Mimecast Leaders Eligible For $456.9M In Payouts In Permira Deal

Mimecast details how much money each of its nine executive officers and eight non-employee board members would be entitled to if the proposed $5.8 billion acquisition by Permira goes through.

Mimecast’s top executives and directors could earn as much as a combined $456.9 million in stock, options, and severance payments if the proposed acquisition by Permira goes through.

The Lexington, Mass.-based email security vendor detailed payouts for its nine current executive officers and eight non-employee members of its board of directors in a preliminary proxy statement filed Jan. 13 with the U.S. Securities and Exchange Commission (SEC). Mimecast declined to provide an on-the-record comment to CRN on the filing.

Mimecast Co-Founder, Chairman and CEO Peter Bauer could receive a payout of as much as $289.6 million as a result of Permira’s $5.8 billion acquisition. Nearly $15.8 million of Bauer’s payout is tied to “golden parachute” compensation that would be paid if Mimecast terminates his employment following the close of the acquisition without cause or if Bauer resigns from the company for “good reason.”

[Related: Mimecast Rejects Acquisition Bid From Rival Proofpoint: Report]

Compensation packages to executives and directors are standard in change-in-control transactions involving public companies, and a source familiar with the situation said those provided to Mimecast’s executives and directors are in the range of comparable transactions. A CRN analysis in June found that Proofpoint’s leaders could earn $154.6 million following the firm’s $12.3 billion sale to Thoma Bravo.

At Mimecast, Co-Founder, Director, and ex-CTO Neil Murray could receive a payout of up to $56.2 million, Chief Financial Officer Rafe Brown could get a payout of up to $33.5 million, and SVP and General Counsel Robert Nault could get up to $17.9 million. Bauer and Murray founded Mimecast in 2003, Nault joined the company in his current role in 2016, and Brown joined in his current role in 2019.

Chief Information Officer Shahriar Rafimayeri is eligible for a payout of up to $10.3 million; Chief Technology and Product Officer David Raissipour is eligible for a payout of $8.9 million; and SVP, Customer Success and Support Heather Bentley is eligible for $7.9 million. Bentley joined Mimecast in 2019, Rafimayeri joined in 2020, and Raissipour joined in 2021, and all three joined in their current roles.

As for the remaining Mimecast executives, Chief Human Resources Officer Karen Anderson is eligible for a payout of $7 million, Chief Security and Resilience Officer Michael Paisley is eligible for $4.8 million, and Chief Marketing Officer Bernhard Leger is eligible for $4.6 million. Anderson joined Mimecast in 2019, Paisley joined in 2020, and Leger joined in 2021, and all three entered in their current roles.

Mimecast’s seven remaining directors are slated to earn a combined $16.5 million for the stock and unvested RSUs in their possession. The directors are: ex-NatWest Group Counsel Christopher FitzGerald; TruEquity Co-Founder Hagi Schwartz; UKG CEO Aron Ain; ex-Home Depot CISO Stephen Ward; ex-NMS Communications CEO Robert Schechter; Riverbed CDO Alpna Doshi; and ex-Orange EVP Helene Potier.

Mimecast may also spend up to $17.5 million on a program that provides cash retention bonuses to employees that remain with the company six months after the close of the Permira acquisition. The company had 1,765 employees and subcontractors as of March 31, 2021, and none of Mimecast’s nine executive officers are expected to receive an award through the retention program.

Permira in December announced plans to purchase publicly traded Mimecast for $5.8 billion, or $80 per share, and the deal is expected to close in the first half of 2022. Bloomberg reported earlier this month that Mimecast received a $6.7 billion takeover proposal from top rival Proofpoint weeks after Permira made its acquisition offer. However, Mimecast rejected the Proofpoint bid over antitrust concerns.

The revelation of Proofpoint’s recent interest could make it harder for Mimecast to secure shareholder approval for the Permira deal, Bloomberg reported. Institutional investor BlackRock owns 7 percent of Mimecast’s outstanding shares; Bauer owns 5.5 percent of outstanding shares; and Murray owns 1.3 percent of outstanding shares.

Mimecast rebounded from a rocky start to 2021 after disclosing in January of last year that Russian foreign intelligence service (SVR) hackers compromised a Mimecast certificate used to authenticate several of the company’s products to Microsoft 365 Exchange Web Services. The SVR got in by exploiting a backdoor in the SolarWinds Orion network monitoring software the company had previously used.

Once inside, the SVR hackers downloaded Mimecast source code repositories and accessed and potentially extracted encrypted customer service account credentials that establish a connection from their Mimecast tenants to on-premises and cloud services. In response to the attack, Mimecast decommissioned its SolarWinds Orion software and replaced it with a Cisco NetFlow monitoring system.

In addition, Mimecast announced in February 2021 plans to lay off 80 employees to help the company shift upmarket and provide more resources to larger enterprises while leveraging automation and efficiency for midmarket and SMB customers. Specifically, Bauer said Mimecast plans to expand and strengthen its enterprise team to give those customers a customized, higher-touch experience.

Mimecast conducted 78 percent of its business through the channel in the company’s most recent fiscal year, targeting large enterprises through partners like CDW and Dimension Data and midmarket clients through Softchoice, SHI, CDW and Softcat. Jonathan Corini joined Mimecast from Forescout in 2020 as global channel chief, while Kurt Mills came over from FireMon in 2019 to lead North American partners.

In the first six months of fiscal 2022, which ended Sept. 30, 2021, Mimecast increased its revenue to $289.8 million, up 21.8 percent from $237.9 million the year prior. The company’s net income improved to $27.7 million, or $0.41 per diluted share, in the first six months of fiscal 2022. That’s stronger than the net income of $13.2 million, or $0.20 per diluted share, recorded in the first six months of fiscal 2021.