Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Transition of Chief Executive Officer to Chief Technology Officer
On January 9, 2022, Shay Banon provided Elastic N.V. (the “Company” or “Elastic”) with notice of his intent to transition from his position as Chairman and Chief Executive Officer (“CEO”) of the Company, to Chief Technology Officer (“CTO”) of the Company, effective as of January 11, 2022. Mr. Banon will continue to serve on the Company’s Board of Directors (the “Board”) and Chetan Puttagunta, currently Lead Independent Director, has been appointed Chairman of the Board.
In connection with his transition to CTO, Elasticsearch, Inc. and Mr. Banon entered into an amended and restated employment agreement on January 11, 2022 (the “Banon Employment Agreement”) on substantially the same terms and conditions as the amended and restated employment agreement between Elasticsearch, Inc. and Mr. Banon dated February 24, 2021 (the “Prior Banon Employment Agreement”), except that the Banon Employment Agreement provides that Mr. Banon will resign as Chairman of the Board and will serve as CTO. Prior to the formal appointment of Ashutosh Kulkarni as CEO as described below, Mr. Banon will no longer exercise the responsibilities of CEO.
For a full description of the Prior Banon Employment Agreement, please see Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 31, 2021, filed with the Securities and Exchange Commission on March 3, 2021.
Mr. Banon’s transition from CEO to CTO is not the result of any material disagreement with the Company relating to the Company’s operations, policies or practices. There are no family relationships between Mr. Banon and any director or executive officer of the Company, and the Company has not entered into any transactions with Mr. Banon that are reportable pursuant to Item 404(a) of Regulation S-K. Except as described above, there are no arrangements or understandings between Mr. Banon and any other persons pursuant to which he was appointed CTO.
Appointment of Chief Executive Officer
On January 12, 2022, the Company announced the promotion of Ashutosh Kulkarni, the Company’s current Chief Product Officer, to CEO, effective as of January 11, 2022. In addition, the Company announced the nomination of Mr. Kulkarni to the Board.
Pursuant to Dutch law, Mr. Kulkarni’s appointment to the Board is subject to a shareholder vote, expected to be held at an extraordinary general shareholder meeting in March 2022 (the “EGM”). Upon his election to the Board, Mr. Kulkarni will be automatically appointed as CEO, without further action by the Board. Until such time, Mr. Kulkarni will serve as acting CEO with the full powers of the CEO conferred upon him by the Board.
In connection with his transition to CEO, Elasticsearch, Inc. and Mr. Kulkarni entered into an amended employment letter effective January 11, 2022 (the “Kulkarni Employment Letter”). The Kulkarni Employment Letter does not have a specific term and provides that Mr. Kulkarni will continue to serve as an at-will employee. Mr. Kulkarni’s annual base salary will be $600,000, and he will be eligible for an annual target cash incentive payment for 2022 equal to the sum of (i) 60% of Mr. Kulkarni’s base salary for the period between the commencement of fiscal year 2022 and January 11, 2022, and (ii) 100% of Mr. Kulkarni’s base salary for the period between January 11, 2022 and the end of fiscal year 2022. In addition, Mr. Kulkarni will be granted equity awards covering ordinary shares of Elastic with an aggregate approximate value of $12,000,000. Subject to approval of Mr. Kulkarni’s appointment as CEO at the EGM, one third of the value of the equity awards will be in the form of a restricted stock unit award, and two thirds of the value of the equity awards will be in the form of a stock option award to purchase shares of Elastic. The restricted stock unit award and stock option award will each vest over a 4-year period ratably on designated vesting dates following the applicable vesting commencement date in accordance with Elastic’s equity grant practices, subject to Mr. Kulkarni’s continuous service with the Company or its affiliates through each vesting date. The restricted stock unit award and stock option award will be subject to such other terms as set forth in the Elastic N.V. Amended and Restated 2012 Stock Option Plan (the “Plan”), the applicable award agreement under the Plan, and the Company’s equity grant practices in effect from time to time.
Mr. Kulkarni previously entered into the Company’s standard change in control and severance agreement with the Company, which will remain in effect. The change in control and severance agreement provides certain severance payments and benefits if Mr. Kulkarni’s employment is terminated other than for “cause” (as defined in the agreement) or if he resigns for “good reason” (as defined in the agreement), subject to Mr. Kulkarni satisfying certain other terms as set forth in the agreement. Mr. Kulkarni also previously entered into the Company’s standard indemnification agreement with the Company, which will remain in effect. The indemnification agreement provides indemnification for certain liabilities that may arise by reason of his status or service. For a full description of the Company’s standard change in control and severance agreements and indemnification agreements, please see Exhibit 10.3 and Exhibit 10.1, respectively, to the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2020, filed with the Securities and Exchange Commission on June 26, 2020.
