DEF 14A of 8X8 Inc /De/

Filed Jul 11, 2024 · FY20240001023731-24-000061

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Board Composition Metrics
Board Composition Metrics
Board Composition Metrics
| | 2024 | | Average Tenure | 4.4 years | | Independence | 86% | | Gender Diversity | 43% | | Ethnic Diversity | 29% |
Board Composition Metrics
These changes to our Board and its four standing committees are explained in more detail below.
Board Composition Metrics
| CHANGES OVER THE LAST 5 YEARS | | JUNE 17, 2024: Andrew Burton appointed as a new director. | | ▪Mr. Burton appointed to the Board and Board size increased from six to seven directors. | | MAY 21, 2024: Alison Gleeson appointed as Chair of the Compensation Committee. | | ▪Ms. Gleeson was appointed as the Chair of the Compensation Committee, filling a vacancy left by Mr. Salzman when he resigned from the Board. | | APRIL 15, 2024: Elizabeth Theophille appointed as member of the Audit Committee. | | ▪Ms. Theophille was appointed to the Audit Committee, filling a vacancy left by Mr. Salzman when he resigned from the Board. | | MARCH 19, 2024: Eric Salzman stepped down from the Board. | | ▪After serving on the Board for more than twelve years, Mr. Salzman resigned from the Board. | | ▪Board size decreased from seven to six directors. |
Board Composition Metrics
| 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 2024, our Governance and Nominating Committee recommended the candidates named in this Proxy Statement, aside from Mr. Burton who was later appointed to the Board in June 2024 and subsequently recommended by the Governance and Nominating Committee for re-election. The full Board approved all candidates recommended by the Governance and Nominating Committee for re-election. 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 2024 fiscal year with the departure of Eric Salzman and was subsequently increased from six to seven in June 2024 with the appointment of Andrew Burton to the Board.
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 re-election. 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. 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 | | | Andrew Burton | | | Todd Ford | | | Alison Gleeson | | | 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 $693,643 to Zoominfo during fiscal 2024) and that Elastic N.V. (“Elastic”), 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 $203,309 to Elastic during fiscal 2024). The Board considered the materiality of each of these arrangements from the perspective of each of the Company, Zoominfo and Elastic. Among other things, the Board 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 and that amount of the Company’s vendor relationship with Elastic was not material to either company, in making its determination regarding Ms. Gleeson’s independence. In making this determination with respect to Mr. Burton, the Board considered, among other factors, that Rapid7, Inc. (“Rapid7”), of which Mr. Burton is a current executive officer as its President and Chief Operating Officer, is a current vendor to the Company. The Company made no payments to Rapid7 in fiscal 2024 and a payment of $150,000 in fiscal 2025 prior to Mr. Burton joining the Board. The Board considered the materiality of this arrangement from the perspective of both the Company and Rapid7, and took into account the fact that Rapid7 was a vendor of the Company before Mr. Burton joined the Board in June 2024, in making its determination regarding Mr. Burton’s independence. Each of the Board’s Audit Committee, Compensation Committee, Governance and Nominating Committee and Technology & Cybersecurity Committee is composed solely of independent directors in accordance with the Nasdaq listing rules. BOARD MEETINGS AND ATTENDANCE The Board held a total of 12 meetings during fiscal 2024. None of the members of our Board standing for re-election attended less than 75% of the meetings of the Board during fiscal 2024. 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 2023. COMMITTEES The Board has four standing committees: an Audit Committee; a Compensation Committee; a Governance and Nominating Committee; and a Technology & Cybersecurity Committee. None of the members of our Board standing for re-election attended less than 75% of the meetings held by all committees on which he or she served during fiscal 2024 (during the period that he or she served). 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 as of the date of this Proxy Statement, unless otherwise noted.
Board Composition Metrics
| Director | Independent | Audit | Compensation | Governance and Nominating | Technology & Cybersecurity | Other Role | | Jaswinder Pal Singh | Yes | | | | | Chair | | Monique Bonner | Yes | | | | | | | Andrew Burton | Yes | | | | | | | Todd Ford | Yes | | | | | | | Alison Gleeson | Yes | | | | | | | Elizabeth Theophille | Yes | | | | | | | Samuel Wilson | No | | | | | |
Board Composition Metrics
| | = Committee Chair | | = Committee Member | Chair = Chairman of the Board |
Board Composition Metrics
| Audit Committee | | | Current Members: Todd Ford Monique Bonner Elizabeth Theophille Current Chair: Todd Ford Former Members Who Served During F2024: Eric Salzman | Purpose: The Audit Committee oversees our corporate accounting and financial reporting process and performs several functions in the execution of this role. Fiscal 2024 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 F2024: 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, including those recommended by stockholders, 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: Jaswinder Pal Singh Todd Ford Alison Gleeson Current Chair: Alison Gleeson Former Members Who Served During F2024: Eric Salzman | 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: 6 | | | 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. 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 2024. 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 2024.
Board Composition Metrics
| Technology & Cybersecurity Committee | | | Current Members: Jaswinder Pal Singh Alison Gleeson Elizabeth Theophille Current Chair: Elizabeth Theophille Former Members Who Served During 2024: Eric Salzman | 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 2024 Meetings: 3 | | | 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 October 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. STOCKHOLDER 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 2024 (ended March 31, 2024), we participated in more than 150 in-person and virtual meetings with institutional stockholders representing approximately 55% of our total shares outstanding at year end. We met with six of our top 10 stockholders (100% of non-index, non-broker holders in the top 10), who collectively represented approximately 31% of shares outstanding. Sylebra Capital Management also met with a member of our Board of Directors regarding executive compensation and corporate strategy. The primary topics in these meetings were corporate performance (including innovation, new products, revenue growth, profitability and cash flow), the macroeconomic and competitive environment (including the impact of a recession on small businesses, new market entrants, and peer competitive practices), and our capital structure (including the early repayment of $25 million of the 2027 term loan and the retirement of the remaining Convertible Senior Notes due in February 2024, as well as plans for early debt retirement in the future, and capital allocation strategies). Engagement and Response on Executive Compensation In response to our on-going engagement with our stockholders, we have been proactive in initiating changes to our executive compensation programs. Although our executive compensation practices received support from the majority of our stockholders in the 2023 executive compensation advisory vote (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 2024, we received investor feedback that with the achievement of sustained non-GAAP profitability and positive cash flow, as well as the successful restructuring of near-term debt obligations, management should increase focus on achieving revenue growth as well as improving profitability and cash flow. To reflect this shift, we increased the weighting of service revenue and net new monthly recurring revenue (nnMRR) relative to non-GAAP operating margin under our employee bonus plan in fiscal 2024, compared with fiscal 2023. Targeted payouts under our fiscal 2024 employee bonus plan were based on achievement of non-GAAP operating profit targets, service revenue and net new monthly recurring revenue (nnMRR) objectives. 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 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 with fiscal 2024, the majority of our employees are compensated entirely in cash and most new hires below the senior director level 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. In fiscal 2024, we continued to build on program initiatives established in 2023 across all three pillars, including: •Expansion of our Diversity, Equity and Inclusion Council globally and publication of a formal statement, •Increased investment in accessibility, including additional education and training programs, as well as additional accessibility testing of our products. •Creation of a cross-functional ESG council and regional site committees to increase awareness, oversee environmental and social activities at the local level, and ensure compliance with new regulations as they become effective. •ISO 14001 (Environmental Systems Management) certification for our UK operations. We also received a Bronze Medal from Ecovadis in the UK, placing us in the top 35% of companies evaluated. 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 ($) | Stock Awards(1)(2)(3) ($) | All Other Compensation (6) ($) | Total ($) | | Jaswinder Pal Singh(4) | 116,250 | 157,850 | — | 274,100 | | Monique Bonner | 62,500 | 157,850 | — | 220,350 | | Todd Ford | 72,500 | 157,850 | — | 230,350 | | Alison Gleeson | 51,250 | 157,850 | — | 209,100 | | Eric Salzman(5) | 71,250 | 157,850 | — | 229,100 | | Elizabeth Theophille(6) | 52,500 | 157,850 | 46,824 | 257,174 |
COMMUNICATIONS WITH THE BOARD
(1)As of March 31, 2024, each of our non-employee directors who served as directors in fiscal 2024 held outstanding RSUs representing the right to acquire the number of Company shares indicated in the table below and none held outstanding Company stock options:
COMMUNICATIONS WITH THE BOARD
| Name | Stock Options | RSUs(2) | | Jaswinder Pal Singh | — | 35,000 | | Monique Bonner | — | 35,000 | | Todd Ford | — | 35,000 | | Alison Gleeson | — | 35,000 | | Eric Salzman | — | 35,000 | | Elizabeth Theophille | — | 35,000 |
COMMUNICATIONS WITH THE BOARD
(2)On July 28, 2023, Dr. Singh, Ms. Bonner, Mr. Ford, Mr. Salzman, Ms. Gleeson, and Ms. Theophille each received a grant of a stock award in the form of RSUs representing the right to receive 35,000 shares of common stock upon the completion of the director’s board service year, subject to his or her continued service through such date. Mr. Burton was not appointed to the Board until June 2024 and is therefore not included in the 2024 Director Compensation Table. (3)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, 2024, filed with the SEC on May 21, 2024. (4)Dr. Singh was appointed Chairman of the Board on December 10, 2020. Prior to his appointment, Dr. Singh served as the Lead Independent Director. (5)Mr. Salzman resigned from the Board on March 19, 2024. (6)Fiscal 2024 amounts listed in the "All Other Compensation" column for Ms. Theophille reflect the tax equalization payments of $46,824 made to Ms. Theophille related to fiscal 2024 when Ms. Theophille was residing in Switzerland. Ms. Theophille’s compensation reported in the table is not reduced to reflect any expat reduction related to services she performed in fiscal 2024. NON-EMPLOYEE DIRECTOR STOCK OWNERSHIP REQUIREMENT In June 2024, the Board amended its stock ownership policy to require all non-employee directors to hold the lesser of (i) a number of shares of common stock with a value equal to $200,000, measured annually at the end of each fiscal year, or (ii) 40,000 shares of common stock, beginning with the fiscal year end following the fifth anniversary of the director’s election to the Board. This amendment added an alternative threshold for meeting the stock ownership requirements to address the recent volatility in the Company’s share price and its impact on non-employee directors and their ability to comply with the stock ownership requirement. Prior to such amendment, non-employee directors who met the service requirement were required 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. 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. As of March 31, 2024, four of our non-employee directors were subject to the minimum stock ownership requirement: Dr. Singh, Mr. Ford, Ms. Bonner and Ms. Theophille. On March 28, 2024 (the last trading day of fiscal 2024), our stock price was $2.70, and, therefore, each non-employee director subject to the minimum stock ownership requirement, as amended in June 2024, was required to hold at least 40,000 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, as amended in June 2024, we believe that each such director complied with the minimum stock ownership requirement as of July 9, 2024. 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 2024 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 2024 Annual Meeting will hold office until the 2025 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 59 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 has also served as Chairman since May 2013 and co-founder since October 2011 of Gwynnie Bee, Inc., an internet technology company in the retail space. ▪Previously, Dr. Singh was co-founder and chief Technology Officer of firstRain, Inc., a SaaS provider of market intelligence solutions for the enterprise. ▪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
| MONIQUE BONNER | | | Age 53 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, and on the board of Leaf Home, a privately held provider of home technology solutions. ▪Ms. Bonner is also the founder of Addison West, a home decor retailer. ▪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
| ANDREW BURTON | | | Age 52 Director Since: 2024 INDEPENDENT | SKILLS AND ATTRIBUTES: Mr. Burton’s qualifications to serve as a director include his extensive experience at various senior technology executive positions, including as President & Chief Operating Officer of a public SaaS company, where he is responsible for sales & marketing, go-to-market, product development and operations functions, and at a venture-backed startup that completed a successful IPO and went on to be a high-growth public company, where he was responsible for products and engineering. Mr. Burton was appointed to the Company’s Board in June 2024. | | | PROFESSIONAL AND ACADEMIC EXPERIENCE: Andrew Burton is currently the President & Chief Operating Officer at Rapid7 (NASDAQ: RPD), a leading provider of cybersecurity solutions for extended risk assessment and threat detection, where he oversees the company’s sales & marketing, go-to-market, product development and operations functions. •Prior to Rapid7, Mr. Burton was the CEO of Logentries, a leading provider of scalable, real-time machine data search and analytics technology, acquired by Rapid7 in October 2015. •Prior to Logentries, Andrew was SVP of products and engineering at LogMeIn (NASDAQ: LOGM), where he played an instrumental role in leading the company from venture-backed startup through a successful IPO and on to a high-growth public company. •He earned a B.S. from Oregon State University, a MSc Information Systems from University College Dublin, and a MBA from Boston College. |
COMMUNICATIONS WITH THE BOARD
| TODD FORD | | | Age 57 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 serves on the board of directors of HashiCorp, Inc. and Artic Wolf Networks, Inc. ▪Mr. Ford holds a B.S. in Accounting from Santa Clara University. |
COMMUNICATIONS WITH THE BOARD
| ALISON GLEESON | | | Age 57 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. (NYSE: ESTC), a search engine company, and ZoomInfo Technologies, Inc. (NASDAQ: ZI), a go-to-market platform solution provider to find, acquire, and grow customers. ▪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
| ELIZABETH THEOPHILLE | | | Age 57 Director Since: 2019 INDEPENDENT Governance and Nominating Committee Technology & Cybersecurity Committee (Chair) Audit Committee | 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
| 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
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 2024 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, in an election of directors that is not a contested election, 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. For purposes of this policy, a “contested” election is an election in which the number of nominees for director exceeds the number of directors to be elected. 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 2024, other than those transactions described under “Director Independence” above and 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, 2024 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). 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 2024 audited consolidated financial statements with our management and Moss Adams LLP, our independent registered public accounting firm for fiscal 2024. 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, 2024. THE AUDIT COMMITTEE Todd Ford, Chair Monique Bonner Elizabeth Theophille 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, 2025. 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 2024 and also to provide other auditing and non-auditing services during fiscal 2024. 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, 2024 and 2023 were pre-approved by our Audit Committee.
COMMUNICATIONS WITH THE BOARD
The following table sets forth the aggregate fees billed to us by Moss Adams LLP for the fiscal years ended March 31, 2024 and 2023:
COMMUNICATIONS WITH THE BOARD
| Service Categories | Fiscal 2024 | Fiscal 2023 | | Audit fees(1) | $3,348,190 | $3,727,000 | | Audit-related fees(2) | 260,286 | 200,250 | | All other fees(3) | — | 17,700 | | Total | $3,608,476 | $3,944,950 |
COMMUNICATIONS WITH THE BOARD
(1)Audit fees consist of fees for professional services provided in connection with (i) the audit of our financial statements; (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 registration statement 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. Vote Required and Recommendation The ratification of the selection of Moss Adams LLP as our independent registered public accounting firm for fiscal 2025 will require the affirmative vote of holders of a majority of the shares present or represented by proxy at the Annual Meeting and 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, 2025. |
COMMUNICATIONS WITH THE BOARD
EQUITY COMPENSATION PLANS EQUITY COMPENSATION PLAN INFORMATION The tables below provide information as of March 31, 2024 and July 9, 2024, 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 July 9, 2024: 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) | 9,800,775 | 9.45 | 4,383,745 | | Equity Compensation plans not approved by security holders(3) | 2,588,341 | 11.57 | 243,528 | | Total | 12,389,116 | 9.96 | 4,627,273 |
COMMUNICATIONS WITH THE BOARD
| As of March 31, 2024: 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) | 10,279,180 | 9.45 | 6,404,144 | | Equity Compensation plans not approved by security holders(3) | 2,935,952 | 11.57 | 166,321 | | Total | 13,215,132 | 9.96 | 6,570,465 |
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, 2024 and July 9, 2024, there were 2,663,533 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 2024 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 2024. For fiscal 2024, our NEOs included: ▪Samuel Wilson, our Chief Executive Officer (our “CEO”)1; ▪Kevin Kraus, our Chief Financial Officer (our “CFO”)2; ▪Laurence Denny, our Chief Legal Officer; ▪Hunter Middleton, our Chief Product Officer; and ▪Suzy Seandel, our Chief Accounting Officer.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION Our fiscal 2024 executive compensation program was designed to incentivize our executive officers to drive performance aligned with our long-term strategy. Consistent with our performance objectives and compensation philosophy, during fiscal 2024, we took the following compensation actions for our executives, including the named executive officers: ▪Base Salary: After evaluating the competitiveness of NEOs’ base salaries in the context of our overall compensation philosophy, the Compensation Committee determined to make adjustments to the base salary of each of our senior executives to either reflect their new positions (Messrs. Wilson & Kraus), realign to market pay levels (Mr. Middleton) or make small market adjustments (Mr. Denny & Ms. Seandel). ▪Annual Cash Incentive Awards: In fiscal 2024, the Company rebalanced the weightings of the metrics in the Annual Cash Incentive Award program to increase the weightings for service revenue and net new monthly recurring revenue, prioritizing efforts to increase customer retention, cross-sell of new products, and customer base expansion with continued increases in non-GAAP profitability.
EXECUTIVE COMPENSATION
▪Balancing Performance-Based Long-Term Incentives with Executive Retention: In fiscal 2024 the Company adjusted the design of its performance-based restricted stock unit awards (“PSUs”) effective for grants made in fiscal 2024 to require significant increases in stock price to be eligible to vest. In addition, and in line with both our pay-for-performance philosophy as well as feedback we had heard from key investors, we increased the portion of long-term compensation delivered in PSUs (assuming target performance) from 25% to 50%. The remainder of long-term incentives granted to NEOs in fiscal 2024 were granted in the form of restricted stock units (“RSUs”). ▪No New Special Supplemental Compensation Arrangements for NEOs in 2024: In fiscal 2023, as the Company implemented changes in strategy and leadership, the Compensation Committee believed that supplemental compensation was necessary and appropriate in specific instances to deliver the best results. These included cash and equity awards for special achievements, interim service and retention. These payments were judged to be appropriate based on the special circumstances at the time of their issuance. The Company did not engage in any special supplemental compensation arrangements with any of our NEOs in fiscal 2024, though some special awards granted in prior years continued to vest and be paid during the year. The Compensation Committee believes that the combination of base salary and incentive awards, including annual cash incentive awards, RSUs and PSUs, effectively supports our compensation objectives.
PAY-FOR-PERFORMANCE PHILOSOPHY
PAY-FOR-PERFORMANCE PHILOSOPHY To succeed in the rapidly evolving market for contact center and cloud-based communication software, we must attract and retain a highly talented executive team. Effective pay-for-performance alignment is a key 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 2024 we continued to focus on driving performance through targeted and calibrated compensation vehicles; increasing the portion of our long-term awards delivered in the form of PSUs from 25% to 50% (assuming target performance) and adjusting our annual incentive cash award program to better reflect balanced performance aligned with market expectations. 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 2024, our performance focus coupled with the decline in our stock price inspired changes to our PSU design to appropriately balance the need for compensation plans that can retain our key talent with the need to drive growth in our stock price. These changes, as further discussed in the “Long-term Incentive Compensation” section, allowed us to increase the retentive period of the award while still requiring substantial stock price growth to vest. Taken as a whole, these award design changes represent a shift towards a longer-term focus in our rewards design that will better meet the needs of the Company during times of volatility, reducing the need for one-time compensation arrangements. NEOs received half of their annual long-term equity compensation granted in fiscal 2024 in the form of PSUs, with final payouts realized based on Company performance over a four-year period. (1)Fiscal 2024 CEO Targeted Compensation Mix reflects Mr. Wilson’s annualized base salary, target bonus opportunity and annual equity awards granted in June of fiscal 2024 valued based on the grant date close price per share. Mr. Wilson’s long-term equity compensation value reflects the target award value, which was converted to a number of shares based on the trailing 20 trading day average closing price or, if greater, for the awards granted in fiscal 2024, $5.00. Awards of PSUs are earned and vest based on achievement of specific stock price hurdles, subject to minimum vesting periods as described in detail under “Long-Term Incentive Compensation” below. (2)Fiscal 2024 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 2024 valued based on the grant date close price per share. The NEO targeted long-term equity compensation value reflects the grant date fair value of the award. Awards of PSUs are earned and vest based on achievement of stock price hurdles as well as minimum vesting periods, as described in detail under “Long-Term Incentive Compensation” below. During fiscal 2024, the Company strengthened the leadership team with key hires in sales and marketing, reduced debt by $88 million, and continued to invest in industry leading innovation. Although we improved our operating margin and cash generation, our enterprise value and stock price declined in fiscal 2024, as did the stock prices of other cloud-based unified communications peers. As a result, the outstanding PSUs that were issued in fiscal 2022 and 2023 are all tracking below the threshold TSR requirement for payout, and RSUs granted during this same period have declined an average of 54% from their grant date fair values. This reduction in the realizable value of our long-term incentive awards, which continues to account for the majority of our NEOs’ compensation, reflects our compensation philosophy that there should be alignment between the take-home pay of our executives and the stockholder returns generated by the Company. We have continued 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 current and former CEOs and the Company’s TSR is illustrated in the following graph, which shows how total targeted CEO compensation 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 historical trend. (1)The above chart illustrates CEO Total Pay for Mr. Verma (our former CEO) for 2020, Mr. Sipes for fiscal 2021 – fiscal 2022, and Mr. Wilson for fiscal 2023 and fiscal 2024. 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 2024 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 adopted a clawback policy to meet the requirements of the Nasdaq listing rules adopted to implement the compensation recovery requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Such clawback policy includes supplemental provisions that allow for additional recovery and forfeiture in the Compensation Committee’s discretion in connection with certain misconduct that contributed to an obligation to restate the Company’s financial statements, reinforcing the clawback provision in our 2012 and 2022 equity incentive plan. | |
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 absolute stock price goals or 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 2024, 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 2024, 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 2024 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 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 position each individual based on an evaluation of the individual talent and/or criticality to the business. 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 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 2024 was updated with assistance from Compensia to ensure that the companies in the peer group remained aligned to 8x8’s size and financial profile. The review of our peer group occurred in January of 2023, reflecting our size and financial performance at that time. The changes to our peer group that were proposed by Compensia and approved by the Compensation Committee reflected a significant decline in our market capitalization vs. the prior year’s review, which resulted in a significant number of changes to the peer group composition to ensure that we were well aligned with the market moving forward. Based on the peer analysis, 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. 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.
Competitive Positioning
| Alteryx | Edgio | Q2 Holdings | | Bandwidth | Everbridge | Rimini Street | | Blackbaud | Five9 | RingCentral | | Commvault Systems | LivePerson | Upland Software | | Domo | Ooma | Yext | | | | Zuora |
Competitive Positioning
The executive compensation peer group was reviewed again at the end of fiscal 2024, based on the same set of financial criteria, and no changes were made for fiscal 2025. 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 2024.
Results of 2023 Stockholder Advisory Vote on Executive Compensation
Results of 2023 Stockholder Advisory Vote on Executive Compensation Stockholders are provided the opportunity to cast an annual advisory vote on executive compensation (commonly known as a “Say on Pay” vote). At our 2023 Annual Meeting of Stockholders held on July 28, 2023, our stockholders indicated support for the compensation of our named executive officers, with approximately 78% of the votes cast in favor of the proposal. The Compensation Committee took note that this level of support was lower than the approximately 97% of the votes cast in favor of the Say on Pay proposal at our 2022 Annual Meeting of Stockholders. In light of such lower level of stockholder support, Eric Salzman, who then served as the chair of the Compensation Committee, engaged in conversations with stockholders representing approximately 39% of shares outstanding to understand their views about the Company’s direction, financial performance and compensation practices. These stockholders indicated that the decrease in Say on Pay support was related to the one-time special cash awards associated with the debt exchange and refinance in August 2022, a special retention award to one NEO, and in-period changes to the weightings and payouts for our short-term cash incentive program. We also received feedback that investors preferred a greater proportion of long-term incentive compensation to be granted to NEOs in the form of PSUs, and that goals include corporate performance metrics as well as TSR. For fiscal 2024, we increased the mix of performance-based incentive compensation for our CEO and all NEOs from 25% of long-term awards to 50% of long-term awards, and designed the achievement and vesting requirements so these awards maintain their retentive value even during periods of stock price and market volatility. We did not pay any special one-time cash awards in fiscal 2024, and the payout of our short-term cash incentive program was not adjusted. Final payout was consistent with actual performance relative to the original targets, as discussed further above under the heading “Executive Compensation.” We value the opinions of our stockholders and will continue to consider the outcome of future Say-on-Pay votes, as well as feedback received throughout the year, when making compensation decisions for our executive officers, including the named executive officers. As part of our stockholder engagement program, we continuously engage in substantive discussions on executive compensation, corporate governance and corporate performance and strategy with our institutional stockholders, including the majority of our top 20 active stockholders.
FISCAL 2024 EXECUTIVE COMPENSATION ELEMENTS
| Element | Description | 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 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 generally to 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. |
BASE SALARY
BASE SALARY Generally, the Compensation Committee reviews the base salaries of our executives, including the named executive officers, as part of its annual review of our executive compensation program and makes recommendations to the Board for adjustments to base salaries to take into account competitive market practices, corporate and individual performance from the prior fiscal year and promotions or changes in responsibilities. Typically, the Board sets the base salaries of our named executive officers at levels that are competitive with the market as reflected in our compensation peer group, after taking into consideration each named executive officer’s role and the scope of his or her responsibilities, his or her experience, and the base salary levels of the other executives. In fiscal 2024, salary changes were effective at the start of the second fiscal quarter, and were aligned to assumption of new roles (Messrs. Wilson & Kraus), small market adjustments (Mr. Denny & Ms. Seandel), and a realignment to our peer market midpoints in the case of Mr. Middleton. In all circumstances, peer group compensation data provided by Compensia was reviewed as part of an in-depth discussion before any decisions were made. The following table sets forth each NEO’s base salary rate for fiscal 2024, as compared to their base salary rate for fiscal 2023:
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 2024
Target Annual Cash Incentive Award Opportunities for Fiscal 2024 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 2024
| Named Executive Officer | Fiscal 2023 Target Bonus Opportunity (as a % of base salary) | | Fiscal 2024 Target Bonus Opportunity (as a % of base salary) | | | Samuel Wilson | | 65 | | 100 | | Kevin Kraus | | 50 | | 65 | | Laurence Denny | | 55 | | 55 | | Hunter Middleton | | 55 | | 65 | | Suzy Seandel | | 45 | | 45 |
Target Annual Cash Incentive Award Opportunities for Fiscal 2024
Increases in the target bonus opportunities for Messrs. Wilson and Kraus between fiscal 2023 and fiscal 2024 reflect changes made as part of their full-time appointments to their roles of Chief Executive Officer and Chief Financial Officer, respectively, following the interim positions they held at the end of fiscal 2023. For Mr. Middleton, the increase in his bonus target reflects the critical nature of his contributions to the business, as well as an alignment to the midpoint target bonus opportunity for comparable roles within our peer group. In all circumstances, peer group compensation data provided by Compensia was reviewed as part of an in-depth discussion before any decisions were made.
2024 PERFORMANCE OBJECTIVES AND EBP STRUCTURE
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. The table below illustrates performance target and weightings under each semi-annual period of the fiscal 2024 EBP. For fiscal 2024, the payouts under non-GAAP operating profit and service revenue were set at 25% of target at threshold achievement, 100% of target at target achievement, and 200% of target at maximum achievement. nnMRR payout percentages were set at 0% 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. For the second half of fiscal 2024, while the weightings and metrics remained unchanged, the portion of the EBP based on service revenue performance for the second half of fiscal 2024 would be $0 if the target for service revenue was not achieved. This change reflected the Company’s need to maintain year-over-year revenue growth, while also taking into consideration the macroeconomic environment and the Company’s shift into Contact Center markets. Continuing to show revenue stability and growth is core to our long-term strategy, and it was decided that performance that did not show such growth would not warrant a payout under the 2024 EBP. The outcome of the fiscal 2024 EBP program is summarized in the chart below. While fiscal 2024 EBP does allow for individual adjustment based on individual performance, in fiscal 2024 the CEO did not recommend any such adjustments to the Board and none were made. Performance under the EBP resulted in payouts of 46% of target in the first half of fiscal 2024 and 51% of target in the second half of fiscal 2024.
FY2024 EBP CHART
| | | FY 2024 EBP Performance Targets | | | | | | | Performance Metric | Weight % | Minimum Threshold Payout ($K) | Target Payout ($K) | Maximum Threshold Payout ($K) | FY 2024 Performance for applicable half of FY24 ($K) | FY 2024 Achievement as a % of Target % | FY 2024 Payout as a % of Target | | FY24 1st Half | | | | | | | | | Q1 & Q2 (4/1/23 - 9/30/23) | | | | | | | | | Non-GAAP Operating Profit | 40 | 38,749 | 48,436 | 60,545 | 50,187 | 104 | 114 | | Service revenue | 30 | 352,328 | 362,055 | 416,363 | 352,160 | 97 | — | | Net New Monthly Recurring Revenue | 30 | 1,177 | 1,308 | 1,700 | 839 | 64 | — | | FY24 1st Half Final Payout | 100 | | | | | | 46 | | FY24 2nd Half | | | | | | | | | Q3 & Q4 (10/1/23 - 3/31/24) | | | | | | | | | Non-GAAP Operating Profit | 40 | 33,420 | 41,775 | 52,219 | 44,536 | 107 | 126 | | Service Revenue | 30 | N/A | 352,730 | 405,640 | 346,443 | 98 | — | | Net New Monthly Recurring Revenue | 30 | 840 | 933 | 1,213 | 188 | 20 | — | | FY24 2nd Half Final Payout | 100 | | | | | | 51 |
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 first or second 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 or, if greater, for the awards granted in fiscal 2024, $5.00. Further, the target award opportunity is structured to align pay and performance, as outlined in more detail under “Fiscal 2024-Executive Performance Plan (Stock Price Growth),” and to drive stockholder value by placing a significant percentage of compensation “at risk” and dependent on achievement of predetermined performance. 8x8 continues to incentivize above market stockholder returns, while also managing the low retentive value of unvested RSUs and PSUs that has been driven by stock price decline. We continue to make adjustments to the design of our long-term incentive program to better reflect the Company’s position and ensure that we maintain the strong executive talent necessary to deliver on our long-term plan. For fiscal 2024, based partially on feedback from major stockholders, we rebalanced our long-term incentive program to grant long-term incentive compensation to NEOs in the form of 50% RSUs and 50% PSUs (assuming target performance). In addition, to preserve the retentive value of our PSUs over a longer period of time, we changed the design of the awards so that the PSUs granted in fiscal 2024 are earned based on the achievement of significant stock price increases, as well as satisfaction of minimum vesting hurdles, as further described below. During fiscal 2024, the Board approved awards of RSUs and PSUs to our named executive officers as set forth in the following table. These equity awards were granted on June 15, 2023 and were determined based on the Board’s and Compensation Committee’s consideration of the above-described factors, in consultation with Compensia.
LONG-TERM INCENTIVE COMPENSATION
| Named Executive Officer | Restricted Stock Unit Awards (number of shares granted)(1) (#) | Performance Stock Unit Awards (number of shares granted at target) (#) | Aggregate Grant Date Fair Value of Equity Awards at target(2) ($) | | Samuel Wilson | 495,000 | 495,000 | 4,078,800 | | Kevin Kraus | 221,100 | 221,100 | 1,821,864 | | Laurence Denny | 100,000 | 100,000 | 824,000 | | Hunter Middleton | 200,000 | 200,000 | 1,648,000 | | Suzy Seandel | 66,666 | 66,666 | 549,328 |
LONG-TERM INCENTIVE COMPENSATION
(1)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 and RSUs 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. Target equity values for Messrs. Wilson, Kraus and Denny were higher than in fiscal 2023 reflecting the new positions that they had recently assumed. For Messrs. Wilson and Kraus, who were serving as Interim CEO and Interim CFO, respectively, at the end of fiscal 2023, the fiscal 2024 equity grant values are aligned to their appointments into permanent CEO and CFO roles. For Mr. Denny, who was promoted into the Chief Legal Officer role in December of fiscal 2023, the increase in grant value reflected an alignment with peer market practices. Fiscal 2024 — Executive Performance Plan (Stock Price Growth) In fiscal 2024, each of our NEOs received a grant of PSUs as part of the Executive Performance Plan (the “2024 EPP”). Such PSUs are the PSUs summarized in the table immediately above. The Compensation Committee believes performance-based grants are important to balance stockholder value creation with core financial performance when building long-term value. Similar to PSUs granted in prior years, the 2024 EPP aims to reward executives for positive stockholder returns. However, in contrast to our prior PSU grants, performance for PSUs granted in fiscal 2024 will be measured based on absolute Company stock price increases, rather than performance relative to the SaaS market. In line with executive compensation best practices and historical feedback from stockholders, we design our executive compensation programs to be performance-based, and to drive our company performance in the direction that best rewards our stockholders. Under this approach, some of the key concerns are ensuring that the compensation programs provide ongoing retentive value, even in the face of share price volatility, and that our performance award opportunities reflect a balanced understanding of Company performance. Over the last three fiscal years, 90% of our PSU awards have been tied to relative Total Shareholder Return (TSR) vs. industry indexes. What we heard from our stockholders last year, and what we have seen, is that when sub-industries move counter to the larger industry, having PSUs designed to pay out based on relative TSR performance can result in pay and performance misalignment. In our case, our market has experienced significant stock price declines over the last three years that have not been seen to the same degree in the broader software industry. This has meant that our PSU award payouts have been impacted by broader economic headwinds despite the dedication and hard work of our executive team. The chart below compares our stockholder returns over the prior two years with those of our key competitors (RingCentral and Zoom Video) and also with the returns of the S&P Software and Services index, and shows the challenges that a relative TSR based PSU design raises in our context. While we believe in pay-for-performance alignment, and that the low PSU payouts to date have been warranted under the circumstances, we also believe that relative TSR is only one way to measure the performance of a company, and that a fulsome executive compensation program should look to measure performance from multiple angles. With that in mind, starting in fiscal 2024, we have begun redesigning our PSU program to ensure that we are: •Continuing to align pay with performance, and, •Maximizing the retentive value of our equity award grants Any PSUs granted under the 2024 EPP are eligible to be earned over a period of up to four years, as further described below. 2024 EPP PSU achievement is measured based on the following performance criteria:
LONG-TERM INCENTIVE COMPENSATION
| FY 2024 Executive Performance Plan PSU Award Criteria and Payouts Percentages | | | | | | Tranche | Weight (% of total grant) | Performance Period | Minimum Vesting Period from Grant Date | Minimum Stock Price Hurdle | | Tranche 1 | 33% | 6/15/2023 - 6/15/2027 | 1 year | ‘+70% ($6.56) | | Tranche 2 | 33% | 6/15/2023 - 6/15/2027 | 2 years | ‘+100% ($7.72) | | Tranche 3 | 33% | 6/15/2023 - 6/15/2027 | 3 years | ‘+130% ($8.88) |
LONG-TERM INCENTIVE COMPENSATION
▪Earned PSU awards, if any, are subject to continued employment through each vesting date; otherwise shares are forfeited. ▪Each tranche of PSUs may be earned over a four-year performance period. ▪Each tranche will vest upon the earliest satisfaction of both the minimum vesting period and the minimum performance condition within the performance period. ▪Any shares that are not earned within the performance period are forfeited. Earned Performance Stock Units Under Prior Awards During fiscal 2024, Messrs. Wilson and Middleton 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 2024, 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 | 6/15/2021 | 6/15/2021 - 6/15/2023 | -20.65 | -83.88 | -63.24 | 17,980 | 0 | 0 | | | 6/29/2020 | 6/15/2020 - 6/15/2023 | 21.05 | -76.98 | -98.03 | 30,343 | 0 | 0 | | Hunter Middleton | 8/15/2021 | 6/15/2021 - 6/15/2023 | -20.65 | -83.88 | -63.24 | 4,579 | 0 | 0 | | | 6/15/2021 | 6/15/2021 - 6/15/2023 | -20.65 | -83.88 | -63.24 | 8,644 | 0 | 0 | | | 6/29/2020 | 6/15/2020 - 6/15/2023 | 21.05 | -76.98 | -98.03 | 10,354 | 0 | 0 |
LONG-TERM INCENTIVE COMPENSATION
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.
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, such as grants of 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 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, 2024. THE COMPENSATION COMMITTEE Alison Gleeson, Chair Jaswinder Pal Singh Todd Ford 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) ($) | All Other Compensation(3)(4) ($) | Total ($) | | Samuel Wilson Chief Executive Officer | 2024 | 489,231 | 200,000 | 3,702,600 | 242,500 | 29,772 | 4,664,103 | | | 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 | | Kevin Kraus Chief Financial Officer | 2024 | 402,692 | 53,333 | 1,653,828 | 132,405 | 29,206 | 2,271,464 | | | 2023 | 334,906 | 151,667 | 602,805 | 141,075 | 35,911 | 1,266,364 | | | 2022 | — | — | — | — | — | — | | Laurence Denny Chief Legal Officer | 2024 | 347,320 | — | 748,000 | 93,363 | 27,641 | 1,216,324 | | | 2023 | 340,083 | 100,000 | 881,254 | 164,071 | 36,718 | 1,522,126 | | | 2022 | — | — | — | — | — | — | | Hunter Middleton Chief Product Officer | 2024 | 406,539 | 350,000 | 1,496,000 | 132,405 | 28,299 | 2,413,243 | | | 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 | | Suzy Seandel Chief Accounting Officer | 2024 | 352,423 | — | 498,662 | 77,916 | 14,814 | 943,815 | | | 2023 | 300,769 | — | 1,107,675 | 119,772 | 23,984 | 1,552,200 | | | 2022 | — | — | — | — | — | — |
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, 2024, 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, 2024 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 is significantly increased year-over-year, due to the central role that equity and stockholder 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 ($k) | | | 2024 | — | — | 4,664,103 | — | — | 2,216,979 | 1,711,212 | 938,524 | 20.98 | 201.46 | (67,592) | 94,700 | | 2023 | — | 5,089,550 | 5,044,815 | — | (1,816,449) | 2,935,365 | 1,839,966 | 929,226 | 32.40 | 159.34 | (73,143) | 64,200 | | 2022 | — | 6,670,866 | — | — | (28,882,064) | — | 2,757,663 | (2,549,356) | 97.82 | 190.46 | (175,383) | 10,600 | | 2021 | 3,139,200 | 27,059,115 | — | 10,113,170 | 40,028,710 | — | 2,023,181 | 5,454,065 | 252.06 | 203.27 | (165,585) | (11,100) |
Pay Versus Performance Table
(*) Our PEOs were as follows: (1) Vikram Verma and David Sipes were our PEOs for fiscal 2021; (2) Mr. Sipes was our PEO for fiscal 2022; and (3) Mr. Sipes and Samuel Wilson were our PEOs for fiscal 2023 and (4) Mr. Wilson was our PEO for fiscal 2024. Specifically, Mr. Verma served as our CEO in fiscal 2021 until he resigned in December 2020 and was replaced by Mr. Sipes. Mr. Sipes served as CEO until November 30, 2022, when he was succeeded by Samuel Wilson, who served as interim CEO for the remainder of fiscal 2023 and is currently our permanent CEO. The following are the adjustments made to the summary compensation table totals to determine the amounts shown as compensation actually paid for the PEO:
Pay Versus Performance Table
| | | Vikram Verma 2021 ($) | David Sipes | | | Samuel Wilson | | | | | | 2021 ($) | 2022 ($) | 2023 ($) | 2023 ($) | 2024 ($) | | (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 | 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 | 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) | (3,702,600) | | | (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 | 2,138,400 | | | (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) | (624,748) | | | (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) | (254,451) | | | (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) | (3,725) | | | (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 | N/A | | Total | | 6,973,970 | 12,969,595 | (35,552,930) | (6,905,999) | (2,109,450) | (2,447,124) |
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; 2024 - Kevin Kraus, Laurence Denny, Hunter Middleton and Suzy Seandel. (*) 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 ($) | 2023 ($) | 2024 ($) | | (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 | | (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 | | (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) | (1,099,122) | | | (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 | 634,787 | | | (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) | (258,278) | | | (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 | N/A | | | (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) | (49,390) | | | (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) | (685) | | | (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 | | Total | | 3,430,884 | (5,307,020) | (910,740) | (772,688) |
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 April 1, 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, 2024. 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 for fiscal 2024 are as follows:
Financial Performance & Compensation Actually Paid (CAP)
| Measure | Explanation | | 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 stockholders, and the compensation that is paid to our executives. While 8x8 has continued to deliver strengthened financial performance, the positive impact these achievements have had on bonus payouts have been significantly overshadowed by the impact of the negative stockholder returns over this same period. This has resulted in either significantly lower, or negative, compensation actually paid to executives for fiscal 2022 - 2024.
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 2024: ▪We continued to incentivize achievement of our near-term goals through a performance-aligned annual cash incentive plan to focus on driving increased profitability. ▪Our CEO’s compensation in fiscal 2024 was weighted heavily to pay elements tied directly to stockholder returns, or those with ultimate value determined by stock price — 80% of the CEO’s target compensation package was delivered in the form of equity with long-term vesting requirements. ▪PSUs granted to executives in fiscal 2024 require significant increases in share price (70% - 130%) in order to be earned. ▪The portion of long-term awards granted as PSUs to our named executive officers was increased from approximately 25% in fiscal 2023, to 50% in fiscal 2024. The foregoing is only a brief summary of a few select aspects of our fiscal 2024 executive compensation program. The Board encourages you to carefully review 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 2024 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the fiscal 2024 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 – APPROVAL OF AMENDMENT TO 2022 EQUITY INCENTIVE PLAN At the 2024 Annual Meeting, our stockholders will be asked to approve an amendment to the 8x8, Inc. 2022 Equity Incentive Plan (the “2022 Plan”) to increase the shares of 8x8, Inc. common stock (“shares”) available for issuance thereunder. The 2022 Plan was approved by our Board on May 26, 2022 and the Company’s stockholders subsequently approved the 2022 Plan on July 12, 2022. Subject to and effective upon stockholder approval, the Board approved an amendment to the 2022 Plan which would increase the number of shares available for issuance under the 2022 Plan by 14,000,000 shares (the “New Shares”). Our Compensation Committee (“Committee”) and Board have determined that an increase in the number of shares available for grants is necessary as a part of our continuing effort to attract, retain, and motivate employees and other service providers and to align their interests with those of our stockholders. The Board expects that the 14,000,000 New Shares available for grant under the 2022 Plan, if approved by stockholders, will satisfy the Company's equity compensation needs through 2026 based on historical grants and the Company’s historical stock price. This proposal is being submitted to our stockholders in compliance with the Nasdaq Corporate Governance Requirements concerning stockholder approval of equity compensation plans and/or material revisions to these plans. Overview We view the approval of this proposal as necessary for us to continue to attract and retain the experienced executives and leaders that we need to drive the future success of the Company. With the requested share increase, we expect to be positioned to accelerate the Company’s growth trajectory as we continue to execute an equity compensation program characterized by responsible management, targeted grant practices, and greater focus on long-term performance. Our equity compensation program is fundamental to our pay-for-performance philosophy and allows us to create intrinsic connections between the rewards delivered to stockholders and those earned by the leadership of the Company. The Company does not currently have enough shares available to maintain our compensation programs for fiscal 2025. Failure to approve Proposal Four will result in significant disruption to our compensation programs, which we believe could: •Increase employee attrition during a pivotal time in the Company’s strategy; •Limit our ability to recruit highly qualified new employees in the future; and/or •Require us to pay additional cash compensation to our employees that would otherwise be paid in equity to maintain market competitive compensation levels. Any of these impacts could and would limit our ability to achieve our long-term goals.
Our equity programs reflect our commitment to responsible equity management
| The following table includes information regarding outstanding equity awards and shares available for future grants under the 2006 Plan, 2012 Plan, 2013 Plan, 2017 Plan and 2022 Plan as of July 9, 2024: | | | | | | | | 2006 Plan | 2012 Plan | 2013 Plan | 2017 Plan | 2022 Plan | | Total shares underlying outstanding stock options | 74,256 | 198,417 | 67,500 | 18,264 | — | | Weighted average exercise price of outstanding stock options | 8.15 | 9.94 | 8.60 | 22.55 | — | | Weighted average remaining contractual life of outstanding stock options, in years | 1.21 | 0.67 | 0.86 | 3.87 | — | | Total shares underlying outstanding unvested restricted stock, RSUs and PSUs (at target) | — | 1,592,807 | — | 2,502,577 | 7,935,295 | | Total shares currently available for grant (1) | — | — | — | 243,528 | 1,720,212 |

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