DEF 14A of Zscaler, Inc.
Filed Nov 22, 2023 · FY20230001628280-23-039884
Board of Directors
Board of Directors
Board of Directors
| Director Nominees | Class | Age | Position | Director Since | Current Term Expires | Expiration of Term for Which Nominated | | Jay Chaudhry | III | 65 | Chief Executive Officer and Chairman of the Board | 2007 | 2023 | 2026 | | Continuing Directors | Class | Age | Position | Director Since | Current Term Expires | Expiration of Term for Which Nominated | | Karen Blasing | I | 67 | Director | 2017 | 2024 | — | | Charles Giancarlo | I | 65 | Director | 2016 | 2024 | — | | Eileen Naughton | I | 65 | Director | 2021 | 2024 | — | | Andrew Brown | II | 60 | Director | 2015 | 2025 | — | | Scott Darling | II | 67 | Director | 2016 | 2025 | — | | David Schneider | II | 55 | Director | 2019 | 2025 | — | | Non-Continuing Directors | Class | Age | Position | Director Since | Current Term Expires | Expiration of Term for Which Nominated | | Amit Sinha, Ph.D. | III | 47 | Director | 2017 | 2023 | — |
AVAILABILITY OF BYLAWS
AVAILABILITY OF BYLAWS A copy of our bylaws may be obtained by accessing our public filings on the SEC’s website at www.sec.gov. You may also contact our Secretary at our principal executive office for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates.
AVAILABILITY OF BYLAWS
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AVAILABILITY OF BYLAWS
Board of Directors and Corporate Governance Our business affairs are managed under the direction of our board of directors, which is currently comprised of eight members. Six of our eight directors are independent within the meaning of the independent director requirements of the Nasdaq Stock Market LLC (“Nasdaq”). Our board of directors is divided into three classes with staggered three-year terms. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the same class whose term is then expiring. Upon the recommendation of our nominating and corporate governance committee, we are nominating Jay Chaudhry as the sole Class III director at the Annual Meeting. If elected, Mr. Chaudhry will hold office for a three-year term until the 2026 annual meeting of stockholders or until his successor is elected and qualified. Amit Sinha, who is currently serving as one of our Class III directors, is not standing for re-election at the Annual Meeting, and his term will end upon the commencement of the Annual Meeting. We thank Mr. Sinha for his many years of service to the Company and our board of directors. The size of our board of directors will be automatically reduced to seven directors effective immediately upon the convening of the Annual Meeting. The following table sets forth the names, ages as of November 1, 2023 and certain other information for each of the directors with terms expiring at the Annual Meeting (who are also nominees for election as a director at the Annual Meeting) and for each of the continuing directors:
AVAILABILITY OF BYLAWS
| Director Nominees | Class | Age | Position | Director Since | Current Term Expires | Expiration of Term for Which Nominated | | Jay Chaudhry | III | 65 | Chief Executive Officer and Chairman of the Board | 2007 | 2023 | 2026 | | Continuing Directors | Class | Age | Position | Director Since | Current Term Expires | Expiration of Term for Which Nominated | | Karen Blasing(1)(2) | I | 67 | Director | 2017 | 2024 | — | | Charles Giancarlo(2)(3) | I | 65 | Director | 2016 | 2024 | — | | Eileen Naughton(2) | I | 65 | Director | 2021 | 2024 | — | | Andrew Brown(1)(2) | II | 60 | Director | 2015 | 2025 | — | | Scott Darling(1)(3) | II | 67 | Director | 2016 | 2025 | — | | David Schneider(3) | II | 55 | Director | 2019 | 2025 | — | | Non-Continuing Directors | Class | Age | Position | Director Since | Current Term Expires | Expiration of Term for Which Nominated | | Amit Sinha, Ph.D. | III | 47 | Director and Former President of Zscaler | 2017 | 2023 | — |
AVAILABILITY OF BYLAWS
(1)Member of our audit committee (2)Member of our compensation committee (3)Member of our nominating and corporate governance committee
AVAILABILITY OF BYLAWS
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AVAILABILITY OF BYLAWS
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Class III Director Nominee
Class III Director Nominee
Class III Director Nominee
| Jagtar (Jay) Chaudhry Age | 65 Director Since | 2007 | Jay Chaudhry is our co-founder and has served as our Chief Executive Officer and as Chairman of our board of directors since September 2007. Mr. Chaudhry holds an M.B.A. and an M.S. in electrical engineering and industrial engineering from the University of Cincinnati and a B. Tech in electronics engineering from the Indian Institute of Technology (Banaras Hindu University) Varanasi. | | | We believe Mr. Chaudhry is qualified to serve as a member of our board of directors because he is a security industry pioneer and an accomplished entrepreneur, having founded and built several companies, and based on the perspective, operational insight and expertise he has accumulated as our co-founder and our Chief Executive Officer. |
Continuing Directors Class I
Continuing Directors Class I
Continuing Directors Class I
| Karen Blasing Age | 67 Director Since | 2017 | Karen Blasing served as the chief financial officer of Guidewire from July 2009 to March 2015. Prior to 2009, Ms. Blasing served as the chief financial officer for Force10 Networks, Inc. and as the senior vice president of finance for Salesforce.com, Inc. She has also served as chief financial officer for Nuance Communications, Inc. and Counterpane Internet Security, Inc. and held senior finance roles for Informix Corporation (now IBM Informix) and Oracle Corporation. She currently serves as a director of Autodesk, Inc., a multinational software corporation, where she serves as a member of the audit committee, and GitLab Inc., a devops platform company, where she serves as a chair of the audit committee. Ms. Blasing previously served as a director of Ellie Mae, Inc. Ms. Blasing holds a B.A. in economics and business administration from the University of Montana and an M.B.A. from the University of Washington. | | | We believe Ms. Blasing is qualified to serve as a member of our board of directors based on her extensive financial leadership and management experience at numerous SaaS and enterprise software companies. |
Continuing Directors Class I
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Continuing Directors Class I
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Continuing Directors Class I
| Charles Giancarlo Age | 65 Director Since | 2016 | Charles Giancarlo has served as chief executive officer of Pure Storage since August 2017. From January 2008 until October 2015, Mr. Giancarlo was a managing director and then strategic advisor of Silver Lake Partners, a private investment firm that focuses on technology-enabled and related growth industries. From May 1993 to December 2007, Mr. Giancarlo served in numerous senior executive roles at Cisco Systems, Inc., a provider of communications and networking products and services, ultimately as the executive vice president and chief development officer from May 2004 to December 2007. Mr. Giancarlo currently serves on the boards of directors of Arista Networks, Inc., a manufacturer of networking products, where he serves as a member of the compensation committee and the nominating and corporate governance committee, and Pure Storage. He previously served on the boards of directors of Accenture plc, Avaya, Inc., Imperva, Inc., ServiceNow, Inc., Netflix, Inc. and Tintri, Inc. Mr. Giancarlo holds a B.S. in electrical engineering from Brown University, an M.S. in electrical engineering from the University of California, Berkeley and an M.B.A. from Harvard Business School. | | | We believe Mr. Giancarlo is qualified to serve as a member of our board of directors based on his extensive business expertise, including his prior executive level leadership, and his experience on the boards of publicly traded technology companies. |
Continuing Directors Class I
| Eileen Naughton Age | 65 Director Since | 2021 | Eileen Naughton served as the Chief People Officer and Vice President of People Operations at Google, Inc. from September 2016 to January 2021. Prior to September 2016, Ms. Naughton served in a variety of senior roles at Google dating back to 2006, including as Vice President and Managing Director for Google UK & Ireland and Vice President of Global Sales. Prior to joining Google in 2006, Ms. Naughton held a number of executive positions at Time Warner, including president of TIME Magazine. Ms. Naughton currently serves on the board of directors of Indigo Books and Music, Inc., Canada’s leading book and lifestyle retailer and Ares Management Corporation, an alternative investment manager operating in the credit, private equity and real estate markets. She previously served on the boards of directors of L’Oreal S.A. and The XO Group. Ms. Naughton holds a B.A. in international relations from the University of Pennsylvania, a Master of Arts from the Lauder Institute and a M.B.A. from the University of Pennsylvania. | | | We believe Ms. Naughton is qualified to serve on our board of directors because of her extensive director experience and her knowledge and experience in operations and management at multiple sophisticated companies. |
Continuing Directors Class I
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Continuing Directors Class I
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Continuing Directors Class II
Continuing Directors Class II
Continuing Directors Class II
| Andrew Brown Age | 60 Director Since | 2015 | Andrew Brown has served as chief executive officer of Sand Hill East LLC, a strategic management, investment and marketing services firm, since February 2014. Since 2006, he has also been the chief executive officer and co-owner of Biz Tectonics LLC, a privately held consulting company. From September 2010 to October 2013, Mr. Brown served as group chief technology officer of UBS Securities LLC, an investment bank. From 2008 to 2010, he served as head of strategy, architecture and optimization at Bank of America Merrill Lynch, the corporate and investment banking division of Bank of America. From 2006 to 2008, Mr. Brown served as chief technology officer of infrastructure at Credit Suisse Securities (USA) LLC, an investment bank. He currently sits on the board of directors of Pure Storage, Inc. ("Pure Storage"), a data storage and management company, where he serves as the chair of the compensation committee, and a member of the audit committee. Mr. Brown previously served on the board of directors of Guidewire Software, Inc. ("Guidewire), a provider of software products for property and casualty insurers. Mr. Brown holds a B.S. (Honors) in chemical physics from University College London. Mr. Brown also, recently, co-authored the book "Cybersecurity: 7 Steps for Boards of Directors". | | | We believe Mr. Brown is qualified to serve as a member of our board of directors based on his extensive experience as chief technology officer of multiple Fortune 500 companies, as well as his service on the board of directors of other publicly traded companies. |
Continuing Directors Class II
| Scott Darling Age | 67 Director Since | 2016 | Scott Darling has served as president of Dell Technologies Capital, the corporate development and venture capital arm of Dell Technologies Inc., since September 2016. Prior to joining Dell Technologies upon its acquisition of EMC Corp., Mr. Darling was president of EMC Corporate Development and Ventures from March 2012 to September 2016, and in this role he was responsible for EMC’s business development and venture capital investment activity. Prior to joining EMC, Mr. Darling was a general partner at Frazier Technology Ventures II, L.P., which he joined in 2007, and was vice president and managing director at Intel Capital Corp., the venture capital arm of Intel Corporation, from 2000 to 2007. Mr. Darling previously served on the board of directors of DocuSign Inc., a provider of electronic signature technology and digital transaction management services. Mr. Darling holds a B.A. in economics from the University of California at Santa Cruz and an M.B.A. from the Stanford University Graduate School of Business. | | | We believe Mr. Darling is qualified to serve as a member of our board of directors based on his experience as a director of and as an investor in multiple technology companies. |
Continuing Directors Class II
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Continuing Directors Class II
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Continuing Directors Class II
| David Schneider Age | 55 Director Since | 2019 | David Schneider has served as a General Partner of Coatue Management, an investment firm focusing on technology companies, since February 2021. Mr. Schneider previously served as president, emeritus of ServiceNow, Inc., a cloud computing company, from July 2020 to December 2021, as president, global customer operations from January 2019 to July 2020, as chief revenue officer from June 2014 to January 2019 and as senior vice president of worldwide sales and services from June 2011 to May 2014. From July 2009 to March 2011, Mr. Schneider served as senior vice president of worldwide sales of the backup recovery systems division of EMC Corporation, a computer storage company acquired by Dell Technologies Inc. From January 2004 to July 2009, Mr. Schneider held senior positions at Data Domain, Inc., a data archiving and deduplication company acquired by EMC, most recently as Senior Vice President of Worldwide Sales. Mr. Schneider holds a B.A. in political science from the University of California, Irvine. | | | We believe Mr. Schneider is qualified to serve on our board of directors because of his knowledge and experience in operations and management at various technology companies. |
Non-Continuing Directors
Non-Continuing Directors
Non-Continuing Directors
| Amit Sinha, Ph.D. Age | 47 Director Since | 2017 | Amit Sinha, Ph.D. has served as the chief executive officer and president, and as a board member of DigiCert, Inc., a global provider of digital trust solutions, since October 2022. Dr. Sinha served as our President from January 2022 until his resignation in October 2022. Previously, Dr. Sinha served as our President, Research and Development, Operations and Customer Service from July 2019 to January 2022. He also previously served as our Executive Vice President of Engineering and Cloud Operations from October 2013 to July 2019. Dr. Sinha was our Chief Technology Officer from December 2010 until January 2022 Dr. Sinha holds a Ph.D. and an M.S. in electrical engineering and computer science from the Massachusetts Institute of Technology, and a B. Tech in electrical engineering from the Indian Institute of Technology, Delhi. | | | We believe Dr. Sinha is qualified to serve as a member of our board of directors because he has more than 15 years of experience as an architect and technical manager in the networking and security industries and because of the operational insight and expertise he previously accumulated in his various leadership roles at Zscaler. |
Non-Continuing Directors
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Non-Continuing Directors
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Considerations in Evaluating Director Nominees
Considerations in Evaluating Director Nominees It is the policy of the nominating and corporate governance committee of our board of directors to consider recommendations for candidates to our board of directors from stockholders holding no less than one percent (1%) of the outstanding shares of the Company’s common stock continuously for at least 12 months prior to the date of the submission of the recommendation or nomination. The nominating and corporate governance committee will use the following procedures to identify and evaluate any individual recommended or offered for nomination to our board of directors: •The nominating and corporate governance committee will consider candidates recommended by stockholders in the same manner as candidates recommended to the nominating and corporate governance committee from other sources. •In its evaluation of director candidates, including the members of our board of directors eligible for re-election, the nominating and corporate governance committee will consider factors such as: ◦business expertise; ◦diversity, including differences in professional background, gender, race, ethnicity, education, skill, and other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on the board of directors; ◦past attendance at meetings, and participation in and contributions to the activities of our board of directors; and ◦other factors that the nominating and corporate governance committee deems appropriate. •The nominating and corporate governance committee requires the following minimum qualifications to be satisfied by any nominee for a position on our board of directors: ◦the highest personal and professional ethics and integrity; ◦proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment; ◦skills that are complementary to those of the existing board of directors; ◦the ability to assist and support management and make significant contributions to the Company’s success; and ◦an understanding of the fiduciary responsibilities that is required of a member of our board of directors and the commitment of time and energy necessary to diligently carry out those responsibilities.
Considerations in Evaluating Director Nominees
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Considerations in Evaluating Director Nominees
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Considerations in Evaluating Director Nominees
If the nominating and corporate governance committee determines that an additional or replacement director is required, the nominating and corporate governance committee may take such measures that it considers appropriate in connection with its evaluation of a director candidate, including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search firm to gather additional information, or reliance on the knowledge of the members of the nominating and corporate governance committee, our board directors or management. The nominating and corporate governance committee may propose to our board of directors a candidate recommended or offered for nomination by a stockholder as a nominee for election to our board of directors. The nominating and corporate governance committee has in the past and may in the future pay fees to third parties to assist in identifying or evaluating director candidates.
Director Compensation
Director Compensation Each non-employee director is eligible to receive compensation for his or her service consisting of annual cash retainers and equity awards under our outside director compensation policy. Our outside director compensation policy was crafted in consultation with Compensia, Inc. ("Compensia"), an independent compensation consulting firm engaged by our compensation committee. Compensia provided us with competitive data, analysis and recommendations regarding non-employee director compensation, which includes a mix of cash and equity-based compensation. After careful consideration of this information and the scope of the duties and responsibilities of our non-employee directors, our board of directors approved our outside director compensation policy. We believe this policy provides reasonable compensation to our non-employee directors that is commensurate with their contributions and appropriately aligned with our peers. We also reimburse our directors for expenses associated with attending meetings of our board of directors and board committees.
Director Compensation
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Director Compensation
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Director Compensation
For fiscal 2023, there were no changes in the director compensation policy, and non-employee directors were entitled to receive the following cash compensation for service in the following positions:
Director Compensation
| Position | Annual Retainer ($) | | Board Member | 30,000 | | Audit Committee Chair | 20,000 | | Audit Committee Member | 8,000 | | Compensation Committee Chair | 12,000 | | Compensation Committee Member | 5,000 | | Nominating and Corporate Governance Committee Chair | 7,500 | | Nominating and Corporate Governance Committee Member | 4,000 |
Director Compensation
In addition, non-employee directors were eligible to receive the following equity awards for board service: (1)Annual restricted stock unit ("RSU") grant with target value of $200,000 (automatically granted at the Annual Meeting). These RSU awards vest in four equal quarterly installments over a one-year period; and (2) Initial RSU grant with a target value equal to two-and one-half times the value of the then effective annual RSU grant, pursuant to which one-third of the RSU awards will vest on the one-year anniversary of the effective date of appointment and the remaining RSU awards will vest in eight equal quarterly installments thereafter. Any director elected at the Annual Meeting for a given year will receive both the initial RSU grant and the annual RSU grant. The number of RSU awards for each of the initial and annual RSU grant will be determined by dividing the annual equity value by the average closing price of Zscaler common stock on the Nasdaq Global Select Market for the 30 trading days ending on the date that is five days prior to the grant date, rounded up to the nearest share. All cash payments to non-employee directors who served in the relevant capacity at any point during the immediately preceding prior fiscal quarter will be paid quarterly in arrears on a prorated basis. A non-employee director who served in the relevant capacity during only a portion of the prior fiscal quarter will receive a pro-rated payment of the quarterly payment of the applicable cash retainer. Dr. Sinha, who resigned as an officer of the Company effective October 21, 2022, was eligible to receive compensation as a non-employee director commencing with the fiscal quarter beginning November 1, 2022.
DIRECTOR STOCK OWNERSHIP GUIDELINES
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Karen Blasing | 55,000 | 180,371 | 235,371 | | Andrew Brown | 50,000 | 180,371 | 230,371 | | Scott Darling | 42,000 | 180,371 | 222,371 | | Charles Giancarlo | 42,500 | 180,371 | 222,871 | | David Schneider | 34,000 | 180,371 | 214,371 | | Eileen Naughton | 35,000 | 180,371 | 215,371 | | Amit Sinha | 22,500 | 180,371 | 202,871 |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our board of directors is currently composed of eight members. In accordance with our certificate of incorporation, our board of directors is divided into three classes with staggered three-year terms. One class is elected each year at the annual meeting of stockholders for a term of three years. At the Annual Meeting, one Class III director will be elected for a three-year term to succeed the same class, consisting of two directors, whose term is then expiring. Amit Sinha has served as a Class III director since 2017 and his term will end upon the commencement of the Annual Meeting. The size of our board of directors will be automatically reduced to seven directors effective immediately upon the convening of the Annual Meeting. Each director’s term continues until the election and qualification of such director’s successor, or such director’s earlier death, resignation, or removal. Any increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of our board of directors may have the effect of delaying or preventing changes in control of the Company.
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY As has historically been the case when designing our compensation programs, in fiscal 2023, our compensation committee aimed to tie our Named Executive Officers’ compensation to key performance measures focusing on growth and capturing additional market share. Specifically, in addition to a base salary, our Named Executive Officers’ target total direct compensation included annual short-term and long-term incentives that are based on our attainment of key business objectives focused on growth. For fiscal 2023, achievement of cash bonuses was determined based on revenue and calculated billings performance metrics, as well as corporate and individual executive performance metrics and goals, and attainment of our newly issued performance-based equity awards will be determined based on long term, multi-year ARR growth targets. We believe our “pay for performance” design is working, as fiscal 2023 was another year of record growth for Zscaler. For the full year, our revenue grew 48% to $1.6 billion and billings grew 37% to over $2 billion. In fiscal 2023, we increased our ARR to over $2 billion, doubling our ARR in only seven quarters and reaching a milestone only a select handful of SaaS companies have achieved. At the end of fiscal 2023, we secured over 7,700 customers and protected over 41 million users. In fiscal 2023, the key highlights of our executive compensation program included:
EXECUTIVE SUMMARY
| BASE SALARIES AND BONUS TARGETS | BONUSES BASED ON PERFORMANCE | PERFORMANCE AWARDS BASED ON LONG-TERM ARR TARGETS | CEO COMPENSATION HEAVILY WEIGHTED TOWARDS PERFORMANCE | | We increased base salaries by a range of 0% to 15% and set bonus targets at similar rates as prior years — ranging from 67% to 100% of base salary. | We set cash bonus funding based on achievement of annual revenue and calculated billings targets, with 50% of the bonus subject to downward discretion by our CEO. For the full year, eligible Named Executive Officers earned an aggregate of 82.6% of their target performance amounts. | After considering analysis performed by Compensia, feedback from our stockholders and the compensation committee’s desire to establish long-term performance metrics, the compensation committee determined the PSU performance metrics for fiscal 2023 were to be based on achievement of a long-term, multi-year ARR metric. | Our CEO was awarded a long-term equity incentive package with 80% of his incentive compensation opportunity in the form of PSU awards and 20% in the form of RSUs. |
Pay-for-Performance
Pay-for-Performance We believe our executive compensation program is reasonable, competitive, and appropriately balances the goals of attracting, motivating, rewarding, and, most importantly, retaining our Named Executive Officers with the goal of aligning their interests with those of our stockholders. To ensure this alignment and to motivate and reward individual initiative and effort, a substantial portion of our Named Executive Officers’ target annual compensation opportunity is both variable in nature and “at-risk.” We emphasize variable compensation that appropriately rewards our Named Executive Officers through two separate compensation elements: •First, we provide our Named Executive Officers (other than our CEO) the opportunity to participate in our cash bonus plan which provides cash payments if they produce results that meet or exceed the financial, operational, and strategic objectives for the fiscal year, as established by our compensation committee. •In addition, we grant RSU and PSU awards that will reward recipients over a multi-year period, with the PSU awards being earned only for achieving performance objectives established by the compensation committee. The RSU awards and, if earned, PSU awards comprise a majority of our Named Executive Officers’ target total direct compensation opportunities. The future value of these awards depends significantly on our performance and the value of our common stock, thereby incentivizing them to build sustainable long-term value for the benefit of our stockholders. These variable pay elements ensure that, each year, a substantial portion of our Named Executive Officers’ target total direct compensation is contingent (rather than fixed) in nature, with the amounts ultimately payable subject to variability above or below target levels commensurate with our actual performance.
Setting Target Total Compensation
•the scope of each Named Executive Officer’s role and responsibilities compared to other similarly-situated executives at the companies in our compensation peer group and/or Compensia’s proprietary compensation database; •the prior performance of each individual Named Executive Officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team, all of which reflect our core values; •the potential of each individual Named Executive Officer to contribute to our long-term financial, operational, and strategic objectives; •our financial performance relative to our compensation and performance peers; •the compensation practices of our compensation peer group and/or the companies in Compensia’s proprietary compensation database and the positioning of each Named Executive Officer’s compensation in a ranking of peer company compensation levels based on an analysis of competitive market data; and •the recommendations of our CEO with respect to the compensation of our Named Executive Officers (except with respect to his own compensation). These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each Named Executive Officer.
Role of Compensation Consultant
Role of Compensation Consultant The compensation committee engaged Compensia as its external compensation consultant to assist it by providing information, analysis, and other advice relating to our executive compensation program. The compensation consultant reports directly to the compensation committee and its chair and serves at the discretion of the compensation committee, which reviews the engagement annually.
Role of Compensation Consultant
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Role of Compensation Consultant
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Role of Compensation Consultant
During fiscal 2023, Compensia attended the meetings of the compensation committee (both with and without management present) as requested and provided the following services: •consultation with the compensation committee chair and other members between compensation committee meetings; •review, research, and updating of our compensation peer group; •an analysis of competitive market data based on the compensation peer group and Compensia's proprietary compensation database for our Named Executive Officers’ positions and an evaluation of how the compensation we pay our Named Executive Officers compares both to our performance and to how the companies in our compensation peer group compensate their executives; •review and analysis of the base salary levels, target annual cash bonus opportunities, and long-term incentive compensation opportunities of our Named Executive Officers; •review and analysis of the metrics used by the companies in our compensation peer group in their short-term incentive compensation plans; •assessment of executive compensation trends within our industry, and updating on corporate governance and regulatory issues and developments; •review and analysis of director compensation levels; and •support on other ad hoc matters throughout the year. The terms of Compensia’s engagement includes reporting directly to the compensation committee chair. Compensia also coordinated with management for data collection and job matching for our Named Executive Officers. Additionally, Compensia provided analysis and produced certain charts and figures, which after having been reviewed and assessed by the Company, were included in the Pay vs. Performance section of this proxy. In fiscal 2023, Compensia did not provide any other services to us. The compensation committee has evaluated its relationship with Compensia to ensure that it believes that such firm is independent from management. This review process included a review of the services that Compensia provided, the quality of those services, and the fees associated with the services provided during fiscal 2023. Based on this review, as well as consideration of the factors affecting independence set forth in Exchange Act Rule 10C-1(b)(4), Rule 5605(d)(3)(D) of the Nasdaq Marketplace Rules, and such other factors as were deemed relevant under the circumstances, the compensation committee has determined that no conflict of interest was raised as a result of the work performed by Compensia and that Compensia is independent.
Competitive Positioning
Competitive Positioning For purposes of assessing our executive compensation against the competitive market, the compensation committee reviews and considers the compensation levels and practices of a select group of peer companies. This compensation peer group consists of technology companies that are similar to us in terms of revenue, market capitalization, and industry focus. The competitive data drawn from this compensation peer group is only one of several factors that the compensation committee considers in making its decisions with respect to the compensation of our Named Executive Officers.
Competitive Positioning
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Competitive Positioning
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Competitive Positioning
The compensation peer group for fiscal 2023 compensation decisions was established in March 2022 and was comprised of publicly-traded technology companies against which we compete for executive talent, as well as, in some instances, business opportunities. In evaluating the companies comprising the compensation peer group, we worked with Compensia to establish the following criteria: •publicly-traded companies headquartered in the United States and traded on a major United States stock exchange with a preference for California-based companies; •companies in the application software and systems software industries; •similar revenues – within a range of ~0.5x to ~2.0x our then-current trailing four quarters revenue of approximately $761 million (approximately $380 million to approximately $1.5 billion); and •similar market capitalization – within a range of ~0.33x to 3.0x our then-current 30-day average market capitalization of approximately $37.2 billion (approximately $12.4 billion to approximately $111.7 billion). Our fiscal 2023 peer group consisted of the following companies:
Competitive Positioning
| ANSYS | Datadog | Okta | The Trade Desk | | Arista Networks | DocuSign | Palantir Technologies | Twilio | | Bill.com Holdings | Dynatrace | Paycom Software | Unity Software | | Cloudflare | HubSpot | RingCentral | Veeva Systems | | CrowdStrike Holdings | MongoDB | Snowflake | Zoominfo Technologies |
Competitive Positioning
The compensation committee reviews our compensation peer group at least annually and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.
COMPENSATION ELEMENTS
| Element | Type of Element | Compensation Element | Objective | | Base Salary | Fixed | Cash | Designed to attract and retain highly talented executives by providing fixed compensation amounts that are competitive in the market | | Annual Cash Bonuses | Variable | Cash | Designed to provide financial incentives to motivate our executives to achieve semi-annual (and, in the case of Mr. Rajic, quarterly) financial objectives | | Long Term Incentive Compensation | Variable | Equity awards in the form of PSU awards and RSU awards,, that may be settled for shares of our common stock, and occasionally option awards | Designed to align the interests of our executives and our stockholders by motivating them to create sustained long-term stockholder value |
Annual Cash Bonuses
Annual Cash Bonuses We use our Employee Incentive Compensation Plan, a cash bonus plan, to motivate employees selected by the compensation committee, including our Named Executive Officers (other than our CEO), to achieve our annual business goals. Pursuant to the Employee Incentive Compensation Plan, our compensation committee, in its sole discretion, establishes a target award for each executive and a bonus pool for our executives as a group, with actual awards payable from the bonus pool, with respect to the applicable performance period. For fiscal 2023, the Employee Incentive Compensation Plan included semi-annual performance periods with semi-annual award payouts after the end of the first six-month period (the period from August 1, 2022 through January 31, 2023), and, then again, after the end of the fiscal year (the period from February 1, 2023 through July 31, 2023). Pursuant to the terms of his Employment Offer Letter, Mr. Rajic is eligible to receive quarterly award payouts under the Employee Incentive Compensation Plan.
Annual Cash Bonuses
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Annual Cash Bonuses
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Annual Cash Bonuses
Fiscal 2023 Target Annual Cash Bonus Award Opportunities For purposes of the Employee Incentive Compensation Plan, cash bonus awards were based upon target annual cash bonus award opportunities as determined by the compensation committee. In September 2022, the compensation committee reviewed the target annual cash bonus award opportunities of our Named Executive Officers and determined to adjust the target annual cash bonus opportunities for each of our eligible Named Executive Officers to set their total target annual cash opportunity for fiscal 2023 at a level that was comparable to those of similarly-situated executives in the competitive marketplace. As in prior fiscal years, our CEO declined to participate in the Employee Incentive Compensation Plan. The target annual cash bonus award opportunities of our Named Executive Officers for fiscal 2023 were as follows:
Annual Cash Bonuses
| Named Executive Officer | Fiscal 2023 Target Annual Cash Bonus Award Opportunity ($) | Fiscal 2022 Target Annual Cash Bonus Award Opportunity ($) | Percentage Adjustment | | Mr. Chaudhry | — | — | — | | Mr. Canessa | 325,000 | 300,000 | 8.3% | | Mr. Nair(1) | 430,000 | — | — | | Mr. Rajic | 430,000 | 415,000 | 3.6% | | Mr. Schlossman | 250,000 | 225,000 | 11.1% |
Annual Cash Bonuses
1.In connection with his appointment as our CTO in May 2023, Mr. Nair’s initial bonus target was set at $430,000. Mr. Nair’s target annual cash bonus award opportunity was pro-rated during fiscal 2023 to reflect his three month’s employment with us. Potential annual cash bonus awards for our Named Executive Officers under the Employee Incentive Compensation Plan could range from zero to 150% of their target annual cash bonus award opportunity. For the full year, eligible named Executive Officers, including Mr. Rajic, earned an aggregate of 82.6% of their target performance amounts. The cash bonuses actually paid to our Named Executive Officers for fiscal 2023 are set forth in the “Fiscal 2023 Summary Compensation Table” below. Incentive Plan Performance Metrics Under the Employee Incentive Compensation Plan, the compensation committee determined the performance metrics and related target levels for the fiscal 2023 annual cash bonus awards. The compensation committee selected revenue and calculated billings as the appropriate corporate performance metrics for the Named Executive Officers because, in its view, these metrics were key indicators of our periodic performance and our progress in executing on our business strategy of focusing on growth and gaining market share. For purposes of the Named Executive Officers’ cash bonus awards: •“revenue” represented total revenue calculated in accordance with generally accepted accounting principles, or GAAP, as reported in our audited financial statements; and •“calculated billings” represented our total revenue plus the change in deferred revenue in a given fiscal period. Calculated billings in any particular fiscal period aims to reflect amounts invoiced for subscriptions to access our cloud platform, together with related support services for our new and existing customers.
Annual Cash Bonuses
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Annual Cash Bonuses
As reflected in our annual operating plan presented to and approved by our board of directors, the target levels established for revenue and calculated billings for the full year of fiscal 2023 by the compensation committee were as follows:
Annual Cash Bonuses
| Performance Metric | Full Year Fiscal 2023 ($) | | Revenue | 1,683,000 | | Calculated Billings | 2,202,000 |
Annual Cash Bonuses
For fiscal 2023, the revenue and calculated billing targets for the Employee Incentive Compensation Plan were significantly greater than the amount achieved in the previous period for the prior fiscal year and represented a very aggressive target for fiscal 2023. The compensation committee determined that the bonus pool would fund and our Named Executive Officers were eligible to earn 50% of their target cash bonus awards (the "Initial Pool") to the extent that we achieved the minimum thresholds for revenue and calculated billings for each performance period in fiscal 2023 as set forth in the following schedule:
Annual Cash Bonuses
| Initial Pool | | | | Metric Achievement | Payment | Bonus Attainment | | Less than 80% | 0% | No payout below 80% achievement | | 80% - 90% | 0% to 70% linear | 80% attainment pays 0% and 90% pays 70% | | 90% - 95% | 70% to 90% linear | 90% attainment pays 70% and 95% pays 90% | | 95% - 100% | 90% to 100% linear | 95% attainment pays 90% and 100% pays 100% | | 100% - 105% | 100% to 125% linear | 100% attainment pays 100% and 105% pays 125% | | 105% - 110% | 125% to 150% linear | 105% attainment pays 125% and 110% pays 150% | | >110% | TBD | Payout over 150%, determined in the discretion of the board of directors |
Annual Cash Bonuses
The compensation committee also determined that the remaining 50% of the bonus pool (the "Secondary Pool") would fund and be reserved for distribution based on achievement of the same revenue and calculated billings targets, with any payouts subject to downward discretion by the CEO, with final payments to be approved by the compensation committee. The Secondary Pool would be funded based on the following performance metrics:
Annual Cash Bonuses
| Secondary Pool | | | | Metric Achievement | Funding Level | Cash Payment | | Less than 90% | 0% | No payout below 90% achievement | | 90% - 99% | 100% | CEO may designate up to funded amount for payment | | 100% or greater | 150% | CEO may designate up to funded amount for payment |
Annual Cash Bonuses
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Annual Cash Bonuses
The amounts funded in the Secondary Pool were to be earned and distributed based on our CEO’s determination of each executive’s individual performance and the Company’s achievement of organization specific goals. Our CEO could authorize payment at any level up to but not exceeding 100% of the funded amount in the Secondary Pool, with final payouts to be approved by the compensation committee.
Annual Cash Bonuses
| Initial Pool - Fiscal 23 Achievement Results | | | | | Period | Billings (% of Target) | Revenue (% of Target) | Bonus Payment (% of Target) | | First Fiscal Half | 91.7 | 98.4 | 86.8 | | Second Fiscal Half | 93.3 | 94.2 | 85 | | Full Fiscal Year | 92.5 | 96.3 | 85.9 | | Secondary Pool - Fiscal 23 Achievement Results | | | | | Period | Metric Achievement | Funded (% of Target) | Adjusted Payment (% of Target) | | First Fiscal Half | | 100 | 58.7 | | Second Fiscal Half | | 100 | 100 | | Full Fiscal Year | | 100 | 79.4 |
Annual Cash Bonuses
Cash Bonus Payments (Other than Mr. Rajic) In February and September 2023, for results relating to the first and second fiscal halves respectively, the compensation committee determined that as a result the performance as displayed in the table above, the cash bonus payments to our eligible Named Executive Officers (other than Mr. Rajic) were equal to 72.8% of their target semi-annual cash bonus for the first half of the year and 85% of their target semi-annual cash bonus for the second half of the year.
Annual Cash Bonuses
| Named Executive Officer | Period | Target Bonus Opportunity ($) | Bonus Payment ($) | | Mr. Canessa | First Half | 162,500 | 118,235 | | | Second Half | 162,500 | 150,313 | | | Total | 325,000 | 268,548 | | Mr. Nair | First Half(1) | — | — | | | Second Half(2) | 71,667 | 66,507 | | | Total | 71,667 | 66,507 | | Mr. Schlossman | First Half | 125,000 | 90,950 | | | Second Half | 125,000 | 115,625 | | | Total | 250,000 | 206,575 |
Annual Cash Bonuses
1.Mr. Nair’s was not employed during the first half of fiscal 2023. 2.Mr. Nair’s participation was pro-rated from his start date for the second half of fiscal 2023.
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Annual Cash Bonuses
Cash Bonus Payments for Mr. Rajic As provided pursuant to his Employment Offer Letter, Mr. Rajic was eligible to participate in the Employee Incentive Compensation Plan on the same terms and conditions, described above for our other Named Executive Officers, subject to determination and receipt of his cash bonus payments on a quarterly, rather than a semi-annual, basis. Based on our corporate performance and funding of the supplemental bonus pool as awarded by our CEO, the cash bonus payments to Mr. Rajic for fiscal 2023 were as follows:
Annual Cash Bonuses
| Fiscal Period | Quarterly Target Bonus Opportunity ($) | Quarterly Bonus Payment ($) | | First Fiscal Quarter | 107,500 | 86,000 | | Second Fiscal Quarter | 107,500 | 70,435 | | Third Fiscal Quarter | 107,500 | 101,319 | | Fourth Fiscal Quarter | 107,500 | 97,395 | | Total | 430,000 | 355,149 |
Long-Term Incentive Compensation
Long-Term Incentive Compensation We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. We use equity awards to incentivize and reward our Named Executive Officers for long-term corporate performance based on the value of our common stock and, thereby, to align the interests of our Named Executive Officers with those of our stockholders. In fiscal 2023, equity awards were granted to the Named Executive Officers included both time-based and performance-based stock awards. The compensation committee determined the amount of long-term incentive compensation for our Named Executive Officers (and, in the case of our CEO, formulated its recommendation to the independent members of the Board for his long-term incentive compensation award) as part of its annual compensation review. In making these awards and recommendation, the compensation committee took the following factors into consideration: •a competitive market analysis performed by its compensation consultant; •the amount of equity compensation held by the Named Executive Officer (including the current economic value of his or her unvested equity and the ability of these unvested holdings to satisfy our retention objectives); •the recommendations of our CEO (except with respect to his own equity awards); •the projected impact of the proposed awards on our earnings and stock-based compensation as a percentage of revenue; •the proportion of our total shares outstanding used for annual employee long-term incentive compensation awards (our “burn rate”) in relation to the companies in our compensation peer group; and •the potential dilution to our shareholders (our “overhang”) in relation to the companies in our compensation peer group
Long-Term Incentive Compensation
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Long-Term Incentive Compensation
Fiscal 2023 Annual Equity Awards For fiscal 2023, except for Mr. Nair, whose new hire package is described below, we issued our annual long-term incentive compensation awards to our Named Executive Officers in the form of PSU awards and time-based RSU awards. The awards were weighted more heavily towards PSUs for our CEO, with 80% of his long-term incentive compensation opportunity in the form of PSU awards and 20% in the form of an RSU award. The compensation committee believed that weighting our CEO’s long-term compensation opportunity more heavily toward PSUs in comparison to other executives better aligns our CEO’s goals with those of our stockholders. For the other Named Executive Officers, their long-term incentive compensation was weighted 25% in the form of PSU awards and 75% in the form of RSU awards. Due to the uncertain macroeconomic environment at the time of the original approval, the awards were approved in October 2022 and were issued with a set number of shares being issued in October 2022 and additional shares issued in April 2023 with such share number determined by dividing a target award value for each Named Executive Officer, respectively, by the average closing share price of the Company's stock for each of the trading days in April 2023. The total equity awards approved for our Named Executive Officer in October 2022 and April 2023 were as follows:
Long-Term Incentive Compensation
| Named Executive Officers | Restricted Stock Unit Award October 2022 (Number of shares) (#) | Performance Stock Unit Award October 2022 (Number of shares) (#) | Restricted Stock Unit Award April 2023 (Number of shares) (#) | Performance Stock Unit Award April 2023 (Number of shares) (#) | | Mr. Chaudhry | 43,704 | 174,815 | 57,726 | 230,902 | | Mr. Canessa | 15,278 | 5,093 | 20,180 | 6,727 | | Mr. Rajic | 33,334 | 11,112 | 44,028 | 14,676 | | Mr. Schlossman | 9,723 | 3,241 | 12,842 | 4,281 |
Long-Term Incentive Compensation
Fiscal 2023 Time-Based Equity Awards Our fiscal 2023 time-based equity awards to our Named Executive Officers, other than Mr. Nair, were issued in the form of RSUs for shares of our common stock and vest over a four-year period in 16 equal quarterly installments beginning on December 15, 2023, subject to each recipient's continued service to the Company. Fiscal 2023 PSU Awards After considering analysis performed by Compensia, feedback from our stockholders and the compensation committee’s desire to establish long-term performance metrics, the compensation committee determined the PSU performance metrics for fiscal 2023 were to be based on achievement of a long-term, multi-year ARR metric. The compensation committee will certify achievement of the performance criteria for these awards after completion of the quarter in which the Company meets or exceeds the required ARR target, as indicated by the financial records of the Company. If such ARR target is achieved on or before January 31, 2026 awarded shares will equal 140% of target shares, and if the ARR target achieved after January 31, 2023 but on or before April 30, 2026 awarded shares will equal 120% of target shares. If the ARR target is achieved after April 30, 2026, awarded shares will equal 100% of target shares. The long-term ARR target was selected because it requires significant growth and we believe it will be a transformative milestone for the Company in our growth cycle. CEO Equity Awards The compensation committee intends the CEO awards for fiscal 2023 to cover approximately four years of equity awards and, as noted above, 80% of the awards are long term performance based-award which will not be attained until the company reaches a long term ARR target. This ARR target represents a challenging, long term and multi-year corporate milestone, the achievement of
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Long-Term Incentive Compensation
which will benefit our stockholders. This equity structure, which only rewards our CEO upon achievement of an aggressive and significant ARR target, establishes material stockholder value alignment. The compensation committee does not anticipate providing additional equity awards to our CEO for the multi-year period covered by the 2023 awards. Fiscal 2023 New Hire Equity Awards On May 24, 2023, Mr. Nair was hired as our CTO and EVP of R&D. Pursuant to his new hire agreement, Mr. Nair received equity stock awards, on June 6,2023, consisting of time-based RSUs with a grant date value of $16,800,000, performance-based awards with a grant date value of $7,200,000 and options to purchase 50,000 shares of common stock. The time based RSUs vest over four years with the first 12.5% vesting after six months and the remainder vesting in equal quarterly installments thereafter. The performance-based awards vest in accordance with the annual executive performance-based awards, as described below, and the options vest 25% after the first year and monthly thereafter over a total of four years. Legacy PSU Awards - Fiscal 2023 Performance Period In fiscal 2020, under the term of his new hire offer letter, Mr. Rajic was granted multi-year PSU awards under a separate four-year arrangement ending in fiscal 2023 and for which fiscal 2023 performance metrics were to be determined during fiscal 2023. The compensation committee determined that the fiscal 2023 PSU Awards were to be earned based on our level of attainment of two equally weighted performance metrics: revenue and calculated billings. The compensation committee selected the metrics because they are key indicators of our progress in executing our business strategy of pursuing growth to capture significant market share aligned directly to Mr. Dali’s role in the Company. For purposes of the Fiscal 2023 PSU Awards, “revenue” and “calculated billings” had the same meanings as under the Employee Incentive Compensation Plan for our senior executives. As reflected in our annual operating plan presented to and approved by our board of directors, the target levels established for revenue and calculated billings for the full year of fiscal 2023 by the compensation committee were as follows:
Long-Term Incentive Compensation
| Performance Metric | Full Year Fiscal 2023 ($) | | Revenue | 1,683,000 | | Calculated Billings | 2,202,000 |
Long-Term Incentive Compensation
For the fiscal 2023 performance year, the total number of units that could be earned scaled from 0% to 150% of the target number of units, based on actual achievement of the fiscal 2023 performance metrics as follows:
Long-Term Incentive Compensation
| Metric Achievement | Payment | PSU Award Attainment | | Less than 80% | 0% | No attainment below 80% achievement | | 80% - 90% | 0% to 70% linear | 80% attainment pays 0% and 90% pays 70% | | 90% - 95% | 70% to 90% linear | 90% attainment pays 70%, and 95% pays 90% | | 95% - 100% | 90% to 100% linear | 95% attainment pays 90% and 100% pays 100% | | 100% - 105% | 100% to 125% linear | 100% attainment pays 100%, and 105% pays 125% | | 105% - 110% | 125% to 150% linear | 105% attainment pays 125%, and 110% pays 150% |
Long-Term Incentive Compensation
In September 2023, our revenue and calculated billings results for fiscal 2023 were presented to the compensation committee for review. After reviewing and analyzing these results, the compensation committee certified that, for the annual performance period
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Long-Term Incentive Compensation
ended July 31, 2023, our calculated billings were achieved at 92.4% of the target performance level and our revenue was achieved at 96.1% of the target performance level, resulting in 79.6% of the calculated billings attainment and 92.2% of the revenue attainment for a total of 85.9% achievement. Of the 23,182 target shares, 19,914 shares were attained and vested on September 15, 2023. The total compensation for Mr. Rajic for fiscal 2023 includes the value of these legacy PSU awards, which significantly increased in value between the grant approval date and the date when the compensation committee determined the metrics and related target levels for the PSU awards. The closing market price of our common stock was $43.98 per share for the awards approved in October 2019 for Mr. Rajic. However, as a result of our strong growth and financial performance following the award approval, the closing market price of our common stock appreciated to $147.63 per share in October 2022 when the performance metrics for these legacy PSU awards were established, and the value of the awards for fiscal 2023 compensation purposes was determined.
EMPLOYMENT ARRANGEMENTS
EMPLOYMENT ARRANGEMENTS We entered into written employment agreement with our CEO and employment offer letters with our other Named Executive Officers in connection with their employment with us. We believe that these arrangements were necessary to induce these individuals to forego other employment opportunities or leave their then-current employer for the uncertainty of a demanding position in a new and unfamiliar organization. In filling each of our executive positions, our board of directors or the compensation committee, as applicable, recognized that it would need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market. At the same time, our board of directors and the compensation committee were sensitive to the need to integrate new executive officers into the executive compensation structure that we were seeking to develop, balancing both competitive and internal equity considerations. Each of these arrangements provides for “at will” employment (meaning that either we or the executive may terminate the employment relationship at any time without cause) and sets forth the initial compensation arrangements for the executive, including their base salary, target annual cash bonus award opportunity (expressed as fixed amount or as a percentage of his or her base salary), participation in our employee benefit programs, eligibility for future equity awards, and reimbursement for all reasonable and necessary business expenses. In addition, in the case of our Named Executive Officers, their employment offer letters and other agreements provide that the executive will be eligible to receive certain severance payments and benefits in connection with certain terminations of employment. These post-employment compensation arrangements are discussed in “Post-Employment Compensation” below. For detailed descriptions of the employment arrangements with our Named Executive Officers, see “Potential Payments upon Termination or Change in Control” below.
POST-EMPLOYMENT COMPENSATION
POST-EMPLOYMENT COMPENSATION The employment offer letters and equity award agreements with our Named Executive Officers provide them with certain protection in the event of their termination of employment other than for “cause,” death, or “disability” (as such terms are defined in the employment offer letters). In addition, our Named Executive Officers are participants in our Change of Control and Severance Policy, or the Severance Policy, which provides for certain protections in the event of a termination of employment in connection with a change in control of the Company. We believe that these protections were necessary to induce these individuals to leave their former employment for the uncertainty of a demanding position in a new and unfamiliar organization and help from a retention standpoint and to retain their services on an ongoing basis. We also believe that these arrangements provided by the Severance Policy help maintain the continued focus and dedication of our Named Executive Officers to their assigned duties to maximize stockholder value if there is a potential transaction that could involve a change in control of the Company. These arrangements provide reasonable compensation to a Named Executive Officer if he or she leaves our employ under certain circumstances to facilitate his or her transition to new employment. Further, in some instances we seek to mitigate any potential employer liability and avoid future disputes or litigation by conditioning post-employment compensation and benefits on a departing Named Executive Officer signing a separation and release agreement acceptable to us. Under the Severance Policy, all payments and benefits in the event of a change in control of the Company are payable only if there is a subsequent loss of employment by a Named Executive Officer (a so-called “double-trigger” arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention value following a change in control of the Company and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction.
POST-EMPLOYMENT COMPENSATION
In the event of a change in control of the Company, to the extent Section 280G or 4999 of the Internal Revenue Code is applicable to a Named Executive Officer, such individual is entitled to receive either: •payment of the full amounts specified in the policy to which he or she is entitled; or •payment of such lesser amount that does not trigger the excise tax imposed by Section 4999, whichever results in him or her receiving a higher amount after taking into account all federal, state, and local income, excise and employment taxes. We do not use excise tax payments (or “gross-ups”) relating to a change in control of the Company and have no such obligations in place with respect to any of our Named Executive Officers. We believe that having in place reasonable and competitive post-employment compensation arrangements, including in the event of a change in control of the Company, are essential to attracting and retaining highly-qualified executive officers. The compensation committee does not consider the specific amounts payable under the post-employment compensation arrangements when determining the annual compensation for our Named Executive Officers. We do believe, however, that these arrangements are necessary to offer compensation packages that are competitive. For detailed descriptions of the post-employment compensation arrangements with our Named Executive Officers, as well as an estimate of the potential payments and benefits payable under these arrangements, see “Potential Payments upon Termination or Change in Control” below.
Taxation of “Parachute” Payments
Taxation of “Parachute” Payments Sections 280G and 4999 of the Internal Revenue Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the Company that exceeds certain prescribed limits, and that the Company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We have not agreed to provide any executive officer, including any Named Executive Officer, with a “gross-up” or other reimbursement payment for any tax liability that the executive officer might owe as a result of the application of Sections 280G or 4999 of the Internal Revenue Code.
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 certain stock-based compensation. Among other things, ASC Topic 718 requires us to record a compensation expense in our income statement for all equity awards granted to our executive officers and other employees. This compensation expense is based on the grant date “fair value” of the equity award and, in most cases, will be recognized ratably over the award’s requisite service period (which, generally, will correspond to the award’s vesting schedule). This compensation expense is also reported in the compensation tables below, even though recipients may never realize any value from their equity awards.
EMPLOYMENT OFFER LETTER WITH MR. CANESSA
EMPLOYMENT OFFER LETTER WITH MR. CANESSA Under Mr. Canessa’s employment offer letter, if we terminate Mr. Canessa’s employment with us other than for “cause,” death or “disability” outside of the period beginning on a “change of control” (as such terms are defined in the Severance Policy) and ending 12 months following the change of control, he will be entitled to receive (i) accelerated vesting as to the number of unvested shares
EMPLOYMENT OFFER LETTER WITH MR. CANESSA
subject to equity awards that otherwise would have vested during the six months following the date his employment with us terminates had he remained employed with us through such time; (2) extension of the period of time in which he has to exercise his vested options until the date that is 12 months following his termination date, subject to earlier termination on a change in control (or similar transaction) pursuant to the terms of the equity plan under which the options are granted; and (3) severance pay at a rate equal to 100% of his annual base salary, as then in effect, for a period of six months following the date of such termination, payable in accordance with our normal payroll practices. To receive the severance benefits upon a qualifying termination, Mr. Canessa must sign and not revoke a release of claims within the time specified in his employment offer letter.
EMPLOYMENT OFFER LETTER WITH MR. RAJIC
EMPLOYMENT OFFER LETTER WITH MR. RAJIC Under Mr. Rajic's employment offer letter, if we terminate Mr. Rajic's employment with us other than for “cause” or he resigns for “good reason”, outside of the “change of control period" (as such terms are defined in the employment offer letter), he will be entitled to receive (i) severance pay at a rate equal to 100% of his annual base salary, as then in effect (less applicable withholding) for a period of six months following the date of such termination; and (ii) extension of the period of time in which he will have to exercise his vested options to purchase our common stock subject to the options until the date that is 12 months following his termination date, subject to earlier termination on a change in control (or similar transaction) pursuant to the terms of the equity plan under which the options were granted. Further, If Mr. Rajic is subject to a "qualifying termination" (as defined in the employment offer letter), he will be entitled to an extension of the period of time in which he will have to exercise his vested options to purchase our common stock subject to the Option until the date that is 12 months following his termination date, subject to earlier termination on a change in control (or similar transaction) pursuant to the terms of the equity plan under which the options were granted. To receive the severance benefits upon a qualifying termination, Mr. Rajic must sign and not revoke a release of claims within the time specified in his employment offer letter.
EMPLOYMENT OFFER LETTER WITH MR. SCHLOSSMAN
EMPLOYMENT OFFER LETTER WITH MR. SCHLOSSMAN Under Mr. Schlossman’s employment offer letter, if we terminate Mr. Schlossman’s employment with us other than for “cause” or he resigns for “good reason”, without a “change of control” (as such terms are defined in the employment offer letter), he will be entitled to receive continuing severance pay at a rate equal to 100% of his annual base salary, as then in effect, for a period of three months from the date of such termination, to be paid periodically in accordance with our normal payroll practices. To receive the severance benefits upon a qualifying termination, Mr. Schlossman must sign and not revoke a release of claims within the time specified in his employment offer letter.
Change of Control and Severance Policy
Change of Control and Severance Policy Our board of directors adopted a Change of Control and Severance Policy, or the Severance Policy. Each of our current executive officers is a participant in the Severance Policy. Under the Severance Policy, if we terminate a participant other than for “cause,” death or “disability” or the Named Executive Officer resigns for “good reason” during the period beginning on a “change of control” (as such terms are defined in the Severance Policy) and ending 12 months following the change of control (which we refer to as the change of control period), such Named Executive Officer will be eligible to receive the following severance benefits: •100% of the then-unvested shares subject to his then-outstanding equity awards will become vested and exercisable, and in the case of equity awards with performance-based vesting, all performance goals and other vesting criteria will be deemed achieved at the specified percentage of target levels; •a lump-sum payment equal to 100% of the greatest of (i) a participant's annual base salary as in effect immediately prior to his termination, (ii) if the termination is a resignation for good reason based on a material reduction in base salary, a participant's annual base salary as in effect immediately prior to such reduction, or (iii) a participant's annual base salary as in effect immediately prior to the change of control; •a lump-sum payment equal to (i) 100% of a participant's target annual bonus award opportunity for the fiscal year in which the termination occurs plus (ii) a pro-rated portion of such target annual bonus award opportunity reduced by any bonus payments made during such fiscal year; and •a lump-sum health benefit severance payment of $36,000. To receive the severance benefits upon a qualifying termination, a Named Executive Officer must sign and not revoke a release of claims within the time specified in the Severance Policy. If we discover, after a Named Executive Officer receives severance payments or benefits, that grounds for terminating him for cause existed, such Named Executive Officer will not receive any further severance payments or benefits under the Severance Policy, and to the extent permitted by law, the Named Executive Officer will be required to repay to us any severance payments or benefits (or gain derived from such payments or benefits) he received under the Severance Policy.
Change of Control and Severance Policy
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Change of Control and Severance Policy
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Change of Control and Severance Policy
In addition to any benefits available to Named Executive Officers under the Severance Policy, in October 2022, the compensation committee approved acceleration of attainment of any outstanding PSUs in the event of a change of control of the Company (as defined in the Severance Policy). In the event of a change of control, outstanding PSUs will be deemed to be achieved at 100% of target, subject, in certain circumstances, to continued time-based vesting.
Fiscal Year 2018 Equity Incentive Plan and 2007 Stock Plan
Fiscal Year 2018 Equity Incentive Plan and 2007 Stock Plan Our Fiscal Year 2018 Equity Incentive Plan (the “2018 Plan”) provides that in the event of a merger or change in control, as defined under our 2018 Plan, each outstanding award will be treated as the administrator determines, without a participant’s consent. The administrator is not required to treat all awards or participants similarly. In the event that a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any outstanding award, then such award will fully vest, all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels and all other terms and conditions met and such award will become fully exercisable, if applicable. If an option or stock appreciation right is not assumed or substituted, the administrator will notify the participant in writing or electronically that such option or stock appreciation right will be exercisable for a period of time determined by the administrator in its sole discretion and the option or stock appreciation right will terminate upon the expiration of such period. In the event of a change in control, with respect to awards granted to an outside director his or her options and other equity awards, will vest fully and become immediately exercisable, all restrictions on his or her restricted stock and RSU awards will lapse and all performance goals or other vesting requirements for his or her performance shares and units will be deemed achieved at 100% of target levels, and all other terms and conditions met. In addition, the agreements for certain performance-based awards granted to our Named Executive Officers hold that performance shares and units will be deemed achieved at 100% of target levels, and all other terms and conditions met, and be subject to continued time-based vesting as set forth in the individual award agreements in the event of a change in control. Our 2007 Plan provides that, in the event of a merger or change in control, as defined under our 2007 Plan, each outstanding award may be assumed or substituted for an equivalent award. In the event that awards are not assumed or substituted for, then the vesting of outstanding awards will be accelerated, and stock options will become exercisable in full prior to such transaction. In addition, if an option is not assumed or substituted in the event of a merger or change in control, the administrator will notify the participant that such award will be fully vested and exercisable for a specified period prior to the transaction, and such award will terminate upon the expiration of such period for no consideration, unless otherwise determined by the administrator.
Fiscal Year 2018 Equity Incentive Plan and 2007 Stock Plan
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Fiscal 2023 Summary Compensation Table
Fiscal 2023 Summary Compensation Table The following table presents information regarding the compensation awarded to, earned by and paid to each of our Named Executive Officers during fiscal 2023, fiscal 2022 and fiscal 2021.
Fiscal 2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | Jay Chaudhry Chief Executive Officer | 2023 | 23,660 | — | 57,751,823(2) | — | — | — | 57,775,483 | | | 2022 | 23,660 | — | 41,506,500(3) | — | — | — | 41,530,160 | | | 2021 | 23,660 | — | 19,975,500(4) | — | — | — | 19,999,160 | | Remo Canessa Chief Financial Officer | 2023 | 430,000 | — | 5,383,820(2) | — | 268,548 | — | 6,082,368 | | | 2022 | 400,000 | — | 10,704,526(3) | — | 347,588 | — | 11,452,114 | | | 2021 | 375,000 | — | 2,719,670(4) | — | 347,117 | — | 3,441,786 | | Syam Nair(5) Chief Technology Officer | 2023 | 80,625 | — | 29,658,794(2) | 4,448,380(6) | 66,507 | — | 34,254,306 | | Dali Rajic Chief Operating Officer | 2023 | 430,000 | — | 15,110,749(2) | — | 355,149 | — | 15,895,898 | | | 2022 | 415,000 | — | 45,154,450(3) | — | 509,076 | — | 46,078,526 | | | 2021 | 400,000 | — | 8,526,289(4) | — | 525,075 | — | 9,451,364 | | Robert Schlossman Chief Legal Officer | 2023 | 375,000 | — | 3,426,192(2) | — | 206,575 | — | 4,007,767 | | | 2022 | 325,000 | — | 8,028,464(3) | — | 260,690 | — | 8,614,154 | | | 2021 | 325,000 | — | 2,175,736(4) | — | 229,453 | — | 2,730,189 |
Fiscal 2023 Summary Compensation Table
(1)The amounts reported represent the grant date fair value of the stock awards granted to the Named Executive Officers during the respective fiscal years as computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the awards reported in this column are set forth in Note 13 to our audited consolidated financial statements included in our Annual Report on Form 10-K for our fiscal year ended July 31, 2023. (2)The awards for fiscal 2023 are comprised of (i) time-based RSU and (ii) PSU awards. The amounts shown in respect of the PSU awards represent the grant date fair value based on the probable outcome of the fiscal 2023 performance condition as of the grant date. The grant date fair value of the PSU awards for which metrics were determined in fiscal 2023 assuming achievement of the maximum level of performance are: Mr. Chaudhry, $64,681,951; Mr. Canessa, $1,884,419; Mr. Nair $10,100,155; Mr. Rajic $9,157,928; and Mr. Schlossman $1,199,340. These amounts do not necessarily correspond to the actual value recognized by the Named Executive Officers. (3)The awards for fiscal 2022 are comprised of PSU awards, and for Mr. Rajic (i) time-based RSU and (ii) PSU awards. The amounts shown in respect of the PSU awards represent the grant date fair value based on the probable outcome of the fiscal 2022 performance condition as of the grant date. The grant date fair value of the PSU awards for which metrics were determined in fiscal 2022 assuming achievement of the maximum level of performance are: Mr. Chaudhry, $62,259,750; Mr. Canessa, $13,380,658; Mr. Rajic $53,044,974; and Mr. Schlossman $10,035,580. These amounts do not necessarily correspond to the actual value recognized by the Named Executive Officers. For example, PSU awards were earned at 106.2% of target for fiscal 2022.
Fiscal 2023 Summary Compensation Table
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Fiscal 2023 Summary Compensation Table
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Fiscal 2023 Summary Compensation Table
(4)The awards for fiscal 2021 are comprised of (i) time-based RSU and (ii) PSU awards. The amounts shown in respect of the PSU awards represent the grant date fair value based on the probable outcome of the fiscal 2021 performance condition as of the grant date. The grant date fair value of the PSU awards for which metrics were determined in fiscal 2021 assuming achievement of the maximum level of performance are: Mr. Chaudhry, $29,963,250; and Mr. Rajic $4,630,720. These amounts do not necessarily correspond to the actual value recognized by the Named Executive Officers. For example, PSU awards were earned at 129.25% of target for fiscal 2021. (5)Mr. Nair was appointed Chief Technology Officer and EVP of R&D on May 24, 2023, and appointed as an Executive Officer in July of 2023. (6)The amounts reported represent the aggregate grant date fair value of the stock options granted to our Named Executive Officers, calculated in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of the awards reported in this column are set forth in Note 13 to our audited consolidated financial statements included in our Annual Report on Form 10-K for our fiscal year ended July 31, 2023. These amounts do not necessarily correspond to the actual value recognized by the Named Executive Officers.
Fiscal 2023 Summary Compensation Table
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Fiscal 2023 Summary Compensation Table
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Fiscal 2023 Grants of Plan-Based Awards Table
Fiscal 2023 Grants of Plan-Based Awards Table The following table sets forth certain information with respect to all plan-based awards granted to our Named Executive Officers during fiscal 2023.
Fiscal 2023 Grants of Plan-Based Awards Table
| | | Estimated Possible Payouts under Non-Equity Incentive Plan Awards(1) | | | Estimated Possible Payouts under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of shares of Stock or Units (#) | Exercise Price of Option Awards ($) | Grant Date Fair Value of Stock and Options Awards ($)(3) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | Jay Chaudhry | 10/17/2022 | — | — | — | — | 174,815 | 244,741 | — | — | 25,397,123 | | | 10/17/2022 | — | — | — | — | — | — | 43,704(4) | — | 6,349,317 | | | 04/28/2023 | — | — | — | — | 230,902 | 323,263 | — | — | 20,804,270 | | | 04/28/2023 | — | — | — | — | — | — | 57,726(5) | — | 5,201,113 | | Remo Canessa | 10/17/2022 | — | 325,000 | 487,500 | — | — | — | — | — | — | | | 10/17/2022 | — | — | — | — | 5,093 | 7,130 | — | — | 739,911 | | | 10/17/2022 | — | — | — | — | — | — | 15,278(6) | — | 2,219,588 | | | 04/28/2023 | — | — | — | — | 6,727 | 9,418 | — | — | 606,103 | | | 04/28/2023 | — | — | — | — | — | — | 20,180(6) | — | 1,818,218 | | Syam Nair | 06/06/2023 | — | 71,667 | 107,501 | — | — | — | — | — | — | | | 06/06/2023 | — | — | — | — | — | — | 50,000(7) | 152.99 | 4,448,380 | | | 06/06/2023 | — | — | — | — | 47,156 | 66,018 | — | — | 7,214,396 | | | 06/06/2023 | — | — | — | — | — | — | 146,705(8) | — | 22,444,398 | | Dalibor Rajic | 10/13/2022 | — | — | — | — | 23,182 | 34,773 | — | — | 3,364,404 | | | 10/17/2022 | — | 430,000 | 645,000 | — | — | — | — | — | — | | | 10/17/2022 | — | — | — | — | 11,112 | 15,557 | — | — | 1,614,351 | | | 10/17/2022 | — | — | — | — | — | — | 33,334(6) | — | 4,842,764 | | | 04/28/2023 | — | — | — | — | 14,676 | 20,546 | — | — | 1,322,308 | | | 04/28/2023 | — | — | — | — | — | — | 44,028(6) | — | 3,966,923 | | Robert Schlossman | 10/17/2022 | | 250,000 | 375,000 | — | — | — | — | — | — | | | 10/17/2022 | — | — | — | — | 3,241 | 4,538 | — | — | 470,852 | | | 10/17/2022 | — | — | — | — | — | — | 9,723(6) | — | 1,412,557 | | | 04/28/2023 | — | — | — | — | 4,281 | 5,994 | — | — | 385,718 | | | 04/28/2023 | — | — | — | — | — | — | 12,842(6) | — | 1,157,064 |
Fiscal 2023 Grants of Plan-Based Awards Table
(1)These amounts reflect the fiscal 2023 target cash bonus award amounts for each of our Named Executive Officers under our Executive Incentive Compensation Plan. Mr. Chaudhry did not participate in the Executive Incentive Compensation Plan. There are no threshold bonus amounts under the Executive Incentive
Fiscal 2023 Grants of Plan-Based Awards Table
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Fiscal 2023 Grants of Plan-Based Awards Table
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Fiscal 2023 Grants of Plan-Based Awards Table
Compensation Plan. The amounts set forth do not represent actual compensation earned or earnable by the Named Executive Officers for fiscal 2023. Please see the "Fiscal 2023 Summary Compensation Table" for the amounts earned by our Named Executive Officers for fiscal 2023. For a description of the Executive Incentive Compensation Plan, see “Compensation Discussion and Analysis –Annual Cash Bonuses” above. (2)These amounts reflect PSU awards granted and eligible to be earned based on achievement of long-term ARR targets established during fiscal 2023 under our 2018 Equity Incentive Plan. Mr. Rajic was also granted a PSU award eligible to be earned based on the achievement of fiscal 2023 revenue and calculated billing targets established by the compensation committee.The amounts set forth do not represent actual compensation earned or earnable by the Named Executive Officers for fiscal 2023. For a description of the fiscal 2023 PSU program, see “Compensation Discussion and Analysis –Long-Term Incentive Compensation” above. (3)The amounts reported represent the aggregate grant date fair value of the stock awards granted to our Named Executive Officers in fiscal 2023, calculated in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value are set forth in the notes to our consolidated financial statements included in our Annual Report. These amounts do not necessarily correspond to the actual value recognized by the Named Executive Officers. (4)The RSU award vests in (16) equal quarterly installments beginning December 15, 2022. (5)The number of shares was determined on April 28, 2023 based on an award value approved on October 17, 2022. The award began vesting on December 15, 2022, prior to the number of shares being determined, resulting in 3/16ths of the RSUs being released on June 15 2023, with the remainder vesting in (13) equal quarterly installments. (6)The RSU award vests in (16) equal quarterly installments beginning December 15, 2023. (7)One-fourth of the shares subject to the option vest on May 24, 2024 and 1/48th of the shares vest monthly thereafter. (8)The RSUs vest 12.5% on December 15, 2023 and the remaining in equal quarterly installments thereafter.
Fiscal 2023 Grants of Plan-Based Awards Table
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Fiscal 2023 Grants of Plan-Based Awards Table
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Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table The following table provides information regarding outstanding equity awards held by our Named Executive Officers as of July 31, 2023.
Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
| | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares or Units That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares or Units or That Have Not Vested ($) | | Jay Chaudhry | 10/17/22(2) | — | — | — | — | 35,510 | 5,695,094 | — | — | | | 10/17/22(3) | — | — | — | — | — | — | 174,815 | 28,036,830 | | | 4/28/23(2) | — | — | — | — | 46,903 | 7,522,303 | — | — | | | 4/28/23(3) | — | — | — | — | — | — | 230,902 | 37,032,063 | | Remo Canessa | 10/5/18(4) | — | — | — | — | 17,579 | 2,819,320 | — | — | | | 10/31/19(4) | — | — | — | — | 9,245 | 1,482,713 | — | — | | | 6/2/20(4) | — | — | — | — | 18,134 | 2,908,331 | — | — | | | 4/13/21(5) | — | — | — | — | 12,793 | 2,051,741 | — | — | | | 9/1/21(6) | — | — | — | — | 23,101 | 3,704,938 | — | — | | | 10/17/22(7) | — | — | — | — | 15,278 | 2,450,286 | — | — | | | 10/17/22(3) | — | — | — | — | — | — | 5,093 | 816,815 | | | 4/28/23(7) | — | — | — | — | 20,180 | 3,236,468 | — | — | | | 4/28/23(3) | — | — | — | — | — | — | 6,727 | 1,078,876 | | Syam Nair | 6/6/23(13) | — | 50,000 | 152.99 | 06/06/33 | — | — | — | — | | | 6/6/23(14) | — | — | — | — | 146,705 | 23,528,548 | — | — | | | 6/6/23(3) | — | — | — | — | — | — | 47,156 | 7,562,879 |
Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
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Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
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Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
| | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares or Units That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares or Units or That Have Not Vested ($) | | Dalibor Rajic | 9/12/19(8) | 111,776 | 6,250 | 49.59 | 09/12/29 | — | — | — | — | | | 10/31/19(9) | — | — | — | — | 5,796 | 929,562 | — | — | | | 6/2/20(4) | — | — | — | — | 21,156 | 3,392,999 | — | — | | | 4/13/21(5) | — | — | — | — | 25,585 | 4,103,322 | — | — | | | 9/1/21(6) | — | — | — | — | 40,427 | 6,483,682 | — | — | | | 1/7/22(10) | — | — | — | — | — | — | 38,250 | 6,134,535 | | | 1/7/22(11) | — | — | — | — | 26,297 | 4,217,513 | — | — | | | 10/13/22(12) | — | — | — | — | — | — | 23,182 | 3,717,929 | | | 10/17/22(7) | — | — | — | — | 33,334 | 5,346,107 | — | — | | | 10/17/22(3) | — | — | — | — | — | — | 11,112 | 1,782,143 | | | 4/28/23(7) | — | — | — | — | 44,028 | 7,061,211 | — | — | | | 4/28/23(3) | — | — | — | — | — | — | 14,676 | 2,353,737 | | Robert Schlossman | 10/5/18(9) | — | — | — | — | 1,954 | 313,383 | — | — | | | 10/5/18(4) | — | — | — | — | 9,766 | 1,566,271 | — | — | | | 10/31/19(4) | — | — | — | — | 10,272 | 1,647,423 | — | — | | | 6/2/20(4) | — | — | — | — | 9,067 | 1,454,165 | — | — | | | 4/13/21(5) | — | — | — | — | 10,234 | 1,641,329 | — | — | | | 9/1/21(6) | — | — | — | — | 17,326 | 2,778,744 | — | — | | | 10/17/22(7) | — | — | — | — | 9,723 | 1,559,375 | — | — | | | 10/17/22(3) | — | — | — | — | — | — | 3,241 | 519,792 | | | 4/28/23(7) | — | — | — | — | 12,842 | 2,059,600 | — | — | | | 4/28/23(3) | — | — | — | — | — | — | 4,281 | 686,587 |
Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
(1)This column represents the market value of the shares underlying the RSU awards or PSU awards, as applicable, as of July 31, 2023, based on the closing price of our common stock, as reported on NASDAQ, of $160.38 per share on July 31, 2023. (2)The remaining RSUs vest in (13) equal quarterly installments through September 15, 2026. (3)Upon achievement of specified performance metrics, earned PSU awards vest 100% on the first quarterly vesting date after achievement has been certified. Amounts reported reflect achievement at target. (4)The remaining RSUs vest in five equal quarterly installments through September 15, 2024.
Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
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Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
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Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
(5)The remaining RSU awards vest as follows: (i) 2.71% of the RSUs vest on September 15, 2023; (ii) 43.24% of the RSUs vest in eight equal quarterly installments through September 15, 2025 and (iii) 54.05% of the RSUs vest in eight quarterly installments through September 15, 2027. (6)The remaining RSUs vest in nine equal quarterly installments through September 15, 2025. (7)The RSUs vest in (16) equal quarterly installments through September 15, 2027. (8)The remaining options vest monthly through September 10, 2023. (9)The remaining RSUs vest on September 15, 2023. (10)Upon achievement of specified performance metrics, earned PSU awards, if any, vest 100% on September 15, 2025. Amounts reported reflect achievement at target. (11)The remaining RSU awards vest in (11) equal quarterly installments through March 15, 2026. (12)Upon achievement of specified performance metrics, earned PSU awards vest on September 15, 2023, or the first quarterly vesting date after achievement has been certified. Amounts reported reflect achievement at target. PSU awards were achieved at 85.9% of target for fiscal 2023. (13)One-fourth of the shares subject to the option vest on May 24, 2024 and the remaining shares vest monthly through May 24, 2027. (14)The RSUs vest 12.5% on December 15, 2023 and the remaining in equal quarterly installments through June 15, 2027.
Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
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Fiscal 2023 Outstanding Equity Awards at Fiscal Year End Table
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Fiscal 2023 Option Exercises and Stock Vested Table
Fiscal 2023 Option Exercises and Stock Vested Table The following table presents, for each of our Named Executive Officers, the shares of our common stock that were acquired upon the exercise of stock options and the related value realized upon exercise during fiscal 2023 and upon the vesting of stock awards and the related value realized upon vesting during fiscal 2023.
Fiscal 2023 Option Exercises and Stock Vested Table
| | 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) | | Jay Chaudhry | — | — | 178,269 | 30,787,046 | | Remo Canessa | — | — | 54,973 | 7,951,136 | | Syam Nair | — | — | — | — | | Dalibor Rajic | — | — | 130,984 | 20,503,492 | | Robert Schlossman | — | — | 45,408 | 6,546,952 |
Fiscal 2023 Option Exercises and Stock Vested Table
(1)The value realized on exercise is pre-tax and represents the difference between the market price of our common stock on the date of exercise less the option exercise price paid for those shares, multiplied by the number of shares for which the option was exercised. (2)The value realized on vesting is calculated as the number of vested shares multiplied by the closing market price of our common stock on the vesting date.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control The tables below quantify the potential payments to our Named Executive Officers under the terms of (i) the Severance Policy and individual agreements in the event of a qualifying termination of employment that is not in connection with a change in control of the Company, (ii) the Severance Policy in the event of a qualifying termination of employment in connection with a change in control of the Company and (iii) individual award agreements and company policies solely in connection with a change in control of the Company . The amounts shown assume that the change in control and/or termination of employment occurred on July 31, 2023, the last business day of fiscal 2023. The values reflected also assume that the payments and benefits to our Named Executive Officers are not reduced by virtue of the provision in the Severance Policy relating to Sections 280G and 4999 of the Internal Revenue Code.
Potential Payments Upon Termination Not in Connection with a Change in Control
Potential Payments Upon Termination Not in Connection with a Change in Control
Potential Payments Upon Termination Not in Connection with a Change in Control
| | | Value of Accelerated Equity Awards | | | Named Executive Officer | Salary Severance ($) | Restricted Stock Units ($)(1) | Total ($) | | Mr. Canessa | 215,000 | 4,228,900 | 4,443,900 | | Mr. Rajic | 215,000 | — | 215,000 | | Mr. Schlossman | 93,750 | — | 93,750 |
Potential Payments Upon Termination Not in Connection with a Change in Control
(1)Reflects the aggregate market value of the unvested shares of our common stock underlying outstanding RSU awards. The aggregate market value is equal to the product obtained by multiplying (i) the number of unvested shares of our common stock subject to outstanding RSU awards and eligible for accelerated vesting as of July 31, 2023, by (ii) $160.38 per share (the closing market price of our common stock on Nasdaq on July 31, 2023, the last trading day in the fiscal year ended July 31, 2023).
Potential Payments Upon Termination Not in Connection with a Change in Control
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Potential Payments Upon Termination Not in Connection with a Change in Control
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Potential Payments Upon Termination in Connection with a Change in Control
Potential Payments Upon Termination in Connection with a Change in Control
Potential Payments Upon Termination in Connection with a Change in Control
| | | | Value of Accelerated Equity Awards | | | | | Named Executive Officer | Salary Severance ($) | Bonus Severance ($) | Restricted Stock Units ($)(1) | Options ($)(2) | Health Benefit Severance Payments ($) | Total ($) | | Mr. Chaudhry | 23,660 | — | 78,286,289 | — | 36,000 | 78,345,949 | | Mr. Canessa | 430,000 | 741,765 | 20,549,489 | — | 36,000 | 21,757,254 | | Mr. Nair | 430,000 | 143,334 | 31,091,427 | 369,500 | 36,000 | 32,070,261 | | Mr. Rajic | 430,000 | 633,131 | 45,522,740 | 693,000 | 36,000 | 47,314,871 | | Mr. Schlossman | 375,000 | 659,050 | 14,226,668 | — | 36,000 | 15,296,718 |
Potential Payments Upon Termination in Connection with a Change in Control
(1)These amounts reflect the aggregate market value of the unvested shares of our common stock underlying outstanding RSU awards. The aggregate market value is equal to the product obtained by multiplying (i) the number of unvested shares of our common stock subject to outstanding RSU awards as of July 31, 2023, by (ii) $160.38 per share (the closing market price of our common stock on the Nasdaq Global Select Market on July 31, 2023, the last trading day in the fiscal year ended July 31, 2023). For performance-based restricted stock unit awards, the assumed number of unvested shares is equal to the target number of shares subject to such award. (2)These amounts reflect the aggregate market value of the unvested shares of our common stock underlying outstanding options. The aggregate market value is equal to (i) the product obtained by multiplying (x) the number of unvested shares of our common stock subject to outstanding options as of July 31, 2023, by (y) $160.38 per share (the closing market price of our common stock on the Nasdaq Global Select Market on July 31, 2023), minus (ii) the aggregate exercise price for such unvested shares.
Potential Payments Solely in Connection with a Change in Control
Potential Payments Solely in Connection with a Change in Control
Potential Payments Solely in Connection with a Change in Control
| | Value of Accelerated Equity Awards | | | Named Executive Officer | Performance-based Restricted Stock Units ($)(1) | Total ($) | | Mr. Chaudhry | 65,068,892 | 65,068,892 | | Mr. Canessa | 2,110,692 | 2,110,692 | | Mr. Nair | 7,562,879 | 7,562,879 | | Mr. Rajic | 13,988,344 | 13,988,344 | | Mr. Schlossman | 1,206,378 | 1,206,378 |
Potential Payments Solely in Connection with a Change in Control
(1)These amounts reflect the aggregate market value of the unvested shares of our common stock underlying outstanding performance-based RSU awards at target. The aggregate market value is equal to the product obtained by multiplying (i) the number of unvested shares of our common stock subject to outstanding performance-based RSU awards as of July 31, 2023, by (ii) $160.38 per share (the closing market price of our common stock on the Nasdaq Global Select Market on July 31, 2023, the last trading day in the fiscal year ended July 31, 2023). The unvested shares are equal to the target number of shares subject to such award. Such shares will be subject to time based vesting depending on the progress toward completion of performance metrics as assessed at the time of the change in control event.
Potential Payments Solely in Connection with a Change in Control
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Potential Payments Solely in Connection with a Change in Control
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PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE
| | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid for PEO (2) | Average Summary Compensation Table Total for Non-PEO NEOs (3) | Average Compensation Actually Paid for Non-PEO NEOs (4) | Total Shareholder Return (5) | Peer Group Total Shareholder Return (6) | Net Income | Company-Selected Measure: Revenue (7) | | 2023 | $57,775,483 | $85,838,523 | $15,060,085 | $17,984,450 | $124 | $168 | $(202,335,000) | $1,616,952,000 | | 2022 | $41,530,160 | $40,909,340 | $26,408,035 | $6,614,390 | $119 | $132 | $(390,278,000) | $1,090,946,000 | | 2021 | $19,999,160 | $36,864,645 | $5,446,150 | $29,838,915 | $182 | $140 | $(262,029,000) | $673,100,000 |
PAY VERSUS PERFORMANCE
(1)Amounts reported in this column represent the total compensation reported in the Summary Compensation Table for the indicated fiscal year for our PEO. For all years reported, our PEO was Mr. Jay Chaudhry (2)Amounts reported in this column represent the compensation actually paid to our PEO, based on his total compensation reported in the Summary Compensation Table for each of the indicated fiscal years and adjusted as shown in the table below:
PAY VERSUS PERFORMANCE
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PAY VERSUS PERFORMANCE
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PEO (Jay Chaudhry)
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Tabular List of Financial Performance Measures
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Relationship Between Pay and Performance
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