01—Abstract
Summary
Summary of the 8-K/A filed June 1, 2020. Cited figures are marked; the original filing is the authoritative source.
Salesforce, Inc. (CRM) filed an 8-K/A on May 31, 2020, to report on stock awards approved by its Compensation Committee on April 22, 2020.
These awards were granted to its Named Executive Officers, including CEO Marc Benioff and CFO Mark Hawkins. The grants consist of stock options and restricted stock units (RSUs), with a significant portion being performance-based RSUs tied to the company's Total Shareholder Return (TSR) relative to the NASDAQ-100 Index. The performance-based RSUs have a four-year vesting schedule contingent on both continued service and the company's TSR performance over a three-year period.
Payouts range from 0%a to 200% of the target shares, with 100% vesting achieved at the 60th percentile of TSR relative to the NASDAQ-100. Specific provisions are in place for change of control events, potentially accelerating vesting based on TSR performance up to that point and continued service. This filing provides transparency into the executive compensation structure and its alignment with shareholder value creation through TSR performance.
02—Key points
Key Highlights
- Approval of stock options, restricted stock units (RSUs), and performance-based RSUs for Named Executive Officers.
- Grants include stock options with a standard four-year vesting schedule.
- Performance-based RSUs are tied to Salesforce's Total Shareholder Return (TSR) relative to the NASDAQ-100 Index over a three-year performance period.
- Payout for performance-based RSUs ranges from 0% to 200% of target, based on TSR percentile ranking.
- A 60th percentile TSR ranking against the NASDAQ-100 results in 100% of target performance shares vesting.
- Accelerated vesting provisions for performance-based RSUs are triggered by a change of control event.
- Specific conditions for accelerated vesting in the event of a change of control include TSR performance and employee service.
03—Questions
Frequently Asked Questions
What type of equity awards were granted to Salesforce's Named Executive Officers?
Salesforce granted stock options, restricted stock units (RSUs), and performance-based RSUs to its Named Executive Officers. These awards are subject to specific vesting schedules and performance conditions.
How is the vesting of the performance-based RSUs determined?
The performance-based RSUs vest based on two conditions: continued employment through May 15, 2023 (service condition), and the company's Total Shareholder Return (TSR) relative to the NASDAQ-100 Index over a three-year period (performance condition). The payout can range from 0% to 200% of the target shares, with specific thresholds tied to percentile rankings.
What happens to the performance-based RSUs if there is a change of control at Salesforce?
In the event of a change of control, the performance-based RSUs become eligible to vest based on Salesforce's TSR performance relative to the NASDAQ-100 Index from the grant date through the date of the change of control. A portion of the service condition is deemed met, and a pro-rated amount of shares vest immediately, with the remainder vesting quarterly thereafter, subject to continued employment.
Are there any safeguards against a negative TSR performance impacting RSU payouts?
Yes, if Salesforce's absolute TSR over the performance period is negative, the number of shares eligible to vest will not exceed 100% of the target amount, even if the relative TSR ranking is above the 60th percentile. Furthermore, no payout occurs if the TSR ranking falls below the 30th percentile.
04—Continue