 | ROPES & GRAY LLP THREE EMBARCADERO CENTER SAN FRANCISCO, CA 94111-4006 WWW.ROPESGRAY.COM |
October 7, 2020
VIA EDGAR
Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Mail Stop 2465
Washington, D.C. 20549
| Attention: | Matthew Crispino, Staff Attorney; Brittany Ebbertt, Senior Staff Accountant | |
| Re: | McAfee Corp. – Registration Statement on Form S-1 (File No. 333-249101) | |
Ladies and Gentlemen:
On behalf of McAfee Corp. (the “Company”), in response to our telephonic conversation on October 6, 2020, the Company hereby provides the following supplemental information regarding the equity awards granted by Foundation Technology Worldwide LLC, all of which were approved by the board of directors or the compensation committee of Foundation Technology Worldwide LLC, as applicable:
Accounting Grant Date | Award Type | Units Underlying Awards | Grant Date Fair Value per Unit | |||||||
15-Feb-2019 | Restricted Equity Units (“RSUs”) | 432 | $ | 43.39 | (1) | |||||
20-Feb-2019 | RSUs | 5,000 | $ | 43.39 | (1) | |||||
08-Apr-2019 | RSUs | 5,220 | $ | 44.20 | (2) | |||||
14-May-2019 | RSUs | 424 | $ | 44.20 | (2) | |||||
13-Aug-2019 | RSUs | 58,715 | $ | 34.57 | (3) | |||||
15-Aug-2019 | RSUs | 542 | $ | 34.57 | (3) | |||||
20-Aug-2019 | Management Incentive Units (“MIUs”) | 94,714 | $ | 9.391721 | (4) | |||||
20-Aug-2019 | RSUs | 19,444 | $ | 34.57 | (3) | |||||
28-Aug-2019 | RSUs | 87,651 | $ | 0.00 | (5) | |||||
19-Sep-2019 | MIUs | 67,653 | $ | 9.443751 | (4) | |||||
19-Sep-2019 | RSUs | 97,318 | $ | 34.57 | (3) | |||||
15-Nov-2019 | RSUs | 542 | $ | 34.57 | (3) | |||||
Securities and Exchange Commission Division of Corporation Finance | October 7, 2020 |
Accounting | Award Type | Units Underlying Awards | Grant Date Fair Value per Unit | |||||||
22-Nov-2019 | MIUs | 115,010 | $ | 9.33647 | (4) | |||||
22-Nov-2019 | RSUs | 193,137 | $ | 34.57 | (3) | |||||
03-Feb-2020 | MIUs | 312,409 | $ | 8.912864 | (4) | |||||
15-Feb-2020 | RSUs | 542 | $ | 34.57 | (3) | |||||
24-Feb-2020 | RSUs | 468,614 | $ | 34.57 | (3) | |||||
15-May-2020 | RSUs | 542 | $ | 34.57 | (3) | |||||
19-May-2020 | MIUs | 732,681 | $ | 9.180031 | (4) | |||||
19-May-2020 | RSUs | 261,192 | $ | 34.57 | (3) | |||||
13-Aug-2020 | MIUs | 362,367 | $ | 9.373423 | (4) | |||||
13-Aug-2020 | RSUs | 261,111 | $ | 34.57 | (3) | |||||
15-Aug-2020 | RSUs | 542 | $ | 34.57 | (3) | |||||
| (1) | Equals the fair value per unit on the date of the grants, as set forth in a third-party valuation dated as of February 7, 2018, the Company’s most recently completed independent third-party valuation as of the grant date. |
| (2) | Equals the fair value per unit on the date of the grants, as set forth in a third-party valuation dated as of March 31, 2019, the Company’s most recently completed independent third-party valuation as of the grant date. |
| (3) | Equals the fair value per unit on the date of the grants, as set forth in a third-party valuation dated as of June 14, 2019, the Company’s most recently completed independent third-party valuation as of the grant date. The decrease in fair value as of June 14, 2019 compared to March 31, 2019 was primarily the result of a substantial distribution to members of Foundation Technology Worldwide LLC following a debt refinancing transaction in June 2019. |
| (4) | Equals the fair value per unit calculated using the Black-Scholes model as of the grant date, which model reflected a fair value of the units underlying the MIUs of $34.57 based on the most recently completed independent third-party valuation as of the date of the grants. |
| (5) | Reflect “top-off” awards granted to existing award holders in connection with an equity restructuring in June 2019, as required under the make whole terms of such existing awards. These incremental awards were analyzed as modification as required by GAAP and no incremental compensation expense was determined to be required due to equivalent aggregate fair values of the awards before and after modification. |
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Securities and Exchange Commission Division of Corporation Finance | October 7, 2020 |
The Company further advises that from the beginning of the fiscal year ended December 28, 2019 through the date hereof, Foundation Technology Worldwide LLC issued a total of 3,952,552 Cash RSUs (“CRSUs”) and a total of 930,677 Management Equity Participation Units (“MEPUs”), which grants were approved by the board of directors or the compensation committee of Foundation Technology Worldwide LLC, as applicable. As disclosed on page F-15 of the Registration Statement, because the CRSUs and MEPUs vest upon a qualifying liquidity event (i.e., a change of control or public offering registered on a Form S-1 (or successor form), in either case, occurring on or before April 3, 2024) (a “Qualifying Liquidity Event”), the Company does not recognize any expense in connection with such awards until the Qualifying Liquidity Event occurs. As further disclosed on page 99 of the Registration Statement, the Company expects to record the equity-based compensation expense recognized upon the vesting of the outstanding CRSUs and MEPUs at the time of the offering based on the price paid by the public in the offering, and will report the amount of such equity-based compensation expense in its unaudited pro forma consolidated financial information disclosed in the Registration Statement.
If you have any questions or comments about this letter or need any further information, please call the undersigned at (415) 315-2355 or Benjamin Kozik at (415) 315-6331.
| Very truly yours, |
| /s/ Thomas Holden |
| Thomas Holden |
| cc: | Peter Leav (McAfee Corp.) |
Venkat Bhamidipati (McAfee Corp.)
Ashish Agarwal (McAfee Corp.)
Katharine Martin (Wilson Sonsini Goodrich & Rosati, P.C.)
Andrew Hill (Wilson Sonsini Goodrich & Rosati, P.C.)
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