UPWORK, INC current report, 18 January 2021

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Business Context and Reporting Period

This Form 8-K Current Report was filed by Upwork, Inc. on January 18, 2021. The filing discloses a significant executive compensation event involving the company's President and Chief Executive Officer, Hayden Brown.

Key Financial Metrics

The filing does not provide financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on the terms of a new equity award.

Material Changes and Executive Compensation

On January 18, 2021, the Compensation Committee granted CEO Hayden Brown a performance-based stock option award for up to 1,500,000 shares of common stock. Key terms include:

  • Exercise Price: $38.80 per share.
  • Vesting Conditions: Vesting requires meeting both a four-year service-based requirement and specific stock price performance goals.
  • Performance Vesting Schedule:
    • $60.00 stock price: 100,000 shares vest
    • $70.00 stock price: 200,000 shares vest
    • $80.00 stock price: 300,000 shares vest
    • $90.00 stock price: 400,000 shares vest
    • $100.00 stock price: 500,000 shares vest
  • Measurement Period: Stock price is measured over any consecutive 90-day period ending on or before the 90th day following the five-year anniversary of the grant date.
  • Service Vesting: Shares vest quarterly (1/16th per tranche) subject to continuous service in a designated C-level position.

Guidance, Risks, and Contingencies

Change in Control and Termination:

  • In the event of a Change in Control while Ms. Brown is CEO, or within three months of a termination without Cause or resignation for Good Reason, the applicable stock price at the time of the event will determine vesting based on the performance table.
  • If termination occurs due to death or disability, the award accelerates for shares that would have vested over the subsequent 12 months, provided the performance requirements were met immediately prior to the event.
Expiration: The award expires for any shares not satisfying the performance requirement by the earlier of the Final Measurement Date, a Change in Control, or the date Ms. Brown ceases to be CEO.

Investor Verification Checklist

  • Verify the full text of the Stock Option Agreement, which is expected to be filed as an exhibit to the Form 10-Q for the quarter ending March 31, 2021.
  • Review the definitions of "Change in Control," "Cause," and "Good Reason" in the Change in Control and Severance Agreement (Exhibit 10.8 to the 2019 Form 10-K).
  • Monitor the volume-weighted average price of Upwork common stock to assess progress toward the performance vesting thresholds.
  • Confirm the total dilution impact of the 1,500,000 potential shares against the company's current outstanding share count.