Thoma Bravo, Apttus’s new owner, turns to damage control with partners like Salesforce and faces questions over an exec’s $26 million ‘parachute package’
- Apttus is scrambling to calm employees and partners following allegations of misconduct by its former CEO.
- David Murphy, the chairman and interim CEO, told staff on Monday that he had to address the concerns with people like Salesforce CEO Marc Benioff.
- But now employees have a new concern: a potential parachute package worth $26.5 million for Apttus’ chief operating officer, who is himself a contentious figure at the company.
Apttus, the Silicon Valley sales software company roiled by allegations of misconduct by its former CEO, is scrambling to calm employees and partners.
On Monday, the interim CEO, David Murphy, held an all-hands meeting with Apttus’ employees to address disturbing allegations of sexual misconduct, discrimination and dubious business practices reported in Business Insider last week.
Murphy — a partner at the private equity firm Thoma Bravo, which officially acquired a majority stake in Apttus on October 10 — told staff that he is focused on changing the perception of Apttus, though he provided few concrete details on how things will change at the company, sources told Business Insider.
Murphy also said the report had forced conversations between Apttus management and some of its clients and partners, including Salesforce CEO Marc Benioff, according to people familiar with the matter.
As Thoma Bravo and Apttus management try to control the damage from the “culture of dishonesty” that is said to have thrived under founding CEO Kirk Krappe, who left the Apttus in July, employees are voicing new concerns about rich compensation packages made to certain executives at the company.
At least four executives from the old guard at Apttus, once valued at $1.6 billion, have parachute provisions in their contracts valued at more than $1 million, according to a document reviewed by Business Insider.
A $26.5 million compensation package to Chief Operating Officer Raj Verma has become especially contentious — Verma is viewed by some employees and partners as part of the reason for the company’s dysfunctional culture, and the rich compensation package is seen as an example that Apttus is not taking the issues seriously enough, according several sources that Business Insider spoke to.
Verma did not respond to a request for comment. Salesforce did not respond to a request for comment.
Next steps at Apttus are unclear
In a letter posted on the Apttus homepage Monday, Murphy echoed sentiments similar to what he expressed in the all-hands meeting. The letter is short on specifics, but Murphy wrote that he is committed “to improving the areas where Apttus may have fallen short.”
“We are dedicated to building an internal culture that promotes transparency, inclusion and cultivates a passion for customer success,” Murphy wrote.
But for many employees, sources said, improving Apttus means changing up its management team.
Thoma Bravo has brought in several new executives, including a new chief finance officer, corporate controller, a vice president of finance, and on Thursday Apttus announced the hiring of a new head of HR, or “chief people officer.” However, two cofounders and longtime allies of Krappe remain in the office of the CEO: Neehar Gir as president and Kent Perkocha as chief customer officer.
Krappe’s departure in July, Business Insider reported, followed a settlement with a former employee who accused him of sexual assault during a company retreat in Cabo.
Though Verma joined the company in 2017, sources told Business Insider that he quickly grew into a contentious figure with both employees and partners a like.
A recent letter sent to Murphy by a former employee upon his resignation singled out Verma as the root of many of the problems at the company.
“As a human being, you only can take so much of this brutality and for me, I chose not to be a part of a company where employees are devalued, bullied, and treated like dirt,” wrote Kyle Bouchard, employee 33 at the startup, in the letter obtained by Business Insider.
“Why would a man who has ruined a company deserve this,” Bouchard wrote, in reference to Verma’s contract.
The $26.5 million parachute
The parachute packages were listed in a document sent to Apttus shareholders around the time of Thoma Bravo’s acquisition. The document outlines payments that “have, will, or may be paid,” the total of which may ultimately prove to be overstated, according to the documents.
A large portion of the payments are contingent on shareholder approval. It is unclear whether shareholders approved of the payments.
The parachute provisions include an array of potential payments, including potential severance packages and unvested equity awards.
Since Verma joined Apttus in September 2017, the total package described includes the equity grants and options he got as part of his compensation in the 12 months before the acquisition closed on October 10.
But it also includes nearly $15.3 million in potential awards if he remains at Apttus. The document lists $7.5 million in “parent equity awards,” — additional stock in Thoma Bravo, which will only vest if Verma meets certain performance goals, as well as $7.8 million in a “long-term incentive pool” grant, which is time and performance based, and may never come to fruition.
The document is related to Section 280G of the US tax code, a regulation which allows companies and executives at private companies to avoid some tax penalties if they put pay packages of a certain size up to a shareholder vote.
Verma had the highest parachute package, at $26.5 million — with $25.3 million of it contingent on shareholder approval, according to the document. In addition to accelerated vesting on his existing equity, Verma has an $865,000 severance package that will go into effect if he is terminated by Thoma Bravo within 12 months of the October acquisition.
Jeff Santelices, chief strategy officer at the company, had a $4.7 million parachute package. Chief Marketing Officer Ben Allen had a $1.3 million package and Chief Information Officer Praniti Lakhwara had a $1.7 million package.