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Veeva Systems 8-K Report, Executive Changes (Jun 21, 2024)

Reports
Leadership Changes·Other Events·Exhibits & Filings
Filing Date
Filed June 21, 2024
Period End
June 19, 2024
Security
VEEV
In the record · 2016–202610-K1110-Q328-K94

VEEV filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 94 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Nov ’19Nov ’19
  2. Leadership change8-K · Aug ’22Aug ’22
  3. Leadership change8-K · Aug ’26Aug ’26

01—Abstract

Summary

Summary of the 8-K filed June 21, 2024. Cited figures are marked; the original filing is the authoritative source.

Veeva Systems Inc. disclosed in an 8-K filed June 21, 2024 that its Board of Directors, on June 19, 2024, approved a premium-priced performance-based stock option grant to Chief Executive Officer and founder Peter P.

Gassner. The grant covers 2,650,000 shares of Class A common stock at an exercise price of $236.90a per share, equal to the Company's 52-week high and well above the $178.74 closing price on the trading date before the grant. The company estimates the grant date fair value at approximately $172 million, to be recognized as stock compensation expense ratably each quarter through the final vesting date.

The option vests in five equal annual increments beginning on each anniversary of February 1, 2025, subject to Mr. Gassner's continued service as CEO. No portion vests unless the closing stock price is sustained at or above $236.90b for sixty consecutive trading days during the period between February 1, 2025 and February 1, 2030. Shares acquired on exercise are subject to a holding period ending on the earlier of two years after exercise and February 1, 2032.

The filing states that the option is not subject to contractual vesting acceleration and that the Board intends it to be Mr. Gassner's only equity-based compensation until at least 2030. Mr. Gassner's only other compensation has been a below-market annual base salary of $450,000,c and he has received no cash compensation since the IPO. In Item 8.01, the Board decided unanimously on June 19, 2024 not to accept the tendered resignation of director Paul Sekhri.

The filing states that Mr. Sekhri did not receive a majority of votes cast in favor of his reelection, which the Board attributes in part to a recommendation from Institutional Shareholder Services (ISS) that shareholders vote against him for being overboarded. Mr. Sekhri will continue to serve on the Board. The filing also contains forward-looking statements and refers readers to the risk factors summarized in the company's Form 10-Q for the period ended April 30, 2024.

02—Key points

Key Highlights

  1. CEO Peter P. Gassner received a performance-based stock option for 2,650,000 Class A shares at an exercise price of $236.90, equal to the 52-week high.
  2. The grant date fair value is estimated at approximately $172 million, to be expensed ratably each quarter through the final vesting date.
  3. The option vests only if the stock closes at or above $236.90 for 60 consecutive trading days during February 1, 2025 to February 1, 2030, in addition to service-based vesting in five annual increments.
  4. Shares acquired on exercise carry a holding period ending on the earlier of two years after exercise and February 1, 2032.
  5. The Board intends this premium-priced option to be Mr. Gassner's only equity-based compensation until at least 2030; his prior equity award was in January 2018.
  6. The stock closed at $178.74 on the trading date immediately before the June 19, 2024 grant date, per the filing.
  7. The Board unanimously decided not to accept director Paul Sekhri's resignation tender, and he will remain on the Board after not receiving a majority of votes cast for his reelection.

03—Questions

Frequently Asked Questions

  1. What is the size and value of the CEO's new stock option grant?

    Peter P. Gassner was granted options on 2,650,000 Class A shares at $236.90 per share. The company estimates the grant date fair value at approximately $172 million, which will be recognized as stock compensation expense ratably each quarter through the final vesting date.

  2. When and under what conditions does the option vest?

    The option vests in five equal increments on each annual anniversary of February 1, 2025, subject to Mr. Gassner's continued service as CEO. No portion vests unless the closing stock price is sustained at or above $236.90 for 60 consecutive trading days during the period between February 1, 2025 and February 1, 2030.

  3. Why is the exercise price set so high relative to the recent stock price?

    The filing states the $236.90 exercise price equals the Company's 52-week high and is significantly above the $178.74 closing price on the trading date before the grant. The Board describes the structure as a premium-priced, performance-based incentive intended to align the CEO with shareholders. Mr. Gassner receives no value from the award unless the stock exceeds $236.90 for 60 consecutive trading days and is above that price at exercise.

  4. Why did the Board decline Paul Sekhri's resignation?

    The Board unanimously determined that accepting his resignation was not in the best interests of the Company, its shareholders, or its public benefit purpose. It cited his executive and board experience, his life sciences knowledge including his perspective as a sitting biotech CEO and director, his attendance of 100% of Board and committee meetings in fiscal 2024, and his institutional knowledge. The filing also states that ISS recommended shareholders vote against him for being overboarded, which the Board believes contributed to him not receiving a majority of votes cast in favor of his reelection.

04—Continue

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