DEF 14A of Elastic N.V.

Filed Aug 26, 2022 · FY20220001707753-22-000044

Open on EDGAR

Nominees for Director
Nominees for Director
Nominees for Director
| | Sohaib Abbasi (Vice-Chairman) | | | | Background and Experience | | | | Sohaib Abbasi has served as a member of our board of directors since July 2022. He has also served as a member of the Executive Council of Balderton Capital, a venture capital firm, since January 2018 and as a Senior Advisor of TPG Global LLC, a private equity firm, since July 2017. •From July 2004 to August 2015, he served as the Chief Executive Officer of Informatica Corporation, a data integration company, where he also served as the Chair and a member of the board of directors from March 2004 to December 2015. •Mr. Abbasi previously served in various executive roles at Oracle Corporation, a computer technology corporation, most recently as a member of Oracle's executive committee and as senior vice president of the Oracle Tools and Oracle Education divisions. •He currently serves on the boards of several private companies and previously served as a director of McAfee Corp., a computer security software company, from November 2018 to March 2022, New Relic, Inc., an enterprise software company, from May 2016 to September 2019, Nutanix, Inc., a cloud computing company, from March 2020 to December 2020, and Red Hat, Inc., a provider of enterprise open source software solutions, from March 2011 to July 2019. | | | Age: 66 | | | | Compensation Committee | | | | Education | | Qualifications | | Mr. Abbasi holds a B.S. and an M.S. in Computer Science from the University of Illinois at Urbana-Champaign. | | We believe Mr. Abbasi is qualified to serve as a member of our board of directors because of his prior experience as CEO of a public technology company and his current and prior executive and directorship experience for multiple large public and private technology companies. |
Nominees for Director
| | Caryn Marooney | | | | Background and Experience | | | | Caryn Marooney has served as a member of our board of directors since April 2019. She has served as a General Partner of Coatue Management, LLC, a global investment manager, since November 2019. •From May 2011 to May 2019, she served in various roles at Meta Platforms, Inc. (formerly Facebook, Inc.), a social networking and technology company, most recently serving as Vice President, Global Communications from March 2012 to May 2019. •From June 1997 to March 2011, Ms. Marooney served in various roles, including President and CEO, of The OutCast Agency, a public relations firm. •Ms. Marooney served as a member of the board of directors of Zendesk, Inc., a software development company that provides a software-as-a-service customer service platform, from January 2014 to May 2020. •Ms. Marooney also serves on the boards of various private companies. | | | Age: 55 | | | | Nominating and Corporate Governance Committee | | | | Education | | Qualifications | | Ms. Marooney holds a B.S. in Labor Relations from Cornell University. | | We believe that Ms. Marooney is qualified to serve as a member of our board of directors because of her prior executive experience and her experience advising technology companies. |
Nominees for Director
| | Chetan Puttagunta (Chairman and Lead Independent Director) | | | | Background and Experience | | | | Chetan Puttagunta has served as a member of our board of directors since January 2017, as our Chairman since January 2022, and as our Lead Independent Director since June 2018. Mr. Puttagunta has served as General Partner of Benchmark Capital Partners since July 2018. •From October 2016 until July 2018, Mr. Puttagunta served as a General Partner of New Enterprise Associates, a venture capital firm he joined in April 2011. •Mr. Puttagunta also serves on the boards of various private companies. | | | Age: 36 | | | | Nominating and Corporate Governance Committee (Chair) Audit Committee | | | | Education | | Qualifications | | Mr. Puttagunta holds a B.S. in Electrical Engineering from Stanford University. | | We believe that Mr. Puttagunta is qualified to serve as a member of our board of directors because of his extensive experience in the venture capital industry and his knowledge of the technology industry. |
Nominees for Director
| | Steven Schuurman | | | | Background and Experience | | | | Steven Schuurman co-founded our Company and has served as a member of our board of directors since July 2012 and previously served as our CEO from July 2012 to May 2017. Mr. Schuurman serves on the boards of various private companies. | | | Age: 46 | | | | Education | | Qualifications | | Mr. Schuurman holds a B.Sc. in Electrical Engineering from TH Rijswijk, now known as The Hague University of Applied Sciences. | | We believe Mr. Schuurman is qualified to serve as a member of our board of directors because of his deep understanding of our business, operations and strategy due to his role as our co-founder and former CEO. |
Continuing Directors
Continuing Directors
Continuing Directors
| | Ashutosh Kulkarni (Chief Executive Officer) | | | | Background and Experience | | | | Ashutosh Kulkarni has served as our CEO since January 2022 and was elected to our board of directors in March 2022. Mr. Kulkarni previously served as our Chief Product Officer (“CPO”) from January 2021 to January 2022. •Prior to joining us, he served as Executive Vice President and Chief Product Officer, Enterprise Business Group, at McAfee Corp., a digital provider of cyber security services, from October 2018 until December 2020. •Prior to joining McAfee Corp., Mr. Kulkarni served as Senior Vice President and General Manager at Akamai Technologies in the Web Performance and Web Security division and in the Web Experience division from August 2016 to October 2018 and August 2015 to August 2016, respectively. •Prior to that, Mr. Kulkarni held various senior leadership, product management, product marketing and engineering roles at Akamai Technologies, Informatica and Sun Microsystems. | | | Age: 47 | | | | Education | | Qualifications | | Mr. Kulkarni earned an M.S. in computer engineering from the University of Texas at Austin, an M.B.A. degree from the University of California, Berkeley and a B.E. in engineering from the University of Mumbai. | | We believe that Mr. Kulkarni is qualified to serve as a member of the Board because of the perspective he brings as our CEO, our former CPO, and his experience as an executive in the technology industry. |
Continuing Directors
| | Shay Banon (Chief Technology Officer) | | | | Background and Experience | | | | Shay Banon co-founded our Company and has served as a member of our board of directors since July 2012 and as our CTO since January 2022. Mr. Banon served as our CEO from May 2017 to January 2022, and as our Chairman and CEO from June 2018 to January 2022. He previously also served as our Chief Technology Officer from July 2012 to April 2017. Mr. Banon is the creator of our Elasticsearch product. | | | Age: 44 | | | | Education | | Qualifications | | Mr. Banon holds a B.Sc. in Computer Science from Technion, Israel Institute of Technology. | | We believe that Mr. Banon is qualified to serve as a member of our board of directors because of the perspective and experience he brings as our CTO, our prior CEO and co-founder and his experience as an executive in the technology industry. |
Continuing Directors
| | Jonathan Chadwick | | | | Background and Experience | | | | Jonathan Chadwick has served as a member of our board of directors since August 2018. Mr. Chadwick has been a private investor since April 2016. •From November 2012 to April 2016, Mr. Chadwick served as Chief Financial Officer (“CFO”) and Executive Vice President of VMware, Inc., a virtualization and cloud infrastructure solutions company, and from August 2014 to April 2016, he also served as VMware’s Chief Operating Officer (“COO”). •From March 2011 until November 2012, he served as the CFO of Skype Communication S.á.r.l., a voice over IP (VoIP) service, and as a corporate vice president of Microsoft Corporation after its acquisition of Skype in October 2011. •From June 2010 until February 2011, Mr. Chadwick served as Executive Vice President and CFO of McAfee, Inc., a security software company, until its acquisition by Intel Corporation. •From September 1997 until June 2010, Mr. Chadwick served in various executive roles at Cisco Systems, Inc., a multinational technology company (“Cisco”). •He also currently serves on the board of directors of Confluent, Inc., a data infrastructure company, Samsara Inc., an IT company, ServiceNow, Inc., a cloud computing company, Zoom Video Communications, Inc., a provider of remote conferencing services, and various private companies. He previously served on the board of directors of Cognizant Technology Solutions Corporation, an IT business services provider, from April 2016 to December 2019, and F5 Networks, Inc., an application networking delivery company, from August 2011 until March 2019. •He also worked for Coopers & Lybrand in various roles in the U.S. and the U.K. | | | Age: 56 | | | | Audit Committee (Chair) Compensation Committee | | | | Education | | Qualifications | | Mr. Chadwick qualified as a Chartered Accountant in England and holds a B.Sc. degree in Electrical and Electronic Engineering from the University of Bath, U.K. | | We believe Mr. Chadwick is qualified to serve as a member of our board of directors because of his significant financial expertise as a CFO and service on the boards of directors of various public companies. |
Continuing Directors
| | Alison Gleeson | | | | Background and Experience | | | | Alison Gleeson has served as a member of our board of directors since January 2020. She currently also serves as a sales strategic advisor to Verkada Inc., a professional monitoring and video verification threat detection company, since August 2021, and Special Advisor and Operating Committee Member at Brighton Park Capital, an investment firm, since October 2019. •From November 2018 to September 2019, she was a private investor. •From January 1996 to October 2018, Ms. Gleeson was with Cisco, where she served in various roles, most recently as Senior Vice President, Americas from July 2014 to October 2018. •Ms. Gleeson currently also serves on the board of directors of 8x8, Inc., a cloud-based provider of voice over IP products, and Zoominfo Technologies Inc., a comprehensive sales and marketing intelligence SaaS platform. | | | Age: 57 | | | | Compensation Committee (Chair) | | | | Education | | Qualifications | | Ms. Gleeson holds a B.A. in Marketing from Michigan State University. | | We believe Ms. Gleeson is qualified to serve as a member of our board of directors because of her prior executive and go-to-market experience for a large public company. |
Continuing Directors
| | Shelley Leibowitz | | | | Background and Experience | | | | Shelley Leibowitz has served as a member of our board of directors since October 2021. Ms. Leibowitz currently serves as President of SL Advisory, which provides advice and insights in innovation and digital transformation, information technology portfolio and risk management, digital trust, performance metrics, and effective governance, and has served in such capacity since January 2016. •From 2009 through 2012, Ms. Leibowitz served as Chief Information Officer for the World Bank Group. •Prior to that, Ms. Leibowitz held Chief Information Officer positions at top-tier financial institutions, including Morgan Stanley and Greenwich Capital Markets. •She currently serves as a director of Morgan Stanley, a global financial services firm. Previously she served as a director of Massachusetts Mutual Life Insurance Company, an insurance and financial services provider, from October 2019 to April 2021, E*Trade Financial Corporation, a financial services company, from December 2014 to October 2020, and AllianceBernstein Holding L.P., a global asset management firm, from November 2017 to June 2019. •Ms. Leibowitz also serves on the boards of private companies in the cybersecurity and risk arenas. | | | Age: 61 | | | | Audit Committee Nominating and Corporate Governance Committee | | | | Education | | Qualifications | | Ms. Leibowitz holds a B.A. in Mathematics from Williams College. | | We believe Ms. Leibowitz is qualified to serve as a member of our board of directors because of her current and prior executive and directorship experience and extensive leadership and experience in technology services, digital transformation, and information security. |
Board of Directors
Board of Directors We have a one-tier board of directors, consisting of executive and non-executive directors. The number of executive and non-executive directors is to be determined by the board of directors. Our one-tier board structure consists of two executive directors and seven non-executive directors. Chetan Puttagunta serves as our Chairman and Lead Independent Director. For more information regarding our board leadership structure, please see “Board of Directors and Corporate Governance—Board Leadership Structure and Role of Independent Chairman and the Lead Independent Director.” Pursuant to our articles of association, our executive and non-executive directors may be appointed for a maximum term of three years (unless such director has resigned at an earlier date). A director may be reappointed, and the three-year maximum term may be deviated from by resolution of the general meeting of shareholders upon a proposal of the board of directors. The members of our board of directors have been appointed to staggered terms. The current terms of Ms. Marooney and Messrs. Puttagunta and Schuurman will expire at this Annual Meeting; the terms of Ms. Gleeson and Mr. Chadwick will expire at the annual general meeting of shareholders to be held in 2023; the terms of Mr. Banon and Ms. Leibowitz will expire at the annual general meeting of shareholders to be held in 2024; and the term of Mr. Kulkarni will expire at the annual general meeting of shareholders to be held in 2025. Mr. Abbasi was appointed to our board of directors to temporarily fill the vacancy resulting from Mr. Volpi’s resignation, such appointment and resignation both effective as of July 13, 2022. The term of Mr. Abbasi’s temporary appointment will expire upon the earlier of (i) the vacancy created by Mr. Volpi’s resignation being filled, which will occur if Mr. Abbasi is appointed upon conclusion of the Annual Meeting in accordance with voting proposal no. 1, (ii) the board appointing another person to temporarily fill such vacancy or (iii) the vacancy has been cancelled.
Non-Executive Director Compensation
Non-Executive Director Compensation Each non-executive director is eligible to receive compensation for their service consisting of annual cash retainers and equity awards. Our board of directors has the discretion to revise non-executive director compensation as it deems necessary or appropriate, in accordance with our remuneration policy as previously adopted by an annual general meeting of shareholders (the “Remuneration Policy”). Cash Compensation. In fiscal year 2022, all non-executive directors were eligible to receive the following cash compensation for their services: •$30,000 per year for service as a board member; •$19,000 per year additionally for service as Lead Independent Director; •$20,000 per year additionally for service as chairperson of the Audit Committee; •$10,000 per year additionally for service as an Audit Committee member; •$15,000 per year additionally for service as chairperson of the Compensation Committee; •$7,500 per year additionally for service as a Compensation Committee member; •$8,500 per year additionally for service as chairperson of the Nominating and Corporate Governance Committee; and •$4,000 per year additionally for service as a Nominating and Corporate Governance Committee member. All cash payments to non-executive directors, or the retainer cash payments, are paid quarterly in arrears on a prorated basis. Equity Compensation. In fiscal year 2022, our non-executive directors were eligible for nondiscretionary, automatic grants of restricted stock units, except for any non-employee director who either (i) beneficially owns more than 2% of the outstanding and issued share capital of the Company, or (ii) is a partner or a member of any venture capital firm that owns securities of the Company representing more than 2% of the outstanding and issued share capital of the Company. •Initial award. Any person who would have first became an eligible non-executive director would have been granted an award of restricted stock units covering a number of shares having a grant date fair value equal to $200,000 pro-rated for the amount of time that remains in the 12-month period prior to the next scheduled annual general meeting of the Company’s shareholders (and if the date of such annual general meeting of the Company’s shareholders is not known, the one-year anniversary of the most recent Annual Award granted to non-executive directors), rounded down to the nearest whole share (the “Initial Award”). The shares underlying the Initial Award will settle on the earlier of (i) the one-year anniversary of the date the Initial Award is granted or (ii) the day prior to the date of the annual general meeting of the Company’s shareholders next following the date the Initial Award is granted, subject to continued service through the applicable vesting date. •Annual award. For fiscal year 2022, on the date of the general meeting of the Company’s shareholders, each eligible non-executive director was eligible to be granted an award of restricted stock units covering a number of shares having a grant date fair value equal to $200,000 (the “Annual Award”). The shares underlying the Annual Award will settle on the earlier of (i) the one-year anniversary of the date the Annual Award is granted or (ii) the day prior to the date of the annual general meeting of our shareholders next following the date the Annual Award is granted, subject to continued service through the applicable vesting date. The grant date fair value is computed in accordance with GAAP. Any award of restricted stock units granted under our non-executive director compensation policy will fully vest and become exercisable in the event of a change in control, as defined in our amended and restated 2012 Stock Option Plan (the “2012 Plan”) provided that the director remains a director through such change in control. Further, our 2012 Plan provides that in the event of a merger or change in control, as defined in our 2012 Plan, each outstanding equity award granted under our 2012 Plan that is held by a non-executive director will fully vest, all restrictions on the shares subject to such award will lapse, and with respect to awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels, and all of the shares subject to such award will become fully exercisable, if applicable, provided such director remains a director through such merger or change in control.
Fiscal 2022 Non-Executive Director Compensation Table
Fiscal 2022 Non-Executive Director Compensation Table The table below shows the total compensation awarded to those serving as non-executive directors during fiscal year 2022:
Fiscal 2022 Non-Executive Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Jonathan Chadwick (2) | 57,500 | 199,852(3) | 257,352 | | Peter Fenton (4) | 24,500 | — | 24,500 | | Alison Gleeson (5) | 41,875 | 199,852(3) | 241,727 | | Shelley Leibowitz (5) | 25,667 | 199,852(3) | 225,519 | | Caryn Marooney (5) | 34,000 | 199,852(3) | 233,852 | | Chetan Puttagunta (5) | 67,500 | 199,852(3) | 267,352 | | Steven Schuurman (6) | 30,000 | — | 30,000 | | Michelangelo Volpi (7) | — | — | — |
Fiscal 2022 Non-Executive Director Compensation Table
(1)The amounts shown represent the grant date fair value of restricted stock unit (“RSU”) awards granted in fiscal year 2022 for financial reporting purposes pursuant to the provisions of Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC 718”). Such amounts do not represent amounts paid to or realized by the non-executive director. See Note 11, “Equity Incentive Plans” of the notes to our consolidated financial statements in the Company’s Annual Report on Form 10-K for fiscal year 2022 regarding assumptions underlying valuation of equity awards. Additional information regarding the RSUs awarded to each non-executive director during fiscal year 2022 is set forth in the footnotes below. (2)As of April 30, 2022, Mr. Chadwick held 1,323 RSUs and 137,500 options to purchase ordinary shares. (3)Represents the aggregate grant date fair value of RSUs granted to the incumbent non-executive directors on October 1, 2021, under the terms of our non-executive director compensation policy for fiscal year 2022 and the 2012 Plan, and calculated in accordance with ASC 718 based on the closing market price of our ordinary shares on the grant date. (4)Mr. Fenton’s term as a member of our board of directors expired at our 2021 Annual Meeting. As of April 30, 2022, Mr. Fenton did not hold any RSUs or options to purchase ordinary shares. (5)As of April 30, 2022, the non-executive director held 1,323 RSUs and no options to purchase ordinary shares. (6)Mr. Schuurman did not receive any grants of RSUs or options to purchase ordinary shares in fiscal year 2022 in accordance with our non-executive director compensation policy, which provides that non-employee directors who, at the time of appointment or the date of the annual general meeting, either (i) beneficially owned more than 2% of the outstanding and issued share capital of the Company, or (ii) was a partner or a member of any venture capital firm that owns securities of the Company representing more than 2% of the outstanding and issued share capital of the Company, are not eligible to receive equity awards. As of April 30, 2022, Mr. Schuurman held no RSUs or options to purchase ordinary shares. (7)Mr. Volpi has waived his right to receive payments of director fees and the annual equity grant to directors. He would have been eligible to receive $39,875 in fees and an RSU award with a grant date fair value of $199,852 calculated in accordance with ASC 718 for his service as a director in fiscal year 2022.
•Long-Term Incentive Compensation
•Long-Term Incentive Compensation ◦Granted long-term incentive compensation in the form of options to purchase ordinary shares to Messrs. Banon, Moorjani, Kulkarni and Appleby with aggregate award values3 of $4.0 million, $4.5 million, $2.0 million, and $2.5 million, respectively, and RSU awards that may be settled for ordinary shares to Messrs. Banon, Moorjani, Kulkarni and Appleby with aggregate award values of $4.0 million, $4.5 million, $4.0 million and $2.5 million, respectively. These awards consist of annual awards approved as part of the annual review of our executive compensation program in December 2021, and with respect to Messrs. Kulkarni and Moorjani, this also included supplemental awards intended to incentivize key employees. •Compensation Arrangements with Mr. Appleby in Connection with his Separation– In connection with stepping down as our President, Worldwide Field Operations, we entered into a separation and transition agreement letter dated as of January 12, 2022 (the “Appleby Separation Letter”) with Mr. Appleby under substantially the same terms of Mr. Appleby’s severance agreement that is part of his employment agreement from August 2020. Pursuant to the Appleby Separation Letter, if Mr. Appleby remained employed with us through June 9, 2022, his scheduled separation date, or was terminated without “Cause” (as defined in the Appleby Separation Letter) prior to June 9, 2022, and Mr. Appleby executed a supplemental separation agreement that became effective and irrevocable within 60 days of his separation date, Mr. Appleby would be eligible to receive the following: ◦a lump sum payment equal to $250,000, less applicable withholdings, which is equal to 6 months of Mr. Appleby’s annual base salary; ◦a lump sum payment equal to $150,000, less applicable withholdings, which is equal to 50% of Mr. Appleby’s annual target bonus amount under our Bonus Plan for fiscal year 2022; and ◦if Mr. Appleby timely elects continued group health plan continuation coverage under COBRA, we will pay the full amount of Mr. Appleby’s premiums on his behalf for continued coverage under our group health plans, including coverage for Mr. Appleby’s eligible dependents, for 12 months from the date Mr. Appleby or his dependents suffer a loss of health coverage under our group health plan or until such earlier date on which he becomes eligible for health coverage from another employer. Other than being permitted to continue vesting with respect to Mr. Appleby’s outstanding and unvested equity awards through the period he remained employed with us through his scheduled separation date, June 9, 2022, Mr. Appleby did not receive any accelerated or additional vesting with respect to his outstanding and unvested equity awards. Mr. Appleby’s remaining outstanding and unvested equity awards were forfeited as of his actual separation date on June 9, 2022. Relationship Between Pay and Performance We strive to design our executive compensation program to balance the goals of attracting, motivating, rewarding and retaining our Named Executive Officers with the goal of promoting the interests of our stakeholders, such as our users, customers, employees, creditors, shareholders and other stakeholders. To ensure this balance and to motivate and reward individual initiative and effort, we seek to ensure that our program is designed so that a meaningful portion of our Named Executive Officers’ annual target total direct compensation is both “at-risk” and variable in nature. While we do not determine either “variable” or “fixed” pay for each Named Executive Officer 3 For purposes of this Compensation Discussion and Analysis, “award value” generally means an economic target value, as distinct from the grant date fair value under Financial Accounting Standard Board’s Accounting Standards Codification Topic 718. The actual number of our ordinary shares subject to an equity award was determined by dividing the applicable award value by one of the following per share values, as applicable: (i) with respect to RSU awards granted to our Named Executive Officers, the value per share was equal to the trading average of our ordinary shares for the 15 trading days immediately prior to the applicable grant date, and (ii) with respect to stock options granted to our Named Executive Officers, the value per share was calculated in accordance with the Black-Scholes option valuation methodology, which calculation assumed that the value of one of our ordinary shares was equal to the trading average of our ordinary shares for the 15 trading days immediately prior to the applicable grant date. with reference to a specific percentage of target total direct compensation, consistent with our “pay-for-performance” philosophy, generally, we seek to emphasize variable pay over fixed pay. Generally, this philosophy is reflected in the target total direct compensation opportunities of our Named Executive Officers. In fiscal year 2022, the majority of the target total direct compensation granted to Mr. Banon and Mr. Kulkarni in the position of CEO consisted of variable pay in the form of a target annual cash incentive award and long-term incentive compensation in the form of options to purchase ordinary shares and RSU awards that may be settled for ordinary shares. As granted by the non-executive directors on our board of directors, fixed pay, primarily consisting of base salary, made up only 5.2% of Mr. Banon’s target total direct compensation and 2.8% of Mr. Kulkarni’s target total direct compensation, while variable pay, consisting of target annual cash incentive awards and long-term incentive compensation in the form of equity awards, made up 94.8% of Mr. Banon’s target total direct compensation and 97.2% of Mr. Kulkarni’s target total direct compensation. In the case of Messrs. Moorjani and Appleby, their target total direct compensation packages were similar to that of Messrs. Banon and Kulkarni, consisting of “at risk” variable pay in the form of a target annual cash incentive award and long-term incentive compensation in the form of both options to purchase ordinary shares and RSU awards that may be settled for ordinary shares. Variable pay made up 95.5% and 91.4% of the target total direct compensation of Messrs. Moorjani and Appleby, respectively, on an annualized basis. Generally, Mr. Garrett’s target total direct compensation package was considered to be largely comprised of “at risk” variable pay even though he did not participate in our Bonus Plan, because even without a target annual cash incentive award, Mr. Garrett’s equity award generally made up the vast majority of his target total direct compensation for fiscal year 2022. However, because Mr. Garrett resigned prior to when the annual equity awards were granted to our executive officers, he received no annual equity award in fiscal 2022 and his total direct compensation for fiscal year 2022 was entirely fixed pay in the form of base salary. As we continue to mature as a public company, we believe that the compensation elements provided to all of our Named Executive Officers will continue to emphasize “at risk” and variable pay that should enable us to provide a balanced set of incentives for our Named Executive Officers to meet our business objectives and drive long-term growth. Executive Compensation Policies and Practices We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. The Compensation Committee reviews our executive compensation program on an annual basis to ensure consistency with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for executive talent. The following summarizes our executive compensation-related policies and practices that were in effect during fiscal year 2022: What We Do:
•Long-Term Incentive Compensation
•Maintain Independent Compensation Committee. The Compensation Committee is composed solely of independent directors who determine our compensation policies and practices (or, with regard to our executive directors, recommend compensation policies and practices to our board of directors, who determine such policies and practices for our executive directors) and who have established effective means for communicating with our shareholders regarding their executive compensation views and concerns, as described in this proxy statement. •Periodic Executive Compensation Review. The Compensation Committee reviews and approves our compensation strategy periodically (or, with regard to the compensation strategy for our executive directors, reviews and recommends to our board of directors to approve such strategy), including a review of our compensation peer group used for comparative purposes. •Maintain Independent Compensation Advisor. The Compensation Committee has engaged its own compensation consultant to assist with the annual executive compensation review. This consultant performed only compensation-related services for us in fiscal year 2022. •Compensation At-Risk. Our executive compensation program is designed so that in setting or recommending our Named Executive Officers’ compensation in a given year, the Compensation Committee considers whether a sufficient portion of their compensation is “at risk” based on corporate performance to align the interests of our Named Executive Officers and shareholders. •Multi-Year Vesting Requirements. The annual equity awards granted to our Named Executive Officers vest over multi-year periods, consistent with current market practice and our retention objectives. •“Double-Trigger” Change-in-Control Arrangements. Under our severance arrangements with our Named Executive Officers, all change-in-control payments and benefits are based on a “double-trigger” arrangement (that is, they require both a change-in-control of the Company plus a qualifying termination of employment before payments and benefits are paid). •Health or Welfare Benefits. Our Named Executive Officers participate in broad-based Company-sponsored health and welfare benefit programs on the same basis as our other employees in the country of their employment. •Succession Planning. Our board of directors and the Nominating and Corporate Governance Committee review the risks associated with our executive officer positions to ensure adequate succession plans are in place. What We Don’t Do: •No Executive Retirement Plans. We do not currently offer, nor do we have plans to offer, defined benefit pension plans or any non-qualified deferred compensation plans or arrangements to our Named Executive Officers other than the plans and arrangements that are available to all employees in the jurisdiction where the Named Executive Officer is located. Our Named Executive Officers in the United States are eligible to participate in our Section 401(k) plan on the same basis as our other employees in the United States, and our Named Executive Officer in Israel is covered by a Section 14 Arrangement under Israel Severance Pay Law, as are all other employees in Israel. •Limited Perquisites. We provide minimal perquisites and other personal benefits to our Named Executive Officers. •No Tax Payments on Perquisites. We do not provide any tax reimbursement payments (including “gross-ups”) on any perquisites or other personal benefits, other than on standard relocation benefits. •No “Golden Parachute” Tax Payments on Change-in-Control Arrangements. We do not provide any excise tax reimbursement payments (including “gross-ups”) on payments or benefits contingent upon a change in control of the Company that our Named Executive Officers might owe as a result of the application of Sections 280G or 4999 of the Internal Revenue Code (the “Code”). •No Hedging or Pledging of our Securities. We prohibit our employees, including our officers, and the members of our board of directors from engaging in hedging transactions or pledging our securities as collateral for a loan or holding our securities in a margin account. Shareholder Advisory Vote on Named Executive Officer Compensation At the 2021 Annual Meeting, our advisory vote on the compensation of our Named Executive Officers (the “Say-on-Pay” vote) received 84.7% support from our shareholders. The board of directors and the Compensation Committee believe the 2021 Say-on-Pay vote result indicates support for the design of our current compensation program and our overall compensation philosophy and decisions for fiscal year 2022. Accordingly, the Compensation Committee did not make any material changes to the underlying structure of our executive compensation program. The Compensation Committee regularly reviews and adjusts our executive compensation program to ensure it remains competitive and aligned with our shareholders’ interests. We value our shareholders’ opinions and feedback and are committed to maintaining an active dialogue to understand the priorities and concerns of our shareholders. We believe that ongoing engagement builds mutual trust and alignment with our shareholders and is essential to our long-term success. At our 2020 annual general meeting of shareholders, our shareholders indicated their approval of the recommendation that we solicit a Say-on-Pay vote on an annual basis. In accordance with that preference, our board of directors has determined that the Company will conduct a Say-on-Pay vote every year until the next shareholder advisory vote on the frequency of Say-on-Pay votes (the “Say-When-on-Pay” vote). The next required Say-When-on-Pay vote will take place no later than at the Company’s 2026 annual general meeting of shareholders. At the Annual Meeting to which this proxy statement relates, we will continue to hold an annual Say-on-Pay vote. Our board of directors and the Compensation Committee will consider the outcome of the 2022 Say-on-Pay vote, as well as feedback received throughout the year, when making compensation decisions for our Named Executive Officers in the future.
Executive Compensation Philosophy and Objectives
Executive Compensation Philosophy and Objectives Our executive compensation program is guided by our overarching philosophy of paying for demonstrable performance. We strive to provide an executive compensation program that is competitive, rewards achievement of our business objectives and aligns our Named Executive Officers’ interests with those of our shareholders. Consistent with this philosophy, we have designed our executive compensation program to achieve the following primary objectives: •provide market competitive compensation and benefit levels that will attract, motivate, reward and retain a highly talented team of executives within the context of responsible cost management; •establish a direct link between our financial and operational results and strategic objectives and the compensation of our executives; •align the interests and objectives of our executives with those of our shareholders by linking their long-term incentive compensation opportunities to shareholder value creation and their cash incentives to our annual performance; and •offer total compensation opportunities to our executives that, while competitive, are internally consistent and fair. We structure the annual compensation of our Named Executive Officers using base salary and long-term incentive compensation in the form of equity awards. In addition, for fiscal year 2022, each of our Named Executive Officers (other than Mr. Garrett) were eligible to earn annual cash incentive awards. The design of our executive compensation program is influenced by a variety of factors, with the primary goals being to align the interests of our Named Executive Officers and shareholders and to link pay with performance. We have not adopted policies or employed guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation or among different forms of non-cash compensation. As described below, the Compensation Committee considers a variety of factors in determining the appropriate yearly mix among such compensatory elements, including our compensation philosophy and the value of unvested equity awards granted previously.
Compensation-Setting Process
Compensation-Setting Process Role of the Compensation Committee The Compensation Committee discharges many of the responsibilities of our board of directors relating to the compensation of our Named Executive Officers, and periodically reviews and makes recommendations to our board of directors regarding their compensation, subject to the terms of our Remuneration Policy (as required by Dutch corporate law). Notwithstanding the responsibility of our board of directors, the Compensation Committee has the overall responsibility for overseeing our compensation and benefits policies generally, and overseeing and evaluating the compensation plans, policies and practices applicable to our Named Executive Officers. Our board of directors has delegated express authority to the Compensation Committee to serve as the administrator of the 2012 Plan. The Compensation Committee has authority to make decisions regarding the compensation of our Named Executive Officers (other than our executive directors) and makes recommendations to our board of directors regarding the compensation of our executive directors. The non-executive directors on our board of directors make all final decisions regarding the compensation of our executive directors with due observance to the Remuneration Policy adopted by our general meeting of shareholders in 2018. In carrying out its responsibilities, the Compensation Committee evaluates our compensation policies and practices with a focus on the degree to which these policies and practices reflect our executive compensation philosophy, develops strategies and makes decisions that it believes further our philosophy or align with developments in best compensation practices, and reviews the performance of our Named Executive Officers when making decisions and recommendations with respect to their compensation. The Compensation Committee’s authority, duties and responsibilities are further described in its charter, which is reviewed annually and revised and updated as warranted. The charter is available in the “Investor Relations” section of our website, which is located at ir.elastic.co by clicking on “Corporate Governance” under “Governance.” The Compensation Committee retains a compensation consultant to provide support in its review and assessment of our executive compensation program; however, the Compensation Committee exercises its own judgment in making its decisions and recommendations with respect to the compensation of our Named Executive Officers. Setting Target Total Direct Compensation Each year, the Compensation Committee conducts an annual review of the compensation arrangements of our Named Executive Officers, typically during the first quarter of the fiscal year. As part of this review, the Compensation Committee evaluates the base salary levels and long-term incentive compensation of our Named Executive Officers, as well as the annual cash incentive awards for our Named Executive Officers who are eligible to receive such awards, and all related performance criteria. The Compensation Committee does not establish a specific target for formulating the target total direct compensation of our Named Executive Officers. In making decisions and recommendations about the compensation of our Named Executive Officers, the members of the Compensation Committee are initially presented with a competitive market analysis prepared by its compensation consultant based on data gathered from the companies in our compensation peer group and considerations from broader executive compensation trends for its review and consideration. Drawing on this data, the members of the Compensation Committee then apply their professional experience to consider the following factors as applicable: •our executive compensation program objectives; •our performance against the financial, operational and strategic objectives established by the Compensation Committee and our board of directors; •each individual Named Executive Officer’s knowledge, skills, experience, qualifications and tenure relative to other similarly-situated executives at the companies in our compensation peer group and/or selected broad-based compensation surveys; •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 selected broad-based compensation surveys; •the prior performance of each individual Named Executive Officer, based on a subjective assessment of their contributions to our overall performance, ability to lead their business unit or function and work as part of a team; •the potential of each individual Named Executive Officer to contribute to our long-term financial, operational and strategic objectives; •our executive directors’ compensation relative to that of our other Named Executive Officers, and compensation parity among our Named Executive Officers; •the compensation practices of our compensation peer group and broader executive compensation trends and the positioning of each Named Executive Officer’s compensation in a ranking of executive officer 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 compensation of our executive directors). These factors provide the framework for compensation decision-making regarding the compensation opportunity for each Named Executive Officer. No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable. The Compensation Committee does not weigh these factors in any predetermined manner, nor does it apply any formulas in developing its compensation decisions and recommendations. The members of the Compensation Committee consider this information in view of their individual experience, knowledge of the Company, knowledge of the competitive market, knowledge of each Named Executive Officer and business judgment in making their decisions and recommendations. The Compensation Committee does not engage in formal benchmarking against other companies’ compensation programs or practices to establish our compensation levels or make specific compensation decisions and recommendations with respect to our Named Executive Officers. Instead, in making its determinations and recommendations, the Compensation Committee reviews information summarizing the compensation paid at a representative group of peer companies, to the extent that the executive positions at these companies are considered comparable to our positions and informative of the competitive environment, as well as from more broad-based compensation surveys to gain a general understanding of market compensation levels. Role of Management In discharging its responsibilities, the Compensation Committee works with members of our management, including our CEO. Our management assists the Compensation Committee by providing information on corporate and individual performance and management’s perspective on compensation matters. Our management also provides certain compensation data about our executive officers to Compensia, the Compensation Committee’s compensation consultant, which presents such information to the Compensation Committee as part of its review and analysis of our executive compensation program. The Compensation Committee solicits and reviews our CEO’s proposals with respect to program structures, as well as his recommendations for adjustments to annual cash compensation, long-term incentive compensation and other compensation-related matters for our Named Executive Officers (except with respect to compensation of our executive directors) based on his evaluation of their performance for the prior year.
Compensation-Setting Process
The Compensation Committee reviews and discusses such proposals and recommendations with our CEO and considers them as one factor in determining and approving the compensation of our Named Executive Officers. Our CEO also attends meetings of our board of directors and the Compensation Committee at which executive compensation matters are addressed, except with respect to discussions involving compensation of our executive directors. Role of the Compensation Consultant The Compensation Committee has the sole authority to retain an external compensation consultant to assist it by providing information, analysis and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review, including the authority to approve the consultant’s reasonable fees and other retention terms. 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. In fiscal year 2022, the Compensation Committee engaged Compensia to serve as its compensation consultant to advise on executive compensation matters, including competitive market pay practices for our Named Executive Officers, and with the data analysis and selection of the compensation peer group. During fiscal year 2022, Compensia attended meetings of the Compensation Committee as requested and provided various services including the following: •the review, analysis and updating of our compensation peer group; •an assessment and review of executive officer and director stock ownership guidelines and peer company practices and considerations of implementing such guidelines; •a review and analysis of our non-executive director compensation program and methodology, including an assessment against competitive market data based on the companies in our compensation peer group; •review of the Compensation Discussion and Analysis for our definitive proxy statement for our 2021 Annual Meeting; •the review and analysis of the base salary levels, target annual cash incentive awards and long-term incentive compensation of our Named Executive Officers and other senior leadership team members against competitive market data based on the companies in our compensation peer group and/or selected broad-based compensation surveys; •the review and analysis of compensation for Mr. Kulkarni, our current CEO; •the review and analysis of our 2021 Say-on-Pay vote results; •the review and assessment on market practice for executive bonus plan design terms and practices; •the review and analysis of compensation for the Chief Sales Officer position; 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 our management for data collection and job matching for our executive officers. In fiscal year 2022, Compensia provided only compensation-related services for 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 such compensation consultant provided, the quality of those services and the fees associated with the services provided during fiscal year 2022. Based on this review, as well as consideration of the factors affecting independence set forth in Exchange Act Rule 10C-1(b)(4), Section 303A.05(c)(iv) of the rules of the NYSE relating to the independence of the Compensation Committee’s compensation advisors 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. Competitive Positioning The Compensation Committee believes that peer group comparisons are useful guides to measure the competitiveness of our executive compensation program and related policies and practices. 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 one of several factors that the Compensation Committee considers in making its decisions and recommendations with respect to the compensation of our Named Executive Officers. The compensation peer group for fiscal year 2022, which was developed in May 2021 with the assistance of Compensia to analyze the compensation of our Named Executive Officers, was composed of publicly-traded technology companies against which we compete for executive talent. In identifying and selecting the companies for the compensation peer group, Compensia considered the following primary criteria: •publicly-traded companies in the software and internet services sectors identified on a national basis, with a focus on California-based companies; •similar revenues – within a range of ~0.5x to ~2.0x our trailing four fiscal quarters’ revenue; and •similar market capitalization – within a range of ~0.33x to ~3.0x our then-market capitalization. After consultation with Compensia, the Compensation Committee approved the following compensation peer group for use when making its fiscal year 2022 executive compensation decisions:
Compensation-Setting Process
The Compensation Committee used data gathered by Compensia from the public filings of the companies in our compensation peer group, as well as data from a custom data cut of the peer companies (other than Zscaler) drawn from the Radford Global Technology Survey database that are similar to us in revenue, market capitalization and industry for purposes of providing additional perspective in the case of executive positions where the compensation peer group offered a limited number of relevant data points. This data permitted us to evaluate the competitive market when determining the total direct compensation packages for our Named Executive Officers, including base salary, target annual cash incentive awards and long-term incentive compensation. 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
Compensation Elements Our executive compensation program consists principally of base salary and long-term incentive compensation in the form of equity awards. In addition, for fiscal year 2022, Messrs. Kulkarni, Banon, Moorjani and Appleby were also eligible to receive annual cash incentive awards. Base Salary Base salary represents the fixed portion of the compensation of our Named Executive Officers and is an important element of compensation intended to attract and retain highly talented individuals. Generally, we use base salary to provide each Named Executive Officer with a specified level of cash compensation during the year with the expectation that they will perform their responsibilities to the best of their ability and in our best interests. Generally, we establish the initial base salaries of our Named Executive Officers through arm’s-length negotiation at the time we hire the individual, taking into account their position, qualifications, and experience, the market compensation for such role, and the base salaries of our other executive officers. Thereafter, the Compensation Committee reviews the base salaries of our Named Executive Officers each year as part of its annual review of our executive compensation program, with input from our CEO (except with respect to the base salary of executive directors), and makes adjustments (other than with respect to our executive directors) that it determines are reasonable and necessary to reflect the scope of a Named Executive Officer’s performance, individual contributions and responsibilities, position in the case of a promotion and market conditions. With respect to our executive directors, the non-executive directors serving on our board of directors determine any base salary adjustments upon the recommendation of the Compensation Committee. In November 2021, the Compensation Committee reviewed the base salaries of our Named Executive Officers employed by the Company at such time. The Compensation Committee recommended to our board of directors that the base salary of Mr. Banon, our then-CEO, be increased, and approved an increase in the base salary of Mr. Moorjani, in each instance, to be more competitive with the base salaries of similarly-situated executive officers at companies of comparable size and stage of maturity, as well as the base salaries of our other executive officers, and to compensate Messrs. Banon and Moorjani for not having received market-based adjustments in prior years. The Compensation Committee also determined not to increase the base salaries of the other Named Executive Officers employed by the Company at such time. In making this recommendation and these decisions, the Compensation Committee took into consideration a competitive market analysis prepared by Compensia, the recommendations of our then-CEO (except with respect to his own base salary) and the current retention risks and challenges facing us, as well as the other factors described in “Compensation-Setting Process – Setting Target Total Direct Compensation” above. Subsequently, in December 2021, the non-executive directors serving on our board of directors increased the base salary of Mr. Banon, effective as of November 1, 2021, upon the recommendation of the Compensation Committee. The base salaries of our Named Executive Officers as determined in November 2021 for fiscal year 2022 were as follows:
Compensation Elements
(1)The revised base salary for Mr. Banon was effective November 1, 2021. In connection with his appointment as our acting CEO, the non-executive directors serving on our board of directors, upon the recommendation from the Compensation Committee, increased the annual base salary of Mr. Kulkarni from $500,000 to $600,000, effective January 11, 2022. The base salaries paid to our Named Executive Officers during fiscal year 2022 are set forth in “Executive Compensation Tables—Fiscal 2022 Summary Compensation Table” below. Annual Cash Incentives Our board of directors has adopted, and our general meeting of shareholders has approved, the Bonus Plan. The Bonus Plan is administered by the Compensation Committee. The Bonus Plan enables the Compensation Committee to provide cash incentive awards to selected employees, including our Named Executive Officers (other than our executive directors), based upon our actual achievement as measured against performance metrics established by the Compensation Committee. In the case of our executive directors, the performance metrics for their cash incentive awards and the actual payment of the awards are established by the non-executive directors serving on our board of directors, upon the recommendation from the Compensation Committee. The Compensation Committee believes that the financial performance measures used in the Bonus Plan contribute to driving the creation of long-term stakeholder value, including shareholder value, and play an important role in influencing the performance of our Named Executive Officers who participate in the plan, who are most directly responsible for our overall success. Under the Bonus Plan, each fiscal year (generally during the first fiscal quarter) the Compensation Committee approves the terms and conditions that will serve as the basis for determining the eligibility for, and amount of, cash incentive awards to be paid under the Bonus Plan. Typically, performance under the Bonus Plan is measured semi-annually as of October 31st and April 30th of each fiscal year. After the end of each six-month period, the Compensation Committee reviews our actual achievement against the target levels for the corporate performance measures established for that period and determines the cash incentive awards, if any, to be paid under the plan. Awards are paid out following the approval by the Compensation Committee and, in the case of our executive directors, the approval by the non-executive directors serving on our board of directors. The Compensation Committee may, in its sole discretion and at any time, increase, reduce or eliminate a participant’s actual award. In the case of our executive directors the non-executive directors serving on our board of directors determine whether an executive director’s actual award is increased, reduced or eliminated, taking into consideration the recommendation of the Compensation Committee. The actual award may be below, at or above a participant’s target annual cash incentive award, as determined at the Compensation Committee’s discretion or, in the case of our executive directors, as recommended by the Compensation Committee to our board of directors for their discretionary action. The Compensation Committee may determine the amount of any change (or recommendation for any change in the case of our executive directors) on the basis of such factors as it deems relevant, and it is not required to establish any allocation or weighting with respect to the factors it considers. In fiscal year 2022, neither the Compensation Committee nor, in the case of our executive directors, the non-executive directors serving on our board of directors, exercised their discretion with respect to any of the actual cash incentive award payments made under the Bonus Plan. The annual operating plan for fiscal year 2022 was based on demanding but realistically achievable business goals in order to drive strong growth. The Compensation Committee approved corporate performance metrics or, in the case of Mr. Banon, our then-CEO, recommended such action to our board of directors, commensurate with the operating plan target levels because it wanted to incentivize these Named Executive Officers to achieve our performance objectives under the Company’s Bonus Plan for fiscal year 2022 (the “Fiscal Year 2022 Bonus Plan”). The Fiscal Year 2022 Bonus Plan was funded based on our actual results for the first and second halves of the fiscal year as evaluated against these performance metrics. Pursuant to the Kulkarni Employment Letter, in connection with the promotion of Mr. Kulkarni to CEO in January 2022 and the Compensation Committee’s desire to incentivize Mr. Kulkarni, who, as a result of his role within the Company, was also best positioned to drive corporate performance to meet or exceed our principal business objectives as set forth in our fiscal year 2022 annual operating plan, the Compensation Committee recommended, and the non-executive directors serving on our board of directors approved, in January 2022, a target annual cash incentive award opportunity for Mr. Kulkarni for fiscal year 2022 equal to the sum of (i) 60% of Mr. Kulkarni’s annual base salary for the period beginning on the commencement of fiscal year 2022 and ending on January 10, 2022, and (ii) 100% of his annual base salary for the period between January 11, 2022 and the end of fiscal year 2022. The prorated 100% target for Mr. Kulkarni was determined upon evaluating the target bonuses for CEOs in the Company’s peer group. Target Annual Cash Incentive Award Opportunities For purposes of the Fiscal Year 2022 Bonus Plan, target annual cash incentive awards were to be based upon a specific percentage of each eligible Named Executive Officer’s annual base salary. In May 2021, as part of its annual review of our executive compensation program, the Compensation Committee reviewed the target annual cash incentive award opportunities of Messrs. Banon, Kulkarni, Moorjani and Appleby. The Compensation Committee recommended to our board of directors that the target percentage of base salary for the annual cash incentive award opportunity of Mr. Banon remain at the level set for the second half of fiscal year 2022. In addition, the Compensation Committee determined to leave the target percentage of base salary for the annual cash incentive award opportunity of Messrs. Kulkarni, Moorjani and Appleby at their fiscal year 2021 levels. In making the recommendation to our board of directors for Mr. Banon’s target annual cash incentive award opportunity and the decisions for the target annual cash incentive award opportunities of the other eligible Named Executive Officers, the Compensation Committee took into consideration a competitive market analysis prepared by Compensia, the recommendations of Mr. Banon (except with respect to his own target annual cash incentive opportunity) and the current retention risks and challenges facing us, as well as the other factors described in “Compensation-Setting Process – Setting Target Total Direct Compensation” above. The target annual cash incentive opportunity of Mr. Banon was approved by the non-executive directors serving on our board of directors in June 2021. Corporate Performance Metrics
Compensation Elements
In May 2021, the Compensation Committee approved (or in the case of Mr. Banon, our then-CEO, recommended to the non-executive directors serving on our board of directors) the financial performance metrics for fiscal year 2022 in connection with the Fiscal Year 2022 Bonus Plan to provide incentives for Messrs. Banon, Kulkarni, Moorjani and Appleby, the Named Executive Officers best positioned at that time to drive corporate performance to meet or exceed our principal business objectives as set forth in our fiscal year 2022 annual operating plan. In June 2021, the non-executive directors serving on our board of directors approved the financial performance metrics for Mr. Banon for fiscal year 2022, upon the recommendation of the Compensation Committee. The Compensation Committee selected the following two performance metrics for the Fiscal Year 2022 Bonus Plan: calculated billings and non-GAAP operating margin percentage. The Compensation Committee believed these performance metrics were appropriate because, in its view, they continued to be the best indicators of our successful execution of our annual operating plan. In addition, they provided a strong emphasis on growth and managing profitability, which the Compensation Committee believed would most directly influence the creation of sustainable long-term shareholder value. Four-fifths of the target annual cash incentive award payout under the Fiscal Year 2022 Bonus Plan was based on the attainment of calculated billings goals, while one-fifth was based on the attainment of non-GAAP operating margin percentage goals. For purposes of the Fiscal Year 2022 Bonus Plan: ▪“calculated billings” meant total revenue plus the increase in total deferred revenue as presented on or derived from our condensed consolidated statements of cash flows less the (increase) decrease in total unbilled accounts receivable in a given period; and ▪“non-GAAP operating margin percentage” meant GAAP operating margin excluding stock-based compensation expense, employer payroll taxes on employee stock transactions, amortization of acquired intangible assets and acquisition-related expenses. In May 2021, the Compensation Committee established threshold, target and maximum achievement levels for each of these performance metrics for the first half of fiscal year 2022 (May 1, 2021 through October 31, 2021). Subsequently, in November 2021, the Compensation Committee established threshold, target and maximum achievement levels for each of these performance metrics for the second half of fiscal year 2022 (November 1, 2021 through April 30, 2022). In establishing these performance levels in May and November, the Compensation Committee set them at an amount that it believed was necessary to provide a target total cash compensation opportunity that was both competitive in the market and that would motivate the eligible Named Executive Officers to achieve an aggressive level of growth and profitability. Following the Compensation Committee’s decisions in May 2021 and November 2021, the bonus targets and thresholds for Mr. Banon, our then-CEO, for the first half of fiscal year 2022 and the bonus targets and thresholds for the second half of fiscal year 2022 were approved by the non-executive directors serving on our board of directors in December 2021 (in each case upon the recommendation of the Compensation Committee). To the extent that performance for either metric was below the threshold performance level, there would be no payout with respect to that metric. In addition, the potential payment for any metric was capped at the maximum performance level. Achievement levels and payout percentages for performance between the threshold and maximum performance levels were set forth in tables approved by the Compensation Committee. For both performance metrics, for achievement between threshold and target, and between target and maximum, the payout was to be determined on a linear interpolation basis. The performance levels for the two performance measures for the first half of fiscal year 2022 were established as follows:
Compensation Elements
| Calculated Billings | | | | Attainment vs. Plan | Amount | Payout Percentage | | Below Threshold (<80%) | <$325 million | 0% | | Threshold (80%) | $325 million | 50% | | Target (100%) | $407 million | 100% | | Maximum (>120%) | >$488 million | 150% |
Compensation Elements
| Non-GAAP Operating Margin Percentage | | | Non-GAAP Operating Margin Percentage | Payout Percentage | | Below Threshold (<-8.7%) | 0% | | Threshold (-8.7%) | 50% | | Target (-3.7%) | 100% | | Maximum (>1.3%) | 150% |
Compensation Elements
| Calculated Billings | | | | Attainment vs. Plan | Amount | Payout Percentage | | Below Threshold (<80%) | <$460 million | 0% | | Threshold (80%) | $460 million | 50% | | Target (100%) | $575 million | 100% | | Maximum (>120%) | >$690 million | 150% |
Compensation Elements
| Non-GAAP Operating Margin Percentage | | | Non-GAAP Operating Margin Percentage | Payout Percentage | | Below Threshold (<-6.5%) | 0% | | Threshold (-6.5%) | 50% | | Target (-1.5%) | 100% | | Maximum (>3.5%) | 150% |
Compensation Elements
Annual Cash Incentive Payouts For the six-month period ended October 31, 2021, we achieved calculated billings of $396.2 million, which was 97.4% of the calculated billings target. Our non-GAAP operating margin percentage was 2.0% , which exceeded the maximum level of 1.3%. Consequently, based on their weighting, the achievement of the performance metrics for the first half of fiscal year 2022 generated a combined payout percentage of 104.9% of the target annual cash incentive award opportunity for that six-month period, determined as follows:
Compensation Elements
| First Half of Fiscal Year 2022 (May 1, 2021 – October 31, 2021) | | | | | | | | Performance Measure | Weighting | Target Performance | Actual Achievement | Achievement Percentage | Payout Percentage | Weighted Payout Percentage | | Calculated Billings | 80% | $406.7 million | $396.2 million | 97.4% | 93.6% | 74.9% | | Non-GAAP Operating Margin Percentage | 20% | -3.7% | 2.0% | N/A | 150.0% | 30.0% | | Total Payout Percentage | | | | | | 104.9% |
Compensation Elements
For the six-month period ended April 30, 2022, we achieved calculated billings of 550.4 million, which was 95.7% of the calculated billings target. Our non-GAAP operating margin percentage was -1.6%, which was one-tenth percentage point below the target level of -1.5%. Consequently, based on their weighting, the achievement of the performance metrics for the second half of fiscal year 2022 generated a combined payout percentage of 91.0% of the target annual cash incentive award opportunity for that six-month period, determined as follows:
Compensation Elements
| Second Half of Fiscal Year 2022 (November 1, 2021 – April 30, 2022) | | | | | | | | Performance Measure | Weighting | Target Performance | Actual Achievement | Achievement Percentage | Payout Percentage | Weighted Payout Percentage | | Calculated Billings | 80% | $575 million | $550.4 million | 95.7% | 89.2% | 71.4% | | Non-GAAP Operating Margin Percentage | 20% | -1.5% | -1.6% | N/A | 98.2% | 19.6% | | Total Payout Percentage | | | | | | 91.0% |
Compensation Elements
| Named Executive Officer | Annual Cash Incentive for First Half of Fiscal Year 2022 ($) | Annual Cash Incentive for Second Half of Fiscal Year 2022 ($) | Total Annual Cash Incentive Award for Fiscal Year 2022 ($) | | Ashutosh Kulkarni | 157,281 | 219,354 | 376,635 | | Janesh Moorjani | 114,815 | 136,437 | 251,252 | | Shay Banon | 121,360 | 127,368 | 248,728 | | Paul Appleby | 157,281 | 150,000 | 307,281 |
Compensation Elements
In the case of Mr. Banon, our former CEO, the non-executive directors serving on our board of directors determined the annual cash incentive award payout for the first half of fiscal year 2022 in December 2021 and determined the annual cash incentive award payout for the second half of fiscal year 2022 in June 2022. In the case of Mr. Kulkarni, our current CEO, the non-executive directors serving on our board of directors determined the annual cash incentive award payout for the second half of fiscal year 2022 in June 2022. The annual cash incentive award payouts for Messrs. Banon, Kulkarni, Moorjani and Appleby for the first half of the fiscal year were paid in the third fiscal quarter of fiscal year 2022 and the annual cash incentive award payouts for Messrs. Banon, Kulkarni Moorjani and Appleby for the second half of the fiscal year were paid in the first fiscal quarter of fiscal year 2023. The annual cash incentive awards paid to our Named Executive Officers for fiscal year 2022 are set forth in “Executive Compensation Tables—Fiscal 2022 Summary Compensation Table” below. Fiscal Year 2023 Corporate Performance Metrics In May 2022, the Compensation Committee approved new corporate performance metrics consisting of total revenue and revenue from Elastic Cloud to replace the calculated billings performance metric. These two new performance metrics, in addition to non-GAAP operating margin, will be the performance metrics applicable for fiscal year 2023. 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 ordinary shares and, thereby, to align their interests with the interests of our stakeholders. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our Named Executive Officers to create value for our shareholders. Equity awards also help us retain our Named Executive Officers in a highly competitive market and as such contribute to the long-term value creation for all our stakeholders. Currently, we use options to purchase ordinary shares and RSU awards with time-based vesting requirements that may be settled for ordinary shares to motivate, reward and retain our Named Executive Officers for long-term increases in the value of our ordinary shares. The Compensation Committee believes that because stock options provide for an economic benefit only in the event that our stock price increases over the exercise price of the option, these awards effectively align the interests of our Named Executive Officers with the interests of our stakeholders and provide our Named Executive Officers with a significant incentive to manage our business from the perspective of a person with an equity stake in the business. In addition, because RSU awards have value to the recipient even in the absence of stock price appreciation, the Compensation Committee believes that we are able to incentivize and retain our Named Executive Officers using fewer ordinary shares than would be necessary if we used stock options exclusively to provide an equity stake in the Company. Since the value of RSU awards increases or decreases with any increase or decrease in the value of the underlying ordinary shares, RSU awards also provide incentives to our Named Executive Officers that are aligned with the interests of our stakeholders. To date, the Compensation Committee has not applied a rigid formula in determining the size of the equity awards to be granted to our Named Executive Officers as part of our annual focal review of equity awards. Instead, in making these decisions and, in the case of our executive directors, its recommendation to our board of directors, the Compensation Committee has exercised its judgment as to the amount of the awards after considering the unvested equity holdings of each Named Executive Officer, the ability of these unvested holdings to satisfy our retention objectives, and Compensia’s recommendations based on a review of compensation practices from our peers. In addition, in granting equity awards to all of our employees, including our Named Executive Officers, the Compensation Committee considers the proportion of our total ordinary shares outstanding used for annual employee long-term incentive compensation awards (our “burn rate”) in relation to the annual burn rate ranges of the companies in our compensation peer group and other recently-public technology companies with which the members of the Compensation Committee are familiar, the potential economic and voting power dilution to our shareholders in relation to the median practice of the companies in our compensation peer group and other recently-public technology companies and the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above. Annual Equity Awards In November 2021, as part of its annual review of our executive compensation program, and after taking into consideration a competitive market analysis prepared by Compensia and the recommendations of Mr. Banon, our then-CEO (except with respect to his own equity award), as well as the factors described in the preceding paragraph, the Compensation Committee determined that annual equity awards should be granted to Messrs. Kulkarni, Moorjani and Appleby in the form of options to purchase ordinary shares and RSU awards with time-based vesting requirements that may be settled for ordinary shares. Further, the Compensation Committee determined that the dollar value of the stock options should comprise 50% of each Named Executive Officer’s fiscal year 2022 annual equity award, and the dollar value of the RSU awards should comprise the remaining 50% of the award. Accordingly, Messrs. Kulkarni and Moorjani received an annual option to purchase ordinary shares with an award value of $2.0 million and an annual RSU award with time-based vesting requirements that may be settled for ordinary shares with an award value of $2.0 million, while Mr. Appleby received an annual option to purchase ordinary shares with an award value of $2.5 million and an annual RSU award with time-based vesting requirements that may be settled for ordinary shares with an award value of $2.5 million. Mr. Garrett informed us of his intention to resign prior to the Compensation Committee’s approval of long term incentive compensation for fiscal year 2022, and accordingly did not receive new equity awards. In the case of Mr. Banon, our then-CEO, after taking into consideration a competitive market analysis prepared by Compensia and the factors described above, the Compensation Committee recommended to our board of directors that Mr. Banon be granted an equity award for fiscal year 2022 in the form of an option to purchase ordinary shares with an award value of $4.0 million and an RSU award with time-based vesting requirements that may be settled for ordinary shares with an award value of $4.0 million. This fiscal year 2022 annual equity award for Mr. Banon was approved by the non-executive directors serving on our board of directors in December 2021. The annual options generally vest over four years in equal monthly installments, while the annual RSU awards generally vest over four years in equal quarterly installments, subject to continued service to us through the applicable vesting date. For more details regarding our annual equity awards, please see the section below titled “Executive Compensation Tables—Fiscal 2022 Outstanding Equity Awards as of Fiscal Year End”. Supplemental Equity Awards
Compensation Elements
In March 2022, in order to retain key employees, and after taking into consideration a competitive market analysis prepared by Compensia and the recommendations of Mr. Kulkarni, our CEO (except with respect to his own equity award), the Compensation Committee determined that supplemental equity awards should be granted to Mr. Moorjani in the form of an option to purchase ordinary shares and an RSU award with time-based vesting requirements that may be settled for ordinary shares. Further, the Compensation Committee determined that the dollar value of the stock option should comprise 50% of Mr. Moorjani’s supplemental equity award, and the dollar value of the RSU award should comprise the remaining 50% of the award. Accordingly, Mr. Moorjani received a supplemental option to purchase ordinary shares with an award value of $2.5 million and a supplemental RSU award with time-based vesting requirements that may be settled for ordinary shares with an award value of $2.5 million. In the case of Mr. Kulkarni, our then-CEO, after taking into consideration a competitive market analysis prepared by Compensia, the Compensation Committee recommended to our board of directors that Mr. Kulkarni be granted a supplemental equity award for fiscal year 2022 in the form of a supplemental RSU award with time-based vesting requirements that may be settled for ordinary shares with an award value of $2.0 million. This supplemental RSU award for Mr. Kulkarni was approved by the non-executive directors serving on our board of directors in March 2022. The supplemental option generally vests over two years in equal monthly installments, while the supplemental RSU awards generally vest over two years in equal quarterly installments, subject to continued service to us through the applicable vesting date. For more details regarding our supplemental equity awards, please see the section below titled “Executive Compensation Tables—Fiscal 2022 Outstanding Equity Awards as of Fiscal Year End”. Promotion Equity Awards for Mr. Kulkarni In connection with the promotion of Mr. Kulkarni to CEO, which was approved by our shareholders at the March 2022 EGM, in March 2022 the Compensation Committee recommended, and the non-executive members serving on our board of directors approved, an equity award for Mr. Kulkarni, consistent with the terms of the Kulkarni Employment Letter, in the form of an option to purchase ordinary shares with an award value of $8.0 million (which was granted on March 8, 2022) and an RSU award with time-based vesting requirements that may be settled for ordinary shares with an award value of $4.0 million (which was granted on March 8, 2022). In approving these promotion equity awards, the Compensation Committee took into consideration a competitive market analysis prepared by Compensia, a review of recent equity awards granted to new CEOs at technology companies in the broader market, the annual equity award granted to Mr. Kulkarni in December 2021, as well as the importance of Mr. Kulkarni’s new role and responsibilities with the Company and the other factors described in “Compensation-Setting Process—Setting Target Total Direct Compensation” above. The promotion option generally vests over four years in equal monthly installments, while the promotion RSU award generally vests over four years in equal quarterly installments, subject to continued service to us through the applicable vesting date. For more details regarding our promotion equity awards, please see the section below titled “Executive Compensation Tables—Fiscal 2022 Outstanding Equity Awards as of Fiscal Year End”. The aggregate equity awards granted to our Named Executive Officers for fiscal year 2022 were as follows:
Compensation Elements
| Named Executive Officer | Stock Options (aggregate # of shares) | Stock Options (aggregate award value) | RSU Awards (aggregate # of shares) | RSU Awards (aggregate award value) | Aggregate Equity Awards (award value) | | Ashutosh Kulkarni | 212,865(1) | $10.0 million | 84,719(2) | $8.0 million | $18.0 million | | Janesh Moorjani | 86,653(3) | $4.5 million | 43,042(4) | $4.5 million | $9.0 million | | Shay Banon | 52,359(5) | $4.0 million | 26,548(6) | $4.0 million | $8.0 million | | Paul Appleby | 32,724(7) | $2.5 million | 16,592(8) | $2.5 million | $5.0 million | | W.H. Baird Garrett | — | — | — | — | — |
Compensation Elements
(1)Consists of (i) an annual option to purchase 26,179 ordinary shares with an award value of $2.0 million, and (ii) a promotion option to purchase 186,686 ordinary shares with an award value of $8.0 million. (2)Consists of (i) an annual RSU award covering 13,724 ordinary shares with an award value of $2.0 million, (ii) a supplemental RSU award covering 23,815 ordinary shares with an award value of $2.0 million, and (iii) a promotion RSU award covering 47,630 shares with an award value of $4.0 million. (3)Consists of (i) an annual option to purchase 26,179 ordinary shares with an award value of $2.0 million, and (ii) a supplemental option to purchase 60,474 ordinary shares with an award value of $2.5 million. (4)Consists of (i) an annual RSU award covering 13,274 ordinary shares with an award value of $2.0 million, and (ii) a supplemental RSU award covering 29,768 ordinary shares with an award value of $2.5 million. (5)Consists of an annual option to purchase 52,359 ordinary shares with an award value of $4.0 million. (6)Consists of an annual RSU award covering 26,548 ordinary shares with an award value of $4.0 million. (7)Consists of an annual option to purchase 32,724 ordinary shares with an award value of $2.5 million. (8)Consists of an annual RSU award covering 16,592 ordinary shares with an award value of $2.5 million. Health, Welfare and Retirement Benefits Our Named Executive Officers are eligible to participate in the same employee benefit plans, and on the same terms and conditions, as all other full-time, salaried employees in the jurisdiction where the Named Executive Officer is located. These benefits include medical, dental, and vision insurance, business travel insurance, an employee assistance program, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance and commuter benefits. We maintain a Section 401(k) plan for our employees, including our Named Executive Officers. The Section 401(k) plan is intended to qualify under Section 401(k) of the Code, so that contributions to the plan by employees or by us, and the investment earnings thereon, are not taxable to the employees until withdrawn, and so that contributions made by us, if any, will be deductible by us when made. Employees may elect to reduce their current compensation by up to the statutorily prescribed annual limits and to have the amount of such reduction contributed to their accounts under the Section 401(k) plan. The Section 401(k) plan permits us to make contributions up to the limits allowed by law on behalf of all eligible employees. Typically, we make matching contributions to the plan up to 6% of a participating employee’s eligible compensation, to a maximum match of $18,300 for calendar year 2022, $17,400 for calendar year 2021, and $17,100 for calendar year 2020. All participating employees’ interests in our matching contributions, if any, vest immediately at the time of contribution. The Section 401(k) plan also contains a Roth component. We also maintain defined-contribution plans for employees in certain other countries. We do not offer any retirement benefits to our executive officer located in Israel, except to the extent certain social benefits are required pursuant to Israeli labor laws or are common practice in Israel, and such social benefits are applicable to all Israeli employees. Specifically, based on Israeli labor laws, an Israeli employee is entitled to severance pay upon termination of employment for any reason, including retirement, equal to the most recent monthly salary of such employee multiplied by the number of years of employment of such employee. We make a payment of 8.333% of each employee’s monthly base salary to an insurance or pension fund to pay for this future liability payable to our employees upon termination of their employment. In addition, we make a payment of up to 7.5% of each employee’s monthly base salary to another insurance or pension fund, and this accrued amount may be withdrawn by the employee only upon retirement (to the extent either the statutory severance or retirement amounts become payable to Mr. Banon, they will offset amounts otherwise payable to Mr. Banon under his employment agreement, as noted below). We generally provide all of our Israeli employees with a fixed travel allowance for commuting costs, except that we provide Mr. Banon with reimbursements for such costs, up to a maximum amount of ILS 550 per month. Also, as is customary in Israel applicable to all Israeli employees, we provide our Israeli employees with a certain amount of monthly contributions (7.5% of their base salary) to a savings fund designed for employee’s study and training purposes. The amounts of the above referenced benefits contributed by us to Mr. Banon in fiscal year 2022 are specified in the Fiscal 2022 Summary Compensation Table of this proxy statement. We design our employee benefits programs to be affordable and competitive in relation to the market as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market. Perquisites and Other Personal Benefits Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our Named Executive Officers except as generally made available to our employees or in situations where we believe it is appropriate to assist an individual in the performance of their duties, to make them more efficient and effective, and for recruitment and retention purposes. During fiscal year 2022, none of our Named Executive Officers received perquisites or other personal benefits that were, in the aggregate, $10,000 or more for each individual. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as those described in the preceding paragraph. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee. In the case of our executive directors, the non-executive directors serving on our board of directors will approve all perquisites or other personal benefits and subject them to periodic review upon the recommendation of the Compensation Committee.
Employment Arrangements
Employment Arrangements We have entered into a written employment agreement with Mr. Banon, which was amended and restated on January 11, 2022 to reflect his transition from the role of our CEO to our CTO (the “Banon Employment Agreement”), and the Kulkarni Employment Letter with Mr. Kulkarni, which was amended on January 12, 2022, to reflect his transition from the role of our CPO to our CEO. We have entered into employment letters with each of Messrs. Moorjani, Appleby and Garrett, as well as a separation letter with Mr. Appleby. The arrangements with Messrs. Banon and Kulkarni, our former and current CEO, respectively, including the Banon Employment Agreement and the Kulkarni Employment Letter, were approved by the non-executive directors serving on our board of directors upon recommendation of the Compensation Committee. The arrangements with each of our other Named Executive Officers, including the Appleby Separation Letter, have been approved by the Compensation Committee. We believe that these arrangements were necessary to secure the service of these individuals in a highly competitive job market. Each of our written employment agreements and employment letters does not have a specific term, provides for “at will” employment (meaning that either we or the Named Executive Officer may terminate the employment relationship at any time without cause) and generally set forth the Named Executive Officer’s initial base salary, target annual cash incentive opportunity, if applicable, and eligibility to participate in our standard employee benefit plans and programs. The Banon Employment Agreement also provides that he may be eligible to receive certain severance payments and benefits in connection with certain terminations of employment with the Company, including a termination of employment in connection with a change in control of the Company, provided that such severance payments and benefits will be reduced by any statutory severance benefits required to be provided to Mr. Banon under applicable law. The amount and type of the severance payments and benefits provided under the Banon Employment Agreement, as well as the terms and conditions under which such severance payments and benefits may be provided, are identical in all material respects to the provisions regarding severance payments and benefits provided for in our change in control and severance agreements, as described under “Post-Employment Compensation” below. For detailed descriptions of the employment arrangements with our Named Executive Officers, see “Executive Compensation Tables—Potential Payments upon Termination or Change in Control” below.
Post-Employment Compensation
Post-Employment Compensation In addition to the severance provisions contained in the Banon Employment Agreement, we have entered into change in control and severance agreements with Messrs. Kulkarni and Moorjani (collectively, the severance provisions in the Banon Employment Agreement and the change in control and severance agreements are referred to as the “Severance Arrangements”). We had also entered into change in control and severance agreements with Messrs. Appleby and Garrett, but these change in control and severance agreements were terminated in connection with the separation and resignation of Mr. Appleby and Mr. Garrett, respectively. The Severance Arrangements provide for certain protections in the event of specified involuntary terminations of employment, including an involuntary termination of employment in connection with a change in control of the Company, in exchange for executing a separation agreement and release of claims in our favor that becomes effective and irrevocable and resigning from all positions the Named Executive Officer may hold as an officer or director. The Severance Arrangements provide reasonable compensation in the form of severance pay and certain limited benefits to a Named Executive Officer if they leave our employ under certain circumstances to facilitate their transition to new employment. Further, in some instances we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing Named Executive Officer to sign a separation agreement and release of claims in a form and with terms acceptable to us providing for a general release of all claims as a condition to receiving post-employment compensation payments or benefits. We also believe that the Severance Arrangements help maintain our Named Executive Officers’ continued focus and dedication to their assigned duties to maximize stakeholder value if there is a potential transaction that could involve a change in control of the Company. Under the Severance Arrangements, all payments and benefits in the event of a change in control of the Company are payable only if there is a connected involuntary 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. In the event of a change in control of the Company, to the extent that any of the amounts provided for under the Severance Arrangements would constitute a “parachute payment” within the meaning of Section 280G of the Code and could be subject to the related excise tax under Section 4999 of the Code, a Named Executive Officer will receive such payment as would entitle them to receive the greatest after-tax benefit, even if it means that we pay the Named Executive Officer a lower aggregate payment so as to minimize or eliminate the potential excise tax imposed by Section 4999 of the Code. We do not provide any tax reimbursement payments (or “gross-ups”) on excise taxes relating to a change in control of the Company and have no such obligations in place with respect to any of our executive officers, including our Named Executive Officers. In addition, the Appleby Separation Letter provides that Mr. Appleby was entitled to receive certain separation benefits upon his qualifying termination on or prior to June 9, 2022, as described above under “Executive Summary – Executive Compensation Highlights – Compensation Arrangements with Mr. Appleby”. The separation benefits provided for in the Appleby Separation Letter are approximately equal in value to the benefits Mr. Appleby would have received under the change in control and severance agreement in effect prior to Mr. Appleby’s separation if Mr. Appleby experienced a qualifying termination under such change in control and severance agreement not in connection with a change in control of the Company. 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 “Executive Compensation Tables—Potential Payments upon Termination or Change in Control” below.
Other Compensation Policies
Other Compensation Policies Equity Award Grant Policy Our equity award grant policy governs our grant of equity awards under our 2012 Plan and such other equity compensation plans as we may adopt from time to time. Pursuant to our equity award grant policy, duly authorized equity awards are granted to employees on predetermined grant dates in a manner that is consistent with the terms set forth in the policy. Consistent with our policy: •We do not grant long-term incentive awards in anticipation of the release of material non-public information and have never had a practice of doing so. •We have never timed and do not plan to time the release of material non-public information for the purpose of affecting the value of executive compensation. Compensation Recovery (“Clawback”) Policy Pursuant to Dutch corporate law, our Remuneration Policy provides that the short-term and long-term variable remuneration of the executive and non-executive directors of the Company, whether payable in cash or equity, may be adjusted or partly or fully clawed back to the extent it was paid on the basis of incorrect information (i) underlying the targets to be achieved or (ii) regarding the circumstances on which the variable remuneration was made conditional. As a public company, if we are required to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities laws as a result of misconduct, the Chief Executive Officer and Chief Financial Officer may be legally required to reimburse Elastic for any bonus or other incentive-based or equity-based compensation they receive in accordance with the provisions of section 304 of the Sarbanes-Oxley Act of 2002. Additionally, we intend to implement a Dodd-Frank Wall Street Reform and Consumer Protection Act-compliant clawback policy once the requirements of such policy are finalized by the SEC. Prohibition on Hedging and Pledging of Securities Under our Insider Trading Policy, our employees, including officers, and the members of our board of directors are prohibited from engaging in transactions in publicly-traded options, such as puts and calls, and other derivative securities with respect to our securities (other than share options, share appreciation rights and other securities issued pursuant to Company benefit plans or other compensatory arrangements with the Company), and debt securities (such as debentures, bonds and notes). This includes any hedging or similar transaction designed to decrease the risks associated with holding our securities. In addition, our employees, including officers, and the members of our board of directors may not engage in short sales (that is, the sale of a security that must be borrowed to make delivery) or “sell short against the box” (that is, a sale with a delayed delivery) involving our securities. Also, under our Insider Trading Policy, our employees, including officers, and the members of our board of directors may not pledge our securities as collateral for a loan or hold our securities in a margin account.
Tax and Accounting Considerations
Tax and Accounting Considerations The Compensation Committee takes the applicable tax and accounting requirements into consideration in designing and overseeing our executive compensation program. Deductibility of Executive Compensation Section 162(m) of the Code generally limits the amount we may deduct from our federal income taxes for compensation paid to our CEO and certain other current and former executive officers that are “covered employees” within the meaning of Section 162(m) to $1 million per individual per year, subject to certain exceptions. The regulations promulgated under Section 162(m) contain a transition rule that applies to companies that become subject to Section 162(m) by reason of becoming publicly held. Pursuant to this rule, certain compensation granted during a transition period (and, with respect to RSU awards, that are paid out before the end of the transition period) currently is not counted toward the deduction limitations of Section 162(m) if the compensation is paid under a compensation arrangement that was in existence before the effective date of the initial public offering and certain other requirements are met. We currently expect our transition period to expire at our annual general meeting of shareholders to be held in 2022, although it could expire earlier in certain circumstances. Although the Compensation Committee may consider the tax implications as one factor in making compensation decisions for our covered employees, the Compensation Committee also considers other factors in making such decisions, including ensuring that our executive compensation program supports our business strategy. Consequently, the Compensation Committee retains the discretion and flexibility to compensate our Named Executive Officers in a manner consistent with the objectives of our executive compensation program and the best interests of the Company and our shareholders, which may include providing for compensation that is not deductible by the Company due to the deduction limit of Section 162(m). While the transition relief for newly-public companies may help to minimize the effect of the Section 162(m) deduction limit under Section 162(m) in the short-term, we expect that, going forward, some portion of our Named Executive Officers’ compensation will not be fully deductible by the Company for federal income tax purposes. 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.
Fiscal 2022 Summary Compensation Table
Fiscal 2022 Summary Compensation Table The following table provides information concerning compensation awarded to, earned by or paid to each of our Named Executive Officers for all services rendered in all capacities during the last three fiscal years during which such individuals were Named Executive Officers. The amounts reported reflect rounding, which may result in slight variations between amounts shown in the Total column and the sum of its components as reflected in the table.
Fiscal 2022 Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($) | Total ($) | | Ashutosh Kulkarni | 2022 | 530,834 | — | 7,122,290 | 9,838,736 | 376,635 | 19,575(3) | 17,888,070 | | Chief Executive Officer | 2021 | 164,773 | 200,000 | 6,495,748 | 3,416,442 | 125,191 | 3,750(3) | 10,405,903 | | Janesh Moorjani | 2022 | 432,500 | — | 3,961,090 | 4,359,393 | 251,252 | 20,100(3) | 9,024,335 | | Chief Financial Officer and Chief Operating Officer | 2021 | 365,000 | — | 1,837,750 | 2,090,179 | 275,825 | 17,100(3) | 4,585,853 | | | 2020 | 365,000 | — | 863,304 | 2,669,951 | 191,636 | 16,298(3) | 4,106,189 | | Shay Banon | 2022 | 426,286(4) | — | 3,406,374 | 3,724,552 | 248,728(4) | 77,971(4)(5) | 7,883,912 | | Chief Technology Officer | 2021 | 387,720(6) | — | 4,594,666 | 5,225,530 | 291,827(6) | 65,864(6)(7) | 10,565,607 | | | 2020 | 375,000 | — | — | 4,872,356(8) | 196,886 | — | 5,444,242 | | Paul Appleby | 2022 | 500,000 | — | 2,128,920 | 2,327,818 | 307,281 | 17,400(3) | 5,281,419 | | Former President, Worldwide Field Operations | 2021 | 344,697 | 200,000 | 6,137,767 | 2,262,072 | 259,058 | 10,888(3) | 9,214,482 | | W.H. Baird Garrett | 2022 | 303,147 | — | — | — | — | — | 303,147 | | Former Senior Vice President and General Counsel | 2021 | 400,000 | — | 918,875 | 1,045,089 | — | — | 2,363,964 | | | 2020 | 400,000 | — | — | — | — | — | 400,000 |
Fiscal 2022 Summary Compensation Table
(1)The amounts shown represent the grant date fair value of RSU awards and options, as applicable, to settle or purchase ordinary shares granted to the Named Executive Officers for financial reporting purposes pursuant to ASC Topic 718. Such amounts do not represent the amounts paid to or realized by the Named Executive Officers. See Note 11, “Equity Incentive Plans” of the Notes to our consolidated financial statements in the Company’s Annual Report on Form 10-K for fiscal year 2022 regarding assumptions underlying valuation of equity awards. (2)Except as otherwise indicated, the amounts reported represent the amounts earned based upon achievement of certain performance goals under our Bonus Plan. The terms of the Bonus Plan are summarized under “Compensation Discussion and Analysis—Compensation Elements—Annual Cash Incentives.” (3)The amount disclosed represents Elastic’s contributions made under our Section 401(k) plan. (4)Amounts have been reported on an as-converted basis from ILS to U.S. dollars (“USD”) based on a spot currency exchange rate of 1 ILS=USD$0.2991 as of our fiscal year end, April 30, 2022. (5)The listed amount is the sum of the following amounts: (i) contributions by Elastic of $35,510 in ILS to a severance fund under a Section 14 Arrangement pursuant to Israeli Severance Pay Law, (ii) contributions by Elastic of $27,973 in ILS to a pension and manager’s insurance fund pursuant to Israeli labor laws, and (iii) contributions by Elastic of $14,488 in ILS to an education savings fund. (6)A portion of each listed amount was paid in ILS in connection with Mr. Banon’s transfer of employment to Israel in March 2021 and has been reported on an as-converted basis from ILS to U.S. dollars (“USD”) based on a spot currency exchange rate of 1 ILS=USD$0.3081 as of our fiscal year end, April 30, 2021. With respect to Salary, $50,220 was paid in ILS. With respect to Non-Equity Incentive Plan Compensation, $149,285 was paid in ILS. With respect to All Other Compensation, $8,174 was paid in ILS (see also footnote (7) below). (7)The listed amount is the sum of the following amounts: (i) Cash payout of $57,690 in USD to Mr. Banon for earned and unused paid time off in accordance with applicable laws upon his relocation from the United States to Israel, (ii) contributions by Elastic of $4,184 in ILS to a severance fund under a Section 14 Arrangement pursuant to Israeli Severance Pay Law, (iii) contributions by Elastic of $3,264 in ILS to a pension and manager’s insurance fund pursuant to Israeli labor laws, and (iv) contributions by Elastic of $726 in ILS to an education savings fund. (8)Mr. Banon declined to accept this option award in order to provide the Company with greater flexibility for additional grants to our other employees as awards for exceptional performance and future leadership. Accordingly, this option award was cancelled in August 2019.
Fiscal 2022 Grants of Plan-Based Awards
Fiscal 2022 Grants of Plan-Based Awards The following table provides information concerning each grant of an award made during fiscal year 2022 for each of our Named Executive Officers under any plan, other than Mr. Garrett who did not receive any awards in fiscal year 2022. See “Compensation Discussion and Analysis—Compensation Elements—Long-Term Incentive Compensation.” This information supplements the information about these awards set forth in the Fiscal 2022 Summary Compensation Table above.
Fiscal 2022 Grants of Plan-Based Awards
| | | | | Estimated possible payouts under non-equity incentive plan awards(1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | All Other Option Awards: Number of Securities Underlying Options (#)(2) | Exercise or Base Price of Option Awards ($)(3) | Grant Date Fair Value of Stock Awards ($)(4) | | Name | Approval Date | Grant Date | Award Type | Threshold ($) | Target ($) | Maximum ($) | | | | | | Ashutosh Kulkarni | | | Annual Cash | 195,205 | 390,411 | 585,616 | | | | | | | 11/29/2021 | 12/8/2021 | RSUs | | | | 13,274 | | | 1,703,187 | | | 3/7/2022 | 3/8/2022 | RSUs | | | | 71,445 | | | 5,419,103 | | | 11/29/2021 | 12/8/2021 | Options | | | | | 26,179 | 128.31 | 1,862,241 | | | 3/7/2022 | 3/8/2022 | Options | | | | | 186,686 | 75.85 | 7,976,495 | | Janesh Moorjani | | | Annual Cash | 129,750 | 259,500 | 389,250 | | | | | | | 11/29/2021 | 12/8/2021 | RSUs | | | | 13,274 | | | 1,703,187 | | | 3/7/2022 | 3/8/2022 | RSUs | | | | 29,768 | | | 2,257,903 | | | 11/29/2021 | 12/8/2021 | Options | | | | | 26,179 | 128.31 | 1,862,241 | | | 3/7/2022 | 3/8/2022 | Options | | | | | 60,474 | 75.85 | 2,497,153 | | Shay Banon | | | Annual Cash | 127,886 | 255,772 | 383,657 | | | | | | | 11/29/2021 | 12/8/2021 | RSUs | | | | 26,548 | | | 3,406,374 | | | 11/29/2021 | 12/8/2021 | Options | | | | | 52,359 | 128.31 | 3,724,552 | | Paul Appleby | | | Annual Cash | 150,000 | 300,000 | 450,000 | | | | | | | 11/29/2021 | 12/8/2021 | RSUs | | | | 16,592 | | | 2,128,920 | | | 11/29/2021 | 12/8/2021 | Options | | | | | 32,724 | 128.31 | 2,327,818 | | W.H. Baird Garrett (5) | | | | | | | | | | |
Fiscal 2022 Grants of Plan-Based Awards
(1)Reflects threshold, target and maximum potential payments for awards under the Fiscal Year 2022 Bonus Plan described in the section above entitled “Compensation Discussion and Analysis—Compensation Elements—Annual Cash Incentives.” Under these awards, the Named Executive Officers (other than Mr. Garrett) were eligible to receive a cash payout subject to the achievement of pre-established corporate performance metrics. (2)All RSU awards and stock options were granted pursuant to the 2012 Plan. (3)The exercise price of the stock options is equal to the closing market price of our ordinary shares on the date of grant. (4)The amounts shown represent the grant date fair value of the RSU awards and options to purchase shares of ordinary shares granted to the Named Executive Officers for financial reporting purposes pursuant to ASC Topic 718. Such amounts do not represent the amounts paid to or realized by the Named Executive Officers. See Note 11, “Equity Incentive Plans” of the Notes to our consolidated financial statements in the Company’s Annual Report on Form 10-K for fiscal year 2022 regarding assumptions underlying valuation of equity awards. (5)Mr. Garrett announced his intention to resign prior to when annual equity awards were granted to our Named Executive Officers for the fiscal year 2022. Accordingly, Mr. Garrett received no equity awards in fiscal year 2022.
Fiscal 2022 Outstanding Equity Awards as of Fiscal Year End
Fiscal 2022 Outstanding Equity Awards as of Fiscal Year End The following table sets forth information regarding outstanding equity awards held by our Named Executive Officers as of April 30, 2022:
Fiscal 2022 Outstanding Equity Awards as of Fiscal Year End
| | | 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) | | Ashutosh Kulkarni | 3/8/2022(2) | 11,667 | 175,019 | 75.85 | 03/07/2032 | | | | | 12/8/2021(3) | 2,181 | 23,998 | 128.31 | 12/07/2031 | | | | | 3/8/2021(4) | 1,776 | 4,786 | 111.20 | 03/07/2031 | | | | | 2/9/2021(5) | 9,816 | 21,599 | 166.43 | 02/08/2031 | | | | | 3/8/2022(6) | | | | | 71,445 | 5,439,822 | | | 12/8/2021(7) | | | | | 12,445 | 947,562 | | | 3/8/2021(8) | | | | | 43,812 | 3,335,846 | | Janesh Moorjani | 3/8/2022(9) | 2,519 | 57,955 | 75.85 | 03/07/2032 | | | | | 12/8/2021(3) | 2,181 | 23,998 | 128.31 | 12/07/2031 | | | | | 12/8/2020(10) | 8,322 | 16,646 | 145.83 | 12/07/2030 | | | | | 6/8/2019(11) | 4,773 | 52,512 | 81.39 | 06/07/2029 | | | | | 4/2/2018(12) | 9,016 | 18,750 | 13.07 | 04/01/2028 | | | | | 9/7/2017(13) | 58,931 | — | 10.15 | 09/06/2027 | | | | | 3/8/2022(14) | | | | | 29,768 | 2,266,536 | | | 12/8/2021(7) | | | | | 12,445 | 947,562 | | | 12/8/2020(15) | | | | | 9,452 | 719,675 | | | 6/8/2019(16) | | | | | 10,607 | 807,617 | | Shay Banon | 12/8/2021(3) | 4,363 | 47,996 | 128.31 | 12/07/2031 | | | | | 12/8/2020(10) | 20,807 | 41,614 | 145.83 | 12/07/2030 | | | | | 4/2/2018(17) | 108,334 | — | 13.07 | 04/02/2028 | | | | | 9/7/2017(18) | 18,007 | — | 10.15 | 09/06/2027 | | | | | 12/8/2021(7) | | | | | 24,889 | 1,895,048 | | | 12/8/2020(15) | | | | | 23,631 | 1,799,264 | | Paul Appleby | 12/8/2021(3) | 2,727 | 29,997 | 128.31 | 12/07/2031 | | | | | 9/8/2020(19) | 15,884 | 24,245 | 99.78 | 09/07/2030 | | | | | 12/8/2021(7) | | | | | 15,555 | 1,184,358 | | | 9/8/2020(20) | | | | | 38,446 | 2,927,278 | | W.H. Baird Garrett (21) | | | | | | | |
Fiscal 2022 Outstanding Equity Awards as of Fiscal Year End
(1)The market value of unvested RSUs is calculated by multiplying the number of unvested RSUs held by the applicable named executive officer by the closing market price of our ordinary shares on April 30, 2022, which was $76.14. (2)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on February 11, 2022, subject to continued service to us through the applicable vesting date. (3)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on January 8, 2022, subject to continued service to us through the applicable vesting date. (4)One-fourth of the ordinary shares subject to the option vest on March 8, 2022, and 1/48th of the ordinary shares subject to the option vest monthly thereafter, subject to continued service to us through the applicable vesting date. (5)One-fourth of the ordinary shares subject to the option vest on January 4, 2022, and 1/48th of the ordinary shares subject to the option vest monthly thereafter, subject to continued service to us through the applicable vesting date. (6)The ordinary shares subject to the award of RSUs vest as follows: (i) 47,630 ordinary shares subject to the award of RSUs vest in sixteen equal quarterly installments beginning on June 8, 2022 and (ii) 23,815 ordinary shares subject to the award of RSUs vest in eight equal quarterly installments beginning on June 8, 2022, in each case subject to continued service to us through the applicable vesting date. (7)The ordinary shares subject to the award of RSUs vest in sixteen quarterly installments beginning on March 8, 2022, subject to continued service to us through the applicable vesting date. (8)One-fourth of the ordinary shares subject to the award of RSUs vest on March 8, 2021, and one-eighth of the ordinary shares subject to the award vest in six equal semiannual installments thereafter, subject to continued service to us through the applicable vesting date. (9)The ordinary shares subject to the option vest in 24 equal monthly installments beginning on April 8, 2022, subject to continued service to us through the applicable vesting date. (10)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on January 8, 2021, subject to continued service to us through the applicable vesting date. (11)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on January 8, 2022, subject to continued service to us through the applicable vesting date. (12)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on November 1, 2019, subject to continued service to us through the applicable vesting date. (13)The option was subject to an early option exercise provision and was immediately exercisable. One-fourth of the ordinary shares subject to the option vested on August 28, 2018, and 1/48th of the ordinary shares subject to the option vested monthly thereafter. The option became fully vested on August 28, 2021. (14)The ordinary shares subject to the award of RSUs vest in eight equal quarterly installments beginning on June 8, 2022, in each case subject to continued service to us through the applicable vesting date. (15)The ordinary shares subject to the award of RSUs vest in eight equal semiannual installments beginning on June 8, 2021, subject to continued service to us through the applicable vesting date. (16)The ordinary shares subject to the award of RSUs vest in eight equal semiannual installments beginning on June 8, 2022, subject to continued service to us through the applicable vesting date. (17)The ordinary shares subject to the option vest in 48 equal monthly installments beginning on May 2, 2018, subject to continued service to us through the applicable vesting date. The option became fully vested on April 2, 2022. (18)The ordinary shares subject to the option vested in 48 equal monthly installments beginning on May 1, 2017, subject to continued service to us through the applicable vesting date. The option became fully vested on April 1, 2021. (19)One-fourth of the ordinary shares subject to the option vest on September 8, 2021, and 1/48th of the ordinary shares subject to the option vest monthly thereafter, subject to continued service to us through the applicable vesting date. (20)One-fourth of the ordinary shares subject to the award of RSUs vest on September 8, 2021, and one-eighth of the ordinary shares subject to the award vest in six equal semiannual installments thereafter, subject to continued service to us through the applicable vesting date. (21)Mr. Garrett did not hold any outstanding equity awards as of April 30, 2022.
Fiscal 2022 Stock Option Exercises and Stock Vested Table
Fiscal 2022 Stock Option Exercises and Stock Vested Table The following table presents, for each of our Named Executive Officers, the number of ordinary shares acquired and the related value realized upon the exercise of stock options and the vesting of RSUs during fiscal year 2022.
Fiscal 2022 Stock 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 ($)(2) | | Ashutosh Kulkarni | 0 | 0 | 15,432 | 1,170,517 | | Janesh Moorjani | 18,217 | 2,090,176 | 3,979 | 475,734 | | Shay Banon | 0 | 0 | 9,535 | 1,158,103 | | Paul Appleby | 0 | 0 | 24,104 | 3,158,485 | | W.H. Baird Garrett | 102,859 | 9,409,603 | 1,575 | 206,425 |
Fiscal 2022 Stock Option Exercises and Stock Vested Table
(1)The value realized on exercise is calculated as the difference between the market value of our ordinary shares underlying the options on the date of exercise and the applicable exercise price of those options. (2)The value realized upon vesting is calculated by multiplying the number of ordinary shares released upon vesting of the RSUs by the market value of such ordinary shares on the vesting date.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control The table below provides information with respect to potential payments and benefits to which our Named Executive Officers would be entitled under the arrangements set forth in, with respect to Messrs. Kulkarni and Moorjani, their change in control and severance agreements, with respect to Mr. Appleby, the Appleby Separation Agreement and, with respect to Mr. Banon, his employment agreement, assuming their employment was terminated as of April 30, 2022, including in connection with a change in control as of April 30, 2022. The amounts reported reflect rounding, which may result in slight variations between amounts shown in the Total column and the sum of its components as reflected in the table.
Potential Payments Upon Termination or Change in Control
| Name | Termination Reason | Base Salary ($) | Bonus ($) | Accelerated Vesting of Equity Awards ($)(1) | Continuation of Insurance Coverage ($)(2) | Total ($) | | Ashutosh Kulkarni | Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control | 600,000 | 600,000 | 9,773,986 | 21,302 | 10,995,288 | | | Termination Without Cause or Resignation for Good Reason | 300,000 | 300,000 | — | 21,302 | 621,302 | | Janesh Moorjani | Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control | 500,000 | 300,000 | 5,940,760 | 17,333 | 6,758,093 | | | Termination Without Cause or Resignation for Good Reason | 250,000 | 150,000 | — | 17,333 | 417,333 | | Shay Banon | Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control | 466,764 | 280,058 | 3,694,313 | 5,795 | 4,446,930 | | | Termination Without Cause or Resignation for Good Reason | 233,382 | 140,029 | — | 5,795 | 379,206 | | Paul Appleby | Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control | 250,000 | 150,000 | — | 21,302 | 421,302 | | | Termination Without Cause or Resignation for Good Reason | 250,000 | 150,000 | — | 21,302 | 421,302 | | W.H. Baird Garrett (3) | Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control | — | — | — | — | — | | | Termination Without Cause or Resignation for Good Reason | — | — | — | — | — |
Potential Payments Upon Termination or Change in Control
(1)The value of accelerated vesting of unvested RSUs is based upon the closing market price of our ordinary shares on April 30, 2022 of $76.14, multiplied by the number of unvested RSUs. The value of accelerated vesting of unvested stock options is based on the difference between the closing market price of our ordinary shares on April 30, 2022 of $76.14, and the exercise price per option multiplied by the number of unvested options. (2)This is based on the payment of monthly COBRA premiums as of April 30, 2022 for a 12-month period. (3)Mr. Garrett terminated employment on December 10, 2021. Mr. Garrett did not receive any severance benefits in connection with his termination of employment.
CEO PAY RATIO
CEO PAY RATIO Pursuant to Item 402(u) of Regulation S-K and Section 953(b) of the Dodd-Frank Act, presented below is the ratio of annual total compensation of our median compensated employee to that of Ashutosh Kulkarni, our current CEO, in fiscal year 2022. The ratio presented below is a reasonable estimate calculated in a manner consistent with SEC rules and applicable guidelines. The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. The pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. As a result, and as explained by the SEC when it adopted these rules, in considering the pay ratio disclosure, shareholders should keep in mind that the rule was not designed to facilitate comparisons of pay ratios among different companies, even companies within the same industry, but rather to allow shareholders to better understand and assess each particular company’s compensation practices and pay ratio disclosures. We identified the median employee using the following methodology: For each member of the applicable employee population, we summed their target cash compensation and equity awards received during fiscal year 2022. For employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars using our anticipated exchange rate for fiscal year 2022. With respect to equity awards, we determined the grant date fair value of restricted stock units and options awarded during fiscal year 2022 computed in accordance with FASB ASC Topic 718 using the closing price of our common stock on the date of grant for restricted stock units and the Black-Scholes option-pricing model for stock options. In determining our employee population, we considered the individuals other than our CEO who were employed by us on March 1, 2022, whether employed in a full-time, part-time or temporary capacity. We did not include any contractors, agency workers or other non-employees. After identifying the median employee, we then calculated the total fiscal year 2022 compensation for this individual using the same methodology we use to calculate the fiscal year 2022 amount reported for our CEO in the “Total” column of the Fiscal 2022 Summary Compensation Table as set forth in this proxy statement. For our fiscal year 2022: For fiscal year 2022, the total compensation for our CEO, Mr. Kulkarni, was $17,888,070 as reported in the “Total” column of the Fiscal 2022 Summary Compensation Table of this proxy statement. Since Mr. Kulkarni was appointed CEO effective January 11, 2022, we annualized the compensation received by Mr. Kulkarni from January 11, 2022 through April 30, 2022 (the “CEO Period”), as reported in the “Salary, “Non-Equity Incentive Plan Compensation” and “All Other Compensation” columns of the Fiscal 2022 Summary Compensation Table, and added the values of equity awards granted to Mr. Kulkarni during the CEO Period, as reported in the “Stock Awards” and “Option Awards” columns of the Fiscal 2022 Summary Compensation Table, to arrive at a value of $14,560,921, used for the ratio of annual total compensation for our CEO to the annual total compensation for our median employee. We annualized Mr. Kulkarni’s total compensation as follows:
CEO PAY RATIO
| Components from Fiscal 2022 Summary Compensation Table (“SCT”) | Actual Values from SCT for CEO Period | For CEO Pay Ratio: Annualized Values + One-Time Values | Rationale | | Salary | $180,822 | $600,000 | Annualized salary | | Option Awards | $7,976,495 | $7,976,495 | Not annualized; one-time grant of promotion option covering 186,686 shares | | Stock Awards | $5,419,103 | $5,419,103 | Not annualized; one-time grant of supplemental RSU award covering 23,815 shares and promotion RSU award covering 47,630 shares | | Non-Equity Incentive Plan Compensation | $219,354 | $545,745 | Annualized bonus equal to (i) the actual bonus earned under the Bonus Plan by Mr. Kulkarni during the second half of fiscal year 2022, which is the performance period that ended during the CEO Period, as a percentage of his target bonus over the same period, or 91%, multiplied by (ii) the percentage of Mr. Kulkarni’s target bonus for the CEO Period, or 100%, multiplied by (iii) Mr. Kulkarni’s annual salary during the CEO Period, or $600,000. | | All Other Compensation | $5,899 | $19,575 | Annualized Company matching contributions to 401(k) Plan | | Total CEO Pay | | $14,560,921 | |
CEO PAY RATIO
The fiscal year 2022 annual total for our median employee was $227,345. Thus, the ratio of our CEO’s total fiscal year 2022 compensation to our median employee’s total fiscal year 2022 compensation was 64:1. Given Mr. Kulkarni was appointed as CEO in January 2022, and as such, received one-time long-term equity grants in fiscal year 2022 to reflect his promotion from CPO to CEO, we anticipate the ratio of his compensation to that of our median employee will decrease in the next disclosure cycle associated with our fiscal year 2023 proxy filing. Neither the Compensation Committee nor our management used this pay ratio in making compensation decisions.

DEF 14A of Elastic N.V.

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

Continuing Directors

Continuing Directors

Continuing Directors

Continuing Directors

Continuing Directors

Continuing Directors

Board of Directors

Non-Executive Director Compensation

Fiscal 2022 Non-Executive Director Compensation Table

Fiscal 2022 Non-Executive Director Compensation Table

Fiscal 2022 Non-Executive Director Compensation Table

•Long-Term Incentive Compensation

•Long-Term Incentive Compensation

Executive Compensation Philosophy and Objectives

Compensation-Setting Process

Compensation-Setting Process

Compensation-Setting Process

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Compensation Elements

Employment Arrangements

Post-Employment Compensation

Other Compensation Policies

Tax and Accounting Considerations

Fiscal 2022 Summary Compensation Table

Fiscal 2022 Summary Compensation Table

Fiscal 2022 Summary Compensation Table

Fiscal 2022 Grants of Plan-Based Awards

Fiscal 2022 Grants of Plan-Based Awards

Fiscal 2022 Grants of Plan-Based Awards

Fiscal 2022 Outstanding Equity Awards as of Fiscal Year End

Fiscal 2022 Outstanding Equity Awards as of Fiscal Year End

Fiscal 2022 Outstanding Equity Awards as of Fiscal Year End

Fiscal 2022 Stock Option Exercises and Stock Vested Table

Fiscal 2022 Stock Option Exercises and Stock Vested Table

Fiscal 2022 Stock Option Exercises and Stock Vested Table

Potential Payments Upon Termination or Change in Control

Potential Payments Upon Termination or Change in Control

Potential Payments Upon Termination or Change in Control

CEO PAY RATIO

CEO PAY RATIO

CEO PAY RATIO