Business Context and Reporting Period
This Form 8-K filing by Sprout Social, Inc. (SPT) is dated February 20, 2020. The report discloses the execution of an amended and restated employment agreement with Joe Del Preto, the Company's Chief Financial Officer and Treasurer, effective as of the filing date.
Key Financial Metrics
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. It focuses exclusively on executive compensation terms.
- Base Salary: $355,000 per year.
- Target Bonus: 30% of base salary (discretionary and performance-based).
- Contract Term: Initial two-year term with automatic one-year renewals absent 45 days' prior notice.
Material Changes
The primary material change is the formalization of Mr. Del Preto's compensation and severance structure. The agreement establishes specific severance triggers for termination without Cause, for Good Reason, or upon non-renewal by the Company.
Guidance, Outlook, and Risks
Severance Provisions:
- Standard Termination: Entitles Mr. Del Preto to six months of base salary and continued health benefits for up to six months.
- Change in Control Termination: If termination occurs within 12 months of a change in control, benefits increase to 12 months of base salary plus the target bonus, accelerated vesting of all outstanding equity awards (performance-based awards vest at target levels), and health benefits for up to 12 months.
Conditions and Risks:
- Receipt of severance is contingent upon the execution of a release of claims and compliance with restrictive covenants, including a 12-month post-termination non-competition and non-solicitation of customers and employees.
- Payments are subject to Internal Revenue Code Section 280G "cutback" provisions to maximize after-tax net amounts for the executive.
Investor Verification Checklist
- Verify the full text of the Del Preto Employment Agreement when filed as an exhibit to the Form 10-Q for the quarter ended March 31, 2020.
- Review the specific definitions of "Cause," "Good Reason," and "Change in Control" within the agreement to understand severance triggers.
- Monitor future filings for any changes to the executive's equity award vesting schedules.