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▪ | Base Salaries – As part of its annual review of our executive compensation program, our compensation committee approved an increase in the annual base salary of our CEO to $425,000 (a 6.25% increase), and our CSO to $284,000 (a 3.27% increase), while leaving the annual base salary of our CFO at its fiscal 2018 level of $360,000. The compensation committee made additional adjustments to the base salaries of certain of our named executive officers in January 2019, in connection with our merger with Hortonworks to reflect the integration of the Hortonworks business and employees.
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▪ | Long-Term Incentive Compensation – As part of its annual review of our executive compensation program, our compensation committee granted long-term incentive compensation opportunities in the form of time-based RSU awards that may be settled for shares of our common stock to our CEO, CFO, and CSO of 330,000 shares, 170,000 shares, and 100,000 shares, respectively.
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▪ | Annual Cash Bonuses – In March 2019, our compensation committee approved annual cash bonuses with respect to Fiscal Year 2019 performance to our CEO in the amount of $385,000 (equal to 90% of his target annual cash bonus opportunity), to our CFO in the amount of $293,884 (equal to 116% of his target annual cash bonus opportunity), and to our CSO in the amount of $142,000(equal to 95% of his target annual cash bonus opportunity).
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▪ | New Peer Group – In connection with our merger with Hortonworks, our compensation committee approved a new peer group reflecting the combined financial position of us and Hortonworks.
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▪ | Appointment of Mr. Murthy as Chief Product Officer – Mr. Murthy was appointed as our Chief Product Officer effective January 3, 2019 in connection with the merger with Hortonworks, and we extended an employment offer letter to Mr. Murthy. Pursuant to the employment offer letter, our initial compensation arrangements with Mr. Murthy were as follows:
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▪ | an initial annual base salary of $380,000;
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▪ | a target annual cash bonus opportunity equal to 60% of his annual base salary, based on the achievement of applicable performance objectives and/or conditions established by us in our sole discretion; and
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▪ | the assumption of a restricted stock unit (“RSU”) award for 220,000 shares of the common stock of his former employer, Hortonworks, granted to him by Hortonworks immediately prior to the merger and conversion of such award into an RSU award for 287,100 shares of our common stock as a result of the merger, with such award to vest in full on December 15, 2019 pursuant to the merger negotiations, subject to his continued employment by us through that vesting date; and |
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▪ | the grant of an RSU award to acquire such number of shares of our common stock equal to $8 million divided by the 10-day closing price average for the period prior to the closing date of our merger with Hortonworks, (i) with 80% of the shares of our common stock subject to such award subject to service-based vesting over approximately a three-year period with 1/12th of the total number of shares underlying that portion of the award vesting on each of our pre-selected vesting dates for RSU recipients (March 15th, June 15th, September 15th, and December 15th) following December 15, 2019, subject to his continued employment by us through each applicable vesting date, and (ii) with the remaining 20% of the shares of our common stock subject to such award to be earned and vest subject to the achievement of performance criteria to be established by our board of directors and his continued employment through the applicable performance period.
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The service based portion of this equity award grant was granted in January 2019 when our compensation committee granted Mr. Murthy an RSU award that may vest and be settled for 582,878 shares of our common stock and which is subject to the vesting schedule as described above.
Finally, Mr. Murthy is eligible to receive certain payments and benefits under a Severance and Change in Control Agreement between him and us to become effective on the earlier of January 3, 2020 (the 12-month anniversary of his employment start date with us) or a change in control of the Company. Prior to the effectiveness of this Severance and Change in Control Agreement, Mr. Murthy will remain eligible for certain severance and acceleration rights (excluding with respect to the RSUs described above) pursuant to his Hortonworks arrangements.
For a summary of the material terms and conditions of Mr. Murthy’s employment offer letter and his potential severance and acceleration rights, see “—Potential Payments upon Termination or Change in Control” below.
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▪ | Stock Ownership Policy – Adopted a stock ownership policy for our executive officers and the non-employee members of our board of directors.
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Pay-for-Performance
We believe our executive compensation program is reasonable, competitive, and appropriately balances the goals of attracting, motivating, rewarding, and retaining our executive officers, including our named executive officers, with the
goal of aligning their interests with those of our stockholders. To ensure this alignment and to motivate and reward individual initiative and effort, a substantial portion of our executive officers’ annual target annual total direct compensation opportunity is both variable in nature and “at-risk.”
We emphasize variable compensation that appropriately rewards our executive officers through two separate compensation elements:
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▪ | First, we provide the opportunity to participate in our annual cash bonus plan which provides cash payments if they▪First, we provide the opportunity to participate in our annual cash bonus plan which provides payment if our executive officers produce short-term financial, operational, and strategic results that meet or exceed the objectives set forth in our annual operating plan.
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▪ | In addition, we grant RSU awards, which comprise a significant portion of their target total direct compensation opportunities, the value of which depends entirely on the value of our common stock, thereby incentivizing them to build sustainable long-term value for the benefit of our stockholders. |
▪In addition, we grant RSU awards, which comprise a significant portion of the target total direct compensation opportunities for our executive officers, the value of which depends entirely on the value of our common stock, thereby incentivizing our executive officers to build sustainable long-term value for the benefit of our stockholders.
These variable pay elements ensure that, each year, a substantial portion of our executive officers’ target total direct compensation is contingent (rather than fixed) in nature, with the amounts ultimately payable subject to variability above or below target levels commensurate with our actual performance.
We believe that this design provides balanced incentives for our executive officers to drive financial performance and long-term growth. To ensure that we remain faithful to our compensation philosophy, our compensation committee regularly evaluates the relationship between the reported values of the equity awards granted to our executive officers, the amount of compensation realizable (and ultimately realized) from such awards in subsequent years, and our total stockholder return over this period.
Executive
Introduction of Long-Term Performance Awards
In furtherance of our Pay for Performance philosophy, for the fiscal year ending January 31, 2022 ("Fiscal Year 2022") we have modified our executive compensation program to introduce long-term performance awards in the form of performance stock units (the "PSUs") as a component of our executives' compensation. The PSUs have a performance period beginning on February 1, 2021, and ending on January 31, 2024. Half of the PSUs awarded to each executive are eligible to vest based on our achievement of our EBITDA goals (the "EBITDA PSUs"), and half of the PSUs are eligible to vest based on our achievement of our revenue goals (the "Revenue PSUs"). The Company's achievement of these goals against the metrics will be measured after each fiscal half year, and up to 1/6th of the total number of EBITDA PSUs and/or Revenue PSUs will vest if the respective EBITDA goals or revenue goals are achieved for the corresponding fiscal half-year. In the event a performance goal has not been met for the applicable period, the corresponding PSUs will be forfeited.
The PSUs constitute a component of our executives' total equity compensation, in combination with the RSUs described above.
Compensation Policies and PracticesGovernance
We endeavor to maintain sound governance standards consistent with our executive compensation policies and practices. Our compensation committee evaluates our executive compensation program on a regular basis to ensure that it is consistent with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for executive talent. The following summarizes our executive compensation and related policies and practices:
What We Do
•Maintain an Independent Compensation Committee. Our compensation committee consists solely of independent directors who establish our compensation practices.
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▪ | Maintain an Independent Compensation Committee•Retain an Independent Compensation Advisor. Our compensation committee has engaged its own compensation consultant to provide information, analysis, and other advice on executive and director compensation matters independent of management. This consultant performed no other consulting or other services for us in Fiscal Year 2021. •Annual Executive Compensation Review. Our compensation committee conducts an annual review and approval of our compensation strategy, including a review and determination of our compensation peer group used for comparative purposes. •. Our compensation committee consists solely of independent directors who establish our compensation practices.
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▪ | Retain an Independent Compensation Advisor. Our compensation committee has engaged its own compensation consultant to provide information, analysis, and other advice on executive compensation independent of management. This consultant performed no other consulting or other services for us in Fiscal Year 2019.
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▪ | Annual Executive Compensation Review. Our compensation committee conducts an annual review and approval of our compensation strategy, including a review and determination of our compensation peer group used for comparative purposes.
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▪ | Compensation At-Risk. Our executive compensation program is designed so that a significant portion of our executive officers’ compensation is “at risk” based on corporate performance, as well as equity-based, to align the interests of our executive officers and stockholders.
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▪ | Use a Pay-for-Performance Philosophy. The majority of our executive officers’ compensation is directly linked to corporate performance; we also structure their target total direct compensation opportunities with a significant long-term equity component, thereby making a substantial portion of each executive officer’s target total direct compensation dependent upon our stock price and/or total direct compensation opportunities with a significant long-term equity component, thereby making a substantial portion of each executive officer’s target total direct compensation dependent upon our stock price and/or total |
stockholder return.
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▪ | •Stock Ownership Policy. We maintain a stock ownership policy that requires our executive officers and our non-employee directors to maintain a minimum ownership level of our common stock. •Compensation Recoupment Policy.We maintain a compensation recoupment ("clawback") policy applicable to all incentive-based compensation paid to our executive officers. Stock Ownership Policy. We have adopted a stock ownership policy that requires our executive officers to maintain a minimum ownership level of our common stock.
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What We Do Not Do
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▪ | No Guaranteed Bonuses.We do not provide guaranteed bonuses to our executive officers. •No Executive Retirement Plans.We do not offer defined benefit pension plans or any non-qualified deferred compensation plans or arrangements to our executive officers other than the plans and arrangements that are available to all employees. Our executive officers are eligible to participate in our 401(k) retirement savings plan on the same basis as our other employees.
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▪ | No Executive Retirement Plans.We do not currently offer, nor do we have plans to offer, defined benefit pension plans or any non-qualified deferred compensation plans or arrangements to our executive officers other than the plans and arrangements that are available to all employees. Our executive officers are eligible to participate in our Section 401(k) retirement savings plan on the same basis as our other employees.
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▪ | No Hedging or Pledging.We prohibit our employees (including our executive officers) and the non-employee members of our board of directors from hedging or pledging our securities.
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▪ | No Tax Payments on Perquisites.Generally, we do not provide any tax reimbursement payments (including “gross-ups”) on any perquisites or other personal benefits.
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▪ | No Excise Tax Payments on Future Post-Employment Compensation Arrangements.We do not provide any excise tax reimbursement payments (including “gross-ups”) on payments or benefits contingent upon a change in control of the Company.
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▪ | No Special Welfare or Health Benefits.We do not provide our executive officers with any welfare or health benefit programs, other than participation in our broad-based employee programs.
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•No Hedging or Pledging.We prohibit our employees (including our executive officers) and the non-employee members of our board of directors from hedging or pledging our securities.
•No Gross-Ups on Excise Taxes.We do not provide any reimbursement (including “gross-ups”) on excise taxes imposed on payments or benefits paid contingent upon a change in control of the Company.
Stockholder Advisory Vote on Frequency of Future Stockholder Advisory Votes on Named Executive Officer Compensation
At our 2020 annual meeting of stockholders, over 90% of the Annual Meeting, we will be conducting a non-binding votevotes cast on the frequency of future stockholderproposal approved, on an advisory votes onbasis, the compensation of our named executive officers (commonly known as a “Say-on-Frequency”disclosed in last year’s proxy statement (the “Say on Pay” vote).
Our board When designing our Fiscal Year 2021 executive compensation program, including the form and amount of directors is recommending that we hold future stockholder advisory votes on the compensation offor our named executive officers, (commonly knownthe compensation committee considered these vote results. The
compensation committee will continue to consider stockholder feedback, including the results of our Say-on-Pay votes, when making future compensation decisions for our named executive officers. In accordance with the preference of our stockholders, as a “Say-on-Pay” vote)expressed in an advisory vote on a triennial, rather thanthe frequency of the Say-on-Pay vote in 2019, we intend to hold an annual or biennial, basis. For additional information about the Say-on-Frequency vote, see “Proposal No. 4: Non-Binding Advisory Vote on the Frequency of Future Non-Binding Advisory Votes to Approve the Compensation of Our Named Executive Officers” above.Say-on-Pay vote.
Executive Compensation Philosophy and Objectives
Our executive compensation program is guided by our overarching philosophy of paying for demonstrable performance. Consistent with this philosophy, we have designed our executive compensation program to achieve the following primary objectives:
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▪ | Provide market competitive compensation and benefit levels that will attract, retain, motivate, and reward a highly-talented team of executives within the context of responsible cost management; |
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▪ | Establish a direct link between our financial, operational, and strategic objectives and results, as well as our values, and the compensation of our executives; |
▪Provide market competitive compensation and benefit levels that will attract, retain, motivate, and reward a highly-talented team of executives within the context of responsible cost management;
▪Establish a direct link between our financial, operational, and strategic objectives and results, as well as our values, and the compensation of our executives;
▪Align the interests and objectives of our executives with those of our stockholders by linking their long-term incentive compensation opportunities to stockholder value creation and their cash incentives to our annual performance; and
▪Offer total compensation opportunities to our executives that are competitive and fair.
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▪ | Align the interests and objectives of our executives with those of our stockholders by linking the long-term incentive compensation opportunities to stockholder value creation and their cash incentives to our annual performance; and |
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▪ | Offer total compensation opportunities to our executives that are competitive and fair. |
Program Design
We structure the annual compensation of our executive officers, including our named executive officers, using three principal elements: base salary, annual cash bonus opportunities, and long-term incentive compensation opportunities in the form of equity awards. While the pay mix and composition may vary from year to year, the ultimate goal is to achieve our compensation objectives as described above.
The key component of our executive compensation program has been long-term incentive compensation in the form of equity awards for shares of our common stock. We believe that these awards offer our executive officers a valuable long-term incentive that aligns their interests with the long-term interests of our stockholders.
We also offer cash compensation in the form of base salaries that we believe, overall, are competitive within the market range for companies of similar size, stage of development, and growth potential. In addition, in designing annual cash bonus opportunities, our compensation committee focuses on the achievement of the financial and strategic objectives that will further our longer-term growth goals in making its determinations.
The design of our executive compensation program is influenced by a variety of factors, with the primary goals being to align the interests of our executive officers and stockholders and to link pay with performance. We evaluate performance over both short-term (annual) and multi-year periods based on our financial and operational performance, including results for certain key performance measures and our total return to stockholders over time, both on an absolute basis and a relative basis.
We have not adopted policies or employed guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation.
Compensation-Setting Process
Role of Compensation Committee
Our compensation committee discharges the responsibilities of our board of directors relating to the compensation of our executive officers, including our named executive officers. The compensation committee has overall responsibility for overseeing our compensation and benefits policies generally, and overseeing and evaluating the compensation plans, policies, and practices applicable to our CEOChief Executive Officer and other executive officers. In addition, the compensation committee makes all final decisions regarding the compensation of our CEOChief Executive Officer and the other executive officers.
In carrying out its responsibilities, Ourour compensation committee evaluates our compensation policies and practices with a focus on the degree to which these policies and practices reflect our executive compensation philosophy, develops strategies and makes decisions that it believes further our philosophy or align with developments in best compensation practices, and reviews the performance of our executive officers when making decisions with respect to their compensation.
Our compensation committee’s authority, duties, and responsibilities are further described in its charter, which is reviewed annually and revised and updated as warranted. The charter is available in the “Investor Relations” section of our website, which is located at https://investors.cloudera.com, by clicking on Cloudera’s investor relations website.
“Governance Documents” in the “Corporate Governance” section.
Our compensation committee also retains a compensation consultant (as described below) to provide support in its review and assessment of our executive compensation program.
Setting Target Total Direct Compensation
Our compensation committee reviews the base salary levels, annual cash bonus opportunities, and long-term incentive compensation opportunities of our executive officers, including our named executive officers and all related performance criteria at the beginning of each fiscal year, or more frequently as warranted. Adjustments are typically effective at the beginning of the fiscal year.
Our compensation committee does not establish a specific target for formulating the target total direct compensation opportunities of our executive officers, including our named executive officers. In making decisions about the compensation of our executive officers, the compensation committee relies primarily on the general experience of its members and subjective considerations oftakes a holistic view that considers various factors, including the following:
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▪ | our executive compensation program objectives;
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▪ | our performance against the financial, operational, and strategic objectives established by the compensation committee and our board of directors; |
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▪ | each individual executive officer’s knowledge, skills, experience, qualifications, and tenure relative to other similarly-situated executives at the companies in our compensation peer group; |
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▪ | the scope of each executive officer’s role and responsibilities compared to other similarly-situated executives at the companies in our compensation peer group; |
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▪ | the prior performance of each individual executive officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team, all of which reflect our core values; |
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▪ | the potential of each individual executive officer to contribute to our long-term financial, operational, and strategic objectives;
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▪ | our CEO’s compensation relative to that of our executive officers, and compensation parity among our executive officers; |
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▪ | our financial performance relative to our compensation and performance peers; |
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▪ | the compensation practices of our compensation peer group and the positioning of each executive officer’s compensation in a ranking of peer company compensation levels based on an analysis of competitive market data; and |
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▪ | the recommendations of our CEO with respect to the compensation of our executive officers (excluding himself). |
▪our executive compensation program objectives;
▪our performance against the financial, operational, and strategic objectives established by the compensation committee and our board of directors;
▪each individual executive officer’s knowledge, skills, experience, qualifications, and tenure relative to other similarly-situated executives at the companies in our compensation peer group;
▪the scope of each executive officer’s role and responsibilities compared to other similarly-situated executives at the companies in our compensation peer group;
▪the prior performance of each individual executive officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team, all of which reflect our core values;
▪the potential of each individual executive officer to contribute to our long-term financial, operational, and strategic objectives;
▪our Chief Executive Officer’s compensation relative to that of our executive officers, and compensation parity among our executive officers;
▪our financial performance relative to our compensation and performance peers;
▪the compensation practices of our compensation peer group and the positioning of each executive officer’s compensation in a ranking of peer company compensation levels based on an analysis of competitive market data; and
▪the recommendations of our Chief Executive Officer with respect to the compensation of our executive officers (excluding himself).
These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable.
Our compensation committee does not weigh these factors in any predetermined manner, nor does it apply any formulas in developing its compensation recommendations.decisions. The members of the compensation committee consider all of this information in light of their individual experience, knowledge of the Company, knowledge of the competitive market, knowledge of each executive officer, and business judgment in making their recommendations.decisions.
Our compensation committee also considers the potential risks in our business when designing and administering our executive compensation program, and we believe our balanced approach to performance measurement and pay delivery works to avoid misaligned incentives for individualsmitigate exposure to undertake excessive or inappropriate risk.risk-taking. Please see
discussion above under “Board“—Board of Directors and Committees of the Board of Directors; Corporate Governance Standards and Director Independence.Independence.”
Our Compensation Committee,compensation committee, in making its determinations, reviews information summarizing the compensation paid at a representative group of peer companies, to the extent that the executive positions at these companies are considered comparable to our positions and informative of the competitive environment, and more broad-based compensation surveys to gain a general understanding of market compensation levels.
Role of Management
In discharging its responsibilities, our compensation committee works with members of our management, including our CEO.Chief Executive Officer. Our management assists the compensation committee by providing information on corporate and individual performance, competitive market data, and management’s perspective and recommendations on compensation matters.
Typically, our CEOChief Executive Officer will make recommendations to our compensation committee regarding compensation matters, including adjustments to annual cash compensation, long-term incentive compensation opportunities, and program structures, for our executive officers, except with respect to his own compensation. At the beginning of each fiscal year, our CEOChief Executive Officer reviews the performance of our other executive officers, including our other named executive officers, based on such individual’s level of success in accomplishing the business objectives established for him or her for the prior fiscal year and his or her overall performance during that year, and then shares these evaluations with, and makes recommendations to, the compensation committee for each element of compensation as described above. The annual business objectives for each executive officer are developed through mutual discussion and agreement between our CEOChief Executive Officer and the executive officers and are reviewed with the compensation committee. The compensation committee reviews and discusses these recommendations and proposals with our CEOChief Executive Officer and uses them as one factor in determining and approving the compensation for our executive officers.
Our CEOChief Executive Officer also attends meetings of our compensation committee at which executive compensation matters are addressed, except with respect to discussions involving his own compensation.
Role of Compensation Consultant
Our compensation committee engages an external compensation consultant to assist it by providing information, analysis, and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review. The compensation consultant reports directly to the compensation committee and its chair, and serves at the discretion of the compensation committee, which reviews the engagement annually.
For Fiscal Year 2019,2021, our compensation committee retained Compensia, Inc. (“Compensia”), a national compensation consulting firm, to serve as its compensation advisor to advise on executive compensation matters, including competitive market pay practices for our executive officers, and with the data analysis and selection of the compensation peer group.
group, and with data analysis.
During Fiscal Year 2019,2021, Compensia attended the meetings of our compensation committee (both with and without management present) as requested and provided various services including the following services:
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▪ | assisting in the review and updating of the compensation peer group; |
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▪ | providing competitive market data based on the compensation peer group for our executive officer positions and evaluating how the compensation we pay our executive officers compares both to our performance and to how the companies in our compensation peer group compensate their executives; |
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▪ | review and analysis of the base salary levels, annual incentive bonus opportunities, and long-term incentive compensation opportunities of our executive officers; |
following:
▪assisting in the review and updating of the compensation peer group;
▪providing competitive market data based on the compensation peer group for our executive officer positions and evaluating how the compensation we pay our executive officers compares both to our performance and to how the companies in our compensation peer group compensate their executives;
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▪ | providing competitive market data based on the compensation peer group for the non-employee members of our board of directors and evaluating how the compensation we pay our non-employee directors compares both to our performance and to how the companies in our compensation peer group compensate their non-employee directors;
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▪ | assessment of executive compensation trends within our industry, and updating on corporate governance and regulatory issues and developments;
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▪ | consulting with our compensation committee chair and other members between compensation committee meetings; and
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▪ | ▪review and analysis of the base salary levels, annual incentive bonus opportunities, and long-term incentive compensation opportunities of our executive officers; ▪providing competitive market data based on the compensation peer group for the non-employee members of our board of directors and evaluating how the compensation we pay our non-employee directors compares both to our performance and to how the companies in our compensation peer group compensate their non-employee directors; ▪conducting a review of aggregate equity usage practices in the broader market based on compensation peer group data; ▪assessing executive compensation trends within our industry, and updating on corporate governance and regulatory issues and developments; ▪consulting with our compensation committee chair and other members between compensation committee meetings; and ▪support on other ad hoc matters throughout the year.
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Compensia did not provide any services to us other than the consulting services to our compensation committee. The compensation committee regularly reviews the objectivity and independence of the advice provided by its compensation consultant on executive compensation matters. The compensation committee has evaluated Compensia’s engagement, and based on the factors set forth in Exchange Act Rule 10C-1(b)(4), as well as the applicable listing standards of The New York Stock Exchange, and such other factors as were deemed relevant under the circumstances, has determined that its relationship with Compensia and the work of Compensia on behalf of the compensation committee did not raise any conflict of interest, and that Compensia is independent within the meaning of the listing standards of The New York Stock Exchange.
Competitive Positioning
For purposes of assessing our executive compensation against the competitive market, our compensation committee reviews and considers the compensation levels and practices of a select group of peer companies. Thiscompanies identified as described below. The compensation committee reviewed the selection criteria for and composition of our compensation peer group consists of technology companieswith Compensia in September 2019 and updated the peer group at that are similartime. The committee did not make any changes to us in terms of revenue, market capitalization, geographical location, growth stage and industry sector.
The companies in the compensation peer group for Fiscal Year 20192021 compensation decisions.
In establishing our compensation peer group, we look at companies that were used for compensation evaluations and decisions made in March 2018 were approved in November 2017 on the basis of their similarity to us, as determined primarily usingmeet the following criteria:
•Industry Sector – broad software/SaaS-related companies but with a focus on B2B system software companies;
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▪ | industry sector – broad software, but with a focus on business-to-business system software companies;
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▪ | revenue – approximately 0.5x to approximately 2.5x our last four fiscal quarter revenue of approximately $310 million (approximately $124 million to $1.1 billion); |
•Revenue – companies with revenues of approximately $500 million to approximately $1.5 billion;
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▪ | market capitalization – approximately 0.5x to approximately 4.0x our market capitalization of approximately $2.1 (approximately $1.1 billion to $9.2 billion); and |
•Market Capitalization – approximately 0.25x to approximately 5.0x our market capitalization; and
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▪ | financial characteristics – a market capitalization multiple of greater than 5.0x and strong annual growth of approximately 20%+.
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In selecting the Fiscal Year 2019•Financial Characteristics – strong annual revenue growth of approximately 20%+.
The compensation peer group the objective was to choose companies that resulted in us being near the median of the group in terms of both revenue and market capitalization.
Our compensation peer group for fiscal 2019 (until September 2018) was as follows:
Cornerstone OnDemand Nutanix
FireEye Okta
Guidewire Software Paycom Software
Hortonworks Proofpoint
HubSpot Pure Storage
Imperva RingCentral
LogMeIn Splunk
MongoDB Tableau Software
Mulesoft Twilio
New Relic Zendesk
The compensation practices of the compensation peer group were the primary guide usedapproved by our compensation committee during Fiscal Yearin September 2019 (until September 2018) to compare the competitiveness of each compensation element and overall compensation levels (base salary, target annual cash bonus opportunities, and long-term incentive compensation).
In September 2018, with the assistance of Compensia, our compensation committee reviewed and updated our compensation peer group to reflect changes in our market capitalization, recognize our evolving business focus, and account for acquisitions of peer companies. The companies in this updated compensation peer group were selected on the basis of their similarity to us, based on the following criteria:
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▪ | industry sector – broad software, but with a focus on business-to-business system software companies;
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▪ | revenue – approximately 0.33x to approximately 3.0x our last four fiscal quarter revenue of approximately $391 million (approximately $146 million to $1.1 billion); |
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▪ | market capitalization – approximately 0.25x to approximately 4.0x our market capitalization of approximately $2.1 billion (approximately $1.5 billion to $9.1 billion); and |
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▪ | financial characteristics – a market capitalization multiple of greater than 5.0x and strong annual growth of approximately 20%+.
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We also considered several key secondary factors, including headcount, gross profit, geographic location, and stage of development (that is, proximity to its initial public offering).
As a result, our compensation committee approved a revised compensation peer group consistingconsists of the following companies:
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Box | Guidewire Software | Paycom Software |
Cornerstone OnDemand | HubSpot | Pivotal Software |
DocuSign | LogMeIn | Proofpoint |
Dropbox | MongoDB | RingCentral |
Fair Isaac | New Relic | Splunk |
FireEye | Nutanix | Zendesk |
Alteryx Nutanix
Appian Okta
Box Paycom Software
Cornerstone OnDemand Pivotal Software
FireEye Proofpoint
Guidewire Software Pure Storage
Hortonworks RingCentral
HubSpot Tableau Software
Imperva Twilio
MongoDB Zendesk
New Relic
In December 2018, with the assistance of Compensia, ourOur compensation committee once again reviewed and updated ourused this compensation peer group in anticipation of our merger with Hortonworks. This updated peer group was usedas a reference for its compensation evaluations and decisions made with respect to our executive officers in January, February, and March of 2019 and with respect to Mr. Murthy who became one of our executive officers in connection with the merger. The companies in this updated compensation peer group were selected on the basis of their similarity to the combined financial position of us and Hortonworks, based on the following criteria:
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▪ | industry sector – data/open-source-related software and services companies, and broader SaaS-related companies; and |
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▪ | revenue – approximately 0.5x to approximately2.0x our projected combined revenue of approximately $800 million (approximately $490 million to $1.4 billion). |
We also considered several key secondary factors, including market capitalization, headcount, gross profit, geographic location, and stage of development (including, proximity to its initial public offering).
As a result, our compensation committee approved a revised compensation peer group consisting of the following companies:
Box Nutanix
Cornerstone OnDemand Paycom Software
Dropbox Pivotal Software
Fair Isaac Proofpoint
FireEye RingCentral
Guidewire Software Splunk
HubSpot Tableau Software
LogMeIn Twilio
New Relic Zendesk
for Fiscal Year 2021.
To analyze the compensation practices of the companies in our compensation peer group, Compensia gathered data from public filings (primarily proxy statements) of the peer group companies, as well as from applicablerelevant Radford High-Technology Surveys. This market data was then used as a reference point for our compensation committee to assess our current compensation levels in the course of its deliberations on compensation forms and amounts.
Our compensation committee reviews our compensation peer group each year (or, more frequently if there have been significant changes to either orour business model or market capitalization) and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group.
Compensation Elements
In Fiscal Year 2019,2021, the principal elements of our executive compensation program, and the purposes for each element, were as follows:
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Element | Type of Element | Compensation Element | Objective |
Base Salary | Fixed | Cash | Designed to attract and retain highly talented executives by providing fixed compensation amounts that are competitive in the market and reward performanceperformance. |
Annual Cash Bonus Awards | Variable | Cash | Designed to motivate our executives to achieve annual business objectives, as contained in our annual operating plan, and provide financial incentives to achieve these annual objectivesobjectives. |
Long Term Incentive Compensation
| Variable | Equity awards in the form of restricted stock unit awards that will be settled for shares of our common stock | Designed to align the interests of our executives and our stockholders by motivating them to create sustainable long-term stockholder valuevalue. |
Fiscal Year 2021 Compensation Decisions
Base Salary
Base salary represents the fixed portion of the compensation of our executive officers, including our named executive officers, and is an important element of compensation intended to attract and retain highly-talented individuals. Generally, we use base salary to provide each executive officer with a specified level of cash compensation during the year with the expectation that he or she will perform his or her responsibilities to the best of his or her ability and in our best interests.
Generally, we establish the initial base salaries of our executive officers through negotiations at the time we hire the individual executive officer, taking into account his or her position, qualifications, experience, prior salary level, the base salaries of our other executive officers, and the base salaries rates being paid for comparable positions at the companies in the compensation peer group. Thereafter, our compensation committee reviews the base salaries of our executive officers each year as part of its annual compensation review, with input from our CEOChief Executive Officer (except with respect to his own base salary) and makes adjustments as it determines to be reasonable and necessary to reflect the scope of an executive officer’s performance, individual contributions and responsibilities, position in the case of a promotion, and market conditions.
Pre-Merger Base Salary Adjustments
In March 2018, our compensation committee reviewed the base salaries of our incumbent executive officers, including our incumbent named executive officers, taking into consideration an updated competitive market analysis prepared by its compensation consultant and the recommendations of our CEO, as well as the other factors described in “—Compensation-Setting Process – Setting Target Total Direct Compensation” above. Following this review, the compensation committee approved base salary increases for some of our incumbent executive officers, including our CEO, effective April 1, 2018, to bring their base salaries to levels that were comparable to those of similarly-situated executives at the companies in our compensation peer group. Our compensation committee also determined to leave the base salaries of some of our executive officer, including our CFO, at their fiscal 2018 levels.
The base salaries approved for our incumbent named executive officers in March 2018 were as follows:
|
| | | |
Named Executive Officer | Fiscal 2018 Base Salary | Fiscal 2019 Base Salary | Percentage Adjustment |
Mr. Reilly | $400,000 | $425,000 | 6.25% |
Mr. Frankola | $360,000 | $360,000 | --- |
Mr. Olson | $275,000 | $284,000 | 3.27% |
Post-Merger Base Salary Adjustments
In January 2019, following the completion of the merger with Hortonworks, our compensation committee reviewed the base salaries of the continuing senior executive team of the combined companies, including our named executive officers taking into consideration a competitive market analysis prepared by its compensation consultant and the recommendations of our CEO, as well as the other factors described in “—Compensation-Setting Process – Setting Target Total Direct Compensation” above. Following this review, the compensation committee approved base salary increaseswere maintained at their Fiscal Year 2020 levels for our executive officers, other than our CEO, effective January 3, 2019, to bring their base salaries to levels that were comparable to those of similarly-situated executives at the companies in our revised compensation peer group. In February 2019, the compensation committee also approved the base salary increase for our CEO, effective January 3, 2019, taking into consideration the various factors described in “—Compensation-Setting Process – Setting Target Total Direct Compensation” above and to bring his base salary to a level that was comparable to those of CEOs at the companies in our revised compensation peer group.Fiscal Year 2021.
The base salaries approved for certain of our named executive officers in January 2019 were as follows:
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| | | |
Named Executive Officer | Fiscal 2019 Base Salary | Fiscal 2020 Base Salary | Percentage Adjustment |
Mr. Reilly | $425,000 | $500,000 (1) | 18% |
Mr. Frankola | $360,000 | $400,000 | 11% |
Mr. Olson | $284,000 | $350,000 | 23% |
Mr. Murthy | --- (2) | $380,000 | --- |
| | | | | |
(1)Named Executive Officer | Mr. Reilly’s base salary effective as of January 3, 2019 was not determined in January 2019, but later approved by our compensation committee in February 2019. |
| Fiscal 2021 Base Salary |
(2)Robert Bearden | Mr.$600,000 (1) |
Jim Frankola | $400,000 |
Arun Murthy joined us in January 2019 following the completion of our merger with Hortonworks. | $380,000 |
The(1) Mr. Bearden’s base salaries paid tosalary was established in connection with his appointment as our named executive officers during fiscal 2019 are set forth in the “—Summary Compensation Table” below.President and Chief Executive Officer, effective January 13, 2020.
Annual Cash Bonuses
In Fiscal Year 2019,2021, we used an annual cash bonus plan to motivate our executive officers, including certain of our named executive officers, and other employees who are members of our leadership team, to achieve our key annual business objectives. In March 2018,2020, our compensation committee approved and adopted the terms of the Cloudera Bonus Plan – Executive Officers and Leadership Team (the “Fiscal 20192021 Bonus Plan”) to provide an annual incentive compensation opportunity for our executive officers based on the achievement of both corporate performance metrics, as reflected in our Fiscal Year 20192021 annual operating plan, and individual performance metrics under the Fiscal 2019 Bonus Plan applicable to Fiscal Year 2019 (the “2019 Performance Metrics”). Each of our incumbent named executive officers was a participant in the Fiscal 2019 Bonus Plan and subject to the 2019 Performance Metrics.
plan.
The Fiscal 20192021 Bonus Plan provided each participant with the opportunity to earn an annual cash bonus based on our actual achievement of the pre-established performance level for each of bookings,three financial performance measures - revenue, annualized recurring revenue and non-GAAP operating cash flowmargin - for Fiscal Year 2019.2021 (the “Fiscal 2021 Performance Metrics”). Each of these corporate performance metrics was weighted separately and differently. All annual cash bonuses were subject to threshold performance for each performance metric, and each of the metrics was measured independently of the others.
Our compensation committee reserved the discretion to modify actual bonus payments based on a number of factors, including individualfactors.
Payouts under the annual cash bonus plan are advanced quarterly, based on performance against quarterly targets through the end of the previous quarter. A true up is then completed at the end of the year, and final payment is made based on full year performance. For Fiscal Year 2021, advances to Messrs. Frankola and Murthy for the second and third quarters were capped at 75% of target amounts, while Mr. Bearden did not receive any advance for these quarters due to concerns regarding the impact of COVID-19 on our business.
Target Annual Cash Bonus Opportunities
For purposes of the Fiscal 20192021 Bonus Plan, cash bonus payments were based upon an eligible percentage of each participant’s base salary. In March 2018,2020, our compensation committee reviewed the target annual cash bonus opportunities of our incumbent named executive officers, taking into consideration the recommendations of our CEOChief Executive Officer (except with respect to his own target annual cash bonus opportunity) as well as the other factors described in “—Compensation-Setting Process – Setting Target Total Direct Compensation”Compensation” above. Following this review, theour compensation committee approved the following target annual cash bonus opportunities for our incumbent named executive officers as follows:set forth below, which were unchanged from the prior year.
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| | |
Named Executive Officer(1) | Fiscal Year 2019 Target Annual Cash Bonus Opportunity (as a percentage of base salary) | Fiscal Year 2019 Target Annual Cash Bonus Opportunity ($) |
Mr. Reilly | 100% | $425,000 |
Mr. Frankola | 70% | $252,000 |
Mr. Olson | 50% | $142,000 |
| |
(1) | Mr. Murthy joined us in January 2019, following the completion of our merger with Hortonworks. Thus, he was not eligible to participate in the Fiscal 2019 Bonus Plan. |
Potential annual cash bonus payments for our named executive officers under the Fiscal 2019 Bonus Plan could range from zero to 150% of their target annual cash bonus opportunity.
| | | | | | | | |
Named Executive Officer | FY21 Target Bonus (% of salary) | FY21 Target Bonus |
Robert Bearden | 83% | $500,000 |
Jim Frankola | 70% | $280,000 |
Arun Murthy | 60% | $228,000 |
Corporate Performance Metrics
For purposes of the Fiscal 20192021 Bonus Plan, in the first quarter of Fiscal Year 2021, our compensation committee selected bookings (weighted 50%), revenue (weighted 20%)33.3% for Messrs. Bearden and Murthy and 25% for Mr. Frankola), annual recurring revenue (weighted 33.3% for Messrs Bearden and Murthy and 25% for Mr. Frankola) and non-GAAP operating cash flowmargin (weighted 30%)33.3% for Messrs Bearden and Murthy and 50% for Mr. Frankola) as the 2019Fiscal 2021 Performance Metrics. Revenue and annual recurring revenue are determined as set forth in our audited financial statements. Non-GAAP operating margin is determined by dividing non-GAAP operating profit, as reported in our audited financial statements, by our total reported revenue. The compensation committee selected these performance metrics based on its belief that they were the best indicators of our successful execution of our annual operating plan, and our ability to continue to grow while moving towards profitability.
In March 2018,2020, our compensation committee set the target performance levels and related performance payoutachievement payment levels for each of the 2019Fiscal 2021 Performance Metrics for purposes of funding the bonus pool under the Fiscal 20192021 Bonus Plan. For Fiscal Year 2019, the target performance level for bookings was $572 million, the target performance level for revenue was $466 million, and the target performance level for operating cash flow was ($38 million).
The threshold, target, and maximum (“excellence”) performance and the related funding levels for each of the 2019Fiscal 2021 Performance Metrics were as follows:
| | | | | | | | |
| ACHIEVEMENT | PAYMENT % (1) |
|
Revenue (Weighted 33% for Messrs. Bearden and Murthy and 25% for Mr. Frankola)
|
Threshold | 85% | 50% |
Target | 100% | 100% |
Excellence | 115% | 150% (maximum) |
Annual Recurring Revenue (Weighted 33% for Messrs. Bearden and Murthy and 25% for Mr. Frankola) |
Threshold | 75% | 50% |
Target | 100% | 100% |
Excellence | 125% | 150% (maximum) |
non-GAAP Operating Margin (Weighted 33% for Messrs Bearden and Murthy and 50% for Mr. Frankola) (2) |
Threshold | 75% | 75% |
Target | 100% | 100% |
Excellence | 150% | 150% (maximum) |
Bookings (Weighted 50%)
|
| | |
Bookings | Achievement Percentage (1) | Payment Percentage (1) |
Below Threshold | <75% | 0 |
Threshold | 75% | 50% |
Target | 100% | 100% |
Excellence | 120% | 150% (maximum) |
(1) In the event of actual performance between the threshold and target, and target and excellence performance levels, the payout percentage was to beis calculated between each designated segment on a linear basis.
Revenue (Weighted 20%)
|
| | |
Revenue | Achievement Percentage (1) | Payment Percentage (1) |
Below Threshold | <85% | 0 |
Threshold | 85% | 50% |
Target | 100% | 100% |
Excellence | 115% | 150% (maximum) |
(1) In the event of actual performance between the threshold and target, and target and excellence, performance levels, the payout percentage was to be calculated between each designated segment on a linear basis.
Operating Cash Flow (Weighted 30%)
|
| | |
Operating Cash Flow (1) | Achievement Percentage (1) | Payment Percentage (2) |
Below Threshold | <75% | 0 |
Threshold | 75% | 75% |
Target | 100% | 100% |
Excellence | 150% | 150% (maximum) |
(1) Performance for the operating cash flow metric is calculated as 1% incremental achievement for every $1 million improvement in operating cash flow.
(2) In the event of actual performance between the threshold and target, and target and excellence performance levels, the payout percentage was to be calculated between each designated segment on a linear basis.
If performance for a specific 2019Fiscal 2021 Performance Metric was achieved at target, the bonus payment attributable to that metric would be paid out at target based on its percentage weighting. Exceeding the target performance level would result in an increased bonus payment of up to 150% of the target annual cash bonus opportunity for that specific weighted metric. Further, the threshold performance level for each 2019Fiscal 2021 Performance Metric was the minimum performance level that had to be achieved before our named executive officers could earn any annual bonus payment with respect to that
metric. If the threshold performance level was not achieved, then no awardbonus payment would be made under the Fiscal 20192021 Bonus Plan with respect to that metric.
Annual Cash Bonus Formula
The following formula was used to calculate the actual annual cash bonus payments for participants in the Fiscal 20192021 Bonus Plan:
Achievement of Corporate Performance Metrics
In March 2019,2021, our compensation committee reviewed our performance with respect to each of the 2019Fiscal 2021 Performance Metrics and determined the extent to which each metric had been achieved during the year. The compensation committee determined that we had achieved the performance results set forth in the table below for each metric, resulting in the payment percentage corresponding to that performance level as follows:
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| | | | | | |
2019 Performance Metric | Target Performance Level ($) | Actual Performance ($) | Percentage Attainment (%) | Percentage Funding (%) | Percentage Weighting (%) | Weighted Payment Percentage (%) |
Bookings | $572 million | $497 million | 87% | 74% | 50% | 37% |
Revenue | $466 million | $453 million | 97% | 91% | 20% | 18% |
Operating Cash Flow | ($38 million) | $27 million | 164% | 150% | 30% | 45% |
Total | | | | | | 100% |
set forth below. Based on these results, our compensation committee determined to fund the bonus pool for the payment of cash bonusesachievement under the Fiscal 20192021 Bonus Plan at the 100%level.117% of target level for Messrs Bearden and Murthy, and 121% of target for Mr. Frankola.
| | | | | | | | | | | | | | | | | | | | | | | |
Performance Metric | Actual Performance
| Percentage Attainment
| Percentage Funding
| Percentage Weighting
| Weighted Payment Percentage |
| | | | (Messrs. Bearden and Murthy) | (Mr. Frankola) | (Messrs Bearden and Murthy) | (Mr. Frankola) |
Revenue | $868 million | 103% | 109% | 33% | 25% | 36% | 27% |
Annual Recurring Revenue | $780 million | 104% | 109% | 33% | 25% | 36% | 27% |
Non-GAAP Operating Margin | 17% | 133% | 133% | 33% | 50% | 44% | 67% |
Total Funding | | | | | | 117% | 121% |
Achievement of Individual Performance Metrics
At that time, our compensation committee evaluated the individual performance against their individual performance objectives for Fiscal Year 2019 of each of our CEO, CFO and CSO in connection with determining the amount of their cash bonus payments. In the case of our CFO and CSO, our CEO evaluated each of his performance against his individual performance objectives for the year and formulated a recommendation for his cash bonus payment for consideration by the compensation committee. In the case of our CEO, the compensation committee evaluated our financial and operational performance for Fiscal Year 2019 and made a determination as to the impact such performance would have on his individual cash bonus payment. The impact of this determination of individual performance was reflected in the annual cash bonus payments set forth in the table below.
Annual Cash Bonus Payments
Based on the foregoing, our compensation committee approved the following annual cash bonus payments for our named executive officers for Fiscal Year 2019:
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| | | |
Named Executive Officer (1) | Target Annual Cash Bonus Payment(2) | Annual Cash Bonus Payment | Percentage of Target Annual Cash Bonus Actually Paid |
Mr. Reilly | $426,680 | $385,000 | 90% |
Mr. Frankola | $254,183 | $293,884 | 116% |
Mr. Olson | $149,280 | $142,000 | 95% |
| |
(1) | Since Mr. Murthy did not join us until January 2019, he was not eligible to participate in the Fiscal 2019 Bonus Plan and received no bonus payment from us. |
| |
(2) | Bonus payment amounts were prorated to reflect the adjustment of annual base salaries effective April 1, 2018. Bonus payments amounts were prorated to reflect the adjustment of annual base salaries effective January 3, 2019. |
2021 as set forth below. Other than the amounts described above, we did not pay our executive officers, including our named executive officers, any other cash bonuses in Fiscal Year 2019.2021. The actual annual
The annual cash bonus payments made to our named executive officers for Fiscal Year 20192021 are set forth in the “—Summary Compensation Table”Table” below.
| | | | | | | | | | | |
Named Executive Officer | Target Bonus Payment | Actual Bonus Payment | Percentage of Target |
Robert Bearden | $500,000 | $585,000 | 117% |
Jim Frankola | $280,000 | $338,800 | 121 % |
Arun Murthy | $228,000 | $266,760 | 117 % |
Long-Term Incentive Compensation
We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our executive officers, including our named executive officers, to create value for our stockholders. Equity awards also help us retain qualified executive officers in a competitive market.
Long-term incentive compensation opportunities in the form of equity awards are granted to our CEOChief Executive Officer and our other executive officers by our compensation committee. As it does with other elements of compensation, the compensation committee determines the amount of long-term incentive compensation for our executive officers as part of its annual compensation review and after taking into consideration the outstanding equity holdings of each executive officer, the proportion of our total shares outstanding used for annual employee long-term incentive compensation awards (our “burn rate”) in relation to the annual burn rate ranges of the companies in our compensation peer group and other recently-public technology companies, and the factors described in “—Governance of ExecutiveCompensation-Setting Process — Setting Target Total Direct Compensation Program – Compensation-Setting Process”” above. The amounts of the equity awards are also intended to provide competitively-sized awards and resulting target total direct compensation opportunities that the compensation committee believes are reasonable and appropriate taking into consideration the factors described in the preceding sentence.
To date,For Fiscal Year 2021, as in prior years, our compensation committee has determinedelected to grant our executive officers, including our named executive officers, long-term incentive compensation opportunities in the form of RSU awards which may vest and be settled for shares of our common stock. The compensation committee believes that because RSU awards representing the right to receive shares of our common stock upon settlement have value even in the absence of stock price appreciation, we are able to incent and retain our executive officers using fewer shares of our common stock. SinceBecause their value increases with any increase in the value of the underlying shares, RSU awards serve as an incentive whichthat aligns with the long-term interests of our executive officers and stockholders. Unlike stock options, however, RSUs have real economic value when they vest even if the market price of our common stock declines or stays flat, thus delivering more predictable value to our executive officers. In addition, because they are subject to a multi-year vesting requirement, RSU awards serve our retention objectives sinceas our executive officers must remain continuously employed by us through the applicable vesting dates to fully earn these awards. Finally, because of their “full value” nature, RSU awards deliver the desired grant date fair value using a lesser number of shares than an equivalent stock option, thereby enabling us to reduce the dilutive impact of our long-term incentive award mix and to use our equity compensation resources more efficiently and better manage the overall number of shares of our common stock granted to our executive officers.
Restricted Stock Unit Awards
Pre-Merger Equity Awards
In March 2018, On April 9, 2020, our compensation committee approved grants of 558,659 RSUs to Mr. Frankola and 390,988 RSUs to Mr. Murthy. One sixth of Mr. Frankola's award vested on June 15, 2020; the remainder vest in 10 equal quarterly installments thereafter, subject to Mr. Frankola's continuing service to us through the vesting dates. Mr. Murthy's award vests in 12 equal quarterly installments commencing on June 15, 2020, subject to Mr. Murthy's continuing service to us through the vesting dates. The size of these awards was determined thatbased on our Chief Executive Officer's recommendations and our compensation committee's review of competitive market data.
As noted above, Mr. Frankola and Mr. Murthy did not receive increases in base pay or in their annual bonus opportunity for Fiscal Year 2021. Instead, based on our Chief Executive Officer's recommendations and our compensation
committee's review of competitive market data, on April 9, 2020, the equitycompensation committee approved a grant of 10,411 RSUs to Mr. Frankola and 11,825 RSUs to Mr. Murthy. These awards to be granted tovested in full on June 15, 2020.
Mr. Bearden had received RSU awards in connection with his appointment as our incumbentPresident and Chief Executive Office, effective January 13, 2020 (in our 2020 fiscal year), and did not receive any additional awards in Fiscal Year 2021. For more information regarding Mr. Bearden's RSU awards, see "— Employment Arrangements — Agreements with Named Executive Officers."
Health and Welfare Benefits
Our executive officers, including our incumbent named executive officers, should be in the form of time-based RSU awards that may be settled for shares of our common stock. The number of shares of common stock subjectfrom time to the RSU awards granted to our incumbent executive officers were determined by the compensation committee after considering the factors described in “—Governance of Executive Compensation Program – Compensation-Setting Process” above.
Our CEO received the largest equity award based on his overall responsibility for our performance and success. In addition, further differentiation was made among our incumbent executive officers based on our compensation committee’s review of the competitive market data for their respective positions, the size of the equity awards previously granted to them in anticipation of our initial public offering, and its desire to smooth transition to a normalized annual grant program.
The RSU awards granted to our incumbent named executive officers in March 2018 were as follows:
|
| | |
Named Executive Officer | Restricted Stock Unit Award (number of shares) | Aggregate Grant Date Fair Value ($) |
Mr. Reilly | 330,000 | $6,695,700.00 |
Mr. Frankola | 170,000 | $3,449,300.00 |
Mr. Olson | 100,000 | $2,029,000.00 |
The time-based RSU awards granted to our incumbent named executive officers vest over a four-year period, with 1/16th of the total number of shares subject to the award vesting on each quarterly anniversary date following March 15, 2018, the vesting commencement date, contingent upon the named executive officer’s continued employment by us through each applicable vesting date.
Post-Merger Equity Awards
In January 2019, our compensation committee determined to grant equity awards to several of the continuing senior executive team of the combined companies, including Mr. Murthy, taking into consideration and the recommendations of our CEO, as well as the other factors described in “—Compensation-Setting Process—Setting Target Total Direct Compensation” above.
In connection with his joining the combined senior executive team following the merger with Hortonworks in January 2019, our compensation committee granted Mr. Murthy, our Chief Product Officer, an RSU award that may vest and be settled for 582,878 shares of our common stock. This award was granted by our compensation committee after taking into consideration an updated competitive market analysis prepared by its compensation consultant, Mr. Murthy’s performance and criticality to our business, the scope of his post-merger role and duties, our individual retention objectives with respect to Mr. Murthy, and his existing unvested equity holdings as of the date of completion of the merger. In addition, we committed to granting Mr. Murthy an RSU for shares of our common stock equal to $1.6 million divided by the 10-day closing price average for the period prior to the closing date of our merger with Hortonworks, to be earned and vest subject to the achievement of performance criteria to be established by our board of directors and his continued employment through the applicable performance period.
The RSU award of 582,878 shares of our common stock granted to Mr. Murthy vests (and becomes exercisable) over a three-year period with 1/12th of the total number of shares underlying that portion of the award vesting on each March 15th, June 15th, September 15th, and December 15th following December 15, 2019, contingent upon his remaining continuously employed by us through each applicable vesting date.
The equity awards granted to our named executive officers during Fiscal Year 2019 are set forth in the “—Summary Compensation Table” and the “—Grants of Plan-Based Awards Table” below.
Welfare and Health Benefits
Our named executive officerstime participate in our company-sponsored benefit programs on generally the same basis as our other salaried employees, including with respect to our 401(k) plan and health and welfare benefits. Currently, we match contributions made by participants in the plan on a dollar-for-dollar basis for 100% of the first 1% of compensation deferred, up to a limit of $5,000.
Additional benefits received by our executive officers, including our named executive officers, includesuch as flexible spending accounts, medical, dental, and vision insurance, business travel insurance, an employee assistance program, accidental death and dismemberment insurance, health savings accounts, short-term and long-term disability insurance, basic life insurance, commuter benefits, and reimbursement for mobile phone coverage. These benefits are providedWe endeavor to our executive officers on the same basis as to all of our employees.
We design our employee benefits programs to be affordable and competitive in relation to the market as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market.
Perquisites and Other Personal Benefits
Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our executive officers, including our named executive officers, except as generally made available to our employees, or in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective, and for recruitment and retention purposes. During Fiscal Year 2019,2021, none of our named executive officers received perquisites or other personal benefits that were,having a total value, individually or in the aggregate, of $10,000 or more for each individual, except that Mr. Reilly incurred the cost of spousal travel to and attendance at a company function and the related tax gross–up to cover the income tax aspects of such travel and attendance. These perquisites are included in the “All Other Compensation” column in the “Summary Compensation Table” to the extent total perquisites or other personal benefits during Fiscal Year 2019 were, in the aggregate $10,000 or more for the individual.
more. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as those described in the precedingthis paragraph. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by our compensation committee.
Employment Arrangements
We have entered into written employment offer letters with each of our CEO, CSO and CPO and an employment agreement with our CFO.executive officers. Each of these arrangements was approved on our behalf by our compensation committee or our board of directors at the recommendation of the compensation committee. We believe that these arrangements were necessary to induce these individuals to forego other employment opportunities or leave their then-current employer for the uncertainty of a demanding position in a new and unfamiliar organization.
In filling each of our executive positions, our board of directors or our compensation committee, as applicable, recognized that it would need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market. At the same time, our board of directors and the compensation committee were sensitive to the need to integrate new executive officers into the executive compensation structure that we were seeking to develop, balancing both competitive and internal equity considerations.
Each of our employment arrangements provides for “at will”“at-will” employment (meaning that either we or the executive officer may terminate the employment relationship at any time without cause) and generally sets forth the initial compensation arrangements for the named executive officer, including an initial base salary, participation in our employee benefit programs, an indication of eligibility for an annual cash incentive award opportunity and an equity award. We have also required each named executive officer to execute a form of our standard confidential information and invention
assignment agreement.
In addition, these
Agreements with Named Executive Officers
We have entered into employment agreements includeor offer letters with each of Messrs. Bearden, Frankola and Murthy, which are summarized below. We also have entered into Severance and Change in Control Agreements with each of Mr. Murthy and Mr. Frankola. Severance arrangements are generally described in the sections titled "Severance and Change in Control Agreements" below, and additional detail including any potential payments and benefits due upon a termination of employment or a change in control are further described in “Executive Compensation Tables — Potential Payments upon Termination or Change in Control” below.
Robert Bearden
We entered into an employment offer letter with Mr. Bearden, our Chief Executive Officer, dated January 13, 2020. This offer letter agreement has no specific term and constitutes at-will employment arrangement. Pursuant to the offer letter, (i) Mr. Bearden’s annual base salary as of January 31, 2020 was $600,000, (ii) he is eligible to receive an annual target bonus of $500,000 based on performance objectives as agreed between Mr. Bearden and the compensation committee of our board of directors (which was paid on a pro-rated basis subject to Mr. Bearden’s continued service through the end of Fiscal Year 2020 and which was guaranteed at target for the first two quarters of Fiscal Year 2021); (iii) he was granted 538,809 RSUs that vested quarterly over one year following December 15, 2019; (iv) he would be eligible to vest in 1,077,619 RSUs quarterly over two years commencing March 15, 2021 if our board of directors (with less than two dissenters) determined its satisfaction with Mr. Bearden’s performance as our Chief Executive Officer (collectively with the 538,809 grant the "New Hire RSUs") and (iv) he will be entitled to certain post-employment arrangements that areseverance and acceleration benefits as discussed below under “—Post-Employment Compensation.”
For detailed descriptions of the employment arrangements and post-employment arrangements we maintained with our named executive officers during Fiscal Year 2019, see section entitled “—Potential Payments upon Termination or Change in ControlControl—Severance Agreements for Current Named Executive Officers—Robert Bearden.”
On May 6, 2020, Mr. Bearden voluntarily forfeited 275,000 shares subject to the New Hire RSUs, representing approximately 17% of the total New Hire RSUs. Mr. Bearden informed the Company that he cancelled this portion of his New Hire RSUs to facilitate making equity grants of approximately the same number of restricted stock units to the Company’s non-executive employees in recognition of a reduction to their cash bonuses for the remainder of Fiscal Year 2021 as a result of COVID-19 and other business factors without resulting in additional dilution to our stockholders.
As a result, the number of shares subject to the New Hire RSUs that are eligible to vest during the third year of the New Hire RSUs overall vesting schedule was reduced by 275,000 and the remaining 263,810 RSUs eligible to vest during the third year will vest pro-rata over four quarters during the third year subject to Mr. Bearden’s continued employment on each vesting date. Our compensation committee accepted and approved this reduction to Mr. Bearden’s New Hire RSUs. No other changes were made to Mr. Bearden’s New Hire RSUs and on February 22, 2021, our board confirmed its satisfaction with Mr. Bearden's performance as our Chief Executive Officer.
Jim Frankola
below.
We entered into an employment agreement with Mr. Frankola, our Chief Financial Officer, dated September 10, 2012. This employment agreement has no specific term and constitutes at-will employment. Mr. Frankola’s annual base salary as of January 31, 2021 was $400,000, and he is eligible to receive an annual cash bonus pursuant to the Fiscal 2021 Bonus Plan.
Arun Murthy
We entered into an employment offer letter with Mr. Murthy, our Chief Product Officer, dated December 31, 2018, in connection with our merger with Hortonworks. The offer letter was amended on July 31, 2019. This offer letter agreement has no specific term and constitutes at-will employment. Pursuant to the terms of the offer letter, Mr. Murthy is eligible to receive an annual target cash bonus equal to 60% of his annual base salary based on the achievement of applicable performance objectives and/or conditions established by us in our sole discretion. Mr. Murthy’s annual base salary as of January 31, 2021 was $380,000.
Post-Employment Compensation
Severance and Change in Control Arrangements
Mr. Bearden is eligible for certain payments and benefits upon the termination of his employment under specified circumstances pursuant to his employment offer letter with us, which terms were negotiated to induce him to join the company. We have also entered into Severance and Change in Control Agreements (the “Severance Agreements”) with each of our named executive officers including each ofother than Mr. Bearden.
Mr. Bearden's offer letter and the Severance Agreements provide our named executive officers. The Severance Agreements provide these individualsofficers with certain protection in the event of their termination of employment under specified circumstances, including following a change in control of the Company. TheMr. Bearden's offer letter and the Severance Agreements also prohibit the executive officer from engaging directly or indirectly in competition with us, recruiting or soliciting any of our employees or consultants, or disparaging us, our employees or officers, or the members of our board of directors.
We believe that these protections were necessary to induce certain of these individuals to leave their former employment for the uncertainty of a demanding position in a new and unfamiliar organization and help from a retention standpoint. These arrangements provide reasonable compensation to the executive officer if he leaves our employ under certain circumstances to facilitate his transition to new employment. Further, in some instances we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiringrequire a departing executive officer to sign a general release of claims in a form prescribed by us as a condition to receiving post-employment compensation payments or benefits.
Mr. Murthy’s Severance Agreement was entered into in connection with our merger with Hortonworks and differs from the other Severance Agreements in that it will only become effective 12 months following his starting date with us (or, if earlier, upon a change in control of the Company). Prior to the effectiveness of Mr. Murthy’s Severance Agreement, Mr. Murthy will remain eligible for certain severance and acceleration rights of equity held pursuant to his Hortonworks arrangements.
We believe that these arrangements help our executives maintain their continued focus and dedication to their assigned duties to maximize stockholder value if there is a potential transaction that could involve a change in control of the Company. The terms and conditions of the Severance Agreements were approved by our board of directors/our compensation committee after an analysis of competitive market data, and for Mr. Murthy, in connection with the merger with Hortonworks.
All payments and benefits in the event of a change in control of the Company are payable only if there is a subsequent loss of employment by an executive officer (a so-called “double-trigger” arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention value following a change in control of the Company and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction. We do not use excise tax payments (or “gross-ups”) relating to a change in control of the Company and have no such obligations in place with respect to any of our executive officers, including our named executive officers.
We believe that having in place reasonable and competitive post-employment compensation arrangements in the event of a change in control of the Company are essential to attracting and retaining highly-qualified executive officers. Our compensation committee does not consider the specific amounts payable under the post-employment compensation arrangements when determining the annual compensation for our executive officers. We do believe, however, that these arrangements are necessary to offer compensation packages that are competitive.
We do not use excise tax payments (or “gross-ups”) relating to a change in control of the Company and have no such obligations in place with respect to any of our named executive officers.
For a summary of the material terms and conditions of the post-employment compensation arrangements we maintained with each of our named executive officers during Fiscal Year 2019,2021, as well as an estimate of the potential payments and benefits that they would have been eligible to receive if a hypothetical change in control or other trigger event had occurred on January 31, 2019,2021, see “"Executive Compensation Tables —Potential Payments Upon Termination or Change in Control”Control” below.
Other Compensation Policies
Equity Award Grant Policy
Our general policy is to grant equity awards on regular, fixed dates determined in advance. Grants of equity awards in connection with the hiring of new employees or the promotion ofgrants to existing employees may be made by our equity incentive committee, consisting of our CEO.Chief Executive Officer. However, all equity grants to executive officers must be made by our compensation committee and grants to non-employee members of our board of directors may only be made by the full board of directors. The exercise price of all stock options rights must be equal to or greater than the closing price of our common stock as reported on the NYSE on the date of grant.
Stock Ownership Policy
In March 2019, our board of directors adopted a stock ownership policy for our executive officers and the non-employee members of our board of directors to further align their respective interests with the interests of our stockholders, and to further promote our commitment to sound corporate governance. This policy requireswas amended in December 2019 to increase the share ownership thresholds for our executive officers and non-employee directors to own a minimum number of shares of our common stock as follows:the levels set forth below.
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| | | | |
Position | Individual Ownership Level |
Chief Executive Officer | Lesser of five times base salary or 180,000 shares |
All Other Executive Officers | Lesser of two times base salary or 58,000 shares |
Non-Employee Directors | Lesser of threefive times annual cash retainer(1) for service as board member or 7,500 shares(1) |
(1) 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).
Each executive officer and non-employee director is expected to meet his or her applicable ownership level within five years of becoming a subject to the stock ownership policy (which will be no earlier than the fifth anniversary of the date the stock ownership policy was adopted).
Unless and until an executive officer or non-employee director has met his or her applicable ownership level, such person is required to retain an amount equal to 50% of the net shares received as the result of the exercise, settlement, vesting, or payment of any equity awards granted to such person by the Company.
Hedging and Pledging Prohibitions
As part of our Insider Trading Policy, our employees (including our executive officersofficers) and the non-employee members of our board of directors are prohibited from: (i) engaging in transactions involving options or other derivative securities on our securities, such as puts and calls, whether on an exchange or in any other market; (ii) engaging in hedging or monetization transactions involving our securities, such as zero-cost collars and forward sale contracts; (iii) engaging in short sales of our securities, including short sales “against the box”; and (iv) using or pledging our securities as collateral in a margin account or as collateral for a loan unless the pledge has been approved by our Compliance Officer.
Compensation Recoupment Policy
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▪ | engaging in transactions involving options or other derivative securities on our securities, such as puts and calls, whether on an exchange or in any other market;
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▪ | engaging in hedging or monetization transactions involving our securities, such as zero-cost collars and forward sale contracts;
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▪ | engaging in short sales of our securities, including short sales “against the box”; and
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▪ | using or pledging our securities as collateral in a margin account or as collateral for a loan unless the pledge has been approved by our Compliance Officer.
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In December 2019, our board of directors adopted a compensation recoupment and forfeiture policy pursuant to which the board may recoup or require the forfeiture of certain incentive-based compensation paid to executive officers in the event that: (i) the Company’s financial statements are adjusted to correct one or more errors that have a material impact on the Company’s financial statements and (ii) the board or compensation committee determines that the executive officer engaged in fraud or intentional misconduct that materially contributed to the need for such adjustments. In the event of the foregoing, our board of directors may recoup or require forfeiture of any portion of the cash or equity-based incentive compensation that is in excess of what would have been earned by the executive officer considering the restated financial results. Our board of directors will disclose any recoupment or forfeiture of incentive compensation pursuant to this policy to the extent it determines that such disclosure would be appropriate and otherwise as required by applicable law.
Tax and Accounting Considerations
We take the applicable tax and accounting requirements into consideration in designing and implementing our executive compensation program.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows the deductibility by any publicly held corporation of individual compensation expensesany remuneration in excess of $1 million paid to certain executive officers within a taxable year. Recent changes to Section 162(m) in connection with the passage of the Tax Cuts and Jobs Act repealed exceptions to the deductibility limit that were previously available for “qualified performance-based compensation,” effective for taxable years after December 31, 2017. As a result, all cash and equity compensation paid to certain of our executive officers in excess of $1 million will be non-deductible unless it qualifies for transition relief afforded to certain binding arrangements in effect on November 2, 2017 or special rules applicable to newly public companies. Because of uncertainties in the interpretation and implementation of the changes to Section 162(m) in the Tax Cuts and Jobs Act, including the scope of the transition relief, we can offer no assurance of such deductibility. Our compensation committee seeks to balance the cost and benefit of tax deductibility with our executive compensation goals designed to promote long-term stockholder interests, and continues to reservereserves the discretion to approve new compensation that will not be deductible by reason of Section 162(m) or modify existing compensation arrangements that result in a loss of deductibility when it believes that such payments are appropriate to attract and retain executive talent.
Accounting for Stock-Based Compensation
Our compensation committee takes accounting considerations into account in designing compensation plans and arrangements for our executive officers and other employees. Chief among these is Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”), the standard which governs the accounting treatment of certain stock-based compensation. Among other things, ASC Topic 718 requires us to record a compensation expense in our income statement of operations for all equity awards granted to our executive officers and other employees. This compensation expense is based on the grant date “fair value” of the equity award and, in most cases, will be recognized ratably over the award’s requisite service period (which, generally, will correspond to the award’s vesting schedule). This compensation expense is also reported in the compensation tables below, even though recipients may never realize any value from their equity awards.
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
The following table provides information concerning compensation awarded to, earned by or paid to each of our named executive officers for all services rendered in all capacities during the last three or fewer fiscal years during which such individuals where named executive officers.
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Name and Principal Position | Fiscal Year | | Salary ($) | | Bonus ($) | Stock Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($) | |
All Other Compensation ($) | | Total ($) |
Robert Bearden(2) | 2021 | | 600,000 | | | 250,000(2) | 0(3) | | | 335,000(2) | | 0 | | 1,185,000 |
Chief Executive Officer | 2020 | | 31,923 | | | 24,725 | | 6,325,618(3) | | | 0 | | 35,000 | | 6,417,266 |
Jim Frankola | 2021 | | 400,000 | | | 4,746,044 | | | 338,800(4) | | 3,303(5) | | 5,488,147 |
Chief Financial Officer | 2020 | | 400,000 | | | 7,703,838 | | | 260,400 | | 864 | | 8,365,102 |
| 2019 | | 363,051 | | | 3,449,300 | | | 293,884 | | — | | 4,106,235 |
Arun Murthy | 2021 | | 380,000 | | | 3,359,460 | | | 266,760(4) | | 5,000(5) | | 4,011,220 |
Chief Product Officer | 2020 | | 380,000 | | | 5,380,283 | | | 212,000 | | 633 | | 5,972,916 |
| 2019 | | 44,612 | | | 7,192,715 | | | — | | — | | 7,237,327 |
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Name and Principal Position | Fiscal Year | | Salary ($) | | Stock Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($) | | All Other Compensation ($) | | Total ($) |
Thomas J. Reilly | 2019 | | 426,554(2) | | 6,695,700 | | | 385,000(5) | | 18,803(14) | | 7,526,057 |
Chief Executive Officer | 2018 | | 391,667(3) | | 5,355,000 | | | 307,000(6) | | | | 6,053,667 |
2017 | | 341,667(4) | | 4,302,000 | | | 269,167(7) | | | | 4,643,667 |
Jim Frankola | 2019 | | 363,051(8) | | 3,449,300 | | | 293,884(5) | | | | 4,106,235 |
Chief Financial Officer | 2018 | | 358,753(9) | | 3,213,000 | | | 203,000(6) | | | | 3,774,333 |
2017 | | 338,339(10) | | 2,516,670 | | | 137,594(7) | | | | 2,854,589 |
Arun Murthy(8)
Chief Product Officer | 2019 | | 44,612(11) | | 7,192,715 | | | --- | | | | 7,237,327 |
Michael A. Olson | 2019 | | 282,500(12) | | 3,827,172 | | | 142,000(5) | | | | 4,251,672 |
Chief Strategy Officer | 2018 | | 270,833(13) | | 2,588,250 | | | 113,750(6) | | | | 2,972,833 |
2017 | | 250,000 | | 2,151,000 | | | 100,938(7) | | | | 2,401,000 |
_________________
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(1) | The amounts reported in this column represent the aggregate grant date fair value of the RSUs granted to our named executive officers under our 2008(1) The amounts reported in this column represent the aggregate grant date fair value of the RSUs granted to our named executive officers under our 2017 Equity Incentive Plan in the years ended January 31, 2017 and 2018 and under our 2017 Equity Incentive |
Plan in the year ended January 31, 2019, 2020 and 2021 as computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the dollar amount recognized for financial statement reporting purposes of the equity awards reported in this column are set forth in Note 912 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2019.2021. Note that the amounts reported in this column reflect the accounting value for these equity awards and do not correspond to the actual economic value that may be receivedrealized by our named executive officers from the equity awards.
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(2) | Mr. Reilly’s salary was increased to $425,000 effective April 1, 2018, and was further increased to $500,000 effective January 3, 2019. |
(2) Mr. Bearden's Offer Letter provided that his bonus target for Fiscal Year 2021 would be $500,000 and that he would be guaranteed payout at target for the first two quarters of fiscal 2021. The guaranteed payout is included in the bonus column, while the balance of Mr. Bearden's annual bonus payout is included in the Non-Equity Incentive Plan Compensation column.
(3) As discussed under the section entitled "— Employment Arrangements — Agreements with Executive Officers" pursuant to Mr. Reilly’s base salaryBearden’s employment offer letter, Mr. Bearden was increasedgranted (i) an RSU award to $400,000 effective April 1, 2017.acquire 538,809 shares of our common stock that vested quarterly over one year following December 15, 2019 and (ii) an RSU award to acquire 1,077,619 shares of our common stock (collectively the "New Hire RSUs") that would vest quarterly over two years commencing March 15, 2021 if our board of directors (with less than two dissenters from such approval) determined its satisfaction with Mr. Bearden’s performance as our Chief Executive Officer. On May 6, 2020, Mr. Bearden voluntarily forfeited 275,000 shares subject to the New Hire RSU granted to him on January 13, 2020 in connection with his appointment as our President and Chief Executive Officer, representing approximately 17% of the total New Hire RSU, reducing the number of shares eligible to vest during the third year of the New Hire RSU’s vesting schedule. On February 22, 2021 our board of directors confirmed its satisfaction with Mr. Bearden's performance. For accounting purposes and, as a result, for disclosure purposes in this Summary Compensation Table, only the initial 538,809 RSUs were deemed granted in Fiscal Year 2020. The additional 1,077,619 RSUs, as adjusted to reflect the forfeiture, are deemed granted in Fiscal Year 2022 and therefore will be included in Mr. Bearden's 2022 compensation, valued as if the grant had occurred on February 22, 2021.
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(4) | Mr. Reilly’s base salary was increased to $350,000 effective April 1, 2016. |
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(5) | These amounts reflect bonuses earned by Messrs. Reilly, Frankola and Olson based upon our achievement of financial objectives and milestones. Mr. Reilly was eligible to earn a target bonus of $425,000. Mr. Frankola was eligible to earn a target bonus of $252,000. Mr. Olson was eligible to earn a target bonus of $142,000. |
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(6) | These amounts reflect bonuses earned by Messrs. Reilly, Frankola and Olson based upon our achievement of financial objectives and milestones. Mr. Reilly was eligible to earn a target bonus of $391,667. Mr. Frankola was eligible to earn a target bonus of $239,167. Mr. Olson was eligible to earn a target bonus of $135,417. |
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(7) | These amounts reflect bonuses earned by Messrs. Reilly, Frankola and Olson based upon our achievement of financial objectives and milestones. Mr. Reilly was eligible to earn a target bonus of $316,667. Mr. Frankola was eligible to earn a target bonus of $161,875. Mr. Olson was eligible to earn a target bonus of $118,750. |
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(8) | Mr. Frankola’s base salary was increased to $400,000 effective January 3, 2019. |
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(9) | Mr. Frankola’s base salary was increased to $360,000 effective April 1, 2017. This amount includes $358,333 base salary and $420 gym reimbursement. |
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(10) | Mr. Frankola’s base salary was increased to $350,000 effective April 1, 2016. This amount includes $337,919 base salary and $420 gym reimbursement. |
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(11) | Mr. Murthy’s compensation disclosed in this table does not include the compensation he received from Hortonworks before our merger with Hortonworks in January 2019. Mr. Murthy’s base salary was set as $380,000 effective January 3, 2019. |
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(12) | Mr. Olson’s base salary was increased to $284,000 effective April 1, 2018, and was further increased to $350,000 effective January 3, 2019 |
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(13) | Mr. Olson’s base salary was increased to $275,000 effective April 1, 2017. |
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(14) | The amount reported represents (i) $18,293 in spousal travel reimbursements, including an associated tax gross-up of $8,715 and (ii) a $510 holiday gift. |
(4) The amounts for Messrs. Frankola and Murthy reflect the annual non-equity incentive compensation earned by each individual under the Company’s executive officer bonus plan for the fiscal year performance periods indicated (these bonuses were paid in the subsequent year but are reported for the fiscal year for which they were earned). For more information, see the “Grants of Plan Based Awards Table” in this Proxy Statement.
(5) This amount represents a 401(k) plan matching contribution. For Fiscal Year 2021, this contribution includes a matching contribution true up that was paid in June 2020 (during Fiscal Year 2021) with respect to calendar year 2019 contributions.
Grants of Plan-Based Awards Table
The following table provides information concerning each grant of an award made during the fiscal year ended January 31, 20192021 for each of our named executive officers under any plan. This information supplements the information about these awards set forth in the Summary Compensation Table.
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| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | |
Estimated Future Payouts Under Equity Incentive Plan Awards | | |
Name | Type of Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares or Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(2) |
Thomas J. Reilly | Cash | N/A | 245,341 |
| 426,680 |
| 640,020 |
| | | | | | |
|
RSUs(3) |
03/23/2018 | — |
|
— |
|
— |
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— |
— |
— |
330,000 |
6,695,700 |
Jim Frankola |
Cash |
N/A | 146,155 |
| 254,183 |
| 381,275 |
| | | | | | |
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RSUs(3) |
03/23/2018 | — |
|
— |
|
— |
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— |
— |
— |
170,000 |
3,449,300 |
Arun Murthy |
Cash |
N/A | — |
| — |
| — |
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RSUs(4) |
01/17/2019 | — |
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— |
|
— |
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— |
— |
— |
582,878 |
7,192,715 |
Michael A. Olson |
Cash |
N/A | 85,836 |
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149,280 |
| 223,920 |
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RSUs(3) |
03/23/2018 | — |
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— |
| — |
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— |
— |
— |
100,000 |
3,827,172 |
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Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | |
Name | Type of Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | All Other Stock Awards: Number of Shares or Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(2) |
Robert Bearden(3) | Cash | | 250,000 | 500,000 | 750,000 |
— |
— |
Jim Frankola |
Cash | | 161,000 | 280,000 | 420,000 |
— |
— |
|
RSUs | April 9, 2020 | — | |
— |
— | 558,659(4) | $ | 4,659,216 |
|
RSUs | April 9, 2020 | — | |
— |
— | 10,411(5) | $ | 86,828 |
Arun Murthy |
Cash | |
131,000 | 228,000 | 342,000 |
— |
— |
|
RSUs | April 9, 2020 | — | |
— |
— | 390,988(6) | $ | 3,260,840 |
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RSUs | April 9, 2020 | — | |
— |
— | 11,825(5) | $ | 98,621 |
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(1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards: Reflects threshold, target and maximum potential payments established in March 2020 for awards under our annual cashFY 2021 bonus plan for executive officers described in the section above entitled “Compensation“Compensation Discussion and Analysis—Compensation Elements—Annual Cash Bonuses.Bonuses.” Under these awards, the named executive officers were eligible to receive a cash payout subject to the achievement of pre-established corporate performance metrics. |
(2) | Grant Date Fair Value of Stock Awards: The amounts reported in this column represent the grant date fair value of each award as computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the RSUs reported in this column are set forth in Note 912 to the audited consolidated financial statements included in our annual report on Form 10-K for the year ended January 31, 2019.2021. Note that the amounts reported in these columns reflect the accounting cost for these awards and do not correspond to the actual economic value that may be receivedrealized by our named executive officers from the awards. |
(3) | As discussed in the section titled "Employment Arrangements — Agreements with Named Executive Officers," pursuant to Mr. Bearden's offer letter, Mr. Bearden's target bonus for Fiscal Year 2021 was $500,000 and he was guaranteed payout at target for the first two quarters of Fiscal Year 2021. |
(4) | One sixth of these RSUs vested on June 15, 2020. The RSUsremainder vest at a rate of 1/16th of the total number of sharesin 10 substantially equal quarterly installments commencing on June 15, 2020, subject to continued service to us through each quarterly anniversary of the vesting commencement date. The outstanding RSU awardsRSUs are subject to acceleration of vesting as described in “—“—Potential Payments upon Termination or Change in Control” below. |
(4)(5) | 100% of these RSUs vested on June 15, 2020. |
(6) | Pursuant to our employment letter with Mr. MurthyThese RSUs vest in connection with the merger with Hortonworks, our initial compensation arrangements with Mr. Murthy include the grant of an RSU award to acquire such number of shares of our common stock12 substantially equal to $8.0 million divided by the 10-day closing price average for the period prior to the closing date of our merger with Hortonworks, with (i) 80% of the shares of our common stockquarterly installments commencing on June 15, 2020, subject to such award subjectcontinued service to service-based vesting over approximately a three-year period with 1/12th of the total number of shares underlying that portion of the award vesting quarterly following December 15, 2019, subject to his continued employment by us through each applicable vesting date, and (ii) with the remaining 20% of the shares of our common stockdate. The outstanding RSUs are subject to such award to be earned and vest subject to the achievementacceleration of performance criteria to be established by our board of directors and Mr. Murthy’s continued employment through the applicable performance period. The service based portion of this equity award grant was granted in January 2019 when the compensation committee granted Mr. Murthy an RSU award that may vest and be settled for 582,878 shares of our common stock and which is subject to the vesting schedule as described in this footnote.“—Potential Payments upon Termination or Change in Control” below.
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Outstanding Equity Awards at Fiscal Year End Table
The following table presents, for each of the named executive officers, information regarding outstanding stock options and RSU awards held as of January 31, 2019.2021.
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| | Option Awards | Stock Awards | | |
| Grant Date(1) | Number of Securities Underlying Unexercised Options | | | Number of Shares or Units that Have not Vested | Market Value of Shares that Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Shares or Units that Have not Vested | Equity Incentive Plan Awards: Market Value of Shares that have not Vested ($) |
Name | Exercisable | Unexercisable | Exercise Price ($) | Expiration Date | | | | |
Robert Bearden | 8/21/2013 | 438,908 | | — | 3.65 | 8/20/2023 | | | | |
| 1/13/2020 | | | | | | | 802,619(3) | 12,255,992 |
Jim Frankola | 1/31/2015 | 41,000 | — | | 16.02 | 1/31/2025 | | | | |
| 3/8/2017(4) | | | | | 11,250 | 171,788 | | |
| 3/23/2018(5) | | | | | 53,125 | 811,282 | | |
| 2/1/2019(6) | | | | | 191,257 | 2,920,494 | | |
| 4/9/2020(7) | | | | | 372,440 | 5,687,159 | | |
Arun Murthy | 8/21/2013 | 112,683 | — | | 3.65 | 8/20/2023 | | | | |
| 9/12/2014 | 169,649 | — | | 10.90 | 9/11/2024 | | | | |
| 1/17/2019(8) | | | | | 388,586 | 5,933,708 | | |
| 12/26/2019(9) | | | | | 282,512 | 4,313,958 | | |
| 4/9/2020(10) | | | | | 293,241 | 4,477,790 | | |
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| | | Option Awards | | Stock Awards |
| Grant Date(1) | | Number of Securities Underlying Unexercised Options | | | | | | Number of Shares that Have Not Vested(2) | | Market Value of Shares that Have Not Vested($)(3) |
Name | | Exercisable | | Unexercisable | | Exercise Price($) | | Expiration Date | | | | |
Thomas J. Reilly | 6/28/2013(4) | | 7,304,755 | | — |
| | 3.21 | | 6/27/2023 | | | | |
| 3/26/2015(5) | | 70,458 | | 18,542 | | 16.24 | | 3/25/2025 | | | | |
| 3/26/2015(6) | | | | | | | | | | 51,750 | | | 698,625 |
|
| 3/17/2016(7) | | | | | | | | | | 83,334 | | | 1,125,009 |
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| 3/8/2017(8) | | | | | | | | | | 168,750 | | | 2,278,125 |
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| 3/23/2018(9) | | | | | | | | | | 268,125 | | | 3,619,688 |
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Jim Frankola | 10/9/2012(10) | | 352,053 | | — |
| | 1.72 | | 10/8/2022 | | | | |
| 11/8/2013(11) | | 79,166 | | 20,834 |
| | 3.64 | | 11/7/2023 | | | | |
| 11/8/2013(12) | | 52,083 | | — |
| | 3.64 | | 11/7/2023 | | | | |
| 1/31/2015(13) | | 41,000 | | — |
| | 16.02 | | 1/30/2025 | | | | |
| 3/17/2016(14) | | | | | | | | | | 36,563 | | | 493,601 |
|
| 3/8/2017(15) | | | | | | | | | | 101,250 | | | 1,366,875 |
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| 3/23/2018(16) | | | | | | | | | | 138,125 | | | 1,864,688 |
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Arun Murthy | 1/3/2019(17) | | 112,683 | | — |
| | 3.65 | | 8/20/2023 | | | | |
| 1/3/2019(18) | | 169,649 | | — |
| | 10.90 | | 9/11/2024 | | | | |
| 1/3/2019(19) | | | | | | | | | | 8,156 | | | 110,106 |
|
| 1/3/2019(20) | | | | | | | | | | 163,125 | | | 2,202,188 |
|
| 1/3/2019(21) | | | | | | | | | | 287,100 | | | 3,875.850 |
|
| 1/17/2019(22) | | | | | | | | | | 582,878 | | | 7,868,853 |
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Michael A. Olson | 3/30/2012(23) | | 165,300 | | — |
| | 1.68 | | 3/29/2022 | | | | |
| 6/28/2013(24) | | 1,583,334 | | — |
| | 3.21 | | 6/27/2023 | | | | |
| 1/31/2015(25) | | 20,500 | | 20,500 |
| | 16.02 | | 1/30/2025 | | | | |
| 1/31/2015(26) | | | | | | | | | | — | | | — |
|
| 3/17/2016(27) | | | | | | | | | | 41,667 | | | 562,505 |
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| 3/8/2017(28) | | | | | | | | | | 81,563 | | | 1,101,101 |
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| 3/23/2018(29) | | | | | | | | | | 81,250 | | | 1,096,875 |
|
| 1/17/2019 | | | | | | | | | | | 145,719 |
| | 1,967,207 |
|
________________
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(1) | Except for Mr. Murthy, outstanding(1) Outstanding equity awards with a grant date prior to April 27, 2017, the effective date of our 2017 Equity Incentive Plan, were granted under our 2008 Stock Incentive Plan and outstanding equity awards with a grant date on or after April 27, 2017 were granted under our 2017 Equity Incentive Plan. All of the outstanding equity awards are subject to acceleration of vesting as described in “—Potential Payments upon Termination or Change in Control” below. |
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(2) | The outstanding RSUs were modified as of March 2017. See “Management’s Discussion and Analysis of Financial Conditions and Results of Operations-Significant Impacts of Stock-based Compensation Expense” in our final prospectus on Form 424(b)(4) (No. 333-220494) as filed with the SEC on September 28, 2017 and incorporated herein by reference. |
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(3) | The market value for our common stock is based on the closing price of our common stock on the NYSE as of January 31, 2019 of $13.50. |
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(4) | 1/4th of the option vested on June 18, 2014 and 1/48th vests monthly thereafter. |
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(5) | 1/24th of the option vests monthly beginning on June 18, 2017. |
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(6) | Our board of directors approved this award on March 26, 2015. These RSUs vest and are settled upon the satisfaction of both a service-based requirement and a liquidity event requirement. The vesting commencement date (the “VCD”) for these RSUs is June 15, 2017. The service-based requirement will be satisfied with respect to 1/8th of the RSUs on each quarterly anniversary of the VCD. The liquidity event requirement was satisfied upon Mr. Reilly’s continued employment through April 27, 2017, the effective date of our initial public offering. On that date, those RSUs for which the service-based vesting requirement has been satisfied vested and 1/8th of the RSUs will continue to vest on each quarterly anniversary the VCD thereafter. |
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(7) | Our board of directors approved this award on March 17, 2016. These RSUs vest and are settled upon the satisfaction of both a service-based requirement and a liquidity event requirement. The VCD for these RSUs is March 15, 2017. The service-based requirement will be satisfied with respect to 1/12th of the RSUs on each quarterly anniversary of the VCD. The liquidity event |
requirement was satisfied upon Mr. Reilly’s continued employment through April 27, 2017, the effective date of our initial public offering. On that2017 Equity Incentive Plan, were granted under our 2008 Stock Incentive Plan and outstanding equity awards with a grant date those RSUs for which the service-based vesting requirement has been satisfied vested and 1/12th of the RSUs will continue to vest on each quarterly anniversary the VCD thereafter.
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(8) | Our board of directors approved this award on March 8, 2017. These RSUs vest and settled upon the satisfaction of both a service-based requirement and a liquidity event requirement. The VCD for these RSUs is March 15, 2017. The service-based requirement will be satisfied with respect to 1/16th of the RSUs on each quarterly anniversary of the VCD. The liquidity event requirement was satisfied upon Mr. Reilly’s continued employment through April 27, 2017, the effective date of our initial public offering. On that date, those RSUs for which the service-based vesting requirement has been satisfied vested and 1/16th of the RSUs will continue to vest on each quarterly anniversary of the VCD thereafter. |
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(9) | Our board of directors approved this award on March 23, 2018. 1/16th of the RSUs vest and settle on each quarterly anniversary of the VCD, which is March 15, 2018. |
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(10) | 1/4th of the option vested at October 1, 2013 and an additional 1/48th vested monthly thereafter. |
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(11) | 1/48th of the option vests monthly beginning on December 1, 2015. |
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(12) | 1/48th of the option vests monthly beginning on December 1, 2014. |
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(13) | 1/24th of the option vests monthly beginning on January 1, 2017. |
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(14) | Our board of directors approved this award on March 17, 2016. These RSUs vest and are settled upon the satisfaction of both a service-based requirement and a liquidity event requirement. The VCD for these RSUs is March 15, 2016. The service-based requirement will be satisfied with respect to 1/16th of the RSUs on each quarterly anniversary of the VCD. The liquidity event requirement was satisfied upon Mr. Frankola’s continued employment through April 27, 2017, the effective date of our initial public offering. On that date, those RSUs for which the service-based vesting requirement has been satisfied vested and 1/16th of the RSUs will continue to vest on each quarterly anniversary of the VCD thereafter. |
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(15) | Our board of directors approved this award on March 8, 2017. These RSUs vest and settled upon the satisfaction of both a service-based requirement and a liquidity event requirement. The VCD for these RSUs is March 15, 2017. The service-based requirement will be satisfied with respect to 1/16th of the RSUs on each quarterly anniversary of the VCD. The liquidity event requirement was satisfied upon Mr. Frankola’s continued employment through April 27, 2017, the effective date of our initial public offering. On that date, those RSUs for which the service-based vesting requirement has been satisfied vested and 1/16th of the RSUs will continue to vest on each quarterly anniversary of the VCD thereafter. |
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(16) | Our board of directors approved this award on March 23, 2018. 1/16 of the of the RSUs vest and settle on each quarterly anniversary of the VCD, which is March 15, 2018. |
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(17) | Pursuant to the terms of the Merger Agreement, Mr. Murthy received this stock option in exchange for a stock option to acquire 86,345 shares of Hortonworks common stock at the exercise price of $4.76 per share. The stock option is fully vested. |
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(18) | Pursuant to the terms of the Merger Agreement, Mr. Murthy received this stock option in exchange for a stock option to acquire 130,000 shares of Hortonworks common stock at the exercise price of $14.22 per share. The stock option is fully vested. |
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(19) | Pursuant to the terms of the Merger Agreement, Mr. Murthy received these RSUs that will settle for shares of our common stock in exchange for RSUs that settle for 6,250 shares of Hortonworks common stock. 1/8th of the RSUs vest and be settled on each three-month anniversary of the VCD, subject to Mr. Murthy’s continued employment. The VCD for these RSUs is March 7, 2017. |
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(20) | Pursuant to the terms of the Merger Agreement, Mr. Murthy received these RSUs that will settle for shares of our common stock in exchange for RSUs that settle for 125,000 shares of Hortonworks common stock. 1/4th of the RSUs vested and settled on February 15, 2019 and 1/3rd of the balance vest and be settled on each three-month anniversary of February 15, 2019, subject to Mr. Murthy’s continued employment. |
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(21) | Pursuant to the terms of the Merger Agreement, Mr. Murthy received these RSUs that will settle for shares of our common stock in exchange for RSUs that settle for 220,000 shares of Hortonworks common stock. The VCD for these RSUs is March 15, 2019 and vest in full on the one-year anniversary of the VCD without interim vesting for any portion. |
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(22) | Our board of directors approved this award on January 17, 2019. The RSUs vest over approximately a three-year period with 1/12th of the total number of shares underlying the award vesting quarterly following December 15, 2019, subject to Mr. Murthy’s continued employment by us through each applicable vesting date. |
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(23) | 1/4th of the option vested on March 29, 2013 and 1/48th vested monthly thereafter. |
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(24) | 1/48th of the option vests monthly beginning on June 27, 2013. |
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(25) | 1/24th of the option vests monthly beginning on January 1, 2017. |
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(26) | Our board of directors approved this award on January 31, 2015. These RSUs vest and are settled upon the satisfaction of both a service-based requirement and a liquidity event requirement. The VCD for these RSUs is December 15, 2016. The service-based requirement will be satisfied with respect to 1/8th of the RSUs on each quarterly anniversary of the VCD. The liquidity event requirement was satisfied upon Mr. Olson’s continued employment through April 27, 2017, the effective date of our initial public offering. On that date, those RSUs for which the service-based requirement has been satisfied vested and 1/8th of the RSUs will continue to vest on each quarterly anniversary the VCD thereafter. |
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(27) | Our board of directors approved this award on March 17, 2016. These RSUs vest and are settled upon the satisfaction of both a service-based requirement and a liquidity event requirement. The VCD for these RSUs is March 15, 2017. The service-based requirement will be satisfied with respect to 1/12th of the RSUs on each quarterly anniversary of the VCD. The liquidity event |
requirement was satisfied upon Mr. Olson’s continued employment throughor after April 27, 2017 were granted under our 2017 Equity Incentive Plan. All of the effective dateoutstanding equity awards are subject to acceleration of vesting as described in “—Potential Payments upon Termination or Change in Control” below.
(2) The market value for our common stock is based on the closing price of our initial public offering. On that date, thosecommon stock on the NYSE as of January 29, 2021 of $15.27.
(3) Shares underlying Mr. Bearden's New Hire RSUs. The performance condition relating to the New Hire RSUs for which the service-based requirement has beenwas satisfied vested and 1/12th of the RSUs will continue to vest on each quarterly anniversary the VCD thereafter.
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(28) | Our board of directors approved this award on March 8, 2017. These RSUs vest and settled upon the satisfaction of both a service-based requirement and a liquidity event requirement. The VCD for these RSUs is March 15, 2017. The service-based requirement will be satisfied with respect to 1/16th of the RSUs on each quarterly anniversary of the VCD. The liquidity event requirement was satisfied upon Mr. Olson’s continued employment through April 27, 2017, the effective date of our initial public offering. On that date, those RSUs for which the service-based vesting requirement has been satisfied vested and 1/16th of the RSUs will continue to vest on each quarterly anniversary of the VCD thereafter. |
(29) Our board of directors approved this award on March 23, 2018. 1/16thFebruary 22, 2021; accordingly, 538,809 of the RSUs vest in four equal quarterly installments commencing March 15, 2021 and settle263,810 of the RSUs vest in four equal quarterly installments commencing on March 15, 2022.
(4) The outstanding RSUs vested on March 15, 2021.
(5) RSUs vest over approximately four years in substantially equal installments on each quarterly anniversary of the VCD, which is March 15, 2018.2018, subject to continued service to us through the applicable vesting date.
(6) RSUs vest over approximately four years in substantially equal installments on each quarterly anniversary of December 15, 2018, subject to continued service to us through the applicable vesting date.
(7) One sixth of the RSUs vested on June 15, 2020. The remainder vest over approximately ten quarters in substantially equal installments on each quarterly anniversary of June 15, 2020, subject to continued service to us through the applicable vesting date.
(8) RSUs vest over approximately three years in substantially equal installments on each quarterly anniversary of December 15, 2019, subject to continued service to us through the applicable vesting date.
(9) RSUs vest over approximately four years in substantially equal installments on each quarterly anniversary of December 15, 2019, subject to continued service to us through the applicable vesting date.
(10) RSUs vest over approximately three years in substantially equal installments on each quarterly anniversary of March 15, 2020.
Stock Option ExerciseExercises and Stock Vested Table
The following table presents, for each of our named executive officers, the number of shares of our common stock acquired upon the exercise of stock options or vesting and settlement of RSUs during the year ended January 31, 20192021 and the aggregate value realized upon the exercise of stock options and the vesting and settlement of RSUs.
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| Stock Option Awards | Stock Awards |
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) |
Thomas J. Reilly | 31,152 |
| 241,117 |
| 307,041 | 5,056,606 |
Jim Frankola | 122,334 |
| 1,204,740 |
| 153,625 | 2,528,921 |
Arun Murthy | — |
| — |
| 8,156 | 91,429 |
Michael A. Olson | — |
| — |
| 135,833 | 2,247,444 |
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| | Stock Option Awards | | Stock Awards |
Name | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) |
Robert Bearden | | — | | — | | | 578,949 | 6,216,063 |
Jim Frankola | | 181,997 | 1,719,237 | | 450,825 | 5,108,998 |
Arun Murthy | | — | | — | | | 470,893 | 5,276,986 |
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(1) | The aggregate value realized upon the exercise of a stock option represents the difference between the aggregate market price of the shares of our common stock on the date of exercise and the aggregate exercise price of the stock option. Shares acquired on exercise includes shares withheld to cover taxes and costs of exercise. |
(2) | The aggregate value realized upon the vesting and settlement of an RSU is based on the closing price on the NYSE of a share of common stock on the date settlement. Shares acquired on vesting includes shares withheld to cover taxes. |
Employment, Severance and Change in Control Agreements
Offer Letters and Employment Agreements
We have entered into offer letters with Messrs. Reilly, Murthy and Olson and an employment agreement with Mr. Frankola. Each of these arrangements provide for at-will employment and generally include the named executive officer’s initial base salary, an indication of eligibility for an annual cash incentive award opportunity and equity awards. In addition, each of our named executive officers has executed a form of our standard confidential information and invention assignment agreement. Any potential payments and benefits due upon a termination of employment or a change in control of us are further described in “Potential Payments upon Termination or Change in Control” below.
Thomas J. Reilly
We entered into an employment offer letter with Mr. Reilly, our chief executive officer, dated May 22, 2013. This offer letter agreement has no specific term and constitutes at-will employment. Mr. Reilly’s annual base salary as of January 31, 2019 was $425,000, and he is eligible to receive an annual cash bonus pursuant to Cloudera Bonus Plan – Executive Officers and Leadership Team (the “Fiscal 2019 Bonus Plan”).
Jim Frankola
We entered into an employment agreement with Mr. Frankola, our chief financial officer, dated September 10, 2012. This employment agreement has no specific term and constitutes at-will employment. Mr. Frankola’s annual base salary as of January 31, 2019 was $360,000, and he is eligible to receive an annual cash bonus pursuant to the Fiscal 2019 Bonus Plan.
Arun Murthy
We entered into an employment offer letter with Mr. Murthy, our chief product officer, dated December 31, 2018, in connection with our merger with Hortonworks. This offer letter agreement has no specific term and constitutes at-will employment. Mr. Murthy’s annual base salary as of January 31, 2019 was $380,000, and he is eligible to receive an annual cash bonus equal to 60% of his annual base salary, based on the achievement of applicable performance objectives and/or conditions established by us in our sole discretion.
Michael A. Olson
We entered into an employment offer letter with Mr. Olson, our chief strategy officer and former president and chief executive officer, dated October 2008. This offer letter agreement constitutes at-will employment. Mr. Olson’s annual base salary as of January 31, 2019 was $284,000, and he is eligible to receive an annual cash bonus pursuant to the Fiscal 2019 Bonus Plan.
Potential Payments upon Termination or Change in Control
Severance Agreements for Current Named Executive Officers
Robert Bearden
We entered into Severance and Change in Control Agreements (the “Severance Agreement”) with each of Messrs. Reilly, Olson, and Frankola in December 2016, and withPursuant to Mr. Murthy in December 2018. The Severance Agreement with Mr. Murthy will become effective on the earlier of the 12-month anniversary of January 3, 2019 or a Change in Control of the Company (as defined in the Severance Agreement). Mr. Murthy’s existing Hortonworks Separation Benefits (as defined in theBearden's offer letter, between Arun Murthy and us, dated December 31, 2018) will remain in effect until the day immediately prior to the effective date of such Severance Agreement, at which date all of his Hortonworks Separation Benefits shall terminate and shall be superseded in their entirety by the terms and conditions of the Severance Agreement. Pursuant to the Amended and Restatement Employment Agreement entered into by Mr. Murthy and Hortonworks as of September 28, 2018 (the “Hortonworks Employment Agreement”, as described more fully below), the existing Hortonworks Separation Benefits include payments depending on whether or not Mr. Murthy’s involuntary termination is connection with a Change in Control (as defined in the Hortonworks Employment Agreement). Pursuant to these Severance Agreements, we have agreed to make certain payments and provide certain benefits upon termination of employment by us without Cause“cause” (as defined in the applicable Severance Agreement)offer letter) or by the employeeMr. Bearden for Good Reason“good reason” (as defined in the applicable Severance Agreement)offer letter). These payments and benefits depend on whether or not such termination occurs in connection with a Change in Control (as defined in the applicable Severance Agreement) and will be subject to the named executive officer’sMr. Bearden’s execution and non-revocation of a general release of claims in a form prescribed by us.
If the termination ofoccurs in connection with a named executive officer occurs duringchange in control (during the period commencing three months prior to and ending twelve months following a change in control, the named executive officercontrol), Mr. Bearden will be entitled to receive:
(i) a lump sum payment equal to the sum of:
(a) 18 months of his annual base salary,
(b) his annual target bonus (calculated as if all applicable bonus targets were achieved) and
(c) a prorated portion of his annual target bonus (calculated as if all applicable bonus targets were achieved and based on the number of days employed during the bonus period)period, less any amounts previously paid);
(ii) COBRA premiums (or a taxable payment in an amount equal to such premiums) until the earlier of the end of a twelve-monthan 18-month period or the date when receiving similar coverage with a new employer; and
(iii) accelerated vesting of 100% of all outstandingany then-unvested shares and other equity awards;awards.
In addition, if the successor or acquiring corporation of us refuses to assume, convert, replace or substitute Mr. Bearden’s then-unvested shares or other equity awards in connection with a change in control, the then-unvested shares and
(iv) a twelve-month post-termination exercise window for all outstanding non-qualified stock options. other equity awards shall become fully vested effective immediately prior to the change in control.
If the termination of a named executive officer does not occur duringin connection with a change in control (outside the period commencing three months prior to and ending twelve months following a change in control, the named executive officercontrol), Mr. Bearden will be entitled to receive:
(i) a lump sum payment equal to the sum of:
(a) 18 months of his annual base salary,
(b) his annual target bonus (calculated as of all applicable bonus targets were achieved) and
(b)(c) a prorated portion of his annual target bonus (calculated as if all applicable bonus targets were achieved and based on the number of days employed during the bonus period)period, less any amounts previously paid);
(ii) COBRA premiums (or a taxable payment in an amount equal to such premiums) until the earlier of the end of a twelve-monthan 18-month period or the date when receiving similar coverage with a new employer; and
(iii) aaccelerated vesting of 100% of any then-unvested New Hire RSUs that would have vested during the twelve-month post-termination exercise window for all outstanding non-qualified stock options.window.
Pursuant to the Severance Agreements, each of the named executive officersoffer letter, Mr. Bearden has also agreed to refrain from competing with us while employed with our company and to refrain from soliciting any of our employees or consultants during, and for the one-year period following, his employment.
Jim Frankola and Arun Murthy’s Hortonworks Separation BenefitsMurthy
BeforeWe entered into Severance Agreements with Mr. Murthy’s Severance Agreement becomes effective, his existing Hortonworks Separation Benefits shall remainFrankola and Mr. Murthy on April 9, 2020 that replaced agreements that had been executed with Mr. Frankola in effect, which, pursuantDecember 2016 and with Mr. Murthy in December 2018. Pursuant to the Hortonworks Employment Agreement, includeSeverance Agreements, we have agreed to make certain payments as described below.
Involuntary Terminationand provide certain benefits upon termination of Employment under the Hortonworks Employment Agreement
In the event that Mr. Murthy’s employment is terminated by us without Cause“cause” (as defined in the Hortonworks Employmentapplicable Severance Agreement) or by the employee for “good reason” (as defined in the applicable Severance Agreement). These payments and benefits depend on whether or not such termination occurs in connection with a “change in control” (as defined in the applicable Severance Agreement) and will be subject to deliveringthe execution and non-revocation of a fully effectivegeneral release of claims hein a form prescribed by us.
Under the Severance Agreement, if the termination of the executive officer occurs in connection with a change in control (during the period commencing three months prior to and ending twenty-four months following a change in control), the executive officer will be entitled to cash severancereceive:
(i)a lump sum payment equal to the sum of:
(a)his then-current annual base salary;
(b)his then-current annual target bonus (calculated as if all applicable bonus targets were achieved and to the extent the target bonus is paid more frequently than annually, bonus amounts will be aggregated to represent a full year); and
(c)a prorated portion of his annual target bonus (calculated as if all applicable bonus targets were achieved and based on the number of days worked during the bonus period and to the extent the target bonus is paid more frequently than annually, bonus amounts will be aggregated to represent a full year);
(ii)twelve months of his base salaryCOBRA premiums (or a taxable payment in an amount equal to such premiums);
(iii)accelerated vesting of 100% of all outstanding equity awards (and with respect to awards that would otherwise vest upon satisfaction of performance criteria, this acceleration will apply at the target level of the performance criteria unless specifically provided otherwise in the equity award agreement); and prorated target incentive compensation
(iv)a twelve-month post-termination exercise window for the quarter (in the case of incentive compensation paid on a quarterly basis) or the year (in the case of incentive compensation paid on an annual basis) in whichall outstanding non-qualified stock options.
If the termination occurs, payable over twelveof the executive officer does not occur in connection with a change in control (outside the period commencing three months plusprior to and ending twenty-four months following a monthlychange in control), the executive officer will be entitled to receive:
(i)a lump sum payment equal to our contribution towards the sum of:
(a)his (andthen-current annual base salary;
(b)50% of his then-current annual target bonus (calculated as if all applicable his qualifiedbonus targets were achieved and participating dependents’) health insurance for twelve months or his COBRA health continuation period, whichever ends earlier. In addition, except to the extent any equity award granted or purchased containsthe target bonus is paid more favorable terms, hefrequently than annually, bonus amounts will receive eighteen months’ accelerationbe aggregated to represent a full year) (previously not provided); and
(c)a prorated portion of his annual target bonus (calculated as if all applicable bonus targets were achieved and based on all stock options, restricted stockthe number of days worked during the bonus period and other stock-based awards held by him. Furthermore, to the extent Mr. Murthy enters into a non-competition agreement, he will receive an additional amount of cash severance, health benefits continuation and equity acceleration based on the length of such non-competition period, whichtarget bonus is paid more frequently than annually, bonus amounts will be payable overaggregated to represent a full year);
(ii)twelve months of COBRA premiums (or a taxable payment in an additional number of monthsamount equal to such premiums);
(iii)twelve months of additional vesting of any then-unvested shares subject to outstanding equity awards (and with respect to awards that would otherwise vest upon satisfaction of performance criteria, this acceleration will apply at the non-competition period.target level of the performance criteria unless specifically provided otherwise in the equity award agreement); and
(iv)a twelve-month post-termination exercise window for all outstanding non-qualified stock options.
Under the Severance Agreements, each of Messrs. Frankola and Murthy has also agreed to refrain from competing with us while employed with our company and to refrain from soliciting any of our employees or consultants during, and for the one-year period following, his employment, and will be required to sign a release of claims in exchange for any of these payments and benefits.
Potential Payments upon Termination Table
The
Except where otherwise noted, the following table provides information concerning the estimated payments and benefits that would be provided in the circumstances described above foramounts payable to each of our named executive officers. Except where otherwise noted, payments and benefits are estimatedofficers, assuming that each individual’s employment terminated with or without a change in control of the triggering event took placeCompany occurring on January 31, 2019, and29, 2021, the last business day of our 2021 Fiscal Year. For purposes of determining the value of accelerated vesting for equity awards as noted below, we have assumed a price per share of our common stock isas $15.27, which was the closing price on the NYSEper share of our common stock as of January 31, 2019 ($13.50). 29, 2021 reported by NYSE.
There can be no assurance that a triggering event would produce the same or similar results as those estimated below if such event occurs on any other date or at any other price, or if any other assumption used to estimate potential payments and benefits is not correct. Due to the number of factors that affect the nature and amount of any potential payments or benefits, any actual payments and benefits may be different.
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| Upon Qualifying Termination - No Change in Control | Upon Qualifying Termination - Change in Control |
Name | Cash Severance ($)(1) | Continuation of Medical Benefits ($)(2) | Value of Accelerated Vesting ($)(3) | Total ($) | Cash Severance ($)(1) | Continuation of Medical Benefits ($)(2) | Value of Accelerated Vesting ($)(3) | Value of Extension of Option Exercise Period(4) | Total ($) |
Robert Bearden | 1,900,000 | | 40,305 | | 8,227,613 | | 10,167,918 | | 1,900,000 | | 40,305 | | 12,255,992 | | — | 14,196,297 | |
Jim Frankola | 820,000 | | 18,833 | | 5,124,584 | | 5,963,467 | | 960,000 | | 18,833 | | 9,590,723 | | 117,364 | | 10,686,970 | |
Arun Murthy(8) | 722,000 | | 26,870 | | 6,394,961 | | 7,143,831 | | 836,000 | | 26,870 | | 14,725,456 | | 294,262 | | 15,882,588 | |
(1)The severance amount was determined based on the annual base salaries and annual target bonuses in effect on January 31, 2021.
(2)The continuation of medical benefits is calculated based on the payment of monthly COBRA premiums as of January 31, 2021.
(3)The value of accelerated vesting of stock awards is calculated based on the per share closing price of our common stock on NYSE as of January 29, 2021 ($15.27).
(4)Reflects the difference between the Black-Scholes value of the options with the extended exercise period and the Black-Scholes value of the options without that extension.
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| Upon Qualifying Termination - No Change in Control | Upon Qualifying Termination - Change in Control |
Name | Cash Severance ($)(1) | Continuation of Medical Benefits ($)(2) | Value of Accelerated Vesting ($)(3) | Total ($) | Cash Severance ($)(1) | Continuation of Medical Benefits ($)(2) | Value of Accelerated Vesting ($)(3) | Total ($) |
Thomas J. Reilly | 926,680 | 22,912 | — |
| 949,592 | 1,353,360 | 22,912 | 7,721,447 | 9,097,719 |
Jim Frankola | 654,183 | 24,539 | — |
| 678,722 | 908,366 | 24,539
| 3,930,586 | 4,863,491
|
Arun Murthy(3) | 380,000 | 28,531 | — |
| 408,531 | 380,000 | 28,531 | 14,056,997 | 14,465,528 |
Michael A. Olson | 499,280 | 23,321 | — |
| 522,601 | 648,560 | 23,321 | 4,727,687 | 5,399,568
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(1) | The severance amount was determined based on the annual base salaries and annual target bonuses in effect on January 31, 2019. |
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(2) | The continuation of medical benefits is calculated based on the payment of COBRA premiums for a 12-month period. |
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(3) | The value of accelerated vesting is calculated based on the per share closing price of our common stock on NYSE as of January 31, 2019 ($13.50) less, if applicable, the exercise price of each outstanding stock option. Accelerated vesting occurs only in the event of a qualifying termination during a change in control period. |
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(4) | The Severance Agreement with Mr. Murthy will become effective on the earlier of the 12-month anniversary of January 3, 2019 or a Change in Control (as defined therein). The payments and benefits disclosed in the above table are estimates assuming that the Severance Agreement was effective as of January 31, 2019. In the event where a qualifying termination occurred as of January 31, 2019 without a Change in Control, Mr. Murthy would receive the following estimated payments under his existing Hortonworks Separation Benefits: the base salary of $380,000, the prorated portion of his target annual incentive compensation of $200,000 under his Hortonworks bonus arrangement prior to our merger with Hortonworks, $28,531 continuation of medical benefits for a 12-month period and $7,499,619 of value of accelerated vesting. |
OTHER INFORMATION
Chief Executive Officer Pay Ratio
As required by SEC rules, we are providing the following information about the relationship between the annual total compensation of our Chief Executive Officer and the median of the annual total compensation of all employees of our Company other than our Chief Executive Officer (our “CEO pay ratio”).
For Fiscal Year 2021:
▪the median of the annual total compensation of all employees of our company (other than our Chief Executive Officer) was $246,417.52;
▪the annual total compensation of our President and Chief Executive Officer, Robert Bearden, was $1,185,000, as disclosed in the Summary Compensation Table; and
▪the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees was 4.8 to 1.
Mr. Bearden's total annual compensation for Fiscal Year 2021 was significantly lower than his annual compensation for Fiscal Year 2020 and is likely to be significantly lower than his annual compensation for Fiscal Year 2022 due to the accounting treatment of his New Hire RSUs. If we were to compare the median of the annual compensation of all employees of our company to Mr. Bearden's Fiscal Year 2020 annualized total compensation, which was $7,425,618, the pay ratio would be 30 to 1. We believe this ratio is a reasonable estimate calculated in a manner consistent with SEC rules.
There has been no change in our employee population or employee compensation arrangements that we believe would result in a significant change to our pay ratio disclosure for Fiscal Year 2021. Accordingly, we have used the same median employee to calculate the pay ratio as we used for Fiscal Year 2020, who is a full-time employeebased in Canada. We calculated the Fiscal Year 2021 annual total compensation for this individual using the same methodology we use for our named executive officers as set forth in our Summary Compensation Table (which excludes any health benefits).
To identify the median employee, we examined the compensation of all our full-time, part-time, temporary or seasonal employees (other than our Chief Executive Officer) as of January 31, 2020, the last day of our preceding fiscal year. As of January 31, 2020, our employee population consisted of 2,796 individuals working at our parent company and consolidated subsidiaries, with 1,460 employees located inside the United States and 1,336 employees located outside the United States. As permitted by SEC rules, we chose to exclude employees who were employed in certain jurisdictions from the determination of our median employee pursuant to the de minimis exemption, given the relatively small number of employees in those jurisdictions and the estimated additional time, effort and expense that would be required to obtain and analyze their compensation information. In total, we excluded 139 employees in 17 countries, who represented less than 5% of our total employee population as of January 31, 2020, from the following jurisdictions: Austria (3), Brazil (16), Colombia (2), Costa Rica (11), Iceland (1), Indonesia (10), Israel (3), Italy (14), Japan (23), Mexico (4), Poland (1), South Africa (4), South Korea (13), Spain (11), Sweden (3), Switzerland (10), and United Arab Emirates (10). After taking into account the de minimis exemption, 2,657 employees were considered for identifying the median employee. We did not include any independent contractors or other non-employee workers in our employee population.
We used a consistently applied compensation measure consisting of actual annual base salary, actual annual variable cash compensation, and the fair value of equity awards granted to newly-hired employees and as part of our regular annual equity award grant cycle for the 12-month period from February 1, 2019 through January 31, 2020 to identify our median employee. We selected this compensation measure as it captures the principal forms of compensation delivered to our employees and this information is readily available with respect to our employees. For simplicity, we calculated annual base salary using a reasonable estimate of the hours worked during fiscal 2020 for hourly employees and actual salary paid for our remaining employees. We annualized base salaries for any full-time and part-time employees who commenced work during fiscal 2020 to reflect a full year. Equity awards granted during the year were included using the same methodology we use for our named executive officers in our fiscal 2020 Summary Compensation Table. Payments not made in U.S. dollars were converted to U.S. dollars using the applicable currency exchange rates in effect as of January 31, 2020. We did not make any cost-of-living adjustment.
Because SEC rules for identifying the median of the annual total compensation of all employees allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their employee population and compensation practices, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies have different employee populations and compensation practices and may have used different methodologies, exclusions, estimates and assumptions in calculating their pay ratios. As explained by the SEC when it adopted these rules, the rule was not designed to facilitate comparisons of pay ratios among different companies, even companies within the same industry, but rather to allow stockholders to better understand and assess each particular company’s compensation practices and pay ratio disclosures.
401(k) Plan
We maintain a retirement plan for the benefit of our employees. The plan is intended to qualify as a tax-qualified 401(k) plan so that contributions to the 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the 401(k) plan (except in the case of contributions under the 401(k) plan designated as Roth contributions). The 401(k) plan provides that each participant may contribute up to 100% of his or her pre-tax compensation, up to an annual statutory limit. Participants who are at least 50 years old can also contribute additional amounts based on statutory limits for “catch-up” contributions. Under the 401(k) plan, each employee is fully vested in his or her deferred salary contributions. Employee contributions are held and invested by the plan’s trustee as directed by participants. Our 401(k) plan provides for discretionary matching of employee contributions. For the calendar 20182021 plan year, we matched each participant’s salary deferral contributions, but in no case more than 100% of the first 1% of compensation deferred. For the calendar 2019 plan, year we will match each participant’s salary deferral contributions, but in no case more than 100% of the first 1% of compensation deferred.
Limitation of Liability and Indemnification of Directors and Officers
Our restated certificate of incorporation contains provisions that limitlimits the liability of our directors for monetary damages to the fullest extent permitted by the Delaware General Corporate Law, as so amended (the “DGCL”). 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 the following:
any(i) breach of their duty of loyalty to us or our stockholders;
(ii) any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
(iii) unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law;DGCL; or
(iv) any transaction from which they derived an improper personal benefit.
Our restated bylaws provide that we shall indemnify,also require us to the fullest extent permitted by law, any person who is or was a party or is threatened to be made a party to any action, suit or proceeding, by reason of the fact that he or she is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. Our restated bylaws provide that we may indemnify our employees or agents. Our restated bylaws also provide that we mustofficers and directors, and to advance expenses, incurred by or on behalf of a director or officer in advance of the final disposition of any action or proceeding, subject to limited exceptions.
We have insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these officers and directors pursuant to our indemnification obligations or otherwise as a matter of law.
We have entered into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the DGCL. These indemnification agreements require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.
At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Rule 10b5-1 Sales Plans
Certain of our directors and executive officers have adopted written plans, known as Rule 10b5-1 plans, in which they have contracted with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or executive officer when entering into the plan, without further direction from them. The director or executive officer may amend or terminate the plan in specified circumstances.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 12, 2021 for:
• each of our named executive officers;
• each of our directors;
• all of our directors and executive officers as a group; and
• each stockholder known by us to beneficially own more than 5% of our common stock.
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 293,978,815 shares of common stock outstanding as of April 12, 2021. In computing the number of shares of common stock beneficially owned by a person or entity and the percentage ownership of that person or entity, we deemed to be outstanding all shares of common stock subject to (i) stock options held by that person or entity that are currently exercisable or exercisable within 60 days of April 12, 2021 and (ii) stock awards held by that person or entity that are scheduled to vest and become releasable within 60 days of April 12, 2021. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person or entity. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Cloudera, Inc., 5470 Great America Parkway, Santa Clara, California 95054.
| | | | | | | | |
Name of Beneficial Owner | Shares Beneficially Owned (#) | Percentage (%) |
Directors and Named Executive Officers: | | |
Robert Bearden(1) | 559,800 | * |
Jim Frankola(1) | 1,291,974 | * |
Arun Murthy(1) | 1,129,630 | * |
Paul Cormier(1) | 269,813 | * |
Peter Fenton(1) | 9,504,372 | 3.2 |
Gary Hu(2) | — | — |
Kevin Klausmeyer(1) | 231,862 | * |
Jesse Lynn(1)(3) | 32,143 | — |
Rosemary Schooler(4) | — | — |
Michael A. Stankey(1) | 157,676 | * |
All Executive Officers and Directors as a Group (10 persons)(1) | 13,177,270 | 4.5 |
5% Stockholders: | | |
The Icahn Group(5) | 52,327,391 | 17.8 |
BlackRock, Inc.(6) | 16,525,347 | 5.6 |
The Vanguard Group(7) | 20,879,683 | 7.1 |
* Represents beneficial ownership of less than 1% of the shares of common stock.
(1) Totals set forth in the table above include:
| | | | | | | | | | | | | | | | | |
| | Shares directly held | Shares underlying options exerciseable within 60 days of record date | RSUs vesting within 60 days of record date | Shares held by a third party |
| Robert Bearden | 120,892 | 438,908 | | |
| Jim Frankola | 1,250,974 | 41,000 | | |
| Arun Murthy | 847,298 | 282,332 | | |
| Paul Cormier | 142,902 | | | 126,911(A) |
| Peter Fenton | 839,826 | | | 8,664,546(B) |
| Kevin Klausmeyer | 106,288 | 125,574 | | |
| Jesse Lynn | 32,143 | | | |
| Michael A. Stankey | 130,287 | 27,389 | | |
| All Executive Officers and Directors as a Group (10 persons) | 12,289,456 | 887,814 | | |
(A) Shares held by The Paul J. Cormier Grantor Retained Annuity Trust of 2019, of which Mr. Cormier is Trustee.
(B) Consists of 395,019 shares held by Benchmark Capital Partners VI, L.P. (“BCP VI”), as nominee for BCP VI, Benchmark Founders' Fund VI, L.P. (“BFF VI”) and 8,269,527 shares held by Benchmark Capital Partners VII, L.P. (“BCP VII”), as nominee for BCP VII, Benchmark Founders' Fund VII, L.P. (“BFF VII”). Benchmark Capital Management Co. VI, L.L.C. (“BCMC VI”) is the general partner of BCP VI and BFF VI. Benchmark Capital Management Co. VII, L.L.C. (“BCMC VII”) is the general partner of BCP VII and BFF VII. Mr. Fenton is a managing member of BCMC VI and BCMC VII.
(2) Mr. Hu joined our board of directors in January 2021. Mr. Hu is a designee of the Icahn Group under the Voting and Standstill Agreement as described above under Proposal No. 1, but does not hold vesting or dispositive power over the shares held by the Icahn Group. See Footnote 5 for more information regarding the shares held by the Icahn Group.
(3) Mr. Lynn, a member of our board of directors, is a designee of the Icahn Group under the Voting and Standstill Agreement as described above under Proposal No. 1, but does not hold vesting or dispositive power over the shares held by the Icahn Group. See Footnote 5 for more information regarding the shares held by the Icahn Group.
(4) During Fiscal Year 2021, Ms. Schooler served on our Board as an Intel nominee director pursuant to our investor agreement with Intel. Ms. Schooler did not hold any shares and was not deemed a beneficial owner of shares held by Intel. Intel sold its shares during Fiscal Year 2021, and did not hold any shares in our Company as of January 31, 2021.
(5) Based on information contained in a Schedule 13D/A filed with the SEC on April 15, 2020 by the Icahn Group, comprising of Icahn Partners Master Fund LP (“Icahn Master”), Icahn Offshore LP (“Icahn Offshore”), Icahn Partners LP (“Icahn Partners”), Icahn Onshore LP (“Icahn Onshore”), Icahn Capital LP (“Icahn Capital”), IPH GP LLC (“IPH”), Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”), Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), Beckton Corp. (“Beckton”), and Carl C. Icahn. According to this Schedule 13D/A, Icahn Master has sole voting power and dispositive power with respect to 21,787,704 shares; Icahn Offshore has shared voting power and dispositive power with respect to 21,787,704 shares; Icahn Partners has sole voting power and dispositive power with respect to 30,539,687 shares; Icahn Onshore has shared voting power and dispositive power with respect to 30,539,687 shares; Icahn Capital has shared voting power and dispositive power with respect to 52,327,391 shares; IPH has shared voting power and dispositive power with respect to 52,327,391 shares; Icahn Enterprises Holdings has shared voting power and dispositive power with respect to 52,327,391 shares; Icahn Enterprises GP has shared voting power and dispositive power with respect to 52,327,391 shares; Beckton has shared voting power and dispositive power with respect to 52,327,391 shares; and Carl C. Icahn has shared voting power and dispositive power with respect to 52,327,391 shares. The address for each of Icahn Master, Icahn Offshore, Icahn Partners, Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn is 16690 Collins Avenue, Suite PH-1, Sunny Isles Beach, FL 33160.
(6) Based on information contained in a Schedule 13G filed with the SEC on February 2, 2021 by BlackRock, Inc. (“BlackRock”). According to this Schedule 13G, BlackRock beneficially owns 16,525,347 shares, has sole voting power with respect to 16,218,329 shares and sole dispositive power with respect to 16,525,347 shares. The principal business address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
(7) Based on information contained in a Schedule 13G/A filed with the SEC on February 10, 2021 by Vanguard Group, Inc. (“Vanguard”). According to this Schedule 13G/A, Vanguard, in its capacity as an investment adviser, may be deemed to beneficially own 20,879,683 shares, of which it has sole dispositive power with respect to 20,364,372 shares, shared dispositive power with respect to 515,311 shares, sole voting power with respect to 0 shares, and shared voting power with respect to 341,166 shares. The principal business office for Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
EQUITY COMPENSATION PLAN INFORMATION
The following table presents information as of January 31, 20192021 with respect to compensation plans under which shares of our common stock may be issued.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Securities (#) | | Weighted- Average Exercise Price of Outstanding Options ($)(1) | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(#) |
| (a) | | (b) | | (c) |
Equity compensation plans approved by security holders(2) | 36,063,315 | | | $ | 10.48 | | | 18,064,959(3) |
Equity compensation plans not approved by security holders | ——(4) | | | | —— | | | —— |
Total | 36,063,315 | | | $ | 10.48 | | | 18,064,959 |
(1) The weighted-average exercise price does not reflect the shares that will be issued in connection with the settlement of RSUs, as RSUs have no exercise price.
(2) Includes our 2008 Equity Incentive Plan, Gazzang 2008 Stock Purchase and Option Plan, 2017 Equity Incentive Plan and 2017 Employee Stock Purchase Plan; however, column (a) excludes purchase rights accruing under the 2017 Employee Stock Purchase Plan.
(3) There are no shares of common stock available for issuance under our 2008 Equity Incentive Plan, but that plan will continue to govern the terms of options and RSUs granted thereunder. Any shares of common stock that are subject to outstanding awards under the 2008 Equity Incentive Plan that are issuable upon the exercise of stock options that expire or become unexercisable for any reason without having been exercised in full will generally be available for future grant and issuance as shares of common stock under our 2017 Equity Incentive Plan. In addition, the number of shares reserved for issuance under our 2017 Equity Incentive Plan increased automatically by 14,561,036 on February 1, 2021 and will increase automatically on the first day of February of each of 2022 through 2027 by the number of shares equal to 5% of the total issued and outstanding shares of our common stock as of the immediately preceding January 31 or a lower number approved by our board of directors. As of January 31, 2021, there were 4,344,158 shares of common stock available for issuance under the 2017 Employee Stock Purchase Plan, of which up to 787,574 are subject to purchase under the offering period in effect as of January 31, 2021. The number of shares reserved for issuance under our 2017 Employee Stock Purchase Plan increased automatically by 2,912,207 on February 1, 2021 and will increase automatically on the first day of February of each year during the term of the 2017 Employee Stock Purchase Plan by the number of shares equal to 1% of the total outstanding shares of our common stock as of the immediately preceding January 31 or a lower number approved by our board of directors.
(4) Excludes outstanding RSUs to acquire 251,525 shares of our common stock as of January 31, 2021 and outstanding options to acquire 1,832,561 shares of our common stock as of January 31, 2021 that were assumed in connection with our merger with Hortonworks. The weighted average exercise price of the outstanding options was $8.24 as of January 31, 2021. In connection with the merger with Hortonworks, we assumed outstanding options and RSUs, but not the Hortonworks plans themselves, and therefore, no further options may be granted under the Hortonworks plans. The Hortonworks plans were previously approved by the Hortonworks stockholders, but were not approved by our stockholders because we did not assume the Hortonworks plans in connection with the merger.
|
| | | | | | | | | |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Securities (#) | | Weighted- Average Exercise Price of Outstanding Options ($)(1) | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(#) |
| (a) | | (b) | | (c) |
Equity compensation plans approved by security holders(2) | 54,175,799 | | | $ | 5.8374 | | | 23,716,043(3) | |
Equity compensation plans not approved by security holders | ——(4)(5) | | | | —— | | | —— | |
Total | 54,175,799 | | | $ | 5.8374 | | | 23,716,043 | |
_______________
| |
(1) | The weighted-average exercise price does not reflect the shares that will be issued in connection with the settlement of RSUs, since RSUs have no exercise price. |
| |
(2) | Includes our 2008 Equity Incentive Plan, Gazzang 2008 Stock Purchase and Option Plan, 2017 Equity Incentive Plan and excludes purchase rights accruing under the 2017 Employee Stock Purchase Plan. |
| |
(3) | There are no shares of common stock available for issuance under our 2008 Equity Incentive Plan, but that plan will continue to govern the terms of options and RSUs granted thereunder. Any shares of common stock that are subject to outstanding awards under the 2008 Equity Incentive Plan that are issuable upon the exercise of stock options that expire or become unexercisable for any reason without having been exercised in full will generally be available for future grant and issuance as shares of common stock under our 2017 Equity Incentive Plan. In addition, the number of shares reserved for issuance under our 2017 Equity Incentive Plan increased automatically by 13,440,931 on February 1, 2019 and will increase automatically on the first day of February of each of 2020 through 2027 by the number of shares equal to 5% of the total issued and outstanding shares of our common stock as of the immediately preceding January 31 or a lower number approved by our board of directors. As of January 31, 2019, there were 2,715,436 shares of common stock available for issuance under the 2017 Employee Stock Purchase Plan. The number of shares reserved for issuance under our 2017 Employee Stock Purchase Plan increased automatically by 2,688,186 on February 1, 2019 and will increase automatically on the first day of February of each year during the term of the 2017 Employee Stock Purchase Plan by the number of shares equal to 1% of the total outstanding shares of our common stock as of the immediately preceding January 31 or a lower number approved by our board of directors. |
| |
(4) | Excludes outstanding options to acquire 4,067,645 shares of our common stock as of January 31, 2019 that were assumed in connection with our merger with Hortonworks. The weighted average exercise price of these outstanding options was $8.9748 as of January 31, 2019. In connection with the merger with Hortonworks, Cloudera has only assumed outstanding options and RSUs, but not the Hortonworks plans themselves, and therefore, no further options may be granted under the Hortonworks plans. The Hortonworks plans were previously approved by the Hortonworks stockholders, but were not approved by our stockholders since we did not assume the Hortonworks plans in connection with the merger. |
| |
(5) | Excludes outstanding RSUs to acquire 7,379,812 shares of our common stock as of January 31, 2019 that were assumed in connection with our merger with Hortonworks. In connection with the merger with Hortonworks, Cloudera has only assumed outstanding options and RSUs, but not the Hortonworks plans themselves, and therefore, no further RSUs may be granted under the Hortonworks plans. The Hortonworks plans were previously approved by the Hortonworks stockholders, but were not approved by our stockholders since we did not assume the Hortonworks plans in connection with the merger. |
REPORT OF THE COMPENSATION COMMITTEE
This report of the compensation committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act.
Our compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the compensation committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement.proxy statement.
Submitted by the Compensation Committee
Michael A. Stankey, Chair
Martin Cole
Paul Cormier
Gary Hu
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the compensation arrangements, including employment, termination of employment and change of control arrangements described in “Executive“Executive Compensation,” the following is a description of each transaction since February 1, 20182020 and each currently proposed transaction in which:
•we have been or are to be a participant;
•the amount involved exceeds $120,000; and
•any of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of or person sharing the household with any of these individuals, had or will have a direct or indirect material interest.
Intel Enterprise Subscription Agreement
We previously entered into an Enterprise Subscription Agreement with Intel, as amended from time to time (the “ESA”) pursuant to which Intel, a holder of more than 5% of our capital stock from 2017 through most of our 2021 fiscal year, became our customer. Under the ESA, Intel may use our platform in support of its big data initiatives and other internal needs. The term has been extended until April 23, 20232024 pursuant to Amendment 34 to the ESA. We have received approximately $10.8 million$6,082,420 for the year ended January 31, 2019Fiscal Year 2021 in payments from Intel for subscriptions and services under the ESA. We anticipate receiving approximately $11.3$11,295,000 million in future payments from Intel under the terms of the ESA, as amended.
Intel Collaboration and Optimization Agreement
In conjunction with theour Series F-1 preferred stock financing, we entered into a collaboration and optimization agreement with Intel, which was amended and restated as of February 1, 2018. This agreement governs our collaboration with Intel on the development, marketing and distribution of specified open source data management software, including the optimization of such software for use with Intel’s processors and architecture. Either party may terminate the agreement under certain circumstances, including if the parties fail to meet certain collaboration goals. Moreover, Intel may terminate the agreement with or without cause upon twelve months written notice at any time after March 21, 2021. The agreement automatically renews following the expiration of the initial term on March 21, 2021 for an additional twelve-month term, and thereafter will be automatically extended for additional twelve-month periods, unless either party provides written notice of non-renewal at least 180 days before the expiration of the renewal term.
Marketing and Miscellaneous Cooperation with Intel
We have received approximately $0.1 million$1,511,700 from Intel during the year ended January 31, 2019Fiscal Year 2021 for miscellaneous marketing, services and other items related to the operation of the strategic partnership.
Deutsche Bank AG
We have received approximately $13.6 million for the year ended January 31, 2019 in payments from Deutsche Bank AG for subscriptions and services in the ordinary course of business. Our board of directors includes Kimberly L. Hammonds, a former Member of the Management Board and Group Chief Operating Officer of Deutsche Bank AG.
Indemnification Agreements
We have entered into indemnification agreements with each of our directors and executive officers. The indemnification agreements and our restated bylaws require us to indemnify our directors to the fullest extent not prohibited by DGCL. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers. For more information regarding these agreements, see the section titled “Executive“Executive Compensation—Limitation of Liability and Indemnification of Directors and Officers.”
Review, Approval or Ratification of Transactions with Related Parties
Our written related person transactions policy provides that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of our common stock and any members of the immediate family of and any entity affiliated with any of the foregoing persons are not permitted to enter into a material related person transaction with
us without the review and approval of our audit committee or a committee composed solely of independent directors in the event it is inappropriate for our audit committee to review such transaction due to a conflict of interest. The policy provides that any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of our common stock or with any of their immediate family members or affiliates, in which the amount involved exceeds $120,000 will be presented to our audit committee for review, consideration and approval. In approving or rejecting any such proposal, we expect that our audit committee will consider the relevant facts and circumstances available and deemed relevant to the audit committee, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
REPORT OF THE AUDIT COMMITTEE
This report of the audit committee is required by the SEC, and is not “soliciting material,” is not to be deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Cloudera under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any filing, unless and only to the extent that we specifically incorporate it by reference.
In fulfilling its oversight role, the audit committee reviewed and discussed our audited financial statements with management and the independent registered public accounting firm. The audit committee met 9seven (7) times during the fiscal year ended January 31, 2019,2021, including meetings with Ernst & Young LLP, our independent registered public accounting firm to review our 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 our financial statements, accounting and financial reporting principles, the effectiveness of our internal controls over financial reporting, and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. Ernst & Young LLP is responsible for performing an independent audit of our consolidated financial statements and internal control over financial reporting in accordance with generally accepted auditing standards in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”), and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles and as to the effectiveness of our internal control over financial reporting.
The audit committee discussed with Ernst & Young LLP the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. Ernst & Young LLP also provided to the audit committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and the audit committee discussed with Ernst & Young LLP its independence from us.
Based upon the audit committee’s review and discussions referred to above, the audit committee recommended to the board of directors that our audited consolidated financial statements be included in Cloudera’s Annual Report on Form 10-K for the year ended January 31, 2019,2021, filed with the SEC on March 29, 2019.25, 2021.
In addition, the audit committee selected Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending January 31, 20202022 and is seeking ratification of such selection by our stockholders.
Submitted by the Audit Committee of the Board of Directors
Keven Klausmeyer (Chair)
Peter Fenton
Michael A. Stankey
ADDITIONAL INFORMATION
Stockholder Proposals for the 20202022 Annual Meeting of Stockholders
Under our amended and restated bylaws, stockholders who wish to present proposals for action, or to nominate directors, at our 20202022 annual meeting of stockholders must give written notice of the proposal or nomination to our Corporate Secretary in accordance with the provisions of our restated bylaws. Our restated bylaws require that such notice be given not later than the close of business (5:00 PM, Pacific Time) on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the prior year’s annual meeting of stockholders. To be timely for the 20202022 annual meeting of stockholders, a stockholder’s notice must be received by us between February 21, 20209, 2022 and March 22, 2020.11, 2022. Such proposals should be delivered or mailed to the attention of our Corporate Secretary at our principal executive offices, which are Cloudera, Inc., 395 Page Mill Road, Palo Alto,5470 Great America Parkway, Santa Clara, California 94306.
If the date of the 20202022 annual meeting is more than 30 days before or more than 60 days after the first anniversary of the 20192021 annual meeting, in order for a notice to be timely, it must be delivered no earlier than the close of business on the 120th day prior to and no later than the close of business on the 90th day prior to the 20202022 annual meeting date or, if later, the close of business on the 10th day following the day on which Public Announcement (as such term defined in the restated bylaws) of the date of the 20202022 annual meeting is first made by us. In no event shall the Public Announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.
These stockholder notices must contain information required by our restated 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 section, 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 20202022 annual meeting pursuant to Rule 14a-8 under the Exchange Act, stockholder proposals would have to be received by our Corporate Secretary no later than January 11, 2020December 28, 2021 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 20202022 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 preceding paragraphs.
Delinquent Section 16(a) Reports
Section 16 of 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 the year ended January 31, 2019, other than two late Forms2021, except that a Form 4 filed byfiling relating to Mr. Stankey, our director,Frankola's exercise of options to report distributionacquire 29,944 shares of common stock from Greylock XII LP and Greylock XII-A LP to Michael A. Stankey Revocable Trust UDA 5/30/14 on June 11, 2018 and September 10, 2018. Additionally, during the fiscal year ended January 31, 2018, all directors, executive officers, and persons who own more than 10% of a registered class of our equity securities timely complied with all Section 16(a) reporting requirements applicable to them, except for the reports disclosed in our definitive proxy statement for our 2018 annual meeting of stockholders and one Form 3 for Ms. Schooler, whichMarch 9, 2020 was filed two days late, on January 7, 2019.March 13, 2020.
Available Information
We will mail, without charge, upon written request, a copy of our annual report on Form 10-K for the year ended January 31, 2019,2021, including the financial statements and list of exhibits, and any exhibit specifically requested. Requests should be sent to:
Cloudera, Inc.
395 Page Mill Road
Palo Alto,5470 Great America Parkway, Santa Clara, California 94306
Attn: Investor Relations
The annual report is also available in the "Investor Relations" section of our website at https://investors.cloudera.com under “Financials & Filings” in the “SEC Filings” section of our website.
Electronic Delivery of Stockholder Communications
We encourage you to help us conserve natural resources, as well as significantly reduce printing and mailing costs, by signing up to receive your stockholder communications electronically via e-mail. With electronic delivery, you will be notified via e-mail as soon as future annual reports and proxy statements are available on the Internet, and you can submit your stockholder votes online. Electronic delivery can also eliminate duplicate mailings and reduce the amount of bulky paper documents you maintain in your personal files. To sign up for electronic delivery:
Registered Owner (you hold our common stock in your own name through our transfer agent, American Stock Transfer & Trust Company, LLC, or you are in possession of stock certificates): visitVisit www.astfinancial.com and log into your account to enroll.
Beneficial Owner (your shares are held by a brokerage firm, a bank, a trustee or a nominee): If you hold shares beneficially, please follow the instructions provided to you by your broker, bank, trustee or nominee.
Your electronic delivery enrollment will be effective until you cancel it. Stockholders who are record owners of shares of our common stock may call American Stock Transfer & Trust Company, LLC, our transfer agent, at (800) 937-5449 or visit www.astfinancial.com with questions about electronic delivery.delivery
“Householding”—Stockholders Sharing the Same Last Name and Address
The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure called “householding.” Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our annual report and proxy materials, including the Notice of Internet Availability of Proxy Materials, unless the affected stockholder has provided contrary instructions. This procedure reduces printing costs and postage fees, and helps protect the environment as well.
This year, aA number of brokers with account holders who are our stockholders will be “householding” our annual report and proxy materials, including the Notice of Internet Availability of Proxy Materials. A single Notice of Internet Availability of Proxy Materials and, if applicable, a single set of annual report and other proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. Stockholders may revoke their consent at any time by contacting Broadridge Financial Solutions, Inc. by calling (866) 540-7095 or writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York, 11717.
Upon written or oral request, we will promptly deliver a separate copy of the Notice of Internet Availability of Proxy Materials and, if applicable, our annual report and other proxy materials to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice of Internet
Availability of Proxy Materials and, if applicable, annual report and other proxy materials, you may write our Investor Relations department at 395 Page Mill Road, Palo Alto,5470 Great America Parkway, Santa Clara, California 94306,95054, Attn: Investor Relations, telephone number (888) 789-1488.
Any stockholders who share the same address and receive multiple copies of our Notice of Internet Availability of Proxy Materials or annual report and other proxy materials who wish to receive only one copy in the future can contact their bank, broker or other holder of record to request information about “householding” or our Investor Relations department at the address or telephone number listed above.
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 Annual Meeting 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,
David Howard
Chief Legal Officer and Corporate Secretary
April 27, 2021
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| | By Order of the Board of Directors, |
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| | David Middler
Chief Legal Officer and Corporate Secretary
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| | May 10, 2019 |