Business Context and Reporting Period
This Form 8-K Current Report was filed by NetApp, Inc. on May 12, 2020. The filing discloses the appointment of Cesar Cernuda as President of the Company, effective July 1, 2020. Mr. Cernuda will report to Chief Executive Officer George Kurian.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on executive compensation and appointment details.
Material Changes
The primary material change is the addition of a new C-suite executive. Mr. Cernuda joins from Microsoft Corporation, where he most recently served as President of Microsoft Latin America and Corporate Vice President. He brings prior experience as President of Microsoft Asia Pacific and holds various board and educational credentials.
Compensatory Arrangements and Terms
The Compensation Committee approved the following material terms for Mr. Cernuda's appointment:
- Base Salary: $800,000 annually.
- Bonus Target: 130% of Base Salary.
- Sign-on Bonus: $1,000,000.
- Sign-on Equity Grant: Service-vested RSUs valued at $2,500,000 (80% vesting Dec 31, 2020; 20% vesting 12 months later).
- New Hire Equity Grant: RSUs up to $3,000,000 (50% vesting on first anniversary; 50% on second anniversary).
- On-Going Equity Grants:
- Performance-Based RSUs (PBRSUs) valued at $3,900,000 over a three-year term.
- RSUs valued at $2,600,000 (50% vesting on first anniversary; 50% on second anniversary).
- Sales Performance-Based Equity: RSUs up to $3,000,000 contingent on achieving 97% of FY2021 Annual Bookings Plan and 100% of FY2022 Annual Bookings Plan.
- Severance: 18 months of base salary and target bonus if terminated without Cause.
- Clawback Provision:
- Resignation within 6 months: Repay 100% of non-salary compensation.
- Resignation between 6-12 months: Repay $2,000,000 cash.
- Resignation between 12-24 months: Repay $1,000,000 cash.
Mr. Cernuda will also enter into a Change in Control Severance Agreement and an Indemnification Agreement effective July 1, 2020.
Investor Verification Checklist
- Verify the vesting commencement dates for the equity grants, as they are tied to the start of employment (July 1, 2020).
- Review the specific terms of the Fiscal Year 2021 PBRSU agreement to understand performance metrics beyond the aggregate value.
- Confirm the definition of "Cause" in the offer letter to understand the conditions under which severance is forfeited.
- Monitor the Company's Annual Report on Form 10-K for the full text of the offer letter and related agreements.