Holdings, Inc.’s filings under the Securities Act of 1933, as amended, irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Sunnyvale, California, on the day of September 1, 2021.
CROWDSTRIKE HOLDINGS, INC.
By: /s/ Burt W. Podbere
Burt W. Podbere
Chief Financial Officer (Principal Financial Officer)
By: /s/ Abhishek Maheshwari
Abhishek Maheshwari
Chief Accounting Officer (Principal Accounting Officer)
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.