Item 5.02 - Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)Entry into Compensatory Arrangements with Chief Executive Officer and
President
On June 15, 2020, Veritone, Inc. (the "Company") entered into new employment
agreements with Chad Steelberg, the Company's Chief Executive Officer, and Ryan
Steelberg, the Company's President (the "Employment Agreements"). The Employment
Agreements replace and supersede the employment agreements entered into with
such executive officers in 2017 and the other compensation plans and
arrangements established by the Compensation Committee of the Board of Directors
(the "Board") of the Company for such officers. Each Employment Agreement has an
initial term expiring on December 31, 2022, which will renew automatically for
additional one-year terms unless the Company or the officer elects not to renew
the agreement by providing written notice to the other party at least 90 days
prior to the expiration of the then-current term.
Pursuant to the Employment Agreements, the annual base salary of Chad Steelberg
has been set at $500,000, and the annual base salary of Ryan Steelberg has been
set at $375,000. Each officer's base salary is subject to review by the Board at
least annually and, in any event, shall be increased by no less than 5%
annually. Each officer may, subject to certain conditions, elect to receive up
to 25% of his base salary during any calendar quarter in the form of fully
vested stock awards issued under the Company's stock incentive plans (with the
number of shares determined based on the average of the daily volume-weighted
average prices per share of the Company's common stock during the quarter).
The Employment Agreements also provide that each officer will be entitled to
receive annual incentive bonuses. Chad Steelberg's target incentive amount shall
be equal to at least 120% of his then-current annual base salary, and Ryan
Steelberg's target incentive amount shall be equal to at least 100% of his
then-current annual base salary. 50% of the incentive amount will tied to the
achievement of annual performance goals with earned amounts paid annually, and
50% of the incentive amount will be tied to the achievement of quarterly
performance goals with earned amounts paid quarterly. However, Chad Steelberg
will receive a total bonus each year equal to at least 50% of his then-current
base salary, and Ryan Steelberg will receive a total bonus each year equal to at
least 25% of his then-current base salary, whether or not the applicable
performance goals have been achieved.
Pursuant to the Employment Agreements, each of Chad Steelberg and Ryan Steelberg
received an initial award of restricted stock units representing the right to
receive upon vesting 350,000 shares of the Company's common stock and 140,000
shares of the Company's common stock, respectively, which will vest in full on
June 15, 2021. In addition, commencing in 2021, Chad Steelberg will be entitled
to receive on an annual basis (a) an award of restricted stock units
representing the right to receive upon vesting 175,000 shares of the Company's
common stock, and (b) an award of restricted stock units representing the right
to receive upon vesting a number of shares of the Company's common stock
determined by dividing $150,000 by the average of the daily volume-weighted
average prices of the Company's common stock for the ninety (90) calendar day
period ended on the last trading day prior to the grant thereof. Commencing in
2021, Ryan Steelberg will be entitled to receive on an annual basis (a) an award
of restricted stock units representing the right to receive upon vesting 125,000
shares of the Company's common stock, and (b) an award of restricted stock units
representing the right to receive upon vesting a number of shares of the
Company's common stock determined by dividing $75,000 by the average of the
daily volume-weighted average prices of the Company's common stock for the
ninety (90) calendar day period ended on the last trading day prior to the grant
thereof. Each such annual restricted stock unit award will vest in full on the
first anniversary of the grant date.
The Employment Agreements provide for payment of other benefits to each officer
including (i) payment of a commuting allowance of $25,000 per calendar quarter
for Chad Steelberg and $12,500 per calendar quarter for Ryan Steelberg, (ii)
purchase of separate healthcare policies covering the officer and his family,
(iii) reimbursement of legal fees reasonably incurred in the negotiation of both
officers' employment agreements, up to a maximum of $50,000, and (iv) other
benefits generally made available to employees under the Company's employee
benefit plans.
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The Employment Agreements are at-will agreements and may be terminated at any
time and for any reason or without reason. However, the Employment Agreements
provide that, if the officer's employment is terminated by the Company without
cause (as defined in his Employment Agreement) or due to his death or disability
(as defined in his Employment Agreement), or the officer resigns for good reason
(as defined in his Employment Agreement) (each, a "Good Leaver Termination"),
then 50% of any unvested portion of any equity awards held by the officer (other
than the performance-based stock options granted to him under the Company's 2018
Performance-Based Stock Incentive Plan (the "2018 Plan")) will immediately vest,
and all stock options held by the officer (other than the performance-based
stock options granted to him under the 2018 Plan) will remain exercisable until
the expiration of the term of such stock option. In addition, the officer shall
be entitled to receive (i) his annual incentive bonus for the year in which the
termination occurs, prorated based on the completed portion of the applicable
performance period through the date of termination, with any performance metrics
based on actual performance as determined at the end of the annual performance
period, and (ii) a severance payment equal to the sum of his annual base salary
and his target annual incentive bonus, multiplied by 1.5, which amount will be
paid in thirty-six (36) equal installments through salary continuation in
accordance with the Company's normal payroll practices.
The Employment Agreements also provide that, in the event of a change in control
of the Company, if the officer's employment is terminated as a result of a Good
Leaver Termination during the six-month period prior to such change in control
or 12-month period following such change in control, the officer shall be
entitled to the same benefits and payments described above, except that such
officer shall also be entitled to an additional severance payment equal to the
sum of his annual base salary and his target annual incentive bonus, multiplied
by 3.5, which amount shall be payable in a lump sum upon the officer's
termination.
With respect to the performance-based stock options granted to each officer
under the 2018 Plan, in addition to the change in control provisions set forth
in the 2018 Plan, the Employment Agreements provide that, if the officer's
employment is terminated by the Company without cause, other than following a
change in control of the Company, then such awards will remain exercisable for
the remainder of the term thereof, provided that the officer has not engaged in
misconduct, as defined in the 2018 Plan.
The foregoing description of the Employment Agreements does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Employment Agreements, which are attached to this Current Report on Form 8-K as
Exhibits 10.1 and 10.2 and incorporated herein by reference. The initial
restricted stock unit awards granted to Chad Steelberg and Ryan Steelberg on
June 15, 2020 pursuant to the Employment Agreements are evidenced by restricted
stock unit award agreements in substantially the form previously filed as
Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended
December 31, 2018, filed with the Securities and Exchange Commission on March
18, 2019, subject to the additional terms and conditions set forth in the
Employment Agreements.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Employment Agreement between Chad Steelberg and the Company
dated June 15, 2020.
10.2 Employment Agreement between Ryan Steelberg and the Company
dated June 15, 2020.
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