DEF 14A of 8X8 Inc /De/

Filed Jun 15, 2023 · FY20230001023731-23-000081

Open on EDGAR

the Securities Exchange Act of 1934
| EMPLOYMENT ARRANGEMENTS | 61 | | POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL | 63 | | CEO PAY RATIO | 66 | | PAY VERSUS PERFORMANCE | 67 | | PROPOSAL THREE – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | 72 | | PROPOSAL FOUR – APPROVAL OF OUR NEW 2022 EQUITY INCENTIVE PLAN | 73 | | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 74 | | STOCKHOLDER PROPOSALS FOR 2023 ANNUAL MEETING | 76 | | VOTING RIGHTS, QUORUM, AND REQUIRED VOTE | 77 | | VOTING REQUIREMENTS | 79 | | SOLICITATION OF PROXIES | 79 | | OTHER MATTERS | 80 | | APPENDIX A – NON-GAAP FINANCIAL INFORMATION AND RECONCILIATIONS | 81 |
Board Composition Metrics
Board Composition Metrics
Board Composition Metrics
| | 2018 | 2023 | | Average Tenure | 9.1 years | 5.1 years | | Independence | 71% | 86% | | Gender Diversity | — | 43% | | Ethnic Diversity | 29% | 29% |
Board Composition Metrics
These changes to our Board and its three standing committees are explained in more detail below.
Board Composition Metrics
| CHANGES OVER THE LAST 5 YEARS | | MAY 26, 2023: Samuel Wilson appointed as permanent new CEO and as a new director. | | ▪Mr. Wilson, who served as interim CEO since the resignation of Mr. Sipes, was appointed as permanent CEO and as a new director. | | APRIL 18, 2023: Establishment of new Technology & Cybersecurity Committee of the Board. | | ▪In fiscal 2024, the Board established the Technology & Cybersecurity Committee to oversee strategy, risks, and opportunities in technology, innovation, R&D, cybersecurity, data privacy, and internal controls, while considering emerging trends and their potential impact on our performance, growth, and competitive position. | | ▪The initial members of the Technology & Cybersecurity Committee are Dr. Singh, Mr. Salzman, Ms. Gleeson and Ms. Theophille. Ms. Theophille was named as the Chair of the Technology & Cybersecurity Committee. | | NOVEMBER 30, 2022: Mr. Sipes resigned from the Board. | | ▪Mr. Sipes resigned from the Board as of November 30, 2022 as he was no longer serving as CEO. | | SEPTEMBER 14, 2022: Vladimir Jacimovic stepped down from the Board. | | ▪After serving on the Board for more than eight years, Mr. Jacimovic resigned from the Board. | | AUGUST 5, 2021: Alison Gleeson appointed as a new director. | | ▪Ms. Gleeson appointed to the Board based on her extensive enterprise sales and go-to-market experience, filling a vacancy left by Bryan Martin when he did not stand for re-election at the 2021 annual meeting. | | ▪Ms. Gleeson appointed as a member of the Compensation Committee. | | DECEMBER 10, 2020: David Sipes appointed as CEO and director, replacing Vikram Verma; Dr. Singh appointed as Chairman. | | ▪Mr. Sipes appointed as CEO and to the Board based on his high-growth cloud and SaaS industry experience, replacing Mr. Verma, who stepped down from the Board when he resigned as CEO in December 2020. | | ▪Our Lead Independent Director Dr. Singh appointed as Chairman of the Board, replacing Mr. Martin, who did not stand for re-election at the 2020 annual meeting. | | JUNE 19, 2019: Elizabeth Theophille appointed as a new director. | | ▪Ms. Theophille appointed to the Board based on her experience with digital transformation in cloud-based solutions and European market expertise, filling a future vacancy that would be created by Mr. Potter when he did not stand for re-election at the 2019 annual meeting. | | ▪Ms. Theophille appointed as a member of the Governance and Nominating Committee. | | ▪Board size increased temporarily from eight to nine members and reverted to eight members concurrently with election of directors at the 2019 annual meeting. | | JUNE 1, 2019: Todd Ford appointed as a new director, succeeding Major General Guy L. Hecker, Jr. | | ▪Mr. Ford appointed to the Audit Committee based on his financial experience in SaaS business models and adjacent markets, filling a vacancy left by Gen. Hecker’s departure, and named Chair of Audit Committee, succeeding Mr. Potter in that role. | | ▪Mr. Ford appointed as a member of the Compensation Committee, increasing its size from three to four members. | | MAY 6, 2019: Major General Guy L. Hecker, Jr. retired from the Board. | | ▪Dr. Singh appointed as Lead Independent Director, succeeding Gen. Hecker in that role. | | ▪Dr. Singh appointed as a member of the Compensation Committee, filling a vacancy left by Gen. Hecker’s departure. | | ▪Dr. Singh appointed as a member of the Governance and Nominating Committee, filling a vacancy left by Gen. Hecker’s departure. | | ▪Ms. Bonner was appointed Chair of the Governance and Nominating Committee, filling a vacancy left by Gen. Hecker’s departure. | | ▪Board size increased from seven to eight directors. | | ▪Ms. Bonner appointed as a member of the Audit Committee, replacing Dr. Singh. | | ▪Ms. Bonner appointed as a member of the Governance and Nominating Committee, increasing its size from two to three members. |
Board Composition Metrics
The Board has not established term limits in the belief that compulsory retirement from the Board could cause the Board to lose the valuable contributions of directors who have developed unique perspectives and insight into the Company. As an alternative to term limits, the Governance and Nominating Committee reviews each director’s continuing contribution to the Board as part of the annual assessment process and whenever a director experiences a change in professional responsibilities. These regular reviews ensure that the collective skills and experience of our Board members continue to match the needs of the Company and best serve the interests of our diverse community of stakeholders. Every Board member is expected to ensure that he or she devotes the time necessary to discharge his or her duties as a director effectively and that other existing and planned future commitments do not materially interfere with his or her service.
Board Composition Metrics
| STEP 1 | è | STEP 2 | è | STEP 3 | è | STEP 4 | | Identify optimum board profile to drive corporate growth, including experience, skills, expertise, diversity, personal and professional integrity, and business judgement. | | Review suitability for continued board service for each board member based on optimum board profile. | | Identify, recruit and interview potential candidates to board positions, including candidates recommended by stockholders. | | Recommend to the board the director nominees for election to the board. |
Board Composition Metrics
IDENTIFYING AND EVALUATING DIRECTOR NOMINEES. The Board is responsible for selecting and nominating candidates for election by the stockholders and for filling vacancies on the Board. The Governance and Nominating Committee recommends to the Board (a) first-time nominees for election, based on the need for new Board members as identified by the Governance and Nominating Committee and the Chairman or other Board members, as well as (b) incumbent directors for re-election, as appropriate. The Governance and Nominating Committee reviews the composition of the Board at least annually with the Board as a whole and, if necessary, recommends measures to be taken so that the Board (a) reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required for the Board as a whole to continue to provide effective oversight and otherwise fulfill its fiduciary and other duties, and (b) contains at least the minimum number of independent directors and diversity requirements established by the Nasdaq and any other applicable law, rule or regulation. In selecting individuals for nomination, the Governance and Nominating Committee seeks the input of the Chairman of the Board and other Board members and may use a third-party search firm to assist in identifying and contacting candidates who meet the expertise, personal integrity, and diversity criteria established by the Committee. The Governance and Nominating Committee will also consider individuals recommended for Board membership by our stockholders, in accordance with our bylaws and applicable law. Prospective candidates are interviewed by our Chairman of the Board, our Chief Executive Officer, and at least one member of the Governance and Nominating Committee. During the selection process, the full Board is kept informed of progress. The Governance and Nominating Committee will consider the suitability of each candidate, including the current members of the Board, in light of the current size and composition of the Board. In evaluating the qualifications of the candidates, the Governance and Nominating Committee may consider many factors, as discussed above. The Governance and Nominating Committee does not intend to alter the manner in which it evaluates candidates, based on whether the candidate was recommended by a stockholder or not. The Governance and Nominating Committee meets to consider and recommend final candidate(s) for approval by the Board. Once a candidate is selected for appointment to the Board, or to stand for election or re-election, as applicable, the Chairman extends the invitation to join the Board, or to stand for election or re-election, on the Board’s behalf. Upon completion of its review and evaluation of the candidates in May 2023, our Governance and Nominating Committee recommended the candidates named in this Proxy Statement, which the full Board approved. Stockholder Nominations and Recommendations The Governance and Nominating Committee will consider any recommendations and nominations for candidates to the Board from stockholders, as required by its charter. When submitting candidates for nomination to be elected at an annual or special meeting of stockholders, stockholders must follow the notice procedures and provide the information required in our by-laws. The following is a partial summary of those procedures and requirements. Stockholder recommendations for candidates to the Board must be sent in writing to our Secretary at the address of our principal executive offices, currently 675 Creekside Way, Campbell, CA 95008. To be timely, a stockholder’s notice proposing the nomination of a director at an annual meeting must be delivered to or mailed and received at our principal executive offices not less than 90 calendar days nor more than 120 calendar days in advance of the first anniversary of the previous year’s annual meeting of stockholders. If no annual meeting was held in the previous year or the date of the annual meeting is more than 30 calendar days earlier than the date contemplated at the time of the previous year’s proxy statement, notice must be received not later than the close of business on the 10th day following the day on which the date of the annual meeting is publicly announced. A timely notice for the nomination of a director by a stockholder at a special meeting of stockholders must be delivered to or mailed and received at our principal executive offices not later than the close of business on the later of (a) the 90th day prior to the special meeting, and (b) the 10th day following the day on which public disclosure of the date of the special meeting is first made. The stockholder’s notice must include certain information about the stockholder (and all persons participating with the stockholder in any proxy solicitation for the proposal) and certain information about the candidate, as set forth in our by-laws, including, but not limited to, the candidate’s name, age, business address and residence address, the candidate’s principal occupation or employment for the past 5 years, the stockholder’s name and address, the class and number of shares of our stock and other securities, including derivatives, beneficially owned by the proposing stockholder and by such candidate, any short interest in any of our securities held by the proposing stockholder, all voting rights with respect to our stock beneficially owned by the stockholder and others joining in the proposal, and a description of all arrangements or understandings between the stockholder making such recommendation and each candidate and any other person or persons (naming such person or persons) pursuant to which the recommendations are to be made by the stockholder, as well as any other information relating to such recommended candidate that is required to be disclosed in solicitations of proxies for elections of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act. In addition, if requested, the proposed nominee must furnish additional information to determine whether he or she is eligible to serve as an independent director or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of the proposed nominee, as set forth in our by-laws. We encourage stockholders to refer to our by-laws for complete information regarding the requirements for submitting stockholder proposals and nominating director candidates. You may contact us at 8x8, Inc., Attn: Secretary, 675 Creekside Way, Campbell, CA 95008, for a copy of the relevant by-law provisions on this topic. Our by-laws also can be found where our filed reports are located on the SEC’s website at http://www.sec.gov. BOARD SIZE AND STRUCTURE. The Board periodically reviews its size, assesses its ability to function effectively based on its size and composition, and determines whether any changes to the size of the Board are appropriate. As described above, the size of our Board decreased from seven to six members during our 2023 fiscal year with the departures of David Sipes and Vladimir Jacimovic, but was increased in May 2023 to seven members with the appointment of Samuel Wilson as CEO and a director. We believe that a seven-member Board is suited to the size of our current operations and allows the Board to function effectively.
Board Composition Metrics
Dr. Singh, formerly our Lead Independent Director, was appointed to the Chairman role in December 2020, replacing Bryan Martin, who did not stand for reelection. With Dr. Singh’s appointment, it was no longer necessary to have a Lead Independent Director. While our Corporate Governance principles do not require that the roles of Chairman and Chief Executive Officer be held by different individuals, the Board believes that the separation of the offices of the Chairman and Chief Executive Officer is appropriate at this time because it allows our Chief Executive Officer to focus primarily on our business strategy, operations and corporate vision. In accordance with governance best practices, if, in the future, the Chairman role is held by a non-independent Director, then our Corporate Governance Principles require the appointment of a Lead Independent Director from among the independent members of the Board. These principles reflect our belief that it is important for the Board to retain flexibility to determine whether the two roles should be separate or combined, and whether the Chairman should be independent or not, based upon the Board’s assessment of the Company’s needs and leadership at a given point in time. DIRECTOR INDEPENDENCE Our Board of Directors determines director independence in compliance with the listing standards of the exchange our common stock is traded on, the rules and regulations of the SEC, and our Corporate Governance Principles. Since our last annual meeting and prior to November 2022, the Company’s common stock was listed for trading on the NYSE, and our Board followed the NYSE’s requirements for determining director independence. In November 2022, the Company transitioned the listing of its common stock to the Nasdaq. Consequently, the Board is required to determine the independence of each director of the Board as required by Nasdaq. The rules of the Nasdaq require that a majority of our directors be independent within the meaning of those rules. Additionally, our Corporate Governance Principles require that a substantial majority of our directors be independent. For a director to be considered independent under the Nasdaq rules, our Board must affirmatively determine that the director: ▪does not hold an executive officer or employee position within the Company; ▪in the Board’s opinion, does not have a relationship that would interfere with the exercise of independent judgment in carrying out a director’s responsibilities; and ▪satisfies each of the requirements under rule 5605(a)(2) of the Nasdaq. Board has adopted a definition of independence which conforms to the above independence requirements of the Nasdaq and further requires a director not to have any relationship (material or otherwise, and including social relationships) that would reasonably be expected to impair his or her exercise of independent judgment in carrying out the responsibilities of a director. We believe it is important that, in making a determination of independence, our Board broadly consider all relevant facts and circumstances. In particular, when assessing the materiality of a director’s relationship with us (whether commercial, consulting, charitable, familial or otherwise), our Board considers the issue not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation. In addition, in affirmatively determining the independence of any director who will serve on our Compensation Committee, our Board must consider all factors specifically relevant to determining whether the individual has a relationship to us which is material to that director’s ability to be independent from management in connection with the duties of a Compensation Committee member. These factors include: ▪the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by the listed company to such director; and ▪whether such a director is affiliated with 8x8, a subsidiary of 8x8 or an affiliate of a subsidiary of 8x8. In this context, the Board assesses the sources of a director’s compensation, considering whether the director receives compensation from any person or entity that would impair their ability to make independent judgments about the Company’s executive compensation. Additionally, when evaluating an affiliate relationship a director has with the Company, a subsidiary of the Company, or an affiliate of a subsidiary of the Company for purposes of Compensation Committee service, the Board determines whether the affiliate relationship places the director under the direct or indirect control of 8x8 or our senior management or creates a direct relationship between the director and members of senior management that would impair the director’s ability to make independent judgments about the Company’s executive compensation. Our Board has determined that six of its seven current nominees for re-election, who are all current members, are “independent directors” within the meaning of Rule 5605(a)(2) of the Nasdaq rules and under our own definition of independence:
Board Composition Metrics
| Independent | Not Independent | | Jaswinder Pal Singh | Samuel Wilson | | Monique Bonner | | | Todd Ford | | | Alison Gleeson | | | Eric Salzman | | | Elizabeth Theophille | |
Board Composition Metrics
In making these determinations, the Board affirmatively determined that there are no business relationships that are material or that would interfere with the exercise of independent judgment by any of the independent directors in their service on the Board or its committees. In making this determination with respect to Ms. Gleeson, the Board considered, among other factors, that Zoominfo, Inc. (“Zoominfo”), of which Ms. Gleeson is a current member of its Board of Directors, is a vendor to the Company (in that we made payments of approximately $538,603 to Zoominfo during fiscal 2023). The Board considered the materiality of this arrangement from the perspective of both the Company and Zoominfo, and took into account the fact that Zoominfo was a vendor of the Company several years before Ms. Gleeson joined the Board in 2021 and before she joined the Board of Zoominfo in 2022, in making its determination regarding Ms. Gleeson’s independence. Each of the Board’s Audit Committee, Compensation Committee and Governance and Nominating Committee is composed solely of independent directors in accordance with the Nasdaq listing rules. BOARD MEETINGS AND ATTENDANCE The Board held a total of 13 meetings during fiscal 2023. None of the members of our Board standing for reelection attended less than 75% of the meetings of the Board during fiscal 2023. Pursuant to our Corporate Governance Principles, members of the Board are encouraged, but are not required, to attend each annual meeting of stockholders. One of our directors attended last year’s annual meeting of stockholders held in July 2022. COMMITTEES The Board has four standing committees: an Audit Committee, a Compensation Committee, a Governance and Nominating Committee and a Technology & Cybersecurity Committee. The Board has adopted charters for each of these committees that are available on the investor relations section of our website under “Corporate Governance”, which can be found at http://investors.8x8.com. Each committee reviews its charter on an annual basis and makes recommendations to the Board for any changes based on its review. The composition of each standing committee is indicated in the table below.
Board Composition Metrics
| Director | Independent | Audit | Compensation | Governance and Nominating | Technology & Cybersecurity | Other Role | | Jaswinder Pal Singh | Yes | | | | | Chair(1) | | Samuel Wilson | No | | | | | | | Monique Bonner | Yes | | | | | | | Todd Ford | Yes | | | | | | | Alison Gleeson | Yes | | | | | | | Eric Salzman | Yes | | | | | | | Elizabeth Theophille | Yes | | | | | |
Board Composition Metrics
| | = Committee Chair | | = Committee Member | Chair = Chairman of the Board |
Board Composition Metrics
(1)The information presented in this table is as of the date of this Proxy Statement, unless stated otherwise.
Board Composition Metrics
| Audit Committee | | | Current Members: Todd Ford Monique Bonner Eric Salzman Current Chair: Todd Ford Former Members Who Served During F2023: None | Purpose: The Audit Committee oversees our corporate accounting and financial reporting process and performs several functions in the execution of this role. Fiscal 2023 Meetings: 6 | | | Responsibilities of the Audit Committee include: ▪Evaluates the performance of and assesses the qualifications of the independent auditors ▪Determines whether to retain or terminate the existing independent auditors or to appoint and engage new independent auditors. Reviews and approves the retention of the independent auditors to perform any proposed permissible non-audit services ▪Confers with management and the independent auditors regarding the effectiveness of internal controls over financial reporting ▪Discusses with management and the independent auditors the results of the annual audit and the results of the reviews of our quarterly financial statements ▪Reviews and approves all business transactions between us and any director, officer, affiliate or related party, including transactions required to be reported in our Proxy Statement ▪Oversees the Company’s internal audit function, risk management processes, and system of internal controls Independence: The Board has determined that each of the current members meets the requirements for membership to the Audit Committee, including the independence requirements under Nasdaq rule 5605(a)(2) and SEC Rule 10A-3(b)(i), and is financially literate in accordance with the additional audit committee requirements of Nasdaq rule 5605(a)(2). The Board has identified Mr. Ford as an “audit committee financial expert” as defined under Item 407(d)(5)(ii) of Regulation S-K, but that status does not impose duties, liabilities, or obligations that are greater than the duties, liabilities, or obligations otherwise imposed on him as a member of our Audit Committee or our Board. |
Board Composition Metrics
| Governance and Nominating Committee | | | Current Members: Monique Bonner Jaswinder Pal Singh Elizabeth Theophille Current Chair: Monique Bonner Former Members Who Served During F2022: None | Purpose: The Governance and Nominating Committee identifies and recommends to the Board individuals qualified to serve as directors of the Company, advises the Board with respect to its committees’ composition, oversees the evaluation of the Board, and oversees other matters of corporate governance. Fiscal 2023 Meetings: 4 | | | Responsibilities of the Governance and Nominating Committee include: ▪Identifies, reviews and evaluates candidates to serve as directors of the Company, consistent with criteria approved by the Board and set forth in the committee’s charter ▪Recommends to the Board candidates for election to the Board, making recommendations to the Board regarding the membership of the committees of the Board ▪Reviews and evaluates the suitability of incumbent directors for continued service on the Board (including those recommended by stockholders) ▪Develops and recommends to the Board for approval Corporate Governance Principles and advises on succession plans for the CEO and other executive officers ▪Oversees and advises the Board on environmental, social and governance (ESG) matters ▪Reviews and formalizes proposals to amend our certificate of incorporation and by-laws ▪Adopts the procedures pursuant to which the Board and each Committee is to conduct an annual evaluation of its own performance and reviews the results of these evaluations and makes recommendations to the Board ▪Reviews CEO succession plan and unexpected absence event policy with CEO Independence: Pursuant to the charter of the Governance and Nominating Committee, all members of the Governance and Nominating Committee must be qualified to serve under the Nasdaq listing rules and any other applicable law, rule regulation and other additional requirements that the Board deems appropriate. The Board has determined that each of the three current members meet these requirements. |
Board Composition Metrics
| Compensation Committee | | | Current Members: Eric Salzman Jaswinder Pal Singh Todd Ford Alison Gleeson Current Chair: Eric Salzman Former Members Who Served During F2023: None | Purpose: The Compensation Committee reviews and recommends compensation arrangements for the Chief Executive Officer for approval by the independent members of the Board and approves the compensation arrangements for all other executives at the level of senior vice president and above. Fiscal 2023 Meetings: 8 | | | Responsibilities of the Compensation Committee include: ▪Recommends the compensation of the Chief Executive Officer to the independent members of the Board for approval ▪Reviews and approves corporate goals and objectives relevant to CEO compensation and evaluates the CEO’s performance in light of those goals and objectives ▪Approves, in consultation with the Chief Executive Officer, the compensation of all other executive officers ▪Oversees our human capital management efforts, including talent acquisition and retention ▪Administers our stock-based award and employee stock purchase plans, as well as our employee bonus plan ▪Reviews and approves all employment, severance and change-in-control agreements, and special or supplemental benefits applicable to executive officers ▪Engages independent compensation consulting firm to advise on executive compensation Independence: The Board has determined that each of the current members meets the requirements for membership to the Compensation Committee, including the independence requirements of the SEC and the Nasdaq listing standards under rule 5605(a)(2). |
Board Composition Metrics
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation Committee of the Board currently consists of Mr. Salzman, Mr. Ford, Dr. Singh and Ms. Gleeson. None of these individuals is currently an officer or employee of ours or was an officer or employee of ours at any time during fiscal 2023. None of our executive officers or directors served as a member of the board or compensation committee of any entity that had one or more executive officers serving as a member of the Board or our Compensation Committee at any time during fiscal 2023.
Board Composition Metrics
| Technology & Cybersecurity Committee | | | Current Members: Jaswinder Pal Singh Alison Gleeson Eric Salzman Elizabeth Theophille Current Chair: Elizabeth Theophille | Purpose: The Technology & Cybersecurity Committee oversees and advises the Board on matters involving the Company’s overall strategy, significant business risks and opportunities in the areas of technology, innovation, and research and development. The Committee also reviews and evaluates the Company’s risk assessment and risk management policies for data privacy, information and cybersecurity and related risks, internal controls for technology, information systems and security procedures, and considers emerging trends in these areas and their contributions to, and potential impact on, the Company’s business performance, growth, and competitive position. Fiscal 2023 Meetings: None (committee first established in fiscal 2024) | | | Responsibilities of the Technology & Cybersecurity Committee include: ▪Reviews the Company’s approach to identification, research, development, and integration of technology and innovation, including strategic technology programs supporting the Company’s corporate strategy, and associated resource allocation and investment ▪Reviews strategic vendor partnerships relating to technology innovation that support the Company’s execution of its corporate strategy ▪Assesses trends or disruptions that could significantly benefit or otherwise affect the Company, including emerging technologies, economic trends, and/or commercial or political events that may influence the Company’s strategy and competitive position with respect to technology, innovation, security, data privacy, information and cybersecurity ▪Reviews the Company’s risk posture and exposures relating to its technology development and application activities, data privacy, information and cybersecurity and related risks ▪Monitors the quality and effectiveness of the Company’s prevention, identification, and mitigation of information systems and cybersecurity risks, as well as data privacy risks ▪Reviews the Company’s significant technology investments and expenditures related to cybersecurity, data privacy, and information security ▪Reviews the Company’s internal controls for matters related to technology, information systems, cybersecurity procedures, data privacy, and related risks ▪Reviews and reports the Committee’s activities, concerns, conclusions, and recommendations to the Board on a periodic basis ▪Conducts an annual evaluation of the Committee’s own performance ▪Reviews and evaluates the Committee’s charter periodically and recommends any changes to the Board as the Committee considers necessary or appropriate Independence: The Board has determined that each of the current members of the Technology & Cyber Security Committee qualify as independent under the definitions promulgated by the Nasdaq and the SEC |
Board Composition Metrics
CODE OF BUSINESS CONDUCT AND ETHICS We are committed to maintaining the highest standards of business conduct and ethics. Our Code of Ethics reflects the values and the business practices and principles of behavior that support this commitment. Our Board most recently updated our Code of Ethics in November 2022. The Code of Ethics is available on the investor relations section of our website under “Corporate Governance”, which can be found at https://8x8.gcs-web.com/corporate-governance/governance-overview. We will post any amendment to, or a waiver from, a provision of the Code of Ethics that are required to be disclosed by the rules of the SEC or the Nasdaq on our website at https://8x8.gcs-web.com/corporate-governance/governance-overview. SHAREHOLDER ENGAGEMENT We believe that effective corporate governance includes regular, constructive conversations with our stockholders on a broad range of governance and business topics, including our business strategy and execution, our executive compensation philosophy and approach, governance topics, and our culture and human capital management. In fiscal 2023 (ended March 31, 2023), we participated in more than 200 in-person and virtual meetings with institutional stockholders representing approximately 40% of our total shares outstanding at year end. We met regularly with five of our top 10 stockholders (100% of non-index, non-broker holders in the top 10), who collectively represented approximately 31% of shares outstanding. Several of our large holders, including Sylebra Capital Management, Archon Capital Management, and Needham Asset Management, also met with members of our Board of Directors. The primary topics in these meetings were corporate performance (including revenue growth, profitability and cash flow), our capital structure (including the exchange transaction that resulted in retirement of the majority of our Convertible Senior Notes due in February 2024 and the issuance of new Convertible Senior Notes due in 2028 and a Term Loan due in 2027), executive compensation and retention, and the CEO and CFO transitions. Engagement and Response on Executive Compensation In response to our on-going engagement with our shareholders, we have been proactive in initiating changes to our executive compensation programs. Although our executive compensation practices received strong support in the fiscal 2022 executive compensation advisory votes (Say on Pay), we have continued to adjust our compensation practices to reflect interim investor feedback and align with our strategic priorities and performance objectives. In Fiscal 2023, reflecting investor feedback and our own belief that increasing non-GAAP operating profit and cash flow was becoming a more significant driver of value in the near term than revenue growth, we prioritized operating profitability, cash flow generation and investment in innovation over incremental spending on sales and marketing programs. To reflect this shift, we added non-GAAP operating profit to the performance metrics to our first half cash employee bonus program. Targeted payouts were based on achievement of non-GAAP operating profit targets, service revenue and net new monthly recurring revenue (nnMRR) objectives. In the second fiscal quarter, to reflect investors’ increased focus on profitability across our industry peer group and demonstrate our commitment to increasing non-GAAP operating profit, we adjusted the percentage weightings of the performance metrics to include a 10% weighting for achievement of the non-GAAP operating profit target for NEOs excluding our CEO. For the second half of the fiscal year, the weighting of non-GAAP operating profit target was increased to 60%, and achievement of service revenue and nnMRR targets were weighted at 20% each. Engagement and Response on Stock-based Compensation While investors have supported our executive compensation practices and recognized that the equity component of compensation was consistent with peers in the software industry, the level of stock-based compensation and new share issuance has been a frequent topic of discussion. Generally, stockholders provided positive feedback on our long-term objective of reducing the dilutive effect of our employee equity incentive programs and acknowledged our progress on reducing our gross and net burn rates, excluding equity awards related to the Fuze, Inc. acquisition – see below in the “Compensation Discussion & Analysis” section for further discussion of our stock based compensation historically relative to peers and the impact of grants to retain and incentivize former Fuze, Inc. employees as well as 8x8 management. However, as stock prices for publicly traded companies in our industry declined in calendar 2022 and early 2023, several large investors conveyed their concern that the reduced compensation value of previously issued (but unvested) equity grants would impact employee retention. Many holders also voiced concern that new share issuance would accelerate and dilute the value of existing holdings as more shares were granted to offset the decline in price per share. In response to these concerns, which we shared, we decided to fundamentally change our approach to equity compensation for non-executive employees. Beginning in fiscal 2024, the majority of our employees will be compensated entirely in cash and most new hires below the senior director level will receive a cash signing bonus instead of equity. Employees retain the opportunity to benefit from share price appreciation through our Employee Stock Purchase Plan. We believe this change will allow us to attract and retain talent across the organization, reduce new share issuance from employee equity programs over time, and maintain alignment of the long term objectives of management and investors. Engagement and Response on Environmental, Social and Governance (ESG) Initiatives and Disclosures While we have not received any inquiries regarding our environmental, social and governance practices from holders of our common stock to date, we recognize the importance of ESG initiatives for our employees, customers, and the investment community at large. We continue to adapt our governance framework to align with best practices and provide Board-level oversight on emerging issues and opportunities. We are also committed to expanding our social and environmental initiatives around the world, further reducing already low the carbon footprint of our operations, and increasing our disclosures on our progress going forward. To achieve these goals, in fiscal 2023 we •Established a separate Technology and Cybersecurity Committee to oversee and advise the Board and management on matters involving the Company’s overall strategy and significant business risks and opportunities in the areas of technology, innovation, cybersecurity and data privacy. We also implemented a formal policy on the use of artificial intelligence by our employees and in our products. •Formalized ESG oversight at the Board level under the Nominating and Governance committee and appointed a Global ESG Coordinator to track regional ESG initiatives and activities. We also engaged outside consultants to help us assess materiality and provide expert advice in defining a multi-year roadmap for our ESG programs. •To support enhanced disclosure on ESG issues and metrics, we evaluated and began implementation of ESG program management software. The software allows us to collect, track, report, and audit ESG related metrics, including community engagement, DEI initiatives, and climate-related metrics, as well as align our disclosures to the most relevant global frameworks, including those from the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD), and the EU Corporate Sustainability Reporting Directive (CSRD).
Board Composition Metrics
•Committed to Net Zero carbon emissions by 2050 in our UK operations, in compliance with UK Procurement Policy Note (PPN) 06/21. Maintaining an active dialogue with our stockholders on these topics is consistent with our corporate values of transparency and accountability, and we intend to further expand our stockholder engagement efforts on ESG, as well as our financial performance, new product initiatives, and overall corporate strategy, in fiscal 2024. CORPORATE GOVERNANCE PRINCIPLES Our Board has adopted Corporate Governance Principles which address various matters relating to Board and Committee structure, composition, meetings and responsibilities. The Corporate Governance Principles are posted on our website at http://investors.8x8.com.
COMMUNICATIONS WITH THE BOARD
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2)(3)(4) ($) | Total ($) | | Jaswinder Pal Singh(5) | 112,500 | 174,998 | 287,498 | | Monique Bonner | 62,500 | 174,998 | 237,498 | | Todd Ford | 72,500 | 174,998 | 247,498 | | Alison Gleeson | 47,500 | 174,998 | 222,498 | | Vladimir Jacimovic | 20,000 | 174,998 | 194,998 | | Eric Salzman | 67,500 | 174,998 | 242,498 | | Elizabeth Theophille | 45,000 | 174,998 | 219,998 |
COMMUNICATIONS WITH THE BOARD
(1)Samuel Wilson does not receive additional compensation for serving as member of the Board, and his compensation from 8x8 is fully reflected in the Summary Compensation Table. (2)As of March 31, 2023, each of our non-employee directors who served as directors in fiscal 2022, other than Mr. Jacimovic who resigned from the Board during the year, held outstanding options to purchase or RSUs representing the right to acquire, the number of shares indicated in the table below:
COMMUNICATIONS WITH THE BOARD
| Name | Stock Options | RSUs(3)(4) | | Jaswinder Pal Singh | 75,000 | 38,461 | | Monique Bonner | — | 38,461 | | Todd Ford | — | 38,461 | | Vladimir Jacimovic | — | — | | Eric Salzman | — | 38,461 | | Elizabeth Theophille | — | 38,461 | | Alison Gleeson | | 38,461 |
COMMUNICATIONS WITH THE BOARD
(3)On July 15, 2022, Mr. Ford, Mr. Salzman, Dr. Singh, Mr. Jacimovic (who has since resigned), Ms. Bonner, and Ms. Theophille each received a grant of a stock award in the form of RSUs representing the right to receive 38,461 shares of common stock upon the completion of the director’s board service year, subject to his or her continued service through such date. (4)The amounts reported reflect the aggregate grant date fair value of the stock awards computed in accordance with FASB ASC Topic 718 based on the closing market price of our common stock on the grant date. For a more detailed discussion of the valuation model and assumptions used to calculate the fair value of our stock awards, refer to note 1 to the consolidated financial statements contained in our Annual Report on Form 10-K for our fiscal year ended March 31, 2023, filed with the SEC on May 24, 2023. (5)Dr. Singh was appointed Chairman of the Board on December 10, 2020. Prior to his appointment, Dr. Singh served as the Lead Independent Director. NON-EMPLOYEE DIRECTOR STOCK OWNERSHIP REQUIREMENT The Board has adopted a policy requiring all non-employee directors to hold a number of shares of common stock with a value equal to $200,000, measured annually at the end of each fiscal year, beginning with the fiscal year end following the fifth anniversary of the director’s election to the Board. The shares counted towards satisfaction of the ownership requirement include shares held by the non-employee director and his or her immediate family members residing in the same household, and shares held in trust for the benefit of the non-employee director and his or her immediate family members residing in the same household. Shares subject to vested RSUs that have not settled by the measurement date are counted for the purpose of this ownership requirement, but shares subject to unvested RSUs are excluded. For purposes of this requirement each share of common stock is valued based on the closing price of our common stock on the Nasdaq, as of the last trading day of the fiscal year. A non-employee director who has not met the applicable stock ownership guideline as of the specified measurement date will be required to retain an amount equal to 100% of the shares awarded to such director as compensation for service on the Board until the requirement has been met. On March 31, 2023, two of our non-employee directors were subject to the minimum stock ownership requirement: Mr. Salzman and Dr. Singh. On March 31, 2023 (the last trading day of fiscal 2023), our stock price was $4.17, and, therefore, each non-employee director subject to the minimum stock ownership requirement was required to hold at least 47,962 shares of our common stock. Based solely on our review of written representations from each non-employee director subject to the minimum stock ownership requirement, we believe that each such director complied with the minimum stock ownership requirement as of March 31, 2023. PROPOSAL ONE — ELECTION OF DIRECTORS NOMINEES Our Board currently consists of seven directors, of whom seven have agreed to be named as nominees and stand for re-election at the 2023 Annual Meeting and serve as directors if elected. We believe that our director nominees, individually and together as a whole, possess the requisite skills, experience and qualifications necessary to carry out their duties and to serve the best interests of 8x8 and its stockholders. Set forth below is a brief biography of each nominee and a description of certain key attributes that the Board considered in recommending such nominee for election. All information is presented as of the date of this Proxy Statement. Each of the directors elected at the 2023 Annual Meeting will hold office until the 2024 Annual Meeting of Stockholders and until his or her successor has been duly elected and qualified.
COMMUNICATIONS WITH THE BOARD
| THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION OF THE NOMINEES SET FORTH BELOW. |
COMMUNICATIONS WITH THE BOARD
| JASWINDER PAL SINGH | | | Age 58 Director Since: 2013 INDEPENDENT Chairman of the Board Compensation Committee Governance and Nominating Committee Technology & Cybersecurity Committee | SKILLS AND ATTRIBUTES: We believe Dr. Singh’s qualifications to serve as a director include his experience as an entrepreneur and executive who successfully managed the rapid growth of an online retail company; his expertise in software engineering, as a leading authority on scalable computing systems, infrastructure, and applications; and his experience managing and advising several other technology companies. Dr. Singh served as our Lead Independent Director prior to being appointed Chairman of the Board in December 2020. | | | PROFESSIONAL AND ACADEMIC EXPERIENCE: Dr. Singh is currently a Full Professor of Computer Science at Princeton University, where he has served on the faculty for over 20 years. ▪Dr. Singh also served as an advisor to Right Media, Inc., a SaaS online advertising exchange that was acquired by Yahoo in 2007, and later led the development of Yahoo’s innovative next- generation advertising marketplace. ▪He is co-author of “Parallel Computer Architecture: A Hardware-Software Approach,” a leading textbook in parallel computing. ▪Dr. Singh is a named inventor under several patents and an author of over 75 published research papers. ▪He holds a BSE degree from Princeton University and MS and PhD degrees from Stanford University |
COMMUNICATIONS WITH THE BOARD
| SAMUEL WILSON | | | Age 55 Director Since: 2023 Chief Executive Officer since 2023 | SKILLS AND ATTRIBUTES: Samuel (Sam) Wilson serves as Chief Executive Officer of 8x8. Mr. Wilson brings more than 25 years of experience in business strategy, financial analysis, investment management and sales leadership. He possesses in-depth knowledge of the growth and expense drivers of our business and has held multiple leadership positions within 8x8. He is an internationally recognized financial expert, Chartered Financial Analyst and former top-rated Wall Street analyst. | | | PROFESSIONAL AND ACADEMIC EXPERIENCE: Mr. Wilson has served as 8x8’s Chief Executive Officer since May 2023. •Mr. Wilson has held multiple leadership positions within 8x8, including Chief Financial Officer, Chief Customer Officer and Managing Director of EMEA, and Senior Vice President responsible for e-commerce, global small business and U.S. mid-market. •Prior to 8x8, he served as VP Finance for MobileIron, an enterprise software security company, from 2011 until 2017, with responsibilities for financial planning and analysis, investor relations, and treasury functions, as well as e-commerce. •Prior to MobileIron, he spent 14 years in technology banking, both as an analyst covering communications and as an institutional investor. •He holds a Bachelor’s Degree in Electrical Engineering from Seattle University and an MBA from the University of California, Berkeley. •Sam also served in the U.S. Army and was Airborne, Air Assault, and Ranger qualified. •He is a Chartered Financial Analyst. |
COMMUNICATIONS WITH THE BOARD
| MONIQUE BONNER | | | Age 52 Director Since: 2018 INDEPENDENT Governance and Nominating Committee (Chair) Audit Committee | SKILLS AND ATTRIBUTES: Ms. Bonner has been a global marketing executive with a track record of successfully building brands, developing customer-centric marketing strategies, driving strategic transformations, and motivating teams to exceptional performance. We believe that Ms. Bonner’s extensive experience in leadership positions within the marketing functions of several large, public technology companies makes her uniquely positioned among our Board members to provide strategic and operational guidance at a time when we are looking to reinvigorate our sales and marketing function. | | | PROFESSIONAL AND ACADEMIC EXPERIENCE: Ms. Bonner was most recently Executive Vice President & Chief Marketing Officer at Akamai Technologies, Inc. until 2021, where she led Akamai’s marketing efforts globally, including brand, communications, and field and digital marketing, as well as the company’s sales and services training and enablement programs. ▪Prior to Akamai, Ms. Bonner spent 16 years at Dell Technologies Inc. in a variety of roles, including sales, operations, strategy, and marketing. She led the company’s first global brand strategy work and designed and developed their digital innovation roadmap for marketing. She was also based in Europe for seven years. ▪Ms. Bonner serves on the board of Agero, Inc., a privately held digital platform company for roadside assistance. ▪She earned a Bachelor of Arts from Middlebury College and Master of Business from the University of Michigan. ▪She was named 2018 Massachusetts Technology Leadership Council CMO of the Year. |
COMMUNICATIONS WITH THE BOARD
| TODD FORD | | | Age 56 Director Since: 2019 INDEPENDENT Audit Committee (Chair) Compensation Committee | SKILLS AND ATTRIBUTES: Mr. Ford’s qualifications to serve as a director include his 15+ years of experience as chief financial officer and in other executive roles at public technology companies. Mr. Ford has been part of the leadership teams that guided the rapid growth and scaling of several successful SaaS businesses, including most recently as President of Finance and Operations of Coupa Software, Inc., a business spend management SaaS business, overseeing the company’s expansion since its initial public offering. In light of his management experience, expertise with the SaaS business model and familiarity with go-to-market strategies used by companies in adjacent industries, we believe Mr. Ford can offer high-level strategic advice and day-to-day operational insights to help 8x8 manage our growth successfully. | | | PROFESSIONAL AND ACADEMIC EXPERIENCE: Mr. Ford served as President of Finance and Operations at Coupa Software, Inc. from June 2021 until March 2022. ▪Mr. Ford served as the Chief Financial Officer of Coupa Software from May 2015 to June 2021. ▪Mr. Ford served as the Chief Financial Officer of MobileIron, Inc., a mobile IT platform company for enterprises, from December 2013 to May 2015. ▪From June 2012 to July 2013, Mr. Ford served as the co-Chief Executive Officer and Chief Operating Officer of Canara, Inc., a provider of power systems infrastructure and predictive services. ▪From July 2007 to December 2013, Mr. Ford also served as the Managing Director of Broken Arrow Capital, a venture capital firm he founded in July 2007. ▪From April 2006 to May 2007, Mr. Ford served as President of Rackable Systems, Inc., a manufacturer of server and storage products for large-scale data center deployments (subsequently named Silicon Graphics International Corporation) and from December 2002 to April 2006, he served as Chief Financial Officer of Rackable Systems. ▪Mr. Ford has served on the board of directors of HashiCorp, Inc. since May 2020. ▪Mr. Ford holds a B.S. in Accounting from Santa Clara University. |
COMMUNICATIONS WITH THE BOARD
| ALISON GLEESON | | | Age 56 Director Since: 2021 INDEPENDENT Compensation Committee Technology & Cybersecurity Committee | SKILLS AND ATTRIBUTES: Ms. Gleeson was former Senior Vice President of the Americas organization, the largest of Cisco Systems, Inc.'s four geographic regions, responsible for more than $25 billion in annual sales for the company and leading nearly 9,000 employees across 35 countries. In more than 20 years at Cisco, Alison has led several top-performing organizations by focusing on a customer-first mentality, building go-to-market and data-driven initiatives, and strengthening Cisco’s relationships with top partners. This includes theaters in Canada, Latin America, US Commercial, US Public Sector, as well as the Global Enterprise Segment which included Cisco’s top 28 customers. We believe that her extensive enterprise sales and marketing experience, gives her a valuable and unique perspective among our Board members, particularly as we continue to focus on our product innovation to meet our customers’ evolving needs and go-to-market strategies. | | | PROFESSIONAL AND ACADEMIC EXPERIENCE: Ms. Gleeson has been Special Advisor and Portfolio Committee Member to Brighton Park Capital, an investment firm that specializes in software, information services, and technology-enabled services, since October 2019. From March 2014 to October 2018 she was Senior Vice President of Cisco. Prior to serving as Senior Vice President at Cisco, Ms. Gleeson held several senior management positions at Cisco, including Senior Vice President, Commercial Business from 2011 to 2014, Vice President US Commercial Sales from 2009 to 2011, Area Vice President from 2004 to 2009, Operations Director from 2000 to 2004, and Regional Sales Manager from 1996 to 2000. ▪Prior to Cisco, Ms. Gleeson served in management roles at Unisys Corporation. ▪Ms. Gleeson currently serves as a Board member of Elasticsearch B.V. and ZoomInfo Technologies, Inc. ▪Ms. Gleeson has received Connected World's "Woman of IoT" award, Diversity Best Practice's "Above and Beyond Legacy Award," and Michigan Council for Women in Technology's "Woman of the Year Award." ▪Ms. Gleeson received a B.A. in Marketing from Michigan State University where she currently serves on the Advisory Board of the Eli Broad College of Business. |
COMMUNICATIONS WITH THE BOARD
| ERIC SALZMAN | | | Age 57 Director Since: 2012 INDEPENDENT Compensation Committee (Chair) Audit Committee Technology & Cybersecurity Committee | SKILLS AND ATTRIBUTES: Mr. Salzman’s qualifications to serve as a director include his more than 20 years investing in and advising high-growth technology companies, his experience serving on the boards of directors of other public and private companies, and his current role as CEO of a publicly traded company. We believe Mr. Salzman is well-positioned to provide strategic advice on all aspects of our business, as well as in corporate governance and executive compensation matters. | | | PROFESSIONAL AND ACADEMIC EXPERIENCE: Mr. Salzman has more than 20 years of experience investing in and advising technology companies with a focus on the communications and software sectors. ▪He has extensive M&A, capital markets, private equity, and board experience, having served on the boards of 10 companies, including as executive chairman, as well as chairman of the audit, compensation, and strategic committees. ▪Since 2020, Mr. Salzman has been the Chief Executive Officer of Safeguard Scientifics, Inc., a publicly traded company (NASDAQ: SFE) which provides capital and expertise to support the growth of technology driven businesses in healthcare, financial services, and digital media. ▪Since 2011, Mr. Salzman has been the Managing Member of SarniHaan Capital Partners LLC, a private boutique consulting firm that provides high impact strategic advice to public and private technology companies. ▪Prior to SarniHaan, he was employed by Lehman Brothers Holdings as a Managing Director in the Private Equity and Principal Investing Group as well as in the Global Trading Strategies Division. ▪Prior to Lehman Brothers, he served as a senior research analyst covering the technology and communications sectors in the hedge fund industry and was a private equity investment professional at two communications-focused private equity funds. ▪Mr. Salzman currently also serves as a Board member on Leonardo DRS, Inc. and Movella, Inc. ▪He began his career in the M&A Group at CS First Boston. ▪Mr. Salzman holds a B.A. Honors from the University of Michigan and an MBA from Harvard University. |
COMMUNICATIONS WITH THE BOARD
| ELIZABETH THEOPHILLE | | | Age 56 Director Since: 2019 INDEPENDENT Governance and Nominating Committee Technology & Cybersecurity Committee (Chair) | SKILLS AND ATTRIBUTES: In various senior management roles within large multinational enterprises, Ms. Theophille has long been an evangelist for cloud-based IT services and an early adopter of innovative technologies. She has overseen the digital transformation of IT systems, an important part of the messaging behind our marketing and sales efforts. We believe that her extensive operational experience with IT systems, her familiarity with the implementation of cloud -based solutions and migration from legacy IT systems, and her experience with European markets, give her a valuable and unique perspective among our Board members, particularly as we continue to hone our go-to-market strategies. | | | PROFESSIONAL AND ACADEMIC EXPERIENCE: Ms. Theophille is currently CEO of EHT Consulting GmbH since February 1, 2023 and was previously the Chief Technology Transformation Officer of Novartis AG from November 2020 until January 2023, and prior to that she was Chief Technology and Digital Officer of Novartis AG from November 2016 until October 2020. Prior to Novartis, Ms. Theophille worked at Alcatel-Lucent S.A. in France from 2011 to 2016, where she held several senior management positions, including: ▪Group Chief Information Officer (2016) ▪Chief Technology Officer (2013-2015) ▪Vice President, Service Delivery (2011-2012) ▪Prior to Alcatel-Lucent, Ms. Theophille served in management roles at Capgemini S.A. in Paris, France, B.P. International Ltd. in Uxbridge, UK, and Vivendi Universal S.A. and Seagram, both in Paris, France. ▪Ms. Theophille currently serves as a Board member of Software One, a leading global software and cloud solutions provider listed on the SIX Swiss Exchange. ▪Ms. Theophille received a B.A., Business Administration, from International Management Center, Buckingham, UK, and a Higher National Certificate, Computer Science, from Glasgow College of Commerce, Glasgow, Scotland. |
COMMUNICATIONS WITH THE BOARD
Unless otherwise instructed, the proxy holders will vote the proxies received by them for each of our seven nominees. In the event that any of our nominees become unable or declines to serve as a director at the time of the 2023 Annual Meeting, the proxy holders will vote the proxies for any substitute nominee who is designated by the current Board to fill the vacancy. It is not expected that any nominee listed will be unable or will decline to serve as a director. The seven nominees receiving the most votes cast “FOR” their selection shall be elected as directors at the Annual Meeting. However, the Board has adopted a policy requiring each director nominee to agree that, if the nominee fails to receive more votes cast “FOR” his or her selection than “WITHHELD,” the nominee shall tender his or her resignation to the Governance and Nominating Committee of the Board, which is authorized to consider each resignation tendered under the policy and recommend to the Board whether or not to accept the resignation. Each nominee for director has agreed to abide by this policy. TRANSACTIONS WITH RELATED PERSONS AND CERTAIN CONTROL PERSONS One or more of our Board members serve as directors or executive officers of other organizations, including organizations with which we have commercial relationships. We do not believe there were any transactions, or series of similar transactions, to which we were or are to be a party in which the amount involved exceeded $120,000, and in which any of our director, officer, beneficial owner of more than 5% of our common stock, or any of his, her, or its affiliates, or any member of the immediate family of any of the foregoing, had or will have a direct or indirect material interest during fiscal 2023, other than compensation described in the sections titled “Compensation of Non-Employee Directors” above and “Executive Compensation” below. The Audit Committee is responsible for reviewing and approving all business transactions between us and any of the persons described above, whom we refer to as a “related person.” It is our policy to require that all transactions between us and a related person also be approved by our Board, including a majority of independent directors who are disinterested in the transactions to be approved. Our Corporate Governance Principles further require that the Board determine or delegate to the Audit Committee to determine, on a case by case basis, whether a conflict of interest exists. Each director will advise the Board of any situation that could potentially be a conflict of interest and will not vote on an issue in which he or she has an interest. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires our officers and directors and persons who beneficially own more than ten percent of our common stock (collectively, the “Reporting Persons”) to file reports of beneficial ownership and changes in beneficial ownership with the SEC. The Reporting Persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of such reports furnished to us during the fiscal year ended March 31, 2023 or written representations provided by each of the Reporting Persons, we believe that none of the Reporting Persons failed to file timely reports under Section 16(a), except for one late report on Form 4 for each of Samuel Wilson, Hunter Middleton, Matthew Zinn and Stephanie Garcia. AUDIT MATTERS REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Audit Committee oversees our financial reporting process on behalf of the Board. Management is responsible for our internal controls, financial reporting process, and compliance with laws, regulations, and ethical business standards. Our independent registered public accounting firm is responsible for performing an integrated audit of our consolidated financial statements and of our internal control over financial reporting in accordance with standards of the public company accounting oversight board (United States) (the “PCAOB”), and to issue opinions thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. In this capacity, the Audit Committee provides advice, counsel, and direction to management and the auditors on the basis of the information it receives, discussions with management and the auditors, and the experience of the Audit Committee’s members in business, financial, and accounting matters. The Audit Committee reviewed and discussed our fiscal 2023 audited consolidated financial statements with our management and Moss Adams LLP, our independent registered public accounting firm for fiscal 2023. The Audit Committee reviewed and discussed with management and the independent auditor management’s assessment of the effectiveness of the Company’s internal control over financial reporting and the independent auditor’s opinion about the effectiveness of the Company’s internal control over financial reporting. The Audit Committee has discussed with Moss Adams LLP matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16, “Communications with Audit Committees” and by the SEC, as currently in effect. The Audit Committee received written disclosures and a letter from the independent auditors pursuant to the applicable requirements of the PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with the auditors their independence. Based upon the Audit Committee’s discussions with management and the auditors and the Audit Committee’s review of the representations of management and the report of the auditors to the Audit Committee, the Audit Committee recommended to the Board, and the Board approved, the inclusion of our audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023. THE AUDIT COMMITTEE Todd Ford, Chair Monique Bonner Eric Salzman PROPOSAL TWO — RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS The Audit Committee of the Board is directly responsible for the appointment of our independent registered public accounting firm. The Audit Committee has appointed Moss Adams LLP, Independent Registered Accounting Firm, to audit our financial statements for the fiscal year ending March 31, 2024. The Board proposes that the stockholders ratify this appointment. The Audit Committee understands the need for Moss Adams LLP to maintain objectivity and independence in its audits of our financial statements. The Audit Committee previously retained Moss Adams LLP to audit our consolidated financial statements for fiscal 2023 and also to provide other auditing and non-auditing services during fiscal 2023. The Audit Committee reviewed all non-audit services provided by Moss Adams LLP and concluded that the provision of such services was compatible with maintaining Moss Adams LLP’s independence in the conduct of its auditing functions. To help ensure the independence of the independent registered public accounting firm, the Audit Committee has adopted a policy for the pre-approval of all audit and non-audit services to be performed for us by our independent registered public accounting firm. The Audit Committee may delegate to one or more of its members the authority to grant the required approvals, provided that any exercise of such authority is presented to the full Audit Committee at its next regularly scheduled meeting. All services rendered by Moss Adams LLP for our fiscal years ended March 31, 2023 and 2022 were pre-approved by our Audit Committee. The following table sets forth the aggregate fees billed to us by Moss Adams LLP for the fiscal years ended March 31, 2023 and 2022:
COMMUNICATIONS WITH THE BOARD
| Service Categories | Fiscal 2023 | Fiscal 2022 | | Audit fees(1)(4) | $3,727,000 | $1,657,989 | | Audit-related fees(2) | 200,250 | 433,475 | | All other fees(3) | 17,700 | 6,000 | | Total | $3,944,950 | $2,097,464 |
COMMUNICATIONS WITH THE BOARD
(1)Audit fees consist of fees for professional services provided in connection with (i) the audit of our financial statements, including additional scope for the acquisition of Fuze, Inc. and issuance of convertible debt; (ii) audit of our internal control over financial reporting; (iii) reviews of our quarterly financial statements; and (iv) reviews and issuances of consents and comfort letters in connection with our filing of Form S-8 and S-3s registration statements and other documents with the SEC. (2)Audit-related fees consist of fees for professional services provided in conjunction with the audit of our employee benefit plan, administrative fee and out of pocket expenses related to audit. (3)All other fees consist of fees for all other services except those described above, including fees for certification work for an international subsidiary. (4)Year-over-year increase due to unbilled fees for provisional services performed by Moss Adams LLP for fiscal year 2022 and additional audit services in Fiscal 2023 in connection with the acquisition of Fuze, Inc. Vote Required and Recommendation The ratification of the selection of Moss Adams LLP as our independent registered public accounting firm for fiscal year 2024 will require the affirmative vote of holders of a majority of the shares entitled to vote on this matter. Abstentions are not counted as affirmative votes and therefore have the same effect as a vote against the proposal. In the event that stockholders fail to ratify the appointment, the Audit Committee may reconsider its selection. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in our best interests. Representatives of Moss Adams LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
COMMUNICATIONS WITH THE BOARD
| THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO RATIFY OUR AUDIT COMMITTEE’S APPOINTMENT OF MOSS ADAMS LLP TO SERVE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MARCH 31, 2024. |
COMMUNICATIONS WITH THE BOARD
EQUITY COMPENSATION PLANS EQUITY COMPENSATION PLAN INFORMATION The tables below provide information as of March 31, 2023 and May 25, 2023, respectively, concerning shares of our common stock that may be issued upon the exercise of outstanding stock options, warrants and other rights, and that remain available for future issuance, under all of our equity compensation plans that were in force as of such dates, including: ▪8x8, Inc. 2022 Equity Incentive Plan ▪8x8, Inc. Amended and Restated 2017 New Employee Inducement Incentive Plan; ▪8x8, Inc. Amended and Restated 2013 New Employee Inducement Incentive Plan; ▪8x8, Inc. Amended and Restated 2012 Equity Incentive Plan; ▪8x8, Inc. 2006 Stock Plan; and ▪8x8, Inc. Amended and Restated 1996 Employee Stock Purchase Plan.
COMMUNICATIONS WITH THE BOARD
| As of May 25, 2023: Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants, and Rights (#) | Weighted- Average Exercise Price of Outstanding Options Warrants and Rights ($) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the 1st Column of this Table) (#) | | Equity Compensation plans approved by security holders(1)(2) | 12,153,559 | 9.76 | 8,853,906 | | Equity Compensation plans not approved by security holders(3) | 1,253,391 | 11.57 | 1,619,764 | | Total | 13,406,950 | 10.01 | 10,473,670 |
COMMUNICATIONS WITH THE BOARD
| As of March 31, 2023: Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (#) | Weighted- Average Exercise Price of Outstanding Options Warrants and Rights ($) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the 1st Column of this Table) (#) | | Equity Compensation plans approved by security holders(1)(2) | 12,924,386 | 9.76 | 8,768,451 | | Equity Compensation plans not approved by security holders(3) | 1,377,771 | 13.87 | 1,560,258 | | Total | 14,302,157 | 10.62 | 10,328,709 |
COMMUNICATIONS WITH THE BOARD
(1)The amounts in this row reflect shares issuable pursuant to awards that have been or could be granted under the 8x8, Inc. 2022 Equity Incentive Plan (the “2022 Plan”), 8x8, Inc. Amended and Restated 2012 Equity Incentive Plan, as amended and restated as of July 27, 2020 (the “2012 Plan”), the 8x8, Inc. 2006 Stock Plan (the “2006 Plan”) or the 8x8, Inc. Amended and Restated 1996 Employee Stock Purchase Plan. We are not authorized to grant any new awards under the 2012 Plan or the 2006 Plan, although we may continue to issue shares pursuant to outstanding awards under such plans. The 2022 Plan permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance units, and stock grants. (2)As of March 31, 2023 and May 25, 2023, there were 4,643,500 shares reserved for issuance under the 8x8, Inc. Amended and Restated 1996 Employee Stock Purchase Plan. (3)The amounts in this row reflect shares issuable pursuant to awards that have been or may be granted under the 8x8, Inc. Amended and Restated 2013 New Employee Inducement Incentive Plan (the “2013 Plan”) or the 8x8, Inc. Amended and Restated 2017 New Employee Inducement Incentive Plan (the “2017 Plan”). We ceased granting awards under the 2013 Plan in 2016 and we are not authorized to grant any new awards under the 2013 Plan, although we may continue to issue shares pursuant to outstanding awards under that plan. Outstanding awards granted under the 2013 Plan or 2017 Plan prior to December 8, 2017 (the date on which we transferred the listing of our common stock from the Nasdaq to the NYSE) were granted in accordance with Rule 5635(c)(4) of the Nasdaq listing rules. Inducement awards granted on or after December 8, 2017 and on or before November 14, 2022 were granted in accordance with Section 303.08A of the NYSE listing rules. Awards granted under the 2017 Plan on or after November 15, 2022 (the date on which we transferred the listing of our common stock from the NYSE to the Nasdaq) and future awards thereunder were or will be granted in accordance with Rule 5635(c)(4) of the Nasdaq listing rules. In accordance with the applicable listing exchange rules, all awards granted under these two Plans were granted to new employees as inducements material to their entering into employment with us. Awards granted under the 2013 Plan or the 2017 Plan in reliance on the applicable listing exchange rules referenced above do not require stockholder approval. Those rules require, among other things, that all such awards be approved by the Compensation Committee or by a majority of the independent directors on our Board. EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS This Compensation Discussion and Analysis provides information regarding the fiscal 2023 compensation program for our “named executive officers,” or “NEOs.” The following provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program and each material element of compensation that we provide our NEOs. In addition, we explain how and why the Compensation Committee and the Board arrived at the specific compensation policies and decisions involving our NEOs during fiscal 2023. For fiscal 2023, our NEOs included: ▪Samuel Wilson, our interim Chief Executive Officer (our “interim CEO”)(1); ▪Hunter Middleton, our Chief Product Officer; ▪Suzy Seandel, our Chief Accounting Officer;(2) ▪Laurence Denny, our Chief Legal Officer (3); ▪Kevin Kraus, our interim Chief Financial Officer (our “interim CFO”)(4); ▪David Sipes, our former Chief Executive Officer (our “former CEO”)(1); and ▪Matthew Zinn, our former Chief Legal Officer(3). (1)Mr. Sipes served as an executive officer in the role of CEO until November 30, 2022, at which time his employment relationship with 8x8 was terminated. Mr. Wilson assumed all of Mr. Sipes’ duties on an interim-basis on November 30, 2022 and served as interim CEO through the end of fiscal 2023. Mr. Wilson was subsequently appointed our permanent CEO on May 26, 2023. (2)Ms. Seandel was hired as our Chief Accounting Officer on May 16, 2022 and was appointed to the role of principal accounting officer on July 21, 2022. (3)Mr. Zinn served as an executive officer in the role of Chief Legal Officer until December 9, 2022, at which time he resigned from his position. Mr. Denny assumed all of Mr. Zinn’s duties on December 9, 2022 and served as an executive officer through the end of fiscal 2023. (4)Mr. Kraus assumed the role of interim CFO on November 30, 2022, in connection with Mr. Wilson assuming the role of interim CEO, and served as interim CFO through the end of the fiscal year. Mr. Kraus was subsequently appointed our permanent CFO on June 5, 2023.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION Our fiscal 2023 executive compensation program was designed to incentivize our executive officers to drive performance in alignment with our long-term strategy. In line with our performance and compensation objectives, during fiscal 2023, we took the following compensation actions for our executives, including the named executive officers: ▪Key Talent Changes: In 2023 we continued to evaluate and build out our executive team to ensure that it could execute its aggressive long-term plans successfully. ▪In May 2022, we hired Suzy Seandel as Chief Accounting Officer, adding a layer of expertise to the Company’s accounting organization and leadership team. ▪In November 2022, the Company terminated its employment relationship with former Chief Executive Officer David Sipes, and appointed former Chief Financial Officer Samuel Wilson to the role of interim Chief Executive Officer. The board of directors initiated a process to identify the best candidate to fill the CEO role on a permanent basis. After an extensive search, the Board appointed Mr. Wilson to the role of Chief Executive Officer on May 30, 2023. ▪Kevin Kraus, most recently Senior Vice President of Finance at 8x8 was appointed interim Chief Financial Officer in connection with Mr. Wilson’s appointment as interim Chief Executive Officer. The board of directors then approved the permanent appointment of Mr. Kraus to the role of Chief Financial Officer on June 5, 2023. ▪In December 2022, we promoted Laurence Denny to the role of Chief Legal Officer from Deputy General Counsel following the departure of former Chief Legal Officer Matthew Zinn. ▪Base Salary: After evaluating the competitiveness of NEOs’ base salaries in the context of our overall compensation philosophy, the Compensation Committee determined to make modest adjustments to the base salary of some of our senior executives to reflect their performance and better align their compensation with the market. ▪Annual Cash Incentive Awards: In fiscal 2023, the Company took multiple actions to ensure that the Annual Cash Incentive Award program continued to drive our priorities while aligning pay to performance, including: ▪For NEOs other than the CEO, amending fiscal 2023 first half performance targets and metrics to reflect a profitability focus after the refinancing of the Company’s debt in August 2022; and ▪Reducing fiscal 2023 second half calculated payouts to ensure payouts were aligned to performance ▪Balancing Performance-Based Long-Term Incentives with Executive Retention: Our NEOs were granted long-term incentives in the form of time-vesting restricted stock units (“RSUs”) and performance-based stock units with vesting tied to our relative total shareholder return (referred to as “PSUs”). The Compensation Committee believes that a mix of time- and performance-vesting equity effectively balances the retention and motivational aspects of our compensation program. Approximately 25% of the total long-term incentive value awarded to our NEOs was delivered in the form of PSUs. ▪Special Compensation Arrangements: As the Company addressed changes in strategy and leadership, there were specific instances where the Compensation Committee believed that supplemental compensation was necessary and appropriate to deliver the best results. These included: 7 Gartner Magic Quadrant for Unified Communications as a Service, Worldwide, Rafael Benitez, Megan Fernandez, Christopher Trueman, Pankil Sheth, November 28, 2022. This Magic Quadrant report name has changed from 2015 onwards- 2015-2021: Magic Quadrant for Unified Communications as a Service, Worldwide, 2014: Magic Quadrant for Unified Communications as a Service, North America With Additional Regional Presence, 2012-2013: Magic Quadrant for Unified Communications as a Service, North America. 8 Gartner Magic Quadrant for Contact Center as a Service, Drew Kraus, Steve Blood, Pri Rathnayake, Pankil Sheth, August 22, 2022. his Magic Quadrant report name has changed from 2015-2019: Magic Quadrant for Contact Center as a Service, North America. ▪Interim Service Compensation - Special cash payments and equity awards issued to Mr. Wilson and Mr. Kraus for their service as interim CEO and interim CFO, respectively. These are more fully described in the “Interim Awards” section below. ▪Special Cash Awards - These are special cash awards made to NEOs either to retain them for a period of 1-year during the transition between leaders, or as special recognition of extraordinary efforts made during the refinancing of the Company’s debt. Such awards are more fully described in the “Refinancing Bonus” and “Interim Awards” sections below. The Compensation Committee believes that the combination of base salary and incentive awards, including PSUs, effectively supports our compensation objectives.
PAY-FOR-PERFORMANCE PHILOSOPHY
PAY-FOR-PERFORMANCE PHILOSOPHY To succeed in the rapidly evolving market for cloud-based communications and contact center software, we must attract and retain a highly talented executive team. Effective pay-for-performance alignment is an important objective of our Compensation Committee in the design of our executive compensation program, particularly for the compensation of our CEO. To further this objective, in fiscal 2023 we weighted our compensation programs towards pay that is either “at risk” (PSUs and bonuses), or for which value is determined by stock price performance (RSUs and PSUs). In this way, we create a pay for performance environment that aligns the long-term interests of our executives with those of our stockholders, while remaining competitive with market values on a targeted total compensation basis. During fiscal 2023, we continued to focus on performance-based incentives, while also ensuring that our compensation plans could be expected to retain the key talent we needed during a period of transition. The low share prices at the start of the fiscal year significantly impacted the retentive power of our outstanding equity awards, reducing the then-anticipated payout of outstanding PSUs to 0% and reducing the value of RSUs by 62% compared with their grant date. The low holding power and changing economic landscape, combined with the need to ensure stability of leadership during a year of transition, led the Compensation Committee to approve a number of the changes reflected in the “Fiscal 2023 Compensation Highlights” section above. These actions, such as issuing special cash awards and adjusting the focus of the bonus plan during the first half of fiscal 2023, enabled the Company to focus performance on the highest priorities and bolster the short-term holding power of our compensation plans during a period of volatility, while both the newly issued and historically outstanding PSU awards continued to provide significant upside incentive for market-beating performance. NEOs received approximately 25% of their annual long-term equity compensation awarded in PSUs, with final payouts realized based on Company performance over a two-year and three year period. (1)Fiscal 2023 CEO Targeted Compensation Mix reflects Mr. Wilson’s annualized base salary, target bonus opportunity and annual equity awards granted in June of fiscal 2023. Mr. Wilson’s long-term equity compensation value reflects the target award value, which was converted to a number of shares based on the 20 day trailing average closing price of 8x8 shares. Awards of PSUs will be measured based on performance of relative TSR against the S&P Software and Services Index (^SPSISS), as described in detail under “Long-Term Incentive Compensation” below. One-time awards and payments for interim service have been excluded from the chart above. (2)Fiscal 2023 average Targeted Compensation Mix for our other NEOs reflects the average annual base salary and the average value of annual equity awards granted in June of fiscal 2023. These values exclude any NEOs who were hired during 2023, promoted to NEO during 2023 or terminated employment during 2023. The NEO targeted long-term equity compensation value reflects the target award value, which was converted to a number of shares based on the 20 day trailing average closing price of 8x8 shares. Awards of PSUs will be measured based on performance of relative TSR against the S&P Software and Services Index (^SPSISS), as described in detail under “Long-Term Incentive Compensation” below. One-time awards and payments for interim service have been excluded from the chart above. While we continued to meet or exceed guidance for the year, our stock price remained volatile, in line with the peers in our industry. Our reduced valuation has continued to impact the potential values of the outstanding PSUs and RSUs that our NEOs hold. As shown in the tables below, the decline in stock price has resulted in all TSR based PSUs tracking below the threshold required for payout and has reduced the cumulative value of outstanding RSU awards by 59% from their grant date fair value. This reduction in the realizable value of our long-term incentive awards, which continues to make up the majority of our NEOs’ compensation, is by design, reflecting alignment between the take-home pay of our executives, and the stockholder returns generated by the Company.
Pay For Performance: Current PSU Performance as of March 31, 2023
Pay For Performance: Current PSU Performance as of March 31, 2023
Pay For Performance: Current PSU Performance as of March 31, 2023
| Grant Year | Recipients | # of Unearned PSUs | Grant Date Fair Value at Target Performance ($) | Comparator Index | Anticipated Payout % based on Current rTSR | | 2023 | Samuel Wilson | 122,036 | 702,927 | S&P Software And Services Index | 0% | | | Sum of Other NEOs | 158,324 | 856,199 | | | | 2022 | Sum of Other NEOs | 87,313 | 2,219,881 | S&P Software And Services Index | 0% | | 2021 | Sum of Other NEOs | 107,927 | 1,657,759 | S&P Software And Services Index | 0% |
Pay For Performance: Current PSU Performance as of March 31, 2023
We will continue to structure our Employee Bonus Plan to align with our annual financial performance, and will continue to focus our long-term incentive awards on creating meaningful alignment between the interests of our NEOs and our stockholders. For fiscal 2024, we have made additional changes including: ▪Increasing the portion of the long-term incentive award allocated to PSUs to continue to drive high performance. ▪Setting higher levels of threshold performance targets under the annual cash incentive plan to promote continued performance improvement. ▪Significantly reducing share-based compensation outside of leadership levels to better control burn rate and dilution. The link between the compensation of our CEOs and the Company’s TSR is illustrated in the following graph, which shows how total targeted compensation for our CEO has varied over the past five years compared to the Company’s five-year TSR. The sharp rise in relative total targeted compensation in fiscal 2021 reflects new hire equity grants awarded to Mr. Sipes in December 2021, followed by a reversion to the approximate trend established from fiscal 2018 to fiscal 2020. (1)The above chart illustrates CEO Total Pay for Mr. Verma (our former CEO) for fiscal 2019 — fiscal 2020, Mr. Sipes for fiscal 2021 – fiscal 2022, and Mr. Wilson for fiscal 2023. CEO Total Pay consists of salary earned, cash bonuses paid, equity award grants and all other compensation as reported in the “Total” column of the “Summary Compensation Table” for the applicable fiscal year.
FISCAL 2023 EXECUTIVE COMPENSATION POLICIES AND PRACTICES
| ▪Compensation At-Risk. Our executive compensation program is designed so that a significant portion of our executive officers’ compensation is “at risk” based on corporate performance, as well as equity-based to align the interests of our executives and stockholders. | ▪No Special Retirement Plans. We do not currently offer, nor do we have plans to provide, pension arrangements, or nonqualified deferred compensation plans or arrangements to our executive officers, other than our 401(k) Plan, which is open to all United States salaried employees. | | ▪Change-in-Control Arrangements. Under our Executive Change-in-Control and Severance Policy, our CEO, EVPs and SVPs are eligible to receive certain specified payments and benefits in the event of a constructive termination of employment in connection with a change-in-control of the Company (a double trigger arrangement). | ▪No Special Health or Welfare Benefits. Our named executive officers participate in broad-based Company- sponsored health and welfare benefits programs on the same basis as our other full-time, salaried employees. | | ▪Executive Officer Stock Ownership Requirement. Each of our named executive officers is required to acquire and retain an ownership interest in shares of our common stock, at least equal in value to six times his current base salary in the case of the CEO, and one times his or her initial base salary in the case of other named executive officers, within five years of their appointment to the role. | ▪No Perquisites. We generally do not provide any perquisites or other personal benefits to our named executive officers. | | ▪Multi-Year Vesting. The annual equity awards granted to our named executive officers generally vest or are earned over multi-year periods, consistent with current market practice and our retention objectives. | ▪No Tax Reimbursements. We do not provide any tax reimbursement payments (including “gross-ups”) on any severance or change-in-control payments or benefits. | | ▪Clawback. Our equity incentive plan includes a clawback provision allowing for the repayment of award proceeds earned by a plan participant if the Compensation Committee determines that the participant has intentionally committed an act of embezzlement, fraud, dishonesty or breach of fiduciary duty during the Participant’s employment that contributed to an obligation to restate the Company’s financial statements. The Company also plans to adopt a clawback policy to meet the requirements of any Nasdaq listing rules adopted to implement the compensation recovery requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act. | |
EXECUTIVE COMPENSATION PROGRAM OBJECTIVES
EXECUTIVE COMPENSATION PROGRAM OBJECTIVES We have designed our executive compensation program to achieve the following objectives: ▪attract, develop, motivate and retain top talent and focus our executive officers on key business goals that enhance stockholder value; ▪ensure executive compensation is aligned with our corporate strategies and business objectives; ▪provide meaningful equity ownership opportunities to our executives to align their incentives with the creation of stockholder value; ▪ensure fairness among our executives by recognizing the contributions each individual makes to our success, as well as the compensation history and prior experience of each executive officer; and ▪provide an incentive for long-term continued employment with us. To achieve these objectives, the Compensation Committee regularly evaluates our executive compensation program with the goal of setting compensation at levels it believes are aligned with our current financial and operational business objectives, as well as competitive with the pay of other companies with whom we compete for executive talent. A majority of the target total direct compensation opportunities of our named executive officers are equity incentive-based and the value realized from these awards will be primarily driven by 8x8’s stock price performance. In most years, compensation packages will also include an annual cash bonus opportunity that may be earned based on the level of achievement measured against pre-established performance goals related to the important financial objectives set forth in our annual operating plan. Target direct compensation opportunities also include long-term incentive compensation in the form of equity awards that are earned over time based on continued service or, in the case of PSUs, subject to achievement of performance goals and relative TSR performance over time. We believe the mix of time-based and performance-and-time based awards is important to retaining our named executive officers and aligning their interests with those of our stockholders.
Role of Compensation Consultant
Role of Compensation Consultant In fulfilling its duties and responsibilities, the Compensation Committee has the authority to engage the services of outside advisers. In fiscal 2023, the Compensation Committee engaged Compensia to assist it with compensation matters. A representative of Compensia attended at least one meeting of the Compensation Committee during fiscal 2023, responded to inquiries from the Compensation Committee at meetings and throughout the fiscal year and provided its analysis with respect to these inquiries. The nature and scope of services provided to the Compensation Committee by Compensia in fiscal 2023 were as follows: ▪assisted in the review and updating of our compensation peer group; ▪analyzed executive compensation levels and practices of the companies in our compensation peer group; ▪provided advice on compensation best practices and market trends for named executive officers and directors; ▪assisted with the design of the annual cash incentive plan and long-term equity incentive compensation plan with appropriate performance goals and targets for our named executive officers and other executives; and ▪provided ad hoc advice and support throughout the year. Compensia does not provide any services to us other than the services provided to the Compensation Committee. The Compensation Committee has assessed the independence of Compensia taking into account, among other things, the factors set forth in Exchange Act Rule 10C-1 and the listing standards of the NYSE and Nasdaq, and has concluded that no conflict of interest exists with respect to the work that Compensia performs for the Compensation Committee.
Competitive Positioning
Competitive Positioning To attract and retain executives with the abilities and experience necessary to deliver strong top-line growth and operating performance, we provide total direct compensation opportunities that are intended to be competitive with market practice. We generally target our compensation around market median values, though we do allow upper quartile positioning to reflect individual talent and/or criticality to the business or to address underlying retention concerns. In connection with its annual review of our executive compensation program for fiscal 2022, the Compensation Committee, with the assistance of Compensia, revised the compensation peer group to generate competitive market data appropriate for comparison with our current size and industry focus. For fiscal 2023, the compensation peer group was updated to account for acquisitions and to reflect changes in the size and scope of the Company as well as the peer companies. The criteria used to identify peer companies was generally consistent with our approach in prior years, and targeted software companies falling within a revenue range of 0.5x to 2.0x of our rolling four quarter revenue for at the time of the review and a market capitalization range of 0.3x to 3.0x of our market capitalization at the time of the review. The relevance of each peer company was evaluated taking into consideration both industry comparability as well as financial metrics, and companies are not required to meet all selection criteria for inclusion in the peer group. Our compensation peer group for fiscal 2023 was updated with assistance from Compensia to ensure that the companies in the peer group remained aligned to 8x8’s size and financial profile. Cornerstone OnDemand and Vonage were removed from the peer group to reflect the impact of acquisitions and Blackline, HubSpot, Paylocity Holding, Twilio and Zoom Video Communications were removed to align 8x8’s market capitalization with the peer group. We added Alteryx, Avaya Holdings, Blackbaud, Bottomline Technologies, Commvault Systems, Progress Software, Vertex and Zuora — all SaaS or companies comparable to 8x8’s size at the time of review — to provide the best possible insights into peer compensation programs. RingCentral, while outside the targeted revenue and market capitalization ranges, was included at the request of the Compensation Committee as it is a key direct competitor for both business and executive talent. The 2023 peer group consisted of the following companies:
Competitive Positioning
| Alteryx | Commvault Systems | PROS Holdings | | Avaya Holdings | Everbridge | Q2 Holdings | | Bandwidth | Five9 | RingCentral | | Blackbaud | LivePerson | SPS Commerce | | Bottomline Technologies | New Relic | Vertex | | Box | Progress Software | Yext | | | | Zuora |
Competitive Positioning
For fiscal 2024, the compensation peer group was updated with the assistance of Compensia based on the same revenue and market capitalization criteria used in fiscal 2023. Bottomline Technologies was removed from the peer group to reflect the impact of an acquisition and Avaya Holdings, Box, New Relic, Progress Software, PROS Holdings, SPS Commerce and Vertex were removed to better align 8x8’s financial profile with the peer group. We added Domo, Edgio, Ooma, Rimini Street and Upland Software — all SaaS or companies comparable to 8x8’s size — to provide the best possible insights into peer compensation programs.
Competitive Positioning
| Alteryx | Edgio | Q2 Holdings | | Bandwidth | Everbridge | Rimini Street | | Blackbaud | Five9 | RingCentral | | Commvault Systems | LivePerson | Upland Software | | Domo | Ooma | Yext | | | | Zuora |
Competitive Positioning
Our executive compensation benchmarking also included survey data provided by Radford Surveys and Consulting, a business unit of Aon Hewitt Consulting, Inc. (“Radford”), from publicly-traded software companies with revenue levels and market capitalization levels comparable to ours. Radford did not provide compensation consulting services to the Compensation Committee during fiscal 2023.
FISCAL 2023 EXECUTIVE COMPENSATION ELEMENTS
| Element | Responsive Actions | Example | | Fixed Annual Cash Compensation / Base Salary | This compensation element provides our named executive officers with a competitive level of fixed annual cash compensation. | Salary | | Annual Cash Incentive Awards | This compensation element provides our executive officers with a competitive variable annual cash performance incentive opportunity tied to the achievement of financial performance objectives in the current fiscal year. | Semi-annual cash payments under the EBP for the NEOs. | | Long-term Incentive Compensation | This compensation element provides our named executive officers with a competitive long-term incentive compensation opportunity in the form of equity awards designed to incentivize them to meet or exceed our long-term strategic goals, serve our retention objectives, and align the interests of our executive officers and stockholders. | Time-based RSU and performance-based PSU awards. | | Health and Welfare Benefits | This compensation element provides all employees with competitive health and welfare benefits, as well as participation in an employee stock purchase and other employee benefit plans. There are no special health or welfare benefits for NEOs that are not also provided to all employees. | Medical, dental, vision, 401(k) Plan (with corporate matching up to $3,000 per year), paid time off (including Company-wide days off, as applicable), parental leave, employee assistance programs (EAPs), and ESPP. |
ANNUAL CASH INCENTIVE AWARDS
ANNUAL CASH INCENTIVE AWARDS
Employee Bonus Plan (EBP) Design
Employee Bonus Plan (EBP) Design We have historically used annual cash incentive awards to motivate and incentivize our named executive officers to achieve our short-term financial and operational objectives while making progress towards our longer-term growth and profitability goals. Consistent with our executive compensation philosophy, these annual cash incentive awards are targeted at a percentage of base salary and have historically constituted a significant percentage of the target cash compensation opportunity for our named executive officers. Typically, the Compensation Committee awards annual cash incentive bonuses based on achievement of our corporate financial objectives and an evaluation of individual performance during the fiscal year. Our plan is designed to pay above-target amounts when we exceed our financial objectives and below-target amounts when we do not achieve these objectives. The objective of the EBP is to incentivize eligible employees to contribute to our overall success and achieve corporate and individual performance goals. The performance goals established under the EBP are designed to focus participants on current goals and strategies identified by the Board and senior management (such as revenue growth and profitability), and to complete individual objectives that support our overall business strategy. Under the EBP, each of our NEOs is eligible to receive cash bonus awards during each fiscal year tied to the Company’s achievement of predetermined financial targets and, in certain cases, the NEO’s achievement of individual goals. Performance is evaluated, and bonuses are payable, on a semi-annual basis, based on performance over two discrete six-month performance periods. The maximum payout in any period is 200% of the targeted percentage. In the event the Company does not achieve minimum financial performance objectives for the relevant payout period, the incentive EBP awards for that period would be zero.
Target Annual Cash Incentive Award Opportunities for Fiscal 2023
Target Annual Cash Incentive Award Opportunities for Fiscal 2023 The target annual cash incentive award opportunity for each of the named executive officers under the EBP is developed by the Compensation Committee for each fiscal year and expressed as a percentage of his or her annual base salary. The Compensation Committee sets the target annual cash incentive award opportunities for our named executive officers, other than our CEO’s target annual cash incentive award opportunity (which is approved by the full Board), after considering the job function of each named executive officer, his or her expected contributions to us for the upcoming fiscal year, the recommendations of our CEO (other than with respect to his own compensation) and the competitive market. The table below shows the annual target bonus opportunity for each NEO as a percentage of his or her base salary:
Target Annual Cash Incentive Award Opportunities for Fiscal 2023
| Named Executive Officer | Fiscal 2022 Target Bonus Opportunity (as a % of base salary) | | Fiscal 2023 Target Bonus Opportunity (as a % of base salary) | | | Samuel Wilson | | 65 | | 65 | | Kevin Kraus | | — | | 50 | | Laurence Denny | | — | | 55 | | Hunter Middleton | | 55 | | 55 | | Suzy Seandel | | — | | 45 | | David Sipes | | 100 | | 100 | | Matthew Zinn | | 55 | | 55 |
2023 PERFORMANCE OBJECTIVES AND EBP STRUCTURE
2023 PERFORMANCE OBJECTIVES AND EBP STRUCTURE For fiscal 2023, the Company’s EBP payouts were based on predetermined financial targets. The performance objectives for the EBP were developed by the Compensation Committee, in coordination with the Company’s compensation consultant, after taking into consideration the feedback from our large institutional holders and the recommendations of our CEO and CFO. The performance measurements for the fiscal 2023 EBP incorporated a mix of semi-annual performance measures tied to revenue and non-GAAP pre-tax income. For NEOs other than the CEO and CFO, individual performance was also considered in determining the final payout, but no payments were adjusted to reflect individual performance. Reflecting the uncertain economic environment at the start of the fiscal year and our increased emphasis on profitability, the Compensation Committee elected to set first half fiscal 2023 goals at the beginning of the fiscal year and add a minimum non-GAAP operating profit threshold to be reached before any payout could be earned. Final payouts remained focused on top line performance, based 50% on service revenue and 50% on net new monthly recurring revenue (nnMRR), excluding the impact of the Fuze acquisition. Net new monthly recurring revenue (nnMRR) is an internal operating metric that represents performance of important parts of our business, but is not a direct representation of our entire business. For example, nnMRR excludes usage revenue, revenue from acquired customers, and revenue from professional services and endpoint hardware. During the first fiscal quarter of the year, the Federal Reserve began an aggressive program to increase interest rates in an effort to curb inflation. Given the rising rate environment, uncertain economic conditions, and our need to refinance convertible debt maturing in early calendar 2024, we determined operating profit and cash flow generation were the highest priority for the Company. In light of this, for executives other than the CEO, the committee approved adjusted performance goals for the second quarter of fiscal 2023. The committee retained the service revenue and nnMRR metrics, but increased the emphasis on non-GAAP operating profit by shifting from a threshold requirement to an achievement metric weighted at 10%. The remainder of the second quarter achievement payouts were weighted 45% on achievement of service revenue goals and 45% on achievement of nnMRR goals. The increased focus on profitability and cash flow generation reflected investor feedback, as well as our internal assessment of our cost structure and sales and marketing investments in the uncertain economic environment. In the second half of the fiscal year, we reduced our cost structure through two actions that reduced our total headcount by approximately 14%. In establishing achievement metrics for the second half of the year, the committee sought to reflect the rationale and impact of these actions. For the second half of the year, the committee continued to use service revenue and nnMRR achievement metrics, but adjusted the weightings to 60% non-GAAP operating profit, 20% service revenue and 20% nnMRR, as we continued to prioritize efficiency and profitability. The table below illustrates performance target and weightings under each semi-annual period of the fiscal 2023 EBP. For the first half of fiscal 2023, the payouts under non-GAAP operating profit, service revenue and nnMRR metrics were set at 0% of target at threshold achievement, 100% of target at target achievement, and 200% of target at maximum achievement. For the second half payouts, nnMRR payout percentages remained the same, but the non-GAAP operating profit and service revenue metrics were adjusted so that they paid out 25% of target at threshold achievement, 100% of target at target achievement and 200% of target at maximum achievement. This resulted in potential payouts of 0% to 200% of targeted payout during each semi-annual EBP performance period. Payouts under all metrics are prorated on a linear basis for outcomes that fall between threshold, target and maximum. The outcome of the fiscal 2023 EBP program is summarized in the chart below. Mr. Sipes’ EBP bonus paid out at 34% of target for the first half of fiscal 2023. Mr. Sipes’ service with 8x8 terminated before he was eligible for an EBP bonus during the second half of fiscal 2023. For executives other than Mr. Sipes, performance under the EBP resulted in payouts of 61% of target in the first half of fiscal 2023 and 144% of target in the second half of fiscal 2023. At the close of fiscal 2023, Mr. Wilson requested that the Compensation Committee exercise its negative discretion to reduce bonus payouts to 110% of target. The committee approved of the recommendation, and final payouts for the second half of fiscal 2023 were made at 110% of target, resulting in an annual payout of 86% of target.
FY2023 SIPES CHART
| | | David Sipes - 2023 EBP Performance Targets | | | | | | Performance Metric | Weight % | Minimum Threshold 0% Payout ($K) | Target 100% Payout ($K) | Maximum Threshold 200% Payout ($K) | 2023 Performance ($K) | 2023 Achievement % | | FY23 1st Half | | | | | | | | Q1 & Q2 (4/1/22 - 9/30/22) | | | | | | | | Non-GAAP Operating Profit | Funding Threshold | 6,200 | — | — | 19,208 | Greater than threshold | | Service revenue | 50 | 332,262 | 369,180 | 461,475 | 357,717 | 69 | | Net New Monthly Recurring Revenue | 50 | 2,035 | 2,713 | 3,391 | 1,940 | — | | FY23 1st half | 100 | | | | | 34 |
FY2023 ALL OTHER NEOs CHART
| | | Other NEOs - 2023 EBP Performance Targets | | | | | | Performance Metric | Weight % | Minimum Threshold Payout ($K) | Target Payout ($K) | Maximum Threshold Payout ($K) | 2023 Performance ($K) | 2023 Achievement % | | FY23 1st Half | | | | | | | | Q1 (4/1/22 - 6/30/22) | | | | | | | | Non-GAAP Operating Profit | Funding Threshold | 3,100 | — | — | 10,135 | Greater than threshold | | Service revenue | 50 | 163,404 | 181,560 | 226,950 | 179,161 | 87 | | Net New Monthly Recurring Revenue | 50 | 1,005 | 1,340 | 1,675 | 1,131 | 38 | | FY23 Q1 | 100 | | | | | 62 | | FY23 1st Half | | | | | | | | Q2 (7/1/22 - 9/30/22) | | | | | | | | Non-GAAP Operating Profit | 10 | 3,950 | 4,937 | 5,924 | 9,073 | 200 | | Service Revenue | 45 | 162,180 | 180,200 | 225,250 | 178,556 | 91 | | Net New Monthly Recurring Revenue | 45 | 1,030 | 1,373 | 1,716 | 809 | — | | FY23 Q2 | 100 | | | | | 61 | | FY23 1st Half Final Payout | 100 | | | | | 61 | | FY23 2nd Half | | | | | | | | Q3 & Q4 (10/1/22 - 3/31/23) | | | | | | | | Non-GAAP Operating Profit | 60 | 25,000 | 34,802 | 50,000 | 43,150 | 155 | | Service Revenue | 20 | 307,260 | 361,482 | 415,704 | 352,328 | 87 | | Net New Monthly Recurring Revenue | 20 | 1,063 | 1,518 | 1,973 | 1,836 | 170 | | FY23 2nd Half Earned Payout | 100 | | | | | 144 | | FY23 2nd Half Final Payout | (after impact of committee discretion) | | | | | 110 |
LONG-TERM INCENTIVE COMPENSATION
LONG-TERM INCENTIVE COMPENSATION Our long-term incentive compensation consists of equity awards in the form of time-based RSU awards and performance-based PSU awards to ensure that named executive officers have a continuing stake in our long-term success. Typically, we grant these equity awards to our named executive officers during the second or third fiscal quarter of the fiscal year in connection with our annual performance reviews. In determining the size of the long-term incentive compensation awards, the CEO makes recommendations for the other NEOs based on each NEO’s experience, performance, current equity holdings, retention risk and the operational complexity, strategic impact, and scope of responsibilities of their role, within the context of the Peer Group and broader market survey data comparisons. The Compensation Committee considers similar factors when determining the CEO’s long-term incentive compensation awards, which it then recommends to the Board for approval. The target award opportunities for each participant are expressed as a U.S. dollar value, with the final number of shares issued calculated based on the trailing 20 trading day average closing price. Further, the target award opportunity is structured to align pay and performance, as outlined in more detail under “Fiscal 2023-Executive Performance Plan (Total Shareholder Return),” and to drive shareholder value by placing a significant percentage of compensation “at risk” and dependent on achievement of predetermined performance. To continue to incentivize above market shareholder returns, while also recognizing that the drop in share price had resulted in low retentive value of unvested RSUs and PSUs, we made adjustments to the design of our long-term incentive program to better reflect the Company’s position and ensure that we maintained the strong executive talent necessary to deliver on our long-term plan. As part of these changes, the portion of the long-term incentive award made up of RSUs was increased from 50% to 75% of target value for the grants to continuing NEOs made on June 15, 2022. For the 25% of the target award granted as PSUs, we also made three key changes: 1) We removed the gross profit margin metric we used in fiscal 2022 to allow the long-term awards to focus entirely on market performance, 2) we switched from three performance periods, covering one-year, two-year and three-year performance to two performance periods covering two-year and three-year performance, and 3) performance is measured by relative TSR percentile achievement against the S&P Software and Services Index, rather than how our absolute TSR performed against the index as a whole. These changes are intended to keep our executives focused on the Company’s long-term strategy while also aligning to more industry standard design. During fiscal 2023, the Board approved awards of RSUs and PSUs to our named executive officers as set forth in the following table. Unless otherwise noted in the footnotes to the table, these equity awards were granted on June 15, 2022. These awards were determined based on the Board’s and Compensation Committee’s consideration of the above-described factors, in consultation with Compensia.
LONG-TERM INCENTIVE COMPENSATION
| Named Executive Officer | Restricted Stock Unit Awards (number of shares granted)(1) (#) | Performance Stock Unit Awards (number of shares granted at target) (#) | Aggregate Grant Date Fair Value of Equity Awards at target(2) ($) | | Samuel Wilson(3) | 595,993 | 122,036 | 3,912,859 | | Kevin Kraus(4) | 87,033 | 13,685 | 535,538 | | Laurence Denny(5) | 103,496 | 57,471 | 815,676 | | Hunter Middleton | 261,506 | 87,168 | 2,008,362 | | Suzy Seandel(6) | 243,445 | — | 1,107,675 | | David Sipes(7) | 543,305 | 181,101 | 4,049,430 | | Matthew Zinn(7) | 224,895 | 74,965 | 1,727,194 |
LONG-TERM INCENTIVE COMPENSATION
(1)With the exception of the interim awards further described in the “Interim Awards” section, the RSUs included in the table vest over a three-year period, with one-third (1/3) vesting on the first anniversary of grant and the remainder vesting in eight quarterly installments, subject to the recipient’s continuous service with us. (2)The target aggregate grant date value of equity awards includes the value of the PSUs based on the closing price of our common stock on the date of grant. This value differs from the value reported in our Summary Compensation Table, which reflects the accounting grant date fair value of the award using the methodology required under FASB ASC 718 accounting standards. (3)On December 15, 2022, Mr. Wilson received 229,885 RSUs valued at $1,101,149 that vest in equal quarterly installments over one year as part of his appointment as interim CEO. This award is discussed further below in the “Interim Awards” section. (4)On December 15, 2022, Mr. Kraus received 45,977 RSUs valued at $220,230 that vest in equal quarterly installments over one year as part of his appointment as interim CFO. This award is discussed further below in the “Interim Awards” section. (5)On December 15, 2022, Mr. Denny received 57,471 RSUs valued at $275,286 and 57,471 PSUs valued at $275,286 in relation to his appointment as Chief Legal Officer. (6)Equity awards for Ms. Seandel reflect new hire awards issued on July 15, 2022 to induce her to join 8x8. (7)Mr. Sipes’ employment with the Company terminated on November 30, 2022, and Mr. Zinn’s employment terminated on December 9, 2022. Due to the termination of their employment, their awards included in the table above were cancelled and did not vest. Mr. Sipes’ equity awards were granted on June 17, 2022. Fiscal 2023 — Executive Performance Plan (Total Shareholder Return) In fiscal 2023, each of our ongoing NEOs received a grant of performance stock units (PSUs) grant as part of the Executive Performance Plan (the “2023 EPP”). The Compensation Committee believes performance-based grants are important to balance shareholder value creation with core financial performance when building long-term value. Similar to PSUs issued in prior years, the 2022 EPP ties the payout of the PSUs to the Company’s TSR relative to the S&P Software & Services Index. We believe that measurement against the S&P Software and Services Index is a meaningful and challenging point of comparison when measuring our success against our competitors, and reflects the companies with which we compete for investor dollars. Any PSUs granted under the 2023 EPP are subject to be earned over a two-year and three-year period. 2023 PSU achievement is measured based on the following performance criteria:
LONG-TERM INCENTIVE COMPENSATION
| FY 2023 Executive Performance Plan PSU Award Criteria and Payouts Percentages | | | | | | | | Tranche | Weight (% of total grant) | Performance Period | Metric | Threshold | Target | Maximum | | Year 2 | 50% | 6/15/2022 - 6/15/2024 | TSR relative to the S&P Software and Services Index | 25th percentile (50% payout) | 50th percentile (100% payout) | 75th percentile (200% payout) | | Year 3 | 50% | 6/15/2022 - 6/15/2025 | | | | |
LONG-TERM INCENTIVE COMPENSATION
▪Earned PSU awards, if any, are subject to continued employment through each vesting date; otherwise shares are forfeited. ▪Achieving threshold performance results in a 50% payout under the TSR metric. Achieving maximum performance results in a 200% payout and achieving target performance results in a 100%. Payouts are interpolated on a linear basis for outcomes that fall between threshold, target and maximum. Earned Performance Stock Units Under Prior Awards During fiscal 2023, Messrs. Wilson, Middleton, Sipes and Zinn were eligible to earn shares from PSU awards granted during earlier fiscal years, based on the achievement of internal financial targets, or the performance of our stock relative to a benchmark during a period that ended during fiscal 2023, as set forth in the table below. Please note that achievement numbers in the table are rounded for clarity. Earned Performance Stock Units Under Prior Awards - Relative Share Performance PSUs
LONG-TERM INCENTIVE COMPENSATION
| NEO | Grant Date | Performance Period | Comparator Index Total Return (%) | 8x8 Total Stock Return (TSR) (%) | 8x8 Relative Performance (rTSR) (% over/under) | Target Shares (#) | Performance Achievement (%) | Earned Shares (#) | | Samuel Wilson | 6/29/2020 | 6/15/2020 - 6/15/2022 | 15.93 | -52.50 | -68.42 | 30,343 | 0 | 0 | | | 9/17/2019 | 9/17/2019 - 9/17/2022 | 26.40 | -79.78 | -106.18 | 10,377 | 0 | 0 | | Hunter Middleton | 6/29/2020 | 6/15/2020 - 6/15/2022 | 15.96 | -52.50 | -68.42 | 10,354 | 0 | 0 | | | 9/17/2019 | 9/17/2019 - 9/17/2022 | 26.40 | -79.78 | -106.18 | 7,264 | 0 | 0 | | David Sipes(1) | 12/10/2020 | 6/15/2020 - 6/15/2022 | 12.46 | -52.37 | -64.84 | 234,864 | 0 | 0 | | Matt Zinn | 6/29/2020 | 6/15/2020 - 6/15/2022 | 15.93 | -52.50 | -68.42 | 13,267 | 0 | 0 | | | 9/17/2019 | 9/17/2019 - 9/17/2022 | 26.4 | -79.78 | -106.18 | 7,264 | 0 | 0 |
LONG-TERM INCENTIVE COMPENSATION
(1)Mr. Sipes’ PSU award granted on December 10, 2020 had the same performance period and comparator group as the PSU awards granted to other NEOs on June 29, 2020, but used a different averaging period to measure performance, resulting in slightly different final performance. As captured in the table above, PSU awards granted in fiscal 2020 and 2021 are eligible to be earned 33% on each of the first, second and third-year anniversaries of the performance period’s start date, in each case subject to the applicable performance metrics. For the listed awards, the TSR portion of PSU performance is measured against the S&P Software & Services index. Earned Performance Stock Units Under Prior Awards - Non-GAAP Gross Profit For PSUs granted in fiscal 2022, the first tranche was eligible to vest based on achievement on Non-GAAP Gross Profit compared to internal targets. Based on 8x8’s Non-GAAP Gross Profit achievement of $395,300 in fiscal 2022, the first tranche of the PSUs granted during fiscal 2022 was earned at 111% of target. These awards vested on June 15, 2022. The remaining tranches of these PSU awards are eligible to earned based on relative TSR performance measured against the S&P Software & Services index over a two-year and three-year period.
LONG-TERM INCENTIVE COMPENSATION
| NEO | Grant Date | Performance Period | Non-GAAP Gross Profit Target ($k) | 8x8 Non-GAAP Gross Profit ($k) | Performance vs. Target (% of Target) | Target Shares (#) | Performance Achievement (%) | Earned Shares (#) | | Samuel Wilson | 6/15/2021 | 4/1/2021 - 3/31/2022 | 391.2 | 395.3 | 101 | 17,981 | 111 | 19,890 | | Hunter Middleton(1) | 6/15/2021 | 4/1/2021 - 3/31/2022 | 391.2 | 395.3 | 101 | 8,645 | 111 | 9,563 | | | 8/15/2021 | 4/1/2021 - 3/31/2022 | 391.2 | 395.3 | 101 | 4,579 | 111 | 5,065 | | David Sipes | 6/15/2021 | 4/1/2021 - 3/31/2022 | 391.2 | 395.3 | 101 | 34,578 | 111 | 38,250 | | Matt Zinn(2) | 6/15/2021 | 4/1/2021 - 3/31/2022 | 391.2 | 395.3 | 101 | 6,051 | 111 | 6,693 | | | 9/15/2021 | 4/1/2021 - 3/31/2022 | 391.2 | 395.3 | 101 | 2,742 | 111 | 3,033 |
LONG-TERM INCENTIVE COMPENSATION
(1)On August 15, 2021, Mr. Middleton received a supplemental grant of PSUs in relation to succession planning for the Chief Product Officer Role. (2)On September 15, 2021, Mr. Zinn received a supplemental grant of PSUs in relation to his service as interim Chief Human Resources Officer.
SPECIAL PAYMENT ARRANGEMENTS
| Named Executive Officer | Refinancing Bonus Value ($) | | Samuel Wilson | 200,000.00 | | Laurence Denny(1) | 100,000.00 | | Kevin Kraus(1) | 125,000.00 | | Matthew Zinn(2) | 150,000.00 |
SPECIAL PAYMENT ARRANGEMENTS
(1)Mr. Denny and Mr. Kraus were not NEOs at the time the refinancing bonuses were approved, but were NEOs when the awards were paid on January 15, 2023. (2)Mr. Zinn did not receive his award, as his employment with 8x8 terminated prior to the award vesting date. Interim Awards In connection with the termination of Mr. Sipes’ employment, 8x8 entered into interim employment arrangements with Mr. Wilson, upon his appointment as interim CEO, and Mr. Kraus, upon his appointment as interim CFO. Interim position awards consisted of two key elements: a supplemental award of RSUs vesting quarterly over a one-year period and a supplemental cash award vesting monthly over the same period. These awards were intended to ensure continuity of leadership during a period of transition and align with market compensation rates during the interim period, while also providing sufficient time to perform a comprehensive evaluation of 8x8’s long-term leadership needs, as well as the available talent in the marketplace. The RSU awards were granted on December 15, 2022.
SPECIAL PAYMENT ARRANGEMENTS
| Named Executive Officer | Interim Position Cash Payment ($) | Value of Interim Position RSU Award ($) | | Samuel Wilson | 300,000 | 1,000,000 | | Kevin Kraus | 80,000 | 200,000 |
SPECIAL PAYMENT ARRANGEMENTS
If the employment of Mr. Wilson or Mr. Kraus is terminated by the Company without cause or either resign with good reason, then any unvested portion of the Interim Position RSU Awards and Interim Position Cash Payments accelerates and would be paid out in full promptly following such termination or resignation. As part of Mr. Sipes’ leadership transition, Mr. Middleton also received a cash retention award of $350,000 that vests 50% in June 2023, and 50% in January 2024, subject to Mr. Middleton’s continuing employment.
Accounting for Stock-Based Compensation
Accounting for Stock-Based Compensation The Compensation Committee takes accounting considerations into account in designing compensation plans and arrangements for our executive officers and other employees. Chief among these is Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”), the standard which governs the accounting treatment of stock-based compensation awards. ASC Topic 718 requires us to compute and recognize in our consolidated statement of operations all share-based payments to employees, including grants of options to purchase shares of our common stock and restricted stock unit awards for shares of our common stock to our executive officers and other employees, based on their fair values. ASC Topic 718 also requires us to recognize the compensation cost of these share-based payment awards in our income statements over the period that an award recipient is required to render service in exchange for the option or other award (which, generally, will correspond to the award’s vesting schedule). REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023. THE COMPENSATION COMMITTEE Eric Salzman, Chair Jaswinder Pal Singh Todd Ford Alison Gleeson SUMMARY COMPENSATION TABLE The following table sets forth certain summary information for the fiscal year indicated with respect to the compensation earned by each of the named executive officers.
Accounting for Stock-Based Compensation
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus(5) ($) | Stock Awards(1)(2) ($) | Non-Equity Incentive Plan Compensation(1) ($) | All Other Compensation(3)(4)(6) ($) | Total ($) | | Samuel Wilson Chief Executive Officer | 2023 | 440,444 | 300,000 | 4,025,897 | 238,973 | 39,501 | 5,044,815 | | | 2022 | 411,053 | | 3,046,171 | 28,206 | 440,288 | 3,925,718 | | | 2021 | 422,163 | | 2,492,546 | | 650,902 | 3,565,611 | | Kevin Kraus Chief Financial Officer | 2023 | 334,906 | 151,667 | 602,805 | 141,075 | 35,911 | 1,266,364 | | | 2022 | | | | | | | | | 2021 | | | | | | | | Laurence Denny Chief Legal Officer | 2023 | 340,083 | 100,000 | 881,254 | 164,071 | 36,718 | 1,522,126 | | | 2022 | | | | | | | | | 2021 | | | | | | | | Hunter Middleton Chief Product Officer | 2023 | 378,846 | | 2,090,011 | 173,993 | 36,999 | 2,679,849 | | | 2022 | 338,247 | | 2,200,467 | 20,376 | 15,820 | 2,574,910 | | | 2021 | | | | | | | | Suzanne Seandel Chief Accounting Officer | 2023 | 300,769 | | 1,107,675 | 119,772 | 23,984 | 1,552,200 | | | 2022 | | | | | | | | | 2021 | | | | | | | | David Sipes Chief Executive Officer (former) | 2023 | 367,944 | | 4,272,104 | 92,820 | 356,682 | 5,089,550 | | | 2022 | 536,491 | | 6,070,605 | 55,576 | 8,194 | 6,670,866 | | | 2021 | 142,906 | | 26,915,414 | | 794 | 27,059,115 | | Matthew Zinn Chief Legal Officer (former) | 2023 | 276,027 | | 1,813,513 | 64,584 | 25,168 | 2,179,292 | | | 2022 | 372,940 | | 1,536,679 | 21,536 | 20,805 | 1,951,960 | | | 2021 | 349,914 | | 1,020,580 | | 6,629 | 1,377,123 |
Potential Payments
Potential Payments The tables below quantify the potential payments and other benefits that would be received by our named executive officers under the Prior Policy or the Policy (as applicable) upon (a) a constructive termination of employment in connection with a change-in-control and (b) a constructive termination of employment not in connection with a change-in-control or upon death or disability at any time. The calculations assume: ▪that the triggering event took place on March 31, 2023, the last business day of our last completed fiscal year; and ▪the closing price of our common stock on the Nasdaq as of March 31, 2023 was the value of the consideration paid for each share of our common stock in the change-in-control, which we refer to as the “Transaction Price,” for purposes of determining the satisfaction of performance requirements under the outstanding PSU awards. As described above, the occurrence of a change-in-control would not by itself result in any payment or the provision of any benefits to a named executive officer. However, the satisfaction of the performance targets under the named executive officer’s PSU awards will be determined as of the date of such change-in-control, based on the Transaction Price. The shares subject to such PSU awards will be deemed earned as of such date to the extent the performance targets as computed on this basis have been satisfied, but the awards will remain subject to any remaining service, or time-based vesting, requirements, unless and until the employment of the named executive officer is terminated in connection with the change-in-control.
Pay Versus Performance Table
Pay Versus Performance Table Our executives’ pay and our performance are strongly linked by the purposeful design of our executive compensation program. As the tables and charts below show, when our share price performance is low, the value that is delivered to executives is significantly impacted, resulting in some years of negative “compensation actually paid” (calculated in accordance with Item 402(v) of Regulation S-K) and some years of meaningfully reduced value. This is true even when our net income and non-GAAP operating profit performance is significantly increased year-over-year, due to the central role that equity and shareholder return-based awards play in our executive compensation program. In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, we provide the following disclosure regarding executive compensation for our principal executive officers (“PEOs”) and Non-PEO named executive officers (“Non-PEO NEOs”) and Company performance for the fiscal years listed below.
Pay Versus Performance Table
| | Summary Compensation Table Total for PEO | | | Compensation Actually Paid to PEO | | | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | Value of Initial Fixed $100 Investment Based on: | | | Non-GAAP Operating Profit ($k) | | Year | Vikram Verma ($) | David Sipes ($) | Samuel Wilson ($) | Vikram Verma ($) | David Sipes ($) | Samuel Wilson ($) | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) | Net Income ($k) | | | 2023 | — | 5,089,550 | 5,044,815 | — | (1,816,449) | 2,935,365 | 1,839,966 | 929,226 | 32.40 | 159.34 | (73,143) | 62,400 | | 2022 | — | 6,670,866 | — | — | (28,882,064) | — | 2,757,663 | (2,549,356) | 97.82 | 190.46 | (175,383) | 10,600 | | 2021 | 3,139,200 | 27,059,115 | — | 10,113,170 | 40,028,710 | — | 2,023,181 | 5,454,065 | 252.06 | 203.27 | (165,585) | (11,100) |
Pay Versus Performance Table
(*) Our PEOs were as follows: (1) Vikram Verma and David Sipes were our PEOs for fiscal 2021; (2) Mr. Sipes was our PEO for fiscal 2022; and (3) Mr. Sipes and Samuel Wilson were our PEOs for fiscal 2023. Specifically, Mr. Verma served as our CEO in fiscal 2021 until he resigned in December 2020 and was replaced by Mr. Sipes. Mr. Sipes served as CEO until November 30, 2022, when he was succeeded by Samuel Wilson, who served as interim CEO for the remainder of fiscal 2023 and is currently our permanent CEO. The following are the adjustments made to the summary compensation table totals to determine the amounts shown as compensation actually paid for the PEO:
Pay Versus Performance Table
| | | Vikram Verma 2021 ($) | David Sipes | | | Samuel Wilson 2023 ($) | | | | | 2021 ($) | 2022 ($) | 2023 ($) | | | (A) Pension Plans—Present Value: Deduct the aggregate change in the actuarial present value of the accumulated benefit under all defined benefit and actuarial pension plans | | N/A | N/A | N/A | N/A | N/A | | (B) Pension Plans—Service Costs: Add the aggregate of service cost and prior service cost for all defined benefit and actuarial pension plans | | N/A | N/A | N/A | N/A | N/A | | (C) Equity Awards | | | | | | | | (1) Deduct the amounts reported in the Summary Compensation Table under “Stock Awards” and “Option Awards”: | | — | (26,915,414) | (6,070,605) | (4,272,104) | (4,025,897) | | | (i) Add the fair value as of the end of the year of all awards granted during the year that are outstanding and unvested as of the end of the year: | — | 39,885,009 | 2,335,035 | — | 2,682,179 | | | (ii) Add the amount equal to the change as of the end of the year (from the end of the prior year) in fair value of any awards granted in any prior year that are outstanding and unvested as of the end of the year: | 6,867,968 | — | (29,161,912) | — | (627,708) | | | (iii) Add, for awards that are granted and vest in the same year, the fair value as of the vesting date: | — | — | 499,152 | 2,035,951 | 113,039 | | | (iv) Add the amount equal to the change as of the vesting date (from the end of the prior year) in fair value of any awards granted in any prior year for which all applicable vesting conditions were satisfied at the end of or during the year: | 495,916 | — | (3,154,600) | (3,059,630) | (211,779) | | | (v) Subtract, for any awards granted in any prior year that fail to meet the applicable vesting conditions during the year, the amount equal to the fair value at the end of the prior year: | (389,913) | — | — | (1,610,216) | (39,283) | | | (vi) Add the dollar value of any dividends or other earnings paid on stock or option awards in the year prior to the vesting date that are not otherwise included in the total compensation for the year: | N/A | N/A | N/A | N/A | N/A | | Total | | 6,973,970 | 12,969,595 | (35,552,930) | (6,905,999) | (2,109,450) |
Pay Versus Performance Table
(*) The non-PEO NEOs for each fiscal year shown in the table were as follows: 2021 - Steve Seger, Matthew Zinn, Dejan Deklich, Bryan Martin, Steven Gatoff, Samuel Wilson; 2022 - Dejan Deklich, Stephanie Garcia, Matthew Zinn, Hunter Middleton, Samuel Wilson; 2023 - Kevin Kraus, Matthew Zinn, Laurence Denny, Suzy Seandel and Hunter Middleton (*) The following are the adjustments made to the summary compensation table totals to determine the amounts shown as compensation actually paid for the non-PEO NEOs:
Pay Versus Performance Table
| | | Non-PEO NEOs | | | | | | 2021 ($) | 2022 ($) | 2023 ($) | | (A) Pension Plans—Present Value: Deduct the aggregate change in the actuarial present value of the accumulated benefit under all defined benefit and actuarial pension plans | | N/A | N/A | N/A | | (B) Pension Plans—Service Costs: Add the aggregate of service cost and prior service cost for all defined benefit and actuarial pension plans | | N/A | N/A | N/A | | (C) Equity Awards | | | | | | (1) Deduct the amounts reported in the Summary Compensation Table under “Stock Awards” and “Option Awards”: | | (1,507,760) | (2,333,715) | (1,299,052) | | | (i) Add the fair value as of the end of the year of all awards granted during the year that are outstanding and unvested as of the end of the year: | 4,149,125 | 835,039 | 702,123 | | | (ii) Add the amount equal to the change as of the end of the year (from the end of the prior year) in fair value of any awards granted in any prior year that are outstanding and unvested as of the end of the year: | 965,512 | (1,526,867) | (134,185) | | | (iii) Add, for awards that are granted and vest in the same year, the fair value as of the vesting date: | 88,388 | 95,331 | 60,162 | | | (iv) Add the amount equal to the change as of the vesting date (from the end of the prior year) in fair value of any awards granted in any prior year for which all applicable vesting conditions were satisfied at the end of or during the year: | 170,462 | (866,788) | (149,192) | | | (v) Subtract, for any awards granted in any prior year that fail to meet the applicable vesting conditions during the year, the amount equal to the fair value at the end of the prior year: | (434,842) | (1,510,019) | (90,596) | | | (vi) Add the dollar value of any dividends or other earnings paid on stock or option awards in the year prior to the vesting date that are not otherwise included in the total compensation for the year: | N/A | N/A | N/A | | Total | | 3,430,884 | (5,307,020) | (910,740) |
Pay Versus Performance Table
Equity values are calculated in accordance with FASB ASC Topic 718. (*) The peer group used for this data is the S&P Software and Services index, which is the peer group used as the basis of relative TSR measurement in the PSUs granted in fiscal 2023. The comparison assumes $100 was invested for the period starting March 31, 2020, through the end of the listed fiscal year in our common stock and in the S&P Software and Services index, respectively. (*) We determined non-GAAP Operating Profit to be the most important financial performance measure used to link Company performance to compensation actually paid to our PEOs and Non-PEO NEOs for our fiscal year ended March 31, 2023. See Appendix A to this proxy statement for an explanation of the Company-selected measure “non-GAAP Operating Profit.”
Financial Performance & Compensation Actually Paid (CAP)
Financial Performance & Compensation Actually Paid (CAP) While the Company considers many elements of financial performance in establishing the design of the executive compensation program, the key performance measures which link 8x8’s performance with the compensation actually paid to the NEOs are as follows:
Financial Performance & Compensation Actually Paid (CAP)
| Measure | Explanation | | Total shareholder return | The total shareholder return of the Company’s stock over a specified period. | | Non-GAAP operating profit | See Appendix A for an explanation of Non-GAAP operating profit. | | Service revenue | Service revenue consists of communication services subscriptions, platform usage revenue, and related fees from our UCaaS, CCaaS, and CPaaS offerings. | | Net new monthly recurring revenue | Net new monthly recurring revenue (nnMRR) is an internal operating metric that represents performance of important parts of our business, but is not a direct representation of our entire business. For example, nnMRR excludes usage revenue, revenue from acquired customers, and revenue from professional services and endpoint hardware. |
Financial Performance & Compensation Actually Paid (CAP)
The charts below illustrate how our compensation programs are designed to maintain strong links between the performance of the Company, the returns earned by our shareholders, and the compensation that is paid to our executives. While 8x8 has delivered significant gains on many of our key financial measures, the positive impact these achievements have had on bonus payouts have been significantly overshadowed by the impact of the negative shareholder returns over this same period. This has resulted in either significantly lower, or negative, compensation actually paid to executives for fiscal 2022 and 2023.
Financial Performance & Compensation Actually Paid (CAP)
| PROPOSAL THREE |
Financial Performance & Compensation Actually Paid (CAP)
PROPOSAL THREE — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION We are providing stockholders with an advisory vote to approve executive compensation as required by Section 14A of the Exchange Act. This vote is advisory, and, therefore, not binding on us, the Board, or the Compensation Committee. However, the Board and the Compensation Committee value the opinions of our stockholders, and to the extent there is any significant vote against the compensation of our named executive officers, as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. As discussed in the Compensation Discussion and Analysis, we have designed our executive compensation program to develop, motivate and retain high quality executive officers, align executive compensation with our strategies and business objectives and the long-term creation of stockholder value, and provide meaningful equity ownership by our executive officers. Effective pay-for-performance alignment is an important objective of our Compensation Committee in the design of our executive compensation program. To further this objective in fiscal 2023: ▪We realigned the Company and the annual cash incentive plan to focus on driving increased profitability. ▪Our CEO’s compensation in fiscal 2023 was weighted heavily to pay elements tied directly to shareholder returns, or those with ultimate value determined by stock price — 83% of the CEO’s target compensation package was delivered in the form of equity with long-term vesting requirements. ▪We actively managed our burn rate and dilution by significantly reducing the employee population eligible for equity awards. The foregoing is only a brief summary of a few select aspects of our fiscal 2023 executive compensation program. The Board encourages you to review carefully the Compensation Discussion and Analysis and the tabular and other disclosures on compensation under Executive Compensation, and to cast a vote to approve our executive compensation programs and the following resolution: “RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Proxy Statement for the 2023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the fiscal year 2023 Summary Compensation Table and the other related tables and disclosure.” Vote Required and Recommendation The proposal to approve our executive compensation programs and the foregoing resolution on an advisory basis will require approval by the holders of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on such proposal. The Board encourages you to vote to approve our executive compensation programs and the foregoing resolution.
Financial Performance & Compensation Actually Paid (CAP)
| THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF OUR EXECUTIVE COMPENSATION AS EXPRESSED IN THE FOREGOING RESOLUTION. |
Financial Performance & Compensation Actually Paid (CAP)
PROPOSAL FOUR – ADVISORY VOTE TO APPROVE FREQUENCY OF THE COMPANY’S FUTURE ADVISORY VOTES TO APPROVE EXECUTIVE COMPENSATION Every six years, we are required by SEC rules to include in our proxy statement an advisory (non-binding) vote as to whether the Company should hold an advisory vote to approve executive compensation every one, two or three years. This vote is commonly referred to as “say-on-frequency.” As explained in Proposal Three above, our stockholders are given the opportunity to cast an advisory vote on the compensation of our named executive officers at the 2023 Annual Meeting. This vote is commonly referred to as “say-on-pay.” This Proposal Four gives our stockholders the opportunity to cast an advisory vote on how frequently we should conduct future say-on-pay votes. Stockholders may vote to have the say-on-pay vote conducted once every year, every two years or every three years, or may abstain from voting. After careful consideration, it is the opinion of the Board that the frequency of the say-on-pay vote should continue to be once every year. The Board recommends a frequency of once per year because an annual vote will allow stockholders to provide feedback on our compensation policies and practices, and the compensation for the relevant named executive officers, each time we disclose this information to our stockholders along with a discussion and analysis from our Compensation Committee in connection with our annual meetings - i.e., once per year. An annual stockholder vote gives our stockholders the opportunity to provide more timely feedback on any compensation decisions we may have made during the period covered by the proxy statement, whereas a vote every two or three years might require a lag between a change in policy and an opportunity for stockholder feedback in the form of the advisory vote. We held our last “say-on-frequency” vote in 2017 and a majority of our stockholders voted for an annual say-on-pay vote at such time. While the Board recommends an annual vote, stockholders are not voting to approve or disapprove of the Board’s recommendation. Rather, stockholders have the opportunity to cast an advisory vote on whether the frequency should be every one year, every two years or every three years. A plurality of the votes cast for one of the three frequency options presented by this Proposal Four will determine the stockholders’ preferred frequency for the say-on-pay advisory vote. Although the vote is advisory and non-binding, and although our Board has recommended a frequency of once per year, our Board and Compensation Committee value our stockholders’ opinions and will consider the outcome of the vote, along with other relevant factors, when making future decisions regarding the frequency of conducting a say-on-pay vote. Vote Required and Recommendation Generally, advisory approval requires approval by the holders of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the proposal. However, because this vote is advisory in nature, if no one single choice (one, two or three years) receives a total majority of the votes, the option receiving the highest number of votes will be considered the option chosen by the stockholders due to the plurality voting requirement. Although this vote is advisory in nature and does not require any action by us, we strongly encourage all stockholders to vote on this matter. Stockholders may vote “1 Year,” “2 Years,” or “3 Years,” or “Abstain.”
Financial Performance & Compensation Actually Paid (CAP)
| THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR 1 YEAR” FOR THE FREQUENCY OF THE COMPANY’S ADVISORY VOTES ON EXECUTIVE COMPENSATION. |
Financial Performance & Compensation Actually Paid (CAP)
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information with respect to the beneficial ownership of our common stock as of June 2, 2023 by: ▪each person (or group of affiliated persons) who is known by us to own beneficially 5% or more of our common stock; ▪each of our directors and nominees for election as directors; ▪each of the named executive officers; and ▪all directors and officers as a group. Ownership information is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC. The number of shares of common stock beneficially owned by each person is determined under rules promulgated by the SEC. Under such rules, beneficial ownership includes any shares as to which the person has sole or shared voting power or investment power, and also includes any shares that the person has the right to acquire within 60 days of the date as of which the beneficial ownership determination is made. Applicable percentages are based upon 116,364,248 voting shares issued and outstanding as of June 2, 2023, and treating any shares that the holder has the right to acquire within 60 days as outstanding for purposes of computing their percent ownership. Unless otherwise noted, the address of the beneficial owner is c/o 8x8, Inc. 675 Creekside Way, Campbell, CA 95008. Except as indicated in the footnotes to the table, the persons named in the table have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them, subject to community property laws where applicable.
Financial Performance & Compensation Actually Paid (CAP)
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership (#) | Percent of Class (%) | | Named Executive Officers & Directors(1): | | | | Samuel Wilson | 369,313 | * | | Kevin Kraus | 65,303 | * | | Laurence Denny | 22,161 | * | | Hunter Middleton | 101,791 | * | | Suzy Seandel | 88,086 | * | | Monique Bonner | 76,887 | * | | Todd Ford | 69,226 | * | | Alison Gleeson | 47,259 | * | | Eric Salzman | 130,094 | * | | Jaswinder Pal Singh | 228,487 | * | | Elizabeth Theophille | 52,377 | * | | All officers and directors as a group (11 persons)(2) | 1,250,984 | 1.08 | | 5% Stockholders: | | | | BlackRock, Inc.(3) | 19,974,694 | 17.90 | | The Vanguard Group, Inc.(4) | 18,056,572 | 16.17 | | Sylebra Capital Limited(5) | 14,389,476 | 12.37 | | ArrowMark Colorado Holdings, LLC(6) | 12,778,721 | 11.44 |
Financial Performance & Compensation Actually Paid (CAP)
(Footnotes to the table appear on the following page) * Indicates less than 1%
Financial Performance & Compensation Actually Paid (CAP)
| SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
Financial Performance & Compensation Actually Paid (CAP)
(1)Includes the following number of shares (rounded) issuable upon the exercise of stock options or the vesting of restricted stock units that were expected to be exercisable or to vest within 60 days of May 31, 2023:
Financial Performance & Compensation Actually Paid (CAP)
| Samuel Wilson | 189,949 | Monique Bonner | | 38,461 | | Kevin Kraus | 27,403 | Todd Ford | | 38,461 | | Larry Denny | 18,705 | Alison Gleeson | | 38,461 | | Hunter Middleton | 91,005 | Eric Salzman | | 38,461 | | Suzy Seandel | 81,148 | Jaswinder Pal Singh | 113,461 | | | | | Elizabeth Theophille | 38,461 | | | | | All officers and directors as a group (11 persons)(2) | | 713,976 |
Financial Performance & Compensation Actually Paid (CAP)
(2)Includes (a) each of the directors listed in this table and (b) each of the named executive officers as of June 02, 2023. (3)This information is based solely on Form 13G/A filed with the SEC by BlackRock, Inc. (“Blackrock”) on January 26, 2023 reporting share ownership as of December 31, 2022. Blackrock reported that it had sole dispositive power over 17,067,853 of the shares beneficially owned and sole voting power over 19,974,694 of the shares beneficially owned. The principal business address of BlackRock is 55 East 52nd Street, New York, New York 10055. (4)This information is based solely on Form 13G/A filed with the SEC by The Vanguard Group (“Vanguard”) on February 9, 2023 reporting share ownership as of December 30, 2022. Vanguard reported that it had shared voting power over 183,288 of the shares beneficially owned; sole dispositive power over 17,767,405 of the shares beneficially owned; and shared dispositive power over 289,167 of the shares beneficially owned. The principal business address of Vanguard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. (5)This information is based solely on Form 13G/A filed with the SEC by Sylebra Capital Limited, (“Sylebra”) on May 26, 2023 reporting share ownership as of May 25, 2023. Sylebra reported that it had shared voting power and shared dispositive power over all 14,389,476 of the shares beneficially owned. The principal business address of Sylebra is 28 Hennessy Road, Floor 20, Wan Chai, Hong Kong, K3 00000. (6)This information is based solely on Form 13G filed with the SEC by ArrowMark Colorado Holdings, LLC (“ArrowMark”) on February 15, 2023 reporting share ownership as of December 31, 2022. ArrowMark reported that it had sole voting power and sole dispositive power over all 12,778,721 of the shares beneficially owned. The principal business address of ArrowMark is 100 Fillmore Street, Suite 325, Denver, Colorado 80206. STOCKHOLDER PROPOSALS FOR 2024 ANNUAL MEETING NOMINATIONS FOR DIRECTORS Stockholders may present proper proposals for nominations of candidates for election as directors at the 2024 annual meeting of stockholders by submitting their proposals in writing to our Secretary in a timely manner. Our Secretary must receive the written proposal at our principal executive offices not later than March 30, 2024. Such stockholder proposals should be addressed to: 8x8, Inc., Attention: Secretary, 675 Creekside Way, Campbell, CA 95008. To be timely, a stockholder proposal relating to a nomination of a candidate for election as a director to be presented at an annual meeting must be received by our Secretary at our principal executive offices not less than 90 nor more than 120 calendar days in advance of the first anniversary of the previous year’s annual meeting of stockholders. For our 2024 annual meeting of stockholders, a timely stockholder notice must contain the information specified in our by-laws and be received by our Secretary at our principal executive offices not earlier than March 30, 2024 and not later than the close of business on April 29, 2024. In the event that we hold the 2024 annual meeting of stockholders more than 30 calendar days earlier than the date contemplated at the time of the previous year’s proxy statement, notice of such stockholder proposal must be received not later than the close of business on the 10th day following the day on which the date of the annual meeting is publicly disclosed. OTHER STOCKHOLDER PROPOSALS Stockholders may present proper proposals for inclusion in our Proxy Statement and for consideration at next year’s annual meeting of stockholders by submitting their proposals in writing to our Secretary in a timely manner. For a stockholder proposal regarding matter(s) other than a nomination of a candidate for election as a director, to be considered for inclusion in our Proxy Statement for the 2024 annual meeting of stockholders, our Secretary must receive the written proposal at our principal executive offices not later than February 16, 2024. In addition, such stockholder proposals must comply with the requirements of Rule 14a-8 under the Exchange Act regarding the inclusion of stockholder proposals in Company-sponsored proxy materials. Such stockholder proposals should be addressed to: 8x8, Inc., Attention: Secretary, 675 Creekside Way, Campbell, CA 95008. Our by-laws also establish an advance notice procedure for stockholders who wish to present a proposal before an annual meeting of stockholders but do not intend for the proposal to be included in our Proxy Statement. Our amended and restated bylaws provide that the only business that may be conducted at an annual meeting of stockholders is business that is (i) specified in our proxy materials with respect to such annual meeting, (ii) otherwise properly brought before such annual meeting by or at the direction of our Board, or (iii) properly brought before such meeting by a stockholder of record entitled to vote at such annual meeting who has delivered timely written notice to our Secretary, which notice must contain the information specified in our by-laws. To be timely, a stockholder proposal to be presented at an annual meeting (relating to matter(s) other than a nomination of a candidate for election as a director) must be received by our Secretary at our principal executive offices not less than 90 nor more than 120 calendar days in advance of the first anniversary of the date our Proxy Statement was released to stockholders in connection with the previous year’s annual meeting of stockholders. For our 2024 annual meeting of stockholders, a timely stockholder notice must be received by our Secretary at our principal executive offices not earlier than February 16, 2024 and not later than the close of business on March 17, 2024. In the event that we hold the 2024 annual meeting of stockholders more than 30 calendar days earlier than the date contemplated at the time of the previous year’s proxy statement, notice of such stockholder proposal that is not intended to be included in our Proxy Statement must be received not later than the close of business on the 10th day following the day on which the date of the annual meeting is publicly disclosed. If a stockholder who has notified us of his, her, or its intention to present a proposal at an annual meeting of stockholders does not appear to present his, her, or its proposal at such annual meeting, we are not required to present the proposal for a vote at such annual meeting. VOTING RIGHTS, QUORUM, AND REQUIRED VOTE GENERAL The accompanying proxy is solicited by the Board of 8x8 for use at the 2023 Annual Meeting of Stockholders to be held July 28, 2023, at 9:00 a.m., Pacific time, or at any adjournments or postponements thereof. The 2023 Annual Meeting will be held virtually via live interactive webcast on the Internet at www.virtualshareholdermeeting.com/8x82023. Our telephone number is (408) 727-1885.
Financial Performance & Compensation Actually Paid (CAP)
You will not be able to attend the 2023 Annual Meeting in person. Any stockholder can listen to and participate in the Annual Meeting live via the internet at www.virtualshareholdermeeting.com/8x82023. Our Board annually considers the appropriate format of our annual meeting. We will only be hosting the 2023 Annual Meeting via live webcast on the Internet. Hosting the Annual Meeting via the Internet provides expanded access, improved communication, reduced environmental impact, and cost savings for our stockholders and the Company. Hosting a virtual meeting enables increased stockholder attendance and participation since stockholders can participate and ask questions from any location around the world and provides us an opportunity to give thoughtful responses. In addition, we intend that the virtual meeting format will provide stockholders a similar level of transparency to the traditional in person meeting format, and we take steps to ensure such an experience. Our stockholders will be afforded similar opportunities to participate at the virtual 2023 Annual Meeting as they would at an in person annual meeting of stockholders. On or about June 15, 2023, we expect to mail to our stockholders as of the record date of June 2, 2023 (the “Record Date”) the Proxy Statement, our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (the “Annual Report”), and proxy card. On the Record Date, we had 116,364,248 shares of common stock issued and outstanding, including shares held in street name and shares held by registered stockholders. In addition, stockholders who wish to view our Annual Report, as filed with the SEC, including our audited financial statements, will find it available on the Investor Relations section of our website at http://www.8x8.com/. To request a printed copy of our Proxy Statement and Annual Report, which we will provide to you free of charge, either: write to 8x8’s Investor Relations Department at 8x8, Inc., 675 Creekside Way, Campbell, CA 95008; call us at (408) 495-2524; or email us at investor.relations@8x8.com. The information in this Proxy Statement relates to the proposals to be voted on at the 2023 Annual Meeting, the voting process, our corporate governance, the compensation of our directors and named executive officers in fiscal 2023, and other required information. VOTING Each holder of one or more shares of 8x8 common stock issued and outstanding as of the Record Date is entitled to vote on all proposals presented at the 2023 Annual Meeting. Each such holder is entitled to one vote for each share of common stock held as of the Record Date. You may vote all shares that you owned as of the Record Date, whether held directly in your name as the stockholder of record or held for you (for example, by a broker, trustee, or nominee) in street name as the beneficial owner. Please vote using each 16-digit control number and proxy card that you receive. WAYS TO VOTE. If you are a stockholder of record, there are four ways to vote: ▪by Internet at www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on July 27, 2023 (have your proxy card in hand when you visit the website); ▪by toll-free telephone until 11:59 p.m. Eastern Time on July 27, 2023 at 1-800-690-6903 (be sure to have your proxy card in hand when you call); ▪by completing and mailing your proxy card so it is received prior to the Annual Meeting; or ▪by attending and voting at the virtual Annual Meeting by visiting www.virtualshareholdermeeting.com/8x82023, where stockholders may vote and submit questions (before and during) the Annual Meeting (have your proxy card in hand when you visit the website). If you have questions or require assistance with voting, you may contact 8x8’s proxy solicitor as follows: Morrow Sodali LLC 333 Ludlow St – 5th Floor – South Tower Stamford, CT 06902 Instructions on how to connect to the Annual Meeting and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/8x82023. If you do not have your 16-digit control number, you will be able to access and listen to the Annual Meeting but you will not be able to vote your shares or submit questions during the Annual Meeting. Even if you plan to attend the Annual Meeting online, we recommend that you also vote by proxy prior to the Annual Meeting so that your vote will be counted if you later decide not to attend the Annual Meeting. If you are a street name stockholder, you will receive voting instructions from your broker, bank, or other nominee. You must follow the voting instructions provided by your broker, bank or other nominee in order to direct your broker, bank, or other nominee on how to vote your shares. Street name stockholders should generally be able to vote by returning a voting instruction form, or by telephone or on the Internet. However, the availability of telephone and Internet voting will depend on the voting process of your broker, bank, or other nominee. As discussed above, if you are a street name stockholder, you may not vote your shares live at the Annual Meeting unless you obtain a legal proxy from your broker, bank, or other nominee. REVOCABILITY OF PROXIES. Your proxy is revocable, and you may change your vote at any time prior to the vote at the 2023 Annual Meeting. If you are the stockholder of record, you may change your vote by: ▪granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above, at any time before the deadline for submitting proxies under that method; ▪providing a written notice of revocation to 8x8, Inc., Attn: Secretary, 675 Creekside Way, Campbell, CA 95008, prior to your shares being voted; or ▪attending and voting at the virtual Annual Meeting (although attendance at the Annual Meeting will not, by itself, revoke a proxy). QUORUM. The quorum requirement for holding and transacting business at the 2023 Annual Meeting is that holders of a majority of the voting power of the issued and outstanding shares of our common stock as of the Record Date must be present virtually or represented by proxy. Abstentions, withhold votes, and broker non-votes are counted for the purpose of determining the presence of a quorum. COUNTING VOTES. An automated system administered by Broadridge Financial Solutions, Inc. (“Broadridge”) will tabulate stockholder votes by proxy instructions submitted by beneficial owners over the Internet, by telephone, or by proxy cards mailed to Broadridge. Broadridge will also tabulate stockholder votes submitted by proxies submitted by stockholders of record. The inspector of the election will tabulate votes cast virtually at the 2023 Annual Meeting. Broker Non-Votes. Brokers holding shares in street name for customers have discretionary authority to vote on some matters when they have not received instructions from the beneficial owners of shares. A broker “non-vote” occurs when a broker or other nominee holding shares for a beneficial owner signs and returns a proxy with respect to shares of common stock held in a fiduciary capacity (typically referred to as being held in “street name”) but does not vote on a particular matter due to a lack of discretionary voting power and instructions from the beneficial owner. Under listing rules governing voting with respect to shares held in street name, brokers have the discretion to vote such shares on routine matters but not on non-routine matters. At the Annual Meeting, only Proposal Two (Ratification of Independent Public Accountants) is considered a routine matter. Therefore, absent your instructions, the shares held for you in street name will not be voted on any other matter at the Annual Meeting. Broker non-votes are excluded from the tabulation of votes cast on each proposal and will not affect the outcome of the vote on any of the proposals at the Annual Meeting.
Financial Performance & Compensation Actually Paid (CAP)
Abstentions. Abstentions are counted as present and entitled to vote for purposes of establishing a quorum at the Annual Meeting. An abstention will have no effect on the election of directors under Proposal One (Election of Directors) because directors are elected by plurality vote. However, an abstention will have the same effect as a vote “against” Proposal Two (Ratification of Independent Public Accountants) because the required approval is a majority of the votes present or represented by proxy and entitled to vote at the Annual Meeting. Additionally, an abstention will have the same effect as a vote “against” Proposal Three (Advisory Vote to Approve Executive Compensation) because we will consider our executive compensation approved on an advisory basis based on a majority of the votes present and entitled to vote at the Annual Meeting. For Proposal Four (Advisory Vote to Approve Frequency of the Company’s Future Advisory Votes to Approve Executive Compensation), abstentions will have no effect because such vote will be determined on an advisory basis by the plurality of votes cast for the alternative frequency periods (one, two, or three years) at the Annual Meeting. INSPECTOR OF ELECTIONS. The inspector of elections will be a representative from the Company. VOTING REQUIREMENTS The voting requirements for the proposals that we will consider at the Annual Meeting are:
Financial Performance & Compensation Actually Paid (CAP)
| PROPOSAL | | VOTING REQUIREMENT | | 1. | Election of seven directors to serve until 2024 Annual Meeting. | The seven nominees receiving the most votes cast “FOR” their election shall be elected as directors.(1) | | 2. | Ratification of appointment of Moss Adams LLP as independent registered public accounting firm for fiscal 2024. | An affirmative vote of the holders of a majority of the shares present or represented by proxy and entitled to vote on this proposal at the Annual Meeting will constitute approval of this proposal. | | 3. | To vote, on an advisory and non-binding basis, to approve the Company’s executive compensation for the fiscal year ended March 31, 2023. | An affirmative vote of the holders of a majority of the shares present or represented by proxy and entitled to vote on this proposal at the Annual Meeting will constitute approval of this proposal on an advisory basis.(2) | | 4. | To vote, on an advisory and non-binding basis, to approve the frequency (every one, two or three years) of future advisory votes to approve executive compensation. | The plurality of votes cast for the alternative frequency periods (one, two, or three years) will be considered by the Board to represent the preference of stockholders for the frequency of non-binding advisory votes to approve executive compensation on an advisory basis.(3) |
Financial Performance & Compensation Actually Paid (CAP)
(1)Pursuant to a policy adopted by the Board, any director nominee who fails to receive more votes cast “FOR” his or her election than “WITHHELD” is expected to tender his or her resignation to the Governance and Nominating Committee of the Board, which is responsible for considering each resignation tendered under the policy and recommending to the Board whether or not to accept the resignation. (2)This is an advisory vote. Neither we nor the Board will be bound by the results of the vote on this proposal. (3)This is an advisory vote. Neither we nor the Board will be bound by the results of the vote on this proposal. SOLICITATION OF PROXIES PERSONS INVOLVED IN SOLICITATION. 8x8 is making this solicitation. MANNER AND COST OF SOLICITATION. Proxies may be solicited by mail, in person, by telephone, and via the Internet. 8x8 will pay the costs of this solicitation, including the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. 8x8 has retained Morrow Sodali LLC as proxy solicitor for a fee of $10,000, plus out-of-pocket expenses. If you choose to access the proxy materials or vote over the Internet, you are responsible for any Internet access charges you may incur. If you choose to vote by telephone, you are responsible for any telephone charges you may incur. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities. OTHER MATTERS The Board knows of no other matters to be presented for stockholder action at the 2023 Annual Meeting. However, if other matters do properly come before the 2023 Annual Meeting or any adjournments or postponements thereof, the Board intends that the persons named in the proxies will vote upon such matters in accordance with the best judgment of the proxy holders. BY ORDER OF THE BOARD Jaswinder Pal Singh, Chairman San Jose, California June 15, 2023 APPENDIX A Non-GAAP Financial Information and Reconciliations The rationale for management’s use of non-GAAP information in the Compensation Discussion and Analysis and Proxy Statement is as follows: The Company has provided, in this proxy statement, financial information that has not been prepared in accordance with Generally Accepted Accounting Principles (GAAP). Management uses these Non-GAAP financial measures internally to understand, manage, and evaluate the business, and to make operating decisions. Management believes they are useful to investors, as a supplement to GAAP measures, in evaluating the Company's ongoing operational performance. Management also believes that some of 8x8’s investors use these Non-GAAP financial measures as an additional tool in evaluating 8x8's ongoing "core operating performance" in the ordinary, ongoing, and customary course of the Company's operations. Core operating performance excludes items that are non-cash, not expected to recur, or not reflective of ongoing financial results. Management also believes that looking at the Company’s core operating performance provides consistency in period-to-period comparisons and trends. These Non-GAAP financial measures may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies, which limits the usefulness of these measures for comparative purposes. Management recognizes that these Non-GAAP financial measures have limitations as analytical tools, including the fact that management must exercise judgment in determining which types of items to exclude from the Non-GAAP financial information. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these Non-GAAP financial measures to their most directly comparable GAAP financial measures below. Detailed explanations of the adjustments from comparable GAAP to Non-GAAP financial measures are as follows: NON-GAAP GROSS PROFIT AND NON-GAAP OPERATING INCOME Non-GAAP Gross Profit and Non-GAAP Operating income excludes: amortization of acquired intangible assets, stock-based compensation expense and related employer payroll taxes, acquisition and integration expenses, certain legal and regulatory costs, and certain severance, transition and contract termination costs from Gross Profit and Operating Profit (Loss). Non-GAAP Gross Margin is Non-GAAP Gross Profit divided by Revenue. Non-GAAP Operating Margin is Non-GAAP Operating Income divided by Revenue. Management believes that these exclusions provide investors with a supplemental view of the Company’s ongoing operating performance. Management evaluates and makes decisions about its business operations based on Non-GAAP financial information by excluding items management does not consider to be “core costs” or “core proceeds.” Management believes some of its investors also evaluate our "core operating performance" as a means of evaluating our performance in the ordinary, ongoing, and customary course of our operations. Management excludes the amortization of acquired intangible assets, which primarily represents a non-cash expense of technology and/or customer relationships already developed, to provide a supplemental way for investors to compare the Company’s operations pre-acquisition to those post-acquisition and to those of our competitors that have pursued internal growth strategies. Stock-based compensation expense has been excluded because it is a non-cash expense and relies on valuations based on future conditions and events, such as the market price of 8x8 common stock, that are difficult to predict and/or largely not within the control of management. The related employer payroll taxes for stock-based compensation are excluded since they are incurred only due to the associated stock-based compensation expense. Acquisition and integration expenses consist of external and incremental costs resulting directly from merger and acquisition and strategic investment activities such as legal and other professional services, due diligence, integration, and other closing costs, which are costs that vary significantly in amount and timing. Legal and regulatory costs include litigation and other professional services, as well as certain tax and regulatory liabilities. Severance, transition and contract termination costs include employee termination benefits, executive severance agreements, cancellation of certain contracts, and lease impairments. Debt amortization expenses relate to the non-cash accretion of the debt discount.
Financial Performance & Compensation Actually Paid (CAP)
| APPENDIX A |
Financial Performance & Compensation Actually Paid (CAP)
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | | | | | | (Unaudited, in thousands) | | | | | | | Years Ended | | | | | | March 31, 2023 | March 31, 2022 | March 31, 2021 | March 31, 2020 | | Gross profit: | | | | | | Gross profit | $502,463 | $390,572 | $302,194 | $245,009 | | Amortization of acquired intangible assets | 8,752 | 5,127 | 5,117 | 6,727 | | Stock-based compensation and related employer payroll taxes | 12,953 | 14,209 | 13,969 | 8,571 | | Acquisition and integration costs | — | — | — | 6 | | Legal and regulatory costs | 85 | — | 290 | — | | Severance, transition and contract termination costs | 2,473 | 2,609 | 1,666 | 3,460 | | Non-GAAP gross profit | $526,725 | $412,517 | $323,236 | $263,773 | | Operating income (loss): | | | | | | GAAP loss from operations | $(66,292) | $(154,141) | $(146,149) | $(159,819) | | Amortization of acquired intangible assets | 21,078 | 8,317 | 6,886 | 8,842 | | Stock-based compensation expense and related employer payroll taxes | 90,636 | 138,226 | 112,505 | 72,096 | | Acquisition and integration costs | (4,553) | 9,717 | 198 | 2,613 | | Legal and regulatory costs | 771 | (2,722) | 4,637 | (730) | | Severance, transition and contract termination costs | 20,717 | 11,191 | 10,816 | 16,117 | | Non-GAAP operating profit (loss) | $62,357 | $10,588 | $(11,107) | $(60,881) |

DEF 14A of 8X8 Inc /De/

the Securities Exchange Act of 1934

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

Board Composition Metrics

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

COMMUNICATIONS WITH THE BOARD

EXECUTIVE COMPENSATION

PAY-FOR-PERFORMANCE PHILOSOPHY

Pay For Performance: Current PSU Performance as of March 31, 2023

Pay For Performance: Current PSU Performance as of March 31, 2023

Pay For Performance: Current PSU Performance as of March 31, 2023

FISCAL 2023 EXECUTIVE COMPENSATION POLICIES AND PRACTICES

EXECUTIVE COMPENSATION PROGRAM OBJECTIVES

Role of Compensation Consultant

Competitive Positioning

Competitive Positioning

Competitive Positioning

Competitive Positioning

Competitive Positioning

FISCAL 2023 EXECUTIVE COMPENSATION ELEMENTS

ANNUAL CASH INCENTIVE AWARDS

Employee Bonus Plan (EBP) Design

Target Annual Cash Incentive Award Opportunities for Fiscal 2023

Target Annual Cash Incentive Award Opportunities for Fiscal 2023

2023 PERFORMANCE OBJECTIVES AND EBP STRUCTURE

FY2023 SIPES CHART

FY2023 ALL OTHER NEOs CHART

LONG-TERM INCENTIVE COMPENSATION

LONG-TERM INCENTIVE COMPENSATION

LONG-TERM INCENTIVE COMPENSATION

LONG-TERM INCENTIVE COMPENSATION

LONG-TERM INCENTIVE COMPENSATION

LONG-TERM INCENTIVE COMPENSATION

LONG-TERM INCENTIVE COMPENSATION

LONG-TERM INCENTIVE COMPENSATION

LONG-TERM INCENTIVE COMPENSATION

SPECIAL PAYMENT ARRANGEMENTS

SPECIAL PAYMENT ARRANGEMENTS

SPECIAL PAYMENT ARRANGEMENTS

SPECIAL PAYMENT ARRANGEMENTS

Accounting for Stock-Based Compensation

Accounting for Stock-Based Compensation

Potential Payments

Pay Versus Performance Table