8-KLeadership ChangesExhibits & Filings

Guardant Health, Inc. 8-K Report, Executive Changes (May 27, 2020)

Filed May 27, 2020For Securities:GH

Summary

Guardant Health, Inc. (GH) announced on May 27, 2020, a significant long-term incentive award to its founders, CEO Helmy Eltoukhy and President AmirAli Talasaz. The independent directors approved the grant of 1,695,574 performance-based restricted stock units (PSUs) to each founder. These PSUs are designed to retain and incentivize the founders by directly tying their compensation to the company's sustained stock price appreciation over a seven-year period, with vesting contingent upon achieving pre-determined stock price milestones of $120, $150, and $200 per share. This award is notable as it is the first equity compensation for the founders since before the company's IPO and comes with substantial concessions. In exchange for these PSUs, each founder has agreed to a base salary of $1 per year until the seventh anniversary of the grant date and will not be eligible for annual bonuses for 2020 or any period prior to this anniversary. Furthermore, they have waived eligibility for other equity or long-term incentive awards until calendar year 2027. The PSUs will also vest upon certain termination events (death, disability, termination by the company without cause, or by the founder for good reason) and under specific change-in-control scenarios, with the vesting tied to achieving or exceeding certain stock price thresholds. The total value of the PSU grants was determined by dividing $131 million by the company's 180-day volume-weighted average stock price (VWAP).

Key Highlights

  • 1Founders Helmy Eltoukhy and AmirAli Talasaz each received 1,695,574 performance-based restricted stock units (PSUs).
  • 2PSU vesting is contingent on sustained stock price achievement over a seven-year period, with milestones at $120, $150, and $200 per share.
  • 3Founders have agreed to a nominal $1 annual base salary and waived bonus eligibility until the seventh anniversary of the grant date.
  • 4In exchange for the PSUs, founders will not be eligible for other equity or long-term incentive awards before calendar year 2027.
  • 5The total value of the PSU grants was calculated based on $131 million divided by the 180-day VWAP, indicating a substantial award value.
  • 6Vesting provisions are included for termination of employment (death, disability, company termination without cause, founder termination for good reason) and change-in-control events, often linked to stock price performance.
  • 7This represents the first equity compensation award for the founders since July 2017, predating the company's IPO.

Frequently Asked Questions

The PSUs are designed to retain and incentivize the company's founders, Helmy Eltoukhy and AmirAli Talasaz, by directly linking a significant portion of their long-term compensation to sustained increases in Guardant Health's stock price over a seven-year period, thereby aligning their interests with long-term stockholder value creation.

The PSUs will generally vest in one-third increments upon the company's common stock closing price achieving and sustaining, for 30 consecutive calendar days, the following thresholds: $120, $150, and $200 per share. If the stock price does not reach $120 per share and sustain it for 30 days prior to May 26, 2027, no PSUs will vest.

In connection with the PSU grants, each founder has agreed to reduce their annual base salary to $1 until the seventh anniversary of the grant date and will not be eligible to receive an annual bonus for 2020 or any period prior to that seventh anniversary. They also agreed not to be eligible for other equity-based or long-term incentive compensation awards until calendar year 2027.

In a change of control, one-third of the PSUs will vest if the per-share price received by stockholders exceeds the grant date fair market value or VWAP but is less than $120. If the per-share price equals or exceeds $120, the PSUs will vest based on the stock price goals achieved by the deal price. Any remaining unvested PSUs that are assumed by the acquiring entity will continue to be eligible to vest based on adjusted stock price goals.