UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Soliciting Material under Rule 14a-12 |
Commvault Systems, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Commvault Systems, Inc.
1 Commvault Way
Tinton Falls, NJ 07724
(732) 870-4000
July 1, 2022
Dear fellow Commvault stockholder:
I would like to take a moment to commend CEO Sanjay Mirchandani and his leadership team.
As Chairman, I have a unique opportunity to serve as an early sounding board for strategic plans, build relationships directly with our stockholders, and share my experiences with the management team to ensure we are all aligned on the Company’s strategic direction. I’m delighted to report that Commvault has made significant progress on this journey, as demonstrated by our strong results.
In just three years, we have strengthened the very core of our business. Commvault has scaled operations, accelerated its go-to-market program, and innovated an award-winning cloud data management portfolio. This includes introducing our hyper-growth Metallic software-as-a-service (SaaS) solutions that are driving a predictable and profitable revenue stream.
One of Sanjay’s strengths as a CEO is to develop and motivate talent. Under his leadership, we have built a strong bench of experienced SaaS leaders. We have also diversified our Board-by race, gender, orientation, and expertise. Our newest directors have experience with cloud, SaaS, and customer success that is invaluable as the Board guides future innovation. Moreover, we have intensified our focus on corporate social responsibility as part of our efforts to promote more sustainable value for our employees, stockholders, and the communities in which we live and work. This has all been achieved while enhancing our balance sheet and repurchasing more than $305 million of our shares.
We believe that Commvault has succeeded in its commitment to shareholders to deliver responsible growth.
On behalf of the entire Board of Directors, thank you for your ongoing support. We are glad you are accompanying us on this exciting journey.
Nicholas Adamo Chairman of | ||||
Notice of Filing Fee (Check the appropriate box):
Meeting of Stockholders
The purposes of the meeting are: 1. To elect six directors for a one-year term; 2. To vote, on an advisory basis, on our executive compensation program; 3. To ratify the appointment of Ernst & Young LLP as Commvault’s independent public accountants for the fiscal year ending March 31, 2023; 4. To approve additional shares to be available for grant under the 2016 Omnibus Incentive Plan, as amended by the Sixth Amendment 5. To transact such other business as may properly come before the meeting, or any adjournment or postponement thereof. Only stockholders of record as of the Record Date are entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. We will mail a Notice Regarding the Availability of Proxy Materials to stockholders of record on or before July 1, 2022, so you can access our proxy materials online or request paper copies of these materials. For information about how to access the virtual meeting, and what to do if you have technical difficulties, please see “Additional Information about the Annual Meeting.” If you vote in advance using our telephone or Internet voting procedures or by sending in your proxy card, you may still attend and vote at the Annual Meeting. A list of stockholders entitled to vote at the Annual Meeting will be available for examination by stockholders during the 10 days preceding the meeting and during the meeting. Information regarding how to examine the stockholder list is available at the meeting website at http://ir.commvault.com/annual-meeting. Important Notice Regarding the Availability of Proxy Materials for the Meeting to be held on August 24, 2022: This proxy statement and our annual report to stockholders are available at www.edocumentview.com/CVLT. | How to Vote: | |||||||
Online during the Meeting: | ||||||||
Attend the Annual Meeting virtually at http://ir.commvault. | ||||||||
Online before the Meeting: | ||||||||
Visit www.investorvote.com/CVLT and | ||||||||
Mail: | ||||||||
Sign, date and return your proxy card in the enclosed envelope | ||||||||
Telephone: | ||||||||
Call the telephone number on your proxy card | ||||||||
By Order of the Board of Directors Danielle Sheer Chief Legal and Compliance Officer July 1, 2022 |
02 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
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03 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Summary
This proxy summary highlights information contained elsewhere in this proxy statement. It does not contain all the information that you should consider. Please read the entire proxy statement is furnished in connection with the solicitation on behalf of the Board of Directors of Commvault Systems, Inc. (which we refer to as “we”, “us”, “our”, “Commvault,” “our company” or the “Company”) of proxies to be voted at the Annual Meeting of Stockholders on August 19, 2021, or at any adjournment or postponement thereof.carefully before voting. This proxy statement and the associated proxy card areis first being made available at
MEETING AGENDA
Proposal | Board’s voting recommendation | For more information | ||||||
Election of directors | FOR each nominee | Page 10 | ||||||
Advisory vote on executive compensation | FOR | Page 29 | ||||||
Ratification of independent auditors | FOR | Page 49 | ||||||
Approval of additional shares under the 2016 Omnibus Incentive Plan | FOR | Page 51 |
• We redesigned our proxy statement and enhanced our disclosures to demonstrate our ongoing commitment to transparency and clarity. • In 2021, we amended the charter of the Board’s Nominations and Governance Committee to ensure Board-level oversight of Commvault’s corporate social responsibility and sustainability programs and efforts. • We adopted a “clawback” policy in 2021 to ensure we can recover any incentive compensation paid to certain officers in the event financial statements are subsequently restated. | • Due to our active Board refreshment program, eight of our ten directors (including three women) have joined the Board in the past four years. • The Nominations and Governance Committee resolved to rotate the chair of each committee every five years and Chair of the Board every ten years. • We issued our third annual Corporate Social Responsibility report in June 2022. • We welcomed Javier Dominguez as our Chief Information Security Officer. |
04 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROXY SUMMARY |ELECTION OF DIRECTORS
The following table shows information about our directors and director nominees. All our directors and nominees are independent except Mr. Mirchandani, Commvault’s President and Chief Executive Officer.
Committees | ||||||||||||||||||
Age | Director Since | Occupation and Background | Audit | Nominations and Governance | Operating | Talent and | ||||||||||||
NOMINEES | ||||||||||||||||||
Nicholas Adamo, Chair of the Board | 58 | 2018 | Former Senior Vice President of the Americas, Cisco Systems | |||||||||||||||
Martha H. Bejar | 60 | 2018 | Senior Partner, Dagrosa Capital LLC and Chief Executive Officer of Red Bison Advisory Group, LLC | |||||||||||||||
Keith Geeslin | 69 | 1996 | Partner, Francisco Partners | |||||||||||||||
Vivie “YY” Lee | 55 | 2018 | Senior Vice President and Chief Strategy Officer, Anaplan | |||||||||||||||
Sanjay Mirchandani | 58 | 2019 | President and Chief Executive Officer, Commvault Systems | |||||||||||||||
David F. Walker | 68 | 2006 | Former Director of the Accountancy Program and the Program for Social Responsibility and Corporate Reporting, University of South Florida St. Petersburg | |||||||||||||||
CONTINUING DIRECTORS |
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R. Todd Bradley | 64 | 2020 | Operating Partner, One Equity Partners | |||||||||||||||
Charles Moran | 67 | 2018 | Founder and former Chief Executive Officer and President, Skillsoft Plc. | |||||||||||||||
Allison Pickens | 37 | 2020 | Former Chief Operating Officer, Gainsight | |||||||||||||||
Arlen Shenkman | 51 | 2020 | Former Executive Vice President and Chief Financial Officer, Citrix Systems, Inc. | |||||||||||||||
Number of Directors | 3 | 3 | 3 | 3 |
Committee Chair | Committee Member |
Diversity and Tenure Among the Ten Directors
05 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROXY SUMMARY |2022 FINANCIAL HIGHLIGHTS
Fiscal 2022 Financial Highlights
Focused and Thoughtful Board Refreshment
Eight of our ten directors have joined the Board in the past four years, increasing the Board’s diversity and range of expertise. |
Fiscal 2022 was a successful year for Commvault, with notable increases in revenues, GAAP and non-GAAP income from operations, and GAAP and non-GAAP diluted earnings per share.
1. | Please see “Reconciliation of GAAP to Non-GAAP Financial Measures” in Annex A for additional information about our non-GAAP financial measures. Our GAAP income/(loss) from operations (EBIT) was $41,566 and ($22,263) in fiscal years 2022 and 2021, respectively. Our GAAP diluted earnings/(loss) per share (EPS) was $0.71 and ($0.66) in fiscal years 2022 and 2021, respectively. |
06 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROXY SUMMARY |GOVERNANCE HIGHLIGHTS
Commvault is committed to excellence in corporate governance. We have recently strengthened several of our annual report on form 10-K for the fiscal year ended March 31, 2021, which includes audited financial statements,policies and practices to demonstrate this commitment, including those summarized below.
Independent Board leadership. Our Board is also being made available concurrently with the proxy statement at www.edocumentview.com/CVLT.
•Independent leadership for the Board. Our independent Chairman of the Board, Mr. Nicholas Adamo, joined the Board in August 2018 as an independent Director and succeeded to the role of Chairman of the Board in April 2019. The separation of the roles of CEO and Chairman represents strong corporate governance and creates dynamic company leadership.
Hedging policy. We have a policy that prohibits our employees, officers, and directors from engaging in any hedging transactions with regard to fraud or other misconduct.Commvault common stock.
•Implementation of Proxy Access Provision. In May 2019, we implementedaccess. Our Amended and Restated Bylaws include a “proxy access” provision in our Amended and Restated Bylaws, which gives shareholdersthat provides stockholders with the ability to nominate director candidates for inclusionto be included in our proxy materials.
•IncreasedLeadership diversity.Our Board Diversity. In 2018, the Boardhas adopted aCorporate Governance Guidelines that includes an express policy on Board diversity, which prioritizes a Board comprised of individuals with diverse backgrounds.to prioritize diversity. Our recent Board appointments reflect these considerations,considerations. Since Mr. Mirchandani joined Commvault in 2019, we have welcomed three women to our executive team and we believe thata third woman to our Board. Our Board participated in our employee diversity and inclusion initiatives for Pride month, including director Ms. YY Lee sharing her insights on the diverse rangeindustry with a focus on allyship, inclusion in the workplace, and individuality as a key to success.
Cybersecurity. Leveraging his 20 years of experiencesexperience in security program transformation, Mr. Javier Dominguez now leads our cybersecurity strategy as our Chief Information Security Officer. The Board provides oversight of the Company’s cybersecurity and backgroundscompliance programs.
Compliance program.We have expanded our compliance program under the leadership of a Director of Compliance. Under the Chief Legal and Compliance Officer and in conjunction with the new Chief Information Security Officer, the Director of Compliance monitors and implements compliance training regarding our policies relating to sanctions, data privacy, cybersecurity, anti-harassment, modern slavery act, background checks, confidentiality, business continuity, equal employment, and anti-corruption. The goal of the compliance program is to meet the needs of our new Board members greatly benefits our Boardcustomers and our company.
We believe these changes and practices represent strong corporate governance measures that are in the best interests of our company and its shareholders.stockholders.
07 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROXY SUMMARY |EXECUTIVE COMPENSATION HIGHLIGHTS
Executive Compensation Highlights
Commvault’s executive compensation program is designed to support our long-term strategic vision and to align with our pay-for-performance philosophy. As shown below, a significant amount of our executives’ direct compensation is long-term and varies based on company (and, for some executives, individual) performance.
08 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROXY SUMMARY |CORPORATE SOCIAL RESPONSIBILITY DEVELOPMENTS
Corporate Social Responsibility Developments
Climate This past year, Commvault’s Environmental, Social and Governance (ESG) team completed a gap analysis against Sustainability Accounting Standards Board (SASB) requirements for software and technology companies. SASB is a widely recognized independent standard for financially material ESG information that is industry-specific, evidence-based, and market-informed to help investors compare companies fairly while monitoring markets over time. As a result of the gap analysis, the ESG team increased its focus on inclusion and belonging by adding three new employee resource groups (ERG)-Capabilities, Family Support Network, and Environmental-to the Commvault ERG community. | ||
We published our second annual CSR report in June 2021. This report highlights that the nature of our business enables us to avoid having a traditional corporate environmental footprint. For example, we do not require physical manufacturing operations or global supply chains. Moreover, nearly 50% of the energy requirements (175 days) for Commvault’s main data center was avoided through the use of innovative free cooling processes, resulting in an annual reduction of 682,000 kilowatt hours or 159,000 kg of C02 emissions. Our products and services, which provide opportunities for responsible data management, can help reduce our customers’ environmental footprints and costs as well. Our third annual CSR report was published in June 2022. |
Human Rights We are proud to be part of the United Nations’ Business Avengers Program, which unites global companies in a commitment to help deliver on the Sustainable Development Goals that have been agreed to by UN nations. For X years, Commvault has supported goal No. 12, Responsible Consumption and Production. | Governance In 2021, we amended the charter for the Board’s Nominations and Governance Committee to give that committee direct responsibility for overseeing and providing direction for Commvault’s corporate social responsibility and sustainability programs and efforts. | Global Philanthropy Commvault matched employees’ donations to the International Rescue Committee dollar-for-dollar in support of Ukrainian refugees. | ||||||||
09 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Election of Directors
Our Board of Directors is currentlywas historically divided into three classes, with one class of directors elected forclasses. Two years ago we began a three-year term at each annual meeting. Each class consistsprocess of four directors, except for Class I which consists of three directors. Previously, each director held office untilde-classifying our Board. At the thirdupcoming annual meeting, aftersix nominees—from classes I and III—will stand for re-election to one-year terms. Beginning with the meeting at which such director was elected and until his or her successor was duly elected and qualified or until his or her earlier resignation, removal or death. However, at our 20202023 Annual Meeting, our stockholders voted in favor of our proposal to amend our corporate governance documents to de-classify our Board of Directors. Once fully implemented, all directors will stand for re-election on an annual basisbe elected annually, and the Board of Directors will no longer be divided into classes. As approved by our stockholders,
If you sign, date and return your proxy card, the de-classification of our Board is being implemented over three fiscal years, and will be completed in 2023 once the class of directors elected at the 2020 Annual Meeting has completed its three-year term. Accordingly, this fiscal year marks the first year in which a class of directors will be elected for a one-year term only.
Our Corporate Governance Committee ofGuidelines provide that the Board of Directors.
Name | Age | Position | Director Since | |||||||||||||||||
Nicholas Adamo | 57 | Chairman of the Board | 2018 | |||||||||||||||||
Martha H. Bejar (3) | 59 | Director | 2018 | |||||||||||||||||
R. Todd Bradley (1)(4) | 63 | Director | 2020 | |||||||||||||||||
Keith Geeslin (1) | 68 | Director | 1996 | |||||||||||||||||
Vivie “YY” Lee (1) | 54 | Director | 2018 | |||||||||||||||||
Sanjay Mirchandani | 57 | Director, President and Chief Executive Officer | 2019 | |||||||||||||||||
Charles Moran (2)(4) | 66 | Director | 2018 | |||||||||||||||||
Allison Pickens (3) | 36 | Director | 2020 | |||||||||||||||||
Arlen Shenkman (2)(4) | 50 | Director | 2020 | |||||||||||||||||
Gary B. Smith (3) | 60 | Director | 2004 | |||||||||||||||||
David F. Walker (2) | 67 | Director | 2006 |
10 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Board deliberations. His insight regarding the company's operations and future are critical to the successful functioning of the Board.
The Board of Directors recommends that you vote FOR each of the nominees listed above.
The contents of the website are not, however, a part of this proxy statement. In addition, we will make a copy of any of these documents available to any person, without charge, upon written request to Commvault Systems, Inc., 1 Commvault Way, Tinton Falls, New Jersey 07724, Attn: General Counsel. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K and applicable Nasdaq rules regarding amendments to or waiversdiverse personal characteristics of our Codedirectors are shown in the graphics below.
Diversity Matrix (As of EthicsJuly 1, 2022)
Total Number of Directors | 10 | |||||||
Female | Male | Non-Binary | Did not disclose Gender | |||||
Directors | 3 | 6 | — | 1 | ||||
NUMBER OF DIRECTORS WHO IDENTIFY IN ANY OF THE CATEGORIES BELOW: | ||||||||
African American or Black | — | — | — | — | ||||
Alaskan Native or Native American | — | — | — | — | ||||
Asian | 1 | 1 | — | — | ||||
Hispanic or Latinx | 1 | — | — | — | ||||
Native Hawaiian or Pacific Islander | — | — | — | — | ||||
White | 1 | 5 | — | — | ||||
Two or More Races or Ethnicities | — | — | — | — | ||||
LGBTQ+ | 1 | |||||||
Did not Disclose Demographic Background | 1 |
11 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 1: ELECTION OF DIRECTORS |NOMINEES FOR ELECTION
Nominees for Senior Financial Officers and Corporate Governance Principles by posting this information on our websiteElection
Class I Directors Whose Three-Year Terms Expire in 2022
Independent Age: 58 Director since 2018 Chair of the Board Committees: None | Nicholas Adamo Professional Background Mr. Adamo is a former senior executive of Cisco Systems, where he served in a variety of sales and leadership roles over a 22-year career before his retirement in 2016. In particular, Mr. Adamo was Senior Vice President of the Americas, where he managed Cisco’s largest geographic region, with annual IT and communications sales of more than $26 billion, and was responsible for 6,500 employees working across 60 countries. Mr. Adamo also served as Senior Vice President of Cisco’s $12 billion Global Service Provider organization, leading sales, service delivery, and development for the company’s top service provider customers, among various other roles. Prior to his tenure at Cisco, Mr. Adamo spent more than a decade at IBM in various sales and management assignments. Qualifications Mr. Adamo is an experienced information technology executive, with a deep working knowledge of the industry. He leverages his background with both enterprise and service provider segments to provide valuable insight and perspectives to our Board and management. He also has demonstrated an extensive ability to balance strategy and operational execution, foster long-standing strategic relationships, and guide business and technology discussions and decisions for shared success. | |||
Other Affiliations • Founder and president of Making A Mark, Inc., a New Jersey-based charitable foundation targeting the environment and education |
12 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 1: ELECTION OF DIRECTORS www.commvault.com.|NOMINEES FOR ELECTION
Independent Age: 60 Director since 2018 Committees: Nominations and | Martha Bejar Professional Background Ms. Bejar has been a senior partner at Dagrosa Capital LLC since 2021. She is also the co-founder and Chief Executive Officer of Red Bison Advisory Group, LLC. Ms. Bejar has served as Chief Executive Officer of several private telecommunications and technology companies, including Unium Inc., Flow Mobile Inc., and Wipro Infocrossing Inc. She has also held executive positions at Microsoft Corporation, Nortel Networks Corporation, and Bell Communications Research. Qualifications Ms. Bejar has a strong track record of leadership and a proven ability to drive and support innovation in the technology and software space. She provides the Board with a wealth of executive, strategic, and governance experience in the industry and valuable insights regarding Commvault’s operations and strategic development. She has a passion for CSR and sustainability and is an active participant in driving initiatives in those areas. | |||
Other Public Company Boards • Lumen Technologies (since 2016) • Quadient S.A. (since 2019) • Sportsman’s Warehouse (since 2019) | Other Affiliations • Afiniti | |||
Independent Age: 68 Director since 2006 Committees: Audit (chair) | David F. Walker Professional Background Mr. Walker was the Director of the Accountancy Program and the Program for Social Responsibility and Corporate Reporting at the University of South Florida St. Petersburg from 2002 through 2009. Prior to joining the University of South Florida, Mr. Walker was with Arthur Andersen LLP. He served as a partner in that firm from 1986 through 2002, including 3 years as partner in charge of the firm’s assurance and business advisory services practice for the Florida and Caribbean region. Mr. Walker is a certified public accountant and a certified fraud examiner, and he was recognized as an NACD Board Leadership Fellow from 2015 through 2021. Qualifications Mr. Walker’s governance, accounting, and finance qualifications include an in-depth understanding of risk oversight, accounting, and financial reporting. The Board has determined that he is an audit committee financial expert. | |||
Other Public Company Boards • Chico’s FAS, Inc. (since 2005) • CoreLogic (2010-2020) |
13 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 1: ELECTION OF DIRECTORS |NOMINEES FOR ELECTION
Class III Directors Whose One-Year Terms Expire in 2022
Independent Age: 69 Director since 1996 Committees: Talent Management | Keith Geeslin Professional Background Mr. Geeslin has been a partner at Francisco Partners, a global private equity firm, since 2004. Before joining Francisco Partners, Mr. Geeslin spent 19 years with the Sprout Group, the venture capital arm of Credit Suisse’s asset management business. Prior to joining the Sprout Group, Mr. Geeslin was the general manager of a division of Tymshare, Inc., a provider of public computer and network services, and held various positions at its Tymnet subsidiary, from 1980 to 1984. He was also previously a staff member of the U.S. Senate Commerce Committee. Qualifications Mr. Geeslin’s private equity and venture capital experience, with a focus on technology sector companies, has given him an understanding of finance and of growth strategies, as well as experience in evaluating businesses in our company’s industry. Originally representing one of our company’s initial investors, Mr. Geeslin has a long history with Commvault and its management, providing continuity to Board deliberations. Mr. Geeslin’s experience on other public company boards is also valuable to the Board. Other Public Company Boards • Synaptics, Inc. (since 1986) | |
Independent Age: 55 Director since 2018 Committees: Talent Management | Vivie “YY” Lee Professional Background Ms. Lee served as Senior Vice President and Chief Strategy Officer of Anaplan, a SaaS software company, from 2018 until October 2021. Prior to joining Anaplan, Ms. Lee served as Chief Executive Officer for FirstRain, a business analytics platform company, from 2015 until 2018, and as Chief Operating Officer for ten years before that. Earlier in her career, Ms. Lee served as General Manager of Worldwide Services at Cadence Design Systems. In that position, she merged several services divisions into an industry-leading advanced technology operation. She held P&L responsibility for the business, spanning research and development, go-to-market, sales, and support across global regions including the US, UK/EU, India, China, and Japan. Before Ms. Lee’s tenure at Cadence, she co-founded Aqueduct Software, an enterprise-class software development solution for automating application data collection, profiling, and analysis during iterative development, testing, and deployment. Bootstrapping the company from the ground-up, she secured top-tier VC financing, and ultimately led the company through acquisition by NetManage in 2000. Ms. Lee began her career at Bell Labs and has also worked at Synopsys and 8x8 (formerly Integrated Information Technology, Inc.) in various product management roles. Qualifications Through her tenures at numerous start-up and mature technology companies, Ms. Lee brings significant entrepreneurial and executive-level experience in the technology and software industry to the Board. Her expertise in the IT space is broad; and provides the Board with tech-focused insight and perspective in the critical areas of operations, marketing, and strategic development. Other Public Company Boards • Synaptics, Inc. (since 2022) |
14 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 1: ELECTION OF DIRECTORS |NOMINEES FOR ELECTION
Age: 58 Director since 2019 Committees: None | Sanjay Mirchandani Professional Background Mr. Mirchandanihas been the President and Chief Executive Officer of Commvault since joining the company in February 2019. Previously, Mr. Mirchandani served as the Chief Executive Officer of Puppet, Inc., an Oregon-based IT automation company from 2016-2019. Before joining Puppet, Mr. Mirchandani was Corporate Senior Vice President and General Manager of Asia Pacific and Japan at VMware, Inc. from 2013 to 2016. From 2006 to 2013, Mr. Mirchandani served as EMC Corporation’s Chief Information Officer and led its Global Centers of Excellence. Prior to that, Mr. Mirchandani held various positions at Microsoft Corporation and Arthur Andersen LLP. Qualifications Mr. Mirchandani brings a wealth of international business, software and SaaS experience from a rich background in technology and IT leadership. As a former CIO, he has unique experience helping CIOs and IT leaders manage the collision occurring between IT and Security. As our Chief Executive Officer, Mr. Mirchandani brings his knowledge and perspective about critical company business strategies, financial position, and operational matters into Board deliberations. His insight regarding the Company’s operations and future are critical to the successful functioning of the Board. | |
The Board of Directors recommends that you vote FOR each of the director nominees. Class II Directors Whose Terms Expire in 2023 | ||
Independent Age: 64 Director since 2020 Committees: Talent Management | R. Todd Bradley Professional Background Mr. Bradley has been an Operating Partner at One Equity Partners since 2020. He previously served as the Chairman and Chief Executive Officer of Mozido, a cloud-based mobile payment provider, from 2015 to 2017. Prior to that, Mr. Bradley served as the President of TIBCO Software Inc., a provider of infrastructure and business intelligence software, from June 2014 until it was acquired in December 2014. From 2005 to 2014, Mr. Bradley served in a variety of roles at HP Inc., a technology company offering computers and printing products and related services, including Executive Vice President, Strategic Growth Initiatives from 2013 to 2014. Earlier in his career, Mr. Bradley served as President and CEO of Palm, Inc., a personal digital assistant and smartphone manufacturer, which was later acquired by HP. Qualifications With decades of experience in the technology industry, Mr. Bradley has significant expertise leading global technology companies as a senior executive and director, particularly as they adapt to large-scale technological and competitive changes. He also has significant leadership, finance, digital, marketing, and software experience. Other Public Company Boards • Mattel, Inc. (since 2018) • Eastman Kodak Company (2017 to 2020) • TrueCar Inc. (2013 to 2016) |
15 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 1: ELECTION OF DIRECTORS |NOMINEES FOR ELECTION
Independent Age: 67 Director since 2018 Committees: Audit, Operating | Charles “Chuck” Moran Professional Background Mr. Moran is the founder of Skillsoft Plc., and served as its Chief Executive Officer and President from 1998 until his retirement in 2015. He served as Chairman of the Board for Skillsoft from 1998 to 2002, as a director from 2002 to 2006, and resumed his service as Chairman from 2006 to 2010. Upon Skillsoft’s privatization in 2010, Mr. Moran served as a director until 2015, and as Chairman from 2015 to 2016. He now serves as a director and advisor to various private companies and private equity firms. Before forming Skillsoft, Mr. Moran was the President and Chief Executive Officer of NETg National Education Training Group, a computer-based information technology training company, from 1995 to 1997. Prior to NETg, Mr. Moran was the Chief Financial Officer and Chief Operations Officer of Softdesk, Inc., where he helped lead the company’s successful initial public offering. Earlier in his career, Mr. Moran held senior-level sales and marketing positions at Insite Peripherals, Inc. and Archive Corporation. Qualifications With more than two decades of experience working with technology companies, Mr. Moran has an in-depth understanding of the industry and expertise in critical areas including operations, finance, sales, marketing, and cloud/SaaS software. Mr. Moran’s various board memberships also give him financial expertise that he deploys to great benefit as a member of our Audit Committee. The Board has determined that he is an audit committee financial expert. Other Public Company Boards • Manhattan Associates, Inc. (since 2017) • Intapp Inc. (since 2019) • Duck Creek Technologies (2016-2022) | |
Independent Age: 37 Director since 2020 Committees: Nominations and | Allison Pickens Professional Background Ms. Pickens is the founding General Partner of The New Normal Fund, LP, a venture capital fund focused on SaaS businesses, a director at dbt Labs, Inc., a venture-backed data transformation company, and a Senior Advisor to Boston Consulting Group, where she advises on strategic transformations of technology companies. Previously, Ms. Pickens served as Chief Operating Officer, and held other executive roles, at Gainsight, a SaaS company, from 2014 to 2020. From 2018 to 2020, she also served as the Executive-in-Residence at Bessemer Venture Partners. Earlier in her career, Ms. Pickens was an associate at Bain Capital Private Equity from 2009 to 2011, where she evaluated investments in a range of industries, and a management consultant to both public and private companies at Boston Consulting Group from 2007 to 2009. She is the co-author of the book The Customer Success Economy, published by Wiley in 2020. Qualifications Ms. Pickens is a technology executive with significant experience driving growth and strategic transformation initiatives at SaaS companies. She has extensive experience coaching CEOs and executives in the software industry through her work at Gainsight and other advisory roles, through speaking engagements, and through the content she has authored, which earned her recognition as one of the Top Women Leaders in SaaS in 2018 by The Software Report. Ms. Pickens also has a unique breadth of experience that spans industries including software, investment management, and management consulting. She brings significant skill in finance, general management, mergers and acquisitions, strategy, and customer growth and retention to the Board. |
16 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 1: ELECTION OF DIRECTORS |NOMINEES FOR ELECTION
Independent Age: 51 Director since 2020 Committees: Operating (chair), | Arlen Shenkman Professional Background Mr. Shenkman was Executive Vice President and Chief Financial Officer at Citrix Systems, Inc. from 2019 until March 2022, where he was responsible for all of the company’s financial and capital management strategies, budgeting and planning, financial accounting, tax and treasury, investor relations, strategic alliances, and M&A. He joined Citrix from SAP, where he served in many roles, including Executive Vice President and Global Head of Business Development and Ecosystems (2017-2019); Chief Financial Officer of SAP North America, the company’s largest business unit (2015-2017); and Global Head of Corporate Development (2012-2015). During his tenure, Mr. Shenkman led the finance functions across North America, including planning and forecasting, business streamlining, and overall financial management, and led SAP’s corporate development and M&A activities worldwide. Qualifications Mr. Shenkman has substantial experience helping to lead large-scale business transformations for growth of SaaS and working with companies that specialize in complex-cloud environments and enterprise application software. He has significant financial experience, including in his role as Chief Financial Officer for Citrix. Due to that experience, the Board has determined that he is an audit committee financial expert. Mr. Shenkman also has significant experience managing large software companies, including in his former roles at Citrix and as CFO of SAP North America, where he was a principal architect of SAP’s rapid transformation into a cloud company. Mr. Shenkman’s substantial record and experience at global SaaS companies make him well qualified to serve as Chair of the Operating Committee. Other Public Company Boards • AspenTech (since 2022) |
Majority Vote Standard and Resignation Policy in Director Elections
In uncontested elections, if a quorum is present or represented, directors are elected by an affirmative vote of a majority of the votes cast.
17 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Governance
The Board has adopted comprehensive Corporate Governance Guidelines to become effective as a resultdefine responsibilities, set high standards of this procedure, the remaining independent directors will appoint a special committee among themselves for the purpose of considering the resignationsprofessional and recommending whether to accept or reject them.
Independence and Composition of Our Board of Directors • Nine of our ten current directors are independent under Nasdaq listing standards. • Our Board is led by an independent chairman so our President and Chief Executive Officer can focus on his executive leadership role. • Eight of our directors have joined the Board since 2018, substantially reducing the Board’s average tenure. • Three women have joined the Board since 2018, significantly increasing the Board’s gender diversity. • We amended our Charter and Bylaws to end the classification of our Board, and are in the process of implementing that change. Beginning with the Annual Meeting in 2023, all directors will stand for election annually. |
Majority Voting for Directors • We have adopted a majority vote standard for the election of directors in an uncontested election. • Any incumbent director who does not receive a majority of the votes cast in an uncontested election must promptly tender an irrevocable resignation, which is contingent upon the Board’s acceptance. |
Standing Committees • The members of all four of the Board’s standing committees are independent and, where relevant, meet the heightened independence standards prescribed by the Nasdaq listing standards and Securities and Exchange Commission (“SEC”) rules for service on particular committees. • The Board decided all members of the Audit Committee qualify as “audit committee financial experts” pursuant to SEC guidelines. • Each standing committee operates under a written charter that is available on our website. • As of 2021, the Nominations and Governance Committee resolved to rotate chairs of each committee every five years and Chair of the Board every ten years. |
18 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Because we do not regularly schedule a Board of Directors meeting to coincide with our Annual Meeting, attendance at our Annual Meeting by our directors is encouraged but not required. All of our directors attended our 2020 Annual Meeting virtually or in person. The Board of Directors has three standing committees and oneCORPORATE GOVERNANCE ad hoc| committee. These committees have the responsibilities and authority described later in this section.OVERVIEW
Corporate Governance Policies • A “proxy access” provision in our Bylaws gives stockholders the ability to nominate director candidates for inclusion in our proxy materials. • We have adopted a policy on Board diversity, which prioritizes a Board made up of individuals with diverse backgrounds. • Our “clawback” policy permits us to recover incentive compensation from certain officers in the event we are required to prepare a financial restatement, without regard to whether the restatement is caused by wrongdoing, negligence, or other misconduct. • Our hedging policy prohibits our employees, officers, and directors from engaging in any hedging transactions with regard to Commvault common stock. • Our insider trading policy subjects all employee trading to prescribed trading window and blackout periods. • We implemented guidebooks for the Board and each committee to provide guidance, establish organization, and ensure predictability as they execute their respective duties. • We established Sanctions Guidelines for the Company that detail our global economic sanctions program, discuss our compliance with applicable sanctions, and explain how employees can seek guidance for their business engagements. |
Governance Documents • Our Code of Ethics, which applies to all directors, officers, employees, and contractors is approved by the Nominations and Governance Committee annually. • We have adopted a Code of Ethics for Senior Financial Managers that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and Controller. • Our Integrity Counts program provides for confidential and anonymous submissions by our employees and other interested parties regarding accounting or auditing matters, violations of our Code of Ethics, and other unethical behavior or practices. • All of our key governance documents are available on our website at www.commvault.com, from the Investor Relations—Corporate Governance tab. |
Board Leadership Structure. Commvault’s
Our policy regarding its leadership structure is to adopt the practice whichleadership structure that best serves our company’sCommvault’s needs at any particular time. OurCurrently, our Board has determined that the most effective leadership structure for our company at this time is for Mr. Nicholas Adamo,to have an independent director, to serve as Chairman of the Board whileso our President and Chief Executive Officer Mr. Sanjay Mirchandani, focusescan focus on his executive leadership role. Mr. Mirchandani is, however, a member of our Board, which ensures that Board members have a high level of access and visibility regarding Mr. Mirchandani's efforts, including his insights and perspectives regarding our company's operations, strategy and future performance. In his capacityAdamo has served as the independent ChairmanChair of the Board since 2019. In this capacity, Mr. Adamo is responsible for presiding at Board meetings and executive sessions, and facilitating communication between Board members and the CEO and other members of senior management.
Board Oversight of Risk. Our company’s
The Board oversees Commvault’s policies and procedures relating to risk assessment and risk management are overseen by its Board of Directors. A fundamental part of risk assessment and risk management is not onlyenterprise risk. This involves understanding the risks a companythe Company faces and whatthe steps management is taking to manage those risks, butand also understandingconsidering what level of risk is appropriate for our company.Company. The Board’s involvement of the Board in setting our company’soverseeing Commvault’s business strategy is a key part ofinforms its assessment of management’s risk tolerance and what constitutesits determination of an appropriate level of risk for our company. risk.
The Board of
19 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CORPORATE GOVERNANCE |BOARD OVERSIGHT OF RISK
While the Board of Directors has the ultimate oversight responsibility for the risk management process, variousthe Board’s standing committees of the Board also have responsibility for risk assessment and risk management. management with respect to matters in their purview.
The Audit Committee is required under its charter to inquire ofdiscuss with management and the independent auditor concerningour significant financial risks or exposures and to assess the steps management has taken to minimize such risks. The Audit Committee also oversees our company’sCommvault’s internal audit function and compliance matters, and reviews with the General CounselChief Legal and Compliance Officer any legal matters, including litigation, that may have a material impact on our company’s financial statements, financial condition, or results of operations. In addition, the
The Talent Management and Compensation Committee assesses compensation related risk and thecompensation-related risk.
The Nominations and Governance Committee addresses management and governance risk, including through its oversight of the succession planning process. and nominating processes, our Corporate Governance Guidelines, and our corporate social responsibility efforts.
The Operating Committee provides oversight on various matters as determined by the Board and management.
Each of these Board committees reports to the full Board with respect to its risk oversight functions.
At the management level, our company has appointed our General CounselChief Legal Officer serves as our Chief Compliance Officer to oversee risk related matters, andrisk-related matters. In addition, we have established a disclosure committeecontrols to monitor our company’s compliance with itssecurities disclosure obligations under law and Nasdaq regulations and an executive review committee to monitor and approve certain transactions or other corporate matters that deviate from our company’s standard practices. The seniorSenior management, of our company, including the Chief Legal and Compliance Officer, report
reports to the Board or an appropriate Board committeescommittee regarding risk issues, including those identifiedissues.
Commvault maintains a cybersecurity governance program for the benefit of the company, our customers, and stockholders. Headed by our Chief Information Security Officer (CISO), our cybersecurity program has a dedicated team monitoring information security using best practices and maintaining a robust security certification library. The CISO regularly meets with management to set our information security policies and priorities based on our assessment of risks and business priorities. Quarterly, the foregoing committees. In accordance withCIO and the CISO update our company’sAudit Committee on information security priorities, key metrics, and progress on audits and compliance measures. The Audit Committee provides oversight of the security program and advises on risk management strategies.
Under our Corporate Governance Policies, the Board has complete and open access to any member of our company’s management and any of our company’s employees,employee, as well as any outside advisorsadvisor or independent advisorsadvisor retained by the Board.Board, to inquire about risk-related (or other) topics. In addition, our company’s Chief Financial Officer and General CounselChief Legal and Chief Compliance Officer are available at Board and committee meetings to answer questions relating to risk oversight. Further, because the Chief Executive Officer is a director, he brings a unique perspective on our company’s risk profile and risk assessment to Board deliberations based on their day to dayhis day-to-day management responsibilities and knowledge about the company.Company.
20 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Audit CommitteeCORPORATE GOVERNANCE . |The Audit Committee is responsible for the appointment of, compensation of and oversight over the work of our independent auditor. Additionally, the Audit Committee monitors the integrity of our financial statements, our independent auditor’s qualifications and independence, our compliance with legal and regulatory requirements and the performance of our internal audit function and independent auditor. The Audit Committee relies on the knowledge and expertise of our management, the internal auditors and the independent auditor in carrying out its oversight responsibilities. The members of the Audit Committee are Messrs. Walker (Chairman), Shenkman and Moran. The Audit Committee is comprised solely of directors who meet all of the independence standards for audit committee membership as set forth in the applicable listing standards of Nasdaq. The BoardSTOCKHOLDER ENGAGEMENT
We maintain a quarterly stockholder outreach program, which includes proactive CEO and CFO post-earnings calls with our top 40 stockholders, and subsequent phone calls with all interested investors. Our CEO, CFO, Head of Investor Relations, and senior management participate in broker-sponsored, non-deal roadshows and conferences each quarter. In fiscal year 2022 we hosted 206 investor meetings or phone calls (compared to 193 in fiscal year 2021), including 116 meetings with existing investors and 90 meetings with potential investors. Every June through August, in advance of our Annual Meeting, we reach out to our top 50 stockholders, representing 78% of our outstanding common stock. During that time period in 2021, we spoke to 11 stockholders, representing approximately 24% of our outstanding common stock. Our proxy outreach team includes the Chair of the Board and several independent directors, the Head of Investor Relations, our Chief Legal Officer, and the Chief People Officer. Topics discussed include our timeline to identify standards for ESG reporting, measures to increase workforce diversity, pandemic effects on our business, capital allocation (such as share repurchases and M&A), and executive compensation. We received positive stockholder feedback on our fiscal year 2022 outreach. In particular, stockholders were impressed with our independent directors’ commitment to stockholder engagement, our receptivity to stockholder feedback, and our numerous corporate governance enhancements over the last several years. | In fiscal year 2022 we hosted 206 investor meetings or phone calls including 116 meetings with existing investors and 90 meetings with potential investors. | |||
Topics discussed include • our timeline to identify standards for ESG reporting • measures to increase workforce diversity • pandemic effects on our business • capital allocation (such as share repurchases and M&A) • executive compensation • operational efficiency • revenue growth and margin targets |
How We Choose Directors has determined that each of Messrs. Walker, Shenkman and Moran qualify as an “audit committee financial expert” as that term is defined in the SEC rules, and that each Audit Committee member has sufficient knowledge in financial and auditing matters to serve on the Audit Committee.
The Nominations and Governance Committee is responsible for assessing the appropriate balance of experience, skills, and characteristics required of our Board of Directors and for carrying out adequate due diligence with respect to prospective board members. Generally speaking, we believe the Board should include individuals with skills and experience in the following areas:
The Nominations and Governance Committee will consider nominees that are recommended by members of the Board of Directors,current directors, management, or stockholders. Candidates recommended by stockholders will be evaluated in the same manner as candidates identified through other stockholders. means.
Nominees for director shall beare selected on the basis of diversity, depth and breadth of experience, integrity, ability to make independent analytical inquiries, understanding of our business environment, the willingness of the candidate to devote adequate time to board duties, and the interplay of the candidate’s experience and skills with those of other board members, and the extent to which the candidate would be a desirable addition to our Board of Directors and any committees of the Board. In addition to the foregoing,members. Our Corporate Governance Guidelines provide that the Nominations and Governance Committee maymust also take into accountconsider gender, race, and ethnicity when recommending director nominees, to the Board of Directors, with the objective of achieving a Board with diverse business, personal, and educational backgrounds.
21 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Operating Committee.CORPORATE GOVERNANCE | The general purpose of the Operating Committee is to oversee the Company’s budgeting processes and to work with Company management to establish margin targets and a balanced capital allocation policy for the Company. The members of the Operating Committee are Mr. Shenkman (Chairman), Mr. Bradley and Mr. Moran. The Operating Committee operates under a written charter. The Operating Committee was established in June 2020 and met six times in the year ended March 31, 2021.BOARD COMMITTEES
The Board of Directors has adoptedthree standing committees and one ad hoc committee. Each committee operates under a policy on Board diversitywritten charter that is implemented byavailable on the Nominations and“Investor Relations—Corporate Governance Committee. This policy requires the Nominations and Governance Committee to consider diversity in professional experience, skills, broad-based business knowledge, understandingOverview” section of our company’s business environment and training when recommending Director nomineeswebsite. The members of all of the committees are independent as defined in the Nasdaq listing standards.
Members: Messrs. Walker (Chair), Moran, and Shenkman Meetings in fiscal 2022: 5 | Audit Committee The Audit Committee is responsible for the appointment, compensation, and oversight of our independent auditor. Additionally, the Audit Committee monitors: | |||
• the integrity of our financial statements • our independent auditor’s performance qualifications, and independence • our compliance with legal and regulatory requirements and our compliance program generally • the performance of our internal audit function and independent auditor • related person transactions | • our cybersecurity and IT compliance programs • whistleblower complaints (Integrity Counts) and related investigations • our audit results • our critical accounting policies and practices • the adequacy of our disclosure controls and procedures • management of significant financial risk | |||
The Audit Committee also is responsible for ensuring Commvault’s Code of Ethics for Senior Financial Officers remains current and for approving any non-auditing services performed by our independent auditor. The Audit Committee relies on the knowledge and expertise of our management, the internal auditors, and the independent auditor in carrying out its oversight responsibilities. The members of the Audit Committee meet all the heightened independence standards for audit committee membership as set forth in the Nasdaq listing standards and SEC rules. The Board of Directors has determined that each of Messrs. Walker, Shenkman, and Moran qualifies as an “audit committee financial expert” as that term is defined in SEC rules, and that each is able to read and understand fundamental financial statements. | ||||
Members: Mr. Geeslin (Chair), Mr. Bradley, and Ms. Lee Meetings in fiscal 2022: met or acted by unanimous written consent 13 times | Talent Management and Compensation Committee The Talent Management and Compensation Committee (the “TMCC”) is responsible for overseeing Commvault’s compensation and benefit plans, including all compensation arrangements for executive officers and directors. In particular, the TMCC sets the compensation of our CEO and reviews and approves our CEO’s recommendations regarding the compensation of our other executive officers. Additionally, the TMCC oversees: | |||
• Commvault’s diversity and inclusion programs and policies • workplace health and safety matters • our corporate culture | • executive employment agreements • talent management • management of risk arising from compensation practices and policies | |||
The TMCC also is responsible for approving Commvault’s Code of Ethics. All members of the TMCC meet the heightened independence standards for compensation committee members set forth in the Nasdaq listing standards. |
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CORPORATE GOVERNANCE |BOARD COMMITTEES
Members: Mses. Bejar (Chair), Lee, and Pickens Meetings in fiscal 2022: 4 | Nominations and Governance Committee The Nominations and Governance Committee is responsible for identifying and recommending to our Board of Directors appropriate director nominee candidates and providing oversight with respect to corporate governance matters, including reviewing our corporate governance program and approving Corporate Governance Guidelines and other governance policies. The Nominations and Governance Committee also oversees: • Commvault’s sustainability, stewardship, and corporate social responsibility • succession planning • annual review of all Board committee charters • annual performance evaluations of the Board and its committees • recommendations for directors to serve on Board committees | |
Members: Messrs. Shenkman (Chair), Bradley, and Moran Meetings in fiscal 2022: 6 | Operating Committee The general purpose of the Operating Committee is to provide oversight of various matters as determined by the Board and management. The Operating Committee reviews Commvault’s annual budget and works with management to establish margin targets and a balanced capital allocation policy. The Operating Committee also oversees earnings announcements and guidance. The focus of the Operating Committee is on achieving profitable growth, return on investment, and value creation. |
During the fiscal year ended March 31, 2022, our Board of Directors held six meetings. Due to the Board, with the objectiveongoing COVID-19 pandemic, most of achieving a board with diverse business and educational backgrounds. It is the goal of this policy for the Board to be composed of members with individual backgrounds that, when combined, provide a portfolio of experience and knowledge that will servethese meetings were held virtually. All our company's governance and strategic needs. In accordance with our company’s Corporate Governance Guidelines, the Nominations and Governance Committee will consider the interplaydirectors attended more than 80% of the director candidate’s experience and skills with thosemeetings of other Board members, as well as the extent to which the candidate would be a desirable addition to the Board and any Committees of the Board. In addition to the foregoing, the Nominations and Governance Committee may also take into account gender, race and ethnicity when recommending director nominees to the Board of Directors withand meetings of the objectivecommittees of achievingthe Board on which they served during the time they served.
The Board of Directors meets in executive session, without management, at every Board meeting. During fiscal year 2022, Mr. Adamo, as the independent Chair of the Board, led these executive sessions and acted as primary spokesperson in communicating matters arising out of these sessions to management.
Because we do not regularly schedule a Board of Directors meeting to coincide with diverse business, personal and educational backgrounds. When recommending nominees for Director, the Nominations and Governance Committee doesour Annual Meeting, director attendance at our Annual Meeting is encouraged but not discriminate against candidates based on gender, ethnicity, religion or national origin. Our company’s Board diversity policy specifies that the Nominations and Governance Committee will review the skills and attributes of Board members within the context of the current make-up of the full Board from time to time as the Nominations and Governance Committee deems appropriate. In connection with its deliberations with respect to Director nominations forrequired. All our company’s Augustdirectors attended our 2021 Annual Meeting the Nominations and Governance Committee assessed that it effectively nominates candidates for Directorvirtually or in accordance with the above described standards, with the currentperson.
How to Contact Our Board being composed of individuals with finance, accounting, technology, management and international experience. See each nominee’s and director’s biography appearing earlier in this proxy statement for a description of the specific experiences that each such individual brings to the Board.
Stockholders can contact our Board of Directors to provide comments, to report concerns, or to ask a question, at the following address.
Corporate Secretary
Commvault Systems, Inc.
1 Commvault Way
Tinton Falls, New Jersey 07724
Email: CorporateSecretary@commvault.com
Communications are distributed to our Board of Directors, or to any individual directors as appropriate, depending on the facts and circumstances outlined innature of the communication. You may also communicate online with our Board of Directors as a group
23 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CORPORATE GOVERNANCE |GOVERNANCE DOCUMENTS
through the Investor Relations section of our website at www.commvault.com. The Secretary will forward allAll relevant communications directed to the full Board will be forwarded to the ChairmanChair of the Audit Committee or the ChairmanChair of the Nominations and Governance Committee, who will determine when it is appropriate to distribute such communications to other members of the Board or to management.
Clawback. Governance DocumentsIn April 2021, we adopted a "clawback" policy which permits
Our Code of Ethics applies to all our directors and employees, including executives and contractors. The Code establishes our legal and ethical standards of behavior, and supports our commitments to human rights, respectful treatment, and equal opportunity. Employees and interested third parties can report concerns or suspected violations of the Compensation CommitteeCode to seek to recover cashCommvault’s Chief Legal and Compliance Officer or equity incentive awards from certain executivesChief People Officer or through Integrity Counts, an anonymous hotline at commvault@integritycounts.ca. The Code and the following additional governance documents are available in the event the company is required to prepare a financial restatement, regardless of whether or not the restatement was due to fraud or otherwise misconduct.
The Board of Directors recognizes that transactions between usthe Company and certain related persons present a heightened risk of conflicts of interest. It is our policy to have the Audit Committee review and approve, ratify, or disapprove of proposed transactions or courses of dealings with respect to which executive officers or directors or members of their immediate families have an interest (including all transactions required to be disclosed pursuant to the SEC’s related persons disclosure requirements (“Related Persons Transactions”).interest. The Audit Committee is to reviewreviews any such transaction based upon the applicable SEC rules of Nasdaq and upon our ethics and governance guidelines. There were no Related Persons Transactionsrelated person transactions during the fiscal year ended March 31, 2021.2022.
24 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
We haveCORPORATE GOVERNANCE |DIRECTOR COMPENSATION
Annual Cash and Equity Retainers
Our TMCC determines the amount and form of any fees and expense reimbursements that non-employee directors receive for or in connection with their service on Commvault’s Board of Directors. During fiscal 2022, the TMCC engaged an external third-party compensation consultant, Compensia, to provide an assessment of our non-employee director compensation practices, including a Codepeer analysis of Business Ethicspractices related to cash compensation, equity compensation, and Conduct, a copy of which is postedequity vesting. Based on the Investor Relations portionresults of this analysis, we revised our compensation program to align to the 50th percentile of the peer group. (For information about our peer group, see “Compensation Discussion and Analysis—How Compensation Decisions are Made—Role of the Peer Group.”)
Compensation earned by our non-employee directors for their service as members of the Board of Directors or any committee of the Board was as follows:
Who receives | Amount | Form | ||
Every non-employee director | $ 42,000 | Cash annual retainer | ||
Independent Board Chair | $125,000 | Additional cash annual retainer | ||
Audit Committee Chair | $ 30,000 | Additional cash annual retainer | ||
TMCC Committee Chair | $ 20,000 | Additional cash annual retainer | ||
Chairs of the Nominations and Governance Committee and the Operating Committee | $ 12,000 | Additional cash annual retainer | ||
Audit Committee members | $ 15,000 | Additional cash annual retainer | ||
TMCC Committee members | $ 10,000 | Additional cash annual retainer | ||
Members of the Nominations and Governance Committee and the Operating Committee | $5,000 | Additional cash annual retainer | ||
Every non-employee director | $200,000 target value on the grant date | Equity in the form of 2,640 restricted stock units awarded on August 19, 2021, that will vest on August 19, 2022, if the director is still serving on our Board at the time. |
RSUs granted to the non-employee directors are issued under our 2016 Incentive Plan. See “Long-Term Equity Incentive Awards” in the Compensation Discussion and Analysis section below for more information about this plan. We also reimburse our non-employee directors for their reasonable expenses incurred in attending meetings of our web page atBoard or Board committees.
25 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CORPORATE GOVERNANCE www.commvault.com|, which appliesDIRECTOR COMPENSATION
The following table shows the specific compensation received for services rendered to us by our non-employee directors in fiscal 2022. Mr. Mirchandani does not receive any additional compensation for his service on the Board.
Name | Fees Earned or Paid in Cash | Stock Awards(1) | Total | |||||||||
Nicholas Adamo(2) | $167,000 | $199,980 | $ | 366,980 | ||||||||
Martha H. Bejar(3) | $ 52,250 | $199,980 | $ | 252,230 | ||||||||
R. Todd Bradley(4) | $ 57,000 | $199,980 | $ | 256,980 | ||||||||
Keith Geeslin(5) | $ 62,000 | $199,980 | $ | 261,980 | ||||||||
Vivie “YY” Lee(6) | $ 55,750 | $199,980 | $ | 255,730 | ||||||||
Charles E. Moran(7) | $ 62,000 | $199,980 | $ | 261,980 | ||||||||
Allison Pickens(8) | $ 47,000 | $199,980 | $ | 246,980 | ||||||||
Arlen Shenkman(9) | $ 69,000 | $199,980 | $ | 268,980 | ||||||||
David F. Walker(10) | $ 72,000 | $199,980 | $ | 271,980 | ||||||||
Gary Smith(11) | $ 13,500 | $ 0 | $ | 13,500 |
1. | The amounts in these columns represent the grant date fair value of restricted stock unit awards granted during the fiscal year indicated as computed in accordance with FASB ASC Topic 718. The amounts reported disregard estimated forfeitures related to service-based vesting conditions. See the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, for a discussion of all assumptions made by us in determining the grant date fair value of such awards. |
2. | Mr. Adamo has 2,640 restricted stock units outstanding as of March 31, 2022. |
3. | Ms. Bejar has 2,640 restricted stock units outstanding as of March 31, 2022. |
4. | Mr. Bradley has 2,640 restricted stock units outstanding as of March 31, 2022. |
5. | Mr. Geeslin has 17,000 stock options, each of which is vested and exercisable, and 2,640 restricted stock units, in either case, outstanding as of March 31, 2022. |
6. | Ms. Lee has 2,640 restricted stock units outstanding as of March 31, 2022. |
7. | Mr. Moran has 2,640 restricted stock units outstanding as of March 31, 2022. |
8. | Ms. Pickens has 2,640 restricted stock units outstanding as of March 31, 2022. |
9. | Mr. Shenkman has 2,640 restricted stock units outstanding as of March 31, 2022. |
10. | Mr. Walker has 17,000 stock options, each of which is vested and exercisable, and 2,640 restricted stock units, in either case, outstanding as of March 31, 2022. |
11. | Mr. Smith received fees for the first quarter of fiscal year 2022. |
Stock Ownership Guidelines for Independent Directors
We currently require our independent directors to acquire an equity ownership interest in Commvault common stock that is equal to five times their base annual cash retainer by the fifth anniversary of the date they first became a director. The TMCC is satisfied that this level of equity ownership among our independent directors is sufficient to provide motivation and to align the directors’ interests with those of our employees. The Code, among other things, has a policy governing conflicts of interests generally and, in particular, prohibiting employment or other activities in certain other businesses, soliciting clients for any other purpose or relationships that may be perceived as impairing the ability of the individual or our company from performing his or its duties, as the case maystockholders. Each independent director who is required to be in an impartial manner,compliance with these guidelines owns the requisite amount of stock.
Security Ownership of Certain Beneficial Owners and use of corporate property for improper personal gain. Any complaints or concerns require disclosure to the Vice President, General Counsel or Vice President, Chief People Officer and, if warranted, to the Audit Committee or Nominations and Governance Committee.Management
Management
The following table shows, as of May 31, 2021,2022, the number of shares of our common stock par value $.01 per share (the only class of voting securities outstanding), beneficially owned by: (1) each current director and nominee for director; (2) each named executive officer (defined below),; and (3) all directors and current executive officers as a group. The number of shares of our common stock beneficially owned by a person includes shares of common stock issuable with respect to options, restricted stock units (including performance-based stock units), and convertible securities held by the person whichthat are exercisable, convertible, or will vest within 60 days. The percentage of our common stock beneficially owned by a person assumes that the person has exercised all options, vested in all restricted stock units, and converted all convertible securities, the person holds whichthat are exercisable, convertible, or will vest within 60 days, and
26 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CORPORATE GOVERNANCE | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
that no other personsperson exercised any of their options, vested in any of their restricted stock units, or converted any of their convertible securities.
Shares of Common Stock Owned | Percent of Common Stock Outstanding | |||||||
Directors | ||||||||
Nicholas Adamo | 12,495 | * | ||||||
Martha H. Bejar | 3,495 | * | ||||||
R. Todd Bradley | 4,618 | * | ||||||
Keith Geeslin(1) | 57,309 | * | ||||||
Vivie “YY” Lee | 13,785 | * | ||||||
Sanjay Mirchandani | 175,197 | * | ||||||
Charles E. Moran | 12,495 | * | ||||||
Allison Pickens | 4,118 | * | ||||||
Arlen Shenkman | 4,618 | * | ||||||
David F. Walker(1) | 70,457 | * | ||||||
Named Executive Officers that are not Directors | ||||||||
Brian Carolan(2) | 136,704 | * | ||||||
Riccardo Di Blasio | 17,182 | * | ||||||
All directors and executive officers as a group (12 individuals) | 512,473 | 1 | % |
* | Less than 1% |
1. | Includes options to acquire 17,000 shares of common stock that are exercisable within 60 days of May 31, 2022. |
2. | Includes options to acquire 79,781 shares of common stock that are exercisable within 60 days of May 31, 2022. |
On April 28, 2022, Mr. Carolan tendered his resignation as Chief Financial Officer effective July 1, 2022.
27 | ||||||||||||||
(1)CORPORATE GOVERNANCE Includes options to acquire 24,500 shares of common stock which are exercisable within 60 days of May 31, 2021.
(3)Includes options to acquire 17,000 shares of common stock which are exercisable within 60 days of May 31, 2021.
The following table sets forth, as of May 31, 20212022 (except to the extent otherwise indicated), certain information regarding the persons known by us to be the beneficial owner of more than 5% of our outstanding common stock (the only classstock. Except as otherwise noted, each entity exercises sole voting power and investment power over the shares of voting securities outstanding).
Name and Address of Beneficial Owner | Shares of Common Stock Owned | Percent of Common Stock Outstanding | |||||||||
BlackRock, Inc. (1) 55 East 52nd Street New York, NY 10055 | 5,761,704 | 12.5 | % | ||||||||
Vanguard Group, Inc. (2) PO Box 2600, V26 Valley Forge, PA 19482 | 4,373,172 | 9.5 | % | ||||||||
Starboard Value LP (3) 777 Third Avenue, 18th Floor New York, NY 10017 | 4,348,023 | 9.4 | % | ||||||||
AllianceBernstein L.P. (4) 1345 Avenue of the Americas New York, NY 10105 | 2,969,151 | 6.4 | % | ||||||||
Renaissance Technologies LLC (5) 800 Third Avenue New York, New York 10022 | 2,294,287 | 5.0 | % |
Name and Address of Beneficial Owner | Shares of Common Stock Owned | Percent of Common Stock Outstanding | ||||||
BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055 | 5,043,826 | 11.2 | % | |||||
Vanguard Group, Inc.(2) PO Box 2600, V26 Valley Forge, PA 19482 | 4,746,564 | 10.6 | % | |||||
Starboard Value LP(3) 777 Third Avenue, 18th Floor New York, NY 10017 | 4,469,256 | 9.9 | % | |||||
AllianceBernstein L.P.(4) 1345 Avenue of the Americas New York, NY 10105 | 2,851,465 | 6.3 | % | |||||
Mackenzie Financial Corporation(5) 180 Queen Street West Toronto, Ontario M5V 3K1 | 2,471,153 | 5.5 | % |
1. | Based solely on a Schedule 13G/A filed on January 28, 2022, by BlackRock, Inc., except for Percent of Common Stock Outstanding. |
2. | Based solely on a Schedule 13G/A filed on February 9, 2022, by Vanguard Group, Inc., except for Percent of Common Stock Outstanding. The Vanguard Group, Inc. reported it held 0 shares with sole voting power, 86,293 shares with shared voting power, 4,621,545 shares with sole dispositive power and 125,019 shares with shared dispositive power. |
3. | Based solely on a Schedule 13D/A filed on November 16, 2020, by Starboard Value LP, except for Percent of Common Stock Outstanding. |
4. | Based solely on a Schedule 13G/A filed on February 14, 2022, by AllianceBernstein L.P., except for Percent of Common Stock Outstanding. AllianceBernstein L.P. reported it held 2,459,879 shares with sole voting power, 0 shares with shared voting power, 2,803,265 shares with sole dispositive power and 48,200 shares with shared dispositive power. |
5. | Based solely on a Schedule 13G/A filed on February 4, 2022, by Mackenzie Financial Corporation, except for Percent of Common Stock Outstanding. |
28 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Advisory Vote on
Executive Compensation
Every year we give stockholders the opportunity to approve, on a Form 13F filed on May 7, 2021 by BlackRock, Inc., exceptnon-binding, advisory basis, the compensation of our executive officers as set forth in the following “Compensation Discussion and Analysis.”
Our executive compensation program is designed to attract, motivate, and reward talented executives who possess the skills required to formulate and drive our Company’s strategic direction and operational execution to achieve the results necessary to create stockholder value. Our compensation practices, which balance long-term and short-term awards, are structured to competitively pay for Percent of Common Stock Outstanding.
We are asking stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as “say-on-pay,” is not intended to address any specific item of compensation, but rather the overall executive compensation program and the related philosophy, policies, and practices. We encourage you to vote FOR the following resolution:
“RESOLVED, that the compensation paid to Commvault’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables, and any related material disclosed in Commvault’s proxy statement, is hereby APPROVED.”
The say-on-pay vote is advisory, and therefore not binding on our Company, the TMCC, or the Board of Directors. However, the Board of Directors and the TMCC value the opinions of our stockholders. If the voting results indicate there is any significant concern about our executive officer compensation program, we will consider those concerns and evaluate whether any actions are necessary to address them.
Because this is a non-binding, advisory vote, there is no specific approval requirement. However, the Board of Directors will consider that the stockholders have approved executive compensation on an advisory basis if this proposal receives the affirmative vote of a majority of the votes cast (in person or by proxy).
The Board of Directors recommends that you vote FOR the approval of Commvault’s executive compensation.
29 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Compensation
Compensation Discussion and Analysis
This section discusses the compensation of the following individuals, who served as executive officers during the fiscal year ended on March 31, 20212022 (the “named executive officers”).
Compensation Discussion and | 30 | ||||
Executive Summary | 31 | ||||
Compensation Tables | 41 | ||||
41 | |||||
42 | |||||
Fiscal 2022 Outstanding Equity Awards at Fiscal Year End Table | 43 | ||||
44 | |||||
Pension Benefits and Deferred Compensation | 44 | ||||
Employment Agreements | 44 | ||||
Change in Control Agreements | 45 | ||||
Estimated Payments and Benefits upon Termination or Change in Control | 46 | ||||
CEO Pay Ratio | 47 |
30 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CD&A |EXECUTIVE SUMMARY
We believe that the skill, talent, judgment, and dedication of our executive officers are critical factors affecting theto Commvault’s long-term value of the company.value. Therefore, the philosophy and objectivesour objective in setting compensation policies for our named executive officers areis to align pay with performance, while at the same time providing fair, reasonable, and competitive compensation that will allow us to attract, retain, and retainreward superior executive talent. The Compensation CommitteeTMCC strongly believes that executive compensation should align our executive officers’ interests with those of our stockholders by rewarding achievement of specific annual, long-term, and strategic company goals, by our company, with the ultimate objective of enhancing long-term stockholder value.
Leadership Change
Mr. Carolan, who has served as Commvault’s Chief Financial Officer since 2012, announced in April that he would step down from this position effective July 1. The Board named Gary Merrill, Commvault’s Chief of Prior Stockholder Advisory Vote on Named Executive Officer Compensation
We believe our executive compensation program has been designed to effectively pay for performance and is aligned with increasing the long-term value of the Company. We believeAs shown in the charts below, demonstrate thethere is a correlation between our performance and the compensation we paid over the past five fiscal years to our former Chairman, President and CEOs.
CEO Mr. N. Robert Hammer, prior to his retirement in 2019, as well as the correlation between our performance and the executive compensation for our current CEO, Mr. Mirchandani, beginning in fiscal 2020.Pay-for-Performance
1. | Fiscal 2019 equity awards represent $12 million of modification expense for our former CEO’s stock options and awards. |
2. | Reflects annual cash bonus compensation. See heading below labeled “Annual Bonus Plan” for more details. |
3. | Reflects the aggregate grant date fair value of stock option and restricted stock unit awards computed in accordance with FASB ASC Topic 718. |
4. | Please see the “Reconciliation of GAAP to Non-GAAP Financial Measures” in Annex A for additional information about our non-GAAP financial measures. |
5. | Reflects the market price of our common stock per share on the last business day of the fiscal year. |
31 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Mix of Compensation Elements.Elements
Our fiscal 20212022 executive compensation program consists of three principal elements: base salary, annual cash incentive bonuses, and long-term equity incentive awards. The chart below illustrates the mix of compensation elements for our CEO for fiscal 2021. Consistent with our pay for performance philosophy, the majority of our CEO's target total directcompensation for the named executive officers in fiscal 20212022 consisted of incentive awards, particularly long-term equity incentive awards. ByThe TMCC believes that emphasizing equity-based compensation in our CEO's compensation, the Compensation Committee believes we createcreates a strong incentive for himour executives to build sustainable long-term shareholder value.
Fiscal 2021 | Fiscal 2020 | % Change 2019 to 2020 | ||||||||||||||||||
Revenue (in thousands) | $ | 723,472 | $ | 670,885 | 8 | % | ||||||||||||||
Non-GAAP Income from Operations (EBIT) (in thousands) | $ | 137,464 | $ | 87,492 | 57 | % | ||||||||||||||
Non-GAAP Diluted Earnings per Share (EPS) (1) | $ | 2.11 | $ | 1.45 | 46 | % | ||||||||||||||
Stock Price (on last business day) | $ | 64.50 | $ | 40.48 | 59 | % |
Prior Stockholder Advisory Vote on Named Executive Officer Compensation In light of the 2021 say-on-pay vote, in which 97% of the votes cast were in favor of our executive compensation program, the TMCC maintained a consistent general approach for fiscal year 2022. In particular, the TMCC continued to emphasize pay-for-performance through the use of performance share awards that reward our executive officers only if they deliver value for our stockholders. The TMCC will continue to consider input from our stockholders when making compensation decisions for our executive officers. |
32 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
In fact, as part of our regular stockholder engagement, typically our stockholders focus on our revenue and non-GAAP EBIT performance as the best measurement of our performance. Further, in our public communications (including on earnings calls), our disclosures typically reference revenue and non-GAAP EBIT performance metrics, in addition to our GAAP performance metrics, as the primary means of how we evaluate our own performance. In other words, these metrics are most closely tied to how we manage the business.
Performance Vesting RSUs / CEO Cash Bonus Financial Performance | |||||||||||||||||
Grant | Fiscal 2017 | Fiscal 2018 | Fiscal 2019 | Fiscal 2020 | Fiscal 2021 (1) | ||||||||||||
Revenue Achievement | 102% | 98% | 61% | 0% | N/A | ||||||||||||
Non-GAAP EBIT Achievement | 110% | 79% | 139% | 0% | N/A | ||||||||||||
Payout % Based on Scale | 132% | 53% | 92% | 0% | N/A |
Performance Vesting RSUs - Total Shareholder Return (TSR) | |||||||||||||||||
Grant | May 2017 | May 2018 | February 2019(1) - New CEO | May 2019 | May 2020 | ||||||||||||
Actual Vest %: | |||||||||||||||||
First Annual Tranche | 159% | 0% | N/A (2) | 96% | 105% | ||||||||||||
Second Annual Tranche | 98% | 71% | 62% | 95% | TBD | ||||||||||||
Third Annual Tranche | 96% | 62% | TBD | TBD | TBD |
•Modifying the revenue and non-GAAP EBIT payout curves for the annual incentive plan to reduce the threshold level of performance required for a payout and to increase the level of performance required for earning the maximum award
Decisions with respect to the total compensation for our executive officers are based primarily upon an assessment of each individual’s performance and the potential to enhance long-term stockholder value. Often, the TMCC relies on judgment is relied upon, rather than rigid guidelines or formulas in determining total compensation and the amount and mix of compensation for each executive officer. Factors affecting such judgment include performance compared to strategic goals established for the individual and our Company at the beginning of the year, the nature and scope of each executive’s responsibilities, and whether the executive officers' responsibilities, effectiveness in leading initiatives to achieve corporate goals and conductingconducts all activities in a manner consistent with our core Company values.
As the pandemic stabilized during fiscal year 2022, we were able to return to granting the types of awards, with the associated performance metrics and time horizons, that we had typically granted in pre-pandemic years. In May 2021, our TMCC approved several changes to the design of our short-term and long-term incentive compensation programs for fiscal 2022, including:
Transitioning from quarterly performance periods back to an annual performance period for our annual incentive plan, except with respect to Mr. Di Blasio, as described below;
Adjusting back to the typical shorter and steeper revenue and non-GAAP EBIT payout curves for the annual incentive plan; and
Adding financial PSUs (which historically made up approximately 25% of the executives’ long-term equity awards) back to the long-term incentive mix.
The TMCC will continue to monitor the design of our incentive compensation programs in the context of the COVID-19 pandemic or other extraneous macro events as well as the continuing maturity of our business, expectations of our stockholders, and market practice among our peers.
How Compensation Decisions are Made
Role of the Talent Management and Compensation Committee and Executive Officers in Compensation Decisions
The Compensation CommitteeTMCC is responsible for setting the compensation of our CEO and alsofor reviewing and approving our CEO’s recommendations forregarding the compensation of our other executive officers. Our
Role of Executive Officers
Each year, the Chief Executive Officer reviews the performance and compensation of each of the executive officers and makes recommendations to the TMCC with respect to their compensation for the coming year. In addition, our CEO, Chief Financial Officer, and Chief Human Resources Officer support the Compensation CommitteeTMCC in its work by providing information relating to our financial plans performance assessments of our executive officers and other personnel-related data. In addition,
33 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CD&A |HOW COMPENSATION DECISIONS ARE MADE
Role of the Compensation CommitteeConsultant
The TMCC has authority under its charter to engage outside advisors and experts for advice as appropriate.
The Compensation CommitteeTMCC regularly reviews the objectivity and independence of the advice provided by its compensation consultant on executive compensation matters.consultant. The Compensation CommitteeTMCC has evaluated Compensia’s engagement and, based on the six factors for assessing independence and identifying potential conflicts of interest that are set forth in the SEC rules and the NASDAQ Marketplace Rules, andNasdaq rules (and such other factors as were deemed relevant under the circumstances,circumstances), the TMCC has determined that its relationship with Compensia and the work of Compensia on behalf of the Compensation CommitteeTMCC did not raise any conflict of interest.
During fiscal 2021, our management and2022, the Compensation Committee jointlyTMCC engaged Compensia to conduct a competitive market analysis for purposes of evaluating our base salaries, annual cash bonus opportunities, and long-term equity incentive plan. The Compensation Committee and management used the data from this analysis was used to ensure that our executive compensation program was optimally structured to attract, motivate, retain, and reward our highly experienced management team, to keep management focused during our expected period of growth, to motivate management to maximize stockholder value and to align our compensation practices with comparable technology industry companies.
In developing the peer group, the Compensation Committee targetingTMCC targeted U.S.-headquartered companies within a similar industryindustries and of a similar size as the Company. In particular, the Compensation CommitteeTMCC targeted direct competitors and other business application software companies. The peer companies were also evaluated based on the followingtwo financial criteria:
Market Capitalization: Target between $625 million and $6.3 billion (0.3x to 3.0x the Company’s market capitalization)
The companies included in the peer group for fiscal year 2022 were | ||||
ACI Worldwide Blackbaud Bottomline Technologies Box Mandiant | MicroStrategy NetScout Systems New Relic Nutanix Progress Software | Pure Storage Rapid7 SecureWorks Tenable Holdings Varonis Systems | ||
COMMVAULT VS. PEER GROUP | ||||
The Company and the TMCC review the peer group annually and make changes as needed to ensure it remains appropriate. |
34 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CD&A
Fiscal Year 2022 Compensation Committee used this peer group for compensation decisions throughout fiscal 2021. The Company and the Compensation Committee review this peer group annually and make changes as needed to ensure its appropriateness for future decisions.
Base salary;salary
The TMCC generally compares our executive officer base salaries to the 30th - 30th—80th percentile of the competitive market data in the analysis prepared by its compensation consultant. The Compensation CommitteeTMCC considers this range, allowing for base salaries to be set at the upper end of the range where appropriate, because executive compensation in the technology industry is intensely competitive and some of our competitors are larger organizations that compensate their executives at higher levelscan provide generally larger compensation packages than organizations of our size. Due to the intense competition to both attract and retain talent, the Compensation CommitteeTMCC believes it is appropriate to target the base salaries of our executive officers at these levels.
Typically, base salary levels are reviewed annually as part of our performance review process, as well as upon a promotion or other change in job responsibility. In addition to considering the competitive market analysis prepared by Compensia when setting base salaries for fiscal 2021,2022, the Compensation CommitteeTMCC also consideredevaluated the scope of, and accountability associated with, each executive officer’s position;position and the overall experience of each executive officer. The table below shows the fiscal 2021 and 2022 base salary rates for each named executive officer.
Name and Principal Position Held | Fiscal 2021 Salary ($) | Fiscal 2022 Salary ($) | Percentage Increase (%) | |||||||||
Sanjay Mirchandani President and Chief Executive Officer | 550,000 | 645,000 | 17.3%* | |||||||||
Brian Carolan Chief Financial Officer | 410,000 | 410,000 | 0% | |||||||||
Riccardo Di Blasio Chief Revenue Officer | 445,000 | 450,000 | 1.1% |
* | In his first two years with Commvault, Mr. Mirchandani received housing and relocation allowances of approximately $180,000 per year. For fiscal year 2022, those allowances were incorporated into his base salary rather than being paid separately, accounting for most of this increase. |
Annual Incentive Plan
During fiscal 2022, Messrs. Mirchandani, Carolan, and Di Blasio each participated in the Commvault Annual Incentive Plan (the “Fiscal 2022 AIP”), which made them eligible to earn a cash bonus based on achievement of pre-established corporate financial goals.
Target Annual Cash Incentive Opportunities
The TMCC approved target cash incentive opportunities for the named executive officers in May 2021 after considering a competitive market analysis, the scope of and accountability associated with each executive officer’s position, the performance of each executive officer since the last annual performance review (in the case of Mr. Carolan); and the overall experience of each executive officer. The table below shows the fiscal 2020 and 2021 base salary rates, as applicable, for each named executive officer:
Name and Principal Position Held | Fiscal 2021 Salary($) | Fiscal 2020 Salary($) | Percentage Increase(%) | |||||||||||||||||
Sanjay Mirchandani President and Chief Executive Officer | 550,000 | 500,000 | 10 | % | ||||||||||||||||
Brian Carolan Vice President and Chief Financial Officer | 410,000 | 397,000 | 3 | % | ||||||||||||||||
Riccardo Di Blasio Vice President and Chief Revenue Office | 445,000 | 430,000 | 3 | % |
The target annual cash bonus opportunity equal to 80% of his 445,000 ending fiscal 2021 base salary. Potential cashincentive opportunities were as follows:
Executive | Fiscal year 2022 base salary | Target annual cash incentive (%) | Target annual cash incentive ($) | |||||||||
Sanjay Mirchandani | $645,000 | 100% | $645,000 | |||||||||
Brian Carolan | $410,000 | 60% | $246,000 | |||||||||
Riccardo Di Blasio | $450,000 | 100% | $450,000 |
Cash bonus payments under the Fiscal 20212022 AIP could range from zero to 200% of their target annual cash bonus opportunity. In addition, Messrs. Carolan and Di Blasio were eligible for an additional 10% of their quarterly target cash bonus opportunity for each quarter Commvault met both the non-GAAP EBIT and Revenue targets for that quarter.target.
35 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CD&A
Performance Measures
For purposes of the Fiscal 2021 AIP, non-GAAP EBIT was calculated as described in the section entitled “Pay for Performance” above.
Corporate Performance Metrics | First Quarter | Second Quarter | ||||||
Revenue (in thousands) | $ | 154,500 | $ | 165,700 | ||||
Non-GAAP EBIT (in thousands) | $ | 10,200 | $ | 21,300 |
Revenue | Non-GAAP EBIT | MBOs | |||||||||
Mr. Mirchandani | 50% | 50% | N/A | ||||||||
Mr. Carolan | 40% | 40% | 20% | ||||||||
Mr. Di Blasio | 40% | 40% | 20% |
For Messrs. Carolan and Mirchandani
Metric | Weight | Threshold (50% payout) | Target (100% payout) | Maximum (200% payout) | ||||||||||||
Revenue (in thousands) | 60% | 90 | % | 100 | % | 105 | % | |||||||||
Non-GAAP EBIT (in thousands) | 40% | 85 | % | 100 | % | 112 | % |
If actual performance falls between the specified goals, the payout percentage is calculated on a linear basis.
For Mr. Di Blasio
Because Mr. Di Blasio is our Chief Revenue Officer, the TMCC believes he should have different targets and multipliers that emphasize the revenue metric. Specifically, Mr. Di Blasio had four independent quarterly revenue goals that, in the aggregate, were the same amount as follows:
In keeping with the quarterly schedule for Mr. Di Blasio’s incentive bonus, he also earned incremental amounts for the non-GAAP EBIT metric. His goal for non-GAAP EBIT was the same as the annual goal set for the other named executive officers. However, for each of the first three quarters of the AIP performance period, Mr. Di Blasio received an amount based on an assumed achievement of 80% of target for non-GAAP EBIT. At the end of the fourth quarter the payout associated with the non-GAAP EBIT metric was adjusted to achieve.
Fiscal 20212022 Annual Cash BonusIncentive Plan Decisions
Achievement (in millions) | Target (in millions) | Achievement vs. Target | Payout Factor | Weighting | Weighted Payout | |||||||||||||||
Q1 Revenue | $ | 173.0 | $ | 154.4 | 112.0 | % | 159.9 | % | 12.5 | % | 20.00 | % | ||||||||
Q1 EBIT | $ | 32.5 | $ | 10.2 | 318.6 | % | 200.0 | % | 12.5 | % | 25.00 | % | ||||||||
Q2 Revenue | $ | 171.1 | $ | 166.4 | 102.8 | % | 114.0 | % | 12.5 | % | 14.25 | % | ||||||||
Q2 EBIT | $ | 28.9 | $ | 24.0 | 120.4 | % | 181.6 | % | 12.5 | % | 22.70 | % | ||||||||
H2 Revenue | $ | 379.3 | $ | 351.1 | 108.0 | % | 140.0 | % | 25.0 | % | 35.00 | % | ||||||||
H2 EBIT | $ | 76.1 | $ | 65.0 | 117.1 | % | 168.4 | % | 25.0 | % | 42.10 | % | ||||||||
Total | 100.0 | % | 159.05 | % |
Achievement (in millions) | Target (in millions) | Achievement vs. Target | Payout Factor | Weighting | Weighted Payout | |||||||||||||||||||
Annual Revenue | $770 | $768 | 100.2 | % | 101.0 | % | 60 | % | 60.60 | % | ||||||||||||||
Non-GAAP EBIT | $162 | $161 | 100.4 | % | 101.3 | % | 40 | % | 40.52 | % | ||||||||||||||
Total | 100.0 | % | 101.12 | % |
The payout for Mr. Di Blasio his actual bonus earned reflects payment at 125% ofwas 128.34% because Commvault significantly exceeded the revenue target forin the MBO portion of the Fiscal 2021 AIP. In addition, the actual bonuses earned by Messrs. Carolanthird quarter, and Di Blasio reflect an additional 10% of theiroutperformed target annual cash bonus opportunities earned based on our actual achievement for both revenue and non-GAAP EBIT exceeding target for(but to a lesser extent) in the first two quarters ofand fourth quarters.
36 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CD&A |FISCAL YEAR 2022 COMPENSATION DECISIONS
As a result, the year andnamed executive officers received the second half of the year.
Target Annual Cash Incentive Opportunity | Percentage of Target Annual Incentive Earned | Actual Annual Incentive Earned | ||||||||||
Mr. Mirchandani | $645,000 | 101.12% | $652,224 | |||||||||
Mr. Carolan | $246,000 | 101.12% | $248,755 | |||||||||
Mr. Di Blasio | $450,000 | 128.34% | $577,539 |
Target Annual Cash Bonus Opportunity | Percentage of Target Bonus Earned | Actual Bonus Earned | |||||||||
Mr. Mirchandani | $550,000 | 159.05% | $874,706 | ||||||||
Mr. Carolan | $246,000 | 157.23% | $386,786 | ||||||||
Mr. Di Blasio | $356,000 | 162.23% | $577,539 |
We currently provide long-term equity incentive awards pursuant to our 2016 Incentive Plan, which is designed to provide our employees, including our executive officers, the non-employee members of our Board of Directors and other service providersplan participants with appropriate incentives to perform in a superior manner and to achieve long-range goals and to align theparticipants’ interests of plan participants with those of our stockholders. The 2016 Incentive Plan permits the grant of incentive stock options, non-qualified stock options, stock appreciation rights, full value share awards (including restricted stock awards, restricted stock unit (“RSU”) awards (including performance-based restricted stock unit (“PSU”) awards), and performance stock awards)awards, and other forms of equity based on, or related to, shares of our common stock, and cash incentive awards whichthat are contingent on performance.
Generally, new executive officers and to the non-employee members of our Board of Directors have been granted and reflected in our consolidated financial statements, based upon the applicable accounting guidance, at fair value on the grant date.
When annual equity awards are granted, granted—typically in May of each year—the Compensation Committee evaluatesTMCC bases grants on an evaluation of each executive officer’s performance during the prior fiscal year, as well as our overall corporate financial performance, and such performance is taken into account when determining the magnitude of these equity awards. The Compensation Committee generally grants follow-on equity awards on an annual basis.performance. The terms of the awardannual awards and the number and form of sharesawards granted are establisheddesigned to ensure the recipient has a meaningful incentive to remain an employee of our Company. The long-term equity incentive awards granted to our executive officers during fiscal 2021 were granted in May 2020.
In preparation to grant thesefor granting annual equity awards in May 2020,2021, the Compensation CommitteeTMCC reviewed a competitive market analysis prepared by Compensia to obtain comparable market data primarily related to the grant date fair value of the equity awards granted to similarly-situatedsimilarly situated executives at the companies in the our compensation peer group.
Time-Based 50% | These awards vest 33.3% on the first anniversary of the grant date and an additional 8.375% | ||||
Relative TSR PSU awards 25% | Recipients may earn up to 200% of their target award based on Earned shares, if any, vest at the end of each applicable performance period. | ||||
Financial PSU awards 25% | Recipients generally may earn up to 200% of their target award based 25% on Commvault’s one-year revenue, 50% on annual recurring revenue for the Metallic product line (“Metallic ARR”), and 25% on non-GAAP EBIT performance for fiscal 2022. Earned shares, if any, vest 33.3% on the first anniversary of the grant date and an additional 8.375% quarterly thereafter until fully vested, generally subject to continued employment on the vesting date. |
Based on the competitive market analysis prepared by Compensia, Commvault’s long-term equity grants are more heavily weighted toward performance-based awards than is the norm within our compensation peer group.
37 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CD&A
Taking into consideration market data and the performance of individual executive officers, the Compensation Committee determined thatTMCC approved the aggregate economic value of thefollowing equity awards granted toaward grants for our named executive officers should be $6.25 million
Executive | Aggregate target value | Time-based restricted stock unit awards (#) | Relative TSR PSU awards (#) | Financial PSU awards (#) | ||||||||||||
Mr. Mirchandani | $ | 8.5 million | 63,961 | 31,980 | 31,980 | |||||||||||
Mr. Carolan | $ | 2 million | 15,049 | 7,524 | 7,524 | |||||||||||
Mr. Di Blasio | $ | 2.5 million | 18,812 | 9,406 | 9,406 |
in the case of Mr. Mirchandani, $2.058 millionin the case of Mr. Carolan, and $1.51millionin the case of Mr. Di Blasio. In determining the number of shares granted to each named executive officer, the Compensation CommitteeTMCC converted the target value of each award to a number of sharesunits based on the 5-trading day average closing price of our common stock prior to the grant date. Fifty percent of the target award value of each named executive officer’s award was granted in the form of time-based RSU awards, with the remaining 50% of the target award value granted in the form of the Relative TSR PSU awards. Based on the competitive market analysis prepared by Compensia, this weighting exceeded the average weighting of time-based and performance-based awards of the companies in our compensation peer group. The number of shares of our common stock granted to our named executive officers as time-based RSU awards and Relative TSR PSU awards for fiscal 2021 was as follows:
Time-based Restricted Stock Unit Awards (number of shares) | Relative TSR PSU Awards (Target number of shares) | ||||||||||
Mr. Mirchandani | 87,364 | 87,364 | |||||||||
Mr. Carolan | 28,768 | 28,768 | |||||||||
Mr. Di Blasio | 21,108 | 21,108 |
Relative TSR PSU Awards
The Relative TSR PSU awards granted to our named executive officers in fiscal 2021 are to2022 will be earned and vest(or not) based on our TSR measured relative to the components of the Russell 3000 Index over three equally-weightedequally weighted overlapping one-year, two-year, and three-year performance periods.The payout scheduleopportunities for the Relative TSR PSU awards isare as follows:
Relative TSR Percentile Rank | % of Target PSU Earned | ||||
< 25th | 0% | ||||
25th | 50% | ||||
50th | 100% | ||||
75th | 150% | ||||
85th | 200% (max) |
Scale is linear between shown points.
Regardless of Commvault’s relative TSR performance, earned shares cannot exceed 100% of target if the Company’s stock price is lower at the end of the performance period than it was at the beginning.
The TMCC regularly considers the appropriate time horizon for the performance measures used in the compensation plan for our named executive officers. The TMCC believes that using multiple-year vesting for the Relative TSR PSUs appropriately balances the one-year performance period for the annual bonus and the three-year vesting period for the time-based RSUs and Financial PSUs.
Our performance and the resulting payouts for Relative TSR PSUs have varied significantly over the past five years.
Performance Vesting RSUs—Total Shareholder Return (TSR)
Grant | May 2018 | February 2019(1) —New CEO | May 2019 | May 2020 | May 2021 | |||||||||||||||
Actual Vest %: | ||||||||||||||||||||
First annual tranche | 0% | N/A(2) | 96% | 105% | 98% | |||||||||||||||
Second annual tranche | 71% | 62% | 95% | 101% | TBD | |||||||||||||||
Third annual tranche | 62% | 66% | 87% | TBD | TBD |
This market-based award was granted to Mr. Mirchandani as part of |
(2) | The first tranche of Mr. Mirchandani’ s awards vested on the second anniversary of the grant date. |
38 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CD&A
Financial PSU awards
The Financial PSUs granted to our named executive officers in fiscal 2022 were eligible to be earned based on our level of achievement against revenue, non-GAAP EBIT, and Metallic ARR goals established at the beginning of fiscal 2022 and measured over a one-year performance period.
Metric | Weight | Threshold (50% payout) | Target (100% payout) | Maximum (200% payout)* | ||||||
Revenue | 25% | 90% | 100% | 105% | ||||||
Non-GAAP EBIT | 25% | 85% | 100% | 112% | ||||||
Metallic ARR | 50% | 75% | 100% | 125% |
* | Mr. Di Blasio is eligible for a payout of 240% for maximum performance on the Revenue metric. |
Any shares earned based on our actual one-year financial performance were to vest 33.3% on the first anniversary of the grant date and an additional 8.375% quarterly thereafter until fully vested.
Other Benefits
Our executive officers participate in health and welfare benefit programs that are substantially the same as the benefits for all other eligible employees of our Company.Commvault employees. These benefits include a 50% matching contribution on the first 4% of eligible pay contributed to our 401(k) plan.
Compensation Risk Assessment
We have reviewed our compensation policies and practices for all employees and concluded that any risks arising from our policies and practices are not reasonably likely to have a material adverse effect on us.
We currently require our independent directors and our CEO to acquire an equity ownership interest in ourCommvault common stock within five years of the date of our adoption of the policy (or by February 2024—five years from the date his start date—that they first became a director or CEO, as applicable) that, in the case of the independent directors is equal to five times their base annual retainer, and in the case of our CEO is equal to five times his current annual base salary. The Compensation CommitteeTMCC is satisfied that this level of equity ownership among our independent directors andis sufficient to motivate our CEO and the equity ownership interests of our other directors and executive officers, is sufficient to provide motivation and to align these groups'his interests with those of our stockholders.
39 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
CD&A
Hedging Prohibition
We have a policy that prohibits our employees (including officers) and the members of our Board of Directorsdirectors from engaging in any hedging transactions which arewith regard to Commvault common stock, including: short sales; purchases or sales of puts, calls, or other derivative securities; and purchases of financial instruments (such as prepaid variable forward contracts, equity swaps, collars, and exchange funds) or other transactions that allowhedge or offset, or are designed to hedge or offset, any decrease in the market value of Commvault securities. Hedging transactions enable the holder to continue to own share of our common stock, but without the full risks and rewards of ownership. When theThe Board believes these transactions are inadvisable because a holder who no longer has the full risks and/orand rewards of ownership they may no longernot have the same objectives as the Company and our other stockholders, and therefore such transactions are prohibited.
Clawback Policy
In April 2021, we adopted a "clawback"“clawback” policy whichthat permits the Compensation CommitteeTMCC to seek to recover cash or equity incentive awards from certain senior leaders, including our chief executive officer, chief financial officer, and chief accounting officer, in the event the Company is required to prepare a financial restatement, regardless of whether or not the restatement was due tonecessary because of fraud or otherwiseother misconduct.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code imposesplaces a limit of $1 million limit on the amount of compensation that a publicly-traded corporationwe may deduct for compensation paid to each of the company’s principal executive officer, principal financial officer and the company’s three next most highly compensated executive officers (“covered employees”). The Tax Reform and Jobs Act of 2017 (the “Act”) eliminated the ability of companies to rely on the “performance-based” compensation exception under Section 162(m) and extended the application of Section 162(m) to compensation payable toas a business expense in any person who was ever a covered employee at any time after 2016 (including compensation payable after termination of employment). As a result, beginning in fiscal 2018, we were no longer able to take a deduction for any compensation paid to our covered employees in excess of $1 million unless the compensation originally qualified for the “performance-based” compensation exception and qualifies for transition relief applicable to certain arrangements in place on November 2, 2017 and that have not subsequently been materially modified. The application of the transition rule will be of limited future valueyear with respect to the preservation of deductions for compensation payable to covered employees in excess of the Section 162(m) limits.
We account for the equity awards granted to all our employees under ASC 718, Compensation—Stock Compensation, which requires us to estimate and record compensation expense over the service period of the award. All equity awards to our employees, including our executive officers, fiscal 2021 compensation arrangements. The following resultsand to the non-employee members of our Board of Directors, are based on the accounting principles that were used to prepare the fiscal 2021reflected in our consolidated financial statements, included in our Annual Report on Form 10-K forbased upon the year ended March 31, 2021.
Fiscal Year Ended March 31, | ||||||||||||||
2021 | 2020 | |||||||||||||
(in thousands except per share data) | ||||||||||||||
Non-GAAP financial measures and reconciliation: | ||||||||||||||
GAAP income (loss) from operations | $ | (22,263) | $ | (17,508) | ||||||||||
Noncash stock-based compensation (1) | 82,086 | 64,135 | ||||||||||||
FICA and related payroll tax expense related to equity compensation (2) | 2,196 | 1,571 | ||||||||||||
Restructuring (3) | 23,471 | 21,348 | ||||||||||||
Hedvig deferred payments (4) | 5,624 | 2,812 | ||||||||||||
Amortization of intangible assets (5) | 5,650 | 5,650 | ||||||||||||
Impairment of intangible assets (6) | 40,700 | — | ||||||||||||
Net change in contingent consideration (7) | — | (3,783) | ||||||||||||
Non-routine shareholder matter (8) | — | 7,628 | ||||||||||||
Acquisition costs (9) | — | 5,639 | ||||||||||||
Non-GAAP income from operations | $ | 137,464 | $ | 87,492 | ||||||||||
GAAP net income (loss) | $ | (30,954) | $ | (5,645) | ||||||||||
Noncash stock-based compensation (1) | 82,086 | 64,135 | ||||||||||||
FICA and related payroll tax expense related to equity compensation (2) | 2,196 | 1,571 | ||||||||||||
Restructuring (3) | 23,471 | 21,348 | ||||||||||||
Hedvig deferred payments (4) | 5,624 | 2,812 | ||||||||||||
Amortization of intangible assets (5) | 5,650 | 5,650 | ||||||||||||
Impairment of intangible assets (6) | 40,700 | — | ||||||||||||
Net change in contingent consideration (7) | — | (3,783) | ||||||||||||
Non-routine shareholder matter (8) | — | 7,628 | ||||||||||||
Acquisition costs (9) | — | 5,639 | ||||||||||||
Non-GAAP provision for income taxes adjustment (10) | (27,674) | (31,863) | ||||||||||||
Non-GAAP net income | $ | 101,099 | $ | 67,492 | ||||||||||
Diluted weighted average shares outstanding | 47,803 | 46,440 | ||||||||||||
Non-GAAP diluted net income per share | 2.11 | 1.45 |
40 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
During the second quarter of fiscal 2020, Commvault incurred costs related to the acquisition of Hedvig, Inc. Management believes, when used as a supplement to GAAP results, that the exclusion of these costs will help investors and financial analysts understand Commvault's operating results and underlying operational trends as compared to other periods.
The following table summarizes the compensation earned by both individuals who served as our Principal Executive Officerthe named executive officers during the fiscal yearyears ended March 31, 2022, 2021, our Principal Financial Officer and our other most highly paid executive officer whose total compensation in fiscal 2021 exceeded $100,000. We refer to these individuals as our “named executive officers”.
Name and Principal Position | Year | Salary($) | Bonus($) | Stock Awards($)(3) | Non-Equity Incentive Plan Compensation($)(4) | All Other Compensation($) | Total ($) | ||||||||||||||||||||||
Sanjay Mirchandani | 2021 | 505,769 | — | 6,336,511 | 874,706 | 288,000 | (5) | 8,004,986 | |||||||||||||||||||||
President and Chief Executive Officer | 2020 | 500,000 | 250,000 | (1) | 4,999,745 | — | 347,771 | 6,097,515 | |||||||||||||||||||||
2019 | 76,923 | 250,000 | (1) | 11,423,757 | — | 167,337 | 11,918,016 | ||||||||||||||||||||||
Brian Carolan | 2021 | 384,123 | — | 2,086,543 | 386,786 | 5,455 | (6) | 2,862,907 | |||||||||||||||||||||
Vice President and | 2020 | 397,000 | — | 2,017,884 | 166,740 | 10,190 | 2,591,814 | ||||||||||||||||||||||
Chief Financial Officer | 2019 | 397,000 | — | 1,874,064 | 238,000 | 18,039 | 2,527,103 | ||||||||||||||||||||||
Riccardo Di Blasio | 2021 | 416,654 | — | 1,530,963 | 577,539 | 5,438 | (7) | 2,530,594 | |||||||||||||||||||||
Vice President and | 2020 | 380,385 | 100,000 | (2) | 1,459,584 | 231,000 | 5,292 | 2,176,259 | |||||||||||||||||||||
Chief Revenue Officer |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation | Total ($) | |||||||||||||||||||||
Sanjay Mirchandani | 2022 | 634,038 | — | 9,413,382 | 652,224 | 60,568 | (5) | 10,760,212 | ||||||||||||||||||||
President and Chief Executive Officer | 2021 | 505,769 | — | 6,336,511 | 874,706 | 288,000 | 8,004,986 | |||||||||||||||||||||
|
2020 |
|
|
500,000 |
|
|
250,000 |
(1) |
|
4,999,745 |
|
|
— |
|
|
347,771 |
|
|
6,097,515 |
| ||||||||
Brian Carolan | 2022 | 410,000 | — | 2,214,758 | 248,755 | 8,263 | (6) | 2,881,776 | ||||||||||||||||||||
Chief Financial Officer | 2021 | 384,123 | — | 2,086,543 | 386,786 | 5,455 | 2,862,907 | |||||||||||||||||||||
2020 | 397,000 | — | 2,017,884 | 166,740 | 10,190 | 2,591,814 | ||||||||||||||||||||||
Riccardo Di Blasio | 2022 | 449,423 | — | 2,768,656 | 577,539 | 8,185 | (7) | 3,803,803 | ||||||||||||||||||||
Chief Revenue Officer | 2021 | 416,654 | — | 1,530,963 | 577,539 | 5,438 | 2,530,594 | |||||||||||||||||||||
2020 | 380,385 | 100,000 | (2) | 1,459,584 | 231,000 | 5,292 | 2,176,259 |
1. | This amount represents the guaranteed bonus due to Mr. Mirchandani as described in his February 2019 employment agreement, limited to fiscal years 2019 and 2020. |
2. | This amount represents Mr. Di Blasio’s one-time cash sign-on bonus. |
3. | The amounts reported in this column represent the grant date fair value of the restricted stock unit awards and performance stock unit awards granted during the fiscal year indicated as computed in accordance with FASB ASC Topic 718. The amounts shown disregard estimated forfeitures related to service-based vesting conditions and assume performance stock units at target (100%). If the performance stock unit awards are achieved at the maximum (generally 200%, but 210% in the case of Mr. Di Blasio), this would result in stock award values of $14,421,770 (for Mr. Mirchandani), $3,393,092 (for Mr. Carolan), and $4,306,495 (for Mr. Di Blasio). See Note 10 of our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended March 31, 2022, for a discussion of the assumptions we made in determining the grant date fair value of such awards. |
4. | The amounts reported in this column consist of annual cash incentive bonuses earned in fiscal 2022 and are more fully described above under the heading “Annual Incentive Plan” in the Compensation Discussion and Analysis. |
5. | Mr. Mirchandani’ s other annual compensation in fiscal 2022 included a monthly housing and travel allowance of $15,000 per month for three months for a total of $45,000 for the fiscal year, relocation reimbursement of $6,745, and $8,823 related to his 401(k) plan company matching contributions. |
6. | Mr. Carolan’s other annual compensation in fiscal 2022 included his 401(k) plan company matching contributions of $8,263. |
7. | Mr. Di Blasio’s other annual compensation in fiscal 2022 included his 401(k) plan company matching contributions of $8,185. |
41 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
(2)COMPENSATION TABLES This amount represents Mr. Di Blasio's one-time cash sign-on bonus.
(4)The amounts reported in this column consist of cash bonuses earned in fiscal 2021 and are more fully described above under the heading “Annual Bonus Plan” in the Compensation Discussion and Analysis.
The following table sets forth information as to grants of plan-based awards to our named executive officers in fiscal 2021:2022.
Grant & Date
| Estimated future payouts under non-equity incentive plan awards ($) | Estimated future payouts under equity incentive plan awards (#) | All Other (#)(7)
| Grant Date Fair Value Awards ($)(8)
| ||||||||||||||||||||||||||||||||
Name | Threshold(1) | Target(2) | Maximum(3) | Threshold(4) | Target(5) | Maximum(6) | ||||||||||||||||||||||||||||||
Sanjay Mirchandani | — | 322,500 | 645,000 | 1,290,000 | — | — | — | — | — | |||||||||||||||||||||||||||
05/17/21 | — | — | — | — | — | — | 63,961 | 4,404,994 | ||||||||||||||||||||||||||||
05/17/21 | — | — | — | 15,990 | 31,980 | 63,960 | — | 2,805,925 | ||||||||||||||||||||||||||||
05/17/21 | — | — | — | 15,990 | 31,980 | 63,960 | — | 2,202,463 | ||||||||||||||||||||||||||||
Brian Carolan | — | 123,000 | 246,000 | 492,000 | — | — | — | — | — | |||||||||||||||||||||||||||
05/17/21 | — | — | — | — | — | — | 15,049 | 1,036,425 | ||||||||||||||||||||||||||||
05/17/21 | — | — | — | 3,762 | 7,524 | 15,048 | — | 660,156 | ||||||||||||||||||||||||||||
05/17/21 | — | — | — | 3,762 | 7,524 | 15,048 | — | 518,178 | ||||||||||||||||||||||||||||
Riccardo Di Blasio | — | 180,000 | 450,000 | 1,008,000 | — | — | — | — | — | |||||||||||||||||||||||||||
05/17/21 | — | — | — | — | — | — | 18,812 | 1,295,582 | ||||||||||||||||||||||||||||
05/17/21 | — | — | — | 4,703 | 9,406 | 18,812 | — | 825,282 | ||||||||||||||||||||||||||||
05/17/21 | — | — | — | 3,528 | 7,055 | 14,110 | — | 485,878 | ||||||||||||||||||||||||||||
05/17/21 | — | — | — | 1,176 | 2, 351 | 5,642 | — | 161,913 |
1. | Represents the threshold amount with respect to each applicable metric under the Fiscal 2022 AIP for each named executive officer. Actual total payouts may be less than the threshold amounts shown if threshold performance goals are not attained. See “Annual Incentive Plan” above for more information on the Fiscal 2022 AIP and performance objectives for each of our named executive officers. |
2. | Represents the total target amount with respect to each applicable metric under the Fiscal 2022 AIP for each named executive officer. See “Annual Incentive Plan” above for more information. |
3. | Represents the maximum amount with respect to each applicable metric under the Fiscal 2022 AIP for each named executive officer. See “Annual Incentive Plan” above for more information. |
4. | Represents the threshold amount for performance stock units granted, or 50% of the target amount, for each named executive officer under our 2016 Incentive Plan. If the threshold conditions for these awards are not met, the award value will be zero. See “Long-Term Equity Incentive Awards” above for more information on the plan and the related performance objectives. |
5. | Represents the target amount for performance stock units granted for each named executive officer under our 2016 Incentive Plan. See “Long-Term Equity Incentive Awards” above for more information. |
6. | Represents the maximum amount for performance stock units granted. The maximum payout opportunity for the financial PSUs is 200% of the target amount for Messrs. Mirchandani and Carolan, and 210% for Mr. Di Blasio. The maximum payout opportunity for the Relative TSR PSUs is 200% for all the named executive officers. See “Long-Term Equity Incentive Awards” above for more information. |
7. | Amounts in this column reflect time-based restricted stock unit awards granted during fiscal 2022 to our named executive officers under our 2016 Incentive Plan. |
8. | The amounts reported in this column represent the grant date fair value of the restricted stock unit awards and performance stock unit awards (shown at target) granted during the fiscal year indicated as computed in accordance with FASB ASC Topic 718. The amounts shown disregard estimated forfeitures related to service-based vesting conditions. See Note 10 of our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended March 31, 2022, for a discussion of the assumptions we made in determining the grant date fair value of such awards. |
42 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Estimated future payouts under non-equity incentive plan awards ($) | Estimated future payouts under equity incentive plan awards (#) | All Other Stock Awards: Number of Shares of Stock or Units (#)(7) | Grant Date Fair Value of Stock and Option Awards($)(8) | ||||||||||||||||||||||||||||||||||||||
Name | Grant & Approval Date | Threshold (1) | Target (2) | Maximum (3) | Threshold (4) | Target (5) | Maximum (6) | ||||||||||||||||||||||||||||||||||
Sanjay Mirchandani | — | 275,000 | 550,000 | 1,100,000 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
05/22/20 | — | — | — | — | — | — | 87,364 | 3,125,010 | |||||||||||||||||||||||||||||||||
05/22/20 | — | — | — | 43,682 | 87,364 | 174,728 | — | 3,211,501 | |||||||||||||||||||||||||||||||||
Brian Carolan | 123,000 | 246,000 | 492,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
05/22/20 | — | — | — | — | — | — | 28,768 | 1,029,031 | |||||||||||||||||||||||||||||||||
05/22/20 | — | — | — | 14,384 | 28,768 | 57,536 | — | 1,057,512 | |||||||||||||||||||||||||||||||||
Riccardo Di Blasio | 178,000 | 356,000 | 712,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||
05/22/20 | — | — | — | — | — | — | 21,108 | 755,033 | |||||||||||||||||||||||||||||||||
05/22/20 | — | — | — | 10,554 | 21,108 | 42,216 | 775,930 |
(3)Represents the maximum amount with respect to each applicable metric under the fiscal 2021 Annual Bonus Plan for each named executive officer. See “Annual Bonus Plan” above for more information on the plans and performance objectives for each of our named executive officers.
The following table reflects all outstanding equity awards held by our named executive officers as of March 31, 2021:2022.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Grant Date(1) | Number of Securities Underlying Unexercised Options (Exercisable) | Option Exercise Price($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not | Market Value Vested($) | Equity Incentive Unearned | Equity Incentive Plan Awards: Market or Unearned Vested($) | ||||||||||||||||||||||||
Sanjay Mirchandani | 05/15/19 | — | — | — | 2,847 | 188,898 | 11,050 | 733,168 | ||||||||||||||||||||||||
05/22/20 | — | — | — | 36,402 | 2,415,273 | 58,242 | 3,864,357 | |||||||||||||||||||||||||
05/17/21 | — | — | — | 111,931 | 7,426,622 | 31,980 | 2,121,873 | |||||||||||||||||||||||||
Brian Carolan | 03/14/13 | 12,000 | 77.57 | 03/14/23 | — | — | — | — | ||||||||||||||||||||||||
10/14/13 | 45,132 | 87.20 | 10/14/23 | — | — | — | — | |||||||||||||||||||||||||
10/14/14 | 22,649 | 45.44 | 10/14/24 | — | — | — | — | |||||||||||||||||||||||||
05/15/19 | — | — | — | 1,608 | 106,691 | 3,013 | 199,913 | |||||||||||||||||||||||||
11/15/19 | — | — | — | 375 | 24,881 | — | — | |||||||||||||||||||||||||
05/22/20 | — | — | — | 11,987 | 795,337 | 19,178 | 1,272,460 | |||||||||||||||||||||||||
05/17/21 | — | — | — | 26,335 | 1,747,327 | 7,524 | 499,217 | |||||||||||||||||||||||||
Riccardo Di Blasio | 05/15/19 | — | — | — | 1,047 | 69,468 | 2,092 | 138,804 | ||||||||||||||||||||||||
11/15/19 | — | — | — | 261 | 17,317 | — | — | |||||||||||||||||||||||||
05/22/20 | — | — | — | 8,795 | 583,548 | 14,072 | 933,677 | |||||||||||||||||||||||||
05/17/21 | — | — | — | 32,945 | 2,185,891 | 9,406 | 624,088 |
1. | Unless otherwise indicated, all restricted stock unit awards granted to our named executive officers vest over three years, with 33.3% vesting on the first anniversary of the grant date and 8.375% vesting quarterly thereafter, subject, in each case, to continued employment or service through the applicable vesting date. Financial performance awards follow the same vesting schedule, but at their respective achievement rates. Relative TSR-based awards vest equally on an annual basis over three years, subject to continued employment or service through the applicable vesting date. The vesting commencement date for all restricted stock unit awards and performance stock unit awards is the grant date. |
2. | Time-based awards include time-vesting restricted stock unit awards and financial performance stock unit awards at the rate achieved for the respective fiscal year. The May 2019 financial performance stock unit awards achieved at 0%, the November 2019 financial performance stock unit awards achieved at 46%, and the May 2021 financial performance stock unit awards achieved at 150%. There were no financial performance stock unit awards granted in fiscal 2021. The value is computed based on the number of achieved unvested shares multiplied by the closing market price of our common stock at the end of fiscal 2022. The actual value (if any) to be realized by the named executive officer depends on whether the shares vest and the future performance of our common stock. On March 31, 2022, the closing price of our common stock was $66.35 per share. See “Long-Term Equity Incentive Awards” above for more information on the plan and the related performance objectives. |
3. | Performance-based awards include Relative TSR performance stock unit awards at the March 31, 2022, payout rate based on Commvault’s TSR measured relative to the components of the Russell 3000 Index. The May 2019, May 2020, and May 2021 awards are calculated at an estimated 100% payout (target). The value is computed based on the number of achieved unvested shares multiplied by the closing market price of our common stock at the end of fiscal 2022. The actual value (if any) to be realized by the named executive officer depends on whether the shares vest and the future performance of our common stock. On March 31, 2022, the closing price of our common stock was $66.35 per share. See “Long-Term Equity Incentive Awards” above for more information on the plan and the related performance objectives. |
43 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date (1) | Number of Securities Underlying Unexercised Options (Exercisable) (#) | Option Exercise Price($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(#)(2) | Market Value of Unearned Shares or Units of Stock That Have Not Vested($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested($) | |||||||||||||||||||||||||||||||||||||||
Sanjay | 02/04/19 | — | — | — | 15,489 | 999,041 | 23,233 | 1,498,529 | |||||||||||||||||||||||||||||||||||||||
Mirchandani | 05/15/19 | — | — | — | 14,232 | 917,964 | 22,100 | 1,425,450 | |||||||||||||||||||||||||||||||||||||||
05/22/20 | — | — | — | 87,364 | 5,634,978 | 87,364 | 5,634,978 | ||||||||||||||||||||||||||||||||||||||||
Brian | 10/12/12 | 35,256 | 56.57 | 10/12/22 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Carolan | 03/14/13 | 12,000 | 77.57 | 03/14/23 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
10/14/13 | 45,132 | 87.20 | 10/14/23 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
10/14/14 | 45,299 | 45.44 | 10/14/24 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
05/15/18 | — | — | — | 1,580 | 101,910 | 2,162 | 139,449 | ||||||||||||||||||||||||||||||||||||||||
05/15/19 | — | — | — | 8,037 | 518,387 | 6,027 | 388,742 | ||||||||||||||||||||||||||||||||||||||||
11/15/19 | — | — | — | 875 | 56,438 | — | — | ||||||||||||||||||||||||||||||||||||||||
05/22/20 | — | — | — | 28,768 | 1,855,536 | 28,768 | 1,855,536 | ||||||||||||||||||||||||||||||||||||||||
Riccardo | 05/15/19 | — | — | — | 5,232 | 337,464 | 4,185 | 269,933 | |||||||||||||||||||||||||||||||||||||||
Di Blasio | 11/15/19 | — | — | — | 609 | 39,281 | — | — | |||||||||||||||||||||||||||||||||||||||
05/22/20 | — | — | — | 21,108 | 1,361,466 | 21,108 | 1,361,466 |
(3)Performance-based awards include Relative TSR performance stock unit awards at the March 31, 2021 payout rate based on the TSR measured relative to the components of the Russell 3000 Index. The May 2018, February 2019, May 2019 and May 2020 awards are calculated at an estimated 100% payout (target). The value is computed based on the number of achieved unvested shares multiplied by the closing market price of our common stock at the end of fiscal 2021. The actual value (if any) to be realized by the named executive officer depends on whether the shares vest and the future performance of our common stock. On March 31, 2021, the closing price of our common stock was $64.50 per share. See “Long-Term Equity Incentive Awards” above for more information on the plan and the related performance objectives.
The following table sets forth information on the number and value of restricted stock units vested during fiscal 20212022 for our named executive officers.
Stock Awards | ||||||||||||||
Name | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($) (1) | ||||||||||||
Sanjay Mirchandani | 91,403 | 4,406,843 | ||||||||||||
Brian Carolan | 26,555 | 1,126,119 | ||||||||||||
Riccardo Di Blasio | 11,773 | 505,741 |
Stock Awards | ||||||||
Name | Number of Shares Acquired on Vesting(#) | Value Realized On Vesting($)(1) | ||||||
Sanjay Mirchandani | 134,244 | 9,271,073 | ||||||
Brian Carolan | 39,562 | 2,748,462 | ||||||
Riccardo Di Blasio | 26,218 | 1,822,725 |
1. | The value realized on the vesting of the restricted stock unit awards is based on the market price of our common stock on the vesting date. See “Long-Term Equity Incentive Awards” above for more information on the plan and the related performance objectives. |
Pension Benefits and the related performance objectives.Deferred Compensation
The following table summarizes the employment agreement with Mr. Mirchandani upon his appointment as Presidentagreements between Commvault and Chief Executive Officer. The agreement provides that Mr. Mirchandani's annual base salary shall be subject to annual review by our Board of Directors. The agreement also provides that Mr. Mirchandani shall be eligible for an annual cash bonus and that he shall be entitled to participate in the employee benefits plans in which our other executives may participate. The agreement further provides that Mr. Mirchandani is entitled to certain equity awards, including annual target equity awards and a one-time new hire award. If we terminate Mr. Mirchandani's employment without cause or if Mr. Mirchandani terminates his employment for good reason, the agreement provides that Mr. Mirchandani will be entitled to receive a lump sum payment equal to (i) 12 months of his then-current base salary and (ii) his annual cash target bonus for the year in which termination of employment occurs. We will also be required to continue paying the premiums for Mr. Mirchandani's and his dependents’ health insurance coverage for a period of 18 months. In addition, Mr. Mirchandani will be entitled to any other amounts or benefits previously accrued under our then applicable employee benefit plans, incentive plans or programs. Furthermore, the vesting of all stock options and stock awards held by Mr. Mirchandani shall immediately accelerate as for one year of additional vesting and any stock awards with performance conditions not yet determined shall be deemed earned at 100% of target. If we terminate Mr. Mirchandani's employment by reason of death or disability, he will be entitled to any compensation earned but not yet paid, any stock options or awards shall immediately vest, and any stock awards with performance conditions not yet determined shall be deemed earned at 100% of target. The agreement also provides that, during his term of employment with us and for a period of one year following any termination of employment with us, Mr. Mirchandani may not participate, directly or indirectly, in any capacity whatsoever, within the United States, in a business in competition with us, other than beneficial ownership of up to one percent of the outstanding stock of a publicly held company. In addition, Mr. Mirchandani may not solicit our employees or customers for a period of one year following any termination of his employment with us. Mr. Mirchandani's employment agreement also contains a change in control provision which is discussed below in the section titled “Change in Control Agreements.”named executive officers.
Sanjay Mirchandani | Riccardo Di Blasio | Brian Carolan | ||||
Compensation arrangements | • annual base salary subject to annual review by our Board of Directors • eligible for an annual cash bonus • entitled to participate in the employee benefits plans in which our other executives may participate • entitled to annual equity awards and a one-time new hire award | • annual base salary • eligible to participate in a sales incentive compensation plan that provides a cash bonus opportunity • entitled to participate in the employee benefits plans in which our other executives may participate • entitled to annual equity awards and a one-time new hire award | • annual base salary • eligible to participate in a sales incentive compensation plan that provides a cash bonus opportunity • entitled to participate in the employee benefits plans in which our other executives may participate • entitled to annual equity awards | |||
Compensation in the event of a termination without “cause” or for “good reason” and other than within 24 months following a “change in control” (subject to execution of a release of claims in favor of the Company) | • lump sum payment equal to (i) 12 months of his then-current base salary and (ii) his target cash incentive bonus for the year in which termination of employment occurs • continued payment of premiums for health insurance for Mr. Mirchandani and his dependents for a period of 18 months | • 12 months of his then-current base salary • an immediate lump sum payment equal to the amount he would have to pay for twelve months of continued group health coverage under the Company’s group health plan as in effect for himself and his dependents immediately prior to his termination of employment |
44 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
COMPENSATION TABLES
Sanjay Mirchandani | Riccardo Di Blasio | Brian Carolan | ||||
• entitled to any other amounts or benefits previously accrued under our then applicable employee benefit plans or incentive plans • 12 months acceleration for time-vesting equity • any stock awards with performance conditions not yet determined will be deemed earned at 100% of target | ||||||
Compensation in the event of termination due to death or disability | • entitled to any compensation earned but not yet paid • any outstanding stock options or awards will immediately vest • any stock awards with performance conditions not yet determined will be deemed earned at 100% of target | |||||
Restrictive covenants | during his term of employment with us and for a period of one year following any termination, may not: • participate, directly or indirectly, within the United States, in a business in competition with Commvault (other than beneficial ownership of up to one percent of the outstanding stock of a publicly held company) • solicit our employees or customers | during his term of employment with us and for a period of one year following any termination, the executive may not: • engage in, or have any interest in, or manage or operate any business that engages in any activity that then competes with any business of the Company or any Commvault subsidiary anywhere in the world (each, a “Competitor”) (other than beneficial ownership of up to 5% of the outstanding voting stock of a publicly traded company) • induce any employee of the Company or its subsidiaries to terminate such employment or to become employed by any Competitor • contact, induce or attempt to induce any customer or potential customer (of which the executive had actual knowledge) to purchase products or services from any entity other than the Company, or to cease being a customer of the Company |
* | Each executive’s employment agreement defines “cause” and “good reason” |
Sanjay Mirchandani
If a change in control of our Company occurs and Mr. Mirchandani'sMirchandani’ s employment is terminated for reasons other than for cause, orMr. Mirchandani’ s employment is terminated on account of disability, or if Mr. Mirchandani terminates his employment for good reason, in each case within two years of the change in control, then all equity awards held by Mr. Mirchandani shallwill immediately become exercisable and vested and any equity awards with performance conditions not yet determined will be deemed earned at 100% of target. Furthermore, subject to execution of a release of claims in favor of the Company, he shallwill be entitled to (1) a lump sum severance payment equal to 18 months of his base salary at the time of the change in control plus an amount equal to his target cash incentive bonus at the time of the change in control, and (2) health insurance coverage for him and his dependents for an 18 month18-month period.
Riccardo Di Blasio and Brian Carolan
Mr. Di Blasio and Mr. Carolan each have entered into changeChange in Control Agreements that are independent of control agreements with each of our other named executive officers whosetheir respective employment agreement sets forth the protections upon a change of control described above. Each of these agreements provide that ifagreements.
If a change in control of our Company occurs, and within two years the employment of either of the named executive officersMr. Di Blasio or Mr. Carolan is terminated for reasons other than for cause, or if the officerexecutive terminates his employment within 60 daysfor good reason (as defined in the Change in Control Agreement), then, subject to the execution of a material diminution in his salary or duties or the relocationgeneral release of his employment following a change in control of our Company, thenclaims, all
45 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
COMPENSATION TABLES |CHANGE IN CONTROL AGREEMENTS
equity awards held by the named executive officer shallwill immediately become exercisable or vested. In addition, if a change in control of our Company occursvested, and the employment of either of the namedthat executive offices is terminated for reasons other than for cause within two years of the change in control, or if the officer terminates his employment within 60 days of a material diminution in his salary or duties or the relocation of his employment within two years following a change in control of our Company, then that named executive officer shallwill be entitled to (1) a lump sum severance payment equal to one times the sum12 months of his annual base salary at the time of the change in control and (2) health insurance coverage for himthe executive and his dependents for an 12 montha 12-month period. Mr. Carolan also is also entitled to receive all bonus payments madeowed to him during the one-year period preceding the date of the change in control of the Company.
The amount of compensation and benefits payable to each named executive officer has been estimated in the table below. The amounts below assume that suchas if any termination was effective as of March 31, 2021,2022, the last day of our fiscal year. The actual amounts to be paid out can only be determined at the time of such named executive officer’s separation from us.an executive’s separation.
Compensation ($) | ||||||||||||||||||||
Base Salary | Annual Cash Incentive Bonus | Accelerated Vesting of Restricted Stock & Units(1) | Continuation of Medical Benefits (Present | Total Compensation and Benefits ($) | ||||||||||||||||
Sanjay Mirchandani | ||||||||||||||||||||
Death | — | — | 16,750,190 | (2) | — | 16,750,190 | ||||||||||||||
Disability | — | — | 16,750,190 | (2) | — | 16,750,190 | ||||||||||||||
Involuntary termination without cause or with good reason | 645,000 | 645,000 | 9,819,468 | (3) | 11,303 | 11,120,771 | ||||||||||||||
Involuntary termination without cause, on account of disability, or with good reason in connection with a change in control | 967,500 | 967,500 | 16,750,190 | (2) | 11,303 | 18,696,493 | ||||||||||||||
Brian Carolan | ||||||||||||||||||||
Death | — | — | 4,645,827 | (2) | — | 4,645,827 | ||||||||||||||
Disability | — | — | 4,645,827 | (2) | — | 4,645,827 | ||||||||||||||
Involuntary termination without cause or with good reason | 410,000 | — | 2,788,160 | (3) | 43,156 | 3,241,316 | ||||||||||||||
Involuntary termination without cause or with good reason in connection with a change in control | 410,000 | 246,000 | 4,645,827 | (2) | 43,156 | 5,344,983 | ||||||||||||||
Riccardo Di Blasio | ||||||||||||||||||||
Death | — | — | 4,552,794 | (2) | — | 4,552,794 | ||||||||||||||
Disability | — | — | 4,552,794 | (2) | — | 4,552,794 | ||||||||||||||
Involuntary termination without cause or with good reason | 450,000 | — | 2,640,686 | (3) | 32,367 | 3,123,053 | ||||||||||||||
Involuntary termination without cause or with good reason in connection with a change in control | 450,000 | — | 4,552,794 | (2) | 32,367 | 5,035,161 |
1. | Amounts in this column describe the value of restricted stock unit awards and performance stock unit awards that would vest upon the triggering event described in the leftmost column, based on a closing price of $66.35 per share of our common stock on March 31, 2022. |
2. | As described in the named executive officers’ respective employment agreements or change in control agreements, upon death, disability, or involuntary termination by the Company without cause or by the named executive officer for good reason, in each case, on or within the two years following a change in control, all outstanding restricted stock unit awards and performance stock unit awards would become immediately vested. Any stock awards with performance conditions that are not yet determinable (such as if the performance measurement period has not been completed) will be deemed to have been earned at 100% of target and will be payable in accordance with their terms. |
3. | As described in the named executive officers’ respective employment agreements, involuntary termination by the Company without cause or by the named executive officer for good reason other than within two years following a change in control would result in the vesting of restricted stock units and performance stock unit awards that would have vested had the named executive officer remained with the Company an additional year. Any performance stock unit awards with conditions that are not yet determined (such as if the performance measurement period has not been completed) will be deemed to have been earned at 100% of target and will be payable in accordance with their terms. |
46 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Compensation ($) | ||||||||||||||||||||||||||||||||
Base Salary | Annual Cash Bonus | Accelerated Vesting of Restricted Stock & Performance Stock Units(1) | Continuation of Medical Benefits (Present Value)($) | Total Compensation and Benefits ($) | ||||||||||||||||||||||||||||
Sanjay Mirchandani | ||||||||||||||||||||||||||||||||
Death | — | — | 16,110,939 | (2) | — | 16,110,939 | ||||||||||||||||||||||||||
Disability | — | — | 16,110,939 | (2) | — | 16,110,939 | ||||||||||||||||||||||||||
Involuntary termination without cause or by non-extension of employment term | 550,000 | 550,000 | 9,110,045 | (3) | 11,303 | 10,221,348 | ||||||||||||||||||||||||||
Involuntary termination without cause or by non-extension of employment term upon a change in control | 825,000 | 825,000 | 16,110,939 | (2) | 11,303 | 17,772,242 | ||||||||||||||||||||||||||
Brian Carolan | ||||||||||||||||||||||||||||||||
Death | — | — | 4,915,997 | (2) | — | 4,915,997 | ||||||||||||||||||||||||||
Disability | — | — | 4,915,997 | (2) | — | 4,915,997 | ||||||||||||||||||||||||||
Involuntary termination without cause or by non-extension of employment term | 410,000 | — | 2,583,612 | (3) | 36,622 | 3,030,234 | ||||||||||||||||||||||||||
Involuntary termination without cause or by non-extension of employment term upon a change in control | 410,000 | — | 4,915,997 | (2) | 36,622 | 5,362,619 | ||||||||||||||||||||||||||
Riccardo Di Blasio | ||||||||||||||||||||||||||||||||
Death | — | — | 3,369,609 | (2) | — | 3,369,609 | ||||||||||||||||||||||||||
Disability | — | — | 3,369,609 | (2) | — | 3,369,609 | ||||||||||||||||||||||||||
Involuntary termination without cause or by non-extension of employment term | 445,000 | — | 1,675,388 | (3) | 32,367 | 2,152,755 | ||||||||||||||||||||||||||
Involuntary termination without cause or by non-extension of employment term upon a change in control | 445,000 | — | 3,369,609 | (2) | 32,367 | 3,846,976 |
Name | Fees Earned or Paid in Cash | Stock Awards (1) | Total | |||||||||||||||||
Nicholas Adamo (2) | $ | 156,500 | $ | 200,006 | $ | 356,506 | ||||||||||||||
Martha H. Bejar (3) | $ | 49,000 | $ | 200,006 | $ | 249,006 | ||||||||||||||
R. Todd Bradley (4) | $ | 59,000 | $ | 200,006 | $ | 259,006 | ||||||||||||||
Keith Geeslin (5) | $ | 64,000 | $ | 200,006 | $ | 264,006 | ||||||||||||||
Vivie “YY” Lee (6) | $ | 54,000 | $ | 200,006 | $ | 254,006 | ||||||||||||||
Charles E. Moran (7) | $ | 64,000 | $ | 200,006 | $ | 264,006 | ||||||||||||||
Allison Pickens (8) | $ | 49,000 | $ | 200,006 | $ | 249,006 | ||||||||||||||
Arlen Shenkman (9) | $ | 71,000 | $ | 200,006 | $ | 271,006 | ||||||||||||||
Gary B. Smith (10) | $ | 56,000 | $ | 200,006 | $ | 256,006 | ||||||||||||||
David F. Walker (11) | $ | 74,000 | $ | 200,006 | $ | 274,006 |
As required by Item 402(u) of Regulation S-K, we are providing the following information regarding the relationship of the annual total compensation for our CEO compared to the median of the annual total compensation of all our employees (except for our CEO).
For fiscal 2021:
The median of the annual total compensation of all our employees, excluding our CEO, was $119,534
The annual total compensation of our CEO was $8,004,986
Therefore, the ratio of CEO compensation relative to the median employee is approximately 6792 to 1
Factors influencing the company’s pay ratio is a reasonable estimate calculatedinclude the Company’s strategic decision to expand into centers of excellence, including nearly 838 employees located in a manner consistent with Item 402(u)India and over 100 employees located elsewhere outside of Regulation S-K.
The methodology we used to identify our median employee for fiscal 20192022 was as follows:
We selected March 1, 201931, 2022, as the date upon which we identified our employee population. We included all employees as of that date, with no exclusions.
We used total cash compensation as our consistently applied compensation measure to identify our median employee. For this purpose, we defined total cash compensation as base wages plus any incentive compensation (bonuses or commissions), and. We did not annualize the compensation of any employees who were employed less than a full year and we did not make any adjustments, assumptions or estimates. For employees outside the United States, we converted their cash compensation to U.S. dollars using the applicable March 1, 201931, 2022 exchange rate
Using this methodology, we determined that our median employee was a full-time, salaried employee based in the United States
We calculated the annual total compensation of our median employee in the same manner that we calculated the total compensation of our CEO for purposes of the Summary Compensation Table. This annual total compensation amount for our median employee was then compared to the annual total compensation of our CEO as reported in the “Total” column of our fiscal 2021 Summary Compensation Table included in this Proxy Statement to determine the pay ratio.
The Audit Committee has reviewed and discussed theCommvault’s audited financial statements of our company for the fiscal year ended March 31, 20212022, with our management. In addition, the Audit Committee has discussed with Ernst & Young LLP, our independent auditors, (“Ernst & Young”), the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (PCAOB) and the SEC.
The Audit Committee has also received from the independent auditors written disclosures and the letter regarding the independent auditors’ communications with the Audit Committee concerning independence required by the applicable requirements of the PCAOB and has discussed with the independent auditors the independent auditors’firm’s independence.
The Audit Committee has considered whether the services rendered by our independent public accountants with respect to audit, audit-related, tax, and other non-audit fees are compatible with maintaining theirthe firm’s independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that theCommvault’s audited financial statements for our company for the fiscal year ended March 31, 20212022, be included in our Annual Report on Form 10‑K10-K for the fiscal year ended March 31, 20212022, for filing with the SEC.
Audit Committee
David F. Walker—Chairman
Chuck Moran
Arlen Shenkman
Ratification of the Appointment
of Independent Auditors
Financial statements of our companythe Company and our consolidated subsidiaries will be included in our Annual Report furnished to all stockholders. The Audit Committee of the Board of Directors has appointed Ernst & Young LLP (“Ernst & Young”) as independent public accountants for us to examine our consolidated financial statements for the fiscal year ending March 31, 2022,2023 and has determined that it would be desirableas a matter of good governance to request that the stockholders ratify the appointment. You may vote for, vote against or abstain from voting with respect to this proposal. Assuming the presenceseek stockholders’ ratification of a quorum, the affirmative vote of a majority of the votes cast, in person or by proxy, at the Annual Meeting is required to ratify the appointment. If the stockholders do not ratify the appointment, the Audit Committee will reconsider the appointment for the 20232024 fiscal year, rather than the 20222023 fiscal year, because of the difficulty and expense involved in changing independent auditors on short notice.
Ernst & Young washas been engaged as our principal independent public accountants forcontinuously since fiscal years 1998 through 2021.year 1998. Representatives of Ernst & Young are expected to be present atattend the Annual Meeting,Meeting. They will have the opportunity to make a statement if they desire to do sowish and are also expected to be available to respond to appropriate questions.
The following table summarizes the aggregate fees and expenses billed to us for the fiscal years ended March 31, 20212022, and 20202021, by our principal accounting firm, Ernst & Young:
2021 | 2020 | |||||||||||||
(In thousands) | ||||||||||||||
Audit fees | $ | 1,948 | $ | 2,194 | ||||||||||
Audit-related fees | 3 | 307 | ||||||||||||
Tax fees | 1,377 | 1,380 | ||||||||||||
All other fees | — | — | ||||||||||||
$ | 3,328 | $ | 3,881 |
2022 | 2021 | |||||||
(In thousands) | ||||||||
Audit fees | $ | 2,065 | $ | 1,948 | ||||
Audit-related fees | 10 | 3 | ||||||
Tax fees | 1,198 | 1,377 | ||||||
All other fees | — | — | ||||||
$ | 3,273 | $ | 3,328 |
Audit Fees Fees—- all services necessary to perform an audit of the consolidated financial statements of our company; the reviews of our company’s quarterly reports on Form 10-Q; services in connection with statutory and regulatory filings or engagements; comfort letters; statutory audits; consents and review of documents filed with the SEC.
49 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS |AUDIT, AUDIT-RELATED, TAX, AND ALL OTHER FEES
Audit Related Fees Fees—- XBRL filing services and subscription to EY Online Research Tool. Fiscal 2020 audit related fees include services related to the acquisition of Hedvig.
Tax Fees Fees—- tax compliance; tax planning; and other tax advice.
All Other Fees Fees—- any other work that is not Audit, Audit-Related, or a Tax Service.
In considering the nature of the services provided by Ernst & Young, the Audit Committee determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed these services with Ernst & Young and our management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as by the American Institute of Certified Public Accountants.
The Audit Committee is responsible for appointing, setting compensation for, and overseeing the work of the independent auditor. The Audit Committee has established a policy regarding pre-approval of permissible non-audit services provided by the independent auditor. Generally, pre-approvals may be made by the chairperson of the Audit Committee in accordance withand ratified by the rules of the Securities and Exchange Commission.full Audit Committee at its next meeting thereafter. All of the services performed by Ernst & Young in the year ended March 31, 20212022, were pre-approved in accordance with the pre-approval policy adopted by the Audit Committee.
The Board of Directors recommends that you vote FOR this proposal.
50 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Approval of the Company’s 2016Omnibus Incentive Plan,
as amendedAmended by the Fifth Amendment.
Our Board of Directors believes it is important for employees to have an equity interest in our company, and is recommendingrecommends the 2016 Incentive Plan, as amended by the FifthSixth Amendment, to stockholders for approval. Stockholder approval so thatof this Proposal will increase the 2016 Incentive Plan can continue to operate. Increasing the number of Common Stock available for issuance under the 2016 Incentive Plan is necessary to ensure that we have a sufficient number of shares of Common StockCommvault common stock available for issuance under the 2016 Incentive Plan for the foreseeable future.
The Fifth Amendment does not amend or replace any other provisions of the 2016 Incentive Plan. The FifthSixth Amendment will become effective upon stockholder approval.
The following summary of the 2016 Incentive Plan, as amended by the FifthSixth Amendment, is qualified in its entirety by the complete text of the amended 2016 Incentive Plan (as so amended) contained in Annex AB to this proxy statement.
We previously maintained the Commvault Systems, Inc. 1996 Stock Option Plan and the 2006 Long-Term Stock Incentive Plan (the “LTIP”, and together with the 1996 Stock Option Plan,(together, the “Prior Plans”).
As described below under “Description of the date of this proxy statement. As of the date of this proxy statement 7,883,038 have been granted under the 2016 Incentive Plan. AsPlan—Types of Awards,” the date of this proxy, no stock options have been granted under the 2016 Incentive Plan. The 2016 Incentive Plan, as previously amended, reserved a total of 8,050,000 shares of Common Stock. The Fifth Amendment will reserve a total 10,050,000 of shares of Common Stock for issuance under the 2016 Incentive Plan, reflecting an increase of 2,000,000 shares.
On June 24, 2021,30, 2022, the last reported sale price of our Common Stock on the NASDAQ stock market was $81.04$62.90 per share.
51 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 4: APPROVAL OF THE OMNIBUS INCENTIVE PLAN, AS AMENDED BY THE SIXTH AMENDMENT
The following table includes information regarding outstanding equity awards and shares available for future awards under our Prior Plans and the 2016 Incentive Plan as of May 31, 2021:
Options | 899,799 | ||||
Non-Vested | 2,784,967 | ||||
Performance-Vesting Shares | 538,183 | ||||
Shares Available for Grant | 1,252,787 | ||||
Weighted Average Exercise Price of Outstanding Options | $ | ||||
Weighted Average Remaining Term of Outstanding Options | 1.28 years |
The following table summarizes our equity usage during the three most recent fiscal years:
Time Period | Time Vesting RSUs Granted | Financial Performance Shares Granted | Financial Performance Shares Earned | Market Based Shares Granted | Market Based Shared Earned(1) | Weighted Average Common Shares Outstanding (Diluted) | ||||||||||||||
Fiscal 2021 | 1,797,021 | — | — | 298,585 | 323,467 | 46,652,000 | ||||||||||||||
Fiscal 2020 | 2,451,000 | 104,545 | 7,776 | 94,804 | 93,601 | 45,793,000 | ||||||||||||||
Fiscal 2019 | 998,000 | 72,463 | 66,665 | 121,432 | 63,456 | 45,827,000 |
Time Period | Time-Vesting RSUs Granted | Financial Performance Shares Granted | Financial Performance Shares Earned | Market-Based Shares Granted | Market-Based Shares Earned(1) | Weighted Average Common Shares Outstanding (Diluted) | ||||||||||||||||||
Fiscal 2022 | 1,727,891 | 118,929 | 185,189 | 105,386 | 103,981 | 47,220,000 | ||||||||||||||||||
Fiscal 2021 | 1,797,021 | – | – | 298,585 | 305,552 | 46,652,000 | ||||||||||||||||||
Fiscal 2020 | 2,451,000 | 104,545 | 7,776 | 94,804 | 89,552 | 45,793,000 |
(1) | Unvested market-based shares are represented at present value as of May 31, 2022. The number of shares may vary until actual results are confirmed. |
Description of May 31, 2021. These shares may vary until actual results are confirmed.
Purpose
The purpose of the 2016 Incentive Plan is to
attract and retain persons who are eligible to participate in the 2016 Incentive Plan,
advance our interests and the interests of Commvault and our stockholders by providing persons who are eligible to participate in the 2016 Incentive Plan, upon whose judgment, initiativeemployees and efforts we largely depend,executives with appropriate incentives to perform in a superior manner and achieve long-range goals, creating a
enhance the link between performance and compensation for plan participants, and
provide incentive compensation opportunities that are competitive with those offered by other similar companies,companies.
Administration
For awards to Commvault officers and
Eligibility
All officers, directors, or other employees of usCommvault or a related company,company; all consultants, independent contractors, or agents of usCommvault or a related company,company; and personsindividuals who are expected to become officers, employees, directors, consultants, independent contractors, or agents of usCommvault or a related company, including, in each case, directors who are not employees of us or any related company (“Outside Directors”), are eligible to receive awards under the 2016 Incentive Plan, and thereby become Participants in the 2016 Incentive Plan. Awardswith two limitations. Specifically, awards to a person who
52 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 4: APPROVAL OF THE OMNIBUS INCENTIVE PLAN, AS AMENDED BY THE SIXTH AMENDMENT |DESCRIPTION OF THE 2016 INCENTIVE PLAN
is expected to become a service provider to usCommvault or a related company cannot be effective prior to the date on whichbefore such person’s service begins. Incentivebegins, and incentive stock options (“ISOs”) may only be granted to employees of us and our corporateCommvault or a related companies which satisfycompany that satisfies certain Code requirements. Generally,requirements in the Internal Revenue Code. For purposes of eligibility, a company is a related company to us“related company” for any period during which we own (directly or indirectly) at least 50% of voting power or ownership interests in such entity or ansuch entity that owns (directly or indirectly) at least 50% of the voting power of our stock.
In fiscal 2021,year 2022, we granted equity awards of the type authorized inunder the 2016 Incentive Plan to approximately 2,600 persons.
Shares of Common Stock Available for Awards
Awards may be made under the 2016 Incentive Plan with respect to Common Stock currentlythat is authorized but unissued or, as permitted by applicable law, currently held or acquired by usCommvault as treasury shares, including shares of Common Stock purchased in the open market or in private transactions. At the discretion of the Committee, an award under the 2016 Incentive Plan may be settled in cash rather than Common Stock.
The maximum number of shares of Common Stock that may be delivered under the 2016 Incentive Plan is equal to 8,050,000 shares.10,050,000. Assuming the FifthSixth Amendment to the 2016 Incentive Plan is approved, thethat maximum number of shares of Common Stock that may be delivered under the 2016 Incentive Plan will be 10,050,000increased to 11,050,000 shares. Any shares of Common Stock covered by an award under the 2016 Incentive Plan that is forfeited, expires, or is terminated without issuance of shares of Common Stock (including shares of Common Stock that are attributable to awards that are settled in cash), and shares of Common Stock that are withheld in payment of taxes payable with respect to the vesting or settlement of a Full Value Award shallwill thereafter be available for further grants under the 2016 Incentive Plan. Shares of Common Stock that are tendered or withheld in payment of the exercise price of an Option or shares of Common Stock that are tendered or withheld in payment of taxes payable with respect to the exercise of an Option or SAR shallwill not be available for further grants under the 2016 Incentive Plan. Shares subject to a Stock Appreciation Right issued under the 2016 Incentive Plan that are not issued in connection with the stock settlement of that Stock Appreciation Right upon its exercise shallwill not again become available for Awards or increasefurther grants under the number of shares available for grant.
The following additional limits apply to awards under the 2016 Incentive Plan:
no more than 3,550,000 shares of Common Stock may be subject to ISOs granted under the 2016 Incentive Plan;
the maximum number of shares of Common Stock that may be covered by Options and SARs that are intended to be performance-based compensation and that are granted to any one Participantparticipant in any one calendar year may not exceed 500,000 shares of Common Stock;
the maximum number of shares of Common Stock that may be delivered pursuant to any such awardFull Value Award that is intended to be performance-based compensation granted to any one Participantparticipant during any calendar year is 250,000, regardless of whether settlement of the award is to occur prior to,before, at the time of, or after the time of vesting, may not exceed 250,000 shares of Common Stock;vesting; and
in the case of Cash Incentive Awards (as described below) that are intended to be performance-based compensation, the maximum amount payable to any one Participant with respect to any performance period of twelve months (pro-rated(pro-rated for performance periods of greater or lesser thanthat are not twelve months) is $2,500,000.
If a Full Value Awards andAward or Cash Incentive AwardsAward that areis intended to be performance-based compensation if the award is denominated in shares but an equivalent amount of cash is delivered (or vice versa), the foregoing limitations will be applied based on the methodology used by the Committee uses to convert shares of Common Stock to cash (or vice versa). If delivery of cash or shares of Common Stock is deferred until after the cash or shares of Common Stock are earned, there will not be any adjustment in the amount delivered to reflect actual or deemed investment experience afterinterim changes in the cash or shares of Common Stock are earned will be disregarded.
Awards granted to any Outside Directorindependent directors for any calendar year (determined as of the date of grant)may not exceed $500,000 ($1,000,000 for the initial year of directorship).
In the event of a corporate transaction including(including a stock dividend, stock split, reverse stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, exchange of shares, sale of assets or subsidiaries, combination or other corporate transaction,combination) that affects the Common Stock such that the Committee determines that an
53 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 4: APPROVAL OF THE OMNIBUS INCENTIVE PLAN, AS AMENDED BY THE SIXTH AMENDMENT |DESCRIPTION OF THE 2016 INCENTIVE PLAN
adjustment is warranted in order to preserve the benefits or prevent the enlargement of benefits of awards under the 2016 Incentive Plan, the Committee will make adjustments toadjust awards in a manner that it determines to be equitable in its discretion. Actions thatSpecifically, the Committee may take are:
adjust the number and kind of shares whichthat may be delivered under the 2016 Incentive Plan (including adjustments toadjusting the individual limitations described above);
adjust the number and kind of shares subject to outstanding awards;
adjust the exercise price of outstanding Options and SARs; and
replace awards with other awards whichthat the Committee determines have comparable value and whichthat are based on stock of a company resulting from the transaction,transaction; and
cancel any award in return for cash payment of the award’s current value, of the award, determined as though the award is fully vested at the time of payment, provided that in the case of an Option or SAR, the amount of such payment may be the excess of the value of the shares of Common Stock subject to the Option or SAR at the time of the transaction over the exercise price.
Options.
The Committee may grant Options to purchase shares of Common Stock which Options may be eitherin the form of ISOs or non-qualified stock options (“NQO”NQOs”). The exercise price of an Option mustcannot be no less than the fair market value of a share of Common Stock on the date the Option is granted. ISOs may only be granted to employees of usCommvault or our permitted corporate subsidiaries and must satisfy other requirements of sectionSection 422 of the Internal Revenue Code. An Option that does not satisfy the requirements for an ISO will be treated as a NQO.
Except for reductions approved by our stockholders or adjustment for corporate transactions, the exercise price of an Option may not be decreased after the date of grant, nor may an Option be surrendered to us as consideration for the grant of a replacement Option or SAR with a lower exercise price or for a Full Value Award. In addition, except as approved by our stockholders, no Option granted under the 2016 Incentive Plan may be surrendered to us in consideration of a cash payment if, at the time of such surrender, the exercise price of the Option is greater than the then fair market value of a share of Common Stock.
Options will be exercisable in accordance with the terms established by the Committee. The full exercise price of each share of Common Stock purchased upon the exercise of any Option must be paid at the time of exercise of the Option (except if the exercise price is payable through the use of cash equivalents, the exercise priceit may be paid as soon as practicable after exercise). Subject to applicable law, the exercise price of an Option may be payable in cash or cash equivalents, shares of Common Stock (valued at fair market value as of the day of exercise), or a combination thereof. The Committee may, in its discretion, may impose such conditions, restrictions, and contingencies on the shares of Common Stock acquired pursuant to the exercise of an Option as the Committee determines to be desirable, including conformity with our recoupment or clawback policies as in effect from time to time. Except as provided by the Committee, an Option will expire on the earliest to occur of earlier of:
• | the 30th day after the participant’s employment or service terminates for any reason other than for cause (as defined in the 2016 Incentive Plan), and |
the following
In any event, an Option will expire no later than the 10
SARs
A SAR entitles the Participantholder to receive the amount (in cash or shares of Common Stock) by which the fair market value of a specified number of shares of Common Stock on the exercise date exceeds an exercise price established by the Committee, whichCommittee. The exercise price may notof a SAR cannot be less than the fair market value of the sharesa share of Common Stock aton the timedate the SAR is granted. Generally, a SAR will be exercisable in accordance with the terms established by the Committee and SARs are generally subject to the same terms and restrictions as
54 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 4: APPROVAL OF THE OMNIBUS INCENTIVE PLAN, AS AMENDED BY THE SIXTH AMENDMENT |DESCRIPTION OF THE 2016 INCENTIVE PLAN
apply to Options as described above (except for matters, such as payment ofto the exercise price, which do not apply to SARs),extent relevant, including the prohibition on lowering of the exercise price, exchanges of the SAR for cash or other awards, the expiration date provisions, and the minimum vesting period.
Full Value Awards
A Full Value Award is a grant of one or more shares of Common Stock or a right to receive one or more shares of Common Stock in the future (including restricted stock, restricted stock units, deferred stock units, performance stock, and performance stock units). Such grantsGrants may be subject to such conditions, restrictions, and contingencies as determined by the Committee, including provisions relating to dividend or dividend equivalent rights and deferred payment or settlement. Notwithstanding the foregoing,settlement, but no dividends or dividend equivalent rights will be paid or settled on performance-based awards that have not been earned based on the performance criteria established.
Cash Incentive Awards
A “CashCash Incentive Award”Award is the grant of a right to receive a payment of cash (or, in the discretion of the Committee, shares of Common Stock having valuewith an equivalent to the cash otherwise payable)value) that is contingent on achievement of performance objectives over a specified period established by the Committee.of time. The grant of Cash Incentive Awards may also be subject to such other conditions, restrictions, and contingencies as determined by the Committee determines, including provisions relating to deferred payment.
No award may vest, in whole or in part, before the first anniversary of the date of grant or, in the case of vesting based upon the attainment of performance-based
If (i) a Change in Control (as defined in the 2016 Incentive Plan) occurs prior to the date on whichbefore an award is vestedvests and prior tobefore the Participant’sholder’s separation from service, ifand (ii) such award remains outstanding following the Change in Control (whether by substitution with another award or otherwise), and if(iii) the Participant’sparticipant’s service is involuntarily terminated by the Company or a related company (or any successor thereto), other than for cause, on or within two years following the Change in Control, then:
the participant’s outstanding Options (regardless of whether in tandem with SARs) shall become fully exercisable;
the participant’s Full Value awards shallwill become fully vested and the Committee shallwill determine the extent to which the associated performance conditions are met, taking into account actual performance and/or the passage of time, in accordance with the terms of the 2016 Incentive Plan and the applicable award agreement.
To the extent any provision of the 2016 Incentive Plan or an award agreement would cause a payment of deferred compensation that is subject to section 409A of the Code to be made upon the occurrence of a Change in Control, then such payment shallwill not be madedeferred unless such Change in Control also constitutes a “change in ownership”,ownership,” “change in effective control”control,” or “change in ownership of a substantial portion of the Company’s assets” within the meaning of section 409A of the Code. In addition, if
If an award does not remain outstanding following a Change in Control, the Committee shallwill determine the vesting and other terms and conditions of the award in connection with the Change in Control in accordance with the terms of the 2016 Incentive Plan.
Non-U.S.
The Committee may grant awards to eligible personsindividuals who are foreign nationals on such terms and conditions different from those specified in the 2016 Incentive Plan as may, in the Committee’s judgment, of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the 2016 Incentive Plan. In furtherance of such purposes,Similarly, the Committee may make such modifications, amendments, procedures, and subplans as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which weCommvault or a related company operates or has employees. The foregoing cannot be applied toemployees, but may not increase the share limitations under the 2016 Incentive Plan or to otherwise change any provision of the 2016 Incentive Plan that would otherwise require the approval of our stockholders.stockholder approval.
55 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 4: APPROVAL OF THE OMNIBUS INCENTIVE PLAN, AS AMENDED BY THE SIXTH AMENDMENT
Other 2016 Incentive Plan Information
Awards under the 2016 Incentive Plan are not transferable except as designated by the Participantholder by will or by laws of descent and distribution or, unless otherwise provided by the Committee, pursuant to a qualified domestic relations order. Unless otherwise provided by the Committee, awards (other than an ISO) may be transferred to or for the benefit of the Participant’sholder’s family (including, without limitation, to a trust or partnership for the benefit of a Participant’s family) in accordance with rules established by the Committee.
All awards and other payments under the 2016 Incentive Plan are subject to withholding of all applicable taxes. With the consent of the Committee, withholding obligations may be satisfied with previously-ownedpreviously owned shares of Common Stock or shares of Common Stock to which the Participantparticipant is otherwise entitled under the 2016 Incentive Plan. Shares of Common Stock that have been held less than six months may only be used to satisfy minimum withholding requirements (or other rates that will not have a negative accounting impact).
The Board may, at any time, amend or terminate the 2016 Incentive Plan, and the Board or the Committee may amend any award agreement, provided that no amendment or termination may, in the absence of written consent to the change by the affected Participantparticipant (or, if the Participantparticipant is not then living, the affected beneficiary), adversely affect the rights of any Participantparticipant or beneficiary under any award granted under the 2016 Incentive Plan prior tobefore the date such amendment is adopted by the Board (or the Committee, if applicable).adopted. The provisions of the 2016 Incentive Plan that prohibit repricing of Options and SARs cannot be amended unless the amendment is approved by the our stockholders, and no other amendment shallwill be made to the 2016 Incentive Plan without the approval of our stockholders if such approval is required by law or the rules of any stock exchange on which the Common Stock is listed. Adjustment to awards made in connection with corporate transactions are not subject to the foregoing restrictions.
The discussion whichthat follows is a summary, based on current law, of some significant U.S. federal income tax considerations relating to awards under the 2016 Incentive Plan. The following is based on U.S. federal tax laws and regulations presently in effect, which are subject to change, and the discussionThis does not purport to be a complete description of the federal income tax aspects of the 2016 Incentive Plan. The ParticipantIn addition, participants may also be subject to foreign, state, and local taxes and employment taxes in connection with stock purchased under the 2016 Incentive Plan. The ParticipantParticipants should consult with an individuala tax advisoradviser to determine the applicability ofhow the tax aspects of 2016 Incentive Plan participationlaws apply in the Participant’stheir personal circumstances. The Company suggests that Participants subject to taxation in other countries other than the United States consult their individual tax advisors in such jurisdictions.
NQOs
The grant of an NQO will not result in taxable income to the Participant.participant. Except as described below, the Participantparticipant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the shares of Common Stock acquired over the exercise price for those shares, of Common Stock, and weCommvault will be entitled to a corresponding deduction. Gains or losses realized by the Participantparticipant upon disposition of such shares of Common Stock will be treated as capital gains and losses, with thea basis in such shares of Common Stock equal to the fair market value of the shares of Common Stock at the time of exercise.
The exercise of an NQO through the delivery of previously acquired Common Stock will generally be treated as a non-taxable, like-kind exchange as to the number of shares of Common Stock surrendered and the identical number of shares of Common Stock received under the Option. That number of shares of Common Stock will take the same basis and, for capital gains purposes, the same holding period as the shares of Common Stock that are given up. The value of the shares of Common Stock received upon such an exchange that are in excessexceed the number of the numbershares given up will be includible as ordinary income to the
ISO
The grant of an ISO will not result in taxable income to the Participant.participant. The exercise of an ISO will not result in taxable income to the Participant provided thatparticipant if the Participantparticipant was, without a break in service, an employee of usCommvault or a corporate subsidiary during the period beginning on the date of the grant of the Option was granted and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the Participantparticipant is disabled, as that term is defined in the Internal Revenue Code).
56 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 4: APPROVAL OF THE OMNIBUS INCENTIVE PLAN, AS AMENDED BY THE SIXTH AMENDMENT
The excess of the fair market value of the shares of Common Stock at the time of the exercise of an ISO over the exercise price is an adjustment that is included in the calculation of the Participant’sparticipant’s alternative minimum taxable income for the tax year in which the ISO is exercised. For purposes of determining the Participant’s alternative minimum tax liability for the year of disposition of the shares of Common Stock acquired pursuant to the ISO exercise, the Participantparticipant will have a basis in those shares of Common Stock equal to the fair market value of the shares of Common Stock at the time of exercise.
If the Participanta participant does not sell or otherwise dispose of the shares of Common Stock within two years from the date of the grant of the ISO or within one year after receiving the transfer of such shares, of Common Stock, then, upon disposition of such shares of Common Stock, any amount realized in excess of the exercise price will be taxed to the Participantparticipant as capital gain, and weCommvault will not be entitled to any deduction for Federalfederal income tax purposes. A capital loss will be recognized to the extent that the amount realized is less than the exercise price.
The exercise of an ISO through the exchange of previously acquired stock will generally be treated in the same manner as such an exchange would be treated in connection with the exercise of an NQO; NQO—that is, as a non-taxable, like-kind exchange as to the number of shares of Common Stock given up and the identical number of shares of Common Stock received under the Option. That number of shares of Common Stock will take the same basis and, for capital gain purposes, the same holding period as the shares of Common Stock that are given up. However, such holding period will not be credited for purposes ofsatisfy the one-year holding period required for the new shares of Common Stock to receive ISO treatment. Common sharesShares received in excess of the number of shares of Common Stock given up will have a new holding period and will have a basis of zero or the amount of cash, if any, cash was paid as part of the exercise price, the excess shares of Common Stock received will have a basis equal to the amount of the cash. If aprice. A disqualifying disposition (a disposition before the end of the applicable holding period) occurs with respect to any of the shares of Common Stock received from the exchange it will be treated as a disqualifying disposition of the shares of Common Stock with the lowest basis.
If the exercise price of an ISO is paid with shares of Common Stock acquired through a prior exercise of an ISO, gain will be realized on the shares of Common Stock given up (and will be taxed(taxed as ordinary income) if those shares of Common Stock have not been held for the minimum ISO holding period (two years from the date of grant and one year from the date of transfer), but the exchange will not affect the tax treatment as described in the immediately preceding paragraph, of the shares of Common Stock received.
SARs
A Participantparticipant generally will not realize any taxable income upon the grant of a SAR. Upon the exercise of thea SAR, the Participantparticipant will recognize ordinary income in an amount equal to the amount of cash and/or the fair market value, at the date of such exercise, of the shares of Common Stock received by the Participant as a result of such exercise. WeCommvault will generally be entitled to a deduction in the same amount as the ordinary income realized by the Participant.
Full Value Awards
The federal income tax consequences of a Full Value Award will depend on the type of award. The tax treatment of the grant of shares of Common Stock depends onaward, and in particular, whether the shares are subject to a substantial risk of forfeiture (determined under Internal Revenue Code rules) at the time of the grant. If the shares are subject to a substantial risk of forfeiture, the Participantparticipant will not recognize taxable income at the time of the grant andgrant. Instead, when the restrictions on the shares lapse (that is, when(meaning the shares are no longer subject to a substantial risk of forfeiture), the Participantparticipant will recognize ordinary taxable income in an amount equal to the fair market value of the shares at that time. If the shares are not subject to a substantial risk of forfeiture or if the Participantparticipant elects to be taxed at the time of the grant of such shares under section 83(b) of the Internal Revenue Code, the Participantparticipant will recognize taxable income atwhen the time of the grant of shares are
57 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 4: APPROVAL OF THE OMNIBUS INCENTIVE PLAN, AS AMENDED BY THE SIXTH AMENDMENT |DESCRIPTION OF THE 2016 INCENTIVE PLAN
granted in an amount equal to the fair market value of such shares at thatthe time, determined without regard to any of the restrictions. If the shares are forfeited before the restrictions lapse, the Participant
In the case of other Full Value Awards, such as restricted stock units or performance stock units, the Participantparticipant generally will not have taxable income upon the grant of the award provided thatso long as there are restrictions on such awards that constitute a substantial risk of forfeiture under applicable Code rules.forfeiture. Participants will generally recognize ordinary income when the restrictions on awards lapse, on the date of grant if there are no such restrictions, or, in certain cases, when the award is settled. At that time, the Participantparticipant will recognize taxable income equal to the cash or the then fair market value of the shares issuable in payment of such award, and such amount will be the tax basis for any shares received. In the case of an award whichthat does not constitute property at the time of grant (such as an award of units), Participantsparticipants will generally recognize ordinary income when the award is paid or settled.
Commvault generally will be entitled to a tax deduction in the same amount, and at the same time, as the income is recognized by the Participant.
Parachute Payments.
Any acceleration of the vesting or payment of awards under the 2016 Incentive Plan in the event of a change in control in the Company may cause part or all of the consideration involved to be treated as an “excess parachute payment” under the Internal Revenue Code, which may subject the Participantparticipant to a twenty percent20% excise tax and preclude a deduction by the Company.
Performance-Based Compensation
Because of Executive Compensation”),changes to Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount that a publicly-traded corporation may deducteliminated favorable tax treatment for performance-based compensation paid to each of the company’s principal executive officer, principal financial officer and the company’s three next most highly compensated executives (“covered employees”). Beginning in 2018, we were no longer able to take a deduction for any compensation paid to our named executive officers in excess of $1 million unless the compensation originally qualified for the “performance-based” compensation exception and qualifies for transition relief applicable to certain arrangements in place on November 2, 2017. Although the 2016 Plan continues to include individual limits on awards as required by section 162(m), future awardstype awarded under the 2016 Incentive Plan, will be subject to the limitations of Section 162(m). In addition, it is expected that the application of the transition rule will be of limited future value with respect to the preservation of deductions for compensation payable to covered employees in excess of the Section 162(m) limits. In any event, the Compensation CommitteeTMCC reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with the company’sCompany’s business needs.
New Plan Benefits
Future benefits under the 2016 Incentive Plan as proposed to be amended cannot be determined at this time because the grants are at the discretion of the TMCC and because their value may depend upon the satisfaction of vesting conditions and the future price of the Company’s stock. During fiscal 2022, the TMCC granted time- and performance-based restricted stock units (with performance-based restricted stock units measured at the target level of performance) to the following individuals and groups: Mr. Mirchandani, 127,921; Mr. Carolan, 30,097; Mr. Di Blasio, 37,624; executive officers who are not named executive officers, 22,572; non-employee members of the board of directors, 23,760 time-based restricted stock units; employees and contractors other than executive officers, 1,710,232 time-based restricted stock units.
58 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
PROPOSAL NO. 4: APPROVAL OF THE OMNIBUS INCENTIVE PLAN, AS AMENDED BY THE SIXTH AMENDMENT |DESCRIPTION OF THE 2016 INCENTIVE PLAN
Equity Compensation Plan Information
The following table provides information as of March 31, 20212022 with respect to the shares of our common stockCommon Stock that may be issuable upon the exercise of options, warrants and rights.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | Number of Securities that Remained Available for Future Issuance Under Equity Plans (Excluding Securities Reflected in Column (a)(c) | |||||||||||||||||
Equity compensation plans approved by security holders (1) | 4,808,433 | $ | 49.74 | 2,110,398 | ||||||||||||||||
Equity compensation plans not approved by security holder | — | — | — | |||||||||||||||||
Totals | 4,808,433 | $ | 49.74 | 2,110,398 |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | Number of Securities that Remained Available for Future Issuance Under Equity Securities Reflected in Column (a)(c)) | |||||||||
Equity compensation plans approved by security holders (1) | 4,227,157 | $ | 60.30 | 2,089,949 | ||||||||
Equity compensation plans not approved by security holder | — | — | — | |||||||||
Totals | 4,227,157 | $ | 60.30 | 2,089,949 |
(1) | Consists of shares of common stock to be issued upon exercise of outstanding options and vesting of restricted stock awards under our Omnibus Incentive Plan. These amounts do not include potentially issuable shares under the Employee Stock Purchase Plan. We have reserved 3,264 thousand shares for the future issuance of shares under the Employee Stock Purchase Plan. |
59 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
About the Annual Meeting
This proxy statement is furnished in connection with the solicitation on behalf of the Board of Directors of Commvault Systems, Inc. of proxies to be voted at the Annual Meeting of Stockholders, including any adjournment or postponement thereof. This proxy statement is first being made available at www.edocumentview.com/CVLT, and Consumer Protection Actwe intend to begin distribution of 2010,the Notice Regarding the Availability of Proxy Materials to stockholders on or about July 1, 2022. A copy of our annual report on Form 10-K for the Dodd-Frank Act, enables ourfiscal year ended March 31, 2022, which includes audited financial statements, is also being made available concurrently with the proxy statement at www.edocumentview.com/CVLT.
How can I participate in the virtual annual meeting?
Our virtual annual meeting format will enable all stockholders to participate, regardless of their location. To participate in the Annual Meeting, please access the meeting website at http://ir.commvault.com/annual-meeting and follow the instructions found there. You will be required to establish your identity as a stockholder in order to vote and to approve,view the list of registered stockholders as of the record date during the meeting. Please have the control number found on a non-binding, advisory basis,your Notice of Internet Availability of Proxy Materials available.
Stockholders can submit questions for the compensationAnnual Meeting’s question and answer session prior to or during the meeting through http://ir.commvault.com/annual-meeting. Once the meeting has concluded, the webcast will be available for replay on the Investor Relations section of our named executive officers whose compensationwebsite for 12 months.
Who is reportedentitled to vote at the Annual Meeting?
The record date for determining stockholders entitled to vote at the Annual Meeting was June 30, 2022. On that date, 44,835,900 shares of Commvault common stock were outstanding and entitled to vote. Each stockholder is entitled to one vote for each share of common stock held of record for each matter to be considered. A list of stockholders entitled to vote at the Annual Meeting will be available for examination by stockholders by arrangement made with Commvault during the 10 days preceding the meeting and also will be available for examination during the Annual Meeting. Information regarding how to examine the stockholder list is available at the meeting website at http://ir.commvault.com/annual-meeting.
The presence at the Annual Meeting, in person (including virtually) or by proxy, of holders of a majority of the issued and outstanding shares of common stock entitled to vote thereat as of the record date is considered a quorum for the transaction of business. If you submit a properly completed proxy or if you appear at the Annual Meeting to vote in person (including virtually), your shares of common stock will be considered part of the quorum. Abstentions and broker non-votes will be counted for the purpose of establishing a quorum.
60 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
ADDITIONAL INFORMATION ABOUT THE ANNUAL MEETING
If you choose to vote your shares at the Annual Meeting, you will be required to provide your control number, which is included in the compensation tablesNotice Regarding the Availability of Proxy Materials that appear earlieryou received. If you hold your Commvault shares through a broker, bank, or other nominee, you may vote during the Annual Meeting only if you obtain a signed proxy from your bank, broker, or other nominee giving you the right to vote the shares. You will be asked to submit that proxy to Commvault via the email address provided on the meeting website at or prior to the Annual Meeting, along with an account statement or letter from the broker, bank, or other nominee indicating that you are the beneficial owner of the shares and that you were the beneficial owner of the shares on June 30, 2022.
What proposals will be considered at the Annual Meeting, and how does the Board recommend that I vote?
The following table summarizes the matters we expect to present to stockholders during the Annual Meeting.
Proposal | Voting options | Board recommendation | Vote required to pass | Effect of abstentions, and broker non-votes* | ||||
Election of directors | FOR, AGAINST, or ABSTAIN for each nominee | FOR each nominee | Each nominee must receive the affirmative vote of a majority of the votes cast on the proposal. | No effect | ||||
Advisory vote on executive compensation | FOR, AGAINST, or ABSTAIN | FOR | As a non-binding, advisory vote, there is no specific approval requirement. However, the Board of Directors will consider that the stockholders have approved executive compensation if the advisory vote receives the affirmative vote of a majority of the votes cast on such proposal. | No effect | ||||
Ratification of the independent auditors | FOR, AGAINST, or ABSTAIN | FOR | The affirmative vote of a majority of the votes cast on the proposal. | Abstentions will have no effect. Broker non- votes, if any, will have no effect. | ||||
Approval of additional shares to be available for grant under the 2016 Incentive Plan, as amended by the Sixth Amendment | FOR, AGAINST, or ABSTAIN | FOR | The affirmative vote of a majority of the votes cast on the proposal. | No effect |
* | for an explanation of broker non-votes, please see “How can I vote if I hold my Commvault stock through a broker?” |
How can I vote if I do not plan to attend the Annual Meeting?
Registered stockholders of record may provide voting instructions before the Annual Meeting in this proxy statement as such compensation is disclosed in this proxy statementone of three ways:
Mail: | Online before the Meeting: | Telephone: | ||||||||||||
Sign, date and return your proxy card in the enclosed envelope | Visit www.investorvote.com/CVLT and finish voting before 3:00 a.m. EST on August 24, 2022. | Call the telephone number on your proxy card |
All properly completed, unrevoked proxies received prior to the close of voting at the Annual Meeting will be voted in accordance with Item 402the instructions provided.
61 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
ADDITIONAL INFORMATION ABOUT THE ANNUAL MEETING
How can I vote if I hold my Commvault stock through a broker?
If you hold your shares through a bank, broker, or other nominee (meaning you are the “beneficial owner” of Regulation S-K (whichshares owned by someone else) your broker will ask how you want your shares to be voted. If you give voting instructions, your broker will vote your shares as you direct. If you do not provide voting instructions, your broker is only permitted to vote your shares on Proposal 3 regarding ratification of the Securities and Exchange Commission’s rule setting forthauditors. Brokers holding shares beneficially owned by their clients do not have the authority to cast votes with respect to the election of directors, executive compensation, disclosure requirements).
What if I return a proxy card but don’t mark all of my choices?
If we strive to enhance long-term stockholder valuehave a properly executed, unrevoked proxy card that does not specifically direct the voting of shares, the shares represented by closely aligning our executive compensation philosophy and practices withsuch proxy will be voted (i) FOR the interestselection of our stockholders by rewarding achievement of specific annual, long-term, and strategic goals by our company, focusing on revenue growth and profitability. Our executive compensation program is designed to attract, motivate, and retain talented executives who possess the skills required to formulate and drive our company’s strategic direction and achieve annual and long-term performance goals necessary to create stockholder value. Our compensation practices, which balance long-term and short-term awards, are structured to payall nominees for performance, to encourage business decision-making aligned with the long-term interests of our company and to promote and to support the human resource requirements of our business. Please read the “Compensation Discussion and Analysis” discussion for additional details about our executive compensation programs, including information about the fiscal year 2021 compensation of our named executive officers.
What if I change my mind after I vote?
You can revoke your proxy at any such matters come beforetime prior to the voting at the Annual Meeting by submitting a later-dated proxy (including a later-dated proxy via the Internet or telephone), by giving timely written notice of such revocation to our Corporate Secretary, or by attending the Annual Meeting and voting in person (virtually). If you attend the Annual Meeting and do not vote, it will not affect any previously submitted proxy or voting instructions.
Who is paying for this solicitation?
Commvault will pay all expenses related to the intentionsolicitation of proxies. Solicitation will be made by mail, and may be made by directors, officers, and employees, personally or by telephone, email, or other electronic means. Proxy cards and material also will be distributed to beneficial owners of our stock through brokers, custodians, nominees, and other like parties, and we expect to reimburse such parties for their charges and expenses.
How can I submit a proposal or a nomination for the persons named2023 annual meeting?
Stockholder proposals to be included in the enclosedCommvault’s Proxy Statement
We must receive any stockholder proposal to be considered for inclusion in our proxy statement and form of proxy cardrelating to the 2023 annual meeting of stockholders by March 17, 2023.
Stockholder nominations under proxy access
Our Bylaws permit qualifying stockholders to include a certain number of director nominees in our proxy statement. For any such nomination for our 2023 annual meeting to be timely, we must receive notice and certain required information at our principal executive offices between February 15, 2023, and March 17, 2023. Stockholders who make nominations pursuant to our proxy access provision should be mindful of the requirements set forth in our Bylaws, which are available on the Investor Relations section of our website.
Other stockholder proposals
If you wish to submit a proposal for consideration at the 2023 stockholder meeting or to nominate a candidate for election as a director at that meeting without utilizing our proxy access provision, you may do so by providing us with written notice of your intention to make such a proposal or nomination before April 16, 2023. Any such
62 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
ADDITIONAL INFORMATION ABOUT THE ANNUAL MEETING
notice must describe the proposal or nomination in sufficient detail for the matter to be summarized on the agenda for the meeting. Among other things, the notice must set forth:
the name and address, as it appears on our books, of the stockholder who intends to make the proposal or nomination and the beneficial owner, if any, on whose behalf the nomination or proposal is made;
a representation that the stockholder is a holder of record of our stock entitled to vote allat the meeting and intends to appear in person or by proxy at the meeting to present such proposal or nomination;
whether the stockholder plans to deliver or solicit proxies (unless otherwise directed by stockholders) in accordance with their judgment on such matters.from other stockholders; and
the class and number of our shares that the stockholder beneficially owns.
If you are nominating a candidate to be elected as a director, your notice must include the following additional information:
(i) | the name and address of any person to be nominated, |
(ii) | a description of all arrangements or understandings between you and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made, |
(iii) | such other information regarding each nominee as would be required to be included in a proxy statement filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, |
(iv) | the consent of each nominee to serve as a director if so elected, and |
(v) | such other information as is set forth in our Fourth Amended and Restated Bylaws, which are available on the Investor Relations section of our website. |
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To the extent that this proxy statement is incorporated by reference in any other filing by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the information included or incorporated in the sections of this proxy statement entitled “Executive Compensation - Compensation—Commvault Systems, Inc. Compensation CommitteeTMCC Report on Executive Compensation” and “Report of Audit Committee” will not be deemed to be incorporated, unless specifically provided otherwise in such filing.
We will furnish without charge to each person whose proxy is being solicited, upon the written request, of any such person, a copy of our annual report on Form 10-K for the fiscal year ended March 31, 2021,2022, as filed with the Securities and Exchange Commission,SEC, including the financial statements and schedules thereto. Requests for copies of such report should be directed to Warren H. Mondschein,Danielle Sheer, Vice President, General CounselChief Legal and Secretary, Chief Compliance Officer, Commvault Systems, Inc., 1 Commvault Way, Tinton Falls, New Jersey 07724. A copy of our annual report on form Form 10-K for the fiscal year ended March 31, 20212022, is also being made available concurrently with the proxy statement at www.edocumentview.com/CVLT.
Danielle Sheer
Chief Legal and Compliance Officer
63 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Reconciliation of GAAP to
Non-GAAP Financial Measures
The following table provides a reconciliation of our reported GAAP results to the non-GAAP financial measures discussed above and used in certain of our named executive officers’ fiscal 2022 compensation arrangements. The following results are based on the accounting principles that were used to prepare the fiscal 2022 consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2022.
Fiscal Year Ended March 31, | ||||||||
2022 | 2021 | |||||||
Non-GAAP financial measures and reconciliation: | ||||||||
GAAP income (loss) from operations | $ | 41,566 | $ | (22,263 | ) | |||
Noncash stock-based compensation(1) | 103,454 | 82,086 | ||||||
FICA and payroll tax expense related to stock-based compensation(2) | 3,261 | 2,196 | ||||||
Restructuring(3) | 6,192 | 23,471 | ||||||
Hedvig deferred payments(4) | 5,622 | 5,624 | ||||||
Amortization of intangible assets(5) | 208 | 5,650 | ||||||
Impairment of intangible assets(6) | — | 40,700 | ||||||
Acquisition costs(7) | 1,379 | — | ||||||
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Non-GAAP income from operations | $ | 161,682 | $ | 137,464 | ||||
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GAAP net income (loss) | $ | 33,624 | $ | (30,954 | ) | |||
Noncash stock-based compensation(1) | 103,454 | 82,086 | ||||||
FICA and payroll tax expense related to stock-based compensation(2) | 3,261 | 2,196 | ||||||
Restructuring(3) | 6,192 | 23,471 | ||||||
Hedvig deferred payments(4) | 5,622 | 5,624 | ||||||
Amortization of intangible assets(5) | 208 | 5,650 | ||||||
Impairment of intangible assets(6) | — | 40,700 | ||||||
Acquisition costs(7) | 1,379 | — | ||||||
Gain on sale of equity method investment(8) | (1,000 | ) | — | |||||
Non-GAAP provision for income taxes adjustment(9) | (34,090 | ) | (27,674 | ) | ||||
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Non-GAAP net income | $ | 118,650 | $ | 101,099 | ||||
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Diluted weighted average shares outstanding | 47,220 | 47,803 | ||||||
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Non-GAAP diluted earnings per share | $ | 2.51 | $ | 2.11 |
1. | Represents noncash stock-based compensation charges associated with stock options and, restricted stock units granted under our 2016 Incentive Plan and purchase rights issued under our Employee Stock Purchase Plan. |
2. | Represents additional FICA and related payroll tax expenses incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards. |
3. | In recent fiscal years, Commvault initiated restructuring plans to increase efficiency in its sales, marketing and distribution functions as well as reduce costs across all functional areas. These restructuring charges relate primarily to severance and related costs associated with headcount reductions, as well as the closure of offices. During the fourth quarter of fiscal 2022, Commvault initiated a restructuring plan to combine the management of its EMEA and APJ field operations. Restructuring includes stock-based compensation related to modifications of |
64 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
ANNEX AA:RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
awards granted to former employees. Management believes, when used as a supplement to GAAP results, that the exclusion of these charges will help investors and financial analysts understand Commvault’s operating results and underlying operational trends as compared to prior periods. |
4. | In connection with the acquisition of Hedvig Inc., certain Hedvig shareholders will receive cash payments for the 30 months following the date of acquisition, subject to their continued employment with Commvault. While these payments are proportionate to these shareholders’ ownership of Hedvig, under GAAP they are accounted for as compensation expense within Research and development expenses over the course of the 30 month service period. Management believes, when used as a supplement to GAAP results, that the exclusion of these non-routine expenses will help investors and financial analysts understand Commvault’s operating results and underlying operational trends as compared to prior periods. |
5. | Represents noncash amortization of intangible assets. |
6. | In the second quarter of fiscal 2021, Commvault recorded an impairment of its acquired intangible assets. These noncash charges are not representative of ongoing costs to the business and are not expected to recur. As a result, these charges are being excluded to provide investors with a more comparable measure of costs associated with ongoing operations. |
7. | During the fourth quarter of fiscal 2022, Commvault incurred costs related to the acquisition of TrapX. Management believes, when used as a supplement to GAAP results, that the exclusion of these costs will help investors and financial analysts understand Commvault’s operating results and underlying operational trends as compared to other periods. |
8. | Represents the gain on the sale of Commvault’s equity investment in Laitek, Inc. |
9. | The provision for income taxes is adjusted to reflect Commvault’s estimated non-GAAP effective tax rate of 27%. |
65 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
Sixth Amendment Thereof)
Omnibus Incentive Plan
This “Sixth Amendment” to the Commvault Systems, Inc. Omnibus Incentive Plan, as amended (the “Plan”) is made as of August 24, 2022. Defined terms used herein have the same definition ascribed to (a) attract and retain employees, directors and other persons providing services tothem in the Company and its Related Companies (as defined herein); (b) advance the interestsPlan.
WHEREAS, Section 10 of the Company and its stockholdersPlan permits the Board to amend the Plan, subject to approval by providing employees, directors and other persons providing services to the Company and its Related Companies, upon whose judgment, initiative and efforts the Company largely depend, with appropriate incentives to perform in a superior manner and achieve long-range goals, (c) to provide incentive compensation opportunities that are competitive with other similar companies, and (d) to further align the interests of Participants’ (as defined herein) with those of the Company’s stockholders and to thereby promoteif such approval is required by law or the long-term financial interestsrules of the Company and the Related Companies, including the growth in value of the Company’s equity and long-term stockholder return.
WHEREAS, the Board desires to trading or, if no such sale is reported on that date, on amendthe last preceding date on which a sale was so reported.
2.22 “Performance-Based Compensation” has the meaning set forth in subsection 7.3.
WHEREAS, if the Related Companies and ceases to perform material services for the Company and the Related Companies (whether as a director or otherwise), regardless of the reason for the cessation; provided that a “Termination Date” shall not be considered to have occurred during the period in which the reason for the cessation of services is a leave of absence approved by the Company or the Related Company which was the recipient of the Participant’s services; and provided further that, with respect to an Outside Director, “Termination Date” means date on which the Outside Director’s service as an Outside Director terminates for any reason.
WHEREAS, if the Company against anyCompany’s stockholders fail to approve this Sixth Amendment, the existing Plan shall continue in full force and all liabilities, losses, costs and expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Committee or its members or authorized delegates by reasoneffect.
NOW THEREFORE, pursuant to Section 10 of the performance of a Committee function ifPlan, the Committee or its members or authorized delegates did not act dishonestly or in willful violationPlan is hereby amended as follows, effective as of the law or regulation under which such liability, loss, cost or expense arises. This indemnification shall not duplicate but may supplement any coverage available under any applicable insurance.Effective Date:
1. | The first sentence of Section 4.1(b) of the Plan is hereby amended and restated as follows: |
(b) Subject to the provisions of subsection 4.2, the number of shares of Common Stock which may be issued with respect to Awards under the Plan shall be equal to 10,050,000. Except as otherwise provided herein, any shares of Common Stock subject to an Award under the Plan which for any reason is forfeited, expires or is terminated without issuance of shares of Common Stock (including shares that are attributable to Awards that are settled in cash) and shares of Stock that are withheld in payment of taxes payable with respect to the vesting or settlement of a Full Value Award shall thereafter be available for further grants under the Plan. Shares of Stock that are tendered or withheld in payment of the Exercise Price of an Option or shares of Stock that are withheld in payment of taxes payable with respect to the exercise of an Option or SAR shall not be available for further grants under the Plan.
2. | Except as expressly amended by this Sixth Amendment, all terms and conditions of the Plan shall remain in full force and effect. This Sixth Amendment shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of laws. |
IN WITNESS WHEREOF, the Exercise Price for any outstanding Option or SAR may not be decreased after the date of grant nor may an outstanding Option or SAR granted underCompany, by its duly authorized officer, has executed this Sixth Amendment to the Plan, be surrendered to the Company as consideration for the grant of a replacement Option or SAR with a lower exercise price or a Full Value Award. Except as approved by the Company’s stockholders, in no event shall any Option or SAR granted under the Plan be surrendered to the Company in consideration for a cash payment if, at the time of such surrender, the Exercise Price of the Option or SAR is greater than the then current Fair Market Value of a share of Common Stock.
COMMVAULT SYSTEMS, INC. | ||
By: |
Sanjay Mirchandani | ||
Chief Executive Officer |
66 | COMMVAULT SYSTEMS, INC.| 2022 PROXY STATEMENT |
COMMVAULT VOTE Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2022 Annual Meeting Proxy Card IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS AND “FOR” PROPOSALS 2, 3 AND 4. 1. Elect six directors for a one-year term; For Against Abstain For Against Abstain For Against Abstain 01—Nicholas Adamo 02—Martha H. Bejar 03 – David F. Walker 04—Keith Geeslin 05—Vivie “YY” Lee 06 – Sanjay Mirchandani For Against Abstain For Against Abstain 2. Approve, by non-binding vote, the Company’s executive 3. Ratify the appointment of Ernst & Young LLP as the Company’s compensation; independent public accountants for the fiscal year ending March 31, 2023; 4. Approve amendment providing additional shares for grant under the Company’s 2016 Omnibus Incentive Plan, as amended by the Board (theSixth Amendment. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Note: Please sign exactly as your name or names appear on which such approval is completed being referred to hereinthis proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the “Effective Date”); provided, however, that no Awards granted under the Plan after the Effective Date prior to the Stockholders’ Meeting will vest or become exercisable prior to the date of the Stockholders’ Meeting (and only if the Plan is approved by the stockholders at the Stockholders’ Meeting) and all such Awards shall be forfeited as of the date of the Stockholders’ Meeting if the Plan is not approved by the Company’s stockholders at the Stockholders Meeting. The Plan shall be unlimited in duration and, in the event of Plan termination, shall remain in effect as long as any shares of Common Stock awarded under it are outstanding and not fully vested; provided, however, that no new Awards will be made under the Plan on or after the tenth anniversary of the Effective Date. Any awards made under the Prior Plan prior to the Effective Date shall continue to be subject to the terms and conditions of the Prior Plan. Following the Effective Date and if the Plan is approved at the Stockholders’ Meeting, no further awards will be made under the Prior Plan.
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. REVOCABLE PROXY — COMMVAULT SYSTEMS, INC. Annual Meeting of Stockholders August 24, 2022 Proxy Solicited by Board of Directors The undersigned does hereby appoint Sanjay Mirchandani and Danielle Sheer (together, the Company.
COMMVAULT VOTE Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 3:00 a.m., ET, on August 24, 2022. Online Go to www.investorvote.com/CVLT or scan the contrary, the Committee may grant Awards to eligible persons whoQR code — login details are foreign nationals on such terms and conditions different from those specifiedlocated in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada. Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/CVLT Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2022 Annual Meeting Proxy Card IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. A Proposals — THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS AND “FOR” PROPOSALS 2, 3 AND 4. 1. Elect six directors for a one-year term; + For Against Abstain For Against Abstain For Against Abstain 01—Nicholas Adamo 02—Martha H. Bejar 03 – David F. Walker 04—Keith Geeslin 05—Vivie “YY” Lee 06 – Sanjay Mirchandani For Against Abstain For Against Abstain 2. Approve, by non-binding vote, the Company’s executive 3. Ratify the appointment of Ernst & Young LLP as the Company’s compensation; independent public accountants for the fiscal year ending March 31, 2023; 4. Approve amendment providing additional shares for grant under the Company’s 2016 Omnibus Incentive Plan, as may,amended by the Sixth Amendment. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Note: Please sign exactly as your name or names appear on this proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by a duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by an authorized person. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the judgmentbox. Signature 2 — Please keep signature within the box. 6 3 BM 03N9JC
The 2022 Annual Meeting of Stockholders of Commvault Systems, Inc. will be held on Wednesday, August 24, 2022 at 9:00 a.m. Eastern Time virtually via the Committee,internet at http://ir.commvault.com/annual-meeting. To vote during the virtual meeting, you must verify your identity as a stockholder. Please have the information that is printed on the shaded bar located on the reverse side of this form available. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.investorvote.com/CVLT Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/CVLT IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. REVOCABLE PROXY — COMMVAULT SYSTEMS, INC. + Annual Meeting of Stockholders August 24, 2022 Proxy Solicited by Board of Directors The undersigned does hereby appoint Sanjay Mirchandani and Danielle Sheer (together, the “Proxies”), and each of them, with full power of substitution, as Proxies to vote, as directed on this card, or, if not so directed, in accordance with the Board of Directors’ recommendations, all shares of Commvault Systems, Inc. held of record by the undersigned at the close of business on June 30, 2022 and entitled to vote at the Annual Meeting of Stockholders of Commvault Systems, Inc. to be necessaryheld at 9:00 a.m., Eastern time, Wednesday, August 24, 2022 virtually via the internet at http://ir.commvault.com/annual-meeting or desirableat any adjournment or postponement thereof, and to foster and promote achievement of the purposes of the Plan. In furtherance ofvote, in their discretion, upon such purposes, the Committee may make such modifications, amendments, procedures and subplansother matters as may be necessary or advisableproperly come before the Annual Meeting. You are encouraged to complyspecify your choices by marking the appropriate boxes, but you need not mark any boxes if you wish to vote in accordance with provisions of laws in other countries or jurisdictions in which the Company or a Related Company operates or has employees. The foregoing provisions of this subsection 9.14 shall not be applied to increase the share limitations of Section 4 or to otherwise change any provision of the Plan that would otherwise require the approval of the Company’s stockholders.