ServiceNow, Inc. 8-K

What Happened

• On December 23, 2025 ServiceNow filed an 8‑K reporting an amendment to CEO William R. McDermott’s employment agreement and changes to the Company’s Executive Severance Policy, both effective January 1, 2026. The amendment states Mr. McDermott will remain in service through at least December 31, 2030 and may serve as CEO, co‑CEO, Executive Chairman, or Non‑Executive Chairman at the Board’s discretion. Compensation while serving as CEO or co‑CEO will be aligned with the Company’s compensation peer group; compensation as Executive Chairman will reflect the level of responsibilities performed.

Key Details

• Term: Commitment through at least December 31, 2030; amendment effective January 1, 2026 (filed Dec 23, 2025).
• Change‑in‑Control severance (Qualifying Termination within 3 months before or 12 months after a Change in Control):
  • Lump sum = 2×(then‑current annual base salary + Target Bonus);
  • COBRA cost reimbursement for 24 months;
  • Immediate 100% vesting of then‑unvested RSUs and 100% vesting of PRSUs based on actual performance.
• Non‑Change‑in‑Control severance (Qualifying Termination otherwise):
  • Lump sum = 1× then‑current annual base salary;
  • Payment of CEO’s Actual Bonus for the fiscal year when it would normally be paid (no later than March 15 following that fiscal year);
  • COBRA cost reimbursement for 12 months;
  • Immediate vesting of RSUs equal to what would have vested over the next 18 months;
  • Pro‑rata vesting of PRSUs based on actual performance plus the portion that would have vested in the next 18 months.
• Other treatments: retirement rules for awards granted at least one year before retirement (age 65+), immediate full vesting on death (PRSUs at target), and continued vesting on disability based on actual performance.

Why It Matters

• Leadership stability: The amendment formally extends McDermott’s service through 2030, signaling continuity of senior leadership and strategic direction for investors.
• Compensation and costs: The updated severance terms increase potential cash payouts and accelerate equity vesting in certain termination scenarios (notably on a Change in Control), which could affect near‑term compensation expense and equity dilution if triggered.
• Retention and alignment: The changes are structured to retain the CEO and tie pay to performance (peer‑aligned pay for CEO/co‑CEO roles and performance‑based PRSU treatment), which investors can view as an effort to align management incentives with company results.