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): September 17, 2018
Red Hat, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| 001-33162 | 06-1364380 | |
| (Commission File Number) | (IRS Employer Identification No.) | |
| 100 East Davie Street, Raleigh, North Carolina | 27601 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(919) 754-3700
(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)) |
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) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
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 |
(d) On September 17, 2018, the Board of Directors (the “Board”) of Red Hat, Inc. (the “Company”) appointed Kevin M. Murai to serve, effective at the close of business on September 17, 2018, as a director of the Company for a term expiring at the Company’s next annual meeting of stockholders. A press release announcing the election was issued on September 20, 2018, and is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K.
Mr. Murai has been employed by Synnex Corporation (“Synnex”), a company providing distribution, logistics and integration services for the technology industry and outsourced services focused on customer engagement, since March 2008. He served as President and Chief Executive Officer of Synnex from December 2008 until March 1, 2018 and served as President and Co-Chief Executive Officer from March 2008 until December 2008. He has served as a director of Synnex since March 2008 and became Chairman of the Synnex board of directors on March 1, 2018. Prior to joining Synnex, Mr. Murai was employed for 19 years at Ingram Micro Inc., a provider of global technology and supply chain services, where he served in several executive management positions, including as President, Chief Operating Officer and a member of the Board of Directors. Currently, he serves on the Board of Directors for StanCorp Financial Group, Inc., which on March 7, 2016 became a wholly-owned subsidiary of Meiji Yasuda Life Insurance Company and ceased to be publicly traded.
Prior to his appointment, the Board approved an increase in the size of the Board to nine members. There are no arrangements or understandings pursuant to which Mr. Murai was selected as a director. The Board has determined that Mr. Murai has no material relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that he is an independent director under the rules of the New York Stock Exchange. Mr. Murai has not yet been appointed to any committees of the Board.
Mr. Murai will be compensated under the compensation plan currently in effect for the Company’s non-employee directors, the Non-Employee Director Compensation Plan (the “Director Compensation Plan”). Under the Director Compensation Plan, he will be eligible to receive an annual cash retainer of $60,000 for his service as a member of the Board. In addition, the Director Compensation Plan provides for the following annual cash retainers for service on committees of the Board: (i) $20,000 for service on the Audit Committee; (ii) $15,000 for service on the Compensation Committee; and (iii) $7,500 for service on the Nominating and Corporate Governance Committee.
Under the Director Compensation Plan, a director may elect to receive all or a portion of any cash compensation in the form of the Company’s deferred stock units (“DSUs”). DSUs represent the right to receive shares of the Company’s common stock (“Common Stock”) at a future date. The number of DSUs to be granted is determined by dividing the portion of the cash compensation with respect to which the election is made by the closing price of a share of Common Stock on the date the cash compensation is due to be paid. DSUs issued in lieu of cash compensation are fully vested upon issuance and will be settled in shares of Common Stock upon termination of service on the Board.
In connection with his election to the Board, Mr. Murai will be granted, on the next regularly scheduled grant date for employees, a restricted stock award equal to a number of shares of Common Stock determined by dividing $300,000 by the closing price of a share of Common Stock on the date of grant. These shares of restricted stock will vest equally over a three-year period on the anniversary of the date of grant.
In addition to an initial equity grant, Mr. Murai will be eligible to receive an annual equity award consisting of a restricted stock award for a number of shares of Common Stock determined by dividing $250,000 by the closing price of a share of Common Stock on the date of grant. These shares of restricted stock will vest on the first anniversary of the grant date. Under the Director Compensation Plan, directors may also elect to receive DSUs on a one-for-one basis in lieu of any annual restricted stock award. These DSUs would vest on the same basis as the annual restricted stock award and will be settled in shares of Common Stock upon termination of service on the Board.
The foregoing description of the terms of the Director Compensation Plan does not purport to be complete and is qualified in its entirety by the provisions of the Director Compensation Plan, which was filed as Exhibit 10.51 to the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2018, and is incorporated herein by this reference.
The Company does not pay meeting fees. Non-employee directors are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of the Board and meetings of any committees of the Board on which they serve.
Mr. Murai has entered into an indemnification agreement with the Company. In general, the indemnification agreement provides that the Company will, to the fullest extent permitted by law, and subject to certain limitations and exceptions, indemnify the indemnitee against expenses, judgments, fines, penalties and amounts paid in settlement that may be incurred in connection with the defense or settlement of threatened, pending or completed proceedings to which the indemnitee becomes subject in connection with his service as director of the Company.
The indemnification agreement provides for indemnification rights regarding both third-party claims and proceedings brought by or in the right of the Company. In addition, the indemnification agreement provides for the advancement of expenses incurred by the indemnitee under certain circumstances. The indemnification agreement is not exclusive of any other rights to indemnification or advancement of expenses to which the indemnitee may be entitled, including any rights arising under the charter or bylaws of the Company, a separate agreement with the Company, or applicable law.
The foregoing summary of the indemnification agreement is qualified in its entirety by reference to the provisions of the Form of Indemnification Agreement, a copy of which was filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the fiscal year ended February 29, 2012, and is incorporated herein by this reference.
| Item 8.01 | Other Events |
On September 17, 2018, as part of a periodic review of the Company’s Stock Ownership Policy, the Board approved an amended and restated policy for the Company’s Chief Executive Officer, the executives who report directly to the Chief Executive Officer and non-employee members of the Board. The amended and restated policy maintains the multiples of annual base salary and annual cash retainer at their current levels and adjusts the share numbers in the guidelines to reflect changes in the price of the Company’s common stock since the guidelines were last adjusted in 2016. The amended and restated policy is included as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by this reference.
| Item 9.01. | Financial Statements and Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | Press Release dated September 20, 2018 | |
| 99.2 | Red Hat, Inc. Stock Ownership Policy for Directors and Senior Executives, amended and restated as of September 17, 2018 | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: September 20, 2018 | RED HAT, INC. | |||||||
| By: | /s/ R. Brandon Asbill | |||||||
| Name: | R. Brandon Asbill | |||||||
| Title: | Assistant Secretary | |||||||
Exhibit 99.1
Media Contact:
Stephanie Wonderlick
Red Hat, Inc.
swonderl@redhat.com
+1-571-421-8169
Red Hat Appoints Kevin M. Murai to its Board of Directors
RALEIGH, N.C.– September 20, 2018 – Red Hat, Inc. (NYSE: RHT), the world’s leading provider of open source solutions, today announced that longtime technology executive Kevin M. Murai has been appointed to its board of directors.
Murai has been employed by Synnex Corporation (“Synnex”), a company providing distribution, logistics and integration services for the technology industry and outsourced services focused on customer engagement, since March 2008. He served as president and CEO (December 2008 – March 1, 2018), and president and co-CEO (March 2008 – December 2008). Murai has been a director of Synnex since March 2008 and has served as chairman of its board since March 1, 2018. Prior to joining Synnex, he held several executive management positions over the course of 19 years at Ingram Micro Inc., a provider of global technology and supply chain services, including president, chief operating officer and a member of its board of directors.
He also currently serves on the board of directors for StanCorp Financial Group, Inc., a wholly-owned subsidiary of Meiji Yasuda Life Insurance Company.
Supporting Quotes
Naren Gupta, chairman of Red Hat’s board of directors
“We are pleased to welcome Kevin Murai to Red Hat’s board of directors. His expertise in the technology industry’s expanding distribution channels combined with his experience leading a global corporation like Synnex will further strengthen our board. As Red Hat strengthens its position at the forefront of today’s technology industry by developing solutions to meet the technology requirements of tomorrow, Kevin will help us continue to address customer needs to help them navigate dynamic business environments.”
Kevin Murai, chairman of the board of directors of Synnex Corporation; member of Red Hat’s board of directors
“Open source software solutions are at the heart of many of the technology industry’s most exciting innovations, and Red Hat plays an important role in bringing those innovations to the enterprise. I appreciate the opportunity to serve on the Red Hat board of directors and look forward to contributing to Red Hat’s continued success.”
About Red Hat, Inc.
Red Hat is the world’s leading provider of open source software solutions, using a community-powered approach to provide reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As a connective hub in a global network of enterprises, partners, and open source communities, Red Hat helps create relevant, innovative technologies that liberate resources for growth and prepare customers for the future of IT.
Forward-Looking Statements
Certain statements contained in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: risks related to the ability of the Company to compete effectively; the ability to deliver and stimulate demand for new products and technological innovations on a timely basis; delays or reductions in information technology spending; the integration of acquisitions and the ability to market successfully acquired technologies and products; risks related to errors or defects in our offerings and third-party products upon which our offerings depend; risks related to the security of our offerings and other data security vulnerabilities; fluctuations in exchange rates; the effects of industry consolidation; uncertainty and adverse results in litigation and related settlements; the inability to adequately protect Company intellectual property and the potential for infringement or breach of license claims of or relating to third party intellectual property; changes in and a dependence on key personnel; the ability to meet financial and operational challenges encountered in our international operations; and ineffective management of, and control over, the Company’s growth and international operations, as well as other factors contained in our most recent Quarterly Report on Form 10-Q (copies of which may be accessed through the Securities and Exchange Commission’s website at http://www.sec.gov), including those found therein under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic and political conditions, governmental and public policy changes and the impact of natural disasters such as earthquakes and floods. The forward-looking statements included in this press release represent the Company’s views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.
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Red Hat is a trademark or registered trademark of Red Hat, Inc. or its subsidiaries in the U.S. and other countries.
Linux® is the registered trademark of Linus Torvalds in the U.S. and other countries.
Exhibit 99.2
Red Hat, Inc.
Stock Ownership Policy for Directors and Senior Executives
Amended and Restated as of September 17, 2018
Each non-employee director, the CEO and each executive who reports directly to the CEO (each, a “covered individual”) is required during the term of his or her service with Red Hat to either hold the applicable number of shares of Red Hat common stock set forth under the Stock Ownership Guidelines or comply with the Retention Requirement set forth below. This policy applies to shares of Red Hat common stock acquired under any Red Hat equity compensation plan. This stock ownership policy is administered and interpreted by the Compensation Committee of Red Hat’s Board of Directors.
Stock Ownership Guidelines
Ownership levels were established based on a multiple of the average annual base salary for the office held, in the case of executives, and a multiple of the annual cash retainer in the case of directors.
| Status |
Ownership Guideline |
|||
| Non-employee director |
2,500 | |||
| CEO |
50,000 | |||
| EVP |
8,000 | |||
| SVP/VP |
5,000 | |||
Retention Requirement
Unless the applicable guideline is satisfied, a covered individual is required to retain an amount equal to 50% of the net shares of Red Hat common stock realized from any equity awarded after March 1, 2010. “Net shares” are those shares that remain after shares are sold or netted to pay withholding taxes and the exercise price of stock options, if applicable.
Counting Shares Owned
All shares of Red Hat common stock owned by a covered individual, or held in trust for the economic benefit of a covered individual or an immediate family member of a covered individual, whether acquired through open market purchase, vesting of restricted stock or performance share units, or stock option exercise, all vested deferred stock units and 50% of unvested restricted stock awards and unvested deferred stock units shall count towards satisfaction of the applicable guideline.
Exceptions
Relief from this policy may be granted in special circumstances, including without limitation financial hardship, compliance with a court order, educational expenses, and estate planning, at the sole discretion of Red Hat’s Compensation Committee, following a written request by a covered individual.
Periodic Guideline Review
Every two years, or as it shall otherwise determine, the Compensation Committee shall review and adjust ownership guideline levels in order to maintain levels at or near the target multiples it has established. For non-employee-directors, the share target shall be based on the annual cash retainer, and for the covered employee-executives, the share target shall be based on the individual’s annual base salary. The target multiples are:
| Status |
Target Multiple |
|||
| Non-employee director |
5x | |||
| CEO |
6x | |||
| EVP |
2x | |||
| SVP/VP |
1.5x | |||