| Item 2.02 | Results of Operations and Financial Condition. |
On October 7, 2024, Cerence Inc. (the “Company”) issued a press release announcing the appointment of Brian Krzanich as President and Chief Executive Officer of the Company and reaffirming its fourth quarter fiscal 2024 guidance previously announced in conjunction with its third quarter fiscal 2024 financial results on August 8, 2024. A copy of the press release is furnished hereto as Exhibit 99.1 and is incorporated into this Item 2.02 by reference. This report and the press release attached hereto as Exhibit 99.1 contain statements intended as “forward-looking statements” that are subject to the cautionary statements regarding forward-looking statements set forth in the press release.
The information in this Item 2.02 and Exhibit 99.1 attached hereto are being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On October 6, 2024, the Board of Directors (the “Board”) of the Company appointed Brian Krzanich as President and Chief Executive Officer (and “principal executive officer”) of the Company, effective October 7, 2024.
Mr. Krzanich, 64, most recently served as Chief Executive Officer of CDK Global, an automotive software company, from 2018 to 2022. Prior to that, Mr. Krzanich served in a number of roles at Intel Corporation beginning in 1982, leading to his ascension to the role of Chief Executive Officer of Intel Corporation from 2013 to 2018. Under his leadership, Intel expanded from its core CPU market into next-generation technologies ranging from cloud computing and artificial intelligence to autonomous vehicles, among others. Mr. Krzanich currently serves on the Board of Directors of SES AI Corporation. He has previously served on the Board of Directors of Electric Last Mile from 2021 to 2022, AMS Osram Ag from 2019 to 2023 and Deere & Company from 2016 to 2018. Mr. Krzanich holds a Bachelor’s Degree in Chemistry from San Jose State University.
In his capacity as President and Chief Executive Officer, Mr. Krzanich will receive a base salary of $600,000 per year. In addition, Mr. Krzanich will be eligible to participate in the Company’s Short Term Incentive Plan with a target opportunity equal to 100% of his base salary. In connection with his appointment, Mr. Krzanich will receive an initial equity award with a target aggregate value of $6.0 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 7, 2025, October 7, 2026 and October 7, 2027, in each case subject to Mr. Krzanich’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 Company performance metrics during the three fiscal-year period ending on September 30, 2027, subject to Mr. Krzanich’s continued service with the Company through the 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. Krzanich has entered into a change of control and severance agreement with the Company (the “Severance Agreement”). The Severance Agreement provides that, in the event that Mr. Krzanich’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. Krzanich will be eligible to receive: (i) a lump sum payment equal to 150% of his annual base salary then in effect; (ii) a lump sum payment equal to 150% 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 18 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 through the end of the performance period; and (v) up to 18 months of monthly COBRA premiums (at the coverage levels in effect for active employees of the Company).
