Item 2.05 Costs Associated with Exit or Disposal Activities
On January 10, 2023, Blend Labs, Inc. ("Blend" or the "Company") committed to a
fourth workforce reduction plan (the "January Plan") in addition to the
workforce reduction plans disclosed on November 9, 2022, August 15, 2022 and
April 18, 2022. The January Plan further streamlines the Company's title
operations, as well as its corporate operations in R&D, sales and marketing, and
general and administrative functions.
The January Plan includes the elimination of approximately 340 positions across
the Company, or approximately 28% of the Company's current onshore workforce.
The Company estimates that it will incur approximately $14 million in charges in
connection with the January Plan, consisting of cash expenditures for severance
payments, employee benefits, payroll taxes and related facilitation costs. The
Company expects that execution of the January Plan, including cash payments,
will be substantially complete in the first quarter of 2023. The eliminated
positions represent annualized compensation expenses of approximately $43
million.
The Company may incur other charges or cash expenditures not currently
contemplated due to unanticipated events that may occur as a result of or in
connection with the implementation of the January Plan. The Company intends to
exclude the charges associated with the January Plan from its non-GAAP financial
measures, including non-GAAP gross profit, non-GAAP operating expenses, non-GAAP
loss from operations, non-GAAP net loss, and non-GAAP basic net loss per share.
Item 2.05 of this Current Report on Form 8-K contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These statements may relate to, but are not
limited to, the number of positions affected by the January Plan, and the
estimated charges associated with, and the time frame for completion of, the
January Plan, and the estimates of annualized compensation expense for positions
eliminated in connection with the January Plan, as well as assumptions relating
to the foregoing. Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expect," "plan," "anticipate," "could," "would," "intend,"
"target," "project," "contemplate," "believe," "estimate," "predict,"
"potential" or "continue" or the negative of these terms or other comparable
terminology that concern Blend's expectations, strategy, plans or intentions.
You should not put undue reliance on any forward-looking statements.
Forward-looking statements should not be read as a guarantee of future
performance or results and will not necessarily be accurate indications of the
times at, or by which such performance or results will be achieved, if at all.
Forward-looking statements are based on information available at the time those
statements are made and/or management's good faith beliefs and assumptions as of
that time with respect to future events and are subject to risks and
uncertainties that could cause actual performance or results to differ
materially from those expressed in or suggested by the forward-looking
statements. These risks and uncertainties include the possibility that: there
are impediments to our ability to execute the January Plan or related
initiatives as currently contemplated; the actual charges in implementing the
January Plan or related initiatives are higher than anticipated? there are
changes to the assumptions on which the estimated charges associated with the
January Plan or related initiatives are based; we are unable to achieve
projected cost savings in connection with the January Plan or related
initiatives; there are unintended consequences from the January Plan or related
initiatives that impact our business; changes in economic conditions, such as
mortgage interest rates, credit availability, real estate prices, inflation or
consumer confidence, such as mortgage interest rates, credit availability, real
estate prices, inflation or consumer confidence, adversely affect our business;
we fail to retain our existing customers or to acquire new customers in a
cost-effective manner; our customers fail to maintain their utilization of our
products and services; our relationships with any of our key customers were to
be terminated or the level of business with them significantly reduced over
time; we are unable to compete in highly competitive markets; we are unable to
manage our growth; we are unable to make accurate predictions about our future
performance due to our limited operating history in an evolving industry; we are
unable to successfully integrate or realize the benefits of our acquisition of
Title365; or impairment charges on certain assets have an adverse effect on our
financial condition and results of operations. Further information on these
risks and other factors are set forth in our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for the year ended
December 31, 2021 and our Quarterly Reports on Form 10-Q for the periods ended
March 31, 2022, June 30, 2022 and September 30, 2022, respectively. In light of
these risks and uncertainties, the forward-looking events and circumstances
discussed in Item 2.05 of this Current Report may not occur and actual results
could differ materially from those anticipated or implied in the forward-looking
statements. These factors could cause actual results, performance, or
achievement to differ materially and adversely from those anticipated or implied
in the forward-looking statements. Moreover, we operate in a very competitive
and rapidly changing environment. New risks and uncertainties emerge from time
to time, and it is not possible for us to predict all risks and uncertainties
that could have an impact on the forward-looking statements contained in Item
2.05 of this Current Report. Except as required by law, Blend does not undertake
any obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future developments, or otherwise.
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Resignation of Director
On January 9, 2023, Roger W. Ferguson, Jr. notified the Company of his
resignation from the Board of Directors of the Company (the "Board"), effective
as of the same date. Mr. Ferguson's resignation was not the result of any
disagreement between the Company and him on any matter relating to the Company's
operations, policies, or practices.
Appointment of Director
On January 10, 2023, the Board appointed Erin Lantz to serve as a member of the
Board. Ms. Lantz was also appointed to serve as a member of the Audit Committee
of the Board and the Compensation Committee of the Board.
Ms. Lantz, 43, is an innovative technology executive and board member who brings
more than 20 years of experience building and scaling operations for leading
real estate and financial service industry companies. Since April 2020, Ms.
Lantz has been the Chief Revenue Officer of Ethos, a fintech company
specializing in life insurance. Prior to Ethos, she was the Vice President and
General Manager of Mortgages at Zillow Group, Inc., an online real estate
database company, where she worked from 2010 through October 2019. Just before
joining Zillow, Ms. Lantz was Senior Vice President at Bank of America
Corporation, a U.S. multinational investment bank and financial services
company, where she led the Direct-to-Consumer purchase home loan business.
Before entering the mortgage industry, Ms. Lantz worked at the Boston Consulting
Group, a global management consulting firm, as an Associate. She currently
serves on the board of TrueCar, a leading digital automotive marketplace. From
September 2016 until August 2018, Ms. Lantz served on the board of directors of
Washington Federal, Inc., a bank holding company, and from July 2021 until
December 2022, she served on the board of directors of Shelter Acquisition
Corp., a special-purpose acquisition company focused on the property technology
industry. Ms. Lantz holds a B.A. in Political Science, Philosophy and Economics
from the University of Pennsylvania and an M.B.A. from Harvard Business School.
In connection with her appointment to the Board, the Company and Ms. Lantz
entered into an offer letter (the "Lantz Offer Letter"), dated as of January 6,
2023. Pursuant to the terms of the Lantz Offer Letter, Ms. Lantz is eligible to
receive equity and cash compensation as set forth in the Company's Outside
Director Compensation Policy. Pursuant to the Outside Director Compensation
Policy, non-employee directors are entitled to receive an annual retainer of
$300,000, 50% of which will be paid in cash and 50% of which will be paid in the
form of restricted stock units ("retainer RSUs"), which will be granted on
December 20 of the then current year (or the trading day prior if December 20 is
not a trading day), and will be fully vested on the date of grant. If a director
is appointed after January 1, the retainer will be prorated based on the number
of months the director serves during the year. The number of shares subject to
the retainer RSUs will be equal to the quotient of (i) 50% of the total retainer
divided by (ii) the average fair market value of one share for the 30
consecutive trading days ending on the last trading day of the month immediately
prior to the month that includes the grant date, provided, that, if the stock
value is less than $1.50 on the grant date for the retainer RSUs, the director
will receive 10,000 RSUs for the full calendar year with the remainder of the
retainer RSUs paid in cash.
In accordance with the Company's customary practice, the Company has entered
into its standard form of indemnification agreement with Ms. Lantz, the form of
which has been filed as Exhibit 10.1 to the amendment to the Registration
Statement on Form S-1 (File No. 333-257223), filed with the SEC on July 6, 2021.
Ms. Lantz has no direct or indirect material interest in any transaction
required to be disclosed pursuant to Item 404(a) of Regulation S-K promulgated
under the Exchange Act.
There are no family relationships, as defined in Item 401 of Regulation S-K,
promulgated under the Exchange Act, between Ms. Lantz and any of the Company's
executive officers or directors or persons nominated or chosen to become a
director or executive officer. There are also no arrangements or understandings
between Ms. Lantz and any other persons pursuant to which Ms. Lantz was
appointed a director of the Company.
Appointment of Head of Finance and Administration
On January 10, 2023, the Board appointed Amir Jafari as the Company's new Head
of Finance and Administration, such appointment to be effective upon Mr.
Jafari's employment commencement date at the Company, which is expected to be on
or
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around January 30, 2023. Mr. Jafari will initially serve as Head of
Administration and assume the role of Head of Finance and principal financial
officer of the Company following the filing of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2022 (the "2022 Form 10-K").
Mr. Jafari, 44 years old, served as Chief Financial Officer of Plastiq Inc., a
financial technology company, from 2021 until 2023. Mr. Jafari previously served
as the Chief Financial Officer for Reputation.com, a customer experience
management company, from 2020 to 2021. From 2015 until 2020, Mr. Jafari served
as a Sr. Director of Accounting Operations, Vice President of Finance &
Corporate Controller and finally Vice President and General Manager of the
Finance and Legal business at ServiceNow, Inc., a cloud computing software
company. From 2010 until 2015, Mr. Jafari served as Director of Finance (Sales)
and Senior Director of Finance and Assistant Controller at Atmel Corporation, a
semiconductor company. Mr. Jafari started his career in 2000 and served
companies spanning distribution, consumer electronics and semiconductor
industries. Mr. Jafari received a B.A. from San Diego State University and an
M.B.A. from San Jose State University.
There are no family relationships between Mr. Jafari and any director or
executive officer of the Company and Mr. Jafari has no direct or indirect
interest in any transaction or proposed transaction required to be disclosed
pursuant to Item 404(a) of Regulation S-K.
In connection with Mr. Jafari's appointment as Head of Finance and
Administration, the Company entered into an employment offer letter (the "Jafari
Offer Letter") with Mr. Jafari setting forth the terms of his employment and
compensation. In accordance with the Jafari Offer Letter, Mr. Jafari will
receive a base salary of $400,000 per year and will be eligible to receive an
annual cash bonus with a target value of $200,000, based on achieving
performance objectives established by the Board or its designated committee and
subject to his continued employment through the payment date. In addition, Mr.
Jafari will receive a signing bonus of $1,000,000 that is subject to repayment
if Mr. Jafari terminates his employment with the Company within one-year of the
payment date.
In addition, subject to Mr. Jafari's continued employment with the Company, Mr.
Jafari will receive equity awards per the following:
•An award of restricted stock units of 2,000,000 shares of the Company's Class A
Common Stock, with 25% of the restricted stock units subject to such award
vesting after 12 months of continuous service and the balance vesting in equal
. . .
Item 7.01 Regulation FD Disclosure
On January 10, 2023, the Company issued a press release announcing a series of
strategic and financial initiatives. A copy of the press release is attached as
Exhibit 99.1 to this Current Report on Form 8-K.
Blend announces material information to the public about Blend, its products and
services and other matters through a variety of means, including filings with
the Securities and Exchange Commission, press releases, public conference calls,
webcasts, the investor relations section of its website (investor.blend.com),
its blog (blend.com/blog) and its Twitter account (@blendlabsinc) in order to
achieve broad, non-exclusionary distribution of information to the public and
for complying with its disclosure obligations under Regulation FD.
The information in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1
attached hereto shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, regardless of any general incorporation language in such filing,
except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit Description
No.
99.1 Press Release, dated January 10 , 2023
104 Cover Page Interactive Data File (formatted as Inline XBRL)
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