DEF 14A of Veeva Systems Inc
Filed May 9, 2019 · FY20190001140361-19-008832
Board Nominees (page 3)
Board Nominees (page 3) There are two nominees for election to the Board.
Board Nominees (page 3)
| Name | Age | Veeva Director Since | Independent | Committee Membership | | Ronald E.F. Codd | 63 | 2012 | Yes | Audit Committee & Compensation Committee | | Peter P. Gassner | 54 | 2007 | Yes | None |
Corporate Governance (page 14)
Corporate Governance (page 14) We regularly review our current corporate governance practices against best practices and peer benchmarks. Over the past year, we have taken the following steps, which are described in more detail elsewhere in this Proxy Statement:
Corporate Governance (page 14)
| • | In March 2019, we reviewed and made changes to our overall compensation program (for both executive officers and employees) with a view toward retention and stockholder alignment (see “Executive Compensation” for more details). We also adopted stock ownership guidelines for directors and executive officers. |
Corporate Governance (page 14)
| • | In 2018, the Board adopted a qualified diverse candidate pool policy, which codifies the Board’s effort since 2014 to recruit female candidates for Board membership (see “Considerations in Evaluating Director Nominees and Board Diversity” for more details). |
Corporate Governance (page 14)
| • | In 2018, we initiated our first broad-based stockholder engagement program to elicit the views of our investors on corporate governance and executive compensation matters (see “Fiscal 2019 Stockholder Engagement on Corporate Governance Matters” for more details) and publicly posted a Corporate Citizenship statement to our website. |
Executive Compensation (page 25)
Executive Compensation (page 25) Since our initial public offering (“IPO”) in October 2013, our Board and Compensation Committee have maintained a simple structure for our executive compensation programs. We pay our NEOs cash compensation that is below the cash compensation levels paid by our peers, we do not offer them a short-term cash incentive program, and we place heavy emphasis on our long-term equity compensation program, generally in the form of stock options and restricted stock units (“RSUs”). In fiscal 2019, all of our NEOs were paid identical annual base salaries, none received short-term cash incentive bonuses, and none received any new equity awards although all NEOs continued to vest in and receive significant value from equity awards granted to them in prior fiscal years. Our Board and Compensation Committee have adhered to this executive compensation approach since our IPO because this program, with its unique long-term focus, has been effective at incentivizing and retaining our senior executives through fiscal 2019 and aligning the interests of our senior management team with those of our stockholders. Because several of the equity awards granted to our NEOs before our IPO are or will soon be fully vested, we began a process in fiscal 2019 to evaluate and restructure our executive compensation program for the future. Our Compensation Committee, after considering feedback from our stockholder outreach program conducted during fiscal 2019 and with our Board’s approval, implemented a new executive compensation program in early fiscal 2020. Although these actions did not occur during fiscal 2019, we summarize our new executive compensation program below in “Other Compensation Information and Policies—Recent Fiscal 2020 Executive Compensation Decisions.”
PROPOSAL ONE: ELECTION OF DIRECTORS
PROPOSAL ONE: ELECTION OF DIRECTORS Our Board unanimously recommends a vote “FOR ALL” Class III nominees. Our Board may establish the authorized number of directors from time to time by resolution. Our Board is currently comprised of seven members who are divided into three classes with staggered three-year terms. Six of our directors qualify as independent in accordance with New York Stock Exchange (“NYSE”) listing standards. A director serves in office until his respective successor is duly elected and qualified or until his earlier death, resignation, or removal. Our restated certificate of incorporation (“Certificate”) and amended and restated bylaws (“Bylaws”) that are currently in effect authorize only our Board to fill vacancies on our Board until the next annual meeting of stockholders. Any additional directorships resulting from an increase in the authorized number of directors would be distributed among the three classes so that, as nearly as possible, each class would consist of one-third of the authorized number of directors. You cannot vote for a greater number of persons than the number of nominees named in this Proxy Statement.
Information About Nominees and Continuing Directors
Information About Nominees and Continuing Directors
Nominees for Election at the Annual Meeting (Class III)
Nominees for Election at the Annual Meeting (Class III) Two Class III directors have been nominated for election at the Annual Meeting for three-year terms, each expiring in 2022. Upon the recommendation of our Nominating and Governance Committee, our Board has nominated Ronald E.F. Codd and Peter P. Gassner for election as Class III directors. The term of office of each person elected as director will continue until such director’s term expires in 2022, or until such director’s successor has been duly elected and qualified.
Nominees for Election at the Annual Meeting (Class III)
| Ronald E.F. Codd Age: 63 Director since 2012 Independent Director Financial Expert Committees Audit (Chair) Compensation | Qualifications Our Board determined that Mr. Codd should serve as a director based on his management and software industry experience, including his experience in finance, which gives him a breadth of knowledge and valuable understanding of our industry. Career Experience Mr. Codd has been an independent business consultant since April 2002. From January 1999 to April 2002, Mr. Codd served as President, Chief Executive Officer, and a director of Momentum Business Applications, Inc., an enterprise software company. From September 1991 to December 1998, Mr. Codd served as Senior Vice President of Finance and Administration and Chief Financial Officer of PeopleSoft, Inc., a provider of enterprise application software. Board Experience Mr. Codd has served on the board of directors of a number of information technology companies, including FireEye, Inc. since July 2012; ServiceNow, Inc. since February 2012, Rocket Fuel Inc. from February 2012 to September 2017; DemandTec, Inc. from February 2007 to February 2012; Data Domain, Inc. from October 2006 to July 2009; Interwoven, Inc. from July 1999 to April 2009; and Agile Software Corporation from August 2003 to July 2007. Education Mr. Codd holds a Bachelor of Science degree in Accounting from the University of California, Berkeley and a Master of Management in Finance and Management Information Systems degree from the Kellogg Graduate School of Management at Northwestern University. |
Nominees for Election at the Annual Meeting (Class III)
| Peter P. Gassner Age: 54 Director since 2007 Committees None | Qualifications Our Board determined that Mr. Gassner should serve as a director based on his position as one of our founders and as our Chief Executive Officer, his extensive experience in general management, as a technologist focused on software and platform development, and his experience in the software industry. Career Experience Mr. Gassner is one of our founders and has served as our Chief Executive Officer since January 2007. Prior to joining Veeva, Mr. Gassner was Senior Vice President of Technology at salesforce.com, inc., a provider of enterprise cloud computing solutions, from July 2003 to June 2005, where he led the development effort to extend the Salesforce Platform to the enterprise. Prior to his time with salesforce.com, Mr. Gassner was with PeopleSoft from January 1995 to June 2003. At PeopleSoft, he served as Chief Architect and General Manager responsible for development, strategy, marketing and deployment of PeopleTools, the architecture underlying PeopleSoft’s application suite. Mr. Gassner began his career with International Business Machines Corporation (IBM). At IBM, Mr. Gassner conducted research and development on relational database technology, including the DB2 database. Board Experience Mr. Gassner has served on the board of directors of Guidewire Software, Inc. since June 2015 and Zoom Video Communications, Inc. since November 2015. Education Mr. Gassner earned a Bachelor of Science degree in Computer Science from Oregon State University. |
Directors Whose Terms Expire at the 2020 Annual Meeting (Class I)
Directors Whose Terms Expire at the 2020 Annual Meeting (Class I)
Directors Whose Terms Expire at the 2020 Annual Meeting (Class I)
| Paul E. Chamberlain Age: 55 Director since 2015 Independent Director Financial Expert Committees Audit | Qualifications Our Board determined that Mr. Chamberlain should serve as a director based on his extensive experience working with high technology and high growth firms, his leadership experience, and his financial expertise. Career Experience Since January 2015, Mr. Chamberlain has operated his own strategic and financial advisory firm, PEC Ventures. From July 1990 to January 2015, Mr. Chamberlain worked at Morgan Stanley, during which time he served as Managing Director for 18 years and as the Co-Head of Global Technology Banking for ten of those years. He also served as a member of the Investment Banking Division’s Operating Committee. Mr. Chamberlain spent the majority of his Morgan Stanley career in the firm’s Menlo Park, California office where he led account teams on financing and strategic transactions for its technology clients. Board Experience Mr. Chamberlain serves on the board of directors of ServiceNow, Inc. since October 2016 and TriNet Group, Inc. since December 2015. He also serves as Chair of the Strategic Advisory Committee of JobTrain, a non-profit organization based in Menlo Park, California that provides vocational and life skills training, and has served on its board of directors for over ten years. Education Mr. Chamberlain earned a Bachelor of Arts in History, magna cum laude, from Princeton University and a Master of Business Administration from Harvard Business School. |
Directors Whose Terms Expire at the 2020 Annual Meeting (Class I)
| Mark Carges Age: 57 Director since 2017 Independent Director Committees None | Qualifications Our Board determined that Mr. Carges should serve as a director based on his extensive enterprise and internet software experience and his experience as a senior technology executive. Career Experience Mr. Carges previously served as the Chief Technology Officer of eBay Inc., an e-commerce company, from September 2009 to September 2014. From September 2009 to November 2013, he served as eBay’s Senior Vice President, Global Products, Marketplaces. From September 2008 to September 2009, he served as eBay’s Senior Vice President, Technology. Prior to joining eBay Inc., Mr. Carges served in a succession of senior technology leadership roles, including most recently as Executive Vice President, Products and General Manager of the Business Interaction Division, at BEA Systems, Inc., a provider of enterprise application infrastructure software, which was acquired by Oracle Corporation. Since September 2017, Mr. Carges also serves as Senior Advisor at Generation Investment Management, an investment management firm focused on sustainable companies. Board Experience Mr. Carges serves on the board of directors of Splunk Inc. since September 2014 and Magnet Systems, Inc., a private mobile engagement software company, since September 2012. Mr. Carges previously served on the board of directors of Rally Software Development Corp., which was acquired by CA Technologies, from November 2011 to July 2015. Education Mr. Carges received his Bachelor of Arts degree in Computer Science from the University of California at Berkeley and his Master of Science degree from New York University. |
Directors Whose Terms Expire at the 2020 Annual Meeting (Class I)
| Paul Sekhri Age: 61 Director since 2014 Independent Director Committees Nominating and Governance | Qualifications Our Board determined that Mr. Sekhri should serve as a director based on his extensive experience as an executive and investor in the life sciences industry as well as his experience on numerous boards of directors for life sciences companies. Career Experience In January 2019, Mr. Sekhri was appointed President and CEO of eGenesis, Inc., a biotechnology company focused on transplantation. Prior to joining eGenesis, Mr. Sekhri served as President and CEO of Lycera Corp., a biopharmaceutical company, from February 2015 to January 2019. From February 2016 to May 2017, Mr. Sekhri was Operating Partner at Highline Therapeutics, a biotech incubator launched by Versant Ventures. Mr. Sekhri was Senior Vice President, Integrated Care at Sanofi S.A., a multinational pharmaceutical company headquartered in France, from April 2014 to January 2015. From May 2013 to March 2014, Mr. Sekhri was Group Executive Vice President, Global Business Development and Chief Strategy Officer at Teva Pharmaceutical Industries, Ltd., a global pharmaceuticals company focusing on the manufacture of generic and proprietary pharmaceutical products headquartered in Israel. From January 2009 to May 2013, Mr. Sekhri was Operating Partner and Head, Biotech Ops Group at TPG Biotech, the life sciences venture arm of the global private investment firm TPG Capital, where he was responsible for a portfolio of more than 50 life sciences companies. From December 2004 to January 2009, Mr. Sekhri was President and CEO of Cerimon Pharmaceuticals, Inc., a pharmaceutical company focusing on auto-immune diseases and pain management. Board Experience Mr. Sekhri has served as a director of numerous private and public company boards, including Ipsen S.A. since May 2018, Compugen Ltd. since October 2017, Alpine Immune Sciences, Inc. since July 2017 following its acquisition of Nivalis Therapeutics, Inc., where Mr. Sekhri served as a director since February 2016, Pharming N.V. since April 2015, Enumeral Biomedical Holdings, Inc. from December 2014 to September 2017, Tandem Diabetes Care Inc. from May 2012 to May 2013, MacroGenics, Inc. from January 2010 to May 2013 and Intercept Pharmaceuticals, Inc. from January 2008 to September 2012. Education Mr. Sekhri completed post-graduate studies in clinical anatomy and neuroscience at the University of Maryland, School of Medicine and received a Bachelor of Science degree in Zoology from the University of Maryland. |
Directors Whose Terms Expire at the 2021 Annual Meeting (Class II)
Directors Whose Terms Expire at the 2021 Annual Meeting (Class II)
Directors Whose Terms Expire at the 2021 Annual Meeting (Class II)
| Timothy C. Barabe Age: 66 Director since 2015 Independent Director Financial Expert Committees Nominating and Governance (Chair) Audit | Qualifications Our Board determined that Mr. Barabe should serve as a director based on his extensive executive experience in the life sciences industry and his experience as a finance executive. Career Experience Mr. Barabe retired in 2013 as Executive Vice President and Chief Financial Officer of Affymetrix, Inc. Previously, from July 2006 until March 2010, he was Senior Vice President and Chief Financial Officer of Human Genome Sciences, Inc. Mr. Barabe served as Chief Financial Officer of Regent Medical Limited, a U.K.-based, privately owned, surgical supply company, from 2004 to 2006. He was with Novartis AG from 1982 through August 2004, where he served in a succession of senior executive positions in finance and general management, most recently as the Chief Financial Officer of Sandoz GmbH, the generic pharmaceutical subsidiary of Novartis. Board Experience Mr. Barabe serves on the board of directors of ArQule, Inc. since November 2001, and Selecta Biosciences, Inc. since July 2016 and served on the board of directors of Opexa Therapeutics from March 2014 to September 2017. Mr. Barabe also serves on the board of directors of Vigilant Biosciences, a private medical device company, since November 2014 and Project Open Hand, a non-profit organization, since April 2014. Education Mr. Barabe received his Bachelor of Business Administration degree in Finance from the University of Massachusetts (Amherst) and his Master of Business Administration from the University of Chicago. |
Directors Whose Terms Expire at the 2021 Annual Meeting (Class II)
| Gordon Ritter Age: 54 Director since 2008 Chairman of the Board Independent Director Committees Compensation (Chair) | Qualifications Our Board determined that Mr. Ritter should serve as a director based on his extensive business experience in the software and web services industries, his experience in venture capital, and his service as a director of numerous private companies. Career Experience Mr. Ritter has been a General Partner at Emergence Capital Partners, a venture capital firm he founded, since June 2002. Prior to founding Emergence, Mr. Ritter was co-founder and Chief Executive Officer of Software As Service, Inc., a web services platform company. Prior to founding Software As Service, Mr. Ritter served as Vice President of the IBM Global Small Business division. Prior to IBM, Mr. Ritter was co-founder and President of Whistle Communications, Inc., an internet appliance and services platform for small and medium-sized businesses, which was acquired by IBM. Before Whistle, Mr. Ritter was co-founder and President of Tribe, Inc., a networking infrastructure company. Prior to Tribe, Mr. Ritter was Vice President of Capital Markets at Credit Suisse First Boston Inc. Board Experience Mr. Ritter currently serves on the boards of directors of numerous private technology companies. Education Mr. Ritter earned a Bachelor of Arts degree in Economics from Princeton University. |
Directors Whose Terms Expire at the 2021 Annual Meeting (Class II)
On February 22, 2019, the Board appointed Matt Wallach to serve as a member of the Board, to be effective as of January 1, 2020. Mr. Wallach will serve as a Class II director until the annual meeting of stockholders in 2021 or until his successor is duly elected and qualified. In addition, the Board increased the size of the Board by one member, to be effective as of January 1, 2020. Mr. Wallach informed the Board on February 22, 2019 of his retirement from his role as President, effective June 3, 2019. There are no family relationships among any of our directors or executive officers.
Director Compensation
Director Compensation The following table sets forth information about the compensation of the non-employee members of our Board who served as a director during fiscal 2019. Other than as set forth in the table and described more fully below, during fiscal 2019, we did not pay any fees to, make any equity awards or non-equity awards to or pay any other compensation to the non-employee member of our Board. Mr. Gassner, our Chief Executive Officer, receives no compensation for his service as a director and, therefore, is not included in the table below.
Director Compensation
| Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2)(3)(4) | Total ($) | | Timothy C. Barabe | 50,000 | 237,496 | 287,496 | | Mark Carges | 50,000 | 199,928 | 249,928 | | Paul E. Chamberlain | 50,000 | 224,919 | 274,919 | | Ronald E.F. Codd | 50,000 | 262,487 | 312,487 | | Gordon Ritter | 50,000 | 274,983 | 324,983 | | Paul Sekhri | 50,000 | 204,992 | 254,992 |
Director Compensation
| Represents the annual cash retainers paid to each director.(1) |
Director Compensation
| Represents the aggregate grant date fair value of RSUs and stock options granted to the director during fiscal 2019, computed in accordance with FASB ASC Topic No. 718. See note 9 of the notes to our consolidated financial statements included in our annual report on Form 10-K filed on March 28, 2019 for a discussion of the assumptions made by us in determining the grant date fair values of our equity awards.(2) |
Director Compensation
| As of January 31, 2019, the above-listed non-employee directors held outstanding options to purchase shares of our Class A common stock as follows: Mr. Barabe — 0; Mr. Carges — 0; Mr. Chamberlain — 0; Mr. Codd — 40,000; Mr. Ritter — 0; and Mr. Sekhri — 20,000. As of January 31, 2019, Mr. Codd also held an outstanding option to purchase 119,250 shares of Class B common stock which represents the unexercised and vested portion of an option granted in March 2012 for 312,500 shares of Class B common stock.(3) |
Director Compensation
| As of January 31, 2019, the above-listed non-employee directors held outstanding RSUs under which the following number of shares of our Class A common stock were issuable upon vesting: Mr. Barabe — 1,454; Mr. Carges — 1,224; Mr. Chamberlain — 1,377; Mr. Codd — 1,607; Mr. Ritter — 1,683; and Mr. Sekhri — 1,255.(4) |
Non-Employee Director Compensation Plan
Non-Employee Director Compensation Plan Effective June 13, 2018 and in consultation with Compensia, the Board approved the following changes to non-employee director compensation: (1) increased the value of the annual grant of RSUs from $150,000 to $200,000 and (2) created additional grants of RSUs to members and the chair of the Nominating and Governance Committee. All other components of the non-employee director compensation program remained unchanged. Each non-employee member of the Board receives an annual cash retainer of $50,000, paid in quarterly installments. Non-employee members of the Board also receive grants of RSUs under our 2013 Equity Incentive Plan on the date of our annual meeting of stockholders. Such annual grants are valued on the date of grant and vest quarterly over one year. On the date of each annual meeting of stockholders, each non-employee director who is serving on the Board as of such date will be issued RSUs valued at $200,000 of our Class A common stock. In addition, the non-executive chairman or lead independent director will receive an additional issuance of RSUs valued at $50,000 of our Class A common stock. Non-employee members of the Audit Committee, Compensation Committee, and Nominating and Governance Committee are granted additional RSUs as follows.
Non-Employee Director Compensation Plan
| • | Audit Committee |
Non-Employee Director Compensation Plan
| ○ | Members: RSUs valued at $25,000 |
Non-Employee Director Compensation Plan
| ○ | Chair: RSUs valued at $50,000 |
Non-Employee Director Compensation Plan
| • | Compensation Committee |
Non-Employee Director Compensation Plan
| ○ | Members: RSUs valued at $12,500 |
Non-Employee Director Compensation Plan
| ○ | Chair: RSUs valued at $25,000 |
Non-Employee Director Compensation Plan
| • | Nominating and Governance Committee |
Non-Employee Director Compensation Plan
| ○ | Members: RSUs valued at $5,000 |
Non-Employee Director Compensation Plan
| ○ | Chair: RSUs valued at $12,500 |
Non-Employee Director Compensation Plan
New directors will receive cash and equity compensation on a pro-rated basis to coincide with our annual director compensation period, which begins in the month of our annual meeting of stockholders. We also have a policy of reimbursing directors for their reasonable out-of-pocket expenses incurred in attending Board and committee meetings.
Considerations in Evaluating Director Nominees and Board Diversity
Considerations in Evaluating Director Nominees and Board Diversity Our Nominating and Governance Committee reviews on at least an annual basis, the composition of the Board, including character, judgment, diversity, independence, expertise, corporate experience, length of service, other commitments, and the like. Our Nominating and Governance Committee considers all aspects of each candidate’s qualifications and skills in the context of the needs of Veeva with a view toward creating a Board with a diversity of experience and perspectives, including diversity with respect to race, gender, geography, and areas of expertise. Accordingly, as set forth in our Corporate Governance Guidelines, when evaluating candidates for nomination as new directors, our Nominating and Governance Committee will consider a set of candidates that includes candidates of different genders. Diversity is important to us, and we have always had diversity within our management team and across the company. Currently, one-third of our executive team, which is comprised of our Chief Executive Officer and his direct reports, are women. We have also had female representation on our Board for much of our history (i.e., from our inception in January 2007 until July 2014). Since that time, while identifying and recruiting director candidates, our Chief Executive Officer and other Board members have targeted and interviewed several qualified female candidates. In keeping with our qualified diverse candidate pool policy, our Chief Executive Officer and Board members engaged a number of female candidates simultaneously with the Board’s consideration of Mr. Wallach’s appointment, which is effective January 1, 2020. Our Nominating and Governance Committee and Board as a whole remain focused on increasing the diversity of our Board in the near term.
Executive Summary
Executive Summary Since our initial public offering (“IPO”) in October 2013, our Board and Compensation Committee have maintained a simple structure for our executive compensation programs. We pay our NEOs cash compensation that is below the cash compensation levels paid by our peers, we do not offer them a short-term cash incentive program, and we place heavy emphasis on our long-term equity compensation program, generally in the form of stock options and restricted stock units (“RSUs”). In fiscal 2019, all of our NEOs were paid identical annual base salaries, none received short-term cash incentive bonuses, and none received any new equity awards although all NEOs continued to vest in and receive significant compensation value from equity awards granted to them in prior fiscal years. Our Board and Compensation Committee have adhered to this executive compensation approach since our IPO because this program, with its unique long-term focus, has been effective at incentivizing and retaining our senior executives through fiscal 2019 and aligning the interests of our senior management team with those of our stockholders. Because several of the equity awards granted to our NEOs before our IPO are or will soon be fully vested, we began a process in fiscal 2019 to evaluate and restructure our executive compensation program for the future. Our Compensation Committee, after considering feedback from our stockholder outreach program conducted during fiscal 2019 and with our Board’s approval, implemented a new executive compensation program in early fiscal 2020. Although these actions did not occur during fiscal 2019, we summarize our new executive compensation program below in “Other Compensation Information and Policies—Recent Fiscal 2020 Executive Compensation Decisions.”
Executive Compensation Philosophy, Objectives, and Components
Executive Compensation Philosophy, Objectives, and Components We operate in the software and technology industry and face a highly competitive environment for top-level executive talent. To accomplish our business and growth objectives, we must be able to attract and retain talented executives whose skills and experience enable them to contribute to our long-term success. To that end, the principal objectives and philosophy of our executive compensation programs are to attract, fairly compensate, appropriately incentivize, and retain our executives in a manner that aligns their long-term interests with those of our stockholders. In fiscal 2019, the primary components of the compensation program for our NEOs were base salary and continued vesting during the course of the year of stock options and, with respect to certain NEOs, RSUs that had been granted in prior fiscal years.
Role of Compensation Committee, Management and Compensation Consultant
Role of Compensation Committee, Management and Compensation Consultant Role of Compensation Committee. Our Board established a Compensation Committee to discharge its responsibilities relating to our executive compensation policies and programs. Our Compensation Committee evaluates the performance of our Chief Executive Officer and determines his compensation. The Compensation Committee also determines the compensation of our other executive officers in consultation with our Chief Executive Officer. In making its decisions, our Compensation Committee considers such matters as its members deem appropriate, including our financial and operating performance, the performance of our Class A common stock, factors specific to individual executives such as their individual achievements and retention concerns, our operational goals, the comparative compensation data described below, the results of our most recent say-on-pay advisory vote, and stockholder feedback on compensation and governance matters. From time to time, our Board approves equity grants to our executive officers upon the recommendation of the Compensation Committee, although our Compensation Committee is also authorized to approve such grants. Our Compensation Committee has delegated authority to our Chief Executive Officer to make certain routine equity award grants. For additional information on the Compensation Committee, see “Board Committees— Compensation Committee” elsewhere in this Proxy Statement. Role of Management. Members of management, including our Chief Executive Officer, Chief Financial Officer, and General Counsel, work with our Compensation Committee and often attend the Compensation Committee meetings. Members of management also make presentations to our Compensation Committee regarding our historical equity grants and the adequacy of the remaining equity pool to achieve retention objectives. These materials are also made available to our Board and included in the Compensation Committee’s report to the Board. Although our Chief Executive Officer participates in the discussion and decisions relating to the compensation of our other executive officers, he is not present during deliberations or voting with respect to his own compensation. Role of Compensation Consultant. Our Compensation Committee has the authority to engage its own advisors to assist it in performing its duties, and we pay the fees charged by such advisors. For fiscal 2019, our Compensation Committee again engaged Compensia to assist it in its decision-making process by providing information on competitive market compensation practices, identifying a peer group against which to compare our compensation programs, providing information including market data on our outside director compensation program, and supplying such other information and recommendations as the Compensation Committee may from time to time request. Compensia also assisted the Compensation Committee in the extensive review and deliberation process it undertook in the second half of fiscal 2018 related to the stock options granted at that time to our Chief Executive Officer. As part of that process, the Compensation Committee also engaged the services of Aon Hewitt, an international human capital and management consulting firm, for the limited purpose of assisting the Compensation Committee evaluate the likely grant date fair value associated with the option grants.
Peer Group and Competitive Data
Peer Group and Competitive Data With respect to fiscal 2019 compensation for our NEOs, our Compensation Committee considered data supplied by Compensia on the compensation of executives at the peer companies listed below as well as Compensia proprietary benchmark data for comparable roles at similarly situated companies. Our Compensation Committee believes it is useful to review this comparative data when evaluating our executive compensation programs and making compensation decisions for our NEOs. While it uses this data as a reference point, the Compensation Committee does not feel it necessary to mirror the compensation provided by these other companies or to target any specific percentile or range of percentiles for cash, incentive, equity, or total compensation for our executive officers relative to these peer companies. Compensia evaluates and recommends a peer group annually for executive compensation benchmarking. Since the peer review conducted for fiscal 2018, Compensia re-evaluated our peer group and recommended adding four additional companies to our group: ANSYS, Inc., Blackbaud, Inc., LogMeIn, Inc., and Tyler Technologies, Inc. The peer group consisted of publicly traded software and software services companies that generally had revenues between approximately $500 million and $2 billion, generally experienced high year-over-year revenue growth, and/or had a market capitalization between $2 billion and $25 billion. Our Compensation Committee considered the peer group’s compensation practices data for compensation decisions during and with respect to fiscal 2019. The peer group consisted of the following companies, which our Compensation Committee has determined are appropriate:
Peer Group and Competitive Data
| ANSYS | Aspen Technology | athenahealth | Blackbaud | | Commvault Systems | Cornerstone OnDemand | Guidewire Software | LogMeIn | | Medidata Solutions | Palo Alto Networks | ServiceNow | Splunk | | Tableau Software | Tyler Technologies | Ultimate Software Group | Workday |
Principal Elements of Compensation
Principal Elements of Compensation The compensation of our NEOs for fiscal 2019 consisted of base salary and continued vesting during the course of the year of stock options and, with respect to certain NEOs, RSUs that had been granted in prior fiscal years. The relative proportion of these components have not been dictated by any particular formula, and the mix and amount of compensation elements has been and will continue to be within the discretion and business judgment of our Compensation Committee. Our Compensation Committee has structured these compensation programs to attract and retain senior executives, provide competitive levels of more liquid and less volatile compensation through base salary and RSUs, continue to foster an ownership mentality and alignment with the long-term interests of stockholders through the use of RSUs and stock options, and encourage the achievement of key operational goals. Base Salary. We provide base salaries to our executive officers to compensate them for services rendered on a day-to-day basis and to provide sufficient fixed cash compensation to allow them to fund their personal and household expenses while remaining focused on their responsibilities to Veeva. Since our IPO, Veeva has maintained a largely flat annual base salary structure for our executive officers. During fiscal 2019, the Compensation Committee increased the annual base salary of all of our NEOs to $325,000 to acknowledge their contributions to the business and increased level of responsibility due to our growth over the two years since the last base salary increase. Base salaries paid to our NEOs for fiscal 2019 are reflected in the Summary Compensation Table below. Annual Cash Incentive Bonuses. We have generally not offered a short-term cash incentive bonus program to our NEOs since our IPO, and our Compensation Committee again determined for fiscal 2019 not to offer such a program. Rather, our Board and Compensation Committee continue to believe that our reliance on equity compensation adequately facilitates the achievement of corporate operational goals and aligns each NEO with stockholder interest. Accordingly, none of our NEOs were paid any cash incentive bonus for fiscal 2019. Equity Awards. Equity compensation awards remain an important part of our executive compensation program. We have granted stock options and RSUs from time to time to our employees, including our executive officers, under our stock plans. Our Compensation Committee believes that stock options are inherently performance-based because the holder benefits only if our stock price increases following the grant date, aligning the option holder’s interest closely with those of our stockholders. Historically, our stock options have had at least a five-year vesting schedule. Our Compensation Committee believes that RSUs are also an important component of a competitive compensation program. RSUs supplement our below-market cash compensation and allow a holder, whose cash needs may, at a given time, exceed our below-market cash compensation, to monetize their stock holdings to meet those needs, while still aligning their interests with those of our stockholders. Generally, our RSUs vest over a four-year service vesting period. Note that not all of our NEOs have been granted RSUs. We believe that the combination of stock options and RSUs in our equity compensation program have effectively emphasized an ownership culture and rewarded our executive officers for growing our business. In fiscal 2019, we did not grant any equity awards to our NEOs. However, all NEOs continued to vest in and receive significant compensation value from equity awards granted to them in prior fiscal years. CEO Equity Compensation. With respect to our Chief Executive Officer, Mr. Gassner, our Compensation Committee has purposefully placed strong emphasis on long-term incentive compensation in the form of stock options to effectively align his long-term interests with those of our stockholders. In March 2013, several months prior to completing our IPO, our Compensation Committee granted Mr. Gassner options to purchase 3,333,333 shares of our common stock (the “pre-IPO grant”). This grant began vesting over a five-year period beginning February 1, 2015 and will complete vesting at the end of the current fiscal year, fiscal 2020. This grant served as his only long-term incentive compensation for that five-year period. Our Board and Compensation Committee believe that Mr. Gassner’s pre-IPO grant has appropriately and successfully compensated him to lead our business and drive our success and has best aligned his interests with the long-term interests of our stockholders and our vision to build a lasting, growing cloud company. On January 10, 2018, upon the recommendation of our Compensation Committee, our Board approved an additional grant to Mr. Gassner of options to purchase an aggregate of 2,838,635 shares of our Class A common stock (the “New Options”) with an exercise price above the closing market price on the grant date. The New Options have an exercise price of $60.00 per share, which approximated the 60-day average of closing market prices around our all-time high closing market price prior to January 10, 2018. The closing market price of our stock on January 10, 2018 was $57.68 per share, and the aggregate grant date fair value of the New Options (as reflected in the Summary Compensation Table below) was approximately $87,843,333. Mr. Gassner recused himself from Board discussions related to the New Options and did not attend the January 10, 2018 meeting of the Board. The table below summarizes the service-based vesting schedule and stock price target conditions upon which Mr. Gassner’s New Options vest and become exercisable:
Principal Elements of Compensation
| Number of Shares | Service-Based Vesting Condition | Stock Price Target Vesting Condition | First Date Exercisable | Expiration Date | | 2,128,975 | Continued service as CEO through February 1, 2025, with vesting in monthly increments beginning February 1, 2020 | N/A | First monthly increment (1/60(th) of total) will become vested and exercisable on March 1, 2020, with additional monthly increments becoming exercisable thereafter through February 1, 2025 | January 9, 2028 | | 177,415 | Same as above | $90.00 | Same as above, but only if the applicable Stock Price Target has previously been achieved | January 9, 2028 | | 177,415 | Same as above | $100.00 | Same as above, but only if the applicable Stock Price Target has previously been achieved | January 9, 2028 | | 177,415 | Same as above | $110.00 | Same as above, but only if the applicable Stock Price Target has previously been achieved | January 9, 2028 | | 177,415 | Same as above | $120.00 | Same as above, but only if the applicable Stock Price Target has previously been achieved | January 9, 2028 |
Principal Elements of Compensation
To achieve each of the above Stock Price Target Vesting Conditions, Veeva’s Class A common stock must sustain the specified Stock Price Target for at least 60 consecutive trading days. Each Stock Price Target Vesting Condition may be satisfied at any time prior to the Expiration Date of the option, and, as of the end of the first quarter of fiscal 2020, the $90.00, $100.00, and $110.00 Stock Price Target Vesting Conditions have been satisfied. Consistent with Mr. Gassner’s pre-IPO grant, the New Options are not subject to any contractual vesting acceleration provisions. Moreover, the New Options reflect the continuation of a five-year long-term incentive compensation cycle for Mr. Gassner and do not begin vesting (based upon the service-based vesting conditions) until Mr. Gassner’s pre-IPO grant stock options complete vesting at the end of our fiscal year ending January 31, 2020. The added features of time-based vesting that continue for seven years after grant, Stock Price Target Vesting Conditions that apply to a portion of the New Options set at increments requiring greater than 50% to 100% increases over the exercise price, and the New Option exercise price that was above grant-date closing market price were intended to strongly align Mr. Gassner’s interests with those of our stockholders. Consistent with its long-term-focused approach as described above, our Board intends that the New Options will be the only long-term incentive awards that it grants Mr. Gassner until at least 2023. Accordingly, the Board has not granted any additional equity awards to Mr. Gassner to date. Our Board and Compensation Committee believe that, at this stage of Veeva’s growth, it continues to be appropriate to evaluate grants to Mr. Gassner on a five-year cadence. The disclosure rules that apply to the Summary Compensation Table require that we reflect the entire grant date fair value for the New Options in fiscal 2018. In determining to approve or recommend, respectively, the New Options grant, our Board and our Compensation Committee considered the fact that, given the five-year grant cycle for Mr. Gassner and the delayed vesting commencement date, the fair value of the New Options might more appropriately be thought of by allocating the grant date fair value in equal portions to each of the five fiscal years in which the options will vest (i.e., fiscal 2021 through fiscal 2025). The fair value allocated under that methodology to each year of the five-year vesting period would be $17,568,667. Other NEO Equity Compensation. We have not in the past had a general practice of making annual equity grants to all our executive officers. However, we have from time to time granted equity to at least some of our executive officers for purposes of either recalibrating compensation as compared to our peers or standardizing our compensation approach amongst our executive officers. During fiscal 2019, the Compensation Committee did not grant any equity awards to our NEOs. However, the continued vesting of each NEO’s previously granted equity awards constituted an important component of our executive compensation program and provided significant compensation value to our NEOs. Perquisites, Retirement, and Other Benefits. We generally do not provide perquisites or other benefits to our executive officers other than those available to employees generally. We have established a 401(k) tax-deferred savings plan, which permits participants, including our executive officers, to make contributions up to applicable annual statutory limits by salary deduction pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). We are responsible for administrative costs of the 401(k) plan. We match 100% of eligible contributions by our employees, including our executive officers, up to $2,000 per year. Such matching contributions are immediately and fully vested. Severance and Change in Control Benefits. Other than Mr. Faddis, none of our executive officers is currently eligible for any severance or change in control-related benefits. Please see “Fiscal 2019 Potential Payments Upon Termination or Change in Control” for more details.
Recent Fiscal 2020 Executive Compensation Decisions
Recent Fiscal 2020 Executive Compensation Decisions In March 2019, our Compensation Committee conducted its annual executive compensation review and made compensation decisions for our continuing executive officers other than our CEO that will impact their compensation for fiscal 2020 and beyond. The Compensation Committee determined to transition from the program developed at the time of our IPO and utilized through fiscal 2019 to a carefully structured program appropriate to the current stage of our company. In making these decisions, our Compensation Committee considered, among other factors, performance of each continuing executive officer and their contribution to the success of the business, pay levels of our executive officers relative to peers, and the overall competitive market, results of the 2018 advisory say-on-pay vote, and the feedback from our stockholders discussed in “Corporate Governance—Fiscal 2019 Stockholder Engagement on Corporate Governance Matters.” Three primary components make up our new executive compensation program: Base salary, a “stock bonus” in the form of an annual RSU grant, and long-term equity incentives in the form of stock options.
Recent Fiscal 2020 Executive Compensation Decisions
| Compensation Element | Description | Purpose | | Base Salary | • All executive officers continue to make the same base salary of $325,000 | • Compensate for services rendered on a day-to- day basis and to provide sufficient fixed cash compensation to allow executive officers to fund their personal and household expenses | | “Stock Bonus” | • A short-term incentive program (a “stock bonus”) utilizing RSUs rather than cash • Stock bonuses are designed to ensure that, when aggregated with previously granted RSUs, the executive officer will have RSUs vesting during each fiscal year that achieve a value based on a percentage of base salary • Target stock bonuses range from 150% to 300% of base salary, with the specific percentage determined with respect to the executive officer’s role within the company and an amount based on the trailing three-month average of the market price of our Class A common stock • To achieve the desired target stock bonus level, executive officers will receive a new RSU grant each year that will vest quarterly over a one-year period • We expect there will be a transition period of two years until all executive officers are fully under this new annual stock bonus program | • Rewards annual performance • Drives company-wide and individual performance • Effective retention tool because unvested awards are forfeited • Allows a holder, whose cash needs may, at a given time, exceed our below-market cash compensation, to monetize their stock holdings to meet those needs, while still aligning their interests with those of our stockholders | | Long-Term Equity Incentives | • Annual award of stock options for Class A common stock based on an “option factor” multiplier applied to the number of RSUs granted as the stock bonus in the same year (i.e., number of RSUs granted for annual stock bonus X option factor = number of stock options) • Option factors range from 4.0 to 6.0 depending on executive officer’s role • Stock options will be granted annually and will vest annually over four years • We expect that there will be a transition period of two years until all executive officers are fully under this new annual stock option program | • Inherently performance-based because the holder benefits only if our stock price increases following the grant date, aligning the option holder’s interest closely with those of our stockholders • Emphasizes an ownership culture and rewards our executives for growing our business • Encourages executive officers to achieve multi-year strategic objectives • Effective retention tool because unvested awards are forfeited |
Accounting Treatment
Accounting Treatment We account for stock compensation in accordance with ASC Topic 718, which requires companies to measure and recognize the compensation expense for all share-based awards made to employees and directors, including stock options and RSUs, over the period during which the award recipient is required to perform services in exchange for the award (for executive officers, generally the four- or five-year vesting period of the award). We estimate the fair value of stock options granted using either a Monte Carlo simulation for market condition awards or the Black-Scholes option-valuation model. This calculation is performed for accounting purposes and reported in the compensation tables below.
Summary Compensation Table
Summary Compensation Table The following table provides information concerning the compensation paid to our NEOs for fiscal 2019, as well as for our prior two fiscal years.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (1) | All Other Compensation ($) (2) | Total ($) | | Peter P. Gassner Chief Executive Officer | 2019 | 322,917 | — | — | — | — | 322,917 | | | 2018 | 300,000 | — | — | 87,843,333(3) | — | 88,143,333 | | | 2017 | 297,917 | — | — | — | — | 297,917 | | Timothy S. Cabral Chief Financial Officer | 2019 | 322,917 | — | — | — | — | 322,917 | | | 2018 | 258,462(4) | — | — | — | 12,188 | 258,462 | | | 2017 | 297,917 | — | — | — | — | 297,917 | | Jonathan W. (“Josh”) Faddis Senior Vice President, General Counsel and Corporate Secretary | 2019 | 322,917 | — | — | — | — | 322,917 | | | 2018 | 300,000 | — | 574,440 | — | — | 874,440 | | | 2017 | 297,917 | — | 196,400 | — | — | 494,317 | | Frederic Lequient (5) Senior Vice President, Global Customer Services | 2019 | 322,917 | — | — | — | — | 322,917 | | | 2018 | 297,917 | — | 495,700 | — | — | 793,617 | | | 2017 | 275,000 | 138,590 | 874,440 | 1,178,040 | — | 2,466,070 | | Alan V. Mateo Executive Vice President, Global Sales | 2019 | 322,917 | — | — | — | — | 322,917 | | | 2018 | 300,000 | — | — | — | — | 300,000 | | | 2017 | 297,917 | — | 392,800 | — | — | 690,717 | | Matthew J. Wallach (6) President | 2019 | 322,917 | — | — | — | — | 322,917 | | | 2018 | 300,000 | — | — | — | — | 300,000 | | | 2017 | 297,917 | — | — | — | — | 297,917 | | E. Nitsa Zuppas Chief Marketing Officer | 2019 | 322,917 | — | — | — | — | 322,917 | | | 2018 | 300,000 | — | — | — | — | 300,000 | | | 2017 | 297,917 | — | 196,400 | — | — | 494,317 |
Summary Compensation Table
| The amounts reported in these columns represent the aggregate grant date fair value of RSUs and options to purchase shares of our Class A common stock, as applicable, computed in accordance with FASB ASC Topic No. 718. See note 11 of the notes to our consolidated financial statements included in our annual report on Form 10-K filed on March 28, 2019 for a discussion of the assumptions made by us in determining the grant date fair value of our equity awards. These amounts do not purport to reflect the value that will be recognized by the NEOs upon sale of the underlying securities.(1) |
Summary Compensation Table
| The amount in this column represents the payout of accrued PTO that resulted when we ceased permitting PTO accrual.(2) |
Summary Compensation Table
| Represents the grant date fair value of options to purchase an aggregate of 2,838,635 shares of our Class A common stock. See discussion in “Compensation Discussion and Analysis—Principal Elements of Compensation—Equity Awards” for additional details about this option grant. This option grant was made to Mr. Gassner on January 10, 2018. Accordingly, the disclosure rules that apply to the Summary Compensation Table require that we reflect the entire grant date fair value for this option grant in fiscal 2018. In determining to recommend and approve, respectively, this option grant, our Compensation Committee and our Board considered the fact that, given its five-year grant cycle for Mr. Gassner and delayed vesting commencement date, the fair value of the option grant might more appropriately be thought of by allocating the grant date fair value in equal portions to each of the five fiscal years in which the options will vest (i.e., fiscal 2021 through fiscal 2025). The fair value allocated under that methodology to each year of the five-year vesting period would have been $17,568,667.(3) |
Summary Compensation Table
| Mr. Cabral took an unpaid leave under our sabbatical program.(4) |
Summary Compensation Table
| Mr. Lequient joined Veeva in February 2016 and became an executive officer effective March 23, 2016.(5) |
Summary Compensation Table
| Mr. Wallach will retire as President on June 3, 2019.(6) |
Fiscal 2019 Grants of Plan-Based Awards
Fiscal 2019 Grants of Plan-Based Awards There were no grants of plan-based awards to our NEOs during fiscal 2019.
Outstanding Equity Awards at Fiscal 2019 Year-End
Outstanding Equity Awards at Fiscal 2019 Year-End The following table sets forth information regarding all unexercised options and unvested RSUs held by each of our NEOs as of January 31, 2019. The vesting schedule applicable to each outstanding award is described in the footnotes to the table below.
Outstanding Equity Awards at Fiscal 2019 Year-End
| | | Option Awards | | | | | Stock Awards | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Vested (#) | Number of Securities Underlying Unexercised Options Unvested (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares of Stock that Have Not Vested ($) (1) | | Peter P. Gassner | 3/10/2013 | 2,611,111 | 722,222(2) | — | 3.92 | 3/9/2023 | — | — | | | 1/10/2018 | — | 2,128,975(3) | — | 60.00 | 1/9/2028 | — | — | | | 1/10/2018 | — | — | 177,415(4) | 60.00 | 1/9/2028 | — | — | | | 1/10/2018 | — | — | 177,415(5) | 60.00 | 1/9/2028 | — | — | | | 1/10/2018 | — | — | 177,415(6) | 60.00 | 1/9/2028 | — | — | | | 1/10/2018 | — | — | 177,415(7) | 60.00 | 1/9/2028 | — | — | | Timothy S. Cabral | 2/24/2010 | 15,000 | — | — | 0.13 | 2/23/2020 | — | — | | | 3/10/2013 | 112,190 | 44,444(8) | — | 3.92 | 3/9/2023 | — | — | | Jonathan W. (“Josh”) Faddis | 9/28/2012 | — | — | — | 1.54 | 9/27/2022 | — | — | | | 3/10/2013 | — | 61,667(2) | — | 3.92 | 3/9/2023 | — | — | | | 3/25/2015 | — | — | — | — | — | 500(9) | 54,530 | | | 3/23/2016 | — | — | — | — | — | 2,500(10) | 272,650 | | | 3/15/2017 | — | — | — | — | — | 6,750(11) | 736,155 | | Frederic Lequient | 2/29/2016 | — | — | — | — | — | 11,250(10) | 1,226,925 | | | 3/3/2016 | 20,000 | 45,000(12) | — | 25.70 | 3/2/2026 | — | — | | | 3/24/2017 | — | — | — | — | — | 5,625(11) | 613,463 | | Alan V. Mateo | 5/1/2015 | 67,036 | 124,999(13) | — | 26.99 | 4/30/2025 | — | — | | | 5/1/2015 | — | — | — | — | — | 8,750(14) | 954,275 | | | 3/23/2016 | — | — | — | — | — | 5,000(10) | 545,300 | | Matthew J. Wallach | 3/10/2013 | 209,960 | 44,444(15) | — | 3.92 | 3/9/2023 | — | — | | E. Nitsa Zuppas | 3/26/2013 | 42,500 | — | — | 3.92 | 3/25/2023 | — | — | | | 3/15/2014 | 13,167 | 5,000(16) | — | 32.26 | 3/14/2024 | — | — | | | 3/25/2015 | — | — | — | — | — | 500(9) | 54,530 | | | 4/27/2015 | — | — | — | — | — | 1,500(9) | 163,590 | | | 3/23/2016 | — | — | — | — | — | 2,500(10) | 272,650 |
Outstanding Equity Awards at Fiscal 2019 Year-End
| Computed in accordance with SEC rules as the number of unvested RSUs multiplied by the closing market price of our Class A common stock at the end of fiscal 2019, which was $109.06 on January 31, 2019 (the last trading day of fiscal 2019).(1) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| The stock options vest monthly over a five-year period following the vesting commencement date. The vesting commencement dates for the option grants are February 1 of 2015 and 2017 for Messrs. Gassner and Faddis, respectively.(2) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| The stock options vest and become exercisable in 60 equal monthly installments between February 1, 2020 and February 1, 2025, subject to Mr. Gassner’s continued service as our Chief Executive Officer.(3) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| The stock options vest and become exercisable in 60 equal monthly installments between February 1, 2020 and February 1, 2025, subject to Mr. Gassner’s continued service as our Chief Executive Officer and the achievement of the Stock Price Target of $90.00 per share for at least 60 consecutive trading days. See discussion in “Compensation Discussion and Analysis— Principal Elements of Compensation—Equity Awards” for additional details about this award.(4) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| The stock options vest and become exercisable in 60 equal monthly installments between February 1, 2020 and February 1, 2025, subject to Mr. Gassner’s continued service as our Chief Executive Officer and the achievement of the Stock Price Target of $100.00 per share for at least 60 consecutive trading days. See discussion in “Compensation Discussion and Analysis— Principal Elements of Compensation—Equity Awards” for additional details about this award.(5) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| The stock options vest and become exercisable in 60 equal monthly installments between February 1, 2020 and February 1, 2025, subject to Mr. Gassner’s continued service as our Chief Executive Officer and the achievement of the Stock Price Target of $110.00 per share for at least 60 consecutive trading days. See discussion in “Compensation Discussion and Analysis— Principal Elements of Compensation—Equity Awards” for additional details about this award.(6) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| The stock options vest and become exercisable in 60 equal monthly installments between February 1, 2020 and February 1, 2025, subject to Mr. Gassner’s continued service as our Chief Executive Officer and the achievement of the Stock Price Target of $120.00 per share for at least 60 consecutive trading days. See discussion in “Compensation Discussion and Analysis— Principal Elements of Compensation—Equity Awards” for additional details about this award.(7) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| The stock options vest in equal monthly installments through March 24, 2019.(8) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| RSUs vest quarterly over four years, with 1/16(th) vesting per quarter, following the vesting commencement date of March 1, 2015.(9) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| RSUs vest quarterly over four years, with 1/16(th) vesting per quarter, following the vesting commencement date of March 1, 2016.(10) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| RSUs vest quarterly over four years, with 1/16(th) vesting per quarter, following the vesting commencement date of March 1, 2017.(11) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| Mr. Lequient’s stock options vest over five years, with 20% of the shares subject to the award vested on March 1, 2017, and 1/20(th) of the total shares vesting equally on a quarterly basis thereafter.(12) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| Mr. Mateo’s stock options vest over five years, with 20% of the shares subject to the award vested on April 13, 2016, and 1/60(th) of the total shares vesting equally on a monthly basis thereafter.(13) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| Mr. Mateo’s RSUs vest quarterly over five years, with 1/20(th) vesting per quarter, following the vesting commencement date of April 13, 2015.(14) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| Mr. Wallach’s stock options vest in equal monthly installments through March 31, 2019.(15) |
Outstanding Equity Awards at Fiscal 2019 Year-End
| Ms. Zuppas’ stock options vest monthly over a five-year period following the vesting commencement date of April 1, 2014.(16) |
Fiscal 2019 Option Exercises and Stock Vested
Fiscal 2019 Option Exercises and Stock Vested The following table shows the number of shares NEOs acquired upon exercise of options and vesting of RSUs during fiscal 2019.
Fiscal 2019 Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (2) | | Peter P. Gassner | — | — | — | — | | Timothy S. Cabral | 280,000 | 23,862,250 | — | — | | Jonathan W. (“Josh”) Faddis | 65,268 | 6,032,023 | 7,000 | 612,938 | | Frederic Lequient | — | — | 11,500 | 1,006,969 | | Alan V. Mateo | 80,806 | 4,590,679 | 11,000 | 953,685 | | Matthew J. Wallach | 156,000 | 12,122,914 | — | — | | E. Nitsa Zuppas | 56,265 | 3,232,073 | 10,000 | 875,625 |
Fiscal 2019 Option Exercises and Stock Vested
| The value realized is based on the fair market value of our Class A common stock on the date of exercise minus the exercise price.(1) |
Fiscal 2019 Option Exercises and Stock Vested
| The value realized on vesting is calculated by multiplying the number of RSUs vesting by the fair market value of a share of our Class A common stock on the vesting date.(2) |
Fiscal 2019 Potential Payments Upon Termination or Change in Control
Fiscal 2019 Potential Payments Upon Termination or Change in Control We have entered into offer letters with each of Messrs. Gassner, Cabral, Faddis, Lequient, Mateo, and Wallach and Ms. Zuppas, none of which provide a right to receive severance in the event of a termination of their employment. Other than Mr. Faddis, none of our NEOs is currently eligible for any change-in-control-related benefits. Mr. Faddis’ offer letter provides that if he is terminated without cause or resigns for good reason within 60 days prior to or 18 months following a change in control, then he will vest in all of his then-outstanding equity awards to the same extent as if he had remained employed for an additional 24 months from the date of such termination or resignation. Assuming Mr. Faddis’ employment was terminated as of January 31, 2019 and such termination was within 60 days prior to or 18 months following our change in control, Mr. Faddis would have been eligible to receive option and RSU acceleration pursuant to his offer letter in the amount of $5,187,140. This value was calculated by multiplying the number of unvested option and RSU shares eligible for acceleration by $109.06, the closing price of our Class A common stock on January 31, 2019, the last trading day of fiscal 2019, or, in the case of his options, by the difference between that price and any applicable exercise price.
CEO Pay Ratio
CEO Pay Ratio We are required to disclose the ratio of the annual total compensation of Mr. Gassner, our Chief Executive Officer, to the median employee’s annual total compensation. We believe our compensation philosophy and process yield an equitable result for all of our employees. The pay ratio reported below is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described below. Neither the Compensation Committee nor our management use our pay ratio to make compensation decisions. Because the SEC’s rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios. Under SEC rules, we are required to identify our median employee only once every three years and calculate annual total compensation for that employee each year. There has been no change in our employee population or employee compensation arrangements in fiscal 2019 that we believe would significantly impact our pay ratio disclosure. For purposes of identifying our “median employee,” we used our worldwide employee population as of November 1, 2017, which consisted of 2,114 part-time and full-time employees, of which 1,145 employees were employed in the United States and 969 employees were employed outside of the United States. To identify the median employee, we used the following methodology and consistently applied material assumptions, adjustments, and estimates:
CEO Pay Ratio
| • | We calculated the total cash compensation of our employee population, excluding Mr. Gassner, as the aggregate of (1) annual base salary for permanent salaried employees, or hourly rate multiplied by expected annual work schedule for hourly employees, as of November 1, 2017 and (2) variable compensation during the 12 months ended October 31, 2017. |
CEO Pay Ratio
| • | We used the exchange rate based on a 12-month average as of November 1, 2017 to convert each non-U.S. employee’s cash compensation to U.S. dollars. |
CEO Pay Ratio
| • | We did not make any cost-of-living adjustments in identifying the median employee nor did we use the de minimis exemption allowed by SEC rules to exclude any of our employee population. |
CEO Pay Ratio
In accordance with SEC rules, our median employee is the same for fiscal 2019. We calculated the annual total compensation for fiscal 2019 for such employee using the same methodology we used for our NEOs as set forth in the Summary Compensation Table above. For fiscal 2019, the annual total compensation for Mr. Gassner and our median employee were $322,917 and $102,907, respectively. Accordingly, the resulting ratio of the two amounts is approximately 3.1:1. Beginning in late fiscal 2019 for new hires and in the first quarter of fiscal 2020 for current Veeva employees, we started offering equity under a new compensation program applicable to the vast majority of our employee base but not applicable to our Chief Executive Officer. Our new compensation program consists of three primary components: total cash compensation (base salary and, in some cases, variable cash compensation), a “stock bonus” in the form of an annual RSU grant, and long-term equity incentives in the form of stock options. Prior to the adoption of the new compensation program, at the time of hire, our employees received a grant of RSUs that vested quarterly over four years and received additional equity from time to time thereafter. Grants after the new-hire grant were not routine. Because RSUs were granted only periodically, compensation fluctuated significantly among similarly situated employees depending on whether an employee received a grant in a particular year. Accordingly, equity has not been included in our methodology for determining the median employee in fiscal 2018 or fiscal 2019. In fiscal 2020, when this new compensation program has been more widely implemented, we expect to identify a new median employee using a methodology that takes this new compensation program into account. We also expect the annual total compensation for our median employee to be higher than the last two fiscal years. As previously disclosed, because our Chief Executive Officer is currently on a five-year equity award grant cycle, we do not expect him to receive additional equity awards until at least 2023.