| 5.4. | Transaction of such other business as may properly come before the annual meeting or before any adjournments or postponements thereof. |
Only stockholders of record of our common stock at the close of business on March 15, 20161, 2018 are entitled to notice of, and to vote at, the annual meeting or any adjournments or postponements thereof. IMPORTANT NOTICE ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, YOU ARE URGED TO SUBMIT YOUR PROXY OVER THE INTERNET, BY TELEPHONE OR BY COMPLETING, DATING AND SIGNING THE ENCLOSED PROXY CARD AND MAILING IT PROMPTLY IN THE ENCLOSEDPOSTAGE-PAID ENVELOPE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME. YOU CAN WITHDRAW YOUR PROXY AT ANY TIME BEFORE IT IS VOTED. PLEASE VOTE YOUR SHARES PROMPTLY By Order of the Board of Directors, 
Trâm T. Phi Senior Vice President, General Counsel and Corporate Secretary Redwood Shores, California March 23, 201612, 2018
TABLE OF CONTENTS
IMPERVA, INC. 3400 Bridge Parkway Redwood Shores, California 94065 PROXY STATEMENT This proxy statement is being furnished to the stockholders of Imperva, Inc., a Delaware corporation, in connection with the solicitation of proxies by our board of directors for use at the annual meeting of stockholders to be held at 3400 Bridge Parkway, Redwood Shores, California 94065, on May 4, 2016April 24, 2018 at 9:1:00 a.m.p.m. Pacific Time, and at any adjournments or postponements thereof. At the annual meeting, holders of our common stock will be asked to vote upon: (i) the election of two Class III directors to serve until the annual meeting of stockholders to be held in 20192021 or until their successors are duly elected and qualified; (ii) anon-binding advisory resolution to approve our named executive officer compensation; (iii) the amendment of our 2011 Stock Option and Incentive Plan (the “2011 Plan”) to increase the shares available for grant by 1,300,000 shares of our common stock and approve changes to its terms; (iv) approval of the ratification of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2016;2018; and (v)(iv) any other business that properly comes before the annual meeting, or any adjournments or postponements thereof. This proxy statement and the accompanying proxy card are first being mailed to stockholders on or about March 23, 2016.12, 2018. The address of our principal executive offices is 3400 Bridge Parkway, Redwood Shores, California 94065. VOTING RIGHTS AND PROXIES Record Date; Outstanding Shares; Quorum Only holders of record of our common stock at the close of business on the record date, which is March 15, 2016,1, 2018, will be entitled to notice of and to vote at the annual meeting. As of the close of business on the record date, there were 32,258,96934,806,089 shares of our common stock outstanding and entitled to vote, held of record by approximately 4120 stockholders. Pursuant to our amended and restated bylaws (“bylaws”), the holders of a majority of the outstanding shares of common stock entitled to vote at the meeting, present in person or by proxy, will constitute a quorum for the transaction of business. Each of our stockholders is entitled to one vote for each share of common stock held as of the record date. For ten days prior to the annual meeting, a complete list of stockholders entitled to vote at the annual meeting will be available for examination by any stockholder, for any purpose germane to the meeting, during ordinary business hours at our principal executive offices at 3400 Bridge Parkway, Redwood Shores, California 94065. Voting of Proxies; Revocation of Proxies; Votes Required Stockholders are requested to complete, date, sign and return the accompanying proxy card in the enclosedpostage-paid envelope, or to submit their vote online or by phone. See “Voting Electronically via the Internet or by Telephone” below for instructions. All properly executed, returned and unrevoked proxies will be voted in accordance with the instructions indicated thereon.on the proxy. Executed but unmarked proxies will be votedFOR each director nominee listed on the proxy card,card; FOR the approval of thenon-binding advisory resolution to approve our named executive officer compensation,FOR the amendment of the 2011 Plan to increase the shares available for grant by 1,300,000 shares of our common stockcompensation; and approve changes to its terms andFOR the ratification of our independent registered public accounting firm for the year ending December 31, 2016.2018. The board of directors does not know of, and does not intend to bring, any business before the annual meeting other than that referred to in this proxy statement and specified in the notice of annual meeting. As to any other business that may properly come before the annual meeting, including any motion made for adjournment or postponement of the annual meeting (including for purposes of soliciting additional votes), the proxy card will confer discretionary authority on the proxies (who are persons designated by the board of directors) to vote all shares covered by the proxy card in their discretion. Any stockholder who has given a proxy that does not state it is irrevocable may revoke it at any time before it is exercised at the annual meeting by (i) delivering a duly executed proxy bearing a later date to, or filing a written notice of the death or incapacity of the maker or revocation with, the Corporate Secretary of Imperva, 3400 Bridge Parkway, Redwood Shores, California 94065, (ii) submitting a later dated proxy or revocation by Internet or telephone, or (iii) attending the annual meeting and voting in person (although attendance at the annual meeting will not, by itself, revoke a proxy). If you hold shares through a brokerage firm, bank or other agent, you must contact that brokerage firm, bank or other agent to revoke any prior voting instructions.
Director elections are determined by a plurality of shares of common stock represented in person or by proxy and voting at the annual meeting (the two properly nominated individuals receiving the highest number of votes will be elected). Approval of thenon-binding advisory resolution to approve our named executive officer compensation approval of the amendment of the 2011 Plan and approval of our independent registered public accounting firm for the year ending December 31, 2016,2018, each require the affirmative vote of a majority of the shares of common stock entitled to vote on the matter that are (i) represented in person or by proxy at the annual meeting and (ii) voted for or against the matter. Effect of Abstentions If an executed proxy is returned and the stockholder has specifically abstained from voting on any matter, the shares represented by such proxy will be considered present at the annual meeting for purposes of determining a quorum and for purposes of calculating the vote, but will not be considered to have been voted for or against such matter. As such, an abstention will have no effect on the vote for thenon-binding advisory resolution to approve our named executive officer compensation and the ratification of our independent registered public accounting firm, Ernst & Young LLP, for the year ending December 31, 2016. Under New York Stock Exchange rules, abstentions are counted as shares voted on the proposal to approve the amendment of the 2011 Plan. Therefore, if you abstain from voting on the proposal to amend the 2011 Plan, it will have the same effect as a vote against the proposal.2018. Effect of “BrokerNon-Votes” If your shares are held by your broker, bank or other agent as your nominee (that is, in “street name”), you will need to obtain a voting form from the institution that holds your shares and follow the instructions included on that voting form regarding how to instruct your broker, bank or other agentnominee to vote your shares. If you do not give instructions to your broker, bank or other agent, theynominee, your nominee can vote your shares with respect to “discretionary” items, but not with respect to“non-discretionary” “non-discretionary” items. Discretionary items are proposals considered routine on which your broker, bank or other agentnominee may vote shares held in street name in the absence of your voting instructions, such as the vote for ratification of our independent registered public accounting firm. Onnon-discretionary items, such as the vote for the election of directors and thenon-binding advisory vote to approve named executive officer compensation, and the vote for the amendment of the 2011 Plan, if you do not give instructions to your broker, bank or other agent, thenominee, your shares will not be voted and will be treated as brokernon-votes. If an executed proxy is returned by a broker, bank or other agent holding shares in street name that indicates that the broker does not have discretionary authority as to certain shares to vote on a proposal (“brokernon-votes”), such shares will be Broker non-votes are considered present at the annual meeting for purposes of determining a quorum, but are not considered voted on allany proposals but will not be considered to be entitled to vote on such proposal.
If a quorum is present, the nominees for director receiving the highest number of affirmative votes of the shares present or represented and entitled to be voted for them shall be elected as directors. Therefore, broker
non-votes willthus have no effect on the electionoutcome of directors. The approval of thenon-binding advisory resolution to approve our named executive officer compensation, the approval of the amendment of the 2011 Plan, and the ratification of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2016 require the approval of the affirmative vote of a majority of the shares of common stock entitled to vote on such matters that are present or represented by proxy at the annual meeting and voted for or against each matter. Because brokernon-votes are not voted affirmatively or negatively, they will have no effect on the approval of thesethose proposals.
Voting Electronically via the Internet or by Telephone General Information for All Shares Voted via the Internet or by Telephone Stockholders whose shares are registered in their own name may choose to grant a proxy the right to vote their shares either via the Internet or by telephone. The laws of Delaware, under which we are incorporated, specifically permit electronically transmitted proxies, provided that each such proxy contains or is submitted with information from which the inspector of elections can determine that such proxy was authorized by the stockholder. The Internet and telephone voting procedures set forth below, as well as on the enclosed proxy card, are designed to authenticate stockholders’ identities, to allow stockholders to grant a proxy to vote their shares and to confirm that stockholders’ voting instructions have been properly recorded. Stockholders granting a proxy to vote via the Internet or telephone should understand that there may be costs associated with electronicsuch access, such as usage charges from Internet access providers and telephone companies, which must be borne by the stockholder. For Shares Registered in Your Name Stockholders of recordYou may go to www.envisionreports.com/impv to grant a proxy to vote their shares online by means ofgoing to www.envisionreports.com/impv. To access the Internet. Theywebsite, you will be required to provide the15-digit control number contained on theiryour proxy cards. The votercard and will then be asked to complete an electronic proxy card. Any stockholder using atouch-tone telephoneYou may also grant a proxy to vote shares by calling(800) 652-8683 the toll-free number on the proxy card and following the recorded instructions.
You may use the Internet to vote your proxy 24 hours a day, seven days a week, until 11:59 p.m.1:00 a.m. Eastern Time (8:59on April 24, 2018 (10:00 p.m. Pacific Time)Time on May 3, 2016.April 23, 2018). You may use atouch-tone telephone to vote your proxy 24 hours a day, seven days a week, until 11:59 p.m.1:00 a.m. Eastern Time (8:59on April 24, 2018 (10:00 p.m. Pacific Time)Time on May 3, 2016.April 23, 2018). Submitting your proxy via the Internet or by telephone will not affect your right to vote in person should you decide to attend the annual meeting.
For Shares Registered in the Name of a Broker, Bank or BankOther Agent Most beneficial owners whose shares are held in street name receive voting instruction forms from their banks, brokers or other agents, rather than our proxy card. If on the record date your shares were held, not in your name, but rather in an account at a brokerage firm, bank or other agent, then you are the beneficial owner of shares held in “street name” and these proxy materials have been forwarded to you by your broker, bank or other agent. The broker, bank or other agent holding your account is considered to be the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct your broker, bank or other agent on how to vote the shares in your account. You are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy issued in your name from your broker, bank or other agent. Solicitation of Proxies and Expenses We will bear the cost of the solicitation of proxies from our stockholders in the enclosed form. Our directors, officers and employees, without additional compensation, may solicit proxies by mail, telephone, letter, facsimile, electronically or in person. Following the original mailing of the proxies and other soliciting materials, we will request that brokers, banks, and other agents, custodians, nominees and other record holders forward copies of the proxy and other soliciting materials to persons for whom they hold shares of common stock and request authority for the exercise of proxies. In such cases, we will reimburse such record holders for their reasonable expenses incurred for forwarding such materials. Voting Results The preliminary voting results will be announced at the annual meeting. The final voting results will be tallied by our Inspector of Elections and published in a Current Report on Form8-K to be filed with the Securities and Exchange Commission, or the SEC, within four business days of the annual meeting. Annual Report on Form 10-K A copy of our Annual Report on Form10-K for the year ended December 31, 2015,2017, including the financial statements, list of exhibits and any exhibit specifically requested filed with the SEC is available without charge upon written request to: Imperva, Inc., Attention: Corporate Secretary, 3400 Bridge Parkway, Redwood Shores, California 94065.
ELECTION OF CLASS IICLASS I DIRECTORS (Item No. 1 on the Proxy Card) Our restated certificate of incorporation (the “certificate of incorporation”) and bylaws provide that the number of authorized directors shall be fixed from time to time by a resolution of the majority of our board of directors. As of the date of this proxy statement, our board of directors consists of eightseven directors. Our restated certificate of incorporation and bylaws provide for a classified board of directors, divided into three classes. This year the terms of our Class I directors, currently consisting of Roger Sippl and Allan Tessler, will expire at the annual meeting. Two of the continuing directors are Class II directors, whose terms will expire at our 2019 annual meeting, and three of the continuing directors are Class III directors, whose terms will expire at our 2020 annual meeting. At each annual meeting of stockholders, holders of common stock eligible to vote at the meeting will be asked to vote on the election of successors to the class of directors whose term expires at that annual meeting will be elected for a term to expire at the third succeeding annual meeting. The individuals so elected will serve until their successors are elected and qualified or until his or hertheir earlier death, resignation or removal. This year the terms of our Class II directors, currently consisting of Anthony Bettencourt, Geraldine Elliott, Theresia Gouw and Frank Slootman, will expire at the annual meeting. Ms. Gouw and Mr. Slootman do not intend to stand for re-election as Class II directors. At the annual meeting, holders of common stock will be asked to vote on the election of Mr. Bettencourt and Ms. Elliott as Class II directors, whose current term will expire at our 2016 annual meeting. The board of directors has nominated each of Anthony BettencourtMessrs. Sippl and Geraldine ElliottTessler to serve as a Class III director for athree-year term that is expected to expire at our annual meeting in 20192021 and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal. You can find the principal occupation and other information about the board’s nominees, as well as other continuing board members, below. Two of the continuing directors are Class III directors, whose terms will expire at our 2017 annual meeting, and two of the continuing directors are Class I directors, whose terms will expire at our 2018 annual meeting.
The election of Class III directors will be determined by the two nominees receiving the greatest number of votes from shares eligible to vote. Unless a stockholder signing a proxy withholds authority to vote for one or more of the board’s nominees in the manner described on the proxy card, each proxy received will be voted for the election of each of the board’s nominees. Proxies cannot be voted for a greater number of persons than the number of nominees named. In the event that any nominee is unable or declines to serve as a director at the time of the annual meeting, the proxies will be voted for the nominee or nominees who shall be designated by the present board of directors to fill the vacancy. We are not aware that any of the nominees will be unable or will decline to serve as a director. There are no family relationships between any of our directors, nominees or executive officers. There are also no arrangements or understandings between any director, nominee or executive officer and any other person pursuant to which he or she has been or will be selected as a director and/or executive officer. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF ANTHONY BETTENCOURTROGER SIPPL AND GERALDINE ELLIOTTALLAN TESSLER AS CLASS III DIRECTORS.
Information Regarding Our Nominees and Directors The following table lists the nominees and continuing members of the board of directors by class, their ages as of March 15, 20161, 2018 and current positions with Imperva. Biographical information for each nominee and/or director is provided below. Nominees | | | | | | | Name | | Age | | Class1 | | Position | Anthony BettencourtRoger Sippl2, 3, 5
| | 5563 | | III | | Director | Allan Tessler2, 4 | | 81 | | I | | Chairman of the Board |
Continuing Directors Name | | Age | | Class1 | | Position | Christopher Hylen2 | | 57 | | II | | Director, President and Chief Executive Officer | Geraldine Elliott3 | | 59 | | II | | Director |
Continuing Directors
| | | | | | | Name61
| | Age | | Class1 | | Position
| Charles Giancarlo2, 3, 4II
| | 58 | | I | | Director | Albert Pimentel5 | | 6062 | | III | | Director | Allan TesslerRandall Spratt3, 5
| | 7965 | | IIII | | Lead Independent Director | James Tolonen4, 5 | | 6668 | | III | | Director | | | | | | | | | | | | | | |
1 | The terms of Class I directors (if elected) will expire at the 2021 annual meeting. The terms of Class II directors (if elected) will expire at the 2019 annual meeting. The terms of Class III directors will expire at the 20172020 annual meeting. The terms of Class I directors will expire at the 2018 annual meeting. |
2 | Member of the Acquisitions Committee. Mr. Sippl was appointed to the Acquisitions Committee in February 2017. Messrs. Hylen and Tessler were appointed to the Acquisitions Committee in February 2018. |
3 | Member of the Compensation Committee. The board of directors intends to appoint Mr. GiancarloMessrs. Sippl and Spratt were appointed to the Compensation Committee to be effective immediately after the 2016 annual meeting.in February 2017. |
4 | Member of the Nominating and Corporate Governance Committee. Mr. Tessler was appointed to the Nominating and Corporate Governance Committee in February 2017. |
5 | Member of the Audit Committee. Messrs. Sippl and Spratt were appointed to the Audit Committee in February 2017. |
Biographies Nominees for Class III Directors Anthony BettencourtRoger Sippl has served as our President, Chief Executive Officer and a member of our board of directors since August 2014,December 2016. Mr. Sippl has been a Managing Member and Partner of Sippl Investments, LLC, a venture capital firm, since 1998. Mr. Sippl was the founder, Chief Executive Officer and Chairman of Elastic Intelligence, Inc., a cloud computing company and developer of the Connection Cloud, which was founded in 2009 and acquired by Intuit Inc. in 2013. In 2002, Mr. Sippl founded Above All Software, Inc., a business integration software company, and served as its Chief Executive Officer until April 2005 and as its Chairman of the board since October 2015.Board from April 2005 until March 2007. Mr. Bettencourt previouslySippl served as the Chief Executive Officer and Chairman of the Board of Visigenic Software, Inc., a software development tools provider that he founded, from 1993 until it was acquired by Borland International, Inc. in 1998. He co-founded The Vantive Corporation, a global enterprise software company specializing in customer relationship management software that was acquired by PeopleSoft, Inc. in 2000. From 1980 to 1989, Mr. Sippl served as Chief Executive Officer of Coverity Inc.,Informix Corporation, a privately helddatabase company that developshe founded, and markets development testing solutions that assist software developers in detecting and fixing quality and security problems from November1989 to 1993, as its Chairman of the Board of Directors. Mr. Sippl was also a director of SolarWinds, Inc. from March 2010 to February 2016, when it was jointly acquired by Thoma Bravo and Silver Lake Partners, and Interwoven, Inc. from April 2007 to March 2014, following Coverity’s acquisition2009, when it was acquired by Synopsys, Inc. From January 2006 to October 2009, Mr. Bettencourt served as Senior Vice President of Special Projects at Autonomy Corporation plc. From 2003 to 2005, Mr. Bettencourt served as the Chief Executive Officer of Verity Inc., an enterprise search company, and led the company through its acquisition by AutonomySippl holds a B.S. in 2005. Mr. Bettencourt currently serves as a board member of Proofpoint, Inc., a leading security-as-a-service provider, and as a board member of two privately held technology companies. Mr. Bettentcourt has announced his intention to resigncomputer science from the boardUniversity of directors of Blinkx PLC, an Internet video search company, effective March 31, 2016. Mr. Bettencourt also previously served on the board of directors of Versant Corporation, a leading object database vendor. Mr. Bettencourt holds a B.A. in English from Santa Clara University.California at Berkeley.
The board of directors believes that Mr. BettencourtSippl possesses specific attributes that qualify him to serve as a director, including his extensive business and leadership experience as a chief executive officer of several technology companies and his substantial expertise in the perspective and experience he bringssoftware industry.
Allan Tessler has served as a member of our board of directors since February 2015, as our lead independent director from October 2015 to February 2018, and as Chairman of the Board since February 2018. Mr. Tessler has been Chairman of the Board and Chief Executive Officer of International Financial Group, Inc., an international merchant banking firm, since 1987 and is Chairman and Chief Executive Officer of Teton Financial Services, a financial services company. He previously served as wellChairman of the Board of Epoch Investment Partners, Inc., an investment management company, from 2004 to 2013, and as Chairman of the Board of J Net Enterprises, a technology holding company, from 2000 to 2004. He also previously served as Chief Executive Officer of J Net Enterprises, Co-Chairman and Co-Chief Executive Officer of Data Broadcasting Corporation, now known as Interactive Data Corporation, Chairman of Enhance Financial Services Group, Inc. and Chairman and principal shareholder of Great Dane Holdings. Mr. Tessler serves on the board of directors of TD Ameritrade Holding Corporation, L Brands, Inc. where he is lead independent director, and a member of the audit and executive committees, and Steel Partners Holdings L.P. He is a member of the board of governors of the Boys & Girls Clubs of America. Mr. Tessler holds a B.A. from Cornell University and an L.L.B. from Cornell University Law School. The board of directors believes that Mr. Tessler possesses specific attributes that qualify him to serve as a director, including his prior executive level leadershipextensive financial, operational and industry experience and his operational expertise.extensive leadership experience as a director and chief executive officer of companies in various industries. Continuing Directors Geraldine Elliott has served as a member of our board of directors since August 2015. She currently serves on the boards of directors of Bed, Bath and Beyond, Inc.Mimecast Limited, Marvell Technology Group Ltd. and Whirlpool Corporation, both of which are leading retailers. She also serves on the board of Charlotte Russe, Inc., a privately held retailer, and Puppet Labs, Inc., a privately held technology operations software company.Corporation. Ms. Elliott served in various executive management roles at Juniper Networks from 2009 to 2014, most recently as Executive Vice President and Chief Customer Officer. Prior to joining Juniper, Ms. Elliott held a series of senior executive positions at Microsoft from 2001 to 2009, with her most recent role beingincluding Vice President, World Wide Public Sector. Before joiningPrior to Microsoft, she spent 22 years at IBM Corporation, where she held executive and management positions spanning sales, services, consulting, strategy development, and product management. Ms. Elliott is on the Advisory Board for BoardList, the Silicon Valley initiative to increase the number of women on tech boards, and is the founder of Broadrooms, a website dedicated to women who serve or want to serve on corporate boards. She previously served on the board of directors of Bed, Bath and Beyond until June 2017. She holds a B.A. in Political Science from New York University.
The board of directors believes that Ms. Elliott possesses specific attributes that qualify her to serve as a director, including her management experience in sales and distribution, technology and engineering, and strategic planning and leadership of complex organizations. Continuing Directors
Charles GiancarloChristopher Hylen has served as a member of our board of directors, as well as our President and Chief Executive Officer, since MayAugust 2017. Prior to that, Mr. Hylen served as President and Chief Executive Officer of GetGo, Inc., a wholly-owned subsidiary of Citrix Systems, Inc. from April 2016 until GetGo was separated from Citrix and subsequently acquired by LogMeIn, Inc. in January 2017. From July 2013 to March 2016, Mr. Hylen served as Senior Vice President and General Manager, Mobility Apps of Citrix. Prior to joining Citrix, Mr. Hylen was the Senior Vice President and General Manager of Payment Solutions at Intuit, Inc. from August 2010 to July 2013. Mr. Giancarlo is a Senior AdvisorHylen also served as Intuit’s Vice President, Marketing Small Business Group from April 2010 to August 2010 and previouslyits Vice President Growth, Intuit Payment Solutions from September 2006 to May 2010. Mr. Hylen served as a Managing Directormember of Silver Lake Partners, a private investment firm that focuses on technology, technology-enabled and related growth industriesthe Board of the ADT Corporation from 2008January 2015 until 2013. Prior to joining Silver Lakeit was acquired by Apollo Global Management in 2008, he was employed by Cisco Systems, Inc., a provider of communications and networking products and services, which he joined in 1993 and where he was Executive Vice President and Chief Development Officer from 2004 to 2007.February 2016. Mr. Giancarlo is also on the boards of directors of Accenture plc, a management consulting business, Avaya, Inc., a provider of business collaboration and communications solutions, ServiceNow, Inc., a provider of a comprehensive suite of cloud-based services for enterprise IT management, and various private companies. He served on the board of directors of Netflix, Inc., an online movie rental subscription service, from April 2007 until May 2012, and Skype, a provider of internet communications software, from 2009 to 2011. Mr. GiancarloHylen holds a B.S. in electrical engineeringEngineering from BrownWidener University an M.S. in electrical engineering from the University of California at Berkeley and an M.B.A. from the Harvard University.Business School of Management.
The board of directors believes that Mr. GiancarloHylen possesses specific attributes that qualify him to serve as a director, including the perspective and experience he brings extensive industryas our Chief Executive Officer, as well as his prior executive level leadership and professional experience, including his specific professional experience whileoperational expertise at Cisco Systems, Inc., to the board of directors.Imperva and in prior roles. Albert A. Pimentel has served as a member of our board of directors since June 2010. Currently,Since March 2017, Mr. Pimentel ishas served as the Chairman of Afero, Inc., a provider of an Executive Vice Presidentinternet of things platform as-a-service solution for developing and deploying connected devices. Prior to Afero, Mr. Pimentel held various executive positions at Seagate Technology PLC, one of the world’s largest manufacturers of storage devices. Mr. Pimentel has served in various executive positions at Seagate, including as President, Global Markets & Customers from October 2013 until January 2016, and Executive Vice President, Chief Sales & Marketing Officerdevices, from April 2011 until October 2013.2016, including most recently as an Executive Vice President. Mr. Pimentel also served on Seagate’s board
of directors from March 2009 until April 2011. Mr. Pimentel has served as a board member of Xilinx Corporation since August 2010, and as a board member of Lifelock, Inc. since August 2011. From May 2008 to August 2010, Mr. Pimentel served as the Chief Operating Officer and Chief Financial Officer for McAfee, Inc., a leading company in the field of consumer and enterprise digital security products.products company. Mr. Pimentel is also on the boards of directors of Xilinx Corporation. Mr. Pimentel holds a B.S. in commerce from Santa Clara University. He is a Certified Public Accountant, inactive, in the State of California. The board of directors believes that Mr. Pimentel possesses specific attributes that qualify him to serve as a director, including his extensive industry experience and financial and operational expertise. Allan TesslerRandall Spratt has served as a member of our board of directors since February 2015 andMay 2016. He also serves as our lead independenta non-employee director since October 2015. Mr. Tessler has been Chairman of the board and Chief Executive Officer of International Financial Group, Inc., an international merchant banking firm, since 1987. He was Chairman of the board of Epoch Investment Partners, Inc., formerly J Net Enterprises. He has previously served as Chief Executive Officer of J Net Enterprises, Co-Chairman and Co-Chief Executive Officer of Data
Broadcasting Corporation, now known as Interactive Data Corporation, chairman of Enhance Financial Services Group, Inc. and chairman and principal shareholder of Great Dane Holdings. Mr. Tessler serves on the board of directors of online brokerage firm TD Ameritrade, Inc.,Interactive Health Holdings. Mr. Spratt was most recently Executive Vice President, Chief Information Officer and servesChief Technology Officer for McKesson Corporation, a global pharmaceutical distribution services and information technology company, from 2009 to 2015. Mr. Spratt joined McKesson in 1999 and held various executive positions at McKesson prior to becoming CIO and CTO, including as the lead directorCIO from 2005 to 2009, Chief Process Officer for McKesson Provider Technologies from 2003 to 2005 and chair of the finance committee of the board of directors of L Brands, Inc., parent companySenior Vice President, Imaging, Technology and Business Process Improvement from 2000 to the Victoria’s Secret, PINK, Bath & Body Works, La Senza and Henri Bendel consumer brands. He serves as a director and chairman emeritus of the Hudson Institute and is a member of the board of governors of the Boys & Girls Clubs of America.2003. Mr. TesslerSpratt holds a B.A.B.S. in biology with a minor in computer science from Cornellthe University and an L.L.B. from Cornell University Law School.of Utah.
The board of directors believes that Mr. Tessler brings extensive financial, operational and industry experienceSpratt possesses specific attributes that qualify him to the board of directors,serve as a director, including his extensive leadership experience as a directorin information technology and chief executive officer of companies in various industries.operations. James R. Tolonen has served as a member of our board of directors since July 2012. Mr. Tolonen currently serves as a member of the board of directors of MobileIron, Inc. and New Relic, Inc. Mr. Tolonen also served on the boards of directors of Blue Coat Systems, Inc. from May 2008 to February 2012, and Taleo Corporation from August 2010 to April 2012. Mr. Tolonen previously served as the Senior Group Vice President and Chief Financial Officer of Business Objects, S.A., an enterprise software solutions provider, where he was responsible for its finance and administration functions commencing infrom January 2003 untilto its acquisition by SAP AG in January 2008. He remained with SAP AG until September 2008. Mr. Tolonen served as the Chief Financial Officer and Chief Operating Officer and a member of the board of directors of IGN Entertainment Inc., an Internet media and service provider focused on the videogame market, from October 1999 to December 2002. He served as President and Chief Financial Officer of Cybermedia, a PC end-user security and performance software provider, from April 1998 to September 1998, and as a member of its board of directors from August 1996 to September 1998. Mr. Tolonen served as Chief Financial Officer of Novell, Inc., an enterprise software provider, from June 1989 to April 1998. Mr. Tolonen currently serves as a member of the board of directors of MobileIron, Inc., an enterprise mobile solutions company. Mr. Tolonen also served on the boards of directors of Blue Coat Systems, Inc. from May 2008 to February 2012, and Taleo Corporation from August 2010 to April 2012. Mr. Tolonen holds a B.S. in mechanical engineering and an M.B.A. from the University of Michigan. He is a Certified Public Accountant, inactive, in the State of California. The board of directors believes that Mr. Tolonen bringspossesses specific attributes that qualify him to serve as a director, including his extensive financial, operational and accounting experience includingand practical experience as a former chief financial officer of several security and software companies, to the board of directors.companies. Board Meetings, Committees and Corporate Governance Our board of directors had fivetwelve meetings during 2015 and held executive sessions ofnon-management and independent directors in four meetings. Our directors also acted by unanimous written consent on two occasions.2017. Our independent directors hold an executive session in conjunction with each regularly scheduled in-person board meeting (of which there are at least four per year) and also hold executive sessions at select telephonic boardas needed during special meetings. During 2015,2017, each incumbent director attended at least 75% of the aggregate number of (i) the meetings of the board of directors and (ii) the meetings of the committees on which he or she served (during the periods that he or she served).served. Director Independence Our board of directors has determined that allother than Mr. Hylen, our Chief Executive Officer, each member of our board of directors other than Mr. Bettencourt, areis independent, as determined under the rules of the New YorkNASDAQ Stock Exchange. Mr. Bettencourt is our Chairman, President and Chief Executive Officer.Market. Board Leadership Our board of directors highly valuesplaces a high value on maintaining its status as an independent board of directors. Currently, more than 75%all but one of the members of our board of directors are independent, as well as all members of the audit committee, the compensation committee and the nominating and corporate governance committee.
The Chairman of our board of directors is Allan Tessler. Mr. Tessler, who was appointed Chairman in February 2018, previously served as lead independent director. The responsibilities of the Chairman include proposing the meeting schedules and meeting agendas for the board of directors, serving as the chair of such meetings, and performing such other functions as the board may request from time to time. Our board’sCorporate Governance Guidelines provide that our board of directors is free to choose its Chairperson in any way that it considers in the best interests of Imperva, in accordance with our bylaws, and do not require the separation of the offices of Chairman and Chief Executive Officer. Our nominating and corporate governance committee periodically considers the leadership structure is comprised of our CEO, who also serves as Chairmanboard of directors and makes recommendations to the board andof directors as it deems appropriate. Our board of directors does not currently include a lead independent director. In October 2015, the board of directors designated Mr. Tessler as itsDuring periods in which we have a lead independent director. The lead independent director, he or she presides at executive sessions of non-management or independent directors and any meetings at which our CEO iscurrent and former chief executive officers are not present. TheOur lead independent director (if any) also calls meetings of the independent or non-management directors as may be necessary from time to time. In addition, heour lead independent director (if any) discusses any significant conclusions or requests arising from the independent directorexecutive sessions with our CEO,current and former chief executive officers, including the scheduling of, and requested agenda items for, future meetings of the board of directors. He may also perform other duties as may be, from time to time, set forth in our bylaws or requested by our board of directors to assist it in the fulfillment of its responsibilities, by individual directors, or by our CEO. Our board structure allows us to leverage the experience of our CEOcurrent chief executive officer and the independent perspective of our lead independent director.Chairman. We believe that this structure, amplified by our strong committee system, meets the current corporate governance needs and oversight responsibilities of the board. Role of the Board in Risk Oversight The board of directors is actively involved in the oversight of our risk management process. The board does not have a standing risk management committee, but administers this oversight function directly through the board as a whole, as well as through its standing committees that address risks inherent in their respective areas of oversight. In particular, our audit committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, our compensation committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessiverisk-taking, our nominating and corporate governance committee monitors our major legal compliance risk exposures and our program for promoting and monitoring compliance with applicable legal and regulatory requirements and our board is responsible for monitoring and assessing strategic risk exposure, with assistance from time to time by our acquisitions committee, and other risks not covered by our committees. The full board, or the appropriate committee, receives reports on risks facing Imperva from our CEOchief executive officer or other members of management to enable it to understand our risk identification, risk management and risk mitigation strategies. We believe that our board’s leadership structure supports effective risk management because it allows the independent directors on our committees to exercise oversight over management. Corporate Governance Guidelines and Code of Business Conduct and Ethics Our board of directors has adopted Corporate Governance Guidelines that set forth expectations for directors, director independence standards, board committee structure and functions, and other policies for the governance of the company. Our board of directors also has adopted a Code of Business Conduct and Ethics for directors, officers and employees that serves as a framework for our commitment to promoting high standards of honest and ethical business conduct and compliance with applicable laws. Our Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on the Investors section of our website, which is located athttp://www.imperva.com/company/investors_corporate-governance.html, by clicking on “Corporate Governance Guidelines” or “Code of Business Conduct and Ethics,” in each case under “Corporate Governance.”Company/CorporateGovernance. The Corporate Governance Guidelines and Code of Business Conduct and Ethics are reviewed at least annually by our nominating and corporate governance committee, and changes are recommended to our board of directors for their approval. Committees of the Board of Directors Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee, each of which operates pursuant to a separate charter adopted by our board of directors, as well as an informal acquisitions committee. The composition and functioning of our board of directors
and all of our audit, compensation and nominating and corporate governance committees comply with all applicable requirements of the Sarbanes Oxley Act of 2002, the New YorkNASDAQ Stock ExchangeMarket and SEC rules and regulations. The composition and responsibilities of each committee are described below. Members serve on these committees until their resignation or until otherwise determined by our board of directors. Audit Committee OurDuring 2017, our audit committee iswas comprised of Mr. Tolonen, who is the chair of the committee, and Messrs. Pimentel, Sippl and Tessler. Mr. Steven Krausz served as a member of our audit committee until the expiration of his term as a Class I director in May 2015 and Greg Clark served as a member of our audit committee from May 2015 until his resignation from our board of directors in August 2015.Spratt. The composition of our audit committee meets the requirements for independence under the current New YorkNASDAQ Stock ExchangeMarket and SEC rules and regulations. Each member of our audit committee is financially literate and is independent, as determined by our board of directors pursuant to the rules of the New YorkNASDAQ Stock Exchange.Market. In addition, the board of directors has determined the three current members of the committee,that Messrs. Pimentel, TesslerSippl and Tolonen, are financial experts within the meaning of Item 407(d)(5)(ii) of RegulationS-K promulgated under the Securities Act of 1933, as amended. All audit services to be provided to us and all permissiblenon-audit services to be provided to us by our independent registered public accounting firm will be approved in advance by our audit committee. Our audit committee recommended, and our board of directors has adopted, a charter for our audit committee. Our audit committee’s responsibilities include:
appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm; approving or, as permitted,pre-approving audit and permissiblenon-audit services, and the terms of such services, to be provided by our independent registered public accounting firm; reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; coordinating the oversight and reviewing the adequacy of our internal control over financial reporting; establishing policies and procedures for the receipt, retention and treatment ofaccounting-related complaints and concerns; and considering the adequacy of our internal accounting controls and audit procedures. The audit committee met eight times during 2015,2017, including meetings with our independent registered public accounting firm to review our quarterly and annual financial statements and discuss their review or audit of such statements. The audit committee also acted by unanimous written consent on one occasion. The audit committee operates pursuant to the audit committee charter, which has been posted on our website at http://www.imperva.com/Company/CorporateGovernance. Compensation Committee Our compensation committee is comprised of Mr. Slootman,Ms. Elliott, who is the chair of the committee, and Mses. ElliottMessrs. Sippl and Gouw. Mr.Spratt, who joined in February 2017. Charles Giancarlo served as a member ofon the committee until May 2015, and Mr. Tessler served as a member of thecompensation committee from May 2015 to2016 until October 2015. The board of directors intends to re-appoint Mr. Giancarlo to2017, when he resigned from the compensation committee, to be effective immediately after the 2016 annual meeting.board. The composition of our compensation committee meets the requirements for independence under the current New YorkNASDAQ Stock ExchangeMarket and SEC rules and regulations and the Internal Revenue Code of 1986, as amended (the “Tax Code”). The purpose of our compensation committee is to discharge the responsibilities of our board of directors relating to compensation of our directors and executive officers. Our compensation committee recommended, and our board of directors has adopted, a charter for our compensation committee. Our compensation committee’s responsibilities include: annually reviewing and approving corporate goals and objectives relevant to the compensation of our executive officers; evaluating the performance of our chief executive officer and other executive officers in light of such corporate goals and objectives and determining the compensation of our chief executive officer;officer and our other executive officers; overseeing and administering ourincentive-based compensation and equity plans; overseeing the review of our diversity‑related compensation equity practices; annually reviewing and making recommendations to the board with respect to director compensation;
| • | reviewing with management our major compensation-related risk exposures and the steps management has taken to monitor or mitigate such exposures; and |
reviewing with management our majorcompensation-related risk exposures and the steps management has taken to monitor or mitigate such exposures; and
reviewing general policies relating to compensation and benefits of our employees. The compensation committee met fiveseven times and acted by unanimous written consent one time during 2015.2017. The compensation committee operates pursuant to the compensation committee charter. Under its charter, which has been posted on our website at http://www.imperva.com/Company/CorporateGovernance, the compensation committee has authority to retain compensation consultants, outside counsel and other advisors that the compensation committee deems appropriate, in its sole discretion, to assist it in discharging its duties, and to approve the terms of retention and fees to be paid to such consultants. The compensation committee engaged Compensia, Inc., an independenta national compensation consulting firm that the committee has determined to be independent, to provide advice and analysis to the compensation committee during 2015. The compensation committee had previously engaged Compensia to help evaluateon our compensation philosophy and provide guidance in administering our compensation program in connection with the review of employee compensationexecutive officer and director compensation.compensation programs during 2017. See “Compensation Discussion and Analysis” for additional discussion regarding the role of Compensia in executive compensation. Nominating and Corporate Governance Committee Our nominating and corporate governance committee is comprised of Ms. Gouw,Mr. Tessler, who is the chair of the committee and Messrs.Mr. Tolonen. Charles Giancarlo and Tolonen. Steven Krausz served as a member of ouron the nominating and corporate governance committee untilfrom May 2016 to October 2017, when he resigned from the expiration of his term as a Class I director in May 2015.board. The composition of our nominating and corporate governance committee meets the requirements for independence under New YorkNASDAQ Stock ExchangeMarket and SEC rules and regulations. Our nominating and corporate governance committee has recommended, and our board of directors has adopted, a charter for our nominating and corporate governance committee. Our nominating and corporate governance committee’s responsibilities include: developing and recommending to the board criteria for board and committee membership; establishing procedures for identifying and evaluating director candidates including nominees recommended by stockholders; identifying individuals qualified to become board members; recommending to the board the persons to be nominated for election as directors and to each of the board’s committees; developing and recommending to the board a code of business conduct and ethics and a set of corporate governance guidelines; overseeing the evaluation of the board, its committees and management; reviewing related party transactions and proposed waivers of our code of conduct; reviewing and discussing public disclosures related to the board’s leadership structure and its role in risk oversight; reviewing developments in corporate governance practices; and evaluating the adequacy of, and making recommendations with respect to, our corporate governance practices and reporting. The nominating and corporate governance committee met threetwo times and acted by unanimous written consent one time during 2015.2017. The nominating and corporate governance committee operates pursuant to the nominating and corporate governance committee charter, which has been posted on our website at http://www.imperva.com/Company/CorporateGovernance. The nominating and corporate governance committee will consider nominees recommended by stockholders for election as directors. If a stockholder would like to recommend a director candidate for the next annual meeting, the stockholder must deliver the recommendation in writing to the Corporate Secretary, Imperva, Inc., 3400 Bridge Parkway, Redwood Shores, California 94065. The recommendation must be submitted not less than 7590 days nor more than 105120 days prior to the first anniversary of the date of the immediately preceding annual meeting of stockholders. Evaluations of candidates generally involve a review of background materials, internal discussions and interviews with selected identified candidates as appropriate. Candidates for the board of directors are generally selected based on desired skills and experience in the context of the existing composition of the board and needs of
the board and its committees at that time, including the requirements of applicable SEC and New YorkNASDAQ Stock ExchangeMarket rules. The nominating and corporate governance committee does not assign specific weights to particular criteria, and no particular criterion is necessarily applicable to all candidates. The committee will choose candidates to recommend for nomination based on the specific needs of the board and Imperva at that time. Although the nominating and corporate governance committee does not have a specific policy on diversity, in its consideration of the specific needs of the board and Imperva, the committee considers diverse backgrounds so that the board composition reflects a broad spectrum of experience and expertise. The nominating and corporate governance committee retained Spencer Stuart to assist in identifying and initially screening board member candidates, including Ms. Elliott, who joined in August 2015. Final approval of nominees to be presented for election is determined by the full board. The nominating and corporate governance committee recommended to the board that Mr. BettencourtMessrs. Sippl and Ms. ElliottTessler be nominated to serve as Class III directors. Acquisitions Committee Our acquisitions committee is an informal committee of the board comprised of Ms. GouwAnthony Bettencourt, until his resignation from the Board in February 2018, and Messrs. BettencourtHylen, Sippl and Giancarlo.Tessler. Mr. Sippl joined the acquisitions committee in February 2017, and Messrs. Hylen and Tessler joined the acquisitions committee in February 2018. Charles Giancarlo served on the acquisitions committee until October 2017, when he resigned from the board. The acquisitions committee’s purpose is to assist our board of directors in review of certain investment and acquisition transactions proposed by management. The acquisitions committee did not meet during 2015.2017. The Board is in the process of evaluating the purview of this committee. Compensation Committee Interlocks and Insider Participation During the course of 2015,2017, the members of our compensation committee were Ms. Elliott and Messrs. Slootman, Giancarlo, Sippl and Tessler, and Mses. Gouw and Elliott.Spratt. Mr. Giancarlo served on the compensation committee from May 2016 to October 2017, when he resigned from the board. None of them hashad at any time in the last year (while serving as a compensation committee member) or had previously been one of our officers or employees and none has had any relationships with our company of the type that is required to be disclosed under Item 404 of Regulation S-K. None of our executive officers has served as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our board of directors or compensation committee during 2015.2017. Communications with Directors Any third party, including any stockholder, may communicate with the board, including its non-management or independent directors, by sending written correspondence to: Board of Directors, c/o Corporate Secretary, Imperva, Inc., 3400 Bridge Parkway, Redwood Shores, California 94065. This disclosure can be found on the Investors section of our website, which is located at http://www.imperva.com/Company/Communications. Communications may be submitted anonymously or confidentially. Communications are distributed to the board, or to any individual directors as appropriate, depending on the facts and circumstances outlined in the communication. The board has instructed the Corporate Secretary to review all correspondence and to determine, in his or her discretion, whether matters submitted are appropriate for board consideration. In particular, the board has directed that communications such as product or commercial inquiries or complaints, resume and other job inquiries, surveys and general business solicitations or advertisements should not be forwarded to the board. In addition, material that is unduly hostile, threatening, illegal, patently offensive or similarly inappropriate or unsuitable will be excluded, with the provision that any communication that is filtered out must be made available to any non-managementindependent director upon request. The Corporate Secretary may forward certain communications elsewhere in the company for review and possible response. Director Attendance of Annual Meetings We encourage directors to attend our annual meetings of stockholders but do not require attendance. Last year, fourSeven directors attended our 20152017 annual meeting of stockholders. Director Compensation The compensation committee, after considering the information, analysis and recommendation provided by Compensia, including data regarding compensation paid to non-employee directors by companies in our “peer group” (as described in “Compensation Discussion and Analysis—Competitive Market Data”), evaluates the
appropriate level and form of compensation fornon-employee directors and recommends changes to the board when appropriate. For 2015,2017, annual compensation for non-employee directors consisted of: | | | | | | | Board Fees1 | | | Cash Retainer | | | $40,000 | | | | Annual Equity Awards2: | | | | Stock Options | | | Targeted Black-Scholes value on grant date of $65,000 | Restricted Stock Units | |
| Equal to $65,000 divided by the closing price of the
company’s common stock on the New York Stock Exchange
on the grant date | Initial Equity Awards for New Directors3: | | | | Stock Options | | | Targeted Black-Scholes value on grant date of $130,000 | Restricted Stock Units | |
| Equal to $130,000 divided by the closing price of the
company’s common stock on the New York Stock Exchange
on the grant date | Committee and Non-Employee Chairman of the Board Fees | | | | | | Chairman of the Board of Directors4 | | $ | 20,000 | | | | Audit Committee Chair | | $ | 16,000 | | | | Compensation Committee Chair | | $ | 12,000 | | | | Nominating and Corporate Governance Chair | | $ | 7,500 | | | | Non-chair Audit Committee Member | | $ | 8,000 | | | | Non-chair Compensation Committee Member | | $ | 6,000 | | | | Non-chair Nominating and Corporate Governance Committee Member | | $ | 3,750 | | | |
Board Fees1 | | | Cash Retainer | $ 30,000 | | Annual Equity Awards for Continuing Directors: | | Restricted Stock Units2 | Equal to $200,000 divided by the closing price of the company’s common stock on the grant date | Initial Equity Awards for New Directors3: | | Restricted Stock Units | Equal to $400,000 divided by the closing price of the company’s common stock on the grant date | Committee and Non-Employee Chairman of the
Board Fees | | | | Chairman of the Board of Directors4 | $ 20,000 | | Lead Independent Director | $ 16,500 | | Audit Committee Chair | $ 20,000 | | Compensation Committee Chair | $ 12,000 | | Nominating and Corporate Governance Chair | $ 7,500 | | Non-chair Audit Committee Member | $ 8,000 | | Non-chair Compensation Committee Member | $ 5,000 | | Non-chair Nominating and Corporate Governance Committee Member | $ 4,000 | |
1 | All cash compensation to directors is paid in quarterly installments upon continuing service. |
2 | The stock option andannual restricted stock unit awards both vest in full after one year. |
3 | Each new non-employee director receives these equity awards when initiallya restricted stock unit grant upon joining the board of directors. The awardsrestricted stock units vest over three years in equal annual installments. |
4 | This fee is only paid to a non-employee Chairman of the Board. |
In February 2016, the board approved of the following changes to the compensation for non-employee directors effective as of the beginning of 2016 to bring our board compensation levels in line with the median for our peer group companies:
decreased the annual cash retainer from $40,000 to $30,000;
increased the aggregate annual equity award value from $130,000 to $200,000 and aggregate initial equity award value from to $260,000 to $400,000, with all awards to be in the form of restricted stock units that vest in full one year from the vesting commencement date for annual awards and three years from the vesting commencement date in equal annual installments for initial awards;
increased the retainer for the chair of the audit committee from $16,000 to $20,000;
approved an annual retainer for the independent lead director of $16,500; and
decreased the fee for non-chair compensation committee members from $6,000 to $5,000 and increased the fee for non-chair nominating and corporate governance committee members from $3,750 to $4,000.
Director Compensation Table The following table provides information for the year ended December 31, 20152017 regarding all plan andnon-plan compensation awarded to, earned by or paid to each person who served as anon-employee director in 2015.2017. Other than as set forth in the table and the narrative that follows it, in 20152017 we did not pay any fees to or reimburse any expenses of ournon-employee directors, make any equity ornon-equity awards tonon-employee directors or pay any other compensation tonon-employee directors. All compensation that we paid to Mr. Bettencourt,Hylen, our only employee director, and Mr. Bettencourt, our former President, Chief Executive officer, non-executive Chairman of the Board and director, is analyzed in the section “Compensation Discussion and Analysis” and presented in the tables summarizing named executive officer compensation in the section “Executive Compensation.” No compensation was paid to Mr.Messrs. Hylen or Bettencourt in histheir capacity as a director.directors. | | | | | | | | | | | | | | | | | Name | | Fees Earned or
Paid
in Cash
($)1 | | | Stock
Awards
($)2,3 | | | Option
Awards
($)2,3 | | | Total
($) | | Greg Clark4 | | | 21,231 | | | | 64,987 | | | | 63,735 | | | | 149,953 | | Geraldine Elliott5 | | | 16,821 | | | | 129,979 | | | | 135,640 | | | | 282,440 | | Charles Giancarlo6 | | | 49,795 | | | | 64,987 | | | | 63,735 | | | | 178,517 | | Theresia Gouw | | | 51,048 | | | | 64,987 | | | | 63,735 | | | | 179,770 | | Shlomo Kramer7 | | | 58,023 | | | | 64,987 | | | | 63,735 | | | | 170,889 | | Steven Krausz8 | | | 12,938 | | | | 64,987 | | | | 63,735 | | | | 141,660 | | Albert A. Pimentel | | | 48,000 | | | | 64,987 | | | | 63,735 | | | | 176,722 | | Frank Slootman | | | 52,000 | | | | 64,987 | | | | 63,735 | | | | 180,722 | | Allan Tessler9 | | | 40,585 | | | | 194,966 | | | | 193,535 | | | | 188,472 | | James Tolonen | | | 59,750 | | | | 64,987 | | | | 63,735 | | | | 149,953 | |
Name | | Fees Earned or Paid in Cash ($)1 | | | Stock Awards ($)2,4 | | | Total ($) | | Geraldine Elliott | | | 42,000 | | | | 199,988 | | | | 237,988 | | Charles Giancarlo3 | | | 31,875 | | | | 199,988 | | | | 231,863 | | Albert Pimentel | | | 38,000 | | | | 199,988 | | | | 237,988 | | Randall Spratt | | | 41,664 | | | | 199,988 | | | | 241,652 | | Roger Sippl | | | 41,664 | | | | 199,988 | | | | 241,652 | | Allan Tessler | | | 51,533 | | | | 199,988 | | | | 251,521 | | James Tolonen | | | 54,000 | | | | 199,988 | | | | 253,988 | |
1 | These amounts reflect quarterly retainer fees earned in 20152017 for board and committee service. |
2 | Amounts shown in this column do not reflect dollar amounts actually received by thenon-employee director. Instead, these amounts reflect the aggregate grant date fair value of eachthe restricted stock unit (“RSU”) award or stock option award, as applicable,awards granted during 2017 calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718,Compensation—Stock Compensation, (“FASB ASC 718”) for awards granted during 2015.. The amounts do not reflect dollar amounts actually received by each non-employee director. See Note 12 of the Notes to our |
| Consolidated Financial Statements in our Annual Report on Form10-K for the year ended December 31, 20152017 for a discussion of all assumptions made in determining the grant date fair values. |
3 | Mr. Giancarlo resigned from the board of directors effective October 17, 2017. |
4 | The aggregate number of outstanding stock options and unvested RSUs held by each of our non-employee directors as of December 31, 20152017 was as follows: |
| | | | | | | | | Name | | RSUs | | | Options | | Greg Clark | | | 0 | | | | 0 | | Geraldine Elliott | | | 1,825 | | | | 3,980 | | Charles Giancarlo | | | 2,275 | | | | 18,108 | | Theresia Gouw | | | 1,433 | | | | 21,165 | | Shlomo Kramer | | | 0 | | | | 0 | | Steven Krausz | | | 0 | | | | 0 | | Albert A. Pimentel | | | 1,433 | | | | 21,165 | | Frank Slootman | | | 1,433 | | | | 21,165 | | Allan Tessler | | | 4,516 | | | | 9,455 | | James Tolonen | | | 1,433 | | | | 21,268 | |
Name | | RSUs | | | Options | | Geraldine Elliott | | | 5,232 | | | | 3,980 | | Charles Giancarlo | | | 0 | | | | 3,075 | | Albert Pimentel | | | 4,624 | | | | 21,165 | | Randall Spratt | | | 12,199 | | | | 0 | | Roger Sippl | | | 11,660 | | | | 0 | | Allan Tessler | | | 4,624 | | | | 9,455 | | James Tolonen | | | 4,624 | | | | 21,268 | |
4 | Mr. Clark resigned from the board of directors effective August 2015. The stock awards and option awards reported in the director compensation table for Mr. Clark were forfeited upon his termination of service. |
5 | Ms. Elliott joined the board of directors effective August 2015. Fees paid to Ms. Elliott include her service on the compensation committee since October 2015. |
6 | Fees paid to Mr. Giancarlo in 2015 include his service on the compensation committee from January 2015 to May 2015. |
7 | Mr. Kramer resigned as Chief Strategy Officer effective January 2015. Mr. Kramer was paid $15,856 for his services as Chief Strategy Officer during January 2015, which is included in the amount shown in the “fees earned or paid in cash” column. Mr. Kramer was paid in Israeli shekels. The amount paid has been converted to U.S. dollars using the average exchange rate for 2015 of US$1.00 to NIS 3.8941. Mr. Kramer resigned as Chairman of the board of directors effective October 2015. The stock awards and option awards reported in the director compensation table for Mr. Kramer were forfeited upon his termination of service from the board. |
8 | Mr. Krausz served on the board until his term as a Class I director expired in May 2015. |
9 | Mr. Tessler joined the board of directors effective February 2015. Fees paid to Mr. Tessler in 2015 include his service on the compensation committee from May 2015 to October 2015 and his service on the audit committee since August 2015. |
Section 16(a) Beneficial Ownership Reporting Compliance Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”), requires our directors and executive officers, and persons who own more than 10% of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms furnished to us and written representations from these officers and directors, we believe that all Section 16(a) filing requirements were met during 2015 except for a Form 4 for our Senior Vice President, Worldwide Services and Support to disclose his new hire equity awards that we inadvertently failed to file and subsequently filed in November 2015.2017. Executive Officers and Other Key Employees Our executive officers and other key employees as of March 15, 2016,1, 2018, and their positions and respective ages on that date, are: | | | | | | | Name | | Age | | | Position | Anthony BettencourtChristopher Hylen
| | | 5557 | | | President and Chief Executive Officer and Chairman of the Board | Mary (Meg) BearDirector
| | | 44 | | | Senior Vice President and General Manager of Imperva Cloud Services | Kim DeCarlis
| | | 49 | | | Chief Marketing Officer | Brett Hooper
| | | 52 | | | Senior Vice President of People | Mark E. Kraynak
| | | 42 | | | Senior Vice President and General Manager of Enterprise Solutions | Michael D. Mooney
| | | 55 | | | Chief Revenue Officer | Sunil D. Nagdev
| | | 52 | | | Senior Vice President, Worldwide Services and Support | Trâm T. Phi | | | 4547 | | | Senior Vice President, General Counsel and Corporate Secretary | Terrence J. SchmidMike Burns
| | | 52 | | | Chief Financial Officer and Treasurer | Amichai Shulman
| | | 46 | | | Chief Technology Officer |
Our executive officers and other key employees serve at the discretion of the board of directors, subject to rights, if any, under contracts of employment. See “Executive Compensation—Employment, Severance and Change in Control Arrangements.” Biographical information for Mr. BettencourtHylen is provided above. See “—Information Regarding Our Nominees and Directors.” Mary (Meg) Bear has served as our Senior Vice President and General Manager of Cloud Services since September 2015. From 2012 to 2015, Ms. Bear was Group Vice President for Social Cloud at Oracle Corporationand from 2005 to 2012 she held several product leadership roles within Oracle, including Vice President of
Human Capital Management (HCM) Development and Senior Director of Development for Oracle PeopleSoft. Prior to the Oracle acquisition of PeopleSoft, Inc. in 2005, Ms. Bear was Senior Director Development at PeopleSoft. Prior to that, Ms. Bear was Senior Director Engineering at Saba Software, Inc. and Vice President Engineering at SmartDB Corporation. Ms. Bear holds a B.S. in Economics and Entrepreneurship from the University of Arizona.
Kim DeCarlis has served as our Chief Marketing Officer since October 2014. From December 2012 to July 2014, Ms. DeCarlis was Vice President, Worldwide Marketing at BMC Software, Inc. Prior to that, she was Vice President of Corporate Marketing at Citrix Systems, Inc., a software and SaaS solutions provider, from November 2007 to November 2012 and was Senior Vice President of Product Marketing at Information Resources, Inc. (IRI), a company that provides big data solutions for consumer packaged goods and retail companies, from June 2005 to October 2007. Before IRI, Ms. DeCarlis held various marketing and sales roles at technology companies including Saba Software, Inc., Documentum, Inc., Xerox Corporation, and IBM. Ms. DeCarlis served on the Board of Directors for Watermark, an organization dedicated to increasing the representation of female leaders, from April 2012 to October 2015. She holds a B.S. in Industrial Engineering from Stanford University.
Brett Hooper has served as our Senior Vice President of People since June 2015. From 2006 to 2015 Mr. Hooper was at JDS Uniphase Corporation, a manufacturer of optical communications networks and provider of test and measurement services to the communications industry, most recently as Senior Vice President, Human Resources. Prior to that, he served as Senior Vice President, Human Resources at Credence Systems Corporation, a manufacturer of test equipment for the semiconductor industry. He had joined Credence through the 2004 acquisition of NPTest where he had held the role of VP, Human Resources and Communications. Earlier in his career, Hooper served in a variety of roles at Schlumberger Limited, most recently as Director of Human Resources. Mr. Hooper holds a B.S. in Petroleum Engineering from the University of Texas, Austin.
Mark E. Kraynak has served as our Senior Vice President and General Manager of Enterprise Solutions since December 2015. Prior to that, he served as our Chief Product Officer from October 2014 to December 2015; Senior Vice President, Worldwide Marketing from July 2012 to October 2014; Vice President, Worldwide Marketing from December 2008 to July 2012; Senior Director, Strategic Marketing from July 2007 to December 2008; Director, Product Marketing from September 2004 to July 2007 and Senior Product Marketing Manager from June 2004 to September 2004. Mr. Kraynak holds a B.Sc. in electrical engineering and English from Duke University and an M.F.A. in literature from American University.
Michael D. Mooney has served as our Chief Revenue Officer since October 2014. Prior to that, Mr. Mooney was Senior Vice President of Americas Field Operations of Autonomy from 2006 through 2012. Hewlett-Packard Company acquired Autonomy in 2011, and from 2012 to August 2014 Mr. Mooney was responsible for Information Analytics and Big Data revenue, as well as for OEM and Federal revenue across all Autonomy divisions at Hewlett-Packard Company. Prior to his roles at Autonomy, Mr. Mooney served in various executive positions at Verity from 2000 until Verity’s acquisition by Autonomy in 2005, most recently as Senior Vice President of Americas Field Operations. Before Verity, Mr. Mooney was Vice President of Sales for Adaptive Media; Vice President of Western Sales for Versant; and held sales and sales management roles for Alantec and CMC.
Sunil D. Nagdev has served as our Senior Vice President, Worldwide Services and Support since December 2014, and also served as our Vice President, Worldwide Services from April 2008 to January 2011. From January 2011 to December 2014, Mr. Nagdev was Senior Vice President, Global Services and Support at Coverity Inc., a privately held company that develops and markets development testing solutions that assist software developers in detecting and fixing quality and security problems. Prior to that, Mr. Nagdev was Vice President, Worldwide Professional Services and Technical Support at Tablus, Inc., and Senior Vice President, Worldwide Professional Services and Technical Support at Verity, Inc. Mr. Nagdev holds a B.S. in computer science from Chico State University.
Trâm T. Phihas served as our Senior Vice President, General Counsel and Corporate Secretary since February 2012. From August 2011 to February 2012, she served as our Vice President, General Counsel and Corporate Secretary. Ms. Phi served as Vice President, General Counsel and Secretary of ArcSight, Inc., a provider of enterprise threat and risk management solutions, from January 2006 until the acquisition of ArcSight by Hewlett-Packard Company in October 2010, and then as general counsel of HP Software, Security until August 2011. From September 2002 to May 2005, Ms. Phi served in various positions at InVision Technologies, Inc., a manufacturer of explosives detection systems, most recently as Senior Vice President and General Counsel, including following the acquisition of InVision by General Electric Company in December 2004. Ms. Phi holds a B.A. in political science from San Jose State University and a J.D. from the University of California, Berkeley, School of Law (Boalt Hall). Terrence J. SchmidMike Burns has served as our Chief Financial Officer since January 2018. Mr. Burns has more than 20 years of senior leadership experience in finance and Treasurer since November 2010. Prior to that, from April 2009 to November 2010, Mr. Schmid was theoperations with high-growth public technology companies. Before Imperva, he served as Chief Financial Officer for Coremetrics, Inc. (acquired by IBM), a provider of marketing optimization software. From November 2006Gigamon from July 2014 to April 2009, Mr. Schmid was the Executive Vice PresidentOctober 2016, and as Chief Financial Officer for Enterasys Networks, Inc., a provider of wired and wireless infrastructure and security solutions.Volterra Semiconductor from August 2007 to October 2013. Mr. SchmidBurns holds a B.A. in economicsEconomics and M.S. in Industrial Engineering from Stanford University, and an M.B.A. from the University of San Francisco and an M.B.A. from Duke University.
Amichai Shulman is ourco-founder and has served as the Chief Technology OfficerCalifornia, Berkeley, Haas School of Imperva Ltd., our Israeli subsidiary, since May 2002. Mr. Shulman has also served as our Secretary from May 2002 to October 2010. Prior to founding Imperva, from 2000 to 2002, Mr. Shulman was a founder and Chief Technology Officer of eDvice Security Services Ltd., an application and database security consulting group. Mr. Shulman holds a B.Sc. and an M.S. in computer science from Technion, Israel Institute of Technology where he currently serves as an adjunct faculty member in the computer science department.Business.
NON-BINDING ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER
COMPENSATION (Item No. 2 on the Proxy Card) In accordance with SEC rules and regulations, we are providing stockholders with anon-binding advisory vote to approve compensation programs for our named executive officers, also known as “say on pay.” Stockholders are urged to read the Compensation Discussion and Analysis section of this proxy statement, which discusses how our executive compensation policies and procedures implement our compensation philosophy, and the Executive Compensation section of this proxy statement, which contains tabular information and narrative discussion about the compensation of our named executive officers. The compensation committee and the board believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving its goals. As described in the Compensation Discussion and Analysis section of this proxy statement, our executive compensation program is designed to recruit, retain and motivate talented individuals with the experience and leadership skills necessary for us to increase stockholder value by drivinglong-term growth in revenue and profitability. We seek to provide executive compensation that is competitive with companies that are similar to us. We also seek to providenear-term andlong-term financial incentives that rewardwell-performing executives when strategic corporate objectives designed to increaselong-term stockholder value are achieved. We believe that executive compensation should include base salary, cash incentives and equity awards. In particular, our executive compensation philosophy is to promotelong-term value creation for our stockholders by rewarding achievement of selected financial metrics, and by using equity incentives. Please see our “Compensation Discussion and Analysis” and the related compensation tables for detailed information about our executive compensation programs, including information about the 20152017 compensation of our named executive officers. As an advisory vote, this proposal is not binding. However, the compensation committee, which is responsible for designing and administering our executive compensation program, values the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when considering future compensation decisions for our named executive officers. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE FOLLOWING RESOLUTION: “RESOLVED, that Imperva’s stockholders approve, on an advisory basis, the compensation of the named executive officers disclosed in the proxy statement for the 20162018 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion.”
COMPENSATION DISCUSSIONDISCUSSION AND ANALYSIS This discussion and analysis of compensation arrangements of our named executive officers should be read together with the compensation tables and related disclosures in the “Executive Compensation” section that follows. This discussion containsforward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. The actual amount and form of compensation and the compensation programs that we adopt may differ materially from currently planned programs as summarized in this discussion. This section discusses the principles underlying our executive compensation policies and decisions and the most important factors relevant to an analysis of these policies and decisions.decisions during and for 2017. It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by the following executive officers and places in perspective the data presented in the tables and narrative that follow: Anthony Bettencourt,Christopher Hylen, our Chairman of the board, President and Chief Executive Officer (our “CEO”);
Trâm Phi, our Senior Vice President, General Counsel and Corporate Secretary; Sunil Nagdev, our Chief Customer Officer; Anthony Bettencourt, our former President and Chief Executive Officer (from August 2014 to August 2017) and former Vice President of Customer Engagement (from August 2017 to February 2018); Terrence Schmid, our former Chief Financial Officer (from November 2010 to November 2017); Michael Mooney, our former Chief Revenue Officer (from October 2014 to February 2018); and Aaron Kuan, our former interim Chief Financial Officer (from November 2017 to December 31, 2017). Mark E. Kraynak, ourMr. Nagdev was Senior Vice President, Worldwide Services and Support from January 2017 to April 2017, Senior Vice President and General Manager, of Enterprise Solutions;
Sunil D. Nagdev, our Senior Vice President, WorldwideProducts and Services and Support;
Terrence J. Schmid, ourfrom April 2017 to January 2018. He has been Chief FinancialCustomer Officer and Treasurer; and
since January 2018. Amichai Shulman, our Chief Technology Officer.
We refer to these executive officers collectively in this Compensation Discussion and Analysis and the related compensation tables as our “named executive officers.officers” or “NEOs.” 20152017 Executive Compensation Highlights
Stockholder Outreach. Based on the lower than expected approval level for the non-binding stockholder advisory vote on our executive compensation program at the annual meeting held in April 2017 (the “2017 Say-on-Pay-Vote”), we conducted a stockholder outreach campaign during the last quarter of 2017 and first quarter of 2018 to understand stockholder concerns with our executive compensation program. A summary of these efforts was presented to the compensation committee prior to their review and approval of our 2018 executive compensation programs. For further information, see the section “—Stockholder Advisory Vote on Executive Compensation and Stockholder Outreach.” Company Performance. In 2017, Imperva achieved total revenue of $321.7 million, up 22% year-over-year, which included product and subscription revenue of $216.5 million, up 27% year-over-year, driven by subscription revenue growth of 42% and product revenue growth of 12%. The incentive-based cash compensation for our NEOs in 2017 reflected these strong results. The performance target for the incentive-based equity awards granted to our NEOs in 2017 was focused on achievement of substantial growth in subscription revenue and as discussed in more detail below reflected less growth than anticipated in subscription revenue. Pay‑for‑Performance ‒ Incentive Compensation Outcomes. | 1. | Record Company Performance.2015 was a year of record financial results. Imperva achieved revenue of $234.3 million, up 43% year-over year, and product and subscription revenue of $153.8 million, up 57% year-over-year, driven by product revenue growth of 45% and subscription revenue growth of 97%. In addition, operating expenses were in line with operating plan targets for the year and operating margins exceeded plan targets. As a result, the performance-based cash and equity compensation earned by our named executive officers in 2015 was at the maximum achievement level for all four quarters and for the year. |
| 2.• | Significant Decrease in Total Compensation for our CEO.As part of its annual executive compensation review in February 2015, theEquity Awards. The compensation committee determined not to award anyapproved equity to our CEO for 2015 because they feltawards with a 50/50 mix between performance-based restricted stock unit awards (“PRSUs”) and restricted stock unit awards (“RSUs”). Generally, at target achievement levels, the new hire stock option and RSU grantsPRSUs made up 50% of the shares awarded to him in August 2014 provided sufficient retention incentive and compensation motivation for 2015. As a result, the total compensation for our CEO as reported in the Summary Compensation Table is almost 14 times less than his compensation last year and significantly less than the total compensation for each of our NEOs for 2017, and RSUs that vest over a four-year period made up the other named executive officers. The compensation committee also did not increase50% of the base salary orshares awarded. We granted PRSUs to our NEOs to be earned upon achievement of an annual cash bonuscontract value of subscription bookings target for our CEO in 2015. Our CEO’s target2017, and, with respect to earned shares, subject to time-based vesting following the 2017 performance period of |
| | an additional two years, for a total cash compensation approximatesof a three-year period from the mediangrant date. Each of our peer group, while total direct compensation is well belowNEOs earned approximately 58% of the 25th percentile. |
| 3. | Strong Pay for Performance Philosophy.In 2015, the cash incentive bonus plan for named executive officers tied quarterly cash bonus payments exclusively to revenue targets and not to individual performance goals to ensure internal alignment among all team members and an exclusive focustarget number of PRSUs awarded based on company performance. In addition, eligible named executive officers were awarded performance-based restricted stock units (“PRSUs”) tied to one-year product and subscription bookings and operating expense targets. Executive officers hired during the second half of 2014, including our CEO and SVP, Worldwide Services and Support, were not eligible to receive PRSUsperformance in 2015. The refresh equity awards granted to eligible named executive officers in 2015 was solely in the form of PRSUs. Once2017. For further information, see “—Equity Awards”
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| • | Cash Awards. Under our 2017 Senior Management Bonus Plan, our NEOs earned the PRSUs are subject to a one-year vesting schedule with 25% vesting on the vesting commencement date 99%, 85%, 98% and 102%of February 15, 2016 and the remaining 75% vesting quarterly over the following three quarters. Approximately 80% of the total compensation for each named executive officer that received a PRSU grant in 2015 was variable and at risk. We believe that our record performancetheir target bonus opportunities for the year reflects the successfirst, second, third and fourth quarters of our pay for performance compensation strategy.2017, respectively. For further information, see “—Cash Bonuses.” |
| 4. | Continued Compensation Best Practices.As in prior years, we have retained our compensation best practices including: |
| • | | Independent compensation committee with an independent compensation consultant.The compensation committee is comprised solely of independent directors that have implemented a rigorous pay for performance compensation program for our executive officers. The compensation committee retained an independent compensation consultant to provide it with market data and advice to support its executive compensation decisions. |
| • | | Annual say-on-pay vote. We conduct annual non-binding say-on-pay advisory votes and we and the compensation committee consider the outcome of the vote when making future compensation decisions for our named executive officers. |
| • | | Annual compensation review. The compensation committee reviews our peer group and executive officer compensation levels annually with data and input from Compensia to ensure that compensation levels for our executive officers are competitive and set at appropriate levels relative to market. |
| • | | Annual compensation-related risk assessment. We and the compensation committee perform an annual review of our compensation programs companywide to ensure that they do not encourage a level of risk taking that would result in a material adverse impact on the company. |
| • | | Double-trigger severance arrangements.We only have double-trigger severance arrangements with our named executive officers under our Change in Control Plan. Our 2011 Stock Option and Incentive Plan does not provide for automatic single-trigger acceleration in the event of a corporate transaction. |
| • | | No gross-ups or reimbursements for taxes.We have not provided any executive officer, including any named executive officer, with a “gross-up” or other reimbursement payment for any tax liability that the executive might owe as a result of the application of Sections 280G or 4999 of the Tax Code and we have not agreed and are not otherwise obligated to provide any executive officer with such a “gross-up” or other reimbursement. |
| • | | No perquisites.We do not provide perquisites to our U.S.-based named executive officers and provide only customary benefits to our Israel-based named executive officer who receives such benefits on the same basis as all our other employees in Israel. |
| • | | No hedging, pledging or margin accounts.Our insider trading policy prohibits directors and officers from engaging in hedging activities, the shorting of our securities, holding our securities in a margin account, and the pledging of our securities as collateral for loans. |
| • | | Clawback policyExecutive Management Transitions. In connection with the amendments to our 2011 Stock Option and Incentive Plan discussed in more detail in proposal three, we have adopted a compensation recovery, or “clawback” policy which provides that, in the event we are required to prepare an accounting restatement as a result of fraud or intentional misconduct, we may recover from those current and former executive officers who are subject to the reporting requirements of Section 16 of the Exchange Act and were involved in the fraud or misconduct, any cash or equity incentive award, erroneously paid or awarded in excess of what would have been paid pursuant to the restated financial statements. |
| • | | Limit on Non-Employee Director Awards.Under our 2011 Stock Option and Incentive Plan we have established a maximum amount of shares that may be granted to a non-employee director in any fiscal year. |
During 2017, there were several changes in our executive management team, including our appointment of a new chief executive officer. These events were important factors in our decision making with regards to 2017 compensation for our NEOs. On August 15, 2017, Mr. Hylen was appointed as our CEO and a member of our board of directors, and Anthony Bettencourt, our former President and Chief Executive Officer, transitioned to the role of Vice President of Customer Engagement, while remaining the Chairman of our board of directors. Mr. Bettencourt resigned as our Vice President of Customer Engagement, non-executive Chairman of the Board and director, effective February 2018. For further information on Mr. Hylen’s initial compensation, see “—New Chief Executive Officer” and the tables and footnotes below. For further information on Mr. Bettencourt’s compensation following his change of roles, see “—Former Chief Executive Officer and Vice President of Customer Engagement” and the tables and footnotes below. Mr. Schmid resigned as our Chief Financial Officer effective November 15, 2017, and on November 16, 2017, Mr. Kuan commenced service as our interim Chief Financial Officer, transitioning from his prior role as our Vice President of Financial Planning and Analysis, and served in that capacity through December 31, 2017. For further information on Mr. Kuan’s compensation related to this interim position, see “—New Interim Chief Financial Officer” and the tables and footnotes below. On January 2, 2018, Mike Burns commenced service as our new Chief Financial Officer. Stockholder Advisory Vote on Executive Compensation and Stockholder Outreach AtStockholders that participated in the 2017 Say-on-Pay Vote approved the non-binding, advisory proposal on the compensation of our 2015 annualNEOs by 57.1% of the votes cast. In response to the results of the 2017 Say-on-Pay Vote, and prior to determining 2018 executive compensation, we conducted a stockholder meeting, we submittedoutreach program designed to help us engage with key stockholders about their opinions and suggestions for our executive compensation program, to a non-binding, advisory voteincluding discussions with stockholders about the structure of our stockholders (the “Say-on-Pay Proposal”). Prior to the meeting, we had engaged in stockholder outreach to discuss our compensation philosophyprogram and goals, including our belief that a significant portion of our executives’ compensation should be linked to company performance. These discussionsWe contacted our top fifteen stockholders, representing approximately 57% of our shares outstanding as of the record date. We had meetings with four of them. The remaining investors declined to meet or did not respond to our inquiries. We also conducted investor meetings for analysts and interested investors on February 26 and 27, 2018 in San Francisco, California.
The individual meetings with significant institutional investors were led by Mr. Schmid, our Chief Financial Officer. Prior toMs. Elliott, the meeting, management provided an update to the headChair of the compensation committee, and Mr. Hooper, our SVP of People. Mr. Burns, our Chief Financial Officer, led the investor meeting. The agenda for the individual meetings requested feedback from stockholders and generally included the following additional content depending on the statusgoals of the outreach program. individual stockholder: (1) a review of our compensation philosophy and the alignment of compensation with financial performance, (2) a review of operations and reported results, and (3) a discussion around strategic direction. Stockholders representing 56%gave us insights into their investment strategies, their view of the shares represented in person or by proxy at the meeting and voting on the matter voted in favorexpectations for Imperva, and discussed what they felt would be compensation best practices. A summary of the Say-on-Pay Proposal. Following the meeting, thethese stockholder communications was presented to our compensation committee in late 2017 and boardearly 2018. The committee considered and took our stockholders’ feedback into account when determining compensation for 2018. Key comments from stockholders included concern over the discretionary bonuses awarded during the third and fourth quarter of directors reviewed2016, giving more
weight to performance metrics, and having performance metrics align more closely to the result of the votemetrics reported to analysts. Based in part on our Say-on-Pay Proposal. Although the stockholder outreach and our annual stockholder meeting took place after the executive compensation decisions had been made for 2015, we believe the compensation committee’s decisions addressed the concerns that had been raised by advisory servicesthese discussion with our 2014 namedstockholders, the committee made the following changes to executive officer compensation program. In particular, the committee did not grant equity awards topractices: (1) approved stock ownership guidelines for executive officers (including our CEO) who commenced employment during the second half of 2014 because they felt their new hire grants provided sufficient retention incentive and compensation motivation for 2015,directors (see “—Stock Ownership Guidelines” below) and the annual equity grants(2) tied bonus and PRSU 2018 targets to our three eligible named executive officers consisted solely of performance-based restricted stock units. In addition, the 2016 annual equity grants to our named executive officers are 50% time-basedrevenue growth rates and 50% performance-based. The time-based awards vest over four years while the performance-based awards have a one-year performance period and three-year vesting schedule from the date of grant to be better aligned with the market data for similarly sized companies. We also are adopting a compensation recovery, or “clawback,” policy in connection with the amendment to the 2011 Plan to assist in mitigating compensation related risks.
operating margin. We expect to continue our dialogue with stockholders and take their feedback into account annually when determining the compensation for our named executive officers. At ourNEOs. Annual Say-on-Pay Vote In 2015, annual stockholder meeting, our stockholders voted in a non-binding advisory vote, in favor of havingsubmitting a Say-on-Pay Proposal submittedsay-on-pay proposal for stockholder consideration every year. Based on the stockholder feedback, our compensation committee determined to haveWe, therefore, hold an annual, Say-on-Pay Proposal.non-binding stockholder advisory vote on our say-on-pay proposal. Our next non-binding stockholder advisory vote on the frequency of our say-on-pay proposals will occur at our 2021 annual meeting. Stock Ownership Guidelines. In February 2018, the board of directors adopted Stock Ownership Guidelines that require executive officers and directors to hold a meaningful amount of equity to link their interests to those of our stockholders as summarized in the table below. Our officers and directors are expected to meet the applicable guideline level within five years of the adoption of the guidelines, subject to narrow hardship and other exceptions. They are subject to the holding requirements for so long as they continue to serve as a director or officer covered by the guidelines. The amount of shares owned includes vested RSUs and the in-the-money value of vested, unexercised stock options. | | Position | Individual Guideline Level | Chief Executive Officer | Lesser of 3x annual base salary or 32,000 shares | All Other Covered Officers | Lesser of 1x annual base salary or 8,000 shares | Director | Lesser of 3x annual cash retainer for service as a board member* or 2,250 shares | * Excludes any additional cash retainer paid as a result of service as a Board chairperson, lead independent director, committee chair or committee member or meeting fees (if any). |
Compensation Best Practices. As in prior years, we maintained the following compensation practices: Independent compensation committee with an independent compensation consultant. The compensation committee is comprised solely of independent directors that have implemented a rigorous pay for performance compensation program for our executive officers. The compensation committee retained an independent compensation consultant to provide it with competitive market data and advice to support its executive compensation decisions. Ongoing stockholder outreach. We engage in stockholder outreach throughout the year to discuss our business, including discussions with stockholders about the structure of our executive compensation program. The compensation committee considers the feedback we receive from stockholders about our executive compensation program when making future compensation decisions for our executive officers. For further information, including with respect to stockholder outreach in response to our 2017 Say-on-Pay Vote, see section “—Stockholder Advisory Vote on Executive Compensation and Stockholder Outreach.” Annual say-on-pay vote. We conduct an annual, non-binding stockholder advisory vote on the compensation of our namedNEOs (a “say-on-pay vote”), and the compensation committee considers the outcome of this vote when making future compensation decisions for our executive officers. | • | Annual compensation review. The compensation committee performs an annual review of our peer group and our executive officer compensation levels against those of our peer group, with |
| | data and input from its independent compensation consultant, to ensure that compensation levels for our executive officers are competitive and appropriate relative to market. |
Annual compensation-related risk assessment. Together with the compensation committee, we perform an annual review of our compensation programs companywide to ensure that they do not encourage a level of risk taking that would result in a material adverse impact on the company. No single trigger acceleration. Our 2011 Stock Option and Incentive Plan and our Change in Control Plan do not provide for automatic single-trigger acceleration in the event of a corporate transaction. No gross-ups or reimbursements for taxes. We have not provided any executive officer, including any NEO, with a “gross-up” or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Sections 280G or 4999 of the Tax Code, and we have not agreed and are not otherwise obligated to provide any executive officer with such a “gross-up” or other reimbursement. No perquisites. We do not provide perquisites to our executive officers. Our executive officers are entitled to generally available benefits on the same basis as all other employees. No hedging, margining or pledging of equity securities. Our insider trading policy prohibits our directors and executive officers from engaging in hedging activities, the shorting of our equity securities or holding our equity securities in a margin account. Our insider trading policy also prohibits our directors and executive officers from pledging our equity securities as collateral for loans unless the pledge has been approved by our compliance officer. Compensation Recovery (or Clawback) Policy. We maintain a Compensation Recovery (or Clawback) Policy, which provides that, in the event we are required to prepare an accounting restatement as a result of fraud or intentional misconduct, we may recover from those current and former executive officers who are subject to the reporting requirements of Section 16 of the Exchange Act and were involved in the fraud or misconduct, any cash or equity incentive award, erroneously paid, or awarded in excess of what would have been paid pursuant to the restated financial statements, over the three years preceding the date on which we are required to prepare the restated financial statements. Stock Ownership Guidelines. We have implemented Stock Ownership Guidelines that require executive officers and directors to hold a meaningful amount of equity to link their interests to those of our stockholders for so long as they remain executive officers and directors. Limit on Non-Employee Director Awards. Under our 2011 Stock Option and Incentive Plan we have established a maximum of 250,000 shares that may be granted to a non-employee director in any calendar year. New Chief Executive Officer On August 15, 2017, Mr. Hylen was appointed as our President and Chief Executive Officer and a member of our board of directors. In developing the compensation package for Mr. Hylen, our compensation committee took into account compensation structure and levels that were deemed reasonable and necessary to incentivize him to join Imperva, market competitive pay levels within our peer group, costs Mr. Hylen would incur to travel to headquarters from his residence, how Mr. Hylen’s compensation package compared to our former chief executive officer’s, the size of Mr. Hylen’s equity awards and whether he would also be eligible to receive additional awards in the near future (subject to the committee’s ongoing review of performance, competitiveness, retention, and other relevant factors), and our 2017 Say-on-Pay Vote. The compensation committee believed that Mr. Hylen’s compensation should be principally tied to long-term stockholder value creation and, accordingly, the compensation committee determined to grant a substantial portion of his compensation in the form of time-based and performance-based RSUs. Mr. Hylen’s compensation elements are described below. a starting annual base salary of $440,000; a sign-on bonus in the amount of $250,000, subject to repayment on a proportional basis if his employment with us terminates within 24 months of its commencement;
| • | a target bonus under our existing Senior Management Bonus Plan equal to 100% of his annual base salary (which, as an inducement for him to join us, is guaranteed at a minimum of 100% for 2017, but prorated for the portion of 2017 that he is employed by us). Going forward, Mr. Hylen has no guaranteed bonus payments under our Senior Management Bonus Plan. |
RSUs that may be settled for 101,200 shares of our common stock. These RSUs were granted pursuant to the terms of our 2015 Equity Inducement Plan, the terms of which plan are substantially similar to our 2011 Stock Option and Incentive Plan. This RSU vests with respect to 25% of the shares of our common stock subject to the award on August 15, 2018, with an additional 6.25% of the shares vesting each quarter thereafter for so long as Mr. Hylen continues to be employed by, or provide services to, us. PRSUs for 110,190 shares of our common stock at target, and up to an additional 110,190 shares of our common stock for performance in excess of target, which were granted in the first quarter of 2018 pursuant to the terms of our 2011 Stock Option and Incentive Plan. The PRSUs are eligible to be earned based on performance metrics determined by our compensation committee in consultation with Mr. Hylen. The number of shares subject to the PRSU that are earned based upon these performance metrics are also subject to time-based vesting with 16.67% of the shares vesting on the later to occur of February 18, 2019 and the date that we publicly issue our earning release for the year ending December 31, 2018, and an additional 16.67% of the shares vesting each quarter thereafter, subject to Mr. Hylen’s continued service with us and, in all cases, only if and to the extent the performance metrics are met. Mr. Hylen is eligible for payments and benefits in the event that he is terminated without “cause” or resigns for “good reason” within 24 months following commencement of employment with us, as set forth in his employment offer letter. These termination benefits were considered reasonable and necessary to incentivize Mr. Hylen to accept employment as our chief executive officer. For further information, see “Executive Compensation—Employment, Severance and Change in Control Agreements.” Mr. Hylen also participates in our Change in Control Plan pursuant to which he is eligible for certain payments and benefits in the event that he is terminated without “cause” or resigns for “good reason” in connection with a Change in Control. For further information, see “Executive Compensation—Employment, Severance and Change in Control Agreements.” Former Chief Executive Officer and Vice President of Customer Engagement In connection with Mr. Hylen’s appointment, Mr. Bettencourt resigned as our President and Chief Executive Officer and was appointed as our Vice President of Customer Engagement. Mr. Bettencourt’s base salary and target cash bonus opportunity were reduced in connection with his transition. Upon Mr. Bettencourt’s transition to his new role, he ceased to be eligible to participate in our Change in Control Plan. The changes to Mr. Bettencourt’s compensation in connection with is transition to Vice President of Customer Engagement are further illustrated in detail in the tables and footnotes below. Effective February 2018, Mr. Bettencourt resigned as Vice President of Customer Engagement, non-executive Chairman of the Board and director. In connection with his resignation, and in exchange for a release of claims, Mr. Bettencourt’s then-outstanding equity that would have vested by April 30, 2019 was accelerated. Former Chief Financial Officer Effective November 15, 2017, Mr. Schmid resigned as our Chief Financial Officer. In connection with Mr. Schmid’s resignation, and in exchange for a release of claims in favor of Imperva, Mr. Schmid received a lump sum cash payment in an amount equal to Mr. Schmid’s annual base salary as in effect immediately prior to his resignation, plus his target annual cash bonus opportunity for 2017, plus twelve months of COBRA premium reimbursements. Interim Chief Financial Officer On November 16, 2017, Mr. Kuan commenced service as our interim Chief Financial Officer, transitioning from his prior role as our Vice President of Financial Planning and Analysis. Mr. Kuan’s annual base salary did not increase in connection with his transition to the role of interim Chief Financial Officer, but he became eligible to
receive a bonus of $20,000 per month for each calendar month (and prorated amounts for any partial calendar months) in which he serves as our interim Chief Financial Officer, with a guaranteed minimum bonus of $60,000. In addition, Mr. Kuan’s target bonus opportunity under our 2017 Senior Management Bonus Plan was also increased from 26% to 35% of his base salary, prorated for the portion of 2017 that he served as our interim Chief Financial Officer. This guaranteed monthly bonus and increased target quarterly bonus opportunity are to compensate Mr. Kuan for his additional responsibilities and services, and to provide him with a market competitive pay level within our peer group for Chief Financial Officer. In addition, Mr. Kuan participated in our Change in Control Plan during the period in which he served as interim Chief Financial Officer, and ceased to participate in the Change in Control Plan when his tenure as interim Chief Financial Officer ended. The changes to Mr. Kuan’s compensation are further illustrated in the tables and footnotes below. Mr. Kuan served as our interim Chief Financial Officer through December 31, 2017. On January 2, 2018, Mr. Burns commenced service as our new Chief Financial Officer. Chief Customer Officer Mr. Nagdev took on roles of increasing oversight and responsibility during 2017. Mr. Nagdev joined the company in December 2014 as Senior Vice President, Worldwide Services and Support responsible for overseeing the professional services and support teams. In January 2017, he assumed responsibility for the development, operations and product management teams for the Incapsula product and in April 2017, he was promoted to the role of Senior Vice President and General Manager, Products and Services. In that role, Mr. Nagdev assumed responsibility for the development, operations and product management teams for all Imperva products. In recognition of Mr. Nagdev’s additional responsibilities and to provide him with a market competitive pay level, his annual base salary was increased from $295,000 to $335,000 and his target bonus opportunity under the 2017 Senior Management Bonus Plan increased from 50% to 65% of base salary. He was also awarded an additional 7,000 RSUs and 7,000 PRSUs at target achievement levels. These additional RSUs and PRSUs are subject to the same terms as the grants awarded in February 2017, but with the time-based vesting commencing one quarter later. In January 2018, as part of organizational changes designed to improve customer experiences, fuel product innovation and increase operational effectiveness, Mr. Nagdev was appointed Chief Customer Officer, the head of the new Customer Success function to focus on ensuring successful customer engagement with our products worldwide. Severance Plan On August 8, 2017, our compensation committee adopted a Severance Plan for designated members of the senior management team. Certain senior executives, including Mr. Nagdev and Ms. Phi, participate in a short-term Severance Plan, which will occur atexpire on August 15, 2018. Mr. Mooney’s participation in our 2021 annual stockholder meeting.Severance Plan terminated when he ceased to be our Chief Revenue Officer. None of our other NEOs participate in our Severance Plan. This Severance Plan provides for severance payments and limited accelerated vesting of outstanding and unvested equity awards in the event of the termination of employment of these NEOs under specified circumstances. See “Executive Compensation—Employment, Severance and Change in Control Arrangements—Severance Plan” for more information. Compensation Philosophy and Objectives Our executive compensation program for our named executive officers is designed to attract individuals with the skills necessary for us to achieve our business plan,annual operating plans, to motivate those individuals,them, to reward those individualsthem fairly over time, and to retain those individuals who continue to perform at or above the levels that we expect. It is also designed to link rewards to measurable corporate performance targets. We believe that the most effective executive compensation program is one that is designed to align executives’our executive officers’ interests with those of theour stockholders by rewarding the achievement of establishedpre-established financial goals, with the ultimate objective of improvingenhancing stockholder value. A portion of theeach executive officer’s target total direct compensation opportunity should be at risk, provided such risk does not lead to excessive risk taking by our named executive officers and should vary based on our financial and operating performance, as well as each named executive officer’s level of responsibility. We evaluate compensation to ensure that we maintain our ability to attract and retain talented employees in key positions, and that the compensation provided to key employeesour executive officers remains competitive relative to the compensation paid to similarly situated executives of our peer companies. To that end, we believe the executive compensation packages provided by uswe provide to our executive officers should include both cash and stock-based compensation that reward achievement of established companypre-established financial performancegoals, including operational and strategic measures.
We work within the framework of our pay-for-performance philosophy to determine each component of an executive’sexecutive officer’s compensation package based on numerous factors, including: the individual’s particular background and circumstances, including training and prior relevant work experience, as well asand historical compensation;compensation levels at the company; the individual’s role with us and the compensation paid to similar persons in the companies represented in the compensation data that we review; the individual’s performance and the performance of our business; the demand for individuals with the individual’s specificsimilar expertise and experience and the retention risk for the individual; and the individual’s ability to meet or exceed expectations for the position and take on additional responsibilities to grow the business. Role of the Compensation Committee and Executive Officers in Compensation Decisions The compensation of our named executive officers is determined by our compensation committee. Our CEO typicallyTypically, our chief executive officer provides annual recommendations to the compensation committee with respect to the annual compensation of our executive officers and discusses with the compensation committee the compensation and performance of all executive officers, other than himself, during the last quarter of the fiscal year and the first quarter of the new fiscal year. Our CEOchief executive officer bases his recommendations in part upon his review of the performance of our executive officers. Our compensation committee reviews the performance of our CEOchief executive officer. The compensation committee discusses its review with the board of directors and meetssolicits its feedback prior to meeting in executive session without himthe chief executive officer present to determine his compensation. Our compensation committee may exercise its discretion in modifying any recommended compensation adjustments or awards to executives. In addition,our executive officers. Our compensation committee meetings typically have included, for all or a portion of each meeting, not only thein addition to our compensation committee members and our CEO, but alsoChief Executive Officer, our Chief Financial Officer, our Senior Vice President and General Counsel, and our Senior Vice President of People. Components of Executive Compensation Our named executive officers’ compensation has the following primary components: base compensation or salary,salary; cash bonuses under our senior management bonus plan,Senior Management Bonus Plan; and new hire equity awards, andawards.
refresh equity awards under our senior management bonus plan.
Each of these components is discussed in more detail in the sections that follow. We setOur compensation committee sets executive officer compensation at a level we believeit believes enables us to hire and retain individuals in a competitive environment and to reward satisfactory individual performance and a satisfactory level of contribution to our overall business goals. WeOur compensation committee also taketakes into account the compensation that is payable by public companies with which we believe we generally compete for executives. To this end, we review executive survey dataour compensation committee reviews surveys and other compensation data of peer companies annually when we reviewdetermining our executive compensation. We utilize salary as the base amount necessary to compete for executive talent. We design our cash incentive bonus plan to focus our management on achieving revenue while controlling operating expense and margin and to reward substantial achievement of these company financial objectives. We utilize cash bonuses to reward achievement of company financial objectives with a time horizon of one year or less in order to focus our executive officers on achieving revenue goals, while controlling operating expenses and we utilizemargin, as provided in our annual operating plan, and to reward substantial achievement of these financial goals. We design our equity awards under our bonus plan to provide long-term rewards for annual performance achievements andwith multi-year vesting periods to encourage similar performance over a longer term. In 2015, we utilized stock optionslonger-term and RSUs as initial grants to newly hired executive officers and PRSUs as “refresh” grants to all executive officers who were not hired during the second half of 2014 to reward long-term performance,align focus with strong corporate performance and extended officer tenure producing potentially significant value for the officer. our stockholders.We view each of these components of compensation as related, but distinct. Although our compensation committee does reviewconsiders total compensation, we do not believe that significant compensation derived from one component of compensation should negate or reduce compensation from other components. We determineOur compensation committee determines the appropriate level for each compensation component based in part but not exclusively, on its understanding of the competitive benchmarkingmarket consistent with our recruiting and retention goals, our view of internal equity and consistency and other considerations we deemit deems relevant, such as rewarding extraordinary performance. We believe
that, as is common in the technology sector, equity awards are a significant compensation-related motivator in attracting and retaining employees. Our compensation committee’s current practice is to performconduct, at least annually, a strategic review of our executive officers’ compensation levels to determine whether they provide adequate incentives and motivation to our executive officers and whether they adequately compensate our executive officers relative to comparable officers in other companies with which we compete for executives. In the fourth quarter of 2014, consistentConsistent with prior years, our compensation committee retained Compensia, a national compensation consulting company,firm, to provide us withcompensation market data onfor similar technology companies, including a peer group of companies in the technology sector, as well as advice into review and advise on the review of compensation in connection with the completion of 20142016 and review of compensation for 2015. We also utilized information from Compensia in connection with the hiring and promotion of executive officers during 2015.2017. The information provided by Compensia is compared against the compensation we offer to ensure that our executive compensation program is competitive. Our compensation committee plans to retain a consultant to provide similar information and advice in future years for consideration in establishing annual salary increases and additional equity grants, and in structuring our executive bonus program. We do not believeOur compensation committee has assessed the retentionindependence of Compensia taking into account, among other things, the various factors as set forth in Exchange Act Rule 10C-1 and the enhanced independence standards and factors set forth in the applicable listing standards of the NASDAQ Stock Market and has determined that the work performed by Compensia createsdoes not give rise to any conflict of interest.
Use of Peer GroupCompetitive Market Data
Our compensation committee generally consultsconsiders market data compiled by Compensia to better inform its determination of the key elementscomponents of our executive compensation program in orderand to develop a compensation program that it believes will enable us to compete effectively for new employeesexecutives and retain existing employees.executives. In general, this market data consists of compensation information from both broad-based third-party compensation surveys and peer groups.a compensation “peer group.” The compensation data for 2015 consisted of2017 (for compensation paid by companies in these peer groups to executives in positions comparable to those held by our executive officers. Because publicly-filedofficers) reflected both companies from the Radford Global Technology Survey and companies in the compensation data is limited to the chief executive officer, chief financial officer and three to five most highly paid executive officers, the peer group comparisons for our named executive officers in 2015 were limited to Messrs. Bettencourt and Schmid.group. While we compete for executive talent to some degree with companies that have revenues significantly in excess of those represented in the surveys and peer groups, we believegroup, our compensation committee believes that the companies represented in the surveys and peer groupsgroup similarly compete with such larger companies and hence are an appropriate comparison for our employment market. Our compensation committee uses market data as one information point when making compensation decisions, understanding that such data cannot be applied formulaically. In addition to market compensation studies, ourOur compensation committee has historically taken into account input from other sources in addition to market compensation studies, including input from the members of the compensation committee and publicly available data relating to the compensation practices and policies of other companies within and outside of our industry. For the review of compensation in connection with the completion of 20142016 and determination of base andsalaries, target bonus compensationopportunities and equity awards for 2015,2017, our compensation committee utilizedreviewed data fromprovided by Compensia based on its proprietary compensation database, a subset of comparable companies from the Radford August 2016 High-Technology Industry Survey, (companies with revenue of $50 million to $200 million), the Zviran 2016 Salary Survey for Israel-based Executives (for executive officers in Israel)and a peer group of companies that reflect our industry, size and growth. TheThis compensation peer group for our compensation review in connection with the determination of base and target bonus compensation for 2015 was selecteddeveloped based on the recommendations of Compensia after it consultedconsultation with, and input from, the chairmanchair of our compensation committee and Mr. Schmid.our chief executive officer, CFO and SVP of People, and was also used for purposes of evaluating non‑employee director compensation. This compensation peer group includedconsisted of the following companies: | | | | | | | | | Bottomline Technologies
| | Ellie Mae | | Infoblox | | Marketo | | PROS Holdings | | | | | | BroadSoftBarracuda Networks
| Callidus Software | FireEye | LogMeIn | Jive Software | | MobileIron | | QualysPROS Holding | | | | | | Bottomline Technologies | Cornerstone OnDemand | Gigamon | Marketo | Qualys | | | | | | Box | Demandware | Guidewire Software | GigamonMobileIron | SecureWorks | | Marin Software | | Proofpoint | | BroadSoft | TangoeEllie Mae | Infoblox | Proofpoint | |
Compensia initially proposeddeveloped the makeupcomposition of the peer group based onstarting with the public companycompensation peer group utilizedused in the prior year, deleting threeyear. No companies (Accelrys, Guidancewere removed from the peer group (Demandware was acquired in July 2016, and Marketo filed a preliminary merger agreement in June 2016, but current compensation data were available for both of these peers at the time Compensia prepared its analysis), and two companies were added (Callidus Software and NIC,SecureWorks, both of which companies were acquired, outside ofdetermined to be within our financial criteria range or considered to have a different business focus), adding four companies (Marketo, MobileIron, Demandware and Marin Software) and confirmingselection criteria). Compensia also confirmed that the remaining companies in the peer group were within our selection criteria of software systems infrastructure companies or similarly sized software companies with revenues from approximately $100 millionof between 0.5× to approximately $400 million. We believe that the2.0× our revenues and market capitalizations of between 0.3× to 3.0× our market capitalization.Our compensation committee approved this peer group was at the time representative of companies in our size range and industry that were a fair representation of the employment market in which we compete.recommended by Compensia. Base CompensationSalary We seek to provide namedour executive officers with a base salary that is appropriate for their position and responsibilities, and that provides them with a level of income stability. Typically, in setting NEOs’ salaries, our compensation committee referenced the 50th percentile of the competitive market as a data point for consideration in its determination. Our compensation committee typically targets named executive officers’ salaries at auses the information from the peer group and the Compensia report as data points in determining the appropriate level that is nearfor each component of our NEOs’ compensation and the median of salaries of executives with similar roles at comparable companies. Our compensation committee believes that the medianlevel for base salaries is the minimum cash compensation level that would allow us to attract and retain talented officers. their overall total compensation. Our compensation committee’s choice of the median50th percentile as a salary targetreference point to apply to the data in the compensation surveys reflected consideration of our stockholders’ interests in paying what is necessary, but not significantly more than necessary, to achieve our corporate goals, while conserving cash as much as practicable. We believe that, given the industry in which we operate and the corporate culture that we have created, base salaries at the levels determined by our compensation at this level iscommittee are generally sufficient to retain our existing executive officers and to hire new executive officers when and as required. The following table shows the base salary of each named executive officerNEO for 20152017 and their salary as athe percentage of the median salary targetchange for each of their roles.NEO from 2016. | | | | | | | | | Named Executive Officer | | Base Salary ($) | | | Base Salary as a
Percentage of Median | | Anthony Bettencourt | | | 375,000 | | | | 92 | % | Mark E. Kraynak1 | | | 287,000 | | | | 100 | % | Sunil D. Nagdev | | | 258,000 | | | | 115 | % | Terrence J. Schmid | | | 294,000 | | | | 100 | % | Amichai Shulman2 | | | 202,041 | | | | 100 | % |
Named Executive Officer | | Base Salary 2016 ($) | Base Salary 2017 ($) | | | Percentage Change | | Christopher Hylen1 | | N/A | | 440,000 | | | | N/A | | Trâm Phi | | 279,000 | | 290,000 | | | | 4% | | Sunil Nagdev2 | | 265,000 | | 335,000 | | | | 26% | | Anthony Bettencourt3 | | 400,000 | | 460,000 | | | | 15% | | Terrence Schmid4 | | 310,000 | | 330,000 | | | | 6% | | Michael Mooney | | 325,000 | | 335,000 | | | | 3% | | Aaron Kuan5 | | N/A | | 252,625 | | | | N/A | |
1 | This information relatesMr. Hylen began his service as the company’s President and Chief Executive Officer on August 15, 2017. Please see Section “—New Chief Executive Officer” for a discussion of his compensation. |
2 | Mr. Nagdev assumed additional roles and responsibilities during 2017 and was promoted to Mr. Kraynak’s role as our Chief Product Officer, which is the role that Mr. Kraynak had at the time that 2015 compensation was determined. Mr. Kraynak became our Senior Vice President and General Manager, Products and Services in April 2017. |
3 | Mr. Bettencourt’s base salary was significantly below the median of Enterprise Solutionsthe peer group when reviewed in December 2015, at which pointFebruary 2017. As a result, the compensation committee approved a more substantial increase to his base salary increased to $300,000 to bring itthan for our other executive officers. On August 15, 2017, when Mr. Bettencourt transitioned to the medianrole of salaries forour Vice President of Customer Engagement, his new role. |
2 | Mr. Shulman was paid in Israeli shekels. All amounts paid to Mr. Shulman have been converted to U.S. dollars using the average exchange rate for 2015 of US$1.00 to NIS 3.8941. Thisannual base salary amount includes $24,899 that was allocatedreduced from $460,000 to car expenses by Mr. Shulman during 2015 and classified as “All Other Compensation” in the Summary Compensation Table.$345,000. |
4 | Effective November 15, 2017, Mr. Schmid resigned as our Chief Financial Officer. |
5 | Mr. Kuan served as the company’s interim Chief Financial Officer from November 16, 2017 through December 31, 2017. Please see Section “—Interim Chief Financial Officer” for a discussion of his compensation. |
As reflected in the table,Our compensation committee reviews the base salary for Mr. Bettencourt continued to be below the median, largely as a resultsalaries of the compensation committee’s consideration of the total compensation for Mr. Bettencourt, in particular in light of the equity grants awarded to him in August 2014 when he joined the company. Mr. Nagdev’s base salary in excess of the median reflects his dual role as head of both our services and support organizations, his significant professional experience, in particular his experience in scaling a professional services organization, and market conditions at his time of hire.
Weexecutive officers annually, review our base salaries, and may adjust them from time to time based on market trends, including review of market data, as well as the recognition that compensation levels are typically reviewed annually and survey information may not fully reflectto account for changes in salary levels over time or particular acute geographic or market circumstances. Wecircumstances that may not have been included in survey information originally considered. Our compensation committee also review the applicablereviews each executive officer’s responsibilities, performance and experience. We do not provide formulaic base salary increases to our executive officers.experience and takes into account internal pay equity. If necessary, weour
compensation committee also realignrealigns base salaries with market levels for the same positions in companies of similar size to us represented in the compensation data we review,it reviews, if we identifyit identifies significant market changes in our data analysis. Additionally, weour compensation committee may adjust base salaries as warranted throughout the year for promotions or other changes in the scope or breadth of an executive’sexecutive officer’s role or responsibilities. Cash Bonuses under the Cash Incentive Bonus Plan Our. Under our 2017 Senior Management Bonus Plan, our cash incentive bonus plan for executives rewardsexecutive officers, we reward our named executive officers for meeting and exceeding our short-term revenue goals in our annual operating plan, as approved by theour compensation committee after consultation with our management team and theour board of directors. Under ourSince 2015, Senior Management Bonus Plan, we paid cash bonuses quarterly in order to reward achievement of our revenue targets from quarter to quarter. The compensation committee chose revenue as the financial metric for bonuses because it believed that we should reward revenue growth, provided that such revenue growth was achieved cost effectively. Under the plan, the compensation committee had the discretion to reduce bonuses in any given quarter upon a determination that Imperva did not substantially meet the operating expense and operating margin targets in the internal operating plan taking into account actual revenue achieved. Likewise, the committee believed a “profitable company” with little or no growth was not acceptable. Thus, the compensation committee considered the chosen metrics to be the best indicators of financial success and stockholder value creation. Payments of cash bonuseshave used exclusively corporate performance goals under the cash bonus plan are contingent upon continued employment through the actual date of payment.
In 2015, our compensation committee determined, upon the recommendation of our CEO, to tie incentive compensation solely to company performance metrics. As a result, we removed the discretionary bonus element that was earned upon achievement of individual performance targets, or MBOs, and also did not have a separate sales commission plan for our Chief Revenue Officer. This ensuredensure that all of our executive officers hadhave the same goal of meeting and exceeding the company financial performance targets as set forth in our annual operating plan. Under our 2017 Senior Management Bonus Plan, our executive officers are not eligible to receive a discretionary bonus element that is earned based upon the achievement of individual performance objectives, and our Chief Revenue Officer does not have a separate sales commission plan. Our compensation committee believes that our executive officers have responsibility for the overall performance of Imperva as aour company, with emphasis on the achievement of financial performance targets.
The target quarterly bonus amount for each named executive officer is set forth in the table below.
| | | | | Named Executive Officer
| | Target Quarterly
Bonus Amount
($) | | Anthony Bettencourt
| | | 93,750 | | Mark E. Kraynak1
| | | 25,000 | | Sunil D. Nagdev
| | | 24,750 | | Terrence J. Schmid
| | | 40,425 | | Amichai Shulman2
| | | 12,278 | |
1 | This information relates to Mr. Kraynak’s role as our Chief Product Officer, which is the role that Mr. Kraynak had at the time that 2015 compensation was determined. Mr. Kraynak became our Senior Vice
|
| President and General Manager of Enterprise Solutions in December 2015, at which point his quarterly bonus amount increased to 50% of base salary or $37,500 quarterly to bring it to the median of cash bonus levels for his new role.
|
2 | Mr. Shulman’s bonus was earned in Israeli shekels and converted to U.S. dollars for the purposes of this column, using the average exchange rate for 2015 of US$1.00 to NIS 3.8941. |
Under our 2017 Senior Management Bonus Plan, cash bonuses are earned quarterly to reward the plan, each named executive officer is eligible to receive a quarterly bonus equal to the Quarterly Revenues Bonus. The “Quarterly Revenues Bonus” is defined as the Target Quarterly Bonus Amount (detailed above), multiplied by the Quarterly Revenues Bonus Percentage determined as follows: | | | Quarterly Revenues
Bonus Percentage
| | Percentage Achievement Relative to Quarterly Revenue Target (in
accordance with the company’s internal operating plan) | 112.5%
| | ³ 105% | 110%
| | ³ 104% and < 105% | 107.5%
| | ³ 103% and < 104% | 105%
| | ³ 102% and < 103% | 102.5%
| | ³ 101% and < 102% | 100%
| | ³ 100% and < 101% | 97.5%
| | ³ 99% and < 100% | 95%
| | ³ 98% and < 99% | 92.5%
| | ³ 97% and < 98% | 90%
| | ³ 96% and < 97% | 87.5%
| | ³ 95% and < 96% | 85%
| | ³ 94% and < 95% | 82.5%
| | ³ 93% and < 94% | 80%
| | ³ 92% and < 93% | 77.5%
| | ³ 91% and < 92% | 75%
| | ³ 90% and < 91% | 70%
| | ³ 89% and < 90% | 65%
| | ³ 88% and < 89% | 60%
| | ³ 87% and < 88% | 55%
| | ³ 86% and < 87% | 50%
| | ³ 85% and < 86% | 0%
| | < 85% |
Based on our actual financial performance in 2015, we paid the following quarterly bonuses:
In the first quarter of 2015, we achieved 112%achievement of our revenue target of $40.1 million. Wetargets from quarter to quarter. Our compensation committee chose revenue as the financial metric for cash bonuses because it believes that we should reward revenue growth, provided that such revenue growth is achieved cost effectively. Our compensation committee had the discretion to reduce such bonuses in any given quarter upon a determination that we did not substantially meet the operating expenses of $42.0 million, substantially in line with the annual operating plan target of $40.8 millionexpense and operating margin of (15%) versus the annualtargets in our internal operating plan targetafter taking into consideration the actual level of (25%). Asrevenue achieved. Our compensation committee believes that merely being a result we paid each of“profitable company” with little or no growth is not acceptable. Thus, our named executive officers at the 112.5% achievement level.
In the second quarter of 2015, we achieved 115% of our compensation committee considered these three metrics—revenue, target of $46.6 million. We had operating expenses of $45.1 million, substantially in line with the annual operating plan target of $42.4 millionexpense and operating marginmargin—to be the best indicators of (4%) versusfinancial success and stockholder value creation. Payment of quarterly cash bonuses is contingent upon continued employment through the annual operating plan targetactual date of (13%). As a result we paid each of our named executive officers at the 112.5% achievement level.
In the third quarter of 2015, we achieved 127% of our revenue target of $49.8 million. We had operating expenses of $45.6 million, substantially in line with our annual operating plan target of $44.2 million and operating margin of 11% versus the annual operating plan target of (10%). As a result we paid each of our named executive officers at the 112.5% achievement level.
In the fourth quarter of 2015, we achieved 118% of our revenue target of $61.6 million. We had operating expenses of $53.2 million, substantially in line with our annual operating plan target of $49.2
| million and operating margin of 9% versus the annual operating plan target of 0%. As a result we paid each of our named executive officers at the 112.5% achievement level.
|
The quarterly bonus amount earned by each named executive officer for 2015 is set forth in the table below.
| | | | | Named Executive Officer
| | Quarterly
Bonus Amount
Earned1 ($) | | Anthony Bettencourt
| | | 105,469 | | Mark E. Kraynak2
| | | 28,125 | | Sunil D. Nagdev
| | | 27,844 | | Terrence J. Schmid
| | | 45,478 | | Amichai Shulman3
| | | 13,813 | |
1 | Each named executive officer earned the amount listed in the table in each quarter of 2015, except for Mr. Kraynak who earned a higher amount in the fourth quarter as discussed in footnote 2. Achievement was at the 112.5% level for all four quarters of 2015. |
2 | Mr. Kraynak was promoted to Senior Vice President and General Manager of Enterprise Solutions in December 2015. As a result of his promotion, he earned a quarterly bonus amount of $32,813 in the fourth quarter of 2015, which reflected an increase to his quarterly bonus amount, effective as of his promotion date. |
3 | Mr. Shulman’s bonus was earned in Israeli shekels and converted to U.S. dollars for the purposes of this column, using the average exchange rate for 2015 of US$1.00 to NIS 3.8941. |
The “target” and “maximum” bonus amounts that could have been earned by each named executive officer in 2015 are shown in the “Grants of Plan-Based Awards— 2015” table. The following table shows the total target cash compensation amount for each named executive officer for 2015 and the amount as a percentage of the median target level for each of our named executive officers:
| | | | | | | | | Named Executive Officer | | Total Target Cash
Compensation
($) | | | Total Target
Cash
Compensation
as a
Percentage of
Median | | Anthony Bettencourt | | | 750,000 | | | | 102 | % | Mark E. Kraynak1 | | | 387,000 | | | | 101 | % | Sunil D. Nagdev | | | 357,000 | | | | 123 | % | Terrence J. Schmid | | | 455,700 | | | | 101 | % | Amichai Shulman2 | | | 251,154 | | | | 100 | % |
1 | This information relates to Mr. Kraynak’s role as our Chief Product Officer, which is the role that Mr. Kraynak had at the time that 2015 compensation was determined. Mr. Kraynak became our Senior Vice President and General Manager of Enterprise Solutions in December 2015, at which point his total cash compensation increased to $450,000 to bring it to the median of cash compensation levels for his new role. |
2 | Mr. Shulman’s compensation was paid in Israeli shekels and converted to U.S. dollars for disclosure purposes, using the average exchange rate for 2015 of US$1.00 to NIS 3.8941. |
Mr. Nagdev’s total cash compensation in excess of the median reflects his dual roles within Imperva with responsibilities over both our services organization and support organization, his significant professional experience, in particular, his experience in scaling a professional services organization, and market conditions at his time of hire.payment.
Our quarterly cash bonuses, as opposedcompared to our equity grants,awards, are designed to more immediately reward our executive officers for their performance during the most recent fiscal quarter. We believe that the immediacy of these cash bonuses, in contrast to our equity grantsawards, which vest over a multi-year period, of time, provides a significant incentive to our executives towards achievingexecutive officers to achieve our company-level objectives. The target annual cash bonus opportunity (which is paid quarterly) for each NEO in 2017 as a percentage of annual base salary and as a dollar amount was as follows. Named Executive Officer | | Annual Target Bonus Opportunity (%) | Annual Target Bonus Opportunity ($) | | Christopher Hylen1 | | 100% | | 440,000 | | Trâm Phi | | 50% | | 145,000 | | Sunil Nagdev2 | | 65% | | 217,750 | | Anthony Bettencourt3 | | 50% | | 172,500 | | Terrence Schmid4 | | 60% | | 198,000 | | Michael Mooney | | 100% | | 335,000 | | Aaron Kuan5 | | 35% | | 88,419 | |
1 | Mr. Hylen was appointed as our President and Chief Executive Officer on August 15, 2017. His target cash bonus amount for 2017 was guaranteed at 100%, prorated for the portion of 2017 that he is employed by us. |
2 | On April 25, 2017, when Mr. Nagdev was promoted to the role of Senior Vice President and General Manager, Products and Services, his annual base salary increased to $335,000 and his annual cash bonus opportunity increased from 50% to 65% of his base salary, prorated for the portion of 2017 that he served in his new role. |
3 | On August 15, 2017, when Mr. Bettencourt transitioned to the role of our Vice President of Customer Engagement, his target bonus percentage of annual base salary was reduced from 100% to 50% and his annual base salary decreased from $460,000 to $345,000. |
4 | Mr. Schmid resigned as our Chief Financial Officer, effective November 15, 2017. |
5 | On November 16, 2017, when Mr. Kuan began serving as interim Chief Financial Officer, his annual cash bonus opportunity increased from 26% to 35% of his base salary, prorated for the portion of 2017 that he served as our interim Chief Financial Officer. |
Under our 2017 Senior Management Bonus Plan, each NEO was eligible to receive a cash bonus amount each quarter equal to one-fourth of the annual target cash bonus opportunity multiplied by the cash bonus payout percentage earned during the quarter. Revenue had to be at least 85% of the revenue target in our annual operating plan for a cash bonus to be earned in each quarter. If revenue was less than 85% of the revenue target, no bonus was earned. If revenue was 85% of the revenue target, 50% of the target bonus amount was earned. If revenue was 100% of the revenue target, the full target bonus amount was earned. If revenue was 107.5% or more of the revenue target, 115% of the target bonus amount was earned. For revenue between 85% and 100% of the revenue target for each quarter, the payout percentage was between 50% and 100%, calculated on a straight line basis between those two percentages. For example, if revenue was 91% of the revenue target, the cash bonus payout percentage for that quarter would be 70% [(((91% – 85%) / (100% – 85%)) x (100%-50%)) + 50%]. If revenue was between 100% and 107.5% of the revenue target, the cash bonus payout percentage for that quarter would be between 100% and 115%, calculated on a straight line basis between those two percentages. For example, if revenue was 104% of the revenue target, the cash bonus payout percentage for that quarter would be 108% [(((104% – 100%) / (107.5% – 100%)) x (115%-100%)) + 100%]. | | Below Threshold | | Threshold | | Target | | Maximum | Revenue Performance Achieved | | < 85% | | 85% | | 100% | | 107.5% | Cash Bonus Payout Percentage | | 0% | | 50% | | 100% | | 115% |
A quarterly bonus, if any, was to be paid to each NEO promptly following our compensation committee’s confirmation of actual performance relative to the revenue target for a particular fiscal quarter. However, our compensation committee could determine to reduce such bonus, including upon a determination that we did not substantially meet our operating margin or operating expense targets (as provided in our annual operating plan) taking into account the actual revenue level in such quarter. For purposes of computing whether operating margins were met or exceeded, expenses actually paid or accrued by us related to the payment of commissions and bonuses to our personnel above the 100% level allocated for such expenses in our annual operating plan were not included as expenses. In addition, when reviewing operating expenses, we do not include stock-based compensation expense, amortization of purchased intangibles, acquisition-related expense, fees and costs associated with the review of strategic alternatives and non-routine stockholder matters and restructuring expense because these expenses are not considered part of ongoing operating costs that should be used to assess the performance of the business. First Quarter 2017. We believepaid a cash bonus for first quarter 2017 performance. In the first quarter 2017, we achieved quarterly revenue of $72.3 million or 99.6% of our revenue target of $72.6 million. We incurred operating expenses of $55.5 million, compared to our annual operating plan target of $55.9 million and operating margin of 4.3% versus the annual operating plan target of 3.3%. As a result, each NEO received a bonus based on a cash bonus payout percentage of 99% for the first quarter of 2017, as set forth in the table below. Second Quarter 2017. We paid a cash bonus for second quarter 2017 performance. In the second quarter 2017, we achieved quarterly revenue of $74.4 million or 95.4% of our revenue target of $78.0 million. We incurred operating expenses of $53.0 million, compared to our annual operating plan target of $57.1 million and operating margin of 9.7% versus the annual operating plan target of 6.7%. As a result, each NEO received a bonus based on a cash bonus payout percentage of 85% for the second quarter of 2017, as set forth in the table below. Third Quarter 2017. We paid a cash bonus for third quarter 2017 performance. In the third quarter 2017, we achieved quarterly revenue of $83.9 million or 99.5% of our revenue target of $84.3 million. We incurred operating
expenses of $57.3 million, compared to our annual operating plan target of $59.2 million and operating margin of 13.6% versus the annual operating plan target of 9.6%. As a result, each NEO received a bonus based on a cash bonus payout percentage of 98% for the third quarter of 2017, as set forth in the table below. Fourth Quarter 2017. We paid a cash bonus for fourth quarter 2017 performance. In the fourth quarter 2017, we achieved quarterly revenue of $91.1 million or 101.1% of our revenue target of $90.1 million. We incurred operating expenses of $61.5 million, compared to our annual operating plan target of $62.8 million and operating margin of 15.4% versus the annual operating plan target of 10.4%. As a result, each NEO received a bonus based on a cash bonus payout percentage of 102% for the fourth quarter of 2017, as set forth in the table below. The quarterly cash bonus amounts earned by each NEO in 2017 is set forth in the table below. Named Executive Officer | Fiscal Quarter | Bonus Payment ($) | Percent of Target1 | Christopher Hylen2 | First | N/A | N/A | | Second | N/A | N/A | | Third | 57,392 | 100% | | Fourth | 112,200 | 102% | | Total | 169,592 | 101% | Trâm Phi | First | 35,888 | 99% | | Second | 30,813 | 85% | | Third | 35,525 | 98% | | Fourth | 36,975 | 102% | | Total | 139,200 | 96% | Sunil Nagdev | First | 36,506 | 99% | | Second | 46,272 | 85% | | Third | 53,349 | 98% | | Fourth | 55,526 | 102% | | Total | 191,653 | 96% | Anthony Bettencourt3 | First | 113,850 | 99% | | Second | 97,750 | 85% | | Third | 98,613 | 98% | | Fourth | 43,988 | 102% | | Total | 354,201 | 96% | Terrence Schmid4 | First | 49,005 | 99% | | Second | 42,075 | 85% | | Third | 48,510 | 98% | | Fourth | N/A | N/A | | Total | 139,590 | 94% | Michael Mooney | First | 82,913 | 99% | | Second | 71,188 | 85% | | Third | 82,075 | 98% | | Fourth | 85,425 | 102% | | Total | 321,600 | 96% | Aaron Kuan5 | First | 16,431 | 99% | | Second | 14,108 | 85% | | Third | 16,266 | 98% | | Fourth | 19,352 | 102% | | Total | 66,157 | 96% |
1 | The “target” and “maximum” cash bonus opportunities that could have been earned by each NEO in 2017 are shown in the “Grants of Plan-Based Awards—2017” table. |
2 | Mr. Hylen’s target bonus under our existing Senior Management Bonus Plan equal is to 100% of his annual base salary. For 2017, this target bonus was guaranteed at a minimum of 100%, but prorated for the portion of |
| 2017 that he is employed by us. Accordingly, Mr. Hylen’s bonus for the third quarter was prorated to his start date on August 15, 2017. |
3 | Mr. Bettencourt’s annual bonus amount decreased from $460,000 to $172,500 effective August 15, 2017 in connection with his resignation as CEO and appointment as Vice President of Customer Engagement. |
4 | Mr. Schmid resigned as our Chief Financial Officer, effective November 15, 2017. |
5 | Mr. Kuan’s target bonus increased from 26% to 35% of annual base salary on November 16, 2017 in connection with his appointment as Interim Chief Financial Officer. |
New Chief Executive Officer Signing Bonus. To induce Mr. Hylen to join us, he received a one-time $250,000 signing bonus, subject to repayment on a prorated basis in the event his employment with us terminates within 24 months of the commencement of his employment (other than due to his termination without “cause” or his resignation for “good reason”, as those terms are defined in our Change in Control Plan). For further information regarding Mr. Hylen’s compensation, see “—New Chief Executive Officer.” Interim CFO Bonus. Mr. Kuan received a guaranteed bonus of $60,000 for the period in which he served as our Interim Chief Financial Officer and an additional $25,000 discretionary bonus in December 2017 in recognition of merit. We appointed a new Chief Financial Officer effective January 2, 2018. These bonuses are an important motivating factor for our named executive officers,were in addition to being a significant factor in attracting and retaininghis target quarterly cash bonus opportunity under our named executive officers.2017 Senior Management Bonus Plan. For further information, see “—Interim Chief Financial Officer.” Equity CompensationAwards The goal of our long-term equity-based incentive awardscompensation program is to provide each namedof our executive officerofficers with an incentive to manage our company from the perspective of an owner with an equity stake in the business. Due to the stage of our business and our evolving industry, we believe that equity awards, principally in the form of RSUsPRSUs and PRSUs,RSUs, will incentivize our executive officers to achieve our long-term performance goals because they provide greater opportunities for our executive officersthem to benefit from future successes in our business. In addition, our compensation committee believes that offering meaningful equity ownership in our company assists us in retaining our key employees. Our compensation committee makes equity-basedgrants equity awards to our executive officers based onafter considering the recommendations of our CEOchief executive officer (except for the awards madewith respect to the CEO)his own equity award), market data provided by Compensia, input from othercompensation committee members, of the committee, and their own experiences as directors and executives at other companies within and outside of our industry. Upon hire, each executive officer isExecutive officers are initially provided withgranted an equity grantaward when they join the company, based on their position with us and their relevant prior experience. These initial grantsequity awards vest over four years with respect to RSUs, over three years with respect to PRSUs, and no shares vest before the one yearone-year anniversary of the date of grant. We spread the vesting of new hire equity awards over three and four years to compensate executivesour executive officers for their contributions over athis period of time. EquityThereafter, equity awards under our equity incentive bonus plan, discussed in more detail below, are madegenerally granted annually to eligible named executive officers. In additionOur compensation committee typically establishes a pool of shares of common stock under our Senior Management Bonus Plan, which may be granted to annual grants underour executive officers (in the bonus plan, ourform of PRSUs and RSUs), as discussed below. Our compensation committee has the discretion to makegrant equity awards in addition to these annual grants to executive officers and other employees dependingunder our bonus plan based on changes in job responsibilities, performance and experience or for executives, material changes in market data for comparable executives that were not reflected intaken into account when the annual grants awardedawards under the bonus plan.plan were determined.
Our compensation committee granted to Mr. Hylen a new hire award of RSUs and committed to grant to Mr. Hylen certain PRSUs in 2018, as discussed under “—New Chief Executive Officer.” In April 2017, our compensation committee granted discretionary PRSUs and RSUs to Mr. Nagdev, in connection with a promotion, and Ms. Phi, in recognition of merit, in addition to the PRSUs and RSUs granted to them and the other NEOs in the first quarter of 2017. These additional PRSUs and RSUs are subject to the same terms as the other PRSUs and RSUs granted in February 2017, but the time-based vesting commences one quarter later. No suchother new hire or discretionary grants were made to our executive officersNEOs in 2015.2017. Executive officers, including our CEOInformation about the aggregate grant date fair value of PRSUs (assuming achievement at the maximum level, rather than at the target level) and SVP of WW Services and Support, whose employment commenced during the second half of 2014, did not receive an annual equity grant under our bonus plan in 2015. The compensation committee believed that the initial equity awards to these executive officers continued to provide sufficient retention incentives for 2015. The new hire equity awards madeRSUs granted to our CEO and SVP of WW Services and Support were based upon their positions with us and their relevant prior experience. Mr. Bettencourt received equity awardsNEOs in August 2014 and Mr. Nagdev received equity awards in February 2015. Their initial equity awards consisted of stock options and restricted stock units that vest over four years with no shares vesting prior to the one year anniversary of the date of grant, consistent with prior practice for our executive team.
The value of the shares subject to the 2015 equity grants to named executive officers are reflected2017 is provided in the “Summary Compensation Table” table, and further information about these grantsawards is reflectedprovided in the “Grants of Plan-Based Awards—2015”2017” table, both in the “Executive Compensation” section.
Participation in the 2011 Employee Stock Purchase Plan is also available to all executive officers on the same basis as our other employees. However, any executive officers who are 5% stockholders, or would become 5% stockholders as a result of their participation in our 2011 Employee Stock Purchase Plan, are ineligible to participate in our 2011 Employee Stock Purchase Plan.
Equity Awards under Our Equity Incentive Bonus Plan The equity portion of our 20152017 Senior Management Bonus Plan provides that our executive officers will be eligible to participate in an equity
Our compensation committee established a pool of shares of common stock under our 2017 Senior Management Bonus Plan, which could be granted to our executive officers (in the form of options and/orPRSUs and RSUs) with the. The size of the equity pool to beis determined by theour compensation committee in connection with the fiscal year-end review, based on the number of executive officers participating, the cumulative achievement of quarterly revenue targets within the fiscal year and other factors. The PRSUs and RSUs are typically granted under our 2011 Stock Option and Incentive Plan. For 2015,2017, our compensation committee determined, upon the recommendation of our CEO,chief executive officer and a review of market data provided by Compensia and the prevailing practices among our compensation peer group, that grantinga 50/50 mix of performance-based and time-based equity solely in the form of PRSUs to eligible named executive officersawards would be the most effective incentive for retaining executivesour executive officers and rewarding them for short-term company performance while also creating long-term incentives to sustain that performance. To be better aligned with the market data for similarly sized companies, the 2017 PRSUs had a one-year performance period and three-year time-based vesting schedule from the date of grant, while the time-based awards vest over a customary four-year period. The individual grantsequity awards granted to our executive officers under the 20152017 Senior Management Bonus Plan (which were granted under our 2011 Stock Option and Incentive Plan) were determined by our compensation committee after input from and consultation with our CEO. Thechief executive officer (except with respect to his own award). Our compensation committee also hashad discretion to modify or adjust any recommended awards to executives. Following our CEO’s recommendations to our compensation committee regarding the equity awards to be made to our executive officers, our compensation committeeand ultimately determined and approved the specific equity awards. awards for each executive officer. When making the recommendation and determining the size of the equity awards, consideration was given to critical roles, and market competitive equity values at comparable companies according to the survey and peer group data provided by Compensia. The RSUs and PRSUs discussed above were granted to our NEOs in February 2017. In 2015,April 2017, we granted additional discretionary grants of PRSUs and RSUs to Mr. Nagdev, in connection with a promotion, and Ms. Phi, in recognition of merit. These additional PRSUs and RSUs are subject to the target valuesame terms as the other 2017 PRSUs and RSUs, but the time-based vesting commences one quarter later than the other PRSUs and RSUs granted in February 2017. Mr. Hylen’s RSUs granted to him in connection with his becoming Chief Executive Officer were granted outside of, but with terms substantially equivalent to, grants made to other executive officers under the 2017 Senior Management Bonus Plan. For further information, see ““—New Chief Executive Officer.” PRSU Terms. The performance objective for the PRSU awards2017 PRSUs was half the marketachievement of annual contract value of the peer group in consideration of the one-year service-based vesting schedule for the PRSUs once earned. See the “Grants of Plan-Based Awards—2015” table in the “Executive Compensation” section for more information about the PRSUs awarded to eligible named executive officers. PRSU Terms.For our 2015 PRSUs, the compensation committee selected achievement of the total productall new and renewal subscription bookings target from the internal operating planof at least $112 million (“2017 ACV”) and annual operating expenses at 110% or less ofthan those under our annual operating plan. Our compensation committee selected these metrics to incentivize our executive officers to focus on the internal operating plan as the performance conditions for the PRSUs because they are important metrics that we usesubscription business while continuing to measure the health and success of the business.control costs. For purposes of computing whether operating expenses were 110% or less of the company’s 2015our 2017 internal operating plan, expenses actually paid or accrued related to the payment of commissions to sales personnel above the 100% level allocated for such expenses in the internal operating plan were not included as expenses. We also did not include stock-based compensation expense, amortization of purchased intangibles, acquisition-related expense, fees and costs associated with the review of strategic alternatives and non-routine stockholder matters and restructuring expense as part of operating expenses for purposes of these calculations because these expenses are not considered part of ongoing operating costs that should be used to assess the performance of the business. The PRSU performance measurement period isfor the 2015PRSUs was fiscal year. Each PRSU grant is made at the maximum amountyear 2017. The number of shares subject to the PRSU that can bewere earned if thebased upon performance targets are fully achieved and will be reduced for actual performance below the maximum level. also subject to time-based vesting as described below.
The actual number of shares earned and eligible to vest dependsdepended on the level of achievement of the 2017 ACV goal and achievement below 80% resultsas set forth in cancellationmore detail in the table below. The number of PRSUs earned by each NEO was equal to the entire award. At 80% achievement 2.5%number of PRSUs that would be earned at the shares are earned and at 120% achievement, 100% oftarget level multiplied by the shares are earned. Once earned, the PRSUs vest as to 25% of the eligible shares on February 15, 2016, with the remainder to vest equally on each of May 15, 2016, August 15, 2016, and November 15, 2016. In February 2016, the compensation committee determined that the performance targetsPRSU eligibility percentage achieved for the PRSUs had been fully achieved at the maximum level.year. 2017 ACV was $128.4 million. As a result, 100%approximately 58% of the shares subjecttarget amount of PRSUs was earned (($128.4M- $112M) / ($140M - $112M)) x (50%). | | Below Threshold | | Threshold | | Target | | Maximum | FY 2017 ACV Achieved | | <$112M | | $112M | | $140M | | $168M | PRSU Eligibility Percentage | | 0% | | 0% | | 100% | | 200% |
The table below sets forth the target amount of PRSUs awarded to each NEO and the actual PRSUs earned, based on actual 2017 ACV goal achievement as described above. Named Executive Officer | | PRSU (Target) | PRSU (Earned and Subject to Time-Based Vesting) | Christopher Hylen | | 0 | | 0 | Trâm Phi1 | | 12,200 | | 7,132 | Sunil Nagdev2 | | 19,500 | | 11,399 | Anthony Bettencourt3 | | 124,800 | | 36,479 | Terrence Schmid4 | | 14,900 | | N/A | Michael Mooney | | 18,900 | | 11,048 | Aaron Kuan5 | | N/A | | N/A |
1 | Ms. Phi was granted 8,700 PRSUs at target in February 2017 and an additional 3,500 PRSUs at target in April 2017. |
2 | Mr. Nagdev was granted 12,500 PRSUs at target in February 2017 and an additional 7,000 PRSUs at target in April 2017. |
3 | Mr. Bettencourt remained entitled to earn and vest in the PRSUs granted to him in February 2017 in connection with his service as Chairman of the board of directors. In connection with Mr. Bettencourt’s resignation as Vice President of Customer Engagement, non-executive Chairman of the Board and director, Mr. Bettencourt received accelerated vesting of 92,311 restricted stock units and options to purchase 33,125 shares of common stock at an exercise price of $29.10 per share in exchange for a release of claims. |
4 | Mr. Schmid resigned as our Chief Financial Officer, effective November 15, 2017. |
5 | Mr. Kuan was not eligible for a PRSU grant in 2017. |
Employment Agreements Each of our NEOs is employed “at will.” Mr. Hylen’s employment offer letter provides that Mr. Hylen is eligible for certain payments and benefits in the event that he is terminated without “cause” or resigns for “good reason” within 24 months following commencement of employment with us, as described below under “—Severance and Change in Control Arrangements” and“Executive Compensation—Employment, Severance and Change in Control Agreements.” These termination benefits were earned byconsidered reasonable and necessary to incentivize Mr. Hylen to accept employment as our chief executive officers.officer. The employment offer letters with our other NEOs do not provide for payments upon termination of employment; however, these officers may be eligible for payments under our Severance Plan and Change in Control Plan, as described below. Severance and Change in Control PaymentsArrangements In 2012,To enable us to attract talented executives, as well as ensure ongoing retention when considering potential corporate transactions that may create uncertainty as to future employment, we offer certain post-employment payments and benefits to our compensation committee adopted aNEOs.
Our named executive officers who are subject to the reporting requirements of Section 16 of the Exchange Act, including Mr. Burns, and that continue to serve the company, participate in our Change in Control Plan that provides for severance payments and accelerated vesting of all outstanding and unvested equity awards in the event of the termination of employment of our executive officersthese NEOs under specified circumstances following a change in control. The committee adoptedcontrol of the plancompany. Mr. Bettencourt’s participation in orderour Change in Control Plan terminated upon his transition out of the role of President and Chief Executive Officer, and he did not participate in our short‑term Severance Plan. Mr. Kuan’s participation in our Change in Control Plan terminated when he ceased to harmonizebe our interim Chief Financial Officer. Mr. Mooney’s participation in our Change in Control Plan terminated when he ceased to be our Chief Revenue Officer. Each of our other NEOs participate in our Change in Control Plan. Certain senior executives, including Mr. Nagdev and Ms. Phi, participate in our short-term Severance Plan, which will expire on August 15, 2018. Mr. Mooney’s participation in our Severance Plan terminated when he ceased to be our Chief Revenue Officer. None of our other NEOs participate in our Severance Plan. This Severance Plan
provides for severance payments and limited accelerated vesting of outstanding and unvested equity awards in the change in control provisions across all executive officersevent of the termination of employment of these NEOs under specified circumstances. Mr. Hylen is also eligible for certain payments and benefits upon the termination of his employment under specified circumstances pursuant to eliminate all single trigger acceleration provisions.his employment offer letter with us, which terms were negotiated to induce him to join the company. Our compensation committee determined that we would provide these severance and change in control arrangements in order to mitigate some of the risk that exists for executives working for a company, like ours, that is smaller than many of its competitors and in an environment where there is a meaningful likelihood that the company may be acquired. These arrangements are intended to attract and retain qualified executives that have alternatives that may appear to them to be less risky absent these arrangements, and to mitigate a potential disincentive to consideration and execution of such an acquisition, particularly where the services of these executive officers may not be required by the acquirer. We also believe that entering into these arrangements will help these executive officers maintain continued focus and dedication to their responsibilities to help maximize stockholder value if there is a potential transaction that could involve a change in control of the company. We do not provide Section 280G excise tax “gross-up” payments to any of our executive officers. For quantificationfurther information, including a summary of the material terms and additional information regardingconditions of the severance and change in control arrangements described above and in effect as of December 31, 2017, see “—New Chief Executive Officer” and “Executive Compensation—Employment, Severance and Change in Control Plan, please see the discussion under “Executive Compensation—Potential Payments Upon Termination or Change in Control.Agreements.” Other Compensation Elements Health and Welfare and Other Benefits . We have established a tax-qualified Section 401(k) retirement plan for all employees who satisfy certain eligibility requirements, including requirements relating to age and length of service. Under this plan, employees may elect to defer a portion of their current compensation subject to certain statutory limits, and contribute to the plan. We currently do not match any contributions made by our employees, including executive officers. We intend for the plan to qualify under Section 401(a) of the Tax Code so that contributions by employees to the plan, and income earned on plan contributions, are not taxable to employees until withdrawn from the plan. In addition, we provide our other health and welfare benefits to our executive officers, including our named executive officers,NEOs, on the same basis as all of our full-time employees. These benefits include medical, dental, and vision benefits, medical and dependent care flexible spending accounts, short-term and long-term disability insurance, accidental death and dismemberment insurance and basic life insurance coverage. These benefits are provided to our executive officers on the same general terms as to all of our full-time employees in the country in which they are resident. We believe that our employee benefits programs are affordable and competitive in relation to the market based on our understanding of the markets in which we compete for talent. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market. WeEmployee Stock Purchase Plan. Our NEOs also are entitled to participate in our 2011 Employee Stock Purchase Plan on the same basis as do our other employees.
Perquisites and Other Personal Benefits. In general, we do not provide extraordinary perquisites or other personal benefits to our executive officers and they are entitled to participate in benefits on the United States.same basis as all other employees. In limited situations, in the future, if we believe it is appropriate to assist an individual in the performance of his duties, to make our executive officers more efficient and effective, or for recruitment and retention purposes, we may provide perquisites subject to the compensation committee’s review and approval. Executive officers resident in Israel receive the customary benefits payable to Israeli employees, including managers’ insurance, contributions to an advanced study fund, vacation and sick leave, recreation pay and use of an automobile. As described above, our named executive officers also are entitled to participate in our 2011 Employee Stock Purchase Plan on the same basis as our other employees.
Other Compensation Policies Stock Ownership Guidelines
Other than the equity plans described in this section, we do not have any equity security ownership guidelines or requirements for our named executive officers (or board members) and we do not have any formal or informal policies or guidelines for allocating compensation between long-term and currently paid out compensation, between cash and non-cash compensation or among different forms of non-cash compensation.
Compensation Recovery (or Clawback) Policy In connection with the amendments to our 2011 Stock Option and Incentive Plan discussed in more detail in the proposal to amend the plan, we have adopted a compensation recovery, or “clawback”, policy whichOur Compensation Recovery (or Clawback) Policy provides that, in the event we are required to prepare an accounting restatement as a result of fraud or intentional misconduct, we may recover from those current and former
executive officers who are subject to the reporting requirements of Section 16 of the Exchange Act and who were involved in the fraud or misconduct, any cash or equity incentive award, erroneously paid, or awarded in excess of what would have been paid pursuant to the restated financial statements, over the three years preceding the date on which we are required to prepare the restated financial statements. Derivatives Trading and Hedging and Pledging Policy Our insider trading policy prohibits our employees, including our executive officers, and our non-employee directors from engaging in hedging activities, the shorting of our equity securities, holding our equity securities in a margin account, and the pledging of our equity securities as collateral for loans. Policy Regarding the Pricing and Timing of Equity Awards All equity awards to our employees, including our executive officers, and to our directors have been granted and reflected in our consolidated financial statements, based upon the applicable accounting guidance, at the closing market price of our common stock on the New YorkNASDAQ Stock ExchangeMarket on the date of grant. Stock Ownership Guidelines We have no program, plan or practice pertaining to the timing of stock option grants toadopted Stock Ownership Guidelines that require executive officers relativeand directors to the timinghold a meaningful amount of the releaseequity to link their interests to those of material nonpublic information. We do not, as of yet, have any plans to implement such a program, plan or practice.our stockholders. See “—2017 Executive Compensation Highlights—Stock Ownership Guidelines” for additional detail. Tax and Accounting Considerations Deductibility of Executive Compensation Section 162(m) of the Tax Code generally disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to certain executive officers. While our Compensation Committee considers the chiefdeductibility of awards as one factor in determining executive officercompensation, our Compensation Committee also looks at other factors in making its decisions, as noted above, and eachretains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible by us for tax purposes. Recent changes to Section 162(m) in connection with the passage of the three other most highly compensatedTax Cuts and Jobs Act repealed exceptions to the deductibility limit that were previously available for “qualified performance-based compensation,” including stock option grants, effective for taxable years after December 31, 2017. As a result, any compensation paid to certain of our executive officers (other than the chief financial officer) in any taxable year. Generally, remuneration in excess of $1 million may onlywill be deducted ifnon-deductible unless it is “performance-based compensation” within the meaningqualifies for transition relief afforded to compensation payable pursuant to certain binding arrangements in effect on November 2, 2017. We believe that compensation expense incurred in respect of the Tax Code. In this regard, the compensation income realized upon the exercise ofour stock options granted prior to November 2, 2017, and the vesting of restricted stock units granted under a stockholder-approved equity incentive plan generallyprior to April 1, 2015, will continue to be deductible so long as thepursuant to this transition rule. In addition, we believe that compensation expense incurred in respect of performance-based RSU awards are granted by a committee whose members are non-employee directors and certain other conditions are satisfied (including specific performance conditions for restricted stock units). On the other hand, annual cash bonuses in excess of $1 million paid will not be deductible unless paid on the basis of pre-established objective performance criteria, the satisfaction of which is certified after the end of the year and upon meeting certain other conditions. We expect that, where reasonably practicable, we will seek to qualify the variable compensation paid to our executive officers for the “performance-based compensation” exemptionprior to November 2, 2017, were designed in a manner intended to be exempt from the deductibility limit. As such,deduction limitation of Section 162(m) because they are paid based on the achievement of pre-determined performance goals established by our Compensation Committee pursuant to our shareholder-approved equity incentive plan and will continue to be deductible. However, because of uncertainties in approving the amountinterpretation and form of compensation for our executive officers, we consider all elementsimplementation of the costchanges to us of providing such compensation,Section 162(m), including the potential impactscope of Section 162(m). In the future, the compensation committee may, in its judgment, authorize compensation payments that do not comply with an exemption from the deductibility limit when it believes thattransition relief, we can offer no assurance of such payments are appropriate to attract and retain executive talent.deductibility.
Taxation of “Parachute” Payments Sections 280G and 4999 of the Tax Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the company that exceed certain prescribed limits, and that the company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officer, including any named executive officer,NEO, with a “gross-up” or other reimbursement payment for any tax liability that the executivehe or she might owe as a result of the application of Sections 280G or 4999 during 20152017, and we have not agreed and are not otherwise obligated to provide any executive officer with such a “gross-up” or other reimbursement.
Accounting for Stock-Based Compensation We account for equity compensation paid to our employees under the rules of FASB ASC 718, which requires us to estimate and record an expense over the service period of the award. Accounting rulesFASB ASC 718 also require requires us to record cash compensation as an expense at the time the obligation is accrued. We structure cash bonus compensation so that it is taxable to our executives at the time it is paid to them. We currently intend that all cash compensation paid will be tax deductible for us. However, with respect to equity compensation awards, while any gain recognized by employees from nonqualified options should be deductible, to the extent that an option constitutes an incentive stock option, gain recognized by the optionee will not be deductible if there is no disqualifying disposition by the optionee. In addition, if we grant restricted stock or restricted stock unit awards that are not subject to performance vesting, they may not be fully deductible by us at the time the award is otherwise taxable to the employee. Compensation Committee Report The compensation committee has reviewed and discussed the Compensation Discussion and Analysis set forth above with our management. Based on its review and discussions, the compensation committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this proxy statement. Submitted by the Compensation Committee of the Board of Directors, Frank Slootman
Theresia Gouw
Geraldine Elliott (Chair) Roger Sippl Randall Spratt The information contained in the foregoing report of Imperva’s compensation committee is not considered to be “soliciting material,” “filed” or incorporated by reference in any past or future filing by Imperva under the Securities Exchange Act of 1934 or the Securities Act of 1933 unless and only to the extent that Imperva specifically incorporates it by reference.
EXECUTIVE COMPENSATIONCOMPENSATION Summary Compensation Table The following table sets forth certain information with respect to compensation awarded to, earned by or paid to each person who served as our Chief Executive Officer, our Chief Financial Officer, and each of our three other most highly compensated executive officers whose compensation was more than $100,000 during the years ended December 31, 2015, 20142017, 2016 and 2013.2015. We refer to these executive officers as our “named executive officers” or “NEOs” elsewhere in this proxy statement. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary
($) | | | Stock
Awards
($)1 | | | Option
Awards
($)1 | | | Non-Equity
Incentive
Compensation
($)2 | | | All Other
Compensation
($) | | | Total
($) | | Anthony Bettencourt3 | | | 2015 | | | | 375,000 | | | | — | | | | — | | | | 421,875 | | | | — | | | | 796,875 | | President and | | | 2014 | | | | 140,625 | | | | 7,751,250 | | | | 3,895,685 | | | | 142,383 | | | | — | | | | 11,929,943 | | Chief Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mark E. Kraynak | | | 2015 | | | | 288,083 | | | | 1,107,080 | | | | — | | | | 117,188 | | | | — | | | | 1,512,351 | | SVP and GM of | | | 2014 | | | | 280,000 | | | | 1,311,840 | | | | 594,811 | | | | 60,750 | | | | — | | | | 2,247,401 | | Enterprise Solutions | | | 2013 | | | | 265,000 | | | | 518,250 | | | | 231,461 | | | | 14,875 | | | | — | | | | 1,029,586 | | | | | | | | | | Sunil D. Nagdev | | | 2015 | | | | 258,000 | | | | 1,703,200 | 4 | | | 828,048 | 4 | | | 111,375 | | | | — | | | | 2,900,623 | | SVP, WW Services and Support | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Terrence J. Schmid | | | 2015 | | | | 294,000 | | | | 1,107,080 | | | | — | | | | 181,912 | | | | — | | | | 1,582,992 | | Chief Financial Officer | | | 2014 | | | | 290,000 | | | | 1,639,800 | | | | 753,936 | | | | 121,500 | | | | — | | | | 2,805,236 | | and Treasurer | | | 2013 | | | | 280,000 | | | | 518,250 | | | | 231,461 | | | | 23,906 | | | | — | | | | 1,053,617 | | | | | | | | | | Amichai Shulman | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chief Technology Officer | | | 2015 | | | | 177,142 | 5 | | | 851,600 | | | | — | | | | 55,252 | 5 | | | 75,929 | 5,6 | | | 1,159,923 | |
Name and Principal Position | | Year | | Salary ($) | | | Bonus ($)1 | | | Stock Awards ($)2 | | | | | Non-Equity Incentive Compensation ($)3 | | | All Other Compensation ($)4 | | | Total ($) | | Christopher Hylen | | 2017 | | | 166,693 | | | | 250,000 | | | | 4,498,340 | | | | | | | 169,592 | | | | 10,000 | | | | 5,094,625 | | President and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chief Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trâm Phi | | 2017 | | | 290,000 | | | | — | | | | 1,549,035 | | | | | | | 139,200 | | | | — | | | | 1,978,235 | | SVP, General Counsel and | | 2016 | | | 279,000 | | | | 27,900 | | | | 1,685,685 | | | | | | | 36,619 | | | | — | | | | 2,029,204 | | Corporate Secretary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Sunil Nagdev | | 2017 | | | 324,718 | | | | — | | | | 2,482,875 | | | | | | | 191,653 | | | | — | | | | 2,999,246 | | Chief Customer Officer | | 2016 | | | 265,000 | | | | — | | | | 927,900 | | | | | | | 89,125 | | | | | | | | 1,282,025 | | | | 2015 | | | 258,000 | | | | — | | | | 1,703,200 | | | | | | | 111,375 | | | | — | | | | 2,072,575 | | Anthony Bettencourt | | 2017 | | | 416,875 | | | | — | | | | 6,955,470 | | | | | | | 354,201 | | | | — | | | | 7,726,546 | | Former Vice President, Customer Engagement; | | 2016 | | | 400,000 | | | | — | | | | 5,536,470 | | | | | | | 105,000 | | | | — | | | | 6,041,470 | | Former Chief Executive Officer | | 2015 | | | 375,000 | | | | — | | | | — | | | | | | | 421,875 | | | | — | | | | 796,875 | | Terrence Schmid | | 2017 | | | 288,750 | | | | — | | | | 1,870,695 | | | | | | | 139,590 | | | | 566,076 | | | | 2,865,111 | | Former Chief Financial | | 2016 | | | 310,000 | | | | 37,200 | | | | 2,505,330 | | | | | | | 48,825 | | | | — | | | | 2,901,355 | | Officer | | 2015 | | | 294,000 | | | | — | | | | 1,107,080 | | | | | | | 181,912 | | | | — | | | | 1,582,992 | | Michael Mooney | | 2017 | | | 335,000 | | | | — | | | | 2,372,895 | | | | | | | 321,600 | | | | — | | | | 3,029,495 | | Former Chief Revenue Officer | | 2016 | | | 325,000 | | | | 61,750 | | | | 2,474,400 | | | | | | | 81,047 | | | | 839 | | | | 2,943,036 | | | | 2015 | | | 325,000 | | | | — | | | | — | | | | | | | 309,875 | | | | — | | | | 634,875 | | Aaron Kuan | | 2017 | | | 252,625 | | | | 85,000 | | | | 251,100 | | | | | | | 66,157 | | | | — | | | | 654,882 | | Former Interim Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 | For 2017, represents sign on bonus for Mr. Hylen, and a $60,000 bonus for Mr. Kuan plus and additional $25,000 discretionary bonus in recognition of merit for Mr. Kuan for serving as Interim CFO. |
2 | Represents the aggregate grant date fair value of RSUs, PRSUs and stock options granted in the periods presented calculated in accordance with FASB ASC 718, excluding the effect of estimated forfeitures. See Note 12 of “Notes to Consolidated Financial Statements” in our Annual Report on Form10-K for the year ended December 31, 20152017 for a discussion of the assumptions made by us in determining the valuation of equity awards. Messrs. Kraynak, Schmid and Shulman were awarded PRSUs. The grant date fair value of PRSUs reported in the Stock Awards column of the Summary Compensation Table reflects achievement at the highest level of the performance conditions. The Grant of Plan Based Awards Table provides information about the number of shares of common stock eligible for issuance under the PRSUs upon achievement of the performance conditions. |
23
| Represents the actual amounts earned for achievement of company performance targets for 2015 under the 20152017 Senior Management Bonus Plan. The Grant of Plan Based Awards Table provides information about the range of possible cash payouts under the 20152017 Senior Management Bonus Plan. |
3 | Mr. Bettencourt did not receive any stock or option awards in 2015. For further information, see “Compensation Discussion and Analysis—Equity Compensation.” |
4 | Mr. Nagdev joined the company in December 2014. Mr. Nagdev’s new hire equity awards were approved by the compensation committee in February 2015 and consisted of RSUs and stock options that vest over four years with no shares vesting prior to the one year anniversary of the date of grant. The Outstanding Equity Awards at Year End Table provides a detailed description of the vesting schedule applicable to these grants. |
5 | Mr. Shulman’s cash compensation bonus was paid in Israeli shekels and converted to U.S. dollars for the purposes of this column, using the average exchange rate for 2015 of US$1.00 to NIS 3.8941. |
6 | Executive officers resident in Israel receive the customary benefits payable to Israeli employees. The amount in this column represents payments made to or on behalf of Mr. Shulman for these customary benefits in 2015, including $24,899 related to a vehicle allowance, $24,322 related to statutorily required pension contributions, and an aggregate of $26,708 related to contributions to an education fund,
|
4 | contributionsFor 2017, represents legal fees reimbursed to a recreation fund, statutorily required national insurance (i.e., social security) contributions, a statutorily required recuperation payment, a meal allowance, telephone expenses, company eventsChief Executive Officer in connection with negotiation of his offer letter with us; and a holiday present.severance paid to our former Chief Financial Officer in connection with his resignation in November 2017.
|
Grants ofPlan-Based Awards—2017 Awards—2015 The following table sets forth certain information with respect to non-equity (i.e., cash) incentive awards and equity plan-based awards for our named executive officers for the year ended December 31, 2015.2017. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Award
Type1 | | Grant
Date | | | Estimated Future Payouts under
Non-Equity Incentive Plan Awards2 | | | Estimated Future Payouts under
Equity Incentive Plan Awards3 | | | All Other
Stock
Awards:
Number
of
Shares
of
Stock or
Units
(#) | | | All Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#) | | | Exercise
or Base
Price of
Option
Awards
($) | | | Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)4 | | Name | | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | | | | Anthony Bettencourt | | Cash | | | — | | | | 187,500 | | | | 375,000 | | | | 421,875 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Mark E. Kraynak | | Cash | | | — | | | | 50,000 | | | | 100,000 | | | | 112,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | PRSUs5 | | | 02/03/2015 | | | | — | | | | — | | | | — | | | | 650 | | | | 13,338 | | | | 26,000 | | | | — | | | | — | | | | — | | | | 1,107,080 | | Sunil D. Nagdev | | Cash | | | — | | | | 49,500 | | | | 99,000 | | | | 111,375 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | RSUs6 | | | 02/03/2015 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 40,000 | | | | — | | | | — | | | | 1,703,200 | | | | Options7 | | | 02/03/2015 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 40,000 | | | $ | 42.58 | | | | 828,048 | | Terrence J. Schmid | | Cash | | | — | | | | 80,850 | | | | 161,700 | | | | 181,912 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | PRSUs5 | | | 02/03/2015 | | | | — | | | | — | | | | — | | | | 650 | | | | 13,338 | | | | 26,000 | | | | — | | | | — | | | | — | | | | 1,107,080 | | Amichai Shulman | | Cash | | | — | | | | 24,598 | | | | 49,196 | | | | 55,345 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | PRSUs5 | | | 02/03/2015 | | | | — | | | | — | | | | — | | | | 650 | | | | 10,260 | | | | 20,000 | | | | — | | | | — | | | | — | | | | 851,600 | |
| | | | | | Estimated Future Payouts under Non-Equity Incentive Plan Awards2 | | Estimated Future Payouts under Equity Incentive Plan Awards3 | | All Other Stock Awards: Number of Shares | | Grant Date Fair | | Name | Award Type1 | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | of Stock or Units (#) | | Value of Stock Awards ($)4 | | Christopher | Cash5 | | | — | | | — | | | 440,000 | | 506,000 | | | — | | | — | | | — | | | — | | | — | | Hylen | RSUs6 | | 08/18/2017 | | | — | | | — | | — | | | — | | | — | | | — | | | 101,200 | | | 4,498,340 | | Trâm Phi | Cash | | | — | | | 72,500 | | | 145,000 | | 166,750 | | | — | | | — | | | — | | | — | | | — | | | RSUs7 | | 02/06/2017 | | | — | | | — | | — | | | — | | | — | | | — | | | 8,700 | | | 364,095 | | | PRSUs8 | | 02/06/2017 | | | — | | | — | | — | | | 217 | | | 8,700 | | | 17,400 | | | | | | 728,190 | | | RSUs9 | | 04/25/2017 | | | — | | | — | | — | | | — | | | — | | | — | | | 3,500 | | | 152,250 | | | PRSUs10 | | 04/25/2017 | | | — | | | — | | — | | | 875 | | | 3,500 | | | 7,000 | | | | | | 304,500 | | Sunil | Cash11 | | | — | | | 108,875 | | | 217,750 | | 250,412 | | | — | | | — | | | — | | | — | | | — | | Nagdev | RSUs7 | | | 02/06/2017 | | | — | | | — | | — | | | — | | | — | | | — | | | 12,500 | | | 523,125 | | | PRSUs8 | | | 02/06/2017 | | | — | | | — | | — | | | 312 | | | 12,500 | | | 25,000 | | | | | | 1,046,250 | | | RSUs9 | | | 04/25/2017 | | | — | | | — | | — | | | — | | | — | | | — | | | 7,000 | | | 304,500 | | | PRSUs10 | | | 04/25/2017 | | | — | | | — | | — | | | 175 | | | 7,000 | | | 14,000 | | | | | | 609,000 | | Anthony | Cash12 | | | — | | | 172,500 | | | 345,000 | | 396,753 | | | — | | | — | | | — | | | — | | | — | | Bettencourt | RSUs7 | | | 02/06/2017 | | | — | | | — | | — | | | — | | | — | | | — | | | 41,400 | | | 1,732,590 | | | PRSUs8 | | | 02/06/2017 | | | — | | | — | | — | | | 1,560 | | | 62,400 | | | 124,800 | | | | | | 5,222,880 | | Terrence | Cash | | | — | | | 99,000 | | | 198,000 | | 227,700 | | | — | | | — | | | — | | | — | | | — | | Schmid | RSUs7 | | 02/06/2017 | | | — | | | — | | — | | | — | | | — | | | — | | | 14,900 | | | 623,565 | | | PRSUs8 | | 02/06/2017 | | | — | | | — | | — | | | 372 | | | 14,900 | | | 29,800 | | | | | | 1,247,130 | | Michael | Cash | | | — | | | 167,500 | | | 335,000 | | 385,250 | | | — | | | — | | | — | | | — | | | — | | | RSUs7 | | 02/06/2017 | | | — | | | — | | — | | | — | | | — | | | — | | | 18,900 | | | 790,965 | | | PRSUs8 | | 02/06/2017 | | | — | | | — | | — | | | 472 | | | 18,900 | | | 37,800 | | | | | | 1,581,930 | | Aaron Kuan | Cash13 | | | — | | | 44,210 | | | 88,419 | | 101,682 | | | — | | | — | | | — | | | — | | | — | | | RSUs7 | | | 02/06/2017 | | | — | | | — | | — | | | — | | | — | | | — | | | 6,000 | | | 251,100 | |
1 | “Cash” refers to payouts under the cash bonus plan in our 20152017 Senior Management Bonus Plan. “PRSUs” refers to payouts under the equity bonus plan described in our 20152017 Senior Management Bonus Plan with individual PRSU grants made pursuant to the Imperva 2011 Stock Option and Incentive Plan. |
2 | Represents the range of possible payouts under the cash bonus plan in our 20152017 Senior Management Bonus Plan. Cash bonuses are payable only upon Imperva’s achievement of at least 85% of itsthe quarterly revenue target in the annual operating plan for 20152017 and no determination by the compensation committee to reduce the bonus amount in the event Imperva is not able to substantially meet the margin or operating expense targets in the annual operating plan for 20152017 (together, the “Threshold”). The actual amounts awarded to our named executive officersNEOs are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
3 | Represents the range of possible PRSU awards under the equity bonus plan described in our 20152017 Senior Management Bonus Plan and granted pursuant to the Imperva 2011 Stock Option and Incentive Plan. PRSUs are earned only upon Imperva’s achievement of (i) at least 80%$112 million in annual contract value of the product and subscription bookings target in the annual operating plan for 20152017 and (ii) annual operating expenses at 110% or less of the annual operating plan target for 20152017 (together, the “Threshold”). The performance targets for the PRSUs wereWe achieved at the maximum level$128.4 million in 2015. As a result, the maximum numberannual contract value of shares subject tosubscription bookings such that the PRSUs were earned by our executive officers.at approximately 58% of target levels in 2017. |
4 | The grant date fair value of each equity award is computed in accordance with FASB ASC 718. For the PRSUs the amounts shown assume the highest level of performance would be achieved with respect to the performance conditions. |
5 | Assuming achievementMr. Hylen was appointed as our President and Chief Executive Officer on August 15, 2017. His target cash bonus amount for 2017 was guaranteed at a minimum of 100%, prorated for the Threshold discussed in footnote 3 above, these PRSUsportion of 2017 that he is employed by us. |
6 | These RSUs vest over one yearfour years as follows: 25% of the sharesRSUs vest on Februaryone year following August 15, 2016,2017, with the remaining 75% vesting in equal quarterly installments over the next three quarters.years. |
67
| These RSUs vest over four years as follows: 25% of the RSUs vest one year following February 15, 2015,2017, with the remaining 75% vesting in equal quarterly installments over the next three years. |
78
| These optionsAssuming achievement of the Threshold discussed in footnote 3 above, these PRSUs vest over fourtwo years as follows: 25%12.5% of the shares vest one year following December 29, 2014,on February 15, 2018, with the remaining 75%remainder vesting in equal quarterly12.5% installments over the next three years.seven quarters. |
9 | These RSUs are subject to the same vesting terms as the RSUs granted in February 2017, but the time-based vesting commences one quarter later (i.e., May 15, 2017). |
10 | These PRSUs are subject to the same vesting terms as the PRSUs granted in February 2017, but the time-based vesting commences one quarter later (i.e., May 15, 2017). |
11 | Represents Mr. Nagdev’s possible payouts under the cash bonus plan in our 2017 Senior Management Bonus Plan following the increase to his target bonus from 50% to 65% of annual base salary in connection with his promotion to the role of Senior Vice President and General Manager, Products. Actual payment will be prorated for the portion of 2017 that he served in this role. |
12 | Represents Mr. Bettencourt’s possible payouts under the cash bonus plan in our 2017 Senior Management Bonus Plan as of December 31, 2017. When Mr. Bettencourt resigned as our President and Chief Executive Officer and was appointed as our Vice President of Customer Engagement in August 2017, his target bonus decreased from 100% to 50% of his base salary, and his base salary decreased from $460,000 to $345,000. The amounts he earned were prorated for the portions of 2017 that he served in the respective roles. |
13 | Represents Mr. Kuan’s possible payouts under the cash bonus plan in our 2017 Senior Management Bonus Plan following the increase to his target bonus from 26% to 35% of annual base salary in connection with his appointment as Interim Chief Financial Officer. Actual payment will be prorated for the portion of 2017 that he served in this role. |
Outstanding Equity Awards at Year End The following table sets forth certain information with respect to equity awards previously granted to our named executive officers that were outstanding as of December 31, 2015.2017. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Name | | Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)1 | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)1 | | | Market Value
of Shares or
Units of
Stock
That
Have Not
Vested
(#)2 | | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights that
Have not
Vested
($)2 | | Anthony Bettencourt | | | 57,812 | | | | 182,188 | 3 | | | 29.25 | | | | 08/19/2024 | | | | — | | | | — | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | 198,750 | 4 | | | 12,582,862 | | | | — | | | | — | | Mark E. Kraynak | | | 5,000 | | | | — | | | | 5.42 | | | | 03/02/2021 | | | | — | | | | — | | | | — | | | | — | | | | | 6,250 | | | | — | | | | 32.79 | | | | 02/07/2022 | | | | — | | | | — | | | | — | | | | — | | | | | 11,250 | | | | 3,750 | 5 | | | 28.57 | | | | 07/15/2022 | | | | — | | | | — | | | | — | | | | — | | | | | 9,313 | | | | 4,687 | 6 | | | 34.55 | | | | 02/04/2023 | | | | — | | | | — | | | | — | | | | — | | | | | 1,500 | | | | 13,500 | 7 | | | 54.66 | | | | 02/03/2024 | | | | — | | | | — | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | 5,000 | 8 | | | 316,550 | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | 4,687 | 9 | | | 296,734 | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | 13,500 | 10 | | | 854,685 | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,000 | 16 | | | 1,646,060 | | Sunil D. Nagdev | | | 10,000 | | | | 30,000 | 11 | | | 42.58 | | | | 02/02/2025 | | | | — | | | | — | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | 40,000 | 12 | | | 2,532,400 | | | | — | | | | — | | Terrence J. Schmid | | | — | | | | 4,687 | 6 | | | 34.55 | | | | 02/04/2023 | | | | — | | | | — | | | | — | | | | — | | | | | — | | | | 30,000 | 13 | | | 54.66 | | | | 02/03/2024 | | | | — | | | | — | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | 4,687 | 9 | | | 296,734 | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | 30,000 | 14 | | | 1,899,300 | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,000 | 16 | | | 1,646,060 | | Amichai Shulman | | | — | | | | 1,875 | 15 | | | 32.79 | | | | 02/07/2022 | | | | — | | | | — | | | | — | | | | — | | | | | — | | | | 4,687 | 6 | | | 34.55 | | | | 02/04/2023 | | | | — | | | | — | | | | — | | | | — | | | | | 7,000 | | | | 9,000 | 7 | | | 54.66 | | | | 02/03/2024 | | | | — | | | | — | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | 4,687 | 9 | | | 296,734 | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | 9,000 | 10 | | | 596,790 | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 20,000 | 16 | | | 1,266,200 | |
| | Option Awards | | | Stock Awards | | Name | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#)1 | | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#)1 | | | | Market Value of Shares or Units of Stock That Have Not Vested ($)2 | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have not Vested ($)2 | | Christopher Hylen | | | — | | | | — | | | | | — | | | — | | | | 101,2003 | | | | | 4,017,640 | | | | — | | | | | — | | Trâm Phi | | | 15,000 | | | | — | | | | | 34.55 | | | 02/04/2023 | | | | — | | | | | — | | | | — | | | | | — | | | | | 15,000 | | | | 1,0004 | | | | | 54.66 | | | 02/03/2024 | | | | — | | | | | — | | | | — | | | | | — | | | | | 58,970 | | | | — | | | | | 10.70 | | | 08/24/2021 | | | | — | | | | | — | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 1,0005 | | | | | 39,700 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 6,1326 | | | | | 243,440 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 2,0636 | | | | | 81,901 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 8,7007 | | | | | 345,390 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 3,5007 | | | | | 138,950 | | | | | | | | | | | | | | — | | | | — | | | | | — | | | — | | | | — | | | | | — | | | | 7,1328 | | | | | 283,141 | | Sunil Nagdev | | | 30,000 | | | | 10,0009 | | | | | 42.58 | | | 02/02/2025 | | | | — | | | | | — | | | | — | | | | | — | |
| | | — | | | | — | | | | | — | | | — | | | | 12,50010 | | | | | 496,250 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 3,3756 | | | | | 133,987 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 1,1366 | | | | | 45,099 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 12,5007 | | | | | 496,250 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | — | | | | | — | | | | 11,3998 | | | | | 452,541 | | Anthony | | | 35,312 | | | | 49,68811 | | | | | 29.25 | | | 08/19/2024 | | | | — | | | | | — | | | | — | | | | | — | | Bettencourt | | | — | | | | — | | | | | — | | | — | | | | 66,25012 | | | | | 2,630,125 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | | — | | | | 20,1386 | | | | | 799,479 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | | — | | | | 6,7776 | | | | | 269,047 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | | — | | | | 36,4798 | | | | | 1,448,217 | | Terrence Schmid | | | 856 | | | | — | | | | | 34.55 | | | | 02/04/2023 | | | | — | | | | | — | | | | — | | | | | — | | | | | 2,125 | | | | — | | | | | 54.66 | | | | 02/03/2024 | | | | — | | | | | — | | | | — | | | | | — | | Michael Mooney | | | 6,250 | | | | 12,50013 | | | | | 29.10 | | | 10/07/2024 | | | | — | | | | | — | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | | — | | | | 12,50012 | | | | | 496,250 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | | — | | | | 9,0006 | | | | | 357,300 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | | — | | | | 3,0296 | | | | | 120,251 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | | — | | | | — | | | | | — | | | | 11,0488 | | | | | 438,606 | | Aaron Kuan | | | 4,969 | | | | 3314 | | | | | 54.66 | | | 02/03/2024 | | | | — | | | | | — | | | | — | | | | | — | | | | | 1,718 | | | | 78214 | | | | | 42.58 | | | 02/02/2025 | | | | — | | | | | — | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 3315 | | | | | 13,141 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 78210 | | | | | 31,045 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 2,8696 | | | | | 113,899 | | | | — | | | | | — | | | | | — | | | | — | | | | | — | | | — | | | | 6,0007 | | | | | 238,200 | | | | — | | | | | — | |
1 | Unless otherwise indicated, these options and RSUs vest over four years as follows: 25% of the shares vest one year following the vesting commencement date (as noted below), with the remaining 75% vesting in equal quarterly installments over the next three years. |
2 | The closing price of our common stock as of December 31, 201529, 2017 was $63.31$39.70 per share. |
3 | The vesting commencement date of this option is August 19, 2014. |
4 | The vesting commencement date of this RSU is NovemberAugust 15, 2014.2017. |
54
| The vesting commencement date of this option is July 1, 2012. |
6 | The vesting commencement date of this option is January 1, 2013.2015. |
75
| The vesting commencement date of this option is January 1, 2014. |
8 | The vesting commencement date of this RSU is November 15, 2012. |
9 | The vesting commencement date of this RSU is February 15, 2013. |
10 | The vesting commencement date of this RSU is February 15, 2014. |
11 | The vesting commencement date of this option is December 29, 2014. |
12 | The vesting commencement date of this RSU is February 15, 2015. |
136
| The vesting commencement date of this option is January 1, 2014. This option vests over four years as follows: 50% of the shares vest two years following the vesting commencement date, with the remaining 50% vesting in equal quarterly installments over the next two years. |
14 | The vesting commencement date of this RSU is February 15, 2014. This restricted stock unit vests over four years as follows: 50% of the shares vest two years following the vesting commencement date, with the remaining 50% vesting in equal quarterly installments over the next two years.2017. |
157
| The vesting commencement date of this optionRSU is January 1, 2012.February 15, 2017. |
168
| Represents PRSUs granted to the named executive officer in 20152017 at the maximumactual achievement level.level of approximately 58% of target. See “Compensation Discussion and Analysis-Equity Awards under Our Equity Incentive Bonus Plan” and footnote 3 to the Grant of Plan Based Awards Table for additional information about the performance conditions for the period ended December 31, 2015.2017. Once earned, the PRSUs vest over one yeartwo years as follows: 25%12.5% of the shares vest on February 15, 2016,2018, with the remaining 75%remainder vesting quarterly in equal quarterly12.5% installments over the next threeseven quarters. The unearned PRSUs were forfeited. |
9 | The vesting commencement date of this option is December 29, 2015. |
10 | The vesting commencement date of this RSU is February 15, 2016. |
11 | The vesting commencement date of this option is August 18, 2015. |
12 | The vesting commencement date of this RSU is November 15, 2015. |
13 | The vesting commencement date of this option is October 1, 2015. |
14 | The vesting commencement date of this option is January 1, 2016. |
Option Exercises and Stock Vested—20152017 The following table sets forth certain information with respect to options that were exercised and stock that vested during the fiscal year endingended December 31, 20152017 with respect to our named executive officers. | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Name | | Number of Shares
Acquired on
Exercise
(#) | | | Value
Realized on
Exercise
($)1 | | | Number of Shares
Acquired on
Vesting
(#)2 | | | Value
Realized on
Vesting
($)3 | | Anthony Bettencourt | | | 25,000 | | | | 1,001,987 | | | | 66,250 | | | | 4,636,175 | | Mark E. Kraynak | | | 10,000 | | | | 223,510 | | | | 25,500 | | | | 1,399,007 | | Sunil D. Nagdev | | | — | | | | — | | | | — | | | | — | | Terrence J. Schmid | | | 16,750 | | | | 628,641 | | | | 3,750 | | | | 225,015 | | Amichai Shulman | | | 17,813 | | | | 392,931 | | | | 20,750 | | | | 1,026,235 | |
| | Option Awards | | | Stock Awards | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)1 | | | Number of Shares Acquired on Vesting (#)2 | | | Value Realized on Vesting ($)3 | | Christopher Hylen | | | — | | | | — | | | | — | | | | — | | Trâm Phi | | | — | | | | — | | | | 11,768 | | | | 531,080 | | Sunil Nagdev | | | — | | | | — | | | | 13,760 | | | | 617,909 | | Anthony Bettencourt | | | 130,000 | | | | 1,969,724 | | | | 88,688 | | | | 3,981,948 | | Terrence Schmid | | | — | | | | — | | | | 18,590 | | | | 837,998 | | Michael Mooney | | | 31,250 | | | | 575,206 | | | | 22,528 | | | | 1,013,154 | | Aaron Kuan | | | 14,359 | | | | 194,199 | | | | 4,243 | | | | 191,406 | |
1 | The value realized on exercise of stock options for each named executive officerNEO is calculated by: (a) subtracting the option exercise price from the average sales price per share obtained by the named executive officerNEO on the date of exercise to determine the realized value per share, (b) multiplying the realized value per share by the number of shares underlying the options exercised, and (c) aggregating the value realized for all options exercised during the year ended December 31, 2015.2017. |
2 | Represents the total number shares of common stock issuable upon settlement of vested RSUs during the year ended December 31, 2015.2017. The amount does not represent the number of shares actually received by each named executive officer,NEO, as a portion of the shares was withheld by Imperva to satisfy the named executive officer’sNEO’s tax withholding obligations. |
3 | The value realized on vesting of RSUs for each named executive officerNEO is calculated by: (a) multiplying the number of RSUs vested by the closing price of Imperva common stock on trading day prior to the vest date and (b) aggregating the value realized upon vesting for all RSUs that vested during the year ended December 31, 2015.2017. The value realized on vesting does not reflect the actual value received by each named executive officerNEO because a portion of the shares were withheld by Imperva to satisfy the named executive officer’sNEO’s tax withholding obligations. |
Chief Executive Officer Pay Ratio Our ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our employees (excluding our CEO) for 2017 is 37 to 1. We believe this ratio, which was calculated in a manner consistent with Item 402(u) of Regulation S-K, to be a reasonable estimate, based upon the assumptions and adjustments described below. The annual total compensation for 2017 for our CEO was $5,638,340. Mr. Hylen commenced services as our CEO in August 2017. Accordingly and as permitted by Item 402(u), we annualized his base salary and target cash incentive as reported in the 2017 Summary Compensation Table, as discussed further below. The median of the annual total compensation for 2017 for all our median employee was $154,243. In identifying the median employee under Item 402(u), reporting companies are permitted to use reasonable estimates, assumptions, and methodologies based on their own facts and circumstances. As a result, the disclosure regarding the compensation of our median employee may not be directly comparable to similar disclosure by other reporting companies. Calculation Methodology We identified the employee with compensation at the median of the compensation of all of our employees (the “median employee”) by considering our employee population as of October 1, 2017 (the “employee population determination date”). We considered all individuals, excluding our CEO, who were employed by us on a world-wide basis (including our consolidated subsidiaries) on the employee population determination date, whether employed on a full-time, part-time, seasonal or temporary basis, including employees on a partial year leave of absence, and independent contractors directly retained by us, subject to the application of the “de minimis” exemption as described below.
The de minimis exemption allows us to exclude up to 5% of our total employees who are non-U.S. employees. Our total number of employees, including U.S. and non-U.S. employees as of the employee population determination date, was 1,069, and we used this number to calculate the maximum number of employees excludable under the de minimis exemption. Accordingly, in identifying the median employee, we used the de minimis exemption to exclude the following numbers of employees who are employed in the following countries: Argentina (2), Brazil (4), Colombia (2), Hong Kong (3), India (3), South Korea (2), Taiwan (3), the Netherlands (2), Germany (5), Italy (2), Poland (4), Russia (2), South Africa (2), Spain (3), Switzerland (1), Turkey (2) and the UAE (3). The compensation measures used for purposes of identifying the median employee included the following: (x) cash compensation paid between January 1, 2017 and September 30, 2017, including, as applicable, salary or wages plus overtime, commissions, cash bonuses, commuter allowances and cash contributions to social benefits in certain foreign jurisdictions and (y) the grant date fair value of equity awards granted between January 1, 2017 and September 30, 2017, calculated in each case using the same methodology we use for calculating the compensation, including the value of equity awards, of our named executive officers to be reported in our Summary Compensation Table. The equity awards included in this calculation include all new hire and “refresh” equity awards granted in 2017 to our employees who were employed as of the employee population determination date. The cash compensation paid during the period between January 1, 2017 and September 1, 2017, as described above, was annualized to estimate compensation paid for a full twelve-month period, including our cash bonuses that are paid quarterly. For employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars using foreign exchange rates in effect on the employee population determination date. We did not make any cost-of-living adjustments for employees outside of the United States. For employees hired between January 1, 2017 and the employee population determination date, we calculated their cash compensation described above as if they had been employed for the entire measurement period. We believe our methodology represents a consistently applied compensation measure that strikes a balance in terms of administrative burden while consistently treating all the primary compensation components for our worldwide employee population. Using this methodology, we identified the median employee who was in the support department and based in the United States. We calculated the annual total compensation for the median employee using the same methodology we use to calculate the amount reported for our named executive officers in the “Total” column of the Summary Compensation Table. During 2017, Anthony Bettencourt served as our President and CEO from January 1, 2017 through August 15, 2017, at which time Christopher Hylen was appointed our President and CEO. As permitted by the SEC rules, we used the annual total compensation of Mr. Hylen, who was serving as our CEO on our employee population determination date, to calculate the required ratio. If we did not annualize Mr. Hylen’s base salary and target cash incentive, and instead used the amounts as reported in the 2017 Summary Compensation Table, it results in an annual total compensation of $5,094,625 or a pay ratio of 33 to 1. Please see the “Compensation Discussion & Analysis” of this proxy statement for additional discussion of Mr. Hylen’s compensation. 401(k) Savings Plan We have established a 401(k) plan to allow our employees to save on atax-favorable basis for their retirement. We do not match any contributions made by any employees, including our named executive officers,NEOs, pursuant to the plan. Pension Benefits None of our named executive officersNEOs participate in or have account balances in pension benefit plans sponsored by us. Non-Qualified Defined Contribution and OtherNon-Qualified Defined Compensation Plans None of our named executive officersNEOs participate in or have account balances innon-qualified defined contribution plans or other deferred compensation plans maintained by us.
Proprietary Information and Invention Agreements Each of our named executive officersNEOs has also entered into a standard form agreement with respect to proprietary information and inventions. Among other things, this agreement obligates each named executive officerNEO to refrain from disclosing any of our proprietary information received during the course of employment and, with some exceptions, to assign to us any inventions conceived or developed during the course of employment. Employment, Severance and Change in Control Agreements Change in Control Plan. We consider it essential to the best interests of our stockholders to foster the continuous employment of our key management personnel. In this regard, we recognize that the possibility of a change in control may exist and that the uncertainty and questions that it may raise among executives could result in the departure or distraction of executives to the detriment of the company and our stockholders. In 2012, our compensation committee adopted a Change in Control Plan in order to eliminate all single trigger acceleration provisions and harmonize the change in control provisions across all executive officers who are subject to the reporting requirements of Section 16 of the Exchange Act. As of December 31, 2017, the eligible participants were: Messrs. Hylen, Mooney, Nagdev and to eliminate all single trigger acceleration provisions.Kuan and Ms. Phi. Under the Change in Control Plan, in the event of a qualifying termination in connection with a Change in Control (as defined below) and contingent upon the participant’s execution of a binding severance and release agreement (which includes customary release, covenantnot-to-sue,non-disparagement,non-solicitation and proprietary information provisions), the participant will be entitled to receive (1) a lump sum cash payment in an amount equal to such participant’s annual base salary as in effect immediately prior to the severancetermination date, plus such participant’s target annual bonus or cash incentive opportunity for the year in which the severancetermination date occurs, less applicable withholding taxes; (2) full acceleration of all outstanding equity awards (subject to the provisions of the 2011 Plan and certain restrictions noted in the Change in Control Plan); and (3) reimbursement of premiums paid for continuation coverage for twelve months pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA. A qualifying termination will be deemed to have occurred if the executive officer is terminated within the three months prior to a potential Change in Control or twelve months following a Change in Control and such termination is by Imperva (or the acquiring company) without Cause (as defined below) or by the executive officer for Good Reason (as defined below). “Cause”For purposes of our Change in Control Plan (and our Severance Plan, as noted below), “Cause” will be deemed to exist upon the occurrence of any of the following:
any willful, material violation by the executive officer of any law or regulation applicable to the business of Imperva, the executive officer’s conviction for, or guilty plea to, a felony or a crime involving moral turpitude, or any willful perpetration by the executive officer of a common law fraud; the executive officer’s commission of an act of personal dishonesty which involves personal profit in connection with Imperva or any other entity having a business relationship with Imperva; any material breach by the executive officer of any provision of any agreement or understanding between Imperva and the executive officer regarding the terms of the executive officer’s service as an employee, officer, director or consultant to Imperva, including without limitation the willful and continued failure or refusal of the executive officer to perform the material duties required of such executive officer as an employee, officer, director or consultant of Imperva, other than as a result of having a disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between Imperva and the executive officer; | continued failure or refusal of the executive officer to perform the material duties required of such executive officer as an employee, officer, director or consultant of Imperva, other than as a result of having a disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between Imperva and the executive officer;
|
the executive officer’s disregard of the policies of Imperva so as to cause loss, damage or injury to the property, reputation or employees of Imperva;
| • | failure by the executive officer to substantially perform, or gross negligence in the performance of the executive officer’s duties after there has been delivered to the executive officer written demand for performance which describes the specific deficiencies in the executive officer’s performance and the specific manner in which performance must be improved, and which provides 30 days from the date of notice to remedy performance deficiencies subject to remedy; or |
failure by the executive officer to substantially perform, or gross negligence in the performance of the executive officer’s duties after there has been delivered to the executive officer written demand for performance which describes the specific deficiencies in the executive officer’s performance and the specific manner in which performance must be improved, and which provides 30 days from the date of notice to remedy performance deficiencies subject to remedy; or
any other misconduct by the executive officer which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, Imperva. AFor purposes of our Change in Control Plan, a “Change in Control” will be deemed to have occurred if any one of the following events shall have occurred:
any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)) or group becomes the “beneficial owner” (as defined in Rule13d-3 of the Exchange Act), directly or indirectly, of securities of the company representing 50% or more of the total voting power represented by the company’sour then-outstanding voting securities; the consummation of the sale or disposition by the company of all or substantially all of the company’sour assets; the consummation of a merger, reorganization, consolidation or similar transaction or series of related transactions of the company with any other corporation, other than a merger or consolidation which would result in the voting securities of the company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least a majority of the total voting power represented by the voting securities of the company or such surviving entity or its parent outstanding immediately after such merger, reorganization, consolidation or similar transaction (or series of related transactions); or any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Tax Code wherein the stockholders of the company give up all of their equity interest in the company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the company). “GoodFor purposes of our Change in Control Plan, “Good Reason” will be deemed to exist upon the occurrence, without the affected executive officer’s written consent, of any of the following:
a material diminution in the executive officer’s authority, duties and responsibilities or, solely with respect to Imperva’s Chief Executive Officer, Chief Financial Officer and General Counsel, a change in the executive officer’s title; a material diminution in the executive officer’s annual base salary, annual bonus opportunity, orlong-term incentive opportunity; any action or inaction that constitutes a material breach by Imperva of this Agreement;the applicable employment agreement between Imperva and the affected executive officer; or a material change (defined for this purpose to mean a change greater than 30 miles from the executive officer’s current principal place of employment) in the geographic location of the executive officer’s principal place of employment. The Change in Control Plan will terminate automatically one year and one day after the Change in Control, or if later, when all benefits payable under the Plan are paid. In order to be eligible to participate in the Change in Control Plan, the participant must opt in to the Change in Control Plan and waive any existing severance arrangement that would be triggered by a Change in Control or similar transaction. Severance Plan. On August 8, 2017, our compensation committee adopted a Severance Plan for designated members of the senior management team, including the following NEOs: Messrs. Mooney, Nagdev and Schmid, and Ms. Phi. None of our other NEOs participate in our Severance Plan. The compensation committee adopted this Severance Plan in order to retain qualified key employees that have alternatives that may otherwise appear to them to be less risky than would be staying with the company absent the adoption of the Severance Plan. Under this Severance Plan, in the event of a termination of employment by us for any reason other than Cause (as defined above with respect to our Change in Control Plan) or by the participant with Good Reason (as defined below) the participant will be entitled to receive (1) a lump-sum cash payment in an amount equal to such participant’s annual
base salary as in effect immediately prior to the termination date less applicable withholding taxes; (2) one year of acceleration of all outstanding equity awards, with any award subject to performance criteria for which the applicable performance period is then on-going deemed to have been performed at the target level of achievement for such equity award, (3) a one-year post-termination stock option exercise period on all outstanding stock options, and (4) reimbursement of premiums paid for health care continuation coverage for one year pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985. In the event of a Change in Control (as defined in the Severance Plan, which definition is substantially similar, but not identical, to the definition of Change in Control in the Change in Control Plan), the Severance Plan will terminate and the terms of the Change in Control Plan will instead apply in the event of a qualifying termination. A participant’s right to receive benefits under the Severance Plan is contingent upon the participant’s timely execution of a binding severance and release agreement. For purposes of our Severance Plan, “Good Reason” will be deemed to exist upon the occurrence, without the affected executive officer’s written consent, of any of the following: a material diminution in the executive officer’s annual base salary, annual bonus opportunity, or long-term incentive opportunity; any action or inaction that constitutes a material breach by Imperva of the applicable employment agreement between Imperva and the affected executive officer; or a material change (defined for this purpose to mean a change greater than 30 miles from the executive officer’s current principal place of employment) in the geographic location of the executive officer’s principal place of employment. The Severance Plan terminates on August 15, 2018 (or upon an earlier Change in Control). Mr. Hylen does not (and Messrs. Bettencourt and Kuan did not) participate in this Severance Plan. Current Chief Executive Officer Employment Offer Letter. Mr. Hylen participates in the Change in Control Plan on the terms described above. In addition, pursuant to the terms of Mr. Hylen’s employment offer letter with us, in the event of a Change in Control (as defined in the Change in Control Plan) prior to the grant of the PRSUs referenced in Mr. Hylen’s employment offer letter, and provided he is still employed by us at the closing of the Change in Control (or in the event of Mr. Hylen’s termination of employment without Cause (as defined in the Change in Control Plan) or resignation for Good Reason (as defined in the Change in Control Plan) within three months prior to the Change in Control), we will provide Mr. Hylen a lump-sum cash payment equal to $4.9 million upon the closing of such Change in Control in lieu granting such PRSUs. This payment in lieu of PRSUs was included in his employment offer letter as the PRSU would not be granted during 2017 because Mr. Hylen commenced employment in the third quarter of 2017 when the 2017 PRSU performance period was already substantially complete. As a result, the PRSU would not be covered by the Change in Control Plan in the event of a Change in Control before it is granted in early 2018. Accordingly, we agreed to provide him with the lump sum payment to provide him with benefits comparable to those of our executive officers who participate in the Change in Control Plan in the event of a Change in Control before the PRSU could be granted, and to induce Mr. Hylen to join Imperva. The $4.9 million amount represents the approximate value of 110,190 shares, the target number of PRSUs, based upon an approximate average trading price for several days prior to the date Mr. Hylen entered into his employment offer letter with us. Mr. Hylen’s right to receive these benefits was contingent upon Mr. Hylen’s timely execution of a binding severance and release agreement. The PRSUs were granted to Mr. Hylen in February 2018. Accordingly, he is no longer eligible for, and we are under no obligation to pay, the $4.9 million cash payment in lieu of the PRSUs. In addition, pursuant to Mr. Hylen’s employment offer letter with us, in event of his termination of employment by us for any reason other than Cause or his resignation for Good Reason within twenty-four months of the commencement of Mr. Hylen’s employment outside of the context of a Change in Control, Mr. Hylen will be entitled to receive (1) a lump sum cash payment in an amount equal to Mr. Hylen’s annual base salary as in effect immediately prior to the termination date; (2) twelve months’ acceleration of all outstanding equity awards, with any award subject to performance criteria for which the applicable performance period is then on-going also deemed to have been performed at the target level of achievement for such equity award; and (3) health care continuation coverage for twelve months pursuant to COBRA paid for by the company, contingent upon Mr. Hylen’s timely execution of a binding severance and release agreement. This provision shall not apply to a termination with respect to which the company’s Change in Control Plan applies.
Former Chief Financial Officer. In connection with Mr. Schmid’s resignation as our Chief Financial Officer on November 15, 2017, Mr. Schmid entered into a separation agreement with us that provided for (1) a lump-sum cash payment in an amount equal to Mr. Schmid’s annual base salary, as in effect immediately prior to his resignation, (2) a cash bonus in the amount of $198,000, plus (3) twelve months of reimbursement of COBRA premiums, in exchange for a customary release of claims by Mr. Schmid in favor of the company. Former Chief Executive Officer. Following his transition from President and Chief Executive Officer to Vice President of Customer Engagement, Mr. Bettencourt ceased to be eligible to participate in our Change in Control Plan, and he did not participate in our Severance Plan. Potential Payments Upon Termination or Change in Control The tables below reflect potential payments and benefits available for each of our named executive officersNEOs upon termination in connection with a change in control or termination, assuming the date of occurrence is December 31, 20152017 and reflects payments and benefits that are provided in the Change in Control Plan.Plan, the Severance Plan and Mr. Hylen’s employment offer letter. See “Executive Compensation—Employment, Severance and Change in Control Agreements.” Named Executive Officer Cash Benefits and Payments upon Termination1 Name | | Termination ($)2 | | | Involuntary Termination within One Year of Change in Control ($)3 | | Christopher Hylen | | | 466,679 | | | | 5,806,679 | | Trâm Phi | | | 322,672 | | | | 467,672 | | Sunil Nagdev | | | 356,973 | | | | 574,723 | | Anthony Bettencourt4 | | | — | | | | — | | Michael Mooney | | | 361,679 | | | | 696,679 | | Aaron Kuan | | | — | | | | 360,942 | |
| | | | | | | | | Name1
| | Termination2 | | | Involuntary Termination
within
One Year of Change in
Control
($)3 | | Anthony Bettencourt
| | | — | | | | 774,857 | | Mark E. Kraynak
| | | — | | | | 473,147 | | Sunil D. Nagdev
| | | — | | | | 377,506 | | Terrence J. Schmid
| | | — | | | | 478,847 | | Amichai Shulman4
| | | — | | | | 251,154 | |
1 | Assumes triggering event effective as of December 31, 2015.2017. Upon a voluntary termination or termination for cause, each named executive officer also would receiveNEO receives any earned but unpaid base salary and unpaid vacation accrued as of December 31, 2015.2017. These payments would be available to all employees upon termination. |
2 | None of our executive officers is entitled to single trigger separation payments.For Messrs. Mooney and Nagdev and Ms. Phi includes payments due under the Severance Plan. For Mr. Hylen, includes payments due under his employment offer letter. Messrs. Kuan and Bettencourt did not participate in the Severance Plan. |
3 | IncludesFor Messrs. Hylen, Kuan, Mooney and Nagdev and Ms. Phi, includes a lump sum payment equal to base salary for twelve months, payment of cash bonuses at 20152017 target levels and for all named executive officers other than Mr. Shulman, continuation of COBRA for twelve months under the Change in Control Plan, as detailed in the table below. For Mr. Hylen, it also includes a $4.9 million cash payment since the PRSUs had not yet been granted as of December 31, 2017 under his employment offer letter. The PRSUs were granted in February 2018 and he is no longer eligible for this cash payment. |
4 | Following his transition as President and Chief Executive Officer to Vice President of Customer Engagement, Mr. Bettencourt ceased to be eligible to participate in our Change in Control Plan, and did not participate in our Severance Plan. |
| | | | | | | | | | | | | Name | | Base Salary
($) | | | 2015 Annual Bonus
Target
($) | | | COBRA
($) | | Anthony Bettencourt | | | 375,000 | | | | 375,000 | | | | 24,857 | | Mark E. Kraynak | | | 300,000 | | | | 150,000 | | | | 23,147 | | Sunil D. Nagdev | | | 258,000 | | | | 99,000 | | | | 20,506 | | Terrence J. Schmid | | | 294,000 | | | | 161,700 | | | | 23,147 | | Amichai Shulman4 | | | 202,041 | | | | 49,113 | | | | N/A | |
Name | | Base Salary ($) | | | 2017 Annual Bonus Target ($) | | | COBRA ($) | | Christopher Hylen | | | 440,000 | | | | 440,000 | | | | 26,680 | | Trâm Phi | | | 290,000 | | | | 145,000 | | | | 32,672 | | Sunil Nagdev | | | 335,000 | | | | 217,750 | | | | 21,973 | | Anthony Bettencourt | | | — | | | | — | | | | — | | Michael Mooney | | | 335,000 | | | | 335,000 | | | | 26,680 | | Aaron Kuan | | | 252,625 | | | | 88,419 | | | | 19,899 | |
4 | Mr. Shulman’s base salary and annual bonus target are paid in Israeli shekels. These amounts were converted to U.S. dollars for the purposes of this disclosure, using the average exchange rate for 2015 of US$1.00 to NIS 3.8941. |
Acceleration of Vesting of Stock Options, RSUs and PRSUs upon Termination1, 2 | | Termination | | | Involuntary Termination within One Year of Change in Control | | Name | | Number of Shares of Accelerated Stock (#) | | | Value of Shares of Accelerated Stock ($) | | | Number of Shares of Accelerated Stock (#) | | | Value of Shares of Accelerated Stock ($) | | Christopher Hylen | | | 31,6253 | | | | 1,255,513 | | | 101,2004 | | | | 4,017,640 | | Trâm Phi | | | 14,2195 | | | | 564,495 | | | 42,4326 | | | | 1,684,550 | | Sunil Nagdev | | | 25,9187 | | | | 1,028,945 | | | 60,8758 | | | | 2,416,738 | | Anthony Bettencourt9 | | | — | | | | — | | | — | | | | — | | Michael Mooney | | | 45,82110 | | | | 1,444,345 | | | 87,80011 | | | | 3,121,910 | | Aaron Kuan | | | — | | | | — | | | 9,98212 | | | | 396,286 | |
| | | | | | | | | | | | | | | | | | | Change in Control21
| | | Involuntary Termination
within One Year of
Change in Control | | Name
| | Number of
Shares of
Accelerated
Stock | | | Value of
Shares of
Accelerated
Stock | | | Number of
Shares of
Accelerated
Stock
(#) | | | Value of
Shares of
Accelerated
Stock
($) | | Anthony Bettencourt
| | | — | | | | — | | | | 380,938 | 3 | | | 18,788,186 | | Mark E. Kraynak
| | | — | | | | — | | | | 71,124 | 4 | | | 3,495,877 | | Sunil D. Nagdev
| | | — | | | | — | | | | 70,000 | 5 | | | 3,154,300 | | Terrence J. Schmid
| | | — | | | | — | | | | 95,374 | 6 | | | 4,236,392 | | Amichai Shulman
| | | — | | | | — | | | | 49,249 | 7 | | | 2,402,597 | |
1 | Assumes a triggering event effective as of December 31, 20152017 and excludes vested stock options held as of such date. The closing price of our common stock as of December 31, 201529, 2017 was $63.31$39.70 per share. |
2 | None of ourCertain named executive officers are participants in the Severance Plan. Under the Severance Plan (summarized above), in the event of a termination of employment by us for any reason other than Cause or by the participant with Good Reason outside of the context of a change in control, the participant will receive one year of acceleration on all outstanding equity awards, with any award subject to performance criteria for which the applicable performance period is entitledthen on-going deemed to single trigger accelerationhave been performed at the target level of vesting ofachievement for such equity awards.award. |
3 | 182,188Pursuant to Mr. Hylen’s offer letter, 31,625 of Mr. Bettencourt’s options and 198,750Hylen’s RSUs would accelerate upon an involuntary termination occurring within 24 months of his employment start date outside of the context of a change in control. |
4 | Pursuant to our Change in Control Plan, 101,200 of Mr. Bettencourt’sHylen’s RSUs would accelerate upon an involuntary termination three months before or within 12 months following a change in control. |
5 | Pursuant to our Severance Plan, 8,844 of Ms. Phi’s RSUs and 5,375 PRSUs would accelerate upon an involuntary termination outside the context of a change of control. The table excludes Ms. Phi’s options with an exercise price of $54.66 per share. |
6 | Pursuant to our Change in Control Plan, 19,332 of Ms. Phi’s RSUs and 23,100 PRSUs, including 12,200 PRSUs that Ms. Phi could have earned at the target achievement level under the 2017 PRSU grant awarded to her, would accelerate upon an involuntary termination three months before or within 12 months following a change in control. The table excludes Ms. Phi’s options with an exercise price of $54.66 per share. |
7 | Pursuant to our Severance Plan, 19,593 of Mr. Nadgev’s RSUs and 6,325 PRSUs would accelerate upon an involuntary termination outside the context of a change of control. The table excludes Mr. Nagdev’s options with an exercise price of $42.58 per share. |
8 | Pursuant to our Change in Control Plan, 35,375 of Mr. Nagdev’s RSUs and 25,500 PRSUs, including 19,500 PRSUs that Mr. Nagdev could have earned at the target achievement level under the 2017 PRSU grant awarded to him, would accelerate upon an involuntary termination three months before or within 12 months following a change in control. The table excludes Mr. Nagdev’s options with an exercise price of $42.58 per share. |
9 | Following his transition from President and Chief Executive Officer to Vice President of Customer Engagement in August 2017, Mr. Bettencourt ceased to be eligible to participate in our Change in Control Plan, and he did not participate in our Severance Plan. |
10 | Pursuant to our Severance Plan, 12,500 of Mr. Mooney’s options, 24,768 of Mr. Mooney’s RSUs and 8,553 PRSUs would accelerate upon an involuntary termination outside the context of a change of control. The exercise price with respect to the options is $29.10 per share. |
11 | Pursuant to our Change in Control Plan, 12,500 of Mr. Mooney’s options, 40,400 of Mr. Mooney’s RSUs and 34,900 PRSUs, including 18,900 PRSUs that Mr. Mooney could have earned at the target achievement level under the 2017 PRSU grant awarded to him, would accelerate upon an involuntary termination three months before or within 12 months following a change in control. The exercise price with respect to the options is $29.25$29.10 per share. |
412
| 21,937Pursuant to our Change in Control Plan, 9,982 of Mr. Kraynak’s options, 23,187 of Mr. Kraynak’s RSUs, and 26,000 PRSUs that Mr. Kraynak could have earned at the maximum achievement level for 2015 company performance conditions would accelerate upon an involuntary termination three months before or within 12 months following a change in control. The exercise price with respect to 3,750 of such options is $28.57 per share. The exercise price with respect to 4,687 of such options is $34.55 per share. The exercise price with respect to 13,500 of such options is $54.66 per share. |
5 | 30,000 of Mr. Nagdev’s options and 40,000 of Mr. Nagdev’sKuan’s RSUs would accelerate upon an involuntary termination three months before or within 12 months following a change in control. The table excludes Mr. Kuan’s options with an exercise price with respect to the options is $42.58 per share.of $42.58. |
6 | 34,687 of Mr. Schmid’s options, 34,687 of Mr. Schmid’s RSUs, and 26,000 PRSUs that Mr. Schmid could have earned at the maximum achievement level for 2015 company performance conditions would accelerate upon an involuntary termination three months before or within 12 months following a change in control. The exercise price with respect to 4,687 of such options is $34.55 per share. The exercise price with respect to 30,000 of such options is $54.66 per share. |
7 | 15,562 of Mr. Shulman’s options, 13,687 of Mr. Shulman’s RSUs, and 20,000 PRSUs that Mr. Shulman could have earned at the maximum achievement level for 2015 company performance conditions would accelerate upon an involuntary termination three months before or within 12 months following a change in control. The exercise price with respect to 1,875 of such options is $32.79 per share. The exercise price with respect to 4,687 of such options is $34.55 per share. The exercise price with respect to 9,000 of such options is $54.66 per share. |
Limitation on Liability and Indemnification Matters Our restated certificate of incorporation (the “certificate of incorporation”) contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for: any breach of the director’s duty of loyalty to us or our stockholders; any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or any transaction from which the director derived an improper personal benefit. Our certificate of incorporation provides that we are required to indemnify our directors and our amended and restated bylaws (the “bylaws”) provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. Any repeal of or modification to our certificate of incorporation or bylaws may not adversely affect any right or protection of a director or officer for or with respect to any acts or omissions of such director or officer occurring prior to such amendment or repeal. Our bylaws also provide that we must advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. We have entered and expect to continue to enter into agreements to indemnify our directors, executive officers and other employees as determined by our board of directors. With certain exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance. The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. For a description of material pending litigation or proceedings involving any of our directors, officers or employees for which indemnification is sought, see “Legal Proceedings” in Part I, Item 3 of our Annual Report on Form 10-K for the year ended December 31, 2015. AMENDMENT TO THE 2011 STOCK OPTION AND INCENTIVE PLAN
(Item No. 3 on the Proxy Card)
We are asking our stockholders to approve an amendment to the Imperva, Inc. 2011 Stock Option and Incentive Plan (the “2011 Plan”) to increase the number of shares that may be issued thereunder by 1,300,000 shares and approve other amendments to the 2011 Plan as discussed in detail below. The board of directors has approved the increase, subject to stockholder approval.
If our stockholders do not approve the amendment to the 2011 Plan, the number of shares available for grant under the 2011 Plan will not be increased and the proposed changes to the 2011 Plan’s terms will not be made and the 2011 Plan will instead maintain its existing terms.
Rationale For and Reasons Why the Board Recommends a Vote FOR the Amendment to the 2011 Plan
Equity Compensation Is a Critical Element of Our Compensation Policy. Offering a broad-based equity compensation program is vital to attracting and retaining highly skilled people in our competitive and fast-paced industry. We use equity awards under the 2011 Plan to increase incentives on the part of eligible employees, non-employee directors and consultants who provide significant services to the company and its affiliates. We believe that providing an equity stake in the future success of our business encourages our employees to be highly motivated to achieve our long-term business goals and to increase stockholder value. Their innovation and productivity are critical to our success. Accordingly, approving the amendment to 2011 Plan is in the best interest of our stockholders because equity awards help us to:
attract, motivate and retain talented employees, directors and consultants;
align employee and stockholder interests; and
link employee compensation with company performance.
We strongly believe that the approval of this amendment to the 2011 Plan will enable us to continue to use the 2011 Plan to achieve our goals in attracting and retaining our most valuable asset: our employees.
We Have Carefully Considered and Forecasted Our Need for Shares. After carefully forecasting our anticipated growth, hiring plans and retention needs and considering our historical grant and forfeitures rates, we anticipate that the 1,300,000 shares we seek to add to the 2011 Plan, combined with the 598,897 shares currently available for grant under the 2011 Plan and the 100,000 shares currently reserved under our 2015 Equity Inducement Plan (which we may use for certain newly hired employees and to grant equity awards in connection with acquisitions), will be sufficient to attract and retain employees through May 2017. However, a change in business conditions or our strategy could alter this projection.
In determining the number of shares to reserve for issuance under the 2011 Plan, our compensation committee considered a number of factors, including:
| • | | Historical Grant Practices. Our compensation committee reviewed the average volume of equity awards granted over the past three years, taking into account the company’s above average needs in 2014 as a result of three executive new hires, including our CEO and several acquisitions which contributed to a high level of grant activity in 2014. When taking into account the grants made in 2014 as a result of acquisitions and executive new hires, our three year average gross burn rate decreases by 1.9% from 9.8% (when we include these amounts) to 7.9% (when we exclude these executive new hires and acquisition related grants). The 7.9% three year average gross burn rate is less than the Institutional Shareholder Services benchmark of 8.7% for Russell 3000 Software and Services industry companies. For purposes of calculating the three year average gross burn rate we take the number of options plus restricted stock units (“RSUs”) and performance-based RSUs (“PRSUs”) granted in a year divided by the weighted-average shares of common stock outstanding for that fiscal year and we increase the number of RSUs and PRSUs granted by multiplying them by 1.5, which in aligned with ISS methodology. |
| • | | Forecasted Grant Practices. Over the next twelve months, we forecast granting full value awards in the form of RSUs and PRSUs equal to approximately 5.0% of our common stock outstanding as of March 1, 2016, or approximately 1.6 million shares. We also forecast cancellations of options and forfeitures of RSUs of approximately 0.5 million shares over this period, based on our historic rates. If our expectations are accurate, our net grants (grants less cancellations) for 2016 would be approximately 1.1 million shares, or approximately 3.4% of our common stock outstanding as of March 1, 2016. If approved, the amendment to the 2011 Plan would increase the number of shares issuable under the 2011 Plan by an additional 1.3 million shares, bringing the total number of shares available for future grants under the 2011 Plan to approximately 1.9 million shares as of March 1, 2016, assuming that the additional 1.3 million shares were available for grant on that date. We believe, and the compensation committee considered, that this increase will provide us with a share reserve that will allow us to make equity awards for expected new hires, focal awards, any special retention needs and non-employee director grants. The compensation committee expects that the total available shares for issuance under the 2011 Plan (as proposed to be amended) should be sufficient to cover our projected equity awards until the 2017 annual meeting of stockholders. We anticipate making future requests for additional increases in the share reserve on an annual basis so that stockholders can routinely evaluate the 2011 Plan’s continued effectiveness. Circumstances such as a change in business conditions, our compensation programs, or our strategy could alter this projection and our expectations. |
| • | | Awards Outstanding Under Existing Grants and Dilutive Impact. As of March 1, 2016, options to purchase 1,942,810 shares with a weighted average exercise price of $39.64 and a weighted average term of 7.95 years, and full value awards covering 2,520,710 shares, were outstanding under all of our equity plans, including awards assumed by us as part of acquisitions and employment inducement awards. The 4,463,520 shares subject to outstanding awards (commonly referred to as the “overhang”) represent approximately 13.8% of our outstanding shares as of March 1, 2016. Our total overhang as of March 1, 2016, which includes the 1,300,000 shares being reserved for grant pursuant to this amendment, the 598,597 shares available for grant under the 2011 Plan and the 100,000 shares available for grant under the 2015 Equity Inducement Plan, is 6,462,117 shares or 20.0% of our outstanding shares as of March 1, 2016. This total overhang was at the 25th percentile of our peer group as of September 2015 and we believe the increase we are requesting would not result in excessive overhang for our stockholders. |
We Broadly Distribute Equity Awards. In 2015, we granted equity awards covering 1,807,925 shares under the 2011 Plan, of which, awards for 152,000 shares, or 8.4%, were granted to our named executive officers; awards for 42,316 shares, or 2.3%, were granted to non-employee directors; and awards covering the remaining 1,613,609 shares, or 89.3%, were granted to our broad-based employee population. We granted equity awards to approximately 60% of our broad-based employee population (including consultants) in 2015. While we grant equity awards on a pre-established bi-weekly schedule, we grant most of our equity awards in the first quarter of each year as part of our company-wide employee performance evaluation.
The 2011 Plan Conforms to Recommended Best Practices. The 2011 Plan, as amended, conforms to best practices in equity incentive plans in that it:
Requires stockholder approval for stock option repricings and cash buyouts of underwater options;
Sets a one-year minimum vesting term for all awards granted under the 2011 Plan (subject to limited caveats);
Does not allow shares tendered or withheld in payment of exercise prices for options or stock appreciation rights or to satisfy applicable tax withholding obligations on options or stock appreciation rights to be added back to the pool of shares available for grant;
Provides for acceleration of performance-based awards at target levels or, if greater, based on actual performance in the event of a corporate transaction in which the acquirer does not assume, substitute or replace the outstanding performance-based awards;
Provides for the company’s ability to recoup or “clawback” equity incentive awards in the event of fraud, restatement of results, errors/omissions or other activities related to such conduct;
Does not provide for tax gross-ups;
Limits the transferability of awards except by will or the laws of descent and distribution;
No longer has an evergreen provision that automatically increases the number of shares available for grant;
Requires that options and stock appreciation rights must have an exercise price of no less than fair market value; and
Establishes a maximum amount of shares that may be granted to a non-employee director in any fiscal year.
Proposed Changes to the 2011 Plan
In addition to the proposed increase to the number of shares that may be issued under the 2011 Plan, the other changes to the 2011 Plan include the following, all of which the board of directors believe are in line with good corporate governance practices:
Eliminates the ability to allow shares tendered or withheld in payment of exercise prices for options or stock appreciation rights or to satisfy applicable tax withholding obligations on options or stock appreciation rights to be added back to the pool of shares available for grant;
Eliminates the evergreen provision that automatically increased the number of shares available for grant.
Adds a one-year minimum vesting term for all awards granted under the 2011 Plan (subject to limited caveats);
Adds a requirement of stockholder approval for stock option repricings and cash buyouts of underwater options;
Adds a limitation that in the event of a corporate transaction in which the acquirer does not assume, substitute or replace outstanding performance-based awards, such performance-based awards may accelerate at target levels or, if greater, based on actual performance; and
Other clarifying, technical and administrative changes.
Awards Outstanding under the 2011 Plan as of March 1, 2016
As of March 1, 2016, 1,504,383 shares were issuable upon exercise of stock options outstanding under the 2011 Plan with a weighted average exercise price of $44.39 per share and a weighted average term of 8.25 years, and an aggregate of 2,296,955 shares were subject to RSUs and PRSUs outstanding under the 2011 Plan with no exercise price. In addition, as of March 1, 2016, there were 598,597 shares available for grant under the 2011 Plan and 100,000 shares available for grant under our 2015 Equity Inducement Plan.
Description of the 2011 Plan
The principal terms of the 2011 Plan are summarized below. This summary is not a complete description of the 2011 Plan, and it is qualified in its entirety by reference to the complete text of the 2011 Plan document. The 2011 Plan, marked to show changes from the existing plan, is attached asAppendix A to this proxy statement.
General
The 2011 Plan provides for the grant of stock options, restricted stock, stock bonuses, stock appreciation rights, restricted stock units and performance shares (collectively, the “stock awards”). The 2011 Plan also provides the ability to grant performance shares that may qualify the compensation attributable to those awards as performance-based compensation for purposes of Section 162(m) of the Tax Code.
Incentive stock options granted under the 2011 Plan are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Tax Code; nonqualified stock options granted under the 2011 Plan are not intended to qualify as incentive stock options under the Tax Code. See “Federal Income Tax Information” for a discussion of the tax treatment of the various stock awards.
Purpose
Our board of directors adopted the 2011 Plan to help us retain the services of our employees, non-employee directors and consultants, and those of any parent or subsidiary of ours, and to attract and retain new talent to our company to execute on our strategy and grow our business. The 2011 Plan provide us with a means to award these eligible individuals with compensation that allows them to benefit from increases in the value of our common stock, thereby aligning the long-term compensation and interests of those individuals with our stockholders.
Administration
The 2011 Plan is administered by our compensation committee, all of the members of which are non-employee directors under applicable federal securities laws and outside directors as defined under the Tax Code. Our compensation committee has the authority to construe and interpret the 2011 Plan, grant and determine the terms of each award, including the exercise price, the number of shares subject to the award, the exercisability of the award and the form of consideration payable upon exercise of the award, and make all other determinations necessary or advisable for the administration of the 2011 Plan.
Eligibility
The 2011 Plan provides for the grant of incentive stock options only to our employees and employees of any parent or subsidiary of ours. All awards other than incentive stock options may be granted to our employees, non-employee directors or consultants, and those of any parent or subsidiary of ours. As of December 31, 2015, we had approximately 923 employees and eight non-employee directors who were eligible to receive awards from the 2011 Plan. Our executive officers and non-employee directors have an interest in this proposal insofar as they are eligible to receive awards under the 2011 Plan.
Shares Subject to the 2011 Plan
If stockholders approve the amendment to the 2011 Plan, then the share reserve under the 2011 Plan will increase by 1,300,000 shares of our common stock, and the cumulative aggregate share authorization under the 2011 Plan will increase to 7,236,237 shares, plus any shares that have been, or are eligible to be, added to the plan pursuant to the “pour over” provision described below. The aggregate share authorization includes the reserved shares that were not issued or subject to outstanding grants under our 2003 Stock Plan (together with any subplans and addenda adopted thereunder, the “Prior Plan”) that were made available for grant under the 2011 Plan on its effective date. As of March 1, 2016, 3,801,338 shares of common stock were subject to issuance upon exercise of options and settlement of RSUs and PRSUs outstanding under the 2011 Plan. In addition, 598,597 shares of common stock remained available for future issuance, not including the 1,300,000 shares for which we are seeking stockholder approval. The closing price of the Imperva common stock on the New York Stock Exchange on March 1, 2016 was $46.69 per share.
The number of shares available for grant and issuance under the 2011 Plan increased automatically on January 1 of each of 2012 through 2015 by an amount equal to 4% of our shares outstanding on the immediately preceding December 31, pursuant to the terms of the 2011 Plan in accordance with a provision commonly known as an “evergreen” clause. Because the “evergreen” provision has expired, we are asking stockholders to approve the current amendment to the 2011 Plan to increase the amount of shares available for grant by 1,300,000 shares. We anticipate making future requests for additional increases in the share reserve on an annual basis to ensure
that we have sufficient equity reserves with which to compensate our employees. In addition, the following shares become available for grant and issuance under our 2011 Plan pursuant to a “pour over” provision:
shares subject to an option or stock appreciation right granted under our 2011 Plan that cease to be subject to the option or stock appreciation right for any reason other than exercise of the option or stock appreciation right;
shares subject to an award granted under our 2011 Plan that are subsequently forfeited or repurchased by us at the original issue price;
shares subject to an award granted under our 2011 Plan that otherwise terminates without shares being issued;
shares surrendered pursuant to an exchange program (with such exchange program subject to approval by our stockholders);
shares used to satisfy the tax withholding obligations related to an award other than an option or stock appreciation right under the 2011 Plan; and
shares (1) subject to stock options granted under the Prior Plan that cease to be subject to such stock options (other than by exercise and other than shares that are withheld to pay the exercise or purchase price for such shares or to satisfy any tax withholding obligations in connection with such shares), (2) issued under the Prior Plan pursuant to the exercise of options that are forfeited or (3) issued under the Prior Plan that are repurchased by us at the original issue price.
Types of Awards under the 2011 Plan
Under the 2011 Plan, we may award six types of equity awards.
Stock Options
The 2011 Plan provides for the grant of nonqualified stock options, incentive stock options or a combination of each. Incentive stock options may only be granted to our employees and employees of any parent or subsidiary of ours. Subject to appropriate adjustment as provided in the 2011 Plan, no person will be eligible to receive more than 500,000 shares in any calendar year under our 2011 Plan, except that new employees are eligible to receive up to a maximum of 1,000,000 shares in the year in which employment commences. Subject to adjustment as provided in the 2011 Plan, in no event shall more than 20,000,000 shares of our common stock be available for issuance pursuant to the exercise of incentive stock options granted under the 2011 Plan.
Each stock option granted under the 2011 Plan must be evidenced by a written agreement between us and the optionee specifying the number of shares subject to the stock option and the other terms and conditions of the stock option, consistent with the requirements of the 2011 Plan. The exercise price of each stock option may not be less than the fair market value of a share of our common stock on the date of grant (except in connection with the assumption or substitution for another stock option in a manner qualifying under Sections 409A and 424(a) of the Tax Code). In addition, any incentive stock option granted to a person who at the time of grant owns stock possessing more than 10% of the total combined voting power of all classes of our stock or any subsidiary corporation of the company (a “Ten Percent Stockholder”) must have an exercise price equal to at least 110% of the fair market value of a share of our common stock on the date of grant. The 2011 Plan provides that the stock option exercise price may be paid in cash or by check, a broker-assisted cashless exercise or any other method authorized by the company.
The compensation committee may provide for options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. Options may vest based on time or achievement of performance conditions. In general, our employee stock options vest over a four-year period, with 25% of the underlying shares vesting on the first anniversary of the grant date and the remaining shares vesting in equal quarterly installments thereafter for the following three years.
We grant options having a ten-year term. Subject to the term of the stock option, a stock option generally will remain exercisable for three months following the optionee’s termination of service, except that if service terminates as a result of an optionee’s death or disability, the stock option generally will remain exercisable for 12 months, and, if an employee optionee’s service is terminated for cause, the stock option will terminate immediately. The Committee, in its discretion, may provide different post-termination exercise periods, but in any event the stock option must be exercised no later than the original expiration of its term.
Unless otherwise determined by the compensation committee, stock options are not assignable or transferable by the optionee other than by will or by the laws of descent and distribution.
Restricted Stock Awards
A restricted stock award is an offer by us to sell shares of our common stock subject to restrictions. The price (if any) of a restricted stock award will be determined by the compensation committee. Unless otherwise determined by the compensation committee at the time of award, vesting will cease on the date the participant no longer provides services to us and unvested shares will be forfeited to or repurchased by us.
Stock Bonus Awards
Stock bonuses are awards of shares of our common stock that are granted as additional compensation for service and/or performance. Payment from the participant is not required for stock bonuses, and stock bonuses are generally not subject to vesting. The compensation committee will determine the number of shares to be awarded to a participant under a stock bonus award and any restrictions thereon. These restrictions may be based upon completion of a specified number of years of service with the company or upon satisfaction of performance goals as specified in the participant’s individual award agreement. Prior to the grant of any stock bonus award, the compensation committee will determine the performance factors to be used, the nature, length and starting date of the performance period and the number of shares that will be awarded to the participant. Except as may be set forth in the participant’s individual award agreement, vesting ceases upon the participant’s termination of service unless determined otherwise by the compensation committee.
Stock Appreciation Rights, or “SARs”
SARs provide for a payment, or payments, in cash or shares of our common stock, to the participant based upon the increase in the fair market value of our common stock on the date of exercise from the stated exercise price. SARs may vest based on time or achievement of performance conditions. Each SAR awarded under the 2011 Plan must be evidenced by a written agreement between us and the participant specifying the terms and conditions of the SAR, consistent with the requirements of the 2011 Plan.
The compensation committee will determine the terms of each SAR, including the number of shares subject to the SAR, the exercise price and the time or times during which the SAR may be settled, the consideration to be distributed on settlement of the SAR and the effect of the participant’s termination on his or her SAR. The exercise price of SAR may be less than the fair market value of the underlying shares of common stock.
A SAR may be awarded upon satisfaction of performance factors that are set out in advance in the participant’s individual award agreement. If the participant earns the SAR upon the satisfaction of performance factors, then the compensation committee will determine the performance factors to be used, as well as the nature, length and starting date of the performance period.
SARs have a term of up to ten years. Except as may be set forth in the participant’s individual award agreement, vesting ceases upon the participant’s termination of service unless determined otherwise by the compensation committee.
Restricted Stock Unit Awards, or “RSUs”
RSUs represent the right to receive shares of our common stock at a specified date in the future, subject to forfeiture of that right because of termination of the participant’s services to us or the participant’s failure to achieve certain performance conditions. If an RSU has not been forfeited, then on the date specified in the RSU agreement, we will deliver to the holder of the RSU whole shares of our common stock, which may be subject to additional restrictions, cash or a combination of our common stock and cash.
The compensation committee will determine the terms of each RSU, including the number of shares subject to the RSU award, the time or times during which the RSU may be settled, the consideration to be distributed on settlement of the RSU and the effect of the participant’s termination on his or her RSU.
An RSU may be granted upon satisfaction of performance factors that are set out in advance in the participant’s individual award agreement. If the RSU is being earned upon the satisfaction of performance factors, then the compensation committee will determine the performance factors to be used, the nature, length and starting date of the performance period and the number of shares that will be subject to the RSU.
Except as may be set forth in the participant’s individual award agreement, vesting ceases upon the participant’s termination of service unless determined otherwise by the Compensation Committee.
Performance Shares
Performance shares are awards denominated in shares of our common stock that may be settled in cash or by issuance of those shares only if performance goals established by the compensation committee have been achieved or the awards otherwise vest. Each performance share will have an initial value equal to the fair market value of a share of our common stock on the date of grant. After the applicable performance period has ended, the holder of performance shares will be entitled to receive a payout of the number of performance shares earned by the participant over the performance period, to be determined as a function of the extent to which the corresponding performance factors or other vesting provisions have been achieved.
Before granting any performance share award, the compensation committee will determine the terms of each performance share award, including the number of shares subject to the award, the performance factors and performance period that will determine the time and extent to which each award of performance shares will be settled, the consideration to be distributed on settlement of the award and the effect of the participant’s termination on his or her performance share award. Before settlement, the compensation committee shall determine the extent to which the performance shares have been earned.
Awards to Non-Employee Directors
Non-employee members of our Board of Directors are eligible to receive any type of award offered under the 2011 Plan except incentive stock options, which can only be granted to employees. If stock options or SARs are granted to our non-employee directors, their exercise price may not be less than the fair market value of our common stock when the option or SAR is granted. The aggregate number of shares subject to awards granted to a non-employee director in any calendar year shall not exceed 250,000 shares. In the event of a corporate transaction, all awards held by our non-employee directors will accelerate fully and become vested and exercisable or settled, as the case may be. Our non-employee director compensation policy provides for equity awards to our non-employee directors both on joining our board and on an annual basis as discussed above under “Director Compensation”. Since the 2011 Plan was adopted, all of our equity awards to our non-employee directors have been stock options or RSUs that were awarded under the 2011 Plan. Equity awards granted to our continuing directors vest in full after one year. Equity awards granted to new directors vest in equal annual installments over three years. Please see “Director Compensation” above for more information.
Adjustment of Shares Subject to the 2011 Plan
If there is any change to the outstanding shares of our common stock without our receipt of consideration (whether through stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in our capital structure), appropriate adjustments will be made to: (a) the number of shares reserved for issuance and future grant under the 2011 Plan, (b) the exercise prices of and number of shares subject to outstanding options and stock appreciation rights, (c) the number of shares subject to RSUs and any other outstanding awards, (d) the maximum number of shares that may be issued as incentive stock options, (e) the maximum number of shares that may be awarded to an individual or new employee in a calendar year and (f) the number of shares that are granted as awards to our non-employee directors.
Corporate Transactions
In the event of certain significant corporate transactions, any or all outstanding awards under the 2011 Plan may be assumed or replaced by the successor corporation. In the alternative, the successor corporation may substitute equivalent awards or provide substantially similar consideration to award holders as was provided to stockholders after taking into account the existing provisions of the awards. The successor corporation may also issue, in place of outstanding company shares held by the award holder, substantially similar shares or other property subject to repurchase restrictions no less favorable to the holder. In the event such successor corporation refuses to assume, convert, replace or substitute awards, then such awards will expire on such transaction at such time and on such conditions as the board will determine. However, the board or compensation committee may accelerate the vesting of such awards in connection with certain significant corporate transactions. If the board or compensation committee decides to accelerate the vesting of performance-based awards, then such acceleration will be at target levels, or if greater, based on the company’s actual performance at the time of the corporate transaction.
In the event of certain significant corporate transactions, the vesting of all awards granted to non-employee members of our board of directors will accelerate and such awards will become exercisable (as applicable) in full prior to the consummation of such corporate transaction at such times and on such conditions as the compensation committee determines.
A significant corporate transaction means the occurrence of any of the following events: (a) any person becomes the beneficial owner of company securities representing 50% or more of the total voting power represented by our then-outstanding voting securities; (b) our consummation of the sale or disposition of all or substantially all of our assets; (c) the consummation of a merger, reorganization, consolidation or other transaction of the company with any other corporation, other than a transaction that would result in our voting securities outstanding immediately prior to such transaction continuing to represent at least a majority of the total voting power represented by the voting securities of the company or such surviving entity or its parent outstanding immediately after such transaction, or (d) any other transaction that qualifies as a “corporate transaction” under Section 424(a) of the Tax Code where the company’s stockholders give up all of their equity interests in the company, except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the company.
Repricings and Exchange Programs
The 2011 Plan provides that we may, only with stockholder approval, (1) reprice stock options or stock appreciation rights, (2) pay cash or issue new awards in exchange for the surrender or cancellation of any or all outstanding awards, or (3) implement an option exchange program.
Provisions for Foreign Participants
The compensation committee may modify awards granted to participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the 2011 Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.
Duration, Termination and Amendment
The compensation committee may terminate or amend the 2011 Plan at any time; provided, however, that the committee will not, without the approval of our stockholders, amend the 2011 Plan in any manner that requires such stockholder approval. Unless sooner terminated, the 2011 Plan is set to expire on September 9, 2021.
U.S. Federal Income Tax Information
The following summary is intended only as a general guide to the current U.S. federal income tax consequences of participation in the 2011 Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances. Furthermore, the tax consequences are complex and subject to change, and a taxpayer’s particular situation may be such that some variation of the described rules is applicable.
Incentive Stock Options
A participant recognizes no taxable ordinary income as a result of the grant or exercise of an incentive stock option qualifying under Section 422 of the Tax Code. However, the exercise of an incentive stock option may increase the participant’s alternative minimum tax liability, if any.
If a participant holds stock acquired through exercise of an incentive stock option for more than two years from the date on which the stock option was granted and more than one year after the date the stock option was exercised for those shares, any gain or loss on a disposition of those shares (a “qualifying disposition”) will be a long-term capital gain or loss. Upon such a qualifying disposition, we will not be entitled to any income tax deduction.
Generally, if the participant disposes of the stock before the expiration of either of those holding periods (a “disqualifying disposition”), then at the time of such disqualifying disposition, the participant will realize taxable ordinary income equal to the lesser of (i) the excess of the stock’s fair market value on the date of exercise over the exercise price, or (ii) the participant’s actual gain, if any, on the purchase and sale. The participant’s additional gain or any loss upon the disqualifying disposition will be a capital gain or loss, which will be long-term or short-term depending on whether the stock was held for more than one year. To the extent the participant recognizes ordinary income by reason of a disqualifying disposition, generally we will be entitled (subject to the requirement of reasonableness, the provisions of Section 162(m) of the Tax Code, and the satisfaction of a tax reporting obligation) to a corresponding income tax deduction in the tax year in which the disqualifying disposition occurs.
Nonqualified Stock Options
Stock options not designated or qualifying as incentive stock options are nonqualified stock options having no special tax status. A participant generally recognizes no taxable ordinary income as the result of the grant of such a stock option. Upon exercise of a nonqualified stock option, the participant normally recognizes ordinary income in the amount of the difference between the stock option exercise price and the fair market value of the shares on the date of purchase. A participant’s tax basis for the shares of Common Stock that a participant acquires when a participant exercises a nonqualified option will be increased by the amount of such taxable income. Generally, we will be entitled (subject to the requirement of reasonableness, the provisions of Section 162(m) of the Tax Code, and the satisfaction of a tax reporting obligation) to an income tax deduction in the tax year in which such ordinary income is recognized by the participant. Upon the disposition of stock acquired by the exercise of a nonqualified stock option, any gain or loss, based on the difference between the sale price and the fair market value on the exercise date, will be taxed as long-term or short-term capital gain or loss, depending on the participant’s holding period for the shares.
Stock Appreciation Rights
A participant recognizes no taxable ordinary income upon the receipt of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the underlying shares of common stock on the exercise date over the exercise price. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. We generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of the stock appreciation right, except to the extent such deduction is limited by applicable provisions of the Tax Code.
Restricted Stock Units
A participant recognizes no taxable income upon receipt of an RSU. In general, the participant will recognize ordinary income in the year in which the shares subject to that award vest and are actually issued to the participant in an amount equal to the fair market value of the shares on the date of issuance. We will be entitled (subject to the requirement of reasonableness, the provisions of Section 162(m) of the Tax Code, and the satisfaction of a tax reporting obligation) to an income tax deduction equal to the amount of ordinary income recognized by the participant at the time the shares are issued. In general, the deduction will be allowed for the taxable year in which such ordinary income is recognized by the participant.
Stock Bonuses
A participant acquiring restricted stock generally will recognize ordinary income equal to the difference between the fair market value of the shares on the “determination date” (as defined below) and the participant’s purchase price, if any. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The “determination date” is the date on which the participant acquires the shares unless they are subject to a substantial risk of forfeiture and are not transferable, in which case the determination date is the earlier of (a) the date on which the shares become transferable or (b) the date on which the shares are no longer subject to a substantial risk of forfeiture. If the determination date is after the date on which the participant acquires the shares, the participant may elect, pursuant to Section 83(b) of the Tax Code, to have the date of acquisition be the determination date by filing an election with the Internal Revenue Service no later than 30 days after the date the shares are acquired. Upon the sale of shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the determination date, will be taxed as a capital gain or loss. Such gain or loss will be long-term or short-term depending on whether the stock was held for more than one year. We will be entitled (subject to the requirement of reasonableness, the provisions of Section 162(m) of the Tax Code, and the satisfaction of a tax reporting obligation) to a corresponding income tax deduction in the year in which ordinary income is recognized by the participant.
Performance Shares
A participant generally will recognize no income upon the grant of a performance share award. Upon the settlement of a performance share award, participants normally will recognize ordinary income in the year of receipt in an amount equal to the cash received, if any, and the fair market value of any unrestricted shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. If the participant receives shares of restricted stock, the participant generally will be taxed in the same manner as described above in “Stock Bonuses.” Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value on the “determination date,” will be taxed as a capital gain or loss. We generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of the Tax Code.
Potential Limitation on Deductions
Section 162(m) of the Tax Code denies a deduction to any publicly held corporation for compensation paid to certain “covered employees” in a taxable year to the extent that compensation to each covered employee exceeds $1 million. It is possible that compensation attributable to awards granted under the 2011 Plan, when combined with all other types of compensation received by a covered employee from the company, may cause this limitation to be exceeded in any particular year. However, certain kinds of compensation, including qualified “performance-based compensation,” are disregarded for purposes of the deduction limitation.
In accordance with Treasury Regulations issued under Section 162(m) of the Tax Code, compensation attributable to stock options and stock appreciation rights will qualify as performance-based compensation if: (a) such awards are approved by a compensation committee comprised solely of “outside directors,” (b) the plan contains a per-employee limitation on the number of shares for which such awards may be granted during a specified period, (c) the terms of the plan, including the per-employee limitation on grant size, are approved by the stockholders, and (d) the exercise or strike price of the award is no less than the fair market value of the stock on the date of grant. It is intended that the compensation committee may grant stock options and stock appreciation rights under the 2011 Plan that qualify as performance-based compensation that is exempt from the $1 million deduction limitation.
Compensation attributable to performance-based awards granted under the 2011 Plan will qualify as performance-based compensation, provided that: (a) the award is approved by a compensation committee comprised solely of “outside directors,” (b) the award is granted (or vests) based upon the achievement of an objective performance goal established in writing by the compensation committee while the outcome is substantially uncertain, (c) the compensation committee certifies in writing prior to the grant (or vesting, as applicable) of the award that the performance goal has been satisfied, and (d) prior to the issuance, stockholders have approved the material terms of the plan (including the class of employees eligible for awards, the business criteria on which the performance goals may be based, and the maximum amount, or formula used to calculate the amount, payable upon attainment of performance goals). It is intended that the compensation committee may grant restricted stock units, stock bonus awards and performance shares under the 2011 Plan that qualify as performance-based compensation that is exempt from the $1 million deduction limitation.
New Plan Benefits
Except for the annual awards to our non-employee directors described in “Awards to Non-Employee Directors” above, following the annual stockholder meeting, the benefits that will be awarded under the 2011 Plan cannot currently be determined. We anticipate that the compensation committee will award RSUs with an aggregate grant date fair value of $1.0 million to our non-employee directors following the annual meeting. Using the closing price of Imperva common stock on the New York Stock Exchange on March 1, 2016 of $46.69 per share, this would be equal to an aggregate of 21,417 shares. All awards, including the annual non-employee director awards, granted under the 2011 Plan are within the discretion of the compensation committee. The committee has not determined future awards or who might receive them.
Existing Plan Benefits
Pursuant to SEC rules, the following table sets forth the number of shares subject to options granted under the 2011 Plan from September 2011 (when we began granting awards under the 2011 Plan) through March 1, 2016. These share numbers do not include shares underlying options that were granted under the 2011 Plan, but were cancelled or expired unexercised. In addition, the share numbers do not include shares underlying RSUs and PRSUs that have been granted to participants under the 2011 Plan, which are discussed in more detail above.
| | | | | Name and Position
| | Total Number of Shares
Subject to Options
Granted Under the
2011 Plan | | Anthony Bettencourt, President and CEO
| | | 0 | | Geraldine Elliott, Director Nominee
| | | 3,980 | | Mark E. Kraynak, SVP and GM of Enterprises
| | | 65,250 | | Sunil D. Nagdev, SVP WW Sales and Support
| | | 40,000 | | Terry Schmid, CFO
| | | 45,000 | | Amichai Shulman, CTO
| | | 61,000 | | All current executive officers as a group
| | | 319,750 | | All non-employee directors as a group
| | | 116,306 | | All employees as a group (excluding executive officers)
| | | 1,826,970 | |
Equity Compensation Plan Information
The following table summarizes information about our equity compensation plans as of December 31, 2015. Prior to our initial public offering (our “IPO”) in November 2011, we issued securities under our 2003 Stock Plan, as amended. Following our IPO, we issued securities under our 2011 Plan and our 2011 Employee Stock Purchase Plan (“ESPP”). The 2003 Stock Plan, 2011 Plan and 2011 ESPP were approved by our stockholders. The table excludes equity compensation plans assumed by us in connection with acquisitions, as described more fully in the footnotes. All outstanding awards relate to our common stock.
| | | | | | | | | | | | | Plan Category | | (a) Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights | | | (b) Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and
Rights1 | | | (c) Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a)) | | Equity compensation plans approved by security holders | | | 3,288,986 | 2,3 | | $ | 40.70 | | | | 2,515,000 | 4 | Equity compensation plans not approved by security holders | | | 463,750 | 5 | | $ | 32.98 | | | | 100,000 | 6 | | | | | | | | | | | | | | Total | | | 3,752,736 | | | | | | | | 2,615,000 | | | | | | | | | | | | | | |
1 | Based on the weighted-average exercise price of outstanding options. RSUs and PRSUs do not have an exercise price and are not included in the calculation. |
2 | Includes 1,723,094 shares subject to issuance upon vesting of outstanding RSUs and PRSUs. Each RSU and each PRSU once earned represents a contingent right to receive one share of common stock upon vesting. |
3 | Does not include information for equity awards assumed by us in connection with acquisitions. In February 2014, in connection with the closing of our acquisition of Skyfence Networks, Ltd., we assumed the outstanding options issued under the Skyfence Networks, Ltd. 2013 Share Incentive Plan. As of December 31, 2015, there were outstanding assumed Skyfence options to purchase 10,106 shares of our common stock (on an as-converted basis), with a weighted-average exercise price of $0.20. In March 2014, in connection with the closing of our acquisition of the remaining shares of Incapsula, Inc., we assumed the outstanding options and PRSUs issued under the Incapsula, Inc. 2010 Stock Incentive Plan. As of
|
| December 31, 2015, there were outstanding (i) assumed Incapsula options to purchase 20,091 shares of our common stock (on an as-converted basis), with a weighted-average exercise price of $24.02 and (ii) 19,838 PRSUs assumed by us in connection with our acquisition of Incapsula, Inc. The PRSUs do not have an exercise price, each unit of which represents a contingent right to receive one share of our common stock upon vesting and the achievement of certain performance metrics
|
4 | Includes 1,457,235 shares available for issuance under the 2011 Plan and 1,057,765 shares available for purchase by our employees under the 2011 ESPP. |
5 | Represents an aggregate of 265,000 outstanding, unexercised options and 198,750 unvested RSUs issued to our President and Chief Executive Officer and SVP, People under the Inducement Stock Option Plan and Agreement and Inducement Restricted Stock Unit Plan and Agreement between each officer and us. We entered into the Inducement Plans in connection with the commencement of employment of each officer. See Note 12 to the “Notes to Consolidated Financials” in our Annual Report on Form 10-K for the year ended December 31, 2015 under “Inducement Stock Option Plans and Agreement and Inducement Restricted Stock Unit Plans and Agreement” for a description of the material features of each plan. |
6 | Represents shares reserved for issuance under the 2015 Equity Inducement Plan. |
Under the 2011 Plan, we may issue stock awards, including but not limited to restricted stock awards, RSUs, stock bonus awards, stock appreciation rights and performance share awards. The 2011 Plan contained a provision that the number of shares available for grant and issuance will be increased on January 1 of each year from 2012 through 2015 by an amount equal to 4% of our shares outstanding on the immediately preceding December 31. The last increase under this provision was on January 1, 2015.
During 2015, it was the policy of our board of directors that each new non-employee director receive (1) a stock option grant when such director initially joined our board of directors with a Black-Scholes grant date fair value of $130,000, and (2) a number of RSUs equal to $130,000 divided by the closing price of the company’s common stock on the New York Stock Exchange on the date of grant. In addition, on or about the date of the first board meeting following each annual stockholder meeting, each non-employee director will automatically be granted pursuant to that policy (1) a stock option grant with a Black-Scholes value of $65,000 based on the date of grant, and (2) RSUs with a number of shares equal to $65,000 divided by the closing price of the company’s common stock on the New York Stock Exchange on the date of grant. The board may also make discretionary grants to purchase common stock to any non-employee director.
Under the 2011 ESPP, we may grant options for the purchase of our common stock. The 2011 ESPP contains a provision that the number of shares available for grant and issuance will be increased on January 1 of each of 2012 through 2019, by an amount equal to 1% of our shares outstanding on the immediately preceding December 31, unless our board of directors, in its discretion determines to make a smaller increase.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE “FOR” THE AMENDMENT OF THE 2011 PLAN.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS In addition to the director and executive officer compensation arrangements discussed under “Compensation Discussion and Analysis” and “Executive Compensation,” the following is a description of transactions, or series of related transactions, since January 1, 2015,2017, to which we were or will be a party in which the amount involved exceeded or will exceed $120,000 and in which the other parties included or will include our directors, executive officers, holders of 5% or more of our voting securities, each of whom we refer to as a beneficial owner, or any member of the immediate family of any of the foregoing persons, to the extent such parties had a direct or indirect material interest in the transactions. Employment Arrangements and Indemnification Agreements We have entered into employment arrangements with our executive officers. See “Executive Compensation—Employment, Severance and Change in Control Arrangements” for information regarding these arrangements with our named executive officers. We have entered into indemnification agreements with our directors and executive officers. The indemnification agreements and our certificate of incorporation and bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. See “Executive Compensation—Limitation on Liability and Indemnification Matters.” In January 2015, theThe son of one of our named executive officers commenced employment with Imperva in January 2015 as a maintenance renewal representative. In August 2016 he moved to the inside sales team as an inside sales represenative and in October 2017 he moved to the field sales team as a sales representative. His total annual compensation for 2015, which includes annual base salary, cash incentive compensation and the grant date fair value of his new hire equity awards2017 including commission was approximately $140,000$240,000 and was at a level consistent with similarly situated employees. He received no equity compensation in 2017. In accordance with the nepotism policy set forth in our related-party transactions policy, the nominating and corporate governance committee approved of the employment arrangement and required that the executive officer be excluded from all hiring, compensation- and other employment-related decisions involving his son.
Change in Control Plan, Severance Plan We have adopted a Change in Control Plan that covers our executive officers which provideswho are also Section 16 officer, providing for severance benefits and acceleration of the vesting of awards in the event of a qualifying termination following a change in control. For more information regarding the Change in Control Plan. See “Executive Compensation—Employment, Severance and Change in Control Agreements” and “—Potential Payments Upon Termination or Change in Control.” We have also adopted a Severance Plan seethat covers designated members of our senior management team, providing for severance benefits and limited acceleration of the vesting of awards in the event of a qualifying termination that is not covered by the Change in Control Plan. See “Executive Compensation—Employment, Severance and Change in Control Agreements” and “—Potential Payments Upon Termination or Change in Control.” Equity Awards For information regarding equity awards granted to our named executive officers and directors, see “Compensation Discussion and Analysis”, “Executive Compensation” and “Election of Class III Directors—Director Compensation.” Registration Rights
Shlomo Kramer, a more than 10% holder of our common stock and our former Chairman of the Board, President and Chief Executive Officer, is party to an agreement with us that provides him with rights to require us to register under the Securities Act up to an aggregate of 1,877,766 shares of common stock owned by him.
Review, Approval or Ratification of Transactions with Related Parties Our policy and the charters of our nominating and corporate governance committee and our audit committee require that any transaction with a related party that must be reported under applicable rules of the SEC, other than compensation related matters, must be reviewed and approved or ratified by our nominating and corporate governance committee, unless the related party is, or is associated with, a member of that committee, in which event the transaction must be reviewed and approved by our audit committee.
Related-Party Transactions Policy In November 2012, theThe board adopted a related-party transactions policy for the company requiringin November 2012, which was subsequently amended by the board in February 2017. The policy requires review ofby our general counsel or associate general counsel and approval of the nominating and corporate governance committee or its chair for any transaction involving a related party, considering the relevant and available facts and circumstances, including such facts as:
the impact on a director’s independence in the event the related party is a director, immediate family member of a director or an entity with which a director is affiliated, the terms of the transaction, and any other relevant information and considerations with respect to the proposed transaction, and approving only those transactions with related party that, in light of known circumstances, are in or are not inconsistent with the best interests of Imperva and our stockholders, as such approval authority determines in the good faith. For the purposes of this policy, related parties include our executive officers, directors and board nominees (during the current or preceding calendar year), any security holder of Imperva known to us to be the beneficial owner of more than 5% of any class of our voting securities and any immediately family members of such related parties. Where the related party involved is, or is affiliated with, any member of the nominating and corporate governance committee, the approval authority is the audit committee or its chair, provided that if the related party involved is, or is affiliated with, the chair of the audit committee, the approval authority is any other member of the audit committee. The policy provides that for the purposes of the related-party transactions policy, in the absence of facts or circumstances indicating special or unusual benefits to the related party, the following transactions, arrangements or relationships need not be approved under the policy: any employment by Imperva of an executive officer of Imperva if: the related compensation is required to be reported in our proxy statement under the SEC’s compensation disclosure requirements (generally applicable to “named executive officers”) under Item 402 of Regulation S-K; or the executive officer is not an immediate family member of another Imperva executive officer or director, the related compensation would be reported in our proxy statement under Item 402 of Regulation S-K if the executive officer were a “named executive officer,” and our compensation committee approved (or recommended that the board approve) such compensation; any compensation paid to a director (in such capacity) if the compensation is required to be reported in our proxy statement under Item 402 of Regulation S-K (or is excluded from disclosure pursuant thereto); any transaction where the related party’s interest arises solely from the ownership of our common stock and all holders of our common stock received the same benefit on a pro rata basis (e.g., dividends); any transaction with another company at which a related party’s only relationship is as an employee (other than an executive officer), director or beneficial owner of less than 10% of that company’s shares or as a limited partner holding interests of less than 10% in the limited partnership (or similar interests in an alternative form of entity); any transaction with a related party: where the rates or charges involved are determined by competitive bids, involving the rendering of services as a common or contract carrier or public utility, at rates or charges fixed in conformity with law or governmental authority, or involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or similar services;
| • | any charitable contribution, grant or endowment to any charitable contribution, grant or endowment by us to a charitable organization, foundation or university at which a related party’s only relationship is as an employee (but not an executive officer), and any charitable contribution, grant or endowment by us to a charitable organization, foundation or university at which a related party is a trustee, director or executive officer, if the aggregate amount involved in a calendar year does not exceed $120,000, or any non-discretionary matching contribution, grant, or endowment made pursuant to a matching gift program; |
any charitable contribution, grant or endowment to any charitable contribution, grant or endowment by us to a charitable organization, foundation or university at which a related party’s only relationship is as an employee (but not an executive officer), and any charitable contribution, grant or endowment by us to a charitable organization, foundation or university at which a related party is a trustee, director or executive officer, if the aggregate amount involved in a calendar year does not exceed $120,000, or any non-discretionary matching contribution, grant, or endowment made pursuant to a matching gift program;
ordinary course business travel and expenses, advances and reimbursements; and indemnification payments and other payments made pursuant to: directors and officers insurance policies, our certificate of incorporation or bylaws, and/or any policy, agreement or instrument approved by the board.board; and any transaction between Imperva and another company or other entity that has a relationship with a related party where the value of the transaction is less than $120,000 and, in the case where the company is the supplier in the transaction, the discount provided is within our standard discounting bands. Corporate OpportunitiesOpportunity and Conflict of InterestInterests Policy In January 2014, at the recommendation of the nominating and corporate governance committee, the board of directors adopted a corporate opportunitiesopportunity and conflict of interestinterests policy applicable to our executive officers and directors to supplement our code of business conduct and ethics and our related-party transactions policy, more specifically addressing these matters. The policy provides that any executive officer or director who is considering an investment in a security company must notify the chair of the nominating and corporate governance committee which establishes procedures for review of the potential investment, including when Imperva desires to pursue the investment opportunity (i.e., because it is in the potential strategic path of Imperva), as well as situations in which an investee company subsequently becomes a competitor of Imperva. The policy provides that in the event that we acquire a company in which an executive officer (including any executive officer that is a member of the board of directors) has an investment, the executive officer will be recused from consideration and approval of the transaction (including as a board member), and if the investment was made after the adoption of the policy and the after-tax profit of such investment for the executive officer after giving effect to the acquisition exceeds $250,000, the executive officer will contribute such excess after-tax profits to charity. This requirement does not apply to shares of publicly held companies or shares acquired by an executive officer in the form of equity compensation while previously employed at the acquired company.
PRINCIPAL STOCKHOLDERSSTOCKHOLDERS The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 1, 20162018, for: each person who we know beneficially owns more than 5% of our common stock; each of our named executive officers; and all of our directors and executive officers as a group. We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws. Applicable percentage ownership is based on 32,250,00634,806,089 shares of common stock outstanding at March 1, 2016.2018. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to (i) options held by that person or entity that are currently exercisable or exercisable within 60 days of March 1, 20162018, and (ii) stock awards held by that person or entity that are scheduled to vest within 60 days of March 1, 2016.2018. We did not deem these shares outstanding however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed in the table below is care of Imperva, Inc., 3400 Bridge Parkway, Redwood Shores, CA 94065. | | | | | | | | | Name of Beneficial Owner | | Shares
Beneficially Owned | | |
Percentage | | Directors and Named Executive Officers: | | | | | | | | | Anthony Bettencourt1 | | | 93,213 | | | | * | | Geraldine Elliott | | | — | | | | — | | Charles Giancarlo2 | | | 19,412 | | | | * | | Theresia Gouw3 | | | 99,033 | | | | * | | Albert A. Pimentel4 | | | 77,565 | | | | * | | Frank Slootman5 | | | 42,565 | | | | * | | Allan Tessler6 | | | 38,155 | | | | * | | James R. Tolonen7 | | | 31,455 | | | | * | | Mark E. Kraynak8 | | | 43,446 | | | | * | | Sunil D. Nagdev9 | | | 18,665 | | | | * | | Terrence J. Schmid10 | | | 26,218 | | | | * | | Amichai Shulman11 | | | 124,230 | | | | * | | All Executive Officers and Directors as a Group (15 persons)12 | | | 732,279 | | | | 2.2 | % | | | | 5% Stockholders: | | | | | | | Shlomo Kramer13 | | | 3,534,957 | | | | 11.1 | % | FMR LLC14 | | | 3,320,596 | | | | 10.3 | % | The Vanguard Group15 | | | 1,858,577 | | | | 5.8 | % | BlackRock, Inc.16 | | | 1,679,060 | | | | 5.2 | % |
Name of Beneficial Owner | | Shares Beneficially Owned | | | Percentage | | Directors and Named Executive Officers: | | | | | | | | | Anthony Bettencourt1 | | | - | | | - | | Geraldine Elliott2 | | | 12,911 | | | * | | Albert Pimentel3 | | | 91,114 | | | * | | Roger Sippl4 | | | 8,142 | | | * | | Randall Spratt5 | | | 8,412 | | | * | | Allan Tessler6 | | | 58,012 | | | * | | James Tolonen7 | | | 45,004 | | | * | | Christopher Hylen | | | - | | | - | | Mike Burns | | | - | | | | - | | Sunil Nagdev8 | | | 32,500 | | | * | | Trâm Phi9 | | | 121,125 | | | * | | Michael Mooney10 | | | - | | | | - | | Aaron Kuan11 | | | 5,300 | | | | * | | Terrence Schmid12 | | | - | | | - | | All Executive Officers and Directors as a Group (14 persons) 13 | | | 382,520 | | | | 1.1 | % | | | | | | | | | | 5% Stockholders: | | | | | | | | | Eminence Capital, LP14 | | | 2,885,315 | | | | 8.3 | % | Black Rock, Inc.15 | | | 2,696,809 | | | | 7.7 | % | The Vanguard Group16 | | | 2,646,883 | | | | 7.6 | % | Elliott Associates, L.P.17 | | | 2,031,363 | | | | 5.8 | % |
* | Represents beneficial ownership of less than 1% of the shares of common stock. |
1 | Mr. Bettencourt resigned as our Chairman of the Board effective February 20, 2018. |
2 | Includes (i) options exercisable for 74,3752,653 shares of common stock within 60 days of March 1, 20162018, (ii) 4,624 restricted stock units that will vest within 60 days of March 1, 2018, and (ii) 18,838(iii) 5,634 shares of common stock owned of record by Mr. Bettencourt.Ms. Elliott. |
23
| Includes (i) options exercisable for 13,25221,165 shares of common stock within 60 days of March 1, 20162018, (ii) 4,624 restricted stock units that will vest within 60 days of March 1, 2018, and (ii) 6,160(iii) 10,325 shares of common stock owned of record by Mr. Giancarlo. |
3 | Includes (i) options exercisable for 18,090 shares of common stock within 60 days of March 1, 2016, (ii) 627 shares of common stock owned of record by the SGLG 2012 Living Trust, dated December 11, 2012, and (iii) 80,316 shares of common stock owned of record by the SGLG 2016 I GRAT dated 2/9/2016. Ms. Gouw is a trustee of the SGLG 2012 Living Trust and SGLG 2016 I GRAT and shares voting and investment power over the these trusts. |
4 | Includes (i) options exercisable for 18,090 shares of common stock within 60 days of March 1, 2016, (ii) 4,475 shares of common stock owned of record by Mr. Pimentel, and (iii) 55,000 shares of common stock owned of record by the Pimentel Family Trust U/D/T dated April 24, 1991 for which Albert A. Pimentel and Laurie Jean Pimentel serve as trustees. |
4 | Includes (i) 4,624 restricted stock units that will vest within 60 days of March 1, 2018, and (iii) 3,518 shares of common stock owned of record by Mr. Sippl. |
5 | Includes (i) 4,624 restricted stock units that will vest within 60 days of March 1, 2018, and (iii) 3,788 shares of common stock owned of record by Mr. Spratt. |
6 | Includes (i) options exercisable for 18,0909,455 shares of common stock within 60 days of March 1, 2016 and2018, (ii) 24,4754,624 restricted stock units that will vest within 60 days of March 1, 2018, (iii) 7,905 shares of common stock owned of record by Mr. Slootman. |
6 | Includes (i) options exercisable for 2,127 shares of common stock within 60 days of March 1, 2016, (ii)(a)Tessler, and (iv) 3,250 shares held by International Financial GP of Nevada, of which Mr. Tessler is the sole owner and Chair/CEO; (b)(v) 7,500 shares held by the Allan R. Tessler Charitable Remainder Unitrust #1 u/a/d 12-16-96, of which Mr. Tessler is the sole trustee; (c)(vi) 7,500 sharesShares held by the Allan R. Tessler Charitable Remainder Unitrust #2 u/a/d 12-16-96, of which Mr. Tessler is the sole trustee; (d)(vii) 6,750 shares held by Tessler Family Limited of which the Mr. Tessler is a limited partner; (e)and (viii) 10,000 shares held by the ART FGT Family Partners Limited, of which Mr. Tessler is a limited partner; and (f) 1,028 shares of common stock owned of record by Mr. Tessler.partner. |
7 | Includes (i) options exercisable for 18,19321,268 shares of common stock within 60 days of March 1, 2016,2018, (ii) 8,2624,624 restricted stock units that will vest within 60 days of March 1, 2018, and (iii) 14,112 shares of common stock owned of record by Mr. Tolonen, and (iii) 5,000 shares of common stock owned of record by James R. Tolonen & Ginger Tolonen as Trustees of the Tolonen Family Trust, dated September 26, 1996. |
8 | Includes (i)Represents options exercisable for 40,68832,500 shares of common stock within 60 days of March 1, 2016, and (ii) 2,758 shares of common stock owned of record by Mr. Kraynak.2018. |
9 | Includes (i) options exercisable for 12,50089,970 shares of common stock within 60 days of March 1, 2016,2018, (ii) 6,466 shares of common stock owned of record Ms. Phi, and (ii) 6,165(iv) 24,689 shares of common stock owned of record by Mr. Nagdev.the Mendez Trust Agreement, dated October 26, 2010, for which Ms. Phi is a co-settlor and co-trustee. |
10 | Includes (i)Mr. Mooney resigned as our Chief Revenue Officer effective February 23, 2018. |
11 | Represents options exercisable for 18,7505,300 shares of common stock within 60 days of March 1, 2016, (ii) 7,468 shares of common stock owned of record by2018. Mr. Schmid.Kuan served as Interim Chief Financial Officer through December 31, 2017. |
1112
| Mr. Schmid resigned as our Chief Financial Officer effective November 15, 2017. |
13 | Includes (i) 89,527 shares of common stock owned of record by Mr. Shulman, (ii) 24,765 shares of common stock owned of record by Amichai Shulman Holdings 2000 Ltd, of which Mr. Shulman has voting and investment power, and (iii) options to purchase 9,938 shares of common stock that are exercisable within 60 days of March 1, 2016. |
12 | The total for all directors and executive officers includes options exercisable for an aggregate of 343,001182,311 shares of common stock within 60 days of March 1, 2016.2018, and (ii) 27,744 restricted stock units that will vest within 60 days of March 1, 2018. |
1314
| Based on information set forth in a Schedule 13G/A filed by Eminence Capital, LP on February 14, 2018. Collectively, Eminence Capital, LP, Eminence GP, LLC, and Ricky C. Sandler beneficially own 2,885,315 shares of common stock. The address for Eminence Capital, Eminence GP and Mr. Sandler is 65 East 55th Street, 25th Floor, New York, NY 10022. |
15 | Based on information set forth in a Schedule 13G/A filed with the SEC on January 25, 2018. Includes (i) 2,613,789 shares of common stock for which Black Rock, Inc. has sole voting power, and (ii) 2,696,809 shares of common stock for which it has sole dispositive power. The principal business office of Black Rock, Inc. is 55 East 2nd Street, New York, NY 10055. |
16 | Based on information set forth in a Schedule 13G/A filed with the SEC on February 3, 2016.9, 2018. Includes (i) 1,304,521 shares of common stock owned of record by Mr. Kramer and (ii) 2,230,436 shares of common stock owned of record by HAPRI LIMITED, an investment holding company. Mr. Kramer is one of two directors of HAPRI LIMITED, with Amir Rapoport, the Kramer family office Chief Financial Officer, being the other director. All of HAPRI LIMITED’s shares are ultimately controlled by a trust of which Mr. Kramer is the sole grantor and sole beneficiary during his life. The address for HAPRI LIMITED is PFD Corporate Services (BVI) Limited, Tropic Isle Building, P.O. Box 3331, Road Town, Tortola, British Virgin Islands VG 1110. |
14 | Based on information set forth in a Schedule 13G/A filed with the SEC on March 10, 2016. FMR LLC and Abigail P. Johnson, a director, the vice chairman, the chief executive officer and the president of FMR LLC have sole dispositive power over the shares and FMR LLC has sole voting power over 973,746 shares. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company (“FMR Co”), a wholly-owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. The principal business office of FMR LLC is 245 Summer Street, Boston, MA 02210. |
15 | Based on information set forth in a Schedule 13G/A filed with the SEC on February 11, 2016. Includes (i) 58,66365,549 shares of common stock for which The Vanguard Group has sole voting power, (ii) 1,6003,453 shares of common stock for which it has shared voting power, (iii) 1,800,0142,580,171 shares of common stock for which it has sole dispositive power, and (iv) 58,56366,712 shares of common stock for which it has shared dispositive power. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group is the beneficial owner of 56,96363,259 shares or 0.18% of the outstanding common stock as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group is the beneficial owner of 3,3005,653 shares or 0.01% of the outstanding common stock as a result of its serving as investment manager of Australian investment offerings. The principal business office of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355. |
1617
| Based on information set forth in a Schedule 13G13D/A filed with the SECby Elliott Associates, L.P. on January 28, 2016. BlackRock,February 13, 2018. Collectively, Elliott Associates, L.P., Elliott International, L.P. and Elliott International Capital Advisors Inc. has sole power to vote or direct the vote of 1,613,041 shares of common stock and has sole power to dispose or direct the disposition of 1,679,060beneficially own 2,031,363 shares of common stock. The principal business office of BlackRock, Inc.address for the Elliott entities is 55 East 52nd40 West 57th Street, New York, NY 10055.New York 10019. |
REPORT OF THE AUDIT COMMITTEECOMMITTEE OF THE BOARD OF DIRECTORS This report of the Audit Committeeaudit committee is required by the Securities and Exchange Commission, and is not “soliciting material,” is not to be deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference in any filing of Imperva under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filing. The audit committee of the board of directors is composed of Mr. Tolonen, who is the chair of the audit committee, Mr. Pimentel, and Messrs. PimentelSippl and Tessler, each of whomSpratt, who both joined the audit committee in February 2017. The board of directors has determined that each member of the audit committee is an independent director, as independence for audit committee members is defined in The New Yorkthe NASDAQ Stock Exchange’sMarket’s listing standards. The board of directors has determined that each of Messrs. Pimentel, TesslerSippl and Tolonen is an “audit committee financial expert” as defined in Item 407(d) of RegulationS-K promulgated under the Securities Act and the Exchange Act. AsThe members of the audit committee for 2015, we assistassisted the board of directors in fulfilling its responsibilities relating to the oversight of the accounting, financial reporting, internal controls, financial practices and audit activities of Imperva and its subsidiaries. The audit committee operates under a charter.
In fulfilling its oversight role, the audit committee has reviewed and discussed Imperva’s audited financial statements with management and the independent registered public accounting firm Imperva’s audited financial statements.firm. The audit committee met eight times during 2015,2017, including meetings with Imperva’s independent registered public accounting firm to review Imperva’s quarterly and annual financial statements and their review or audit of such statements. It is not the duty of the audit committee to plan or conduct audits or to determine that the financial statements are complete and accurate and conform to generally accepted accounting principles. Management is responsible for the preparation, presentation, and integrity of Imperva’s financial statements, accounting and financial reporting principles, internal controls, and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. Ernst & Young LLP, Imperva’s independent registered public accounting firm, is responsible for performing an independent audit of Imperva’s consolidated financial statements in accordance with generally accepted auditing standards in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and expressing an opinion on the effectiveness of Imperva’s internal control over financial reporting. The audit committee discussed with Imperva’s independent registered public accounting firmErnst & Young LLP the matters required to be discussed by Auditing Standard No. 161301 (Communication with Audit Committees), issued by the PCAOB. Imperva’s independent registered public accounting firmErnst & Young LLP also provided to the audit committee the written disclosures and the letter required by Ethics and Independence Rule 3526 of the PCAOB (Communications with Audit Committees Concerning Independence), and the audit committee discussed with the independent registered public accounting firm that firm’sErnst & Young LLP its independence. Based upon the audit committee’s review and discussions referred to above, the audit committee recommended to the board of directors that Imperva’s audited consolidated financial statements be included in Imperva’s Annual Report on Form10-K for the year ended December 31, 2015,2017, filed with the SEC on February 26, 2016.23, 2018. In addition, the Audit Committeeaudit committee selected Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 20162018 and is seeking ratification of such selection by our stockholders. Submitted by the Audit Committee of the Board of Directors, James Tolonen (Chair) Albert Pimentel Allan Tessler
Roger SipplRandall Spratt
RATIFICATION OF INDEPENDENT REGISTEREDREGISTERED PUBLIC ACCOUNTING FIRM, ERNST & YOUNG LLP, FOR THE YEAR ENDING DECEMBER 31, 20162018 (Item No. 4 on the Proxy Card) Our audit committee has selected, and is submitting for ratification by the stockholders its selection of, the firm of Ernst & Young LLP, or EY, to serve as our independent registered public accounting firm for the year ending December 31, 20162018 and until their successors are appointed. EY has been selected as our independent registered public accounting firm every year since our IPO in November 2011. Although action by stockholders is not required by law, the audit committee has determined that it is desirable to request approval of this selection by the stockholders. Notwithstanding the selection, the audit committee, in its discretion, may direct the appointment of a new independent registered public accounting firm at any time during the year, if the audit committee feels that such a change would be in the best interests of Imperva and our stockholders. In the event of a negative vote on ratification, the audit committee will reconsider the selection of EY as our independent registered public accounting firm. Principal Accountant Fees and Services The following table sets forth the aggregate fees and related expenses for professional services provided by EY during 20152017 and 2014.2016. The audit committee considered the provision of the services corresponding to these fees, and the audit committee believes that the provision of these services is compatible with EY maintaining its independence. | | | | Years Ended December 31, | | | Years Ended December 31, | | | | | 2015 | | | 2014 | | | 2017 | | | 2016 | | Audit fees | | $ | 1,849,605 | | | $ | 1,543,555 | | | $ | 1,942,459 | | | $ | 1,635,363 | | Audit-related fees | | | — | | | | — | | | | — | | | | — | | Tax fees | | | 172,152 | | | | 94,762 | | | | 128,579 | | | | 114,314 | | All other fees | | | — | | | | — | | | | — | | | | — | | | | | | | | | | Total | | $ | 2,021,757 | | | $ | 1,638,317 | | | $ | 2,071,038 | | | $ | 1,749,677 | | | | | | | | | |
Audit Fees Fees for EY audit services include fees associated with the annual audit, quarterly reviews of financial statements and accounting consultations. Audit-Related Fees Fees for other services includeNo audit-related fees associated with a subscription for accounting research.were incurred during 2017 and 2016.
Tax Fees Fees for EY tax services include fees associated with international tax advice related to transfer pricing and international tax assistance related to tax filings. All Other Fees Fees forNo other services include fees associated with services related to information securitywere incurred during 2017 and network penetration testing.2016.
Representatives of EY are expected to be atattend the annual meeting. Representatives of EY will be given the opportunity to make a statement if they desire to do so, and they will be available to respond to appropriate questions. Pre-Approval Policies and Procedures The audit committeepre-approval policies and procedures require prior approval of each engagement of EY to perform services. We adopted thesepre-approval policies in accordance with the requirements of theSarbanes-Oxley Act and all of the professional services listed herein were approved in accordance with these policies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2016.2018.
STOCKHOLDER PROPOSALS FOR THE 20172019 ANNUAL MEETING OF STOCKHOLDERS AND INCLUSION IN IMPERVA’S PROXY MATERIALS Stockholder Proposals Under our bylaws, stockholders who wish to present proposals for action, or to nominate directors, at our next2019 annual meeting of stockholders (that is, the next annual meeting following the annual meeting to which this proxy statement relates) must give written notice thereofof the proposal or nomination to our Corporate Secretary at the address set forth on the cover page of this proxy statement in accordance with the provisions of our bylaws. Our bylaws which require that such notice be given not less than 7590 days nor more than 105120 days prior to the first anniversary of the date of the immediately precedingprior year’s annual meeting of stockholders. To be timely for the 20172018 annual meeting of stockholders, a stockholder’s notice must be received by us between December 25, 2018 and January 20, 2017 and February 19, 2017.24, 2019. Such proposals should be delivered or mailed to the attention of our Corporate Secretary at our principal executive offices, which are Imperva, Inc., 3400 Bridge Parkway, Redwood Shores, California 94065. If the date of the 20172019 annual meeting is more than 30 days before or more than 60 days after the first anniversary date of the 20162018 annual meeting, in order for a notice to be timely, it must be delivered no earlier than 105120 days prior to and notno later than 7590 days prior to the 20162019 annual meeting date or, if later, the close of business on the 10th10th day following the day on whichafter we first publicly announce the date of the 20172019 annual meeting. These stockholder notices must contain information required by our bylaws. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements. If a matter is properly brought before our next annual meeting under the procedures outlined in this paragraph, the proxy holders named by our board of directors will have the discretion to vote on such matter without having received directions from stockholders delivering proxies to them for such meeting, provided that our proxy statement for our next meeting briefly describes the matter and how the proxy holders intend to vote on it. In order for proposals to be eligible for inclusion in our proxy statement and proxy card for the 20172019 annual meeting pursuant to Rule14a-8 under the Exchange Act, stockholder proposals would have to be received by our Corporate Secretary no later than November 24, 201612, 2018 and satisfy the conditions established by the SEC for stockholder proposals. In order for any other stockholder proposals to be eligible to be brought before the stockholders at the 20172019 annual meeting, the stockholders submitting such proposals must also comply with the procedures, including the deadlines, required by our then current bylaws, as referenced in the two preceding paragraphs. Stockholder nominations of directors are not stockholder proposals within the meaning of Rule14a-8 and are not eligible for inclusion in our proxy statement. Any such nominations should comply with our bylaws. Inclusion in Imperva’s Proxy Materials In December 2017, our Board adopted proxy access amendments to our bylaws to permit a stockholder or a group of up to 20 stockholders that has maintained continuous ownership of at least 3% of Imperva’s common stock for at least three years to include nominees in Imperva’s proxy materials for an annual meeting of stockholders, provided the stockholder(s) and nominee(s) satisfy the requirements specified in the bylaws. The number of director nominees that may be so included is limited to the greater of two or 20% of the total number of directors. In order for proxy access nominations to be eligible for inclusion in our proxy statement and proxy card for the 2019 annual meeting, stockholder nominations under the proxy access provisions of our bylaws would have to be received by our Corporate Secretary between November 25, 2018 and December 25, 2018 and satisfy the requirements in our bylaws.
TRANSACTION OF OTHER BUSINESS At the date of this proxy statement, the board of directors knows of no other business that will be conducted at the 20162018 annual meeting of stockholders other than as described in this proxy statement. If any other matter or matters are properly brought before the annual meeting, or any adjournment or postponement of the annual meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxy on such matters in accordance with their best judgment. By Order of the Board of Directors, 
Trâm T. Phi Senior Vice President, General Counsel and Corporate Secretary March 23, 2016 APPENDIX A
IMPERVA, INC.
2011 Stock Option and Incentive Plan
1.PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, and any Parents and Subsidiaries that exist now or in the future, by offering them an opportunity to participate in the Company’s future performance through the grant of Awards. Capitalized terms not defined elsewhere in the text are defined in Section 27.
2.SHARES SUBJECT TO THE PLAN.
2.1Number of Shares Available. Subject to Section 2.5 and any other applicable provisions hereof, the total number of Shares reserved and made available for grant and issuance pursuant to this Planas of the date of adoption of this Plan by the Board, is 1,000,000is 7,236,237Sharesplus (a) any , which includes thereserved shares not issued or subject to outstanding grants under the Company’s 2003 Stock Plan (together with any subplans and addenda adopted thereunder, the “Prior Plan”) on the Effective Datethat were made available for grant under this Plan on the Effective Date,plus any(b) (a) shares that are subject to stock options granted under the Prior Plan that cease to be subject to such stock options after the Effective Date (other than by exerciseand other than shares that are withheld to pay the exercise or purchase price for such shares or to satisfy any tax withholding obligations in connection with such shares),(c) (b) shares issued under the Prior Plan before or after the Effective Date pursuant to the exercise of stock options that are, after the Effective Date, forfeited, and(d) (c) shares issued under the Prior Plan that are repurchased by the Company at the original issue price.
2.2Lapsed, Returned Awards. Shares subject to Awards, and Shares issued under this Plan under any Award, will again be available for grant and issuance in connection with subsequent Awards under this Plan to the extent such Shares: (a) are subject to issuance upon exercise of an Option or SAR granted under this Plan but which cease to be subject to the Option or SAR for any reason other than exercise of the Option or SAR; (b) are subject to Awards granted under this Plan that are forfeited or are repurchased by the Company at the original issue price; (c) are subject to Awards granted under this Plan that otherwise terminate without such Shares being issued; or (d) are surrendered pursuant to an Exchange Program.and permitted to be returned to the Plan. The following Shares may not again be made available for future grant and issuance as Awards under the Plan: (i) Shares that are withheld to pay the exercise or purchase price of an Option or SAR or to satisfy any tax withholding obligations in connection with an Option or SAR, (ii) Shares not issued or delivered as a result of the net settlement of an outstanding Option or SAR or (iii) shares of the Company’s Common Stock repurchased on the open market with the proceeds of an Option exercise price.To the extent an Award under this Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under this Plan. Shares usedto pay the exercise price of an Award orto satisfy the tax withholding obligations related to an Award that is not an Option or SAR will become available for future grant or sale under this Plan. For the avoidance of doubt, Shares that otherwise become available for grant and issuance because of the provisions of this Section 2.2 shall not include Shares subject to Awards that initially became available because of the substitution clause in Section 21.2 hereof.
2.3Minimum Share Reserve. At all times the Company shall reserve and keep available a sufficient number of Shares as shall be required to satisfy the requirements of all outstanding Awards granted under this Plan.
2.4 Automatic Share Reserve Increase. The number of Shares available for grant and issuance under this Plan shall be increased on January 1, of each of 2012 through 2015, by the lesser of (a) four percent (4%) of the number of Shares issued and outstanding on each December 31 immediately prior to the date of increase(rounded down to the nearest whole share), or (b) such number of Shares determined by the Board.
2.42.5 Limitations. No more than 20,000,000 Shares shall be issued pursuant to the exercise of ISOs.
2.52.6Adjustment of Shares. If the number of outstanding Shares is changed by a stock dividend, an extraordinary cash dividend, recapitalization, spin-off, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company, without consideration, then (a) the number of Shares reserved for issuance and future grant under this Plan set forth in Section 2.1, (b) the Exercise Prices of and number of Shares subject to outstanding Options and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the maximum number of shares that may be issued as ISOs set forth in Section 2.4, (e) the maximum number of Shares that may be issued to an individual or to a new Employee in any one calendar year set forth in Section 3 and (f) the number of Shares that are granted as Awards to Non-Employee Directors as set forth in Section 12, shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws; provided that fractions of a Share will not be issued.
3.ELIGIBILITY. ISOs may be granted only to Employees. All other Awards may be granted to Employees, Consultants, Directors and Non-Employee Directors of the Company or any Parent or Subsidiary of the Company;provided such Consultants, Directors andNon-Employee Directors render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. No Participant will be eligible to receive or be granted more than 500,000 Shares in any calendar year under this Plan pursuant to the grant of Awards except that new Employees of the Company or of a Parent or Subsidiary of the Company (including new Employees who are also officers and directors of the Company or any Parent or Subsidiary of the Company) are eligible to receive or be granted up to a maximum of 1,000,000 Shares in the calendar year in which they commence their employment.
4.ADMINISTRATION.
4.1Committee Composition; Authority. This Plan will be administered by the Committee or by the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan, except, however, the Board shall establish the terms for the grant of an Award to Non-Employee Directors. The Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to this Plan or any Award;
(c) select persons to receive Awards;
(d)subject to Section 4.6, determine the form and terms and conditions, not inconsistent with the terms of this Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised or settled (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, the method to satisfy tax withholding obligations or any other tax liability legally due and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Committee will determine;
(e) determine the number of Shares or other consideration subject to Awards;
(f) determine the Fair Market Value in good faith, if necessary;
(g) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;
(h) grant waivers of Plan or Award conditions;
(i)subject to Section 4.6, determine the vesting, exercisability and payment of Awards;
(j) correct any defect, supply any omission or reconcile any inconsistency in this Plan, any Award or any Award Agreement;
(k) determine whether an Award has been earned;
(l) determine the terms and conditions of any, and to institute any Exchange Program approved by shareholders;
(m) reduce or waive any criteria with respect to Performance Factors;
(n) adjust Performance Factors to take into account changes in law and accounting or tax rules as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code with respect to persons whose compensation is subject to Section 162(m) of the Code; and
(o) delegate any of the foregoing to a subcommittee consisting of one or more officers pursuant to a specific delegation as permitted by applicable law; and
(p) make all other determinations necessary or advisable for the administration of this Plan.
4.2Committee Interpretation and Discretion. Any determination made by the Committee with respect to any Award shall be made in its sole discretion at the time of grant of the Award or, unless in contravention of any express term of this Plan or Award, at any later time, and such determination shall be final and binding on the Company and all persons having an interest in any Award under this Plan. Any dispute regarding the interpretation of this Plan or any Award Agreement shall be submitted by the Participant or Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and the Participant. The Committee may delegate to one or more executive officers the authority to review and resolve disputes with respect to Awards held by Participants who are not Insiders, and such resolution shall be final and binding on the Company and the Participant.
4.3Section 162(m) of the Code and Section 16 of the Exchange Act. When necessary or desirable for an Award to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall include at least two persons who are “outside directors” (as defined under Section 162(m) of the Code) and at least two (or a majority if more than two then serve on the Committee) such “outside directors” shall approve the grant of such Award and timely determine (as applicable) the Performance Period and any Performance Factors upon which vesting or settlement of any portion of such Award is to be subject. When required by Section 162(m) of the Code, prior to settlement of any such Award at least two (or a majority if more than two then serve on the Committee) such “outside directors” then serving on the Committee shall determine and certify in writing the extent to which such Performance Factors have been timely achieved and the extent to which the Shares subject to such Award have thereby been earned. Awards granted to Participants who are subject to Section 16 of the Exchange Act must be approved by two or more “non-employee directors” (as defined in the regulations promulgated under Section 16 of the Exchange Act). With respect to Participants whose compensation is subject to Section 162(m) of the Code, and provided that such adjustments are consistent with the regulations promulgated under Section 162(m) of the Code, the Committee may adjust the performance goals to account for changes in law and accounting and to make such adjustments as the Committee deems necessary or appropriate to reflect the impact of extraordinary or unusual items, events or circumstances to avoid windfalls or hardships, including without limitation (i) restructurings, discontinued operations, extraordinary items, and
other unusual or non-recurring charges, (ii) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (iii) a change in accounting standards required by generally accepted accounting principles.
4.4Foreign Award Recipients. Notwithstanding any provision of this Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Committee, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries shall be covered by this Plan; (b) determine which individuals outside the United States are eligible to participate in this Plan; (c) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Committee determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in this Plan; and (e) take any action, before or after an Award is made, that the Committee determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.
4.5Documentation. The Award Agreement for a given Award, this Plan and any other documents may be delivered to, and accepted by, a Participant or any other person in any manner (including electronic distribution or posting) that meets applicable legal requirements.
4.6Vesting Limitations. Awards granted to Participants shall not provide for any vesting prior to at least twelve (12) months from grant. Notwithstanding the foregoing, the Committee may permit (i) acceleration of vesting of Awards in the event of the Participant’s death or Disability, or in the event of a Corporate Transaction and (ii) the vesting of Awards prior to twelve (12) months from grant provided Shares subject to such Awards do not exceed an aggregate of five percent (5%) of the Shares authorized for grant under the Plan.
5.OPTIONS. The Committee may grant Options to Participants and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following:
5.1Option Grant. Each Option granted under this Plan will identify the Option as an ISO or an NQSO. An Option may be, but need not be, awarded or vested upon satisfaction of such Performance Factors during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the Option is being earned upon the satisfaction of Performance Factors, then the Committee will: (a) determine the nature, length and starting date of any Performance Period for each Option; and (b) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to Options that are subject to different performance goals and other criteria.
5.2Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, or a specified future date. The Award Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.
5.3Exercise Period. Options may be exercisable within the times or upon the conditions as set forth in the Award Agreement governing such Option;provided,however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; andprovided further that no ISO granted to a person who, at the time the ISO is granted, directly or by attribution owns more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.
5.4Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted; provided that: (i) the Exercise Price of an ISO will be not less than one hundred percent (100%) of the Fair Market Value of the Shares on the date of grant and (ii) the Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased must be made in accordance with Section 11 and the Award Agreement and in accordance with any procedures established by the Company. The Exercise Price of a NQSO may not be less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
5.5Method of Exercise. Any Option granted hereunder will be exercisable according to the terms of this Plan and at such times and under such conditions as determined by the Committee and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (a) notice of exercise (in such form as the Committee may specify from time to time) from the person entitled to exercise the Option, and (b) full payment for the Shares with respect to which the Option is exercised (together with applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Committee and permitted by the Award Agreement and this Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 2.5 of this Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of this Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
5.6Termination. The exercise of an Option will be subject to the following (except as may be otherwise provided in an Award Agreement):
(a) If the Participant is Terminated for any reason except for Cause or the Participant’s death or Disability, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable by the Participant on the Termination Date no later than three (3) months after the Termination Date (or such shorter time period or longer time period not exceeding five (5) years as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be the exercise of an NQSO), but in any event no later than the expiration date of the Options.
(b) If the Participant is Terminated because of the Participant’s death (or the Participant dies within three (3) months after a Termination other than for Cause or because of the Participant’s Disability), then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the Participant on the Termination Date and must be exercised by the Participant’slegal representative, or authorizeddesignee or in the absence of a designee,as prescribedin theAward Agreement,manner set forth in Section 14, no later than twelve (12) months after the Termination Date (or such shorter time period not less than six (6) months or longer time period not exceeding five (5) years as may be determined by the Committee), but in any event no later than the expiration date of the Options.
(c) If the Participant is Terminated because of the Participant’s Disability, then the Participant’s Options may be exercised only to the extent that such Options would have been exercisable by the
Participant on the Termination Date and must be exercised by the Participant (or the Participant’s legal representative orauthorized designeeguardian) no later than twelve (12) months after the Termination Date (with any exercise beyond (a) three (3) months after the Termination Date when the Termination is for a Disability thatis not a “permanent and total disability” as defined in Section 22(e)(3) of the Code, or (b) twelve (12) months after the Termination Date when the Termination is for a Disability thatis a “permanent and total disability” as defined in Section 22(e)(3) of the Code, deemed to be exercise of an NQSO), but in any event no later than the expiration date of the Options.
(d) If the Participant is terminated for Cause, then Participant’s Options shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee, but in any no event later than the expiration date of the Options.
5.7Limitations on Exercise. The Committee may specify a minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent any Participant from exercising the Option for the full number of Shares for which it is then exercisable.
5.8Limitations on ISOs. With respect to Awards granted as ISOs, to the extent that the aggregate Fair Market Value of the Shares with respect to which such ISOs are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as NQSOs. For purposes of this Section 5.8, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.
5.9Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject to Section 18 of this Plan, by written notice to affected Participants, the Committee may reduce the Exercise Price of outstanding Options without the consent of such Participants;provided,however, that the Exercise Price may not be reduced below the Fair Market Value on the date the action is taken to reduce the Exercise Price.
5.10No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section 422 of the Code.
6.RESTRICTED STOCK AWARDS.
6.1Awards of Restricted Stock. A Restricted Stock Award is an offer by the Company to sell to a Participant Shares that are subject to restrictions (“Restricted Stock”). The Committee will determine to whom an offer will be made, the number of Shares the Participant may purchase, the Purchase Price, the restrictions under which the Shares will be subject and all other terms and conditions of the Restricted Stock Award, subject to this Plan.
6.2Restricted Stock Purchase Agreement. All purchases under a Restricted Stock Award will be evidenced by an Award Agreement. Except as may otherwise be provided in an Award Agreement, a Participant accepts a Restricted Stock Award by signing and delivering to the Company an Award Agreement with full payment of the Purchase Price, within thirty (30) days from the date the Award Agreement was delivered to the
Participant. If the Participant does not accept such Award within thirty (30) days, then the offer of such Restricted Stock Award will terminate, unless the Committee determines otherwise.
6.3Purchase Price. The Purchase Price for a Restricted Stock Award will be determined by the Committee, may be less than Fair Market Value on the date the Restricted Stock Award is granted, and may be zero. Payment of the Purchase Price must be made in accordance with Section 11 of this Plan, and the Award Agreement and in accordance with any procedures established by the Company.
6.4Terms of Restricted Stock Awards. Restricted Stock Awards will be subject to such restrictions as the Committee may impose or are required by law. These restrictions may be based on completion of a specified number of years of service with the Company or upon completion of Performance Factors, if any, during any Performance Period as set out in advance in the Participant’s Award Agreement. Prior to the grant of a Restricted Stock Award, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Restricted Stock Award; (b) select from among the Performance Factors to be used to measure performance goals, if any; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Restricted Stock Awards that are subject to different Performance Periods and having different performance goals and other criteria.
6.5Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).
7.STOCK BONUS AWARDS
7.1Awards of Stock Bonuses. A Stock Bonus Award is an award to an eligible person of Shares for services to be rendered or for past services already rendered to the Company or any Parent or Subsidiary. All Stock Bonus Awards shall be made pursuant to an Award Agreement. Except as otherwise determined by the Committee, no payment from the Participant will be required for Shares awarded pursuant to a Stock Bonus Award. If the Committee requires payment for Shares awarded pursuant to a Stock Bonus Award, the Purchase Price will be determined by the Committee and may be less than Fair Market Value on the date the Stock Bonus Award is granted. Payment of the Purchase Price must be made in accordance with Section 11 of this Plan, and the Award Agreement and in accordance with any procedures established by the Company.
7.2Terms of Stock Bonus Awards. The Committee will determine the number of Shares to be awarded to the Participant under a Stock Bonus Award and the restrictions thereon (if any). These restrictions may be based upon completion of a specified number of years of service with the Company or upon satisfaction of performance goals based on Performance Factors during any Performance Period as set out in advance in the Participant’s Stock Bonus Agreement. Prior to the grant of any Stock Bonus Award subject to restrictions or performance goals, the Committee shall: (a) determine the nature, length and starting date of any Performance Period for the Stock Bonus Award; (b) select from among the Performance Factors to be used to measure performance goals; and (c) determine the number of Shares that may be awarded to the Participant. Performance Periods may overlap and a Participant may participate simultaneously with respect to Stock Bonus Awards that are subject to different Performance Periods and different performance goals and other criteria.
7.3Form of Payment to Participant. Payment may be made in the form of cash, whole Shares, or a combination thereof, based on the Fair Market Value of the Shares earned under a Stock Bonus Award on the date of payment, as determined in the sole discretion of the Committee.
7.4Termination of Participation. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).
8.STOCK APPRECIATION RIGHTS.
8.1Awards of SARs. A Stock Appreciation Right (“SAR”) is an award to a Participant that may be settled in cash, or Shares (which may consist of Restricted Stock), having a value equal to (a) the difference between the Fair Market Value on the date of exercise over the Exercise Price multiplied by (b) the number of Shares with respect to which the SAR is being settled (subject to any maximum number of Shares that may be issuable as specified in an Award Agreement). All SARs shall be made pursuant to an Award Agreement.
8.2Terms of SARs. The Committee will determine the terms of each SAR including, without limitation: (a) the number of Shares subject to the SAR; (b) the Exercise Price and the time or times during which the SAR may be settled; (c) the consideration to be distributed on settlement of the SAR; and (d) the effect of the Participant’s Termination on each SAR. The Exercise Price of the SAR will be determined by the Committee when the SAR is granted, and may not be less than Fair Market Value. A SAR may be awarded upon satisfaction of Performance Factors, if any, during any Performance Period as are set out in advance in the Participant’s individual Award Agreement. If the SAR is being earned upon the satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for each SAR; and (y) select from among the Performance Factors to be used to measure the performance, if any. Performance Periods may overlap and Participants may participate simultaneously with respect to SARs that are subject to different Performance Factors and other criteria.
8.3Exercise Period and Expiration Date. A SAR will be exercisable within the times or upon the occurrence of events determined by the Committee and set forth in the Award Agreement governing such SAR. The SAR Agreement shall set forth the expiration date; provided that no SAR will be exercisable after the expiration of ten (10) years from the date the SAR is granted. The Committee may also provide for SARs to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the attainment during a Performance Period of performance goals based on Performance Factors), in such number of Shares or percentage of the Shares subject to the SAR as the Committee determines. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee). Notwithstanding the foregoing, the rules of Section 5.6 also will apply to SARs.
8.4Form of Settlement. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying (i) the difference between the Fair Market Value of a Share on the date of exercise over the Exercise Price; times (ii) the number of Shares with respect to which the SAR is exercised. At the discretion of the Committee, the payment from the Company for the SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. The portion of a SAR being settled may be paid currently or on a deferred basis with such interest or dividend equivalent, if any, as the Committee determines, provided that the terms of the SAR and any deferral satisfy the requirements of Section 409A of the Code.
8.5Termination of Participation. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).
9.RESTRICTED STOCK UNITS.
9.1Awards of Restricted Stock Units. A Restricted Stock Unit (“RSU”) is an award to a Participant covering a number of Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). All RSUs shall be made pursuant to an Award Agreement.
9.2Terms of RSUs. The Committee will determine the terms of an RSU including, without limitation: (a) the number of Shares subject to the RSU; (b) the time or times during which the RSU may be settled; and (c) the consideration to be distributed on settlement, and the effect of the Participant’s Termination on each RSU. An RSU may be awarded upon satisfaction of such performance goals based on Performance
Factors during any Performance Period as are set out in advance in the Participant’s Award Agreement. If the RSU is being earned upon satisfaction of Performance Factors, then the Committee will: (x) determine the nature, length and starting date of any Performance Period for the RSU; (y) select from among the Performance Factors to be used to measure the performance, if any; and (z) determine the number of Shares deemed subject to the RSU. Performance Periods may overlap and participants may participate simultaneously with respect to RSUs that are subject to different Performance Periods and different performance goals and other criteria.
9.3Form and Timing of Settlement. Payment of earned RSUs shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned RSUs in cash, Shares, or a combination of both. The Committee also may permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code.
9.4Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).
10.PERFORMANCE SHARES.
10.1Awards of Performance Shares. A Performance Share Award is an award to a Participant denominated in Shares that may be settled in cash, or by issuance of those Shares (which may consist of Restricted Stock). Grants of Performance Shares shall be made pursuant to an Award Agreement.
10.2Terms of Performance Shares. The Committee will determine, and each Award Agreement shall set forth, the terms of each award of Performance Shares including, without limitation: (a) the number of Shares deemed subject to such Award; (b) the Performance Factors and Performance Period that shall determine the time and extent to which each award of Performance Shares shall be settled; (c) the consideration to be distributed on settlement, and the effect of the Participant’s Termination on each award of Performance Shares. In establishing Performance Factors and the Performance Period the Committee will: (x) determine the nature, length and starting date of any Performance Period; (y) select from among the Performance Factors to be used; and (z) determine the number of Shares deemed subject to the award of Performance Shares. Prior to settlement the Committee shall determine the extent to which Performance Shares have been earned. Performance Periods may overlap and Participants may participate simultaneously with respect to Performance Shares that are subject to different Performance Periods and different performance goals and other criteria.
10.3Value, Earning and Timing of Performance Shares. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. After the applicable Performance Period has ended, the holder of Performance Shares will be entitled to receive a payout of the number of Performance Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Factors or other vesting provisions have been achieved. The Committee, in its sole discretion, may pay earned Performance Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Shares at the close of the applicable Performance Period) or in a combination thereof.
10.4Termination of Participant. Except as may be set forth in the Participant’s Award Agreement, vesting ceases on such Participant’s Termination Date (unless determined otherwise by the Committee).
11.PAYMENT FOR SHARE PURCHASES.
Payment from a Participant for Shares purchased pursuant to this Plan may be made in cash or by check or, where expressly approved for the Participant by the Committee and where permitted by law (and to the extent not otherwise set forth in the applicable Award Agreement):
(a) by cancellation of Participant’s indebtedness to the Company;
(b) by surrender of shares of the Company held by the Participant that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Award will be exercised or settled;
(c) by waiver of compensation due or accrued to the Participant for services rendered or to be rendered to the Company or a Parent or Subsidiary of the Company;
(d) by consideration received by the Company pursuant to a broker-assisted or other cashless exercise program implemented by the Company in connection with this Plan;
(e) by any combination of the foregoing; or
(f) by any other method of payment as is permitted by applicable law.
12.GRANTS TO NON-EMPLOYEE DIRECTORS.
12.1Types of Awards. Non-Employee Directors are eligible to receive any type of Award offered under this Plan except ISOs. Awards pursuant to this Section 12 may be automatically made pursuant to policy adopted by the Board, or made from time to time as determined in the discretion of the Board. The aggregate number of Shares subject to Awards granted to a Non-Employee Director pursuant to this Section 12 in any calendar year shall not exceed 250,000 shares; provided however, that this maximum number can later be increased by the Board effective for the calendar year next commencing thereafter without further stockholder approval.
12.2Eligibility. Awards pursuant to this Section 12 shall be granted only toNon-Employee Directors. A Non-Employee Director who is elected or re-elected as a member of the Board will be eligible to receive an Award under this Section 12.
12.3Vesting, Exercisability and Settlement. Except as set forth in Section 21, Awards shall vest, become exercisable and be settled as determined by the Board. With respect to Options and SARs, the exercise price granted to Non-Employee Directors shall not be less than the Fair Market Value of the Shares at the time that such Option or SAR is granted.
13.WITHHOLDING TAXES.
13.1Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company an amount sufficient to satisfy applicable federal, state, local and international withholding tax requirements prior to the delivery of Shares pursuant to exercise or settlement of any Award. Whenever payments in satisfaction of Awards granted under this Plan are to be made in cash, such payment will be net of an amount sufficient to satisfy applicable federal, state, local and international withholding tax requirements.
13.2Stock Withholding. The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time, may require or permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, (iii) delivering to the Companyalready-owned Shares having a Fair Market Value equal to the minimum amount required to be withheld , or (iv) withholding from the proceeds of the sale of otherwise deliverable Shares acquired pursuant to an Award either through a voluntary sale or through a mandatory sale arranged by the Company. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.
14.TRANSFERABILITY. Unless determined otherwise by the Committee, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws
of descent or distribution. If the Committee makes an Award transferable, such Award will contain such additional terms and conditions as the Committee deems appropriate. All Awards shall be exercisable: (i) during the Participant’s lifetime only by (A) the Participant, or (B) the Participant’s guardian or legal representative; and (ii) after the Participant’s death, by the Participant’s designee, provided that such designee has been designated prior to the Participant’s death on a form prescribed by the Company. In the absence of any such effective designation, such Awards may be exercised only by the beneficiary designated by the Participant with the largest beneficial interest; or, if there is no single beneficiary with a majority or plurality of interest, the then-acting trustee of the latest revocable trust established by the Participant of which Participant was a beneficiary or, if none, the executors or administrators of the Participant’s estate. No transfer by will or the laws of descent and distribution of any Award shall be effective to bind the Company unless the Committee shall have been furnished with (a) written notice thereof and with a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer and (b) an agreement by the transferee to comply with all the terms and conditions of the Award that are or would have been applicable to the Participant and to be bound by the acknowledgements made by the Participant in connection with the grant of the Award.
15.PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES.
15.1Voting and Dividends. No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant except for any Dividend Equivalent Rights permitted by an applicable Award Agreement. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares;provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock;provided,further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Shares that are repurchased at the Participant’s Purchase Price or Exercise Price, as the case may be, pursuant to Section 15.2. The Committee, in its discretion, may provide in the Award Agreement evidencing any Award that the Participant shall be entitled to Dividend Equivalent Rights with respect to the payment of cash dividends on Shares subject to such Award during the period beginning on the date the Award is granted and ending, with respect to each Share subject to the Award, on the earlier of the date on which the Award is exercised or settled or the date on which they are forfeited;provided, that under no circumstances may Dividend Equivalent Rights be granted for any Option or SAR. Such Dividend Equivalent Rights, if any, shall be credited to the Participant in the form of additional whole Shares as of the date of payment of such cash dividends on Shares.
15.2Restrictions on Shares. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) a right to repurchase (a “Right of Repurchase”) a portion of any or all Unvested Shares held by a Participant following such Participant’s Termination at any time within ninety (90) days after the later of the Participant’s Termination Date and the date the Participant purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at the Participant’s Purchase Price or Exercise Price, as the case may be. The Company’s Right of Repurchase shall be automatic with respect to Unvested Shares awarded to the Participant for no Purchase Price.
16.CERTIFICATES. All certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.
17.ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company
or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of the Participant’s obligation to the Company under the promissory note;provided,however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.
18.REPRICING; EXCHANGE AND BUYOUT OF AWARDS.WithoutAn Exchange Program, including but not limited to any repricing of Options or SARs, is not permitted without prior stockholder approval, the Committee may (a) reprice Options or SARS (and where such repricing is a reduction in the Exercise Price of outstanding Options or SARS, the consent of the affected Participants is not required provided written notice is provided to them), and (b) with the consent of the respective Participants (unless not required pursuant to Section 5.9 of this Plan), pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, outstanding Awards.
19.SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and/or (b) completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.
20.NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time.
21.CORPORATE TRANSACTIONS.
21.1Assumption or Replacement of Awards by Successor. In the event of a Corporate Transaction any or all outstanding Awards may be assumed or replaced by the successor corporation, which assumption or replacement shall be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions no less favorable to the Participant. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, then notwithstanding any other provision in this Plan to the contrary, such Awards will expire on such transaction at such time and on such conditions as the Board will determine; the Board (or, the Committee, if so designated by the Board) may, in its sole discretion, accelerate the vesting of such Awards in
connection with a Corporate Transaction, provided that if Awards subject to performance-based vesting are accelerated, the performance shall be deemed achieved at the greater of (x) target performance or (y) the actual performance achieved as of the Corporate Transaction as determined by the Committee, and the resulting number of shares shall accelerate in full as of the time of the consummation of the Corporate Transaction. In addition, in the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a Corporate Transaction, the Committee will notify the Participant in writing or electronically that such Award will be exercisable for a period of time determined by the Committee in its sole discretion, and such Award will terminate upon the expiration of such period. Awards need not be treated similarly in a Corporate Transaction.
Notwithstanding anything to the contrary in this Section 21.1, the Committee, in its sole discretion, may grant Awards that provide for acceleration upon a Corporate Transaction or in other events in the specific Award Agreements.
21.2Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either; (a) granting an Award under this Plan in substitution of such other company’s award; or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the Purchase Price or the Exercise Price, as the case may be, and the number and nature of Shares issuable upon exercise or settlement of any such Award will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option in substitution rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price. Substitute Awards shall not reduce the number of Shares authorized for grant under this Plan or authorized for grant to a Participant in a calendar year.
21.3Non-Employee Directors’ Awards. Notwithstanding any provision to the contrary herein, in the event of a Corporate Transaction, the vesting of all Awards granted toNon-Employee Directors shall accelerate and such Awards shall become exercisable (as applicable) in full prior to the consummation of such event at such times and on such conditions as the Committee determines.
22.ADOPTION AND STOCKHOLDER APPROVAL. This Plan shall be submitted for the approval of the Company’s stockholders, consistent with applicable laws, within twelve (12) months before or after the date this Plan is adopted by the Board.
23.TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will become effective on the Effective Date and will terminate ten (10) years from the date this Plan is adopted by the Board. This Plan and all Awards granted hereunder shall be governed by and construed in accordance with the laws of the State of Delaware.
24.AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including, without limitation, amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan;provided,however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval;provided further, that a Participant’s Award shall be governed by the version of this Plan then in effect at the time such Award was granted.
25.NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be
construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock awards and bonuses otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
26.INSIDER TRADING POLICY. Each Participant who receives an Award shall comply with any policy adopted by the Company from time to time covering transactions in the Company’s securities by Employees, officers and/or directors of the Company.
27.ALL AWARDS SUBJECT TO COMPANY CLAWBACK OR RECOUPMENT POLICY. All Awards issued or paid under this Plan will be subject to clawback or recoupment in accordance with any clawback policy adopted by the Board, required by the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is required by other applicable law, including, but not limited to, the cancellation of outstanding awards and the recoupment of any gains realized with respect to awards issued under the Plan. No recovery of compensation under such policy or applicable law will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company.
28.27.DEFINITIONS.As used in this Plan, and except as elsewhere defined herein, the following terms will have the following meanings:
“Award” means any award under this Plan, including any Option, Restricted Stock, Stock Bonus, Stock Appreciation Right, Restricted Stock Unit or award of Performance Shares.
“Award Agreement” means, with respect to each Award, the written or electronic agreement between the Company and the Participant setting forth the terms and conditions of the Award, which shall be in substantially a form (which need not be the same for each Participant) that the Committee has from time to time approved, and will comply with and be subject to the terms and conditions of this Plan.
“Board” means the Board of Directors of the Company.
“Cause” means (except as may otherwise be defined in Participant’s employment or services agreement or Award Agreement) (a) the commission of an act of theft, embezzlement, fraud or dishonesty, (b) a breach of fiduciary duty to the Company or a Parent or Subsidiary, or (c) a failure to materially perform the customary duties of Employee’s employment.
“Code” means the United States Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
“Common Stock” means the common stock of the Company.
“Committee” means the Compensation Committee of the Board or those persons to whom administration of this Plan, or part of this Plan, has been delegated as permitted by law.
“Company” means Imperva, Inc., or any successor corporation.
“Consultant” means any person, including an advisor or independent contractor, engaged by the Company or a Parent or Subsidiary to render services to such entity.
“Corporate Transaction” means the occurrence of any of the following events: (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) or “group” (two or more persons acting as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding, or disposing of
the applicable securities referred to herein) becomes the “beneficial owner” (as defined in Rule13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’sthen-outstanding voting securities; (b) the consummation of the sale or other disposition by the Company of all or substantially all of the Company’s assets; (c) the consummation of a merger, reorganization, consolidation or similar transaction or series of related transactions of the Company with any other corporation, other than a merger, reorganization, consolidation or similar transaction (or series of related transactions) which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least a majority of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger, reorganization, consolidation or similar transaction (or series of related transactions), or (d) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Code wherein the stockholders of the Company give up all of their equity interest in the Company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of the Company).
Notwithstanding the foregoing, to the extent that any amount constituting deferred compensation (as defined in Section 409A of the Code) would become payable under this Plan by reason of a Corporate Transaction, such amount shall become payable only if the event constituting a Corporate Transaction would also qualify as a change in ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, each as defined within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and IRS guidance that has been promulgated or may be promulgated thereunder from time to time.
“Director” means a member of the Board.
“Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided, however, that except with respect to Awards granted as ISOs, the Committee in its discretion may determine whether a total and permanent disability exists in accordance with non-discriminatory and uniform standards adopted by the Committee from time to time, whether temporary or permanent, partial or total, as determined by the Committee.
“Dividend Equivalent Right” means the right of a Participant, granted at the discretion of the Committee or as otherwise provided by the Plan, to receive a credit for the account of such Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant.
“Effective Date” means the date of the underwritten initial public offering of the Company’s Common Stock pursuant to a registration statement that is declared effective by the SEC.
“Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
“Exchange Program” means a program pursuant to which outstanding Awards are surrendered, cancelled or exchanged for cash, the same type of Award or a different Award (or combination thereof).
“Exercise Price” means, with respect to an Option, the price at which a holder may purchase the Shares issuable upon exercise of an Option, and with respect to a SAR, the price at which the SAR is granted to the holder thereof.
“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:
(a) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported inThe Wall Street Journalor such other source as the Board or the Committee deems reliable;
(b) if such Common Stock is publicly traded but is neither listed nor admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported inThe Wall Street Journalor such other source as the Board or the Committee deems reliable;
(c) in the case of an Option or SAR grant made on the Effective Date, the price per share at which shares of the Company’s Common Stock are initially offered for sale to the public by the Company’s underwriters in the initial public offering of the Company’s Common Stock pursuant to a registration statement filed with the SEC under the Securities Act; or
(d) if none of the foregoing is applicable, by the Board or the Committee in good faith.
“Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.
“Non-Employee Director” means a Director who is not an Employee of the Company or any Parent or Subsidiary.
“Option” means an award of an option to purchase Shares pursuant to Section 5.
“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
“Participant” means a person who holds an Award under this Plan.
“Performance Factors” means the factors selected by the Committee, which may include, but are not limited to the, the following measures (whether or not in comparison to other peer companies) to determine whether the performance goals established by the Committee and applicable to Awards have been satisfied:2018
bookings and/or bookings growth;
net revenue and/or net revenue growth;
earnings per share and/or earnings per share growth;
earnings before income taxes and amortization and/or earnings before income taxes and amortization growth;
operating income and/or operating income growth;
net income and/or net income growth;
total stockholder return and/or total stockholder return growth;
operating cash flow return on income;
adjusted operating cash flow return on income;
intellectual property (e.g., patents)/product development;
mergers and acquisitions or divestitures;
individual business objectives;
company-specific operational metrics; and
any other factor (such as individual business objectives or unit-specific operational metrics) the Committee so designates.
“Performance Period” means the period of service determined by the Committee, not to exceed five (5) years, during which years of service or performance is to be measured for the Award.
“Performance Share” means an Award granted pursuant to Section 10 or Section 12 of this Plan.
“Plan” means this Imperva, Inc. 2011 Stock Option and Incentive Plan, as amended from time to time.
“Purchase Price” means the price to be paid for Shares acquired under this Plan, other than Shares acquired upon exercise of an Option or SAR.
“Restricted Stock Award” means an award of Shares pursuant to Section 6 or Section 12 of this Plan, or issued pursuant to the early exercise of an Option.
“Restricted Stock Unit” means an Award granted pursuant to Section 9 or Section 12 of this Plan.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the United States Securities Act of 1933, as amended.
“Shares” means shares of the Company’s Common Stock, as adjusted pursuant to Sections 2 and other applicable provisions hereof, and any successor security.
“Stock Appreciation Right” means an Award granted pursuant to Section 8 or Section 12 of this Plan.
“Stock Bonus” means an Award granted pursuant to Section 7 or Section 12 of this Plan.
“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director, consultant, independent contractor or advisor to the Company or a Parent or Subsidiary of the Company. An employee will
not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee;provided, that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any employee on a leave of absence or a reduction in hours worked (for illustrative purposes only, a change in schedule from that of full-time to part-time), the Committee may make such provisions respecting suspension of or modification of vesting of the Award while on leave from the employ of the Company or a Parent or Subsidiary of the Company or during such change in working hours as it may deem appropriate, except that in no event may an Award be exercised after the expiration of the term set forth in the applicable Award Agreement. The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).
“Unvested Shares” means Shares that have not yet vested or are subject to a right of repurchase in favor of the Company (or any successor thereto).
MMMMMMMMMMMM IMPERVA, INC.
IMPORTANT ANNUAL MEETING INFORMATION
000004 MMMMMMMMMMMMMMM 000000000.000000 ext 000000000.000000 ext C123456789 MMMMMMMMMENDORSEMENT_LINE______________ SACKPACK_____________ MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 11:59 PM,by1:00 AM, ET on May 3, 2016.
April 24, 2018. Vote by Internet
• Go to www.envisionreports.com/IMPV
• Or scan the QR code with your smartphone
• Follow the steps outlined on the secure website
Vote by telephone
• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
• Follow the instructions provided by the recorded message
Using a black ink pen, mark your votes with an X as shown in X this example. Please do not write outside the designated areas.
Annual Meeting Proxy Card
1234 5678 9012 345 • IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
• A Proposals -— THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” THE ELECTION OF DIRECTORS AND “FOR” ITEMS 2 3 and 4.
3. Mark here to vote FOR all nominees 01 - Roger Sippl 1. ELECTION OF CLASS I DIRECTORS:
Nominees: 01 - Anthony Bettencourt 02 - Geraldine Elliott
Mark here to vote Mark here to WITHHOLD vote from all nominees 02 - Allan Tessler For All EXCEPT - To withhold authority to vote for any
FOR all nominees vote from all nominees nominee(s), write the name(s) of such nominee(s) below.
+ For Against Abstain
_____________________________________________ 2. PROPOSAL TO APPROVE THE NON-BINDING ADVISORY RESOLUTION
RELATING TO NAMED EXECUTIVE OFFICER COMPENSATION.
For Against Abstain For Against Abstain
3. PROPOSAL TO AMEND THE 2011 STOCK OPTION AND 4. PROPOSAL TO RATIFY THE APPOINTMENT OF
INCENTIVE PLAN. THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
B Non-Voting Items
Change of Address -— Please print new address below. Comments -— Please print your comments below.
C Authorized Signatures -— This section must be completed for your vote to be counted. -— Date and Sign Below
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
Date (mm/dd/yyyy) -— Please print date below. Signature 1 -— Please keep signature within the box. Signature 2 -— Please keep signature within the box.
1UPX MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE C 1234567890 J N T 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1UP X 3628731 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MMMMMMM +
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. Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The Proxy Statement and the 20152017 Annual Report to Stockholders are available at: www.envisionreports.com/IMPV
• IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
• Proxy -— IMPERVA, INC.
2016 2018 Meeting of Stockholders - May 4, 2016
– April 24, 2018 THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints Anthony BettencourtChristopher S. Hylen and Terrence Schmid,Mike Burns, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Imperva, Inc. Common Stock which the undersigned is entitled to vote, and, in their discretion, to vote upon such other business as may properly come before the 20162018 Meeting of Stockholders of Imperva, Inc. to be held May 4, 2016April 24, 2018 or at any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” THE ELECTION OF DIRECTORS AND “FOR” ITEMS 2 3 and 4.
(Continued3. (Continued and to be marked, dated and signed, on the other side) |
