now-20211026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (date of earliest event reported): October 26, 2021

___________

SERVICENOW, INC.

(Exact name of registrant as specified in its charter)

___________

Delaware

001-35580

20-2056195

(State or other jurisdiction of

incorporation or organization)

(Commission File Number)

(I.R.S. Employer

Identification Number)

2225 Lawson Lane

Santa Clara, California 95054

(Address of Principal Executive Offices)

(408) 501-8550

(Registrant's telephone number, including area code)


Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.001 per share

NOW

The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On October 26, 2021, the Board of Directors (the “Board”) of ServiceNow, Inc. (the “Company”), upon recommendation of the Leadership Development and Compensation Committee of the Board (the “Compensation Committee”), approved a grant to William R. McDermott, our chief executive officer (“CEO”), of a long-term performance-based stock option award (the “Performance Option Award”) to purchase such number of shares of the Company’s common stock with an approximate award value of $150 million as of the Grant Date (as defined below) if all performance conditions were achieved. The Performance Option Award may vest in eight equal tranches. As described in more detail below, the Board structured the Performance Option Award to align with shareholders’ interests:

•The award is 100% performance-based, dependent on pre-determined, quantitative goals for stock price (“Stock Price Metric”) and subscription-based revenue (“Subscription Revenue Metric”) achievements;

•Each of the eight tranches vests if, and only if, both a specified Stock Price Metric and a specified Subscription Revenue Metric for such tranche are achieved (together, the “Performance Metrics”);

•Notwithstanding any earlier achievement of the Performance Metrics, no portion of the Performance Option Award will vest prior to the two-year anniversary of the date of grant (the “Two-Year Cliff”);

•The Performance Metrics must be achieved within the period starting on the Grant Date and ending on September 30, 2026 (the “Performance Period);

•Mr. McDermott may not sell any shares issued upon the exercise of the Performance Option Award until after the Performance Period ends, except for sales to satisfy a cashless exercise (cost of exercise and taxes);

•In the event the Company conducts material acquisitions or divestitures during the Performance Period, the Subscription Revenue Metric would be adjusted proportionally if the Board or Compensation Committee determines that such adjustment is necessary;

•For any tranche of the Performance Option Award to vest, Mr. McDermott must remain in service as the Company’s CEO or Executive Chairman to ensure that all compensation must be earned through creation of shareholder value; and

•The Performance Option Award is subject to applicable clawback provisions.

Each of the eight tranches vests only when both the applicable Subscription Revenue Metric and Stock Price Metric for such tranche are certified by the Compensation Committee as having been met. In addition, Mr. McDermott must remain in service as the Company’s CEO or Executive Chairman through the later of the certification of a tranche and the Two-Year Cliff in order for the corresponding tranche to vest. The Performance Option Award will have a grant date of October 29, 2021 (the “Grant Date”), with an exercise price equal to the closing price on the Grant Date, and will be exercisable (to the extent achieved and vested) until the expiration date of October 29, 2031 unless Mr. McDermott’s employment is terminated for Cause.

The Compensation Committee designed the Performance Option Award to incentivize significant outperformance and to drive the Company’s strategic direction and value creation over the long-term, with performance goals that are incrementally aggressive relative to the Company’s plan. The Performance Option Award is also intended to ensure leadership continuity over the next five years in the next phase of ServiceNow’s growth. The Performance Option Award is not part of Mr. McDermott’s regular annual compensation and will not be awarded on a regularly recurring basis.

The Performance Option Award aligns Mr. McDermott’s interests and success with those of the Company’s shareholders over the long-term. For example, if Mr. McDermott were to lead the Company to achieve the highest Stock Price Metric, the stock price will have more than doubled, implying more than $150 billion in incremental shareholder value creation.

The Subscription Revenue Metric and Stock Price Metric for a particular tranche may be achieved at different points in time and in any order, and multiple Performance Metrics may be achieved simultaneously; provided that each tranche of options will become eligible to vest, upon the later of the applicable Subscription Revenue Metric and Stock Price Metric to be achieved and certified. Subject to any applicable clawback provisions, policies or other recoupment and forfeiture terms described in the Performance Option Agreement (as defined below), once a goal is achieved, it is forever deemed achieved for determining the vesting of a tranche.

There is no automatic full acceleration of vesting of the Performance Option Award upon a “change in control.” Rather, in connection with a change in control, the Subscription Revenue Metric will be disregarded and achievement of the Stock Price Metric will be measured using the per share common stock price (plus the per share of common stock value of any other consideration) received by the shareholders in the change in control. Any such resulting “achieved” shares and, in the case of a change in control prior to the Two-Year Cliff, any previously achieved shares, will vest on the change in control. The Two-Year Cliff will not apply to previously achieved shares in the event of Mr. McDermott’s death or permanent disability.

In the event the Company conducts material acquisitions or divestitures during the Performance Period and if the Board or Compensation Committee determines that an adjustment is necessary, the Subscription Revenue Metric would be increased in proportion to the relevant revenue of such material acquired companies and the Subscription Revenue Metric would be reduced in proportion to the relevant revenue of such material spun-off/out or divested entities, as applicable. Similarly, if the Board or Compensation Committee determines that such adjustment is necessary, the Stock Price Metric would be adjusted for stock repurchases, stock dividends, stock splits and any similar transaction(s).

The Performance Option Award is being granted under the Company’s 2021 Equity Incentive Plan, and is memorialized in a Notice of Global Performance Stock Option Grant to Mr. McDermott (the “Grant Notice”) and Global Performance Stock Option Award Agreement associated with the Grant Notice (the “Award Agreement”, together with the Grant Notice, the “Performance Option Agreement”) that includes, among other terms and conditions, a restriction on the sale of any shares issued upon exercise of the Performance Option Award until after September 30, 2026, the final day of the Performance Period (other than shares sold in a same-day sale to pay the exercise price and related tax withholding obligations).

The foregoing summary of the terms and conditions of the Performance Option Award set forth above do not purport to be complete and are qualified by reference to the provisions of the Company’s 2021 Equity Incentive Plan and form of Notice of Global Performance Stock Option Grant & Global Performance Stock Option Agreement previously filed with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SERVICENOW, INC.

By:

/s/ Russell S. Elmer

Russell S. Elmer
General Counsel

Date: October 27, 2021

ServiceNow, Inc. filed SEC Form 8-K: Leadership Update