8-K: Veritone Amends Consulting Agreement with Steel Holdings, Appoints New Board Chairman

Veritone, Inc. has amended its consulting agreement with Steel Holdings, LLC, and appointed Ryan Steelberg as Chairman of the Board, effective January 22, 2024.

Summary

• Veritone has entered into an amended consulting agreement with Steel Holdings, LLC, replacing the original agreement from January 1, 2023.
• Chad Steelberg, the former CEO and current board member, will provide technical advisory services related to Veritone's software and technology strategy.
• The new agreement runs until December 31, 2025, and includes a $1 million cash payment on July 1, 2024, plus $50,000 per month from January 2024 through December 2025.
• Veritone will also reimburse Steel Holdings for reasonable expenses.
• The agreement can be terminated by either party with 90 days' notice, with remaining payments due if Veritone terminates without cause or in the event of a change of control.
• Ryan Steelberg, the current CEO, has been appointed Chairman of the Board, effective January 22, 2024, while Chad Steelberg remains a board member.

Sentiment

Score: 7

Explanation: The document outlines a strategic move to secure technical expertise and consolidate leadership, which is generally positive. However, the financial obligations and termination clauses introduce some risk.

Positives

• The amended agreement secures Chad Steelberg's technical expertise for Veritone's software and technology strategy.
• The agreement provides clear terms for compensation and termination.
• The appointment of Ryan Steelberg as Chairman of the Board consolidates leadership under the current CEO.
• The agreement includes a clause for reimbursement of reasonable expenses.

Negatives

• The company is obligated to pay a significant sum of $1 million in cash on July 1, 2024, plus $50,000 per month, which could impact cash flow.
• The agreement includes a clause that requires the company to pay all remaining payments if the agreement is terminated without cause or in the event of a change of control, which could be a significant liability.

Risks

• The termination clause could result in significant financial obligations for Veritone if the agreement is terminated without cause or in the event of a change of control.
• The company is reliant on a single consultant for technical advisory services, which could pose a risk if the consultant is unavailable.
• The agreement includes a clause that requires the company to pay all remaining payments if the agreement is terminated without cause or in the event of a change of control, which could be a significant liability.

Future Outlook

The amended agreement secures technical advisory services from Chad Steelberg until December 31, 2025, while Ryan Steelberg's appointment as Chairman of the Board signals a consolidation of leadership.

Management Comments

• The company retained Mr. Steelbergs services as a consultant to the Company.
• Mr. Steelberg will provide technical advisory services related to the Companys software, software architecture and technology strategy as requested by the Companys Chief Executive Officer.
• The Board of Directors of the Company appointed Ryan Steelberg, the Companys Chief Executive Officer, as Chairman of the Board of Directors of the Company.

Industry Context

This announcement reflects a trend of companies leveraging the expertise of former executives in advisory roles. The appointment of the current CEO as Chairman is a common practice to align leadership and strategy.

Comparison to Industry Standards

• Consulting agreements with former executives are common in the tech industry, with compensation structures varying based on the scope of services and the individual's expertise.
• The combination of a large upfront payment and monthly fees is a typical structure for high-level consulting engagements.
• The appointment of a CEO as Chairman is a common practice in many companies, including those in the technology sector, such as Microsoft with Satya Nadella and Alphabet with Sundar Pichai, to ensure alignment between management and the board.

Management Changes

Related Party Transactions

• The amended consulting agreement is a related party transaction as Chad Steelberg, the consultant, is the Chairman of the Board and former CEO.

Stakeholder Impact

• Shareholders may view the amended consulting agreement and leadership changes as a positive step for the company's strategic direction.
• Employees may experience changes in leadership and reporting structures.
• Customers and suppliers may not be directly impacted by these changes.

Next Steps

• Veritone will make a $1 million cash payment to Steel Holdings on July 1, 2024.
• Steel Holdings will provide technical advisory services to Veritone until December 31, 2025.
• Veritone will pay Steel Holdings $50,000 per month for services rendered.

Key Dates

Keywords

consulting agreement, technical advisory, board of directors, chairman, software architecture, technology strategy, compensation, termination, change of control, Veritone, Steel Holdings