CrowdStrike Dangles $200 Million Incentive at CEO, Links Pay With Stock Price
Cybersecurity firm also agreed to a lucrative severance package with its CEO in case the company is acquired.
September 2, 2021
On September 1, 2021, CrowdStrike (CRWD), an endpoint and cloud cybersecurity firm, entered into a change in control and severance agreement with George Kurtz, the Company’s President and Chief Executive Officer. If CrowdStrike were acquired Kurtz, under certain circumstances, is now entitled to 1.5X his annual salary, 1.5X his annual target bonus, and the accelerated vesting of equity grants.
Three days earlier, CrowdStrike’s board of directors granted Kurtz a special award of 540,000 performance stock units (PSUs) that under certain circumstances vest immediately upon a change in control. The award includes four tranches of PSUs that vest based on the following conditions:
1) Share price hurdles
2) Half vest a year after the “vesting commencement date” and the rest in four equal quarterly installments of 12.5%
If CrowdStrike is acquired, the PSUs beneath the takeout price immediately vest. If the takeout price lands between any of the tranches, CrowdStrike’s latest 10-Q reveals:
“... pro rata portion of the tranche of PSUs that is subject to the higher of such two price hurdles will be deemed earned using linear interpolation…”
Kurtz’s award is worth approximately $200 million if CrowdStrike’s share price reaches $400.
The board approved Kurtz’s new package two months after outside directors received an 11.6% increase in their annual $33.5k retainers and a 5% increase in their $200k annual equity awards. Each received equity worth $375,000 at the beginning of their terms.
Investors may find it useful to know Kurtz sold a cybersecurity company to McAfee before founding CrowdStrike. Prior to that, Kurtz worked at EY and PwC. He is an accountant by training.
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