Last week Rackspace gained its fifth CEO in the last six years. Under a transition agreement between exiting CEO Kevin Jones and the company’s board, Jones will be given an extra year of compensation.
According to an SEC filing filed by the company Monday morning, Jones’ separation package includes one year of base salary, a bonus salary dependent on the company meeting certain targets, and health benefits. Last year Jones’ base salary was slightly more than $880,000 and his bonus salary was around $1.2 million.
Jones also stands to pocket more than $1.16 million in restricted stock units, which will become available “if he complies with his restrictive covenants for 18 months following his termination.” All told, that could mean Jones, who is taking on the role of “operating advisor” with Apollo Global Management, could pocket more than $3 million.
Apollo is the private equity giant that bought the company in 2016 in a $4.3 billion deal. It retains the largest share of the company.
The company said it would include in its upcoming third quarter report a full copy of Jones’ transition agreement, as well as the employment agreement of new CEO Amar Maletira.
Maletira, who was promoted as the company’s chief financial officer, is set to receive a base salary of $900,000. If the company meets certain performance targets, his compensation would catapult to more than $2.2 million.
Maletira is still serving as the company’s interim chief financial officer until a replacement is hired.
Pending the board’s approval, Maletira will also receive a one-time equity grant worth $15 million in restricted and performance-based stock units. An additional $11 million in stock units will be granted in portions over time, beginning in 2023, according to the filing.
Jones in the last year sold an estimated $3.72 million worth of stock units and still owns about $3.2 million in Rackspace stock units. Rackspace stock as of Monday morning was trading for slightly more than $4, its lowest price since it became public again in 2020. It peaked in April 2021 at more than $26 a share.
Outside of Rackspace, Jones also made close to $250,000 last year as a member of Herbalife’s board of directors.
Rackspace has grappled with growing losses in recent years and is looking to sell off parts of the company. Earlier this year it floated selling the entire company following “inbound interest” but ultimately cast that plan aside.