| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On February 25, 2019, the Board of Directors of Avalara, Inc. (the “Company”) appointed Amit Mathradas to the newly-created position of President and Chief Operating Officer, effective March 4, 2019. Mr. Mathradas will be replacing Scott M. McFarlane as President; Mr. McFarlane will continue to serve as the Company’s Chairman and Chief Executive Officer. As Chief Operating Officer, Mr. Mathradas will oversee theend-to-end customer experience for businesses seeking tax compliance support, including business development, sales, marketing, customer success, and professional services.
Prior to joining Avalara, from November 2015 to March 2019, Mr. Mathradas, age 44, served as General Manager and Head of North American Small Business at PayPal, a digital payments company, where he led the company’s small business segment, managing teams responsible for acquisition, activation, cross-sell, and retention of small businesses. Prior to PayPal, from September 2013 to October 2015, Mr. Mathradas served as senior vice president and GM of Web.com, an Internet services offering, focusing on small businesses. Mr. Mathradas holds a Bachelor’s Degree from Wittenberg University and an M.B.A. from Northwestern University’s Kellogg School of Management.
In connection with Mr. Mathradas’s appointment, the Company has entered into an employment agreement with Mr. Mathradas that governs the terms of his employment with the Company. Under Mr. Mathradas’s employment agreement, his base salary is $450,000, subject to periodic review. Mr. Mathradas is also eligible to receive an annual target performance-based bonus of 80% of his base salary and to participate in the Company’s employee benefit programs. Mr. Mathradas will receive asign-on bonus of $300,000 payable in two equal installments, the first of which will be paid on the first regularly scheduled payroll date following Mr. Mathradas’s commencement of employment. Thesign-on bonus is subject to certain repayment obligations if Mr. Mathradas’s employment terminates prior to theone-year anniversary of employment. Mr. Mathradas is also eligible to receive relocation assistance of up to $100,000.
Subject to approval by the Company’s board of directors (or the Compensation and Leadership Development Committee thereof), Mr. Mathradas is eligible to receive the following equity awards under the Company’s 2018 Equity Incentive Plan:
| | • | | restricted stock units (“RSUs”) for that number of shares of the Company’s common stock calculated by dividing $4,200,000 by the average closing price of the Company’s common stock during the calendar month preceding the grant date of the RSUs. The RSUs will vest 20% on each of the first, second, and third anniversaries of the vesting commencement date and 40% on the fourth anniversary of the vesting commencement date, subject to continued employment or service on each vest date. |
| | • | | a nonqualified stock option, based on a target equity value of $1,800,000 and converted to a number of shares of the Company’s common stock based on the Company’s financial accounting valuations of stock options. The option will have a per share exercise price equal to the closing price of the Company’s common stock on the grant date. The option will vest 25% on the first anniversary of employment and thereafter an additional 1/48th will vest each month thereafter for the next 36 months, subject to continued employment or service on each vest date. |
In the event Mr. Mathradas’s employment is terminated by the Company without “cause” or by Mr. Mathradas for “good reason,” (each as defined in the employment agreement) including pursuant to a change in control termination, Mr. Mathradas will be eligible to receive the following severance payments and benefits, subject to execution, andnon-revocation, of a general release and waiver of claims against the Company in a form satisfactory to the Company and his continued compliance with the Company’s proprietary information and inventions agreement:
| | • | | severance pay equal to 12 months’ base salary, provided that in the event of a change in control termination, such amount will be equal to 18 months’ base salary; |
| | • | | in the event of a change in control termination, payment of the target bonus for the year of termination,pro-rated for the number of full months worked in such calendar year; |
| | • | | COBRA continuation coverage for a period of six months following termination, provided that coverage will be for 12 months in the event of a change in control termination (or in either case until such time as Mr. Mathradas is no longer entitled to COBRA continuation coverage under the group health plan, whichever period is shorter); and |
| | • | | in the event of a change in control termination, full acceleration of time-based equity awards. |
