Business Context and Reporting Period
This Form 8-K Current Report was filed by Varonis Systems, Inc. on January 11, 2016, regarding events occurring on January 7, 2016. The filing discloses the appointment of a new executive officer and the terms of his employment agreement.
Key Financial Metrics
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. It focuses exclusively on executive compensation details:
- Base Salary: $350,000 annually.
- Target Commission: Equal to the Base Salary (100% of base).
- Equity Grant: 85,000 Restricted Stock Units (RSUs) and 85,000 Stock Options.
- Contract Term: Three years, with automatic one-year renewals unless terminated with 90 days' notice.
Material Changes
The primary material change is the appointment of Eric Mann as Chief Operating Officer, effective January 7, 2016. Mr. Mann joins from Fortinet, Inc., where he served as Vice President of Americas sales, and previously held senior sales leadership roles at NetApp, Inc.
Outlook, Risks, and Unusual Items
Severance and Change in Control: The employment agreement includes severance provisions ranging from one-third to one times the Base Salary upon termination without Cause or for Good Reason. In the event of a Change in Control followed by such a termination within one year, Mr. Mann is entitled to one times Base Salary, unpaid target commission, and accelerated vesting of equity awards.
Restrictive Covenants: The agreement includes standard twelve-month post-termination non-competition and non-solicitation covenants.
Equity Vesting: RSUs vest quarterly (25% annually). Options vest 25% on the first anniversary, with the remainder vesting monthly over the subsequent 36 months.
Investor Verification Checklist
- Verify the impact of the new COO's sales background on Varonis's growth strategy.
- Review the full text of the Employment Agreement (Exhibit 10.1) for specific definitions of "Cause" and "Good Reason."
- Assess the dilution impact of the 170,000 total equity units granted (85,000 RSUs + 85,000 Options).
- Confirm the Compensation Committee's approval of the equity grant as noted in the filing.