| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Chief Financial Officer Transition
On February 28, 2024, the Board of Directors (the “Board”) of Cerence Inc. (the “Company”) appointed Daniel Tempesta as Chief Financial Officer (and, in such capacity, the “principal financial officer” and “principal accounting officer” of the Company), effective March 18, 2024.
Mr. Tempesta, age 53, most recently served as Executive Vice President and Chief Financial Officer at Nuance Communications, Inc. (“Nuance”) from July 2015 until December 2023, and in this role, he oversaw all finance and accounting operations, as well as tax, treasury, investor relations, order management, and procurement. Prior to his appointment as Nuance’s Chief Financial Officer, Mr. Tempesta served as Nuance’s Chief Accounting Officer, Corporate Controller and Senior Vice President of Finance. Before joining Nuance, Mr. Tempesta held several positions at Teradyne, Inc. from February 2004 to February 2008, including Chief Accounting Officer and Corporate Controller. Prior to that, he was in the audit practice of PricewaterhouseCoopers L.L.P. He received an accounting degree from the Isenberg School of Management at the University of Massachusetts, Amherst.
Mr. Tempesta will receive an annual base salary of $500,000. In addition, Mr. Tempesta will be eligible to participate in the Company’s Short Term Incentive Plan with a target opportunity equal to 75% of his base salary. In connection with his appointment, Mr. Tempesta will receive an initial equity award with a target aggregate value of $3 million. Such award will consist of 50% time-based restricted stock units and 50% performance-based restricted stock units. The time-based restricted stock units will vest in three equal installments on each of October 1, 2024, October 1, 2025 and October 1, 2026, in each case subject to Mr. Tempesta’s continued service with the Company through the applicable vesting date. The performance-based restricted stock units will be earned based on the achievement of pre-determined Company performance metrics for each of fiscal years 2024, 2025 and 2026 with one-third of the total performance-based restricted stock units eligible to be earned for each fiscal year, subject to Mr. Tempesta’s continued service with the Company through the applicable vesting date. Mr. Tempesta will also receive a one-time sign-on time-based restricted stock unit award with a target value of $3 million (the “Sign-On RSU Award”). The Sign-On RSU Award will vest in three equal installments on each of December 15, 2024, December 15, 2025 and December 15, 2026, in each case subject to Mr. Tempesta’s continued service with the Company through the applicable vesting date. These equity awards will be subject to the terms and conditions set forth in the 2024 Inducement Plan (as defined below) and the applicable award agreement.
In connection with his appointment, Mr. Tempesta will enter into a change of control and severance agreement with the Company (the “Severance Agreement”) that will continue until terminated in accordance with its terms. The Severance Agreement provides that, in the event that Mr. Tempesta’s employment is terminated by the Company other than for “cause” (as defined in the Severance Agreement) and for a reason other than due to his death or “disability” (as defined in the Severance Agreement) outside of the one-year period following a change of control (as defined in the Severance Agreement), Mr. Tempesta will be eligible to receive: (i) a lump sum payment equal to 100% of his annual base salary then in effect; (ii) a lump sum payment equal to 100% of his target bonus and a pro-rated percentage of his target bonus for the fiscal year in which the termination occurs; (iii) vesting of the portion of his time-based equity awards that would have vested in the twelve months following the termination date; (iv) vesting of the earned portion of any performance-based equity awards for which the performance period is complete as of the termination date and the opportunity under certain circumstances to earn a pro-rata portion of any performance-based awards with a single three-year performance period for which the performance period is not complete as of the termination date based on actual performance at the end of the performance period; and (v) up to twelve months of monthly COBRA premiums (at the coverage levels in effect for active employees of the Company).
If Mr. Tempesta’s employment is terminated by the Company other than for cause and for a reason other than due to his death or disability or he resigns for “good reason” (as defined in the Severance Agreement) within one year following a change of control, he will instead be eligible to receive: (i) a lump sum payment equal to 150% of his annual base salary then in effect (or, if greater, as in effect immediately prior to the change of control); (ii) a lump
