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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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| Soliciting Material Pursuant to §240.14a-12 |
KEYSIGHT TECHNOLOGIES, INC. |
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| | | Dear Stockholders:
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Keysight Technologies, Inc.
1400 Fountaingrove Parkway
Santa Rosa, California 95403
January 24, 2022
IT IS A PRIVILEGE TO SERVE AS CHAIR, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF KEYSIGHT. WE HAVE AN INCREDIBLY KNOWLEDGEABLE, COMMITTED AND ENGAGED WORKFORCE, MANAGEMENT TEAM, AND BOARD OF DIRECTORS FOCUSED ON DRIVING VALUE CREATION FOR ALL OF OUR STOCKHOLDERS. CHAIR | | |
On behalf of the board of directors (“Board of Directors” or “Board”) of Keysight Technologies, Inc. (“Keysight”), I am pleased to invite you to attend our 2022 Annual Meeting of Stockholders (the “2022 Annual Meeting”). To support the health and well-being of our stockholders, employees, and Board in light of the continuing COVID-19 pandemic, the Keysight Technologies, Inc. 2022 Annual Meeting will be held on Thursday, March 17, 2022 at 8:00 a.m., Pacific Time, virtually via the Internet at https://meetnow.global/MQ7GZR6. Stockholders of record as of the close of business on January 18, 2022 are entitled to vote. |
| | |
| | You can attend the 2022 Annual Meeting online, vote your shares during the online meeting and submit questions during the online meeting by visiting the above- mentioned internet site. We are committed to affording stockholders the ability to participate at the virtual meeting to the same extent as they would at an in-person meeting. We hope that the circumstances next year will allow us to resume our historical practice of holding an in-person annual meeting of stockholders. Details regarding how to access the virtual meeting via the internet and the business to be conducted at the meeting are more fully described in the accompanying Notice of 2022 Annual Meeting and Proxy Statement. |
| | |
| | Macro dynamics, including COVID-19 disruption and supply chain constraints, continue to create uncertainty. Despite these challenges, Keysight remains focused on executing against our software-centric solutions strategy to deliver differentiated solutions that enable our customers to accelerate innovation to connect and secure the world. For the past seven years, this strategy and our operating model has yielded strong results for stockholders, and we remain confident in our ability to continue creating value. At the same time, Keysight is committed to corporate social responsibility and diversity, equity, and inclusion and we’ve established measurable goals in both areas to make meaningful progress. |
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| | It is a privilege to serve as Chair, President, and Chief Executive Officer of Keysight. We have an incredibly knowledgeable, committed, and engaged workforce, management team, and Board of Directors focused on driving value creation for all of our stakeholders. |
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| | On behalf of our Board of Directors, thank you for being a Keysight stockholder and for your continued support of Keysight. |
| | |
| | Sincerely, |
| | |
| | |
| | |
| | Ronald S. Nersesian
Chairman, Chair, President and Chief Executive Officer |
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NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS
January 31, 2020
To Our Stockholders:
I am pleased to invite you to attend our annual
VIRTUAL MEETING LOGISTICS
DATE: Thursday, March 17, 2022 |
TIME: 8:00 a.m., Pacific Time |
LIVE WEBCAST: https://meetnow.global/MQ7GZR6 access begins at 7:30 a.m. Pacific Time. To access the meeting, copy and paste the URL into your preferred browser. Please note that Internet Explorer is not supported. |
The Notice of
stockholders (the “Annual Meeting”) of Keysight Technologies, Inc. (“Keysight” or “Company”) to be held on Thursday, March 19, 2020 at 8:00 a.m., Pacific Standard Time, at Keysight’s headquarters, located at 1400 Fountaingrove Parkway, Santa Rosa, California 95403 (U.S.A.). Details regarding admission to the2022 Annual Meeting,
and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting and Proxy Statement.If you are unable to attend the Annual Meeting in person, you may listen through the Internet or by telephone. To listen to the live webcast, log on at www.investor.keysight.com and select the link for the webcast. To listen by telephone, please call (833) 245-9654 (international callers should dial +1 (647) 689-4226 . The meeting pass code is 7972309. The webcast will begin at 8:00 a.m. and a recording of the webcast will remain on Keysight’s website for six months. You cannot record your vote or ask questions on this website or at this phone number.
We have elected to take advantage of Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders on the Internet. We believe that the rules will allow us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting.
Your vote is important. Whether or not you plan to attend the Annual Meeting, I hope that you will vote as soon as possible. Please review the instructions on each of your voting options described in the Proxy Statement, and the Annual Report on Form 10-K for the fiscal year ended October 31, 2021 are available free of charge at www.envisionreports.com/KEYS
ITEMS OF BUSINESS
Elect four directors to a 3-year term;
Ratify the Audit and Finance Committee’s appointment of PricewaterhouseCoopers LLP as Keysight’s independent registered public accounting firm;
Approve, on a non-binding advisory basis, the compensation of Keysight’s named executive officers;
Approve an amendment to Keysight’s Amended and Restated Certificate of Incorporation to declassify the Board of Directors; and
Consider such other business as may properly come before the meeting.
IMPORTANT MEETING INFORMATION
Record Date
Stockholders of record as of close of business on January 18, 2022 (“Record Date”) will be entitled to vote and participate in the 2022 Annual Meeting.
How to Attend the 2022 Annual Meeting
This year’s Annual Meeting will take place entirely online. If you are a stockholder of record, you may attend and vote at the 2022 Annual Meeting by visiting https://meetnow.global/MQ7GZR6 and entering the control number included on your Notice of Internet Availability of Proxy Materials
(“Notice”) or on your proxy card that accompanied your proxy materials (if you received
a printed copy of the proxy materials). If you are a beneficial owner of shares held in
“street name” (meaning, if you hold your shares through a broker, bank, or other nominee), you may attend and vote at the
mail.Thank2022 Annual meeting by visiting https://meetnow.global/MQ7GZR6 and entering the control number on your voting instruction form, or you for your ongoing support of, and continued interestmay register in Keysight.
Sincerely,
Admission to the Annual Meeting will be limited to stockholders and their proxies. You are entitledadvance to attend the 2022 Annual Meeting only if you are a stockholder of record as of the close of business on January 21, 2020, the record date,and to vote your shares or hold a valid proxy for the meeting. In order to be admitted to the Annual Meeting, you must present proof of ownership of Keysight stock as of the record date. This can be a brokerage statement or letter from a bank or broker indicating ownership on January 21, 2020, the Notice of Internet Availability of Proxy Materials, a proxy card, or legal proxy or voting instruction card provided by your broker, bank or nominee. Any holder of a proxy from a stockholder must present the proxy card, properly executed, and a copy of the proof of ownership. Stockholders and proxyholders may also be asked to present a form of photo identification such as a driver’s license or passport. Backpacks, cameras, cell phones with cameras, recording equipment and other electronic recording devices will not be permitted atask questions during the Annual Meeting. Keysight reservesPlease see pages 90-91 in the right to inspect any persons or proposals prior to their admission to“Frequently Asked Questions” section of this Proxy Statement for more information.
By Order of the Annual Meeting. Failure to follow the meeting rules or permit inspection will be grounds for exclusion from the Annual Meeting.Board of Directors,
Jeffrey K. Li
Senior Vice President, General Counsel and Secretary
Santa Rosa, California
January 24, 2022
YOUR VOTE IS IMPORTANT. PLEASE VOTE.
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KEYSIGHT TECHNOLOGIES, INC.
1400 Fountaingrove Parkway
This summary provides an overview of selected information in this year’s Proxy Statement. We encourage you to read the entire Proxy Statement before voting. In this Proxy Statement, the terms “Keysight,” “we,” and “our” refer to Keysight Technologies Inc. Information presented in this Proxy Statement is based on Keysight’s fiscal year starting with November 1 and ending on October 31 of each year (“Fiscal Year” or “FY”), unless specifically stated otherwise.
ANNUAL MEETING OF STOCKHOLDERS
Santa Rosa, California 95403
Date & Time: | | | Thursday, March 17, 2022 at 8:00 a.m. Pacific Time |
Location: | | | https://meetnow.global/MQ7GZR6 |
Record Date: | | | January 18, 2022 |
VOTING MATTERS
(707) 577-6915
Notice of
Stockholders will be asked to vote on the following matters at the 2022 Annual Meeting of
StockholdersKeysight:
| | | | |
PLACE
| Keysight Technologies, Inc.
1400 Fountaingrove Parkway
Santa Rosa, California 95403 (U.S.A.)
|
| | | |
ITEMS OF BUSINESS
| (1) To elect threePROPOSAL 1. Elect four directors to a 3-year term. At the Annual Meeting, the Board of Directors (the “Board”) intends to present the following nominees for election as directors:term
| | | Vote FOR
each director
nominee | |
| | | •
| Paul N. Clark
|
| | •
| Richard P. Hamada
|
| | •
| Paul A. Lacouture
|
| | | |
| (2) To ratifyPROPOSAL 2. Ratify the Audit and Finance Committee’s appointment of PricewaterhouseCoopers LLP as Keysight’s independent registered public accounting firm.firm
| | | Vote FOR | |
| | | | |
| (3) To approve,PROPOSAL 3. Approve, on a non-binding advisory basis, the compensation of
Keysight’s named executive officers.officers
| | | Vote FOR | |
| | PROPOSAL 4. Approve an amendment to Keysight’s Amended and Restated Certificate of Incorporation to declassify the Board of Directors
| | | Vote FOR | |
| | | |
| (4) To consider such other business as may properly come before the Annual Meeting.
|
| | | |
RECORD DATE
| You are entitled to vote at the Annual Meeting and at any adjournments or postponements thereof if you were a stockholder at the close of business on January 21, 2020.
|
| | | |
ANNUAL MEETING ADMISSION
| To be admitted to the Annual Meeting, you must present proof of ownership of Keysight stock as of the record date. This can be a brokerage statement or letter from a bank or broker indicating ownership on January 21, 2020, the Notice of Internet Availability of Proxy Materials, a proxy card, or legal proxy or voting or voting instruction card provided by your broker, bank or nominee. You may also be asked to present a form of photo identification such as a driver’s license or passport. The Annual Meeting will begin promptly at 8:00 a.m. Limited seating is available on a first come, first served basis.
|
| | | |
VOTING
| For instructions on voting, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail or, if you received a hard copy of the2022 Proxy Statement on your enclosed proxy card.i
|
| By Order of the Board,
|
| |
| Jeffrey K. Li
|
| Senior Vice President, General Counsel and Secretary
|
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KEYSIGHT AT A GLANCE
Keysight is a leading technology company that helps its engineering, enterprise and service provider customers and governments accelerate innovation to connect and secure the world. We provide electronic design and test solutions that are used in simulation design, validation, manufacture, installation, optimization and secure operations of electronics systems in the communications, networking and electronics industries. We also offer customization and optimization services throughout the customer’s product development lifecycle, including start-up assistance, asset management, up-time services, application services and instrument calibration and repair.
32,000+ | PROXY SUMMARY | 1
|
This Proxy Statement and the accompanying proxy card are being sent or made available
on or about January 31, 2020.
PROXY SUMMARY
The following is a summary which highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider, and you are urged to read the entire Proxy Statement carefully before voting.
Voting Matters and Vote Recommendations
There are three items of business which Keysight currently expects to be considered at the 2020 Annual Meeting. The following table lists those items of business and the Keysight Board’s vote recommendation.
| | PROPOSAL2,000+
| | | BOARD VOTE RECOMMENDATION14,000+
| | | 145,000+ |
Election of Directors▼
| | | For each director nominee▼
| | | ▼ | | | ▼ |
Ratification ofCustomers, including
our indirect channel, in
more than 100 countries | | | Active US and foreign patents issued or pending | | | Diverse employees located around the Independent Registered Public Accounting Firmworld | For
|
Advisory Vote to Approve Named Executive Officer Compensation
| ForStudents and future engineers engaged through STEM education in
Fiscal Year 2021 |
OUR VALUES
Director Nominees
At Keysight, we are driven to deliver breakthrough solutions and trusted insight in electronic design, test, manufacture, and optimization to help customers accelerate the innovations that connect and secure the world. Our values guide how we work with each other and how we interact with our customers, our suppliers, our partners, our stockholders, and our communities. Keysight’s
Board of Directors is divided into three classes serving staggered three-year terms. The following table provides summary information, as of December 31, 2019, about each of the director nominees who are being voted on at the Annual Meeting.NAME | AGE | DIRECTOR
SINCE | INDEPENDENT | COMMITTEE
MEMBERSHIPS | OTHER
PUBLIC
BOARDS |
AC | CC | NCG | EC |
Paul N. Clark | | 72 | | | 2014 | | | Yes | | | M | | | | | | C | | | M | | | • | | Agilent Technologies, Inc. |
Richard P. Hamada | | 61 | | | 2014 | | | Yes | | | | | | M | | | M | | | | | | • | | None |
Paul A. Lacouture | | 69 | | | 2019 | | | Yes | | | M | | | | | | M | | | | | | • | | None |
GOVERNANCE HIGHLIGHTS
Key: AC: Audit and Finance Committee; CC: Compensation Committee; NCG:
BOARD COMPOSITION
The Nominating and Corporate Governance
Committee; EC: Executive Committee; C: Chairperson; M: MemberIndependent Registered Public Accounting Firm
We askCommittee of the Board of Directors (the “Nominating and Corporate Governance Committee”) regularly reviews the overall composition of the Board and its committees to assess whether they reflect the appropriate mix of skills, experience, backgrounds and qualifications that are relevant to Keysight’s current and future business and strategy.
Each member of our
stockholdersBoard has the necessary qualifications, expertise, and attributes in technology, global business, leadership, and financial literacy to
ratifybe an effective member of the
selectionBoard. The table below summarizes the number of
PricewaterhouseCoopers LLP (“PwC”) as Keysight’s independent registered public accounting firm for fiscal year 2020.The following table presents fees for professional audit services renderedDirectors possessing each of the skills and experience we have determined are most relevant to Keysight by PwC for the years ended October 31, 2019decision to nominate candidates to serve on the Board. Our director nominees’ biographies describe each director’s background and 2018.
Fee Category: | Fiscal 2019 ($) | % of Total (%) | Fiscal 2018 ($) | % of Total (%) |
Audit Fees | $ | 5,058,000 | | | 93.0 | | $ | 5,775,000 | | | 97.0 | |
Audit-Related Fees | | 326,000 | | | 6.0 | | | 34,250 | | | 1.0 | |
Tax Fees:
| | | | | | | | | | | | |
Tax compliance/preparation | | 38,741 | | | 1.0 | | | 148,000 | | | 2.0 | |
Other tax services | | — | | | 0 | | | — | | | 0 | |
Total Tax Fees | | 38,741 | | | 1.0 | | | 148,000 | | | 2.0 | |
All Other Fees | | 3,000 | | | 0 | | | 3,000 | | | 0 | |
Total Fees | | 5,425,741 | | | 100.0 | | | 5,960,250 | | | 100.0 | |
relevant experience in more detail.
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| 2022 Proxy Statement PROXY SUMMARY iii| 2 |
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FISCAL YEAR 2021 Board Profile
BOARD REFRESHMENT
Thoughtful consideration is continuously given to the composition of our Board in order to maintain an appropriate mix of experience and qualifications, introduce fresh perspectives, and broaden and diversify the views and experience represented on the Board. To that end, we added one new director to our Board in Fiscal Year 2021. As of the end of Fiscal Year 2021, the average tenure of our Board was 5.3 years.
OUR DIRECTORS1
| | James G. Cullen | | | 79 | | | October
2014 | | | • | | | | | | (C) | | | | | | • | |
| | Charles J. Dockendorff | | | 67 | | | October
2014 | | | • | | | (C) | | | | | | | | | • | |
| | Richard P. Hamada | | | 63 | | | October
2014 | | | • | | | | | | • | | | | | | • | |
| | Michelle J. Holthaus | | | 48 | | | May
2021 | | | • | | | | | | | | | | | | • | |
| | Paul A. Lacouture | | | 71 | | | March
2019 | | | • | | | • | | | | | | | | | • | |
| | Ronald S. Nersesian | | | 62 | | | December
2013 | | | (C) | | | | | | | | | (C) | | | | |
| | Jean M. Nye | | | 69 | | | October
2014 | | | • | | | | | | • | | | | | | (C) | |
| | Joanne B. Olsen | | | 63 | | | May
2019 | | | • | | | | | | • | | | | | | • | |
| | Robert A. Rango | | | 63 | | | November
2015 | | | • | | | • | | | | | | | | | • | |
(1)
| Paul N. Clark retired from the Keysight Board of Directors effective on December 1, 2021 |
Executive Compensation MattersTABLE OF CONTENTS
The
GOVERNANCE PRACTICES
We are vocal advocates for the adoption of sound corporate governance policies that include strong Board leadership and strategic deliberation, prudent management practices and transparency.
Highlights of our Fiscal Year 2021 governance practices include, among others:
| | • Nine of ten directors are independent
• Lead Independent Director with clearly defined role
• Independent standing Board committees
• Regular meetings of our independent directors without management present
• 30% of directors are female
• 10% of directors are Under Represented Minorities (“URM”)
• Average Board tenure of 5.3 years (as of end of Fiscal Year 2021)
• Annual evaluation of the CEO by independent directors
• Annual board self-assessment process | | | • Policies prohibiting hedging, short selling and pledging of our common stock for all employees and directors
• Stock ownership guidelines for executive officers and directors
• Risk oversight by Board and Committees.
• Procedures for stockholders to communicate directly with the Board
• Annual advisory vote on executive compensation
• Periodic review of Committee charters and Corporate Governance Guidelines
• Compensation and Human Capital Committee oversight of human capital management matters | |
This proxy statement contains information aboutincludes a proposal to amend Keysight’s Amended and Restated Certificate of Incorporation to phase out the classification of our board over a three-year period such that, if approved, beginning with the election of directors at the 2025 Annual Meeting of Stockholders, all directors would stand for election annually for one-year terms.
STOCKHOLDER COMMUNICATION
Stockholder communication is essential to our ongoing review of our corporate environmental, social, governance and executive compensation programs.programs and practices. This year, we reached out to stockholders representing over 32% of our outstanding shares and invited them to meet with our General Counsel and Corporate Secretary, our Chief Administrative Officer and Chief of Staff (“CAO”), and our Director of Investor Relations.
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FISCAL YEAR 2021 FINANCIAL PERFORMANCE
The COVID-19 pandemic continued to create challenges for Keysight in Fiscal Year 2021 in spite of development and increasing availability of the COVID-19 vaccines. Throughout the year, we maintained our focus on our priorities of keeping employees and their families safe and healthy, keeping Keysight strong and helping our communities. Our Fiscal Year began with surging infection rates around the world, impacting operations at major sites such as our facility in India. As vaccines became more readily available in parts of the world, we made plans to bring employees back to work in our facilities, which were halted by the Delta variant. Throughout the year, we continued to limit on site access to employees whose jobs can only be performed on site, and employees who can do so continued to work from home.
Our ability to be resilient and adapt quickly to external changes has been critical to our creation of value for our stockholders, customers and employees notwithstanding the continued challenges presented by the pandemic. In particular, you will find detailed informationFiscal Year 2021, we, like most companies, continued to experience supply chain disruptions which impacted our customers, suppliers and vendors, but saw the benefit of our differentiated solutions which helped fuel our growth despite managing longer lead times. Our accomplishments included:
| | Generally Accepted Accounting Principles (“GAAP”) Revenues | | | $4.9B | | | 17.1% YoY growth | |
| | GAAP Net Income | | | $894M | | | 42.6% YoY growth | |
| | Non-GAAP Net Income | | | $1,164M | | | 26.7% YoY growth | |
| | GAAP Earnings Per Share (“EPS”) | | | $4.78 per share | | | 44.6% YoY growth | |
| | Non-GAAP EPS | | | $6.23 per share | | | 28.4% YoY growth | |
LONG TERM STOCKHOLDER VALUE CREATION
(1)
| Measured the closing stock price on October 29, 2021 as compared to the closing stock price on October 31, 2016 and October 31, 2018 for the 5 Year and 3 Year TSR, respectively. |
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COMPENSATION DISCUSSION AND ANALYSIS HIGHLIGHTS
COMPENSATION POLICIES AND PRACTICES
Our commitment to designing an executive compensation program that is consistent with responsible financial and risk management is reflected in the following policies and practices:
| | • Compensation and Human Capital Committee of the Board of Directors (the “Compensation and Human Capital Committee”) is comprised 100% of independent directors
• Independent compensation consultant retained by the Compensation and Human Capital Committee
• Balance short- and long-term incentives, cash and equity, and fixed and variable pay elements to executive officers
• Measurable ESG metric as a component of executive short-term incentive plan
• Performance-based equity awards comprising approximately 60% of the overall equity allocation to executive officers
• Maximum limits on the amount of annual cash incentives and performance-based restricted stock units (“PSUs”) that may be paid out
• Maintain a clawback policy that applies to both cash incentives and equity awards
• Annually assess and mitigate compensation risk
• Solicit an annual advisory vote on executive compensation
• Maintain robust stock ownership guidelines | | | • No employment agreements providing for multi-year guarantees of salary increases, non-performance based bonuses or equity compensation.
• No repricing or repurchasing of underwater stock options or stock appreciation rights without stockholder approval
• No dividends or dividend equivalents on unearned awards
• Prohibitions on executive officers engaging in hedging transactions or pledging our securities as collateral for loans
• No single trigger change of control acceleration of vesting for equity awards
• No excessive perquisites
• No excessive severance benefits
• No golden parachute tax gross-ups | |
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INCENTIVE PROGRAM – PAY-FOR-PERFORMANCE HIGHLIGHTS
As described more fully in the Compensation Discussion and Analysis
starting on page 27 and the Executive Compensation tables starting on page 45.Oursection of this Proxy Statement, our named executive officers (“NEOs”) are compensated in a manner consistent with Keysight’s business strategy, competitive practice, sound compensationour performance-based pay philosophy and corporate governance principles, and stockholder interests and concerns. Our compensation policies and decisionsbest practices. Below are focused on pay-for-performance. We believe that our programs are well aligned with the interestsa few highlights of our stockholderspay for performance philosophy as they relate to our Chief Executive Officer (“CEO”) and are instrumental to achieving our business strategy.
We are requesting your non-binding vote to approve the compensation of the Company’s named executive officers as described on pages 27 to 60, including the Summary Compensation Table and subsequent tables on pages 45 to 60 of the proxy statement.
NEOs. 
(1)
| Long Term Incentive Plan (“LTI”) |
(2)
| Short Term Incentive Plan (“STI”) |
FISCAL YEAR 2021 INCENTIVE PLAN RESULTS
Short-Term Incentive Plan Results
| | Non-GAAP EPS | | | 113.9% | | | 118.7% | |
| | Keysight Non-GAAP Revenue Growth | | | 143.0% | | | 226.9% | |
| | Keysight Non-GAAP Annualized Recurring Revenue (“ARR”) Growth | | | 210.0% | | | 137.8% | |
| | Worldwide Quota (“WWQ”) | | | 108.0% | | | 110.9% | |
viii 2022 Proxy Statement | |
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LONG-TERM PERFORMANCE PLAN RESULTS
Fiscal Year 2019 - Fiscal Year 2021 Performance Stock Unit (“PSU”) Grants: TSR
| | Threshold
(25% Payout) | | | Target
(100% Payout) | | | Maximum
(200% Payout) | | | | |
| | 40 percentage
points below index | | | Equals Index | | | 40 percentage
points above index | | | | |
| | | | | S&P 500 Total Return Index
65.3% | | | Keysight TSR
173.7% | | | 108.4 ppts above index | |
| | | | | | | | | | | 200% Payout | |
Fiscal Year 2019 - Fiscal Year 2021 PSU Grants: Non-GAAP Operating Margin (“OM”)
| | Year | | | Threshold
(50% Payout) | | | Target
(100% Payout) | | | Maximum
(200% Payout) | | | | |
| | | | | 5 points below annual Non-GAAP OM plan | | | Achievement of annual Non-GAAP OM plan | | | 5 points above annual Non-GAAP OM plan | | | | |
| | 2019 | | | 14.5% | | | 19.5% | | | 24.5% | | | 24.0% | |
| | 2020 | | | 19.6% | | | 24.6% | | | 29.6% | | | 25.4% | |
| | 2021 | | | 20.9% | | | 25.9% | | | 30.9% | | | 27.8% | |
| | | | | | | | | | | | | | 148% Payout | |
See the “Compensation Discussion and Analysis” section of this Proxy Statement for more information.
| 2022 Proxy Statement TABLE OF CONTENTSix | i |
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CORPORATE SOCIAL RESPONSIBILITY KEY IMPACT GOALS
Keysight established targeted measures across environmental sustainability, social impact and ethical governance in Fiscal Year 2021. Goals have been identified to align with short-, mid-, and long-term efforts as noted.
| | Value committed to strengthening communities | | | $250M | | | $315M+ | |
| | Students and future engineers engaged through STEM education | | | 75,000 | | | 145,000+ | |
| | Global New Hires are Women by the end of Fiscal Year 2021 | | | 35% | | | 34.4% | |
| | U.S. New Hires are Underrepresented Minorities (“URM”)(1)
by the end of Fiscal Year 2021 | | | 45% | | | 46.4% | |
| | Material negative impact to the income statement and institutional investments | | | ZERO | | | ZERO | |
| | Emissions in Company Operations | | | NET ZERO | |
(1)
| California Assembly Bill 979 defines underrepresented minority as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska native, or as gay, lesbian, bisexual, or transgender. |
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OUR COVID-19 RESPONSE
KEYSIGHT’S PLEDGE
At Keysight, our mission is to accelerate innovation to connect and secure the world. As the world has continued to adapt to new ways of working and interacting with one another, our mission is especially relevant. Throughout Fiscal Year 2021, we continued to prioritize the health and safety of our employees, support our customers, find new ways to help engineers accelerate innovation, and help local communities fight the ongoing pandemic.
KEYSIGHT’S PRIORITIES
Health & Safety of Employees
& Their Families | | | Support for
Customers | | | Helping
Relief Efforts |
▼ | | | ▼ | | | ▼ |
Keysight has continued to focus on protecting employees and their families by continued work from home, limiting site access to essential workers, limiting travel, requiring rigorous safety procedures and protocols for employees working at manufacturing and service sites, financial assistance to employees in India, vaccine clinics and vaccine mandates. | | | Keysight remained committed to supporting customers during this time and minimizing disruption. | | | Keysight is helping its customers and the community fight this pandemic. |
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| | Election of Directors | 3PROPOSAL 1:
ELECTION OF DIRECTORS |
DIRECTOR NOMINATION CRITERIA: QUALIFICATIONS AND EXPERIENCE PROPOSAL 1—ELECTION OF DIRECTORS
Director Nomination Criteria: Qualifications and Experience
The Nominating and Corporate Governance Committee performs an assessment of the skills and the experience needed to properly oversee the interests of the Company.Keysight and its stockholders. Generally, the Nominating and Corporate Governance Committee reviews both the short and long-term strategies of the CompanyKeysight to determine what current and future skills and experience are required of the Board in exercising its oversight function. The Nominating and Corporate Governance Committee then compares those skills and experience to the skillsthose of the current directors and potential director candidates. The Nominating and Corporate Governance Committee conducts targeted efforts to identify and recruit individuals who have the qualifications identifiedhighlighted through this process.
The
Nominating and Corporate Governance Committee looks for its current and potential directors collectively to have a mix oftable below summarizes the key qualifications, skills, and
qualifications, someattributes most relevant to the decision to nominate candidates to serve on the Board in Fiscal Year 2022. A mark indicates a specific area of
focus or expertise on which
are described below:the Board particularly relies. The absence of a reputation for personalmark does not mean the director does not possess that qualification or skill. Our director nominees’ biographies describe each director’s background and professional integrity and ethics;
executive or similar policy-makingrelevant experience in relevant businessmore detail.
VOTE REQUIRED
The affirmative vote by the holders of a majority of the shares of Keysight common stock present or technology areas or national prominence in academic, governmentrepresented by proxy and voting at the 2022 Annual Meeting is required for approval of this proposal, provided sufficient shares are represented for the required quorum. If you own shares through a bank, broker or other relevant fields;
breadthholder of experience;
soundness of judgment;
the ability to make independent, analytical inquiries;
the willingness and ability to devote the time required to perform Board activities adequately;
the ability to represent the total corporate interests of Keysight; and
the ability to represent the long-term interests of stockholders as a whole.
In addition to these minimum requirements, the Nominating and Corporate Governance Committee will also consider whether the candidate’s skills are complementary to the existing Board members’ skills; the diversity of the Board with respect to factors such as age, race, gender, experience in technology, manufacturing, finance and marketing, international experience and culture; and the Board’s needs for specific operational, managementrecord, you must instruct your bank, broker or other expertise. The Nominating and Corporate Governance Committee from timeholder of record how to time reviews the appropriate skills and characteristics required of Board members, including factorsvote in order for them to vote your shares so that it seeks in Board members such as diversity of business experience, viewpoints and, personal background, and diversity of skills in technology, finance, marketing, international business, financial reporting and other areas that are expected to contribute to an effective Board. In evaluating potential candidates for the Board, the Nominating and Corporate Governance Committee considers these factors in the light of the specific needs of the Board at that time.
your vote can be counted on this proposal.KEYSIGHT’S BOARD RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES.
TABLE OF CONTENTSCurrent Director Terms
| | Board Diversity
Representation of gender and/or ethnic diversity | | | | | | | | | URM | | | F | | | | | | | | | F | | | F | | | | |
| | Technology
A significant background working in technology, resulting in knowledge of how to anticipate technological trends, generate disruptive innovation and extend or create new business models | | | • | | | • | | | • | | | • | | | • | | | • | | | • | | | • | | | • | |
| | Global Business
Experience cultivating and sustaining business relationships internationally and overseeing multinational operations | | | • | | | • | | | • | | | • | | | • | | | • | | | • | | | • | | | • | |
| | Leadership
Has overseen the execution of important strategic, operational and policy issues while serving in an executive or senior leadership role | | | • | | | • | | | • | | | • | | | • | | | • | | | • | | | • | | | • | |
| | Strategic Transactions
A history of leading growth through acquisitions, other business combinations and strategic partnership transactions | | | • | | | • | | | • | | | | | | • | | | • | | | • | | | | | | • | |
| | Financial Literacy
Knowledge of financial markets, financing operations, complex financial management and accounting and financial reporting processes | | | • | | | • | | | • | | | • | | | • | | | • | | | • | | | • | | | • | |
| | Institutional Knowledge
Significant knowledge of our business strategy, operations, key performance indicators and competitive environment | | | • | | | • | | | • | | | | | | | | | • | | | • | | | | | | • | |
| | Sales and Marketing
Has served in a senior sales management, marketing campaign management or marketing/ advertising role or function | | | • | | | | | | • | | | • | | | | | | • | | | | | | • | | | • | |
| | Enterprise Human Capital Management
Enterprise-wide experience in recruiting, managing, developing and optimizing a company’s human resources | | | • | | | | | | | | | | | | | | | • | | | • | | | | | | | |
| | Information Security
Experience in creating, managing, or overseeing enterprise-wide information security programs | | | | | | • | | | | | | | | | • | | | | | | | | | | | | • | |
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Keysight’s Board is currently divided into three classes serving staggered three-year terms. Directors for each class are elected at the Annual Meeting held in the year in which the term for their class expires. Keysight’s Bylaws, as amended, allow the Board to fix the number of directors by resolution. OurIn May 2021, the Board currently consistsadded Michele J. Holthaus as a director, thereby increasing the number of directors from nine directors divided into three classes.to ten. Following the retirement of Paul N. Clark in December 2021, our Board voted to reduce its size from ten to nine directors. The terms of the threefour current director nominees will expire at thisthe 2022 Annual Meeting. The current composition of the Board as of December 31, 2022 and the term expiration dates for each director is as follows:
| | I | | | Ronald S. Nersesian, Charles J. Dockendorff and Robert A. Rango | | | 20212024
| |
| | II | | | James G. Cullen, Michelle J. Holthaus, Jean M. HalloranNye and Joanne B. Olsen | | | 2022 | |
| | III | | | Paul N. Clark, Richard P. Hamada and Paul A. Lacouture
| | | 20202023
| |
Directors elected at the 20202022 Annual Meeting will hold office for a three-year term expiring at the annual meeting in 20232025 (or until their respective successors are elected and qualified, or until their earlier death, resignation or removal). Each nominee is a current director of Keysight, and information regarding each of the nominees is provided below as of December 31, 2019.2021. There are no family relationships among Keysight’s executive officers and directors.
Proposal 4 in this Proxy Statement is a proposal to amend Keysight’s Amended and Restated Certificate of Incorporation to phase out classification of our Board over a three-year period such that, if approved, beginning at the election of directors at the 2025 Annual Meeting of Stockholders, all directors would be up for election annually for a one-year term (“Declassification Amendment”). The affirmative vote of holders of at least 80% of the outstanding shares entitled to vote will be required to approve the Declassification Amendment. If the Declassification Amendment is not approved by our stockholders, the Board will remain classified.
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DIRECTOR NOMINEES FOR ELECTION TO NEW THREE-YEAR TERMS THAT WILL EXPIRE IN 2025 James G. Cullen
Director Nominees for Election to New Three-Year Terms That Will Expire in 2023
PAUL N. CLARK
| | Age: 72AGE: 79
| | | Keysight Committees:KEYSIGHT COMMITTEES:
| | | Public Directorships:PUBLIC DIRECTORSHIPS:
| |
Director Since:
| | | •
| | | Audit and Finance
| | | •
| Agilent Technologies, Inc.
|
| | Director Since:
October 2014 | •
| | Compensation and
Human Capital
(Chair)
Nominating and Corporate Governance (Chair) | | | Avinger, Inc.
|
October 2014 through October 2019 (Chairman of the Board)
| •
| Executive
|
| |
| | Former Public Directorships Held During the Past Five Years:
Neustar, Inc. Prudential Financial, Inc. Agilent Technologies, Inc. | |
| | November 2019 to present (Lead Independent Director)
| | | | | | | | |
| | •
| Biolase, Inc.
|
| | | •
| Catalent, Inc.
|
Mr. ClarkCullen was President and Chief Operating Officer of Bell Atlantic Corporation (now known as Verizon) from 1997 to June 2000 and a Strategic Advisory Board member of Genstar Capital LLCthe office of Chair from August 20071993 to December 2016June 2000. Prior to this appointment, Mr. Cullen was the President and was an Operating PartnerChief Executive Officer of the Telecom Group of Bell Atlantic from August 20071995 to January 2013. Genstar is a middle market private equity firm which focuses on investments in selected segments of life sciences and healthcare services, industrial technology, business services and software.1997. Prior to that time, Mr. Clark was the Chief Executive Officer and President of ICOS Corporation, a biotherapeutics company, from June 1999 to January 2007, and the Chairman of the Board of Directors of ICOS from February 2000 to January 2007. From 1984 to December 1998, Mr. Clark worked in various capacities for Abbott Laboratories, a health care products manufacturer, retiring from Abbott Laboratories as Executive Vice President and a board member. His previous experience included seniorCullen held management positions with Marion Laboratories, a pharmaceutical company,New Jersey Bell and Sandoz Pharmaceuticals (now Novartis Corporation), a pharmaceutical company.AT&T. Mr. Clark receivedCullen holds a Bachelor of Arts degree in financeEconomics from Rutgers University and a Master of Science degree in Management Science from the Massachusetts Institute of Technology. Mr. Cullen self-identifies as a white male.
IMPACT
Mr. Cullen has considerable managerial and operational experience and expertise from his senior leadership position with Bell Atlantic and its predecessors. In addition, Mr. Cullen brings significant public company director experience and perspective on public company management and governance. Mr. Cullen has a strong understanding of Keysight’s business having served on the board of Agilent Technologies, Inc. (“Agilent”) for over 10 years, including more than five years as the non-executive Chair.
SKILLS AND QUALIFICATIONS
• Technology
• Global Business
• Leadership
• Strategic Transactions
• Financial Literacy
• Institutional Knowledge
• Sales and Marketing
• Enterprise Human Capital Management
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Michelle J. Holthaus
| | | | | | | | | | |
| | Director Since:
May 2021 | | | Nominating and Corporate Governance | | | None
Former Public Directorships Held During the Past Five Years:
None
| |
| | | | | | | | | |
Mrs. Holthaus has served as executive vice president and chief revenue officer at Intel Corporation since September 2019 where she leads Intel’s global sales, marketing and communications functions. She previously served as senior vice president and general manager of sales and marketing from July 2018 to September 2019, as corporate vice president and general manager of sales and marketing from September 2017 to July 2018, and as division vice president and division general manager of sales and marketing from February 2016 to September 2017. She has been with Intel since 1996 and has held a variety of roles within the products and marketing areas.
Mrs. Holthaus received a B.A. in Finance from Linfield College. Mrs. Holthaus self-identifies as a white female.
IMPACT
Mrs. Holthaus brings a strong combination of sales and marketing experience , deep customer insight and financial acumen from her numerous senior management positions, making her a valuable addition to the Keysight Board.
Skills and Qualifications:
• Diversity
• Technology
• Global Business
• Leadership
• Financial Literacy
• Sales and Marketing
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Jean M. Nye
| | | | | | | | | | |
| | Director Since:
October 2014 | | | Compensation and
Human Capital
Nominating and Corporate Governance (Chair) | | | None
Former Public Directorships Held During the Past Five Years:
Adaptive Insights, Inc. | |
| | | | | | | | | |
Ms. Nye served as Senior Vice President of Human Resources for Agilent from August 1999 through October 2014. She directed all aspects of Agilent’s talent and rewards management, leadership development and culture. Ms. Nye has extensive experience in Human Resources, extending back to when she joined Hewlett Packard’s Medical Products Group in 1980. Within that group, she held various positions in Manufacturing, Quality and Strategic Planning as well as Human Resources. In 1993, Ms. Nye headed Human Resources for HP’s Measurement Systems Organization and, in 1997, was appointed Director of Education for the company. Ms. Nye received her BA from Princeton University and an MBA from Harvard University. Ms. Nye has served as a director of Alabamaseveral schools and non-profit organizations. Ms. Nye self-identifies as a Masters in Business Administration from Dartmouth College. Mr. Clarkwhite female.
IMPACT
Ms. Nye has significant experience within-depth knowledge of Keysight and its businesses, having been a leader at Keysight’s predecessors, Agilent and HP, for over 30 years. Over the course of her career, she developed considerable expertise in Keysight’s businesses, policies and practices. This perspective provides valuable insight on the Keysight Board.
SKILLS AND QUALIFICATIONS
• Board Diversity
• Technology
• Global Business
• Leadership
• Strategic Transactions
• Financial Literacy
• Institutional Knowledge
• Enterprise Human Capital Management
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Joanne B. Olsen
| | | | | | | | | | |
| | Director Since:
May 2019 | | | Compensation and
Human Capital
Nominating and
Corporate Governance | | | Ciena Corporation
Teradata Corporation
Former Public Directorships Held During the Past Five Years:
None | |
| | | | | | | | | |
Ms. Olsen has served as a director of Keysight’s predecessor, Agilent,Keysight since May 2006. He additionally2019. Ms. Olsen also serves on the board of directors of Ciena Corporation and Teradata Corporation. Ms. Olsen most recently served as Executive Vice President of Oracle Global Cloud Services and Support until her retirement in 2017. She previously served as Senior Vice President and leader of Oracle’s applications sales, alliances and consulting organizations in North America. Ms. Olsen began her career with IBM, where, over the course of more than three decades, she held a variety of executive management positions across sales, global financing and hardware. Ms. Olsen holds a B.A. in Mathematics and Economics from East Stroudsburg University of Pennsylvania. Ms. Olsen self-identifies as a white female.
IMPACT
Ms. Olsen brings extensive managementa strong combination of sales, support and product experience from numerous senior management positions and considerable public company director experience.experience, making her a valuable addition to the Keysight Board.
SKILLS AND QUALIFICATIONS
• Board Diversity
• Technology
• Global Business
• Leadership
• Financial Literacy
• Sales and Marketing
KEYSIGHT’S BOARD RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES.
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CONTINUING DIRECTORS NOT BEING CONSIDERED FOR ELECTION AT THIS ANNUAL MEETING RICHARDThe Keysight directors whose terms are not expiring this year are listed below. They will continue to serve as directors for the remainder of their terms or through such other date, in accordance with Keysight’s Bylaws. Information regarding each of such directors, as of December 31, 2021, is provided below.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2023
Richard P. HAMADAHamada
Director Since:
| | | •
| | | Compensation
| | | •
| None.
|
| | Director Since:
October 2014 | •
| | Compensation and
Human Capital
Nominating and Corporate Governance | | | None
|
| | | Former Public Directorships Held During the Past Five Years:
|
| | | •
| Avnet, Inc. | |
| | | | | | | | | |
Mr. Hamada served as the Chief Executive Officer of Avnet Inc. from July 2011 until July 2016 and as a member of the Avnet Boardboard of Directorsdirectors from February 2011 until July 2016. He first joined Avnet in 1983 and has served in many capacities including President from May 2010 until July 2011 and Chief Operating Officer from July 2006 until July 2011, as President of Avnet’s Technology Solutions operating group from July 2003 until July 2006, and as President of its Computer Marketing business unit from January 2002 until July 2003. Mr. Hamada holds a Bachelor of Science degree in Finance from San Diego State University where, in June 2009, he was namedUniversity. Mr. Hamada self-identifies as a member of the College of Business Administration Advisory Board. an Asian male.
IMPACT
As a result of Mr. Hamada’s broad background in the technology and electronics industries, spanning his career, Mr. Hamada provides the Keysight Board with extensive sales, marketing and management knowledge.
SKILLS AND QUALIFICATIONS
• Board Diversity
• Technology
• Global Business
• Leadership
• Strategic Transactions
• Financial Literacy
• Institutional Knowledge
• Sales and Marketing
• Information Security
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PAUL A. LACOUTURE
| | Age: 69AGE: 71
| | | Keysight Committees:KEYSIGHT COMMITTEES:
| | | Public Directorships:PUBLIC DIRECTORSHIPS:
| |
| | | | | | | | | | |
| | Director Since:
March 2019 | •
| | Audit and Finance
| •
| None.
|
March 2019
| •
| Nominating and Corporate Governance | | | None
|
| | | Former Public Directorships Held During the Past Five Years:
|
| | | •
| Neustar, Inc. | |
| | | | | | | | | |
Mr. Lacouture served as a director of Neustar, Inc. from 2007 to 2018. Mr. Lacouture retired in 2007 as Executive Vice President of Engineering and Technology for Verizon Telecom, a telecommunications services provider, a position he had held since 2006. From 2000 to 2006, Mr. Lacouture was President of the Verizon Network Services Group. Prior to the Bell Atlantic/GTE merger in July 2000, Mr. Lacouture was President of the Network Services group at Bell Atlantic. Mr. Lacouture received his Bachelor of Science degree in Electrical Engineering from Worcester Polytechnic Institute and an MBA from Northeastern University. Mr. Lacouture self identifies as a white male.
IMPACT
Mr. Lacouture brings extensive management experience from numerous senior management positions and considerable public company director experience to the Keysight Board.
SKILLS AND QUALIFICATIONS
• Technology
• Global Business
• Leadership
• Strategic Transactions
• Financial Literacy
• Information Security
Keysight’s Board recommends a vote FOR the election to the Board of each of the foregoing nominees. | 2022 Proxy Statement 11 |
TABLE OF CONTENTSContinuing Directors Not Being Considered for Election at this Annual Meeting
The Keysight directors whose terms are not expiring this year are listed below. They will continue to serve as directors for the remainder of their terms or such other date, in accordance with Keysight’s Bylaws. Information regarding each of such directors, as of December 31, 2019, is provided below.
Directors Whose Terms Will Expire in 2021
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2024
RONALDRonald S. NERSESIANNersesian
| | | | | | | | | | |
| | Director Since:
December 2013
November 2019 to present (Chair of the Board) | •
| | Executive (Chair) | •
| | Trimble, Inc.None
|
December 2013
|
| | | |
November 2019 to present (Chairman of the Board)
| | | Former Public Directorships Held During the Past Five Years:
Trimble, Inc. | |
| | | | | | | | •
| None
|
Mr. Nersesian has served as the ChairmanChair of the Board since November 1, 2019 and as President, Chief Executive Officer and Director of Keysight since December 2013. In September 2013, Agilent announced that Mr. Nersesian would be appointed Chief Executive Officer of Keysight since December 2013. Prior toupon separation of the companies. From September 2013 through separation, Mr. Nersesian served as served as Executive Vice President of Agilent Technologies, Inc. and additionallyAgilent. Mr. Nersesian served as President of Agilent from November 2012 to September 2013 and as Chief Operating Officer, Agilent from November 2011 to September 2013. From November 2011 to November 2012, Mr. Nersesian served as Agilent’s Executive Vice President and Chief Operating Officer. He served as Senior Vice President, Agilent, and President, Electronic Measurement Group from March 2009 to November 2011, as Agilent’s Vice President and General Manager of the Wireless Business Unit of the Electronics Measurement Group from February 2005 to February 2009, and as Agilent’s Vice President and General Manager of the Design Validation Division from May 2002 to February 2005.2011. Prior to joining Agilent,that time, Mr. Nersesian served inheld a variety of senior management positions withroles at Agilent, LeCroy Corporation from 1996 to 2002. From 1984 through 1996, Mr. Nersesian served in various roles with HP, Inc.and HP. Mr. Nersesian holds a Bachelor of Science degree in electrical engineering from Lehigh University and an MBA from New York University, Stern School of Business. Mr. Nersesian self-identifies as a white male.
IMPACT
Mr. Nersesian brings to the Board strong business operational experience with technology companies and management expertise developed over three decades.
SKILLS AND QUALIFICATIONS
• Technology
• Global Business
• Leadership
• Strategic Transactions
• Financial Literacy
• Institutional Knowledge
• Sales and Marketing
• Enterprise Human Capital Management
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CHARLES J. DOCKENDORFF
| | Age: 65AGE: 67
| | | Keysight Committees:KEYSIGHT COMMITTEES:
| | | Public Directorships:PUBLIC DIRECTORSHIPS:
| |
| | | | | | | | | | |
| | Director Since:
October 2014 | •
| | Audit and Finance (Chair)
| •
| Boston Scientific Corporation
|
October 2014
| •
| Nominating and Corporate Governance | •
| | Boston Scientific Corporation
Haemonetics Corporation
|
| | | •
| Hologic, Inc.
|
| | | Former Public Directorships Held During the Past Five Years:
None | |
| | | | | | | | | •
| None
|
Mr. Dockendorff served as the Executive Vice President and Chief Financial Officer of Covidien plc from 2006 until his retirement in March 2015, and as Vice President and Chief Financial Officer from 1995 to 2006. Mr. Dockendorff was appointed Chief Financial Officer of Tyco Healthcare in 1995, having joined the Kendall Healthcare Products Company as Controller. He was named Vice President and Controller of Kendall in 1994. Prior to joining Kendall/Tyco Healthcare, Mr. Dockendorff was the Chief Financial Officer, Vice President of Finance and Treasurer of Epsco Inc. and Infrared Industries, Inc. Mr. Dockendorff is a Certified Public Accountant and holds a Bachelor’s degree in Business Administration and Accounting from the University of Massachusetts and a Master of Science degree in Finance from Bentley College. Mr. Dockendorff self-identifies as a white male.
IMPACT
As a result of Mr. Dockendorff’s significant financial experience,Mr. Dockendorff provides the Keysight Board with extensive accounting, tax, treasury, financial planning, and audit knowledge.
SKILLS AND QUALIFICATIONS
• Technology
• Global Business
• Leadership
• Strategic Transactions
• Financial Literacy
• Institutional Knowledge
• Information Security
ROBERT A. RANGO
Age: 61 | Keysight Committees:2022 Proxy Statement 13
|
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Robert A. Rango
| | | | | | | | | | |
| | Director Since:
November 2015 | •
| | Audit and Finance
| •
| KLA Corporation
|
November 2015
| •
| Nominating and Corporate Governance | | | KLA Corporation
|
| | | Former Public Directorships Held During the Past Five Years:
|
| | | •
| Integrated Device Technology, Inc. | |
| | | | | | | | | | |
Mr. Rango has served as the President and Chief Executive Officer of Enevate Corporation since June 2016. Mr. Rango served from March 2002 to July 2014 as an executive at Broadcom Corporation. From 2010 to 2014, he served as Executive Vice President and General Manager of Broadcom’s Mobile and Wireless Group. During his tenure at Broadcom, Mr. Rango held many senior management positions in the company’s Network Infrastructure Business Unit, Mobile and Wireless Group and Wireless Connectivity Group. Mr. Rango received his Bachelor of Engineering degree in Electrical Engineering from State University of New York and his Master of Engineering in Electrical Engineering from Cornell University. Mr. Rango self-identifies as a white male.
IMPACT
Mr. Rango possesses significant operating and leadership skills, including extensive experience in global semiconductor product marketing, development and sales. His mobile, wireless, semiconductor, optical, software and technology management expertise make him a valuable member of the Keysight Board.
Directors Whose Terms Will Expire in 2022
SKILLS AND QUALIFICATIONS
• Technology
• Global Business
• Leadership
• Strategic Transactions
•JAMES G. CULLEN Financial LiteracyAge: 77
| Keysight Committees:
| Public Directorships:
|
Director Since:
| •
| Compensation (Chair)
| •
| Avinger, Inc.
|
October 2014
| •
| Nominating and Corporate Governance
| | |
| | | Former Public Directorships Held During the Past Five Years:
|
| | | •
| Johnson & Johnson
|
| | | •
| Neustar, Inc.
|
| | | •
| Prudential Financial, Inc.
|
| | | •
| Agilent Technologies, Inc.
|
• Institutional Knowledge
Mr. Cullen was President
• Sales and Chief Operating Officer of Bell Atlantic Corporation (now known as Verizon) from 1997 to June 2000 and a member of the office of chairman from 1993 to June 2000. Prior to this appointment, Mr. Cullen was the President and Chief Executive Officer of the Telecom Group of Bell Atlantic from 1995 to 1997. Prior to the creation of Bell Atlantic on January 1, 1984, Mr. Cullen held management positions with New Jersey Bell from 1966 to 1981 and AT&T from 1981 to 1983. Mr. Cullen holds a Bachelor of Arts degree in Economics from Rutgers University and a Master of Science degree in Management Science from the Massachusetts Institute of Technology. Mr. Cullen has considerable managerial and operational experience and expertise from his senior leadership position with Bell Atlantic and itsMarketing
• Information Security
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| | Election of Directors | 7
CORPORATE GOVERNANCE |
predecessors. In addition, Mr. Cullen brings significant public company director experience and perspective on public company management and governance. Mr. Cullen has a strong understanding of Keysight’s business having served on the board of Agilent for over 10 years, including more than five years as the non-executive chairman.
CORPORATE GOVERNANCE HIGHLIGHTS JEAN M. HALLORAN
Age: 67
| Keysight Committees:
| Public Directorships:
|
Director Since:
| •
| Nominating and Corporate Governance
| •
| None.
|
October 2014
| •
| Compensation
| | |
| | | Former Public Directorships Held During the Past Five Years:
|
| | | •
| Adaptive Insights, Inc.
|
Ms. Halloran served as Senior Vice President of Human Resources for Agilent Technologies from August 1999 through October 2014. She directed all aspects of Agilent’s talent and rewards management, leadership development and culture. Ms. Halloran has extensive experience in Human Resources, extending back to when she joined Hewlett Packard’s Medical Products Group in 1980. Within that group, she held various positions in Manufacturing, Quality and Strategic Planning as well as Human Resources. In 1993, Ms. Halloran headed Human Resources for HP’s Measurement Systems Organization and, in 1997, was appointed Director of Education for the company. Ms. Halloran received her BA from Princeton University and an MBA from Harvard University. Ms. Halloran has served as a director of several schools and non-profit organizations. Ms. Halloran has in-depth knowledge of Keysight and its businesses, having been a leader at Keysight’s predecessors, Agilent and HP, for over 30 years. Over the course of her career, she developed considerable expertise in Keysight’s businesses, policies and practices. This perspective provides valuable insight on the Keysight Board.
JOANNE B. OLSEN
Age: 60
| Keysight Committees:
| Public Directorships:
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Director Since:
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| Nominating and Corporate Governance
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| Ciena Corporation
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May 2019
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| Compensation
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| Teradata Corporation
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| | | Former Public Directorships Held During the Past Five Years:
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| None
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Ms. Olsen has served as a director of Keysight since May 2019. Ms. Olsen also serves on the Board of Directors of Ciena Corporation (NYSE: CIEN) and Teradata Corporation (NYSE: TDC). Ms. Olsen most recently served as Executive Vice President of Oracle Global Cloud Services and Support until her retirement in 2017. She previously served as Senior Vice President and leader of Oracle’s applications sales, alliances and consulting organizations in North America. Ms. Olsen began her career with IBM, where, over the course of more than three decades, she held a variety of executive management positions across sales, global financing and hardware. Ms. Olsen holds a B.A. in Mathematics and Economics from East Stroudsburg University of Pennsylvania. Ms. Olsen brings a strong combination of sales, support and product experience from numerous senior management positions and considerable public company director experience, making her a valuable addition to the Keysight Board.
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| Corporate Governance Matters | 8
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Corporate Governance Matters
Corporate Governance Highlights
The Board is committed to sound and effective governance practices that promote long-term stockholder value and strengthen Board and management accountability to our stockholders, customers and other stakeholders.stockholders. The following table highlights many of our key Fiscal Year 2021 governance practices.
practices, as of October 31, 2021.✔
| Eight• All of our nine directors other than our CEO are independent
| ✔
| Annual board self-assessment process
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✔
| •Lead Independent Director with clearly defined role
| ✔
| Majority voting and director resignation policy in uncontested director elections
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✔
| •Independent standing boardBoard committees
| ✔
| Annual evaluation of the Chief Executive Officer by independent directors
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✔
| •Regular meetings of our independent directors without management present
| ✔
| Strong focus on pay-for-performance
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✔
| Two• 30% of our nine directors are female (22%)female. 10% of directors are URM
• Average Board tenure of 5.3 years (as of end of Fiscal Year 2021)
• Annual evaluation of the CEO by independent directors
• Annual board self-assessment process | ✔
| | Stock ownership guidelines for executive officers and directors
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✔
| One of our nine directors is racially diverse (11%)
| ✔
| •Policies prohibiting hedging, short selling and pledging of our common stock for all employees and directors
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✔• Stock ownership guidelines for executive officers and directors
| Average• Risk oversight by Board tenure of 4 years (as of end of FY19)and Committees
| ✔• Procedures for stockholders to communicate directly with the Board
| Clawback policy• Annual advisory vote on executive compensation
• Periodic review of Committee charters and Corporate Governance Guidelines
• Compensation and Human Capital Committee oversight of human capital management matters | |
CORPORATE SOCIAL RESPONSIBILITY (CSR) Keysight’s CSR strategy is a three-pronged approach that: 1) supports efforts that help the planet and company thrive; 2) engages Keysight stakeholders and company values; and 3) utilizes a formal governance structure and management system. Supported by a framework of foundational pillars – each with supporting policies, programs, action plans, and accountability – this strategy provides an enterprise-wide structure with which Keysight CSR efforts are aligned and against which they are measured. Keysight’s progress is tracked and reported through our annual CSR report and related materials.
ETHICAL GOVERNANCE
Keysight is committed to conducting business in an ethically responsible manner, with strategic and operational policies, procedures, and values that support transparency, sustainability, and legal compliance. Keysight’s leadership team is responsible for placing ethics at the core of our operations, and all employees are expected to uphold these values in their daily work. We regularly evaluate our Standards
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of Business Conduct (“SBC”) and monitor emerging issues to confirm that our standards are appropriate to meet contemporary business challenges while adhering to Keysight’s core value of uncompromising integrity. As such, we have an Ethics Management System which was designed to ensure continuous improvement of the company’s ethics and compliance program, in support of Keysight’s commitment to transparency, sustainability, and legal compliance.
THE ENVIRONMENT
Keysight prioritizes natural resource conservation, greenhouse gas emissions reduction, waste minimization and pollution prevention, and partners with our suppliers and contractors to advance these objectives. To support our efforts in this regard, we have adopted innovative solutions for continual improvement in our operational and site management practices. Driven by our ISO 14001:2015-certified Environmental Management System and guided by international initiatives such as the United Nations Sustainable Development Goals and the Paris Agreement, Keysight has made it a priority to reduce the company’s environmental impact by committing to achieve net zero emissions in company operations by the end of Fiscal Year 2040, while providing solutions that support our customers’ goals and enable sustainability innovation. This approach and associated principles aid Keysight in achieving its CSR vision to build a better planet by accelerating innovation to connect and secure the world. Keysight’s approach to environmental sustainability, health and safety management is grounded in accountable governance and results tracking and is shaped and supported through commitments to international standards and partnerships.
RESPONSIBLE SOURCING
Keysight requires our suppliers to adhere to environmental and social responsibility principles aligned with those valued in our company. Keysight has strong partnerships with strategic suppliers to support mutual success and commitment to leadership in sustainable practices, technology and business operations. Keysight’s responsible sourcing program has been developed by benchmarking against external standards, including the Responsible Business Alliance Code of Conduct, the California Transparency in Supply Chains Act of 2010, the United Nations Guiding Principles on Business and Human Rights, ISO 14001:2015, and other industrial practices as specified in the Keysight Supplier Code of Conduct. By working with suppliers to support our sustainability policies and identify and mitigate supply risks, Keysight is able to maintain a leadership position in sustainable business practices.
OUR PEOPLE
Keysight values a diverse, inclusive, and respectful work environment where employees are provided challenging assignments, a safe environment, development opportunities, and competitive salaries. Employees are the driving force in carrying out our CSR vision. Through direction and oversight by the company’s leadership team, utilizing our Keysight Leadership Model (“KLM”) and supporting benefits, programs, policies, and communications, employees are given the tools for success across our CSR foundational pillars. The health and safety of employees is the highest priority throughout our continued COVID-19 response. In accordance with the Universal Declaration of Human Rights, we strive to support all Keysight employees with dignity and respect, including in our pandemic response efforts. We advocate for similar treatment of all workers worldwide. Keysight leverages its Labor Management System to validate the company’s global, systematic approach to driving continuous improvement in human rights and labor compliance.
COMMUNITIES
Keysight contributes to the communities where the company operates, participates in local and global volunteer efforts, and supports numerous charitable and educational organizations. Keysight’s worldwide community programs tangibly demonstrate our values and commitment to corporate citizenship, and directly support our social impact goals. The company’s engagement and investment in communities is set annually at the corporate and local site levels, and is focused on the areas of STEM education, women and underrepresented minorities in technology, health and human services, and environmental conservation. Philanthropic and charitable efforts revolve around our global Giving Program, which includes providing employees the opportunity to support a broad range of eligible nonprofit organizations. In Fiscal Year 2021, Keysight maintained volunteerism efforts where viable under health protocols.
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OUR SOLUTIONS
Keysight helps build a better planet through our end-to-end electronic measurement solutions that accelerate innovations to change lives, secure the world, and connect people across the globe. Keysight customers are leaders in technology, achieving breakthroughs that connect and secure the world. Keysight accelerates these breakthroughs by providing leading-edge design, test, manufacturing and optimization solutions to help build a better planet through purposeful technology applications in areas such as clean technology, social impact and wellness, and safety and security. Our highly reliable, long-lasting solutions are designed to be safe, to be compliant with applicable regulations, and to maximize the value of limited environmental resources. In addition, Keysight services complement our solution offerings, providing multiple options to extend product life up to 40 years of active service, which can help customers meet their CSR goals.
KEY IMPACT GOALS FOR FISCAL YEAR 2021
Keysight set the following key impact goals across environmental sustainability, social impact and ethical governance for Fiscal Year 2021. Goals were identified to align with short-, mid-, and long-term efforts and progress was made as noted below.
| | Value committed to strengthening communities | | | $250M | | | $315M+ | |
| | Students and future engineers engaged through STEM education | | | 75,000 | | | 145,000+ | |
| | Global New Hires are Women by the end of Fiscal Year 2021 | | | 35% | | | 34.4% | |
| | U.S. New Hires are URMs by the end of Fiscal Year 2021 | | | 45% | | | 46.4% | |
| | Material negative impacts to the income statement and institutional investment | | | ZERO | | | ZERO | |
| | Emissions in Company Operations | | | NET ZERO | |
We have a diverse, inclusive and respectful work environment, where employees are given challenging assignments, development opportunities, competitive salaries, and a safe workplace. As of October 31, 2021, we had approximately 14,300 employees worldwide representing more than 80 self-identified nationalities working across approximately 30 countries. Of those, 5,200 are located in North America, with approximately 5,000 of those being located in the U.S, 2,700 are located in Europe and 6,400 are located in Asia.
CULTURE, VALUES AND STANDARDS
Our core values and culture reflect a commitment to ethical business practices and outstanding corporate citizenship. We adhere to the tenets of the United Nations Guiding Principles on Business and Human Rights, the core International Labor Organization Conventions, and we are an Affiliate Member of the Responsible Business Alliance. We comply with the labor and employment laws of all countries in
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which we operate, prioritizing fair employment practices, labor compliance, nondiscrimination, and equal employment opportunity. Our Keysight Leadership Model (“KLM”) provides the framework for how we do business, enabling us to execute on our strategies with our customers, stockholders and employees while demonstrating our values of Speed and Courage, Uncompromising Integrity, High Performance, Social Responsibility and One Keysight.
We believe our culture is a competitive advantage as it fosters employee inclusion, engagement and innovation. We are committed to maintaining a work environment founded on respect for all in the workplace regardless of race, color, age, gender, sexual orientation, gender identity and expression, ethnicity, religion, disability, veteran status, national origin, or any protected class. Our Keysight Standards of Business Conduct (“SBC”) govern our dealings with our customers, competitors, suppliers, third-party partners, as well as with our fellow employees, and are readily available for review. Our employees are responsible for upholding the SBC, and SBC training is required annually for all our employees.
GOVERNANCE AND OVERSIGHT
The CAO is responsible for developing and executing the company’s human capital strategy. This includes directing Keysight's global policies and programs for leadership and talent development, compensation, benefits, staffing and workforce planning, human resources systems, education and organization development, workplace strategies, and ensuring effective and efficient internal company operations. The CAO is responsible for developing and integrating the company’s diversity, equity and inclusion (“DEI”) priorities and strategy.
The CEO and CAO regularly update our Board of Directors and the Compensation and Human Capital Committee on human capital matters. In addition, in this past year the Board of Directors changed the name of the Committee from the Compensation Committee to the Compensation and Human Capital Committee and revised the Committee Charter to reflect the Committee’s increased oversight responsibility for Human Capital Management.
HIRING, RETENTION AND SUCCESSION PLANNING
As an engineering company, we understand that Science, Technology, Engineering and Math (STEM) education in our schools is critical to creating a pipeline of future engineers. We support STEM education through a variety of company-sponsored and employee-led programs such as “Introduce a Girl to Engineering” and “Expand Your Horizons” which introduce school-age students to engineering.
Our talent acquisition and human resources teams work with business leaders to understand and align on business goals and strategies and how they impact our talent needs. The teams use this information to inform recruiting efforts and to build talent pipelines to support growth. In partnership with the marketing team, we believe we have built a strong company brand utilizing multiple communication platforms, social media, and online job boards to highlight Keysight culture, our achievements, business and overall mission, all to better enable us to attract top talent.
We are continuously refining and expanding our talent acquisition strategies and processes, from interviewing to onboarding. As part of our talent acquisition strategy, we provide training to recruiters and hiring managers to assist them in recruiting and hiring top talent. “Developing Job Descriptions & Marketing Job Openings Inclusively” and “SELECT – The Neuroscience of Better Hiring” are two examples of the courses available to recruiters and hiring managers. Through our global end-to-end onboarding project, we have created a smooth and simple onboarding experience for our new hires. We had a global job acceptance rate of 86.3% in fiscal year 2021, and we have more than doubled the number of our software engineers since 2014.
Our business leaders have developed workforce management plans that enable us to re-allocate resources where needed to balance attrition, retirements, and source new capabilities. On an annual basis, our business leaders are required to evaluate employee contributions to the company and to identify key contributors, as well as those in need of improvement. Our annual rewards process provides each employee with feedback on their performance over the past fiscal year and rewards achievement.
Working with Human Resources, business leaders develop retention strategies and initiatives to minimize attrition and keep critical talent focused and engaged. The average tenure of our employees is 12.7 years. Our three-year average employee turnover rate was approximately 6.2%, which has been lower than the industry average for the past five years.
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Through succession planning and leadership development, we are developing our leadership bench. We have identified core competencies for our leadership positions along with a learning and development framework that can help leaders refine those skills. The executive team is involved in creating, reviewing and revising the company succession plans. Succession planning sessions are conducted annually in each business and at many levels in the organization. These reviews provide visibility to the overall leadership bench, potential gaps, top talent and development plans.
Globally, 4.0% of our employee population is likely ready to retire in the near term. In the U.S. and Japan, 27.1% and 15.7% of our employees are eligible, respectively. We recognize that many of these employees have invaluable skills and historical information and that knowledge transfer is critical. As part of our knowledge transfer practices, we utilize a combination of work shadowing, paired work, coaching, documenting workflows, and cross-training. In the U.S., we have a program specifically designed to enable retirement ready critical talent to gradually reduce hours, giving us time to transfer critical information and processes. Once retired, these former employees are also given the opportunity to consult with us on a limited basis to provide on-going mentoring and training.
DIVERSITY AND EQUAL EMPLOYMENT
We are an equal opportunity employer, and we are committed to maintaining a diverse and inclusive work environment that is free from harassment and discrimination. Our commitment to DEI helps us attract and retain the best talent and drives high performance through innovation and collaboration. Diversity is a competitive advantage, and we strive to maintain a best-in-class work environment that fosters respect for individuals, their ideas and contributions. We benefit from the innovation that results when people with differing experiences, perspectives and cultures work together.
DEI are among our CEO’s top priorities, with clearly outlined near-term actions to accelerate progress specifically for URMs in addition to our broader DEI initiatives. We have a Senior Director of Diversity and Inclusion who is responsible for driving implementation of new and ongoing initiatives to continue to foster a diverse and inclusive environment.
Our staffing policies underscore our commitment to diversity, ethics, integrity and compliance. In order to increase the pool of diverse candidates for open positions, we participate in diversity-focused career fairs and conferences in the U.S., Asia and Europe. We identify diversity recruiting business champions to develop business specific talent acquisition plans, and we have partnerships with universities worldwide that are aligned with our strategic talent needs, including Historically Black Colleges and Universities in the United States.
We seek to create an environment where employees can be successful and provide mentoring programs, inclusive benefits, support for employee network groups, and training for every stage employment.
As of October 31, 2021, women represented 30.3% of our global workforce and URMs represented 35.5% of the U.S. workforce. Women in leadership positions (Officer, Senior Vice President, Vice President, Senior Manager, Integrating Manager, Operating Manager and Supervisor) globally were 23.4% and URMs were 31.4%. At the senior executive level (Officer, Senior Vice President, Vice President), 18.2% were women and 21.6% were URMs. Our Board has ten members, three of whom are women, and one is a self-identified underrepresented minority.
We established annual hiring goals to improve our workforce diversity and our competitive advantage. In Fiscal Year 2021, 34.4% of our global external new hires were women, falling just short of our fiscal year 2021 goal of 35.0% while 46.4% of our external U.S. new hires were URMs, exceeding the 45.0% goal. Our Fiscal Year 2022 hiring goal is intended to show improvement with an increase to 35.4% global external new hires being women and 47.4% of external new hires in the U.S. being URMs. To measure achievement of this goal, we are using the California Assembly Bill 979 definition of underrepresented minorities, which includes Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, Alaska Native, or gay, lesbian, bisexual, or transgender. We have included a similar metric in our executive short-term incentive program for Fiscal Year 2022.
LEARNING AND DEVELOPMENT
We believe that learning is a lifelong pursuit that creates a mindset of professional growth and continuous improvement. We emphasize experimentation, on the job learning through stretch assignments, development opportunities, and education. Our employees have access to a wide range of programs, workshops, classes and resources to help them excel in their careers and share what they know with
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others. Our Keysight University platform offers training and development programs, as well as learning resources. Our Employee Educational Assistance Program provides financial and management support to eligible employees, allowing them to pursue academic degrees related to their field of work. Employees are eligible for tuition reimbursement programs and distance learning degree programs with major universities.
Many of our employees are required to take annual training courses related to their work, including those pertaining to the environment, data privacy, and workplace health and safety. We also have leadership development programs available to employees, including the New Manager Training Program, Manager’s Boot Camp, and Executive Online Development Program.
We hold an annual Keysight Executive Development (“KED”) program with senior leaders to align on strategy and key focus areas for the Company. These recorded sessions and the calls to action are then cascaded down to all Keysight employees. Our KLM was rolled out at one such program and over 11,500 Keysight employees have completed KLM training.
In addition, we expect all of our managers to complete the Yale University Fostering Inclusion & Diversity program by the end of Fiscal Year 2022.
COMPENSATION AND BENEFITS
We compensate employees with competitive wages and benefit programs designed to meet employee needs. Our compensation and benefit programs are designed to recognize our employees' contributions to value creation and business results. These programs include competitive base salaries and variable pay, which reward company and individual performance; share-based equity award grants; health and welfare benefits; time-off; development programs and training; and opportunities to give back to our communities through donations of time and money. We seek to ensure pay parity across our organization, and in Fiscal Year 2021 we achieved a worldwide, men to women, salary ratio of nearly 1:1. We monitor our benefits programs to ensure they meet the health and welfare needs of our employees; for example, in Fiscal Year 2021 we expanded our welfare programs to provide benefit advocacy and care coordination assistance.
LISTENING TO EMPLOYEES
We provide multiple avenues for employee input to be heard. Our Open-Door Policy provides employees with direct access to any level of management to discuss ideas, get input on career development and discuss concerns in a constructive manner.
Our MyVoice program fosters inclusion through engagement surveys on a variety of topics that gives us insight into what employees’ value and helps us identify where to prioritize our efforts. We also created a global Inclusion Council comprised of employees from all functions and around the world to help formulate our goals and track our progress.
HEALTH, SAFETY AND WELLNESS
We strive to maintain a best-in-class work environment and provide a safe and healthy workplace for all employees. We accomplish this through strict compliance with applicable laws and regulations regarding workplace safety, including recognition and control of workplace hazards, tracking injury and illness rates, utilizing a global travel health program, and maintaining robust emergency and disaster recovery plans. We promote the health and wellness of our employees through our Employee Well Being programs and workplace accessibility and accommodations.
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CONTINUED RESPONSE TO COVID-19 In Fiscal Year 2021 we continued to navigate through the COVID-19 pandemic, operating in accordance with our three guiding principles – keep employees and their families safe and healthy, keep Keysight strong, and support our local communities. Our actions in response to the pandemic have been guided by these principles and as such we implemented the following over the past year.
| | • | | | Held vaccination clinics for employees, their family members, and customers in select global locations | |
| | • | | | Provided financial assistance to employees in hard hit countries to help offset the cost of medical care and hospitalization | |
| | • | | | Instituted a vaccine mandate for all employees located in the U.S. with limited exceptions for those with approved medical or religious accommodations | |
| | • | | | Developed a Company sponsored employee podcast to help create connections and start conversations about thriving at Keysight during the pandemic | |
| | • | | | Maintained a comprehensive COVID-19 employee website as a resource for education, assistance programs, vaccine requirements, travel restrictions, and benefits including ergonomic and wellness information | |
| | • | | | Workers whose jobs permitted them to work from home continued to do so and we reimbursed reasonable and necessary work from home expenses | |
| | • | | | Maintained appropriate safety protocols for employees, contractors and visitors to sites, including masking, physical distancing and enhanced cleaning | |
| | • | | | Provided free personal protective equipment to employees where needed | |
In addition to employee-focused COVID-19 recovery efforts, we remained committed to supporting customers and communities in need throughout Fiscal year 2021. By maintaining business continuity and meeting the needs of customers, we were able to preserve our business resilience to keep Keysight strong while helping customer make progress in the fight against the pandemic. Keysight solutions and services have assisted medical equipment providers and their suppliers increase the production of ventilators and parts and have enabled universities to develop new technologies to fight COVID-19 leveraging Keysight products and solutions.
Keysight offices around the world directly engaged with their community leaders to assist in local pandemic related response efforts. In one particularly high-impacted area, local Keysight leaders helped develop and facilitate community-based testing facilities, vaccination programs, and oxygen generation plants.
The Keysight Foundation donates to local non-profit organizations to assist with relief efforts. We donate funds and equipment (including personal protective equipment and janitorial supplies) to charitable relief, healthcare and emergency responder organizations around the world in support of the local communities where we do business.
In Fiscal Year 2021, we developed plans to fully return our employees to our facilities worldwide, but the prevalence of emerging virus variants delayed implementation of these plans. As the pandemic evolves, we will continue to adjust our response and make plans which are aligned with the principles that have guided us throughout the pandemic.
Information security is an important priority for Keysight. Our Borderless Information Security Program applies an enterprise-wide, risk-based approach to information security that has foundations in industry standards and best practices. Our information security operations and procedures provide a comprehensive Information Security Management System (“ISMS”) that enable us to maintain the confidentiality, integrity, and availability of information and systems in our environment.
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BORDERLESS INFORMATION SECURITY PROGRAM
The Borderless Information Security Program is focused on the following priorities:
Risk Management and Compliance – We have worldwide operations and are subject to and comply with laws and regulatory requirements wherever we conduct business. Using our enterprise-wide risk management programs and Information Security Review process we assess, document, monitor and report information security risks. Using this information, we evaluate the likelihood and impact of harmful events and deliver recommendations regarding a response to risks presented.
Training and Awareness – Keysight requires all employees to take annual security awareness training which includes training on information security. We regularly deploy enterprise-wide phishing simulation tests with mandatory follow-up training and education as needed. Our information security policies are based on NIST SP 800-171 and apply enterprise-wide. They are reviewed at least annually and are updated as needed. Additionally, we provide an easy mechanism for employees to report suspicious email messages to the information security team for additional investigation.
Security Tools Optimization – We utilize a variety of tools to protect our network and systems, including firewalls, intrusion detection and prevention systems, web content filtering protection, anti-virus and malware detection tools, system scans and full disk encryption. We use Security Information and Event Management (“SIEM”) to process logs and events. The SIEM correlates input from across the Keysight network and creates alerts when suspicious behavior is detected.
Third Party Risk—Third party access to Keysight networks is catalogued and reviewed. Third parties are only granted access required to carry out their work. Our Internal Audit organization performs independent audits to help identify potential control weaknesses, compliance concerns or operational inefficiencies in our processes.
Data Protection and Asset Management – We maintain an up-to-date inventory of assets with access to our networks and encrypt mobile devices and control configurations of those devices. We use a database activity monitoring tool to identify and report fraudulent or suspicious activity. We have documented disaster recovery plans and processes which are regularly reviewed and tested.
Security Operations – We have multiple processes in place for detection and response to potential attacks, breaches or disruptions, including the Security Operations Center which is a dedicated, in-house, 24x7 monitoring and response center.
GOVERNANCE AND OVERSIGHT
Keysight has a dedicated Chief Information Security Officer (“CISO”) who is responsible for the ISMS, including the legal, physical, and technical controls associated with that system. The CISO and reports directly to the Company’s Chief Information Officer (“CIO”). The CIO is the head of the Company’s global information technology (“IT”) team which has an integrated governance structure consisting of a Senior Executive Committee, a Cyber Executive Committee and Cyber Leaders. The Senior Executive Committee prioritizes the information technology components of strategic business imperatives and oversees IT capability and security programs.
The Cyber Executive Committee reviews identified risks, sponsors initiatives to address risk and oversees security and compliance responses. Cyber leaders are management representatives from all functions and lines of business who are responsible for executing on programs and initiatives sponsored by the Executive Committee.
The Audit and Finance Committee, which is comprised entirely of independent directors with information security experience, oversees and monitors the Company’s information security programs. The CIO meets with the Audit and Finance Committee regularly to report on risks, mitigation, initiatives, compliance and outcomes and the Audit and Finance Committee reports relevant information to the full Board.
AUDIT AND SCORING
We engage with approved third-party companies that audit our regulatory compliance, validate control performance, perform penetration testing and provide impartial risk assessments. Additionally, our information security programs are monitored by Bitsight and Security Scorecard, leading cybersecurity ratings agencies, that continuously monitor and provide security report cards for all companies with an internet presence. We are proud that our Bitsight rating puts us in the “Advanced” category, and effective January 5, 2022 Security Scorecard gave us an “A” rating. There have been no information security breaches in Fiscal Years 2019, 2020, or 2021.
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INFORMATION SECURITY RISK INSURANCE
Keysight maintains information security risk insurance to offset the costs of an information security breach. The policy is reviewed annually and updated as needed.
CORPORATE GOVERNANCE GUIDELINES The Board has adopted a set of Corporate Governance Guidelines to assist it in guiding
Keysight’sour governance practices. We have reviewed internally, and
with the Board
has reviewed, the provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), the rules of the SEC, and the
NYSE’sNew York Stock Exchange (“NYSE”) corporate governance listing standards regarding corporate governance policies and processes and
we have determined that we are in compliance with the applicable rules and listing standards. These practices are regularly reevaluated by the Nominating and Corporate Governance Committee in light of changing circumstances to ensure that the best interests of
the CompanyKeysight and its stockholders are being served. A copy of our Corporate Governance Guidelines is located in the Investor Relations section of our website and can be accessed by clicking on “Governance Policies” in the “Corporate Governance” section of our web page at
http://investor.keysight.com.
Communicating with the BoardCOMMUNICATING WITH THE BOARD
Stockholders and other interested parties may communicate with the Board and Keysight’s ChairmanChair of the Board by filling out the form at “Contact the Chairman”Chair” under “Corporate Governance” at http://investor.keysight.com or by writing to Ronald S. Nersesian, c/o Keysight Technologies, Inc., General Counsel, 1400 Fountaingrove Parkway, Santa Rosa, CA 95403. TheOur General Counsel will perform a legal review in the normal discharge of his duties to ensure that communications forwarded to the ChairmanChair of the Board preserve the integrity of the process. For example, items that are unrelated to the duties and responsibilities of the Board such as spam, junk mail and mass mailings, product complaints, personal employee complaints, product inquiries, new product suggestions, resumes and other forms of job inquiries, surveys, business solicitations or advertisements (“Unrelated Items”) will not be forwarded to the Chairman of the Board. In addition, unrelated items include material that is unduly hostile, threatening, illegal or similarly unsuitable, and will not be forwarded to the Chairman of the Board. Any communication that is relevant to the conduct of Keysight’sour business and is not forwarded will be retained for one year (other than Unrelated Items)a reasonable period of time or for as long as legally required and made available to the ChairmanChair of the Board and any other independent director upon request. The independent directors grant the General Counsel discretion to decide which correspondence will be shared with Keysight’sour management and specifically instruct that any personal employee complaints be forwarded to Keysight’sthe Human Resources Department.
STOCKHOLDER COMMUNICATION We recognize the importance of regular and transparent communication with our stockholders. Stockholder communication is essential to our ongoing review of our corporate governance and executive compensation programs and practices. This year, we reached out to stockholders representing over 32% of our outstanding shares and invited them to meet with our General Counsel and Corporate Secretary, our CAO, and our Director of Investor Relations to discuss our environmental, social and governance activities as well as other topics of interest to them. We had an overwhelmingly positive response to the invitation and met with stockholders representing over 28% of our outstanding shares. In those meetings, we discussed our ongoing efforts related to DEI, our commitment to the environment and corporate governance and we listened to their perspective on issues of importance to them.
While each of our stockholders had their own perspectives on issues of importance to them, three themes were common across our discussions. Stockholders want to see increased diversity on our Board, increased transparency regarding our diversity efforts with our employees, and they want us to phase out our classified Board structure. We listened carefully to this input and discussed and it with our Board and our executives.
Efforts to increase diversity on our Board have been underway for several years and are continuing. In Fiscal Year 2021, we added Michelle Holthaus to our Board, increasing the number of women on the Board to three. We will continue our efforts to attract women and URM Board candidates by expanding both our recruiting efforts and the criteria for selection.
Additionally, we recently published the Company’s EEO-1 report which can be found on http://www.keysight.com/go/EEO-1. Further, Proposal 4 in this Proxy Statement is a management proposal to amend Keysight’s Amended and Restated Certificate of Incorporation to phase out the classification of our Board over a three-year period such that, if approved, beginning with the election of directors at the 2025 Annual Meeting of Stockholders, all directors would then be elected annually for one-year terms.
TABLE OF CONTENTSDirector Qualification Standards
Keysight’s
| | Common Themes | | | Our Response | |
| | • Board Diversity | | | • Continued work to expand the Board | |
| | • EEO-1 Disclosure | | | • Disclosure of our EEO-1 report | |
| | • Classified Board | | | • Management Proposal to Declassify Board | |
We also communicate with stockholders through a number of routine forums, including quarterly earnings presentations, SEC filings, our Annual Report and Proxy Statement, the Annual Meeting, and investor meetings, conferences and web communications. We relay stockholder feedback and trends on corporate governance and sustainability developments to our Board and its standing Committees and work with them to enhance our practices and improve our disclosures.
DIRECTOR NOMINATION AND APPOINTMENT PROCESS The Nominating and Corporate Governance Guidelines provideCommittee proposes a slate of directors for election by Keysight’s stockholders at each annual meeting and recommends to the Board candidates to fill any vacancies on the Board.
The Nominating and Corporate Governance Committee will consider director candidates recommended for nomination by stockholders, provided that the recommendations are made in accordance with the procedures described in the section entitled “General Information about the Meeting” located at the end of this Proxy Statement. Candidates recommended for nomination by stockholders that comply with these procedures will receive the same consideration as other candidates recommended by the Nominating and Corporate Governance Committee.
We hire third-party executive search firms to help identify and facilitate the screening and interview process for director candidates. To be considered by the Nominating and Corporate Governance Committee, is responsiblewe look for reviewing with Keysight’s Board the appropriate skills and characteristics required of Board members in the context of the makeup of the Board and developing criteriadirector nominees who have:
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The process that this Committee uses to identify a nominee to serve as a member of the Board depends on the qualities being sought. From time to time, Keysight may engage an executive search firm to assist the Nominating and Corporate Governance Committee in identifying individuals qualified to be Board members. The Nominating and Corporate Governance Committee considers the knowledge, experience, diversity and personal and professional integrity and ethics;
Soundness of potential directors, as well as theirjudgment;
The ability to make independent, analytical inquiries;
The willingness and ability to devote the time necessaryrequired to effectively carry outperform Board activities adequately;
The ability to represent the dutiestotal corporate interests of Keysight; and responsibilities
The ability to represent the long-term interests of stockholders as a whole.
In an effort to increase the diversity of our Board, membership. When seeking new directorwe recently expanded our Board search criteria to include not only CEO public board experience, but executive or high-level management experience as well. Although we have not formally adopted a Rooney Rule, we consciously include diverse candidates in our Board selection process. In addition to these minimum requirements, the Nominating and Corporate Governance Committee will also consider potentialwhether the candidate’s skills are complementary to the existing Board members’ skills and experience in technology, manufacturing, finance and marketing, information security, human capital management, international experience and culture; and the Board’s needs for specific operational, management or other expertise. The executive search firm screens the candidates, does reference checks, prepares a biography for directors submitted by our stockholders.each candidate for the Nominating and Corporate Governance Committee to review and helps set up interviews. The Nominating and Corporate Governance Committee does not evaluateand Keysight’s CEO interview candidates differently based uponthat meet the source of the nominee. The Nominatingcriteria, and Corporate Governance Committee may reevaluate the relevant criteria for Board membership from time to time in response to changing business factors or regulatory requirements. The Board is responsible for selecting candidates for election as directors based on the recommendation of the Nominating and Corporate Governance Committee.Committee selects candidates that best suit the Board’s needs. We do not use a third party to evaluate current Board members. In the past year, we added Michelle J. Holthaus to the Board.
TABLE OF CONTENTSBoard Leadership Structure
BOARD LEADERSHIP STRUCTURE In Fiscal Year 2021, ending on October 31, 2021, Keysight’s Board
consistsconsisted of
nineten directors,
eightnine of which are independent. Mr. Nersesian, who serves as Keysight’s President and
Chief Executive Officer,CEO, was unanimously elected
ChairmanChair of the Board effective November 1, 2019. Mr. Clark, who served as Keysight’s
ChairmanChair of the Board from 2014 through October 2019
is the Lead Independent Director. The responsibilities ofwas the Lead Independent Director
include reviewing and coordinating the agenda for Board meetings in consultation with the Chairman; liaising between the Chairman and the independent directors; presiding over meetings of independent directors at which the Chairman is not present; in conjunction with the Compensation Committee, evaluating the performanceuntil his retirement on December 1, 2021. The duties of the
Chief Executive Officer and reviewing Chief Executive Officer compensation; guiding the Board’s annual self-assessment process; and leadingChair of the Board,
Lead Independent Director and CEO are set forth in
periodic reviews of senior management succession planning.the table below:
| | • Presides over meetings of the Board
• Presides over meetings of stockholders
• Prepares the agenda for each Board meeting
• Prepares the agenda for each stockholder meeting | | | • Presides over meetings of independent directors at which the Chair is not present
• In conjunction with the Compensation and Human Capital Committee, evaluates the performance of the CEO and reviews CEO compensation
• Guides the Board’s annual self- assessment process and leads the Board in periodic reviews of senior management succession planning
• Reviews and coordinates the agenda for Board meetings in consultation with the Chair
• Acts as liaison between the Chair and the independent directors | | | • Manages the day-to-day affairs of Keysight, subject to the overall direction and supervision of the Board and its committees
• Consults with and advises the Board and its committees on the business and affairs of Keysight
• Performs such other duties as may be assigned by the Board | |
The Board believes that combining the positions of Chief Executive OfficerCEO and ChairmanChair of the Board will provideprovides greater coordination between the Board and management on strategies for growth and value creation. The Board also believes that havingIn addition, the Chief Executive Officer serve as ChairmanBoard’s appointment of the Board, together with an experienced and engaged Lead Independent Director isto work with the Chair of the Board and CEO provided the balanced and appropriate leadership structure for Keysight at this time.during Fiscal Year 2021.
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BOARD’S ROLE IN RISK OVERSIGHT The Board’s
Rolerole in
Risk OversightTherisk oversight is consistent with Keysight’s leadership structure, with management having day-to-day responsibility for identifying, evaluating and managing Keysight’s risk exposure and the Board executes its risk management responsibility directly and through its Committees. The Audit and Finance Committee has primaryhaving the ultimate responsibility for overseeing Keysight’s enterprise risk management process. The Audit and Finance Committee receives updates and discusses individual and overall risk areas during its meetings, includinggovernance with a focus on Keysight’s financial risk assessments, risk management policies and major financial risk exposures and the steps management has taken to monitor and control such exposures. The Compensation Committee oversees risks associated with Keysight’s compensation policies and practices with respect to both executive compensation and compensation generally. The Compensation Committee receives reports and discusses whether Keysight’s compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company.
most significant risks. The Board is kept abreastassisted in meeting this responsibility by its committees as described below.
| | • | Regularly reviews the strategic plans of Keysight and each of its operating segments | |
| | • | Reviews specific risk topics, including risks associated with our capital structure, growth plans and client relationships | |
| | • | Receives regular written reports on enterprise-level risks, including the risks presented by the continued COVID-19 pandemic | |
| | • | Receives regular reports from each of the Board’s committees on their areas of risk oversight | |
| | • | At least annually, reviews Keysight’s succession plan to ensure Keysight maintains an appropriate succession plan for its senior management | |
| | • | Reviews internal controls and Keysight’s financial statements with the Chief Financial Officer, Corporate Controller and the external and internal auditors | |
| | • | Oversees risks relating to key accounting and reporting policies | |
| | • | Receives regular reports from Keysight’s Vice President of Internal Audit regarding enterprise risk management and compliance | |
| | • | Receives quarterly legal and regulatory updates from Keysight’s General Counsel | |
| | • | Meets regularly with the external independent auditors, Chief Financial Officer, General Counsel and internal auditors in executive session | |
| | • | Oversees compliance policies (including the Standards of Business Conduct and Director Code of Ethics) and program, compliance statistics and investigations, trainings, certifications, and relevant legal developments | |
| | • | Receives regular reports from Keysight’s Chief Information Officer regarding Information security risks and prevention plans | |
| | • | Oversees risks associated with our compensation policies and practices with respect to both executive compensation and compensation generally | |
| | • | Employs an independent compensation consultant to assist in designing and reviewing compensation programs, including the potential risks created by the programs | |
| | • | Oversees enterprise-wide Human Capital Management risks, including providing input to the Board on succession planning | |
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| | • | Oversees risks relating to Keysight’s governance structure and other corporate governance matters and processes | |
| | • | Evaluates related person transactions and any risks associated therewith | |
| | • | Oversees compliance with key corporate governance policies, including the Corporate Governance Guidelines | |
| | • | Identifies and makes recommendations regarding director nominees to the Board | |
THE BOARD’S ROLE IN ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) OVERSIGHT
Our ESG progress is overseen by our Board and its committees. Members of
its Committees’ risk oversightmanagement representing Environmental Health and
other activities via reports ofSafety, Human Resources, Information Security, and Legal are responsible for reviewing and assessing significant ESG risks that could impact the
Committee chairpersons toCompany. Management regularly briefs the
full Board during Board meetings.We have adopted charters of our Compensation Committee, Auditboard and Finance Committee, Nominatingthe relevant committees on ESG topics and Corporate Governance Committee and Executive Committee consistent with the applicable rules and standards. Our Committee charters are located in the Investor Relations Section of our website and can be accessed by clinking on “Governance Policies” in the “Corporate Governance” section of our web page at http://investor.keysight.com.
Company’s strategy for addressing those issues.
| | • | Reviews the Company’s ESG strategy to ensure alignment with the Company’s long-term value creation strategies | |
| | • | Reviews and monitors compliance with environmental laws and regulations | |
| | • | Evaluates environmental risks, opportunities strategies and long- and short-term goals and monitors the financial impact on the Company | |
| | • | Reviews and evaluates risks and opportunities related to information security | |
| | • | Oversees Company culture including diversity, equity and inclusion initiatives | |
| | • | Establishes and measures achievement of ESG metrics in executive compensation programs | |
| | • | Monitors pay equity, sets compensation philosophy and oversees executive compensation programs | |
| | • | Periodically evaluates the skills and qualifications of current directors | |
| | • | Assists the Board in establishing a pool of director candidates and evaluates their qualifications | |
| | • | Periodically reviews corporate governance practices and makes recommendations for changes to the Board | |
Majority Voting for DirectorsMAJORITY VOTING FOR DIRECTORS
Our Bylaws provide for majority voting of directorsby stockholders regarding director elections. In an uncontested election, any nominee for director shall be elected by the vote of a majority of the votes cast with respect to the director. A “majority of the votes cast” means that the number of shares voted “FOR”FOR a director must exceed 50% of the votes cast with respect to that director. The “votes”votes cast with respect to that director shall
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include votes to withhold authority and exclude votes to
“ABSTAIN”ABSTAIN with respect to that director’s election. If a director is not elected due to a failure to receive a majority of the votes cast and his or her successor is not otherwise elected and qualified, the director shall promptly tender his or her resignation following certification of the stockholder vote.
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The Nominating and Corporate Governance Committee will consider the tendered resignation and recommend to the Board whether to accept or reject it, or whether other action should be taken. The Board will act on the Nominating and Corporate Governance Committee’s recommendation within 90 days following certification of the stockholder vote. Thereafter the Board will promptly disclose their decision and the rationale behind it in a press release to be disseminated in the same manner as Company press releases typically are distributed.release. Any director who tenders his or her resignation pursuant to this provision shall not participate in the Nominating and Corporate Governance Committee recommendation or Board action regarding whether to accept the resignation offer.
Policies on Business EthicsKeysight hasPOLICIES ON BUSINESS ETHICS
We have adopted
a Standards of Business Conductthe SBC that requires all
itsof our business activities to be conducted in compliance with laws, regulations and ethical principles and values. All officers and employees
of Keysight are required to read, understand and abide by the requirements of the
Standards of Business Conduct. Keysight hasSBC and must take annual SBC training. We have also adopted a Director Code of Ethics applicable to Keysight’s directors.
These documents are accessible on
the Company’sKeysight’s website at
http://investor.keysight.com.investor.keysight.com under “Governance Policies.” Any waiver of these codes for directors or executive officers may be made only by the Audit and Finance Committee.
KeysightWe will disclose any amendment to, or waiver from, a provision of the
Standards of Business ConductSBC for the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on
the Company’sour website within four business days following the date of the amendment or waiver. In addition,
Keysightwe will disclose any waiver from these codes for the other executive officers and for directors on the website.
Director IndependenceDIRECTOR INDEPENDENCE
The majority of
Keysight’sour Board is “independent” as defined by the rules of the NYSE and the Corporate Governance Guidelines adopted by the Board.
TheFor Fiscal Year 2021, the Board
has affirmatively determined that Paul N. Clark, James G. Cullen, Charles J. Dockendorff,
Jean M. Halloran, Richard P. Hamada,
Michelle J. Holthaus, Paul A. Lacouture,
Jean M. Nye, Joanne B. Olsen, and Robert A. Rango
arewere independent. The criteria adopted by
Keysight’sthe Board to assist it in making determinations regarding the independence of its members are consistent with the NYSE listing standards regarding director independence. To be considered independent, the Board has to determine that a director does not have a material relationship with Keysight or its subsidiaries (either directly or as a partner, stockholder or officer of an organization that has a relationship with Keysight or its subsidiaries). In assessing independence, the Board considers all relevant facts and circumstances. In particular, when assessing the materiality of a director’s relationship with Keysight or its subsidiaries, the Board considers the issue not just from the standpoint of the director, but also from that of the persons or organizations with which the director has an affiliation.
Keysight’s
Annually, the Board assesses
on a regular basis, and at least annually, the independence of directors and based on the recommendation of the Nominating and Corporate Governance Committee, makes a determination as to which members are independent.
Audit and Finance Committee Member Independence
Keysight has
AUDIT AND FINANCE COMMITTEE MEMBER INDEPENDENCE
We have adopted standards for Audit and Finance Committee member independence in compliance with the Securities and Exchange Commission (the “SEC”)SEC and NYSE corporate governance listing standards. In affirmatively determining the independence of any director who will serve on the Audit and Finance Committee, the Board must consider all factors specifically relevant to determining whether such director has a relationship to Keysight or any of its subsidiaries which is material to such director’s ability to be independent from management in connection with the duties of an Audit and Finance Committee member, including, but not limited to:
theThe source of compensation of such director, including any consulting, advisory or other compensatory fee paid by Keysight to such director;
whetherWhether such director is affiliated with Keysight, a subsidiary of Keysight or an affiliate of a subsidiary of Keysight; and
whetherWhether such director serves on more than three reporting company audit committees.
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Charles Dockendorff currently serves on the audit committee of four public companies, including Keysight. The Board has considered whether such simultaneous service would impair his ability to effectively serve as the
chairpersonChair of
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Keysight’s Audit and Finance Committee. In its analysis, the Board considered the committee’sCommittee’s demanding roles and responsibilities and the time commitment required by such service. The Board also considered the skills and expertise of Mr. Dockendorff, including his prior experience as a Chief Financial Officer of a number of public companies and the various commitments of his time. After careful consideration, the Board concluded that Mr. Dockendorff’s other audit committee service does not impair his ability to effectively fulfill his responsibilities to Keysight at thethis time and, therefore, the Board has specifically approved his continuation as chairpersonChair of Keysight’s Audit and Finance Committee.
The Board has also determined that each of the members of the Audit and Finance Committee is independent.
COMPENSATION AND HUMAN CAPITAL COMMITTEE MEMBER INDEPENDENCE
Compensation Committee Member Independence
Keysight has adopted standards for Compensation and Human Capital Committee member independence in compliance with the SEC and NYSE corporate governance listing standards. In affirmatively determining the independence of any director who will serve on the Compensation and Human Capital Committee, the Board must consider all factors specifically relevant to determining whether such director has a relationship to Keysight or any of its subsidiaries which is material to such director’s ability to be independent from management in connection with the duties of a Compensation and Human Capital Committee member, including, but not limited to:
theThe source of compensation of such director, including any consulting, advisory or other compensatory fee paid by Keysight to such director; and
whetherWhether such director is affiliated with Keysight, a subsidiary of Keysight or an affiliate of a subsidiary of Keysight.
The Board has determined that each of the members of the Compensation and Human Capital Committee is independent.
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COMMITTEES OF THE BOARD OF DIRECTORS
The Board has four standing Committees and their composition as of the end of
fiscal year 2019Fiscal Year 2021 was as set forth in the table below. The Board held
six6 meetings during
fiscal year 2019.Fiscal Year 2021. Each director attended at least 75%
of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by all
committeesCommittees of the Board on which each such director served, during the period for which each such director served. The members of the
committees, as of the date of this Proxy Statement,Committees and the number of Board and committee meetings during
fiscal 2019Fiscal Year 2021 are identified in the following table.
Director | Board | Audit and
Finance | Compensation | Nominating and
Corporate
Governance | Executive |
Paul N. Clark | CHAIR | ✔ | | CHAIR | CHAIR |
James G. Cullen | ✔ | | CHAIR | ✔ | |
Charles J. Dockendorff | ✔ | CHAIR | | ✔ | |
Jean M. Halloran | ✔ | | | | |
Richard P. Hamada | ✔ | | ✔ | ✔ | |
Paul A. Lacouture | ✔ | ✔ | | ✔ | |
Ronald S. Nersesian | ✔ | | | | ✔ |
Joanne B. Olsen | ✔ | | ✔ | ✔ | |
Robert A. Rango | ✔ | ✔ | | ✔ | |
Number of Meetings | 6 | 11 | 5 | 3 | — |
| | Paul N. Clark | | | • | | | • | | | | | | • | | | (C) | |
| | James G. Cullen | | | • | | | | | | (C) | | | | | | • | |
| | Charles J. Dockendorff | | | • | | | (C) | | | | | | | | | • | |
| | Richard P. Hamada | | | • | | | | | | • | | | | | | • | |
| | Michelle J. Holthaus | | | • | | | | | | | | | | | | • | |
| | Paul A. Lacouture | | | • | | | • | | | | | | | | | • | |
| | Ronald S. Nersesian | | | (C) | | | | | | | | | (C) | | | | |
| | Jean M. Nye | | | • | | | | | | • | | | | | | • | |
| | Joanne B. Olsen | | | • | | | | | | • | | | | | | • | |
| | Robert A. Rango | | | • | | | • | | | | | | | | | • | |
| | Number of Meetings in Fiscal Year 2020 | | | 6 | | | 11 | | | 4 | | | 0 | | | 5 | |
Keysight encourages, but does not require, its Board members to attend the annual stockholders meeting. In 2019, allAs a result of the COVID-19 pandemic, Keysight’s then-sitting directors attended the annual stockholders meeting.
Audit and Finance Committee
2021 Annual Meeting virtually.
RESPONSIBILITIES OF THE AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee is responsible for the oversight of the quality and integrity of Keysight’s consolidated financial statements, its compliance with legal and regulatory requirements, the qualifications and independence of its independent registered public accounting firm, the performance of its internal audit function and independent registered public accounting firm and other significant financial matters. In discharging its duties, the Audit and Finance Committee is expected to:
haveHave the sole authority to appoint, retain, compensate, oversee, evaluate and replace the independent registered public accounting firm;firm to perform audit and non-audit services;
reviewReview and approve the scope of the annual internal and external audits;
review and pre-approve the engagement of Keysight’s independent registered public accounting firm to perform audit and non-audit services and the related fees;
meetMeet independently with Keysight’s internal auditing staff, independent registered public accounting firm and senior management;
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Review the adequacy and effectiveness of the system of internal control over financial reporting and any significant changes in internal control over financial reporting;
reviewReview Keysight’s consolidated financial statements and disclosures including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’sKeysight’s periodic reports on Form 10-K or Form 10-Q;
establishEstablish and oversee procedures for (a) the receipt, retention and treatment of complaints received by the CompanyKeysight regarding accounting, internal accounting controls or auditing matters, and (b) the confidential anonymous submission by employees of the CompanyKeysight of concerns regarding questionable accounting or auditing matters;
monitorMonitor compliance with Keysight’s StandardsSBC;
Review and monitor the adequacy and effectiveness of Business Conduct;information security policies and programs; and
reviewReview disclosures from Keysight’s independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independence of accountant’s communications with the Audit and Finance Committee.
In accordance with section 407 of the Sarbanes-Oxley Act, of 2002, the Board has identified Charles J. Dockendorff as the Audit and Finance Committee’s “Financial Expert.Experts.”
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Compensation Committee
The Compensation and Human Capital Committee is responsible for compensation of Keysight’s CEO and other executive officers as well as Keysight’s compensation plans, policies and programs as they affect the CEO and other executive officers. In Fiscal Year 2021, the Compensation and Human Capital Committee’s Charter was expanded to include oversight of human capital management and input to the full Board on matters related to succession planning. In recognition of these expanded responsibilities, the Compensation Committee’s name was changed to the Compensation and Human Capital Committee. In addition, the Compensation and Human Capital Committee:
determinesDetermines the compensation and the corporate goals and objectives of the performance of the CEO and other executive officers;
reviewsReviews and evaluates the performance of the CEO and other executive officers;
supervisesSupervises and oversees the administration of Keysight’s incentive compensation, variable pay and stock programs, and arrangements, including the impact of such programs and arrangements on Company risk;
establishesEstablishes comparator peer group and compensation targets based on this peer group for the Company’s named executive officers;
review and assess, on an annual basis, the impact of the Company’s compensation programs and arrangements on Company risk;Keysight’s NEOs; and
hasHas sole authority to retain and terminate executive compensation consultants.
For more information on the responsibilities and activities of the Compensation and Human Capital Committee, including the Committee’s processes for determining executive compensation, see “Compensation Discussion and Analysis,” “Compensation and Human Capital Committee Report,” and “Executive Compensation,”Compensation” in this Proxy Statement and the Compensation and Human Capital Committee’s charter.
charter located under “Governance Policies” in the “Corporate Governance” section of our Investor Relations website at http://investor.keysight.com.
The Compensation and Human Capital Committee is aided by an independent compensation consultant, currently Frederic W. Cook & Co., Inc. (“F. W. Cook”), who is selected and retained by the Compensation and Human Capital Committee. The role of F. W. Cookthe compensation consultant is to advise the Compensation and Human Capital Committee on marketplace trends in executive compensation, management proposals for compensation programs, and executive officer compensation decisions. F. W. CookThe compensation consultant also evaluates compensation for non-employee directors and equity compensation programs generally. The firm consults withgenerally and advises the Compensation and Human Capital Committee about its recommendations to the Board on chief executive officerCEO compensation. To maintain the independence of the firm’s advice, F. W. Cookthe compensation consultant does not provide any services for Keysight other than those described above. These standards require thatOur Compensation and Human Capital Committee selected Meridian Compensation Partners LLC (“Meridian”) as its independent compensation consultant to provide advice and recommendations on Fiscal
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Year 2021 executive compensation matters. In the
process of selecting the independent compensation consultant, our Compensation and Human Capital Committee
annually assessconsidered Meridian’s independence by taking into account the
independence of its compensation consultant. In assessingfactors prescribed by the
consultant’s independence,NYSE listing rules. Based on this evaluation, the Compensation
and Human Capital Committee
considers all factors relevantdetermined that no conflict of interest existed with respect to
that person’s independence from management, including the rules of the NYSE. F. W. Cook annually prepares for the Committee an independence letter providing assurances and confirmation of the consultant’s independent status under the standards. The Committee believes that F. W. Cook has been independent during its service for the Compensation Committee.Nominating and Corporate Governance Committee
Meridian.
RESPONSIBILITIES OF THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee
proposes a slate of directorsis responsible for
electionassisting the Board by
Keysight’s stockholders at each annual meetingidentifying individuals qualified to become Board members, consistent with criteria approved by the Board, and
recommendsrecommending to the Board
candidatesthe director nominees for the next annual meeting of stockholders and the individuals to fill
any vacancies
on the Board.occurring between annual meetings of stockholders. It is also responsible for
reviewing management succession plans, recommending to the Board the appropriate Board size and Committee structure and developing and reviewing corporate governance principles applicable to Keysight.
The Nominating and Corporate Governance Committee will consider director candidates recommended for nomination by stockholders, provided that the recommendations are made in accordance with the procedures described in the section entitled “General Information about the Meeting” located at the end of this Proxy Statement. Candidates recommended for nomination by stockholders that comply with these procedures will receive the same consideration as other candidates recommended by the Nominating and Corporate Governance Committee.
Keysight typically hires a third-party executive search firm to help identify and facilitate the screening and interview process for director candidates. To be considered by the Nominating and Corporate Governance Committee, a director nominee must have:
a reputation for personal and professional integrity and ethics;
executive or similar policy-making experience in relevant business or technology areas or national prominence in an academic, government or other relevant field;
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breadth of experience;
soundness of judgment;
the ability to make independent, analytical inquiries;
the willingness and ability to devote the time required to perform Board activities adequately;
the ability to represent the total corporate interests of Keysight; and
the ability to represent the long-term interests of stockholders as a whole.
In addition to these minimum requirements, the Nominating and Corporate Governance Committee will also consider whether the candidate’s skills are complementary to the existing Board members’ skills; the diversity of the Board in factors such as age, race, gender, experience in technology, manufacturing, finance and marketing, international experience and culture; and the Board’s needs for specific operational, management or other expertise. The Nominating and Corporate Governance Committee from time to time reviews the appropriate skills and characteristics required of Board members, including factors that it seeks in Board members such as diversity of business experience, viewpoints and, personal background, and diversity of skills in technology, finance, marketing, international business, financial reporting and other areas that are expected to contribute to an effective Board. In evaluating potential candidates for the Board, the Nominating and Corporate Governance Committee considers these factors in the light of the specific needs of the Board at that time. The executive search firm screens the candidates, does reference checks, prepares a biography for each candidate for the Nominating and Corporate Governance Committee to review and helps set up interviews. The Nominating and Corporate Governance Committee and Keysight’s Chief Executive Officer interview candidates that meet the criteria, and the Nominating and Corporate Governance Committee selects candidates that best suit the Board’s needs. We do not use a third party to evaluate current Board members.
The Nominating and Corporate Governance Committee also administers Keysight’s Related Person Transactions Policy and Procedures.Procedures (the “Related Person Transactions Policy”). See “Related Person Transactions Policy and Procedures” in this Proxy Statement for more information.
Executive Committee
RESPONSIBILITIES OF THE EXECUTIVE COMMITTEE
The Executive Committee meets or takes written action when the Board is not otherwise meeting. The
Executive Committee has full authority to act on behalf of the Board, except that it cannot amend Keysight’s Bylaws, recommend any action that requires the approval of the stockholders, fill vacancies on the Board or any Board
Committee,committee, fix director compensation, amend or repeal any non-amendable or non-repeatable resolution of the Board, declare a distribution to the stockholders except at rates determined by the Board, appoint other Committees or take any action not permitted under Delaware law to be delegated to a committee.
During
fiscal year 2019,Fiscal Year 2021, the Executive Committee did not hold any meetings.
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We have adopted charters for our Audit and Finance Committee, Compensation and Human Capital Committee, and Nominating and Corporate Governance Committee and Executive Committee consistent with the applicable rules and standards. Our Committee charters are located under “Governance Policies” in the “Corporate Governance” section of our Investor Relations website at investor.keysight.com.COMPENSATION AND HUMAN CAPITAL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are set forth in the table on page 12.
No member of the Compensation
and Human Capital Committee was at any time during
fiscal 2019Fiscal Year 2021 or at any other time an officer or employee of Keysight, and no member of this committee had any relationship with Keysight requiring disclosure under Item 404 of Regulation S-K. No executive officer of Keysight has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of the Compensation
and Human Capital Committee during
fiscal 2019.Fiscal Year 2021.
Each
of the membersmember of the Compensation
and Human Capital Committee is considered independent under
the Company’sKeysight’s Board and Compensation Committee Independence Standards as set forth in
the Company’sKeysight’s Amended and Restated Corporate Governance Guidelines.
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RELATED PERSON TRANSACTIONS POLICY AND PROCEDURES
The Company’s Standards of Business Conduct
Keysight’s SBC and Director Code of Ethics require that all employees and directors avoid conflicts of interests that interfere with the performance of their duties or the best interests of
the Company.Keysight. In addition,
the Company haswe have adopted
athe written Related Person Transactions Policy
and Procedures (the “Related Person Transactions Policy”) that prohibits any of
the Company’sKeysight’s executive officers, directors or any of their immediate family members from entering into a transaction with
the Company,Keysight, except in accordance with the policy. For purposes of the policy, a “related person transaction” includes any transaction (within the meaning of Item 404(a) of Regulation S-K) involving
the CompanyKeysight and any related person that would be required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Under our Related Person Transactions Policy, the General Counsel must advise the Nominating and Corporate Governance Committee of any related person transaction of which he becomes aware. The Nominating and Corporate Governance Committee must then either approve or reject the transaction in accordance with the terms of the policy. In the course of making this determination, the Nominating and Corporate Governance Committee shall consider all relevant information available to it and, as appropriate, must take into consideration the following:
theThe size of the transaction and the amount payable to the related person;
theThe nature of the interest of the related person in the transaction;
whetherWhether the transaction may involve a conflict of interest; and
whetherWhether the transaction involved the provision of goods or services to the CompanyKeysight that are available from unaffiliated third parties and, if so, whether the transaction is on terms and made under circumstances that are at least as favorable to the CompanyKeysight as would be available in comparable transactions with or involving unaffiliated third parties.
Under the Related Person Transactions Policy, Company management screens for any potential related person transactions, primarily through the annual circulation of a Directors and Officers Questionnaire (“D&O Questionnaire”) to each member of the Board and each officer of the CompanyKeysight that is a reporting person under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The D&O Questionnaire contains questions intended to identify related persons and transactions between the CompanyKeysight and related persons. If a related person transaction is identified, such transaction is brought to the attention of the Nominating and Corporate Governance Committee for its approval, ratification, revision, or rejection in consideration of all of the relevant facts and circumstances.
The Nominating and Corporate Governance Committee must approve or ratify each related person transaction in accordance with the policy. Absent this approval or ratification, no such transaction may be entered into by
the CompanyKeysight with any related person.
In 2014, the Board adopted the Related Person Transactions Policy to provide for standing pre-approval of limited transactions with related persons. Pre-approved transactions include:
Any transaction with another company at which a related person’s only relationship is as an employee (other than an executive officer or an equivalent), director or beneficial owner of less than 10% of that company’s shares, if the aggregate amount involved does not exceed the greater of (i) $1,000,000, or (ii) 2% of that company’s total annual revenues.
Any charitable contribution, grant or endowment by the CompanyKeysight to a charitable organization, foundation or university at which a related person’s only relationship is as an employee (other than an executive officer or an equivalent), a director or a trustee, if the aggregate amount involved does not exceed the lesser of $500,000, or 2% of the charitable organization’s total annual receipts.
Keysight will disclose the terms of related person transactions in its filings with the SEC to the extent required.
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| RELATED PERSON TRANSACTIONS POLICY AND PROCEDURES | 17
|
TRANSACTIONS WITH RELATED PERSONS
Transactions with Related Persons
We purchase services, supplies, and equipment in the normal course of business from many suppliers and sell or lease products and services to many customers. In some instances, these transactions occur with companies with which members of our management or Board have relationships as directors or executive officers. For transactions entered into during fiscal year 2019,Fiscal Year 2021, none exceeded or fell outside of the pre-approved thresholds set forth in our Related Party Transaction Policy.
During fiscal year 2019,Fiscal Year 2021, we did not enter into any financial transaction, arrangement or relationship in which a related person had or will have direct or indirect material interest, in an amount exceeding $120,000, except for the following:
BlackRock, Inc. holds 6.8%10.4% of Keysight’s total outstanding equity pursuant to information contained in a Schedule 13G filed with the SEC on February 6, 2019.January 27, 2021. During fiscal year 2019,Fiscal Year 2021, Keysight purchased from BlackRock Advisors (UK) Ltd.,Life Limited, a subsidiary of BlackRock, Inc. approximately $181,000$253,400 of products and/or services, and from BlackRock Investment Management (UK) Ltd., also a subsidiary of BlackRock, Inc. approximately $31,000$197,500 of products and/or services, for a total amount of approximately $212,000.$450,900. The transactions with BlackRock Advisors (UK) Ltd.Life Limited and BlackRock Investment Management (UK) Ltd. fell within Keysight’s pre-approved transactions.
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| | RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 18Proposal 2: Ratification of the
Independent Registered Public
Accounting Firm |
PROPOSAL 2—RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Audit and Finance Committee of the Board has appointed PricewaterhouseCoopers LLP (“PwC”) as Keysight’s independent registered public accounting firm to audit its consolidated financial statements for theFiscal Year 2022. During Fiscal Years 2021 and 2020, fiscal year. During the 2019 fiscal year, PwC served as Keysight’s independent registered public accounting firm and also provided certain tax and other non-audit services. Although Keysight is not required to seek stockholder approval of this appointment, the Board believes it to be sound corporate governance to do so. If the appointment is not ratified, the Audit and Finance Committee will investigate the reasons for stockholder rejection and will reconsider the appointment.
Representatives of PwC are expected to attend the Annual Meeting where they will be available to respond to questions and, if they desire, to make a statement.
VOTE REQUIRED
The affirmative vote by the holders of a majority of the shares of Keysight common stock present or represented by proxy and voting at the 2022 Annual Meeting is required for approval of this proposal, provided sufficient shares are represented for the required quorum. If you are a stockholder of record and you sign your proxy card but do not provide voting instructions, your shares will be voted in accordance with the management’s recommendations for this proposal. If you are a beneficial owner and you sign your voting instruction form but do not provide voting instructions, your bank, broker, or nominee has the discretion to either vote your shares or leave your shares unvoted for this proposal.
KEYSIGHT’S BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE AUDIT AND FINANCE COMMITTEE’S APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS KEYSIGHT’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Keysight’s Board recommends a vote FOR the ratification of
the Audit and Finance Committee’s appointment of PricewaterhouseCoopers LLP as
Keysight’s Independent Registered Public Accounting Firm. | 2022 Proxy Statement 35 |
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FEES PAID TO PRICEWATERHOUSECOOPERS LLP Fees Paid to PricewaterhouseCoopers LLP
The following table presents fees for professional audit services rendered to Keysight by PwC for the years ended October 31,
20192021 and
2018.Fee Category: | Fiscal 2019 ($) | % of Total (%) | Fiscal 2018 ($) | % of Total (%) |
Audit Fees | $ | 5,058,000 | | | 93.0 | | $ | 5,775,000 | | | 97.0 | |
Audit-Related Fees | | 326,000 | | | 6.0 | | | 34,250 | | | 1.0 | |
Tax Fees:
| | | | | | | | | | | | |
Tax compliance/preparation | | 38,741 | | | 1.0 | | | 148,000 | | | 2.0 | |
Other tax services | | — | | | 0 | | | — | | | 0 | |
Total Tax Fees | | 38,741 | | | 1.0 | | | 148,000 | | | 2.0 | |
All Other Fees | | 3,000 | | | 0 | | | 3,000 | | | 0 | |
Total Fees | | 5,425,741 | | | 100.0 | | | 5,960,250 | | | 100.0 | |
| | Audit Fees | | | 4,650,000 | | | 97 | | | 4,830,240 | | | 98 | |
| | Audit-Related Fees | | | 11,000 | | | 0 | | | 13,670 | | | 0 | |
| | Tax Fees | | | | | | | | | | | | | |
| | Tax compliance/preparation | | | 113,065 | | | 2 | | | 70,829 | | | 1 | |
| | Other tax services | | | — | | | 0 | | | 7,997 | | | 0 | |
| | Total tax fees | | | 113,065 | | | 2 | | | 78,826 | | | 2 | |
| | All Other Fees | | | 2,700 | | | 0 | | | 2,700 | | | 0 | |
| | Total Fees | | | 4,776,765 | | | 100 | | | 4,925,436 | | | 100 | |
AUDIT FEES
Audit
Fees: Consistsfees consist of fees billed for professional services rendered for the integrated audit of Keysight’s consolidated financial statements and its internal control over financial reporting and review of the interim condensed consolidated financial statements included in quarterly reports. Fees for
fiscal 2019Fiscal Years 2021 and
20182020 also consist of fees billed for services that are normally provided by PwC in connection with statutory reporting and regulatory filings or engagements, and attest services, except those not required by statute or regulation.
Audit-Related Fees: Consists
AUDIT-RELATED FEES
Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of Keysight’s consolidated financial statements and are not reported under
“AuditAudit Fees.
” These services include accounting consultations in connection with acquisitions and divestitures, attest services that are not required by statute or regulation, and consultations concerning financial accounting.
TAX FEES
Tax
Fees: Consistsfees consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance, tax audits and appeals, customs and duties, mergers and acquisitions and international tax planning.
ALL OTHER FEES
All
Other Fees: Consistsother fees consist of fees for all other services other than those reported above. These services include a license for specialized accounting research software. Keysight’s intent is to minimize services in this category.
In making its recommendation to ratify the appointment of PwC as Keysight’s independent registered public accounting firm for the
fiscal year ending October 31, 2020,Fiscal Year 2022, the Audit and Finance Committee has considered whether services other than audit and audit-related services provided by PwC are compatible with maintaining the independence of PwC.
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AUDIT AND FINANCE COMMITTEE PREAPPROVAL POLICY | RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 19
|
Policy on Audit and Finance Committee Preapproval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The Audit and Finance Committee’s policy is to preapprove all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Preapproval is generally provided for up to one year and any preapproval is detailed as to the particular service or category of services and is subject to a specific budget.
KEYSIGHT’S BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE AUDIT AND FINANCE COMMITTEE’S APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS KEYSIGHT’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
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| AUDIT AND FINANCE COMMITTEE REPORT | 20
|
AUDIT AND FINANCE COMMITTEE REPORT
The Audit and Finance Committee Report does not constitute soliciting material and shall not be deemed to be filed or
incorporated by reference into any other Company filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent that the CompanyKeysight specifically incorporates the Audit and Finance Committee Report by reference therein.December
16, 201915, 2021
The Audit and Finance Committee of the Board reviewed the quality and integrity of Keysight’s consolidated financial statements contained in the
20192021 Annual Report on Form 10-K, its compliance with legal and regulatory requirements, the qualifications and independence of its independent registered public accounting firm, the performance of its internal audit function and independent registered public accounting firm and other significant financial matters. Each of the Audit and Finance Committee members satisfies the definition of independent director and is financially literate as established in the
New York Stock ExchangeNYSE Listing Standards. In accordance with section 407 of the Sarbanes-Oxley Act,
of 2002, the Board has identified Charles J. Dockendorff as the Audit and Finance Committee’s “Financial Expert.” Keysight operates with a November 1 to October 31 fiscal year. The Audit and Finance Committee met eleven times during the
2019 fiscal year.Fiscal Year 2021.
The Audit and Finance Committee’s work is guided by a written charter that the Board has approved. The Audit and Finance Committee regularly reviews its charter to ensure that it is meeting all relevant audit committee policy requirements of the
U.S. Securities and Exchange Commission,SEC, the Public Company Accounting Oversight Board and the
New York Stock Exchange.NYSE. You can access the latest Audit and Finance Committee charter by clicking on “Governance Policies” in the “Corporate Governance” section of the web page at
www.investor.keysight.com or by writing to us at Keysight Technologies, Inc., 1400 Fountaingrove Parkway, Santa Rosa, California 95403, Attention: Investor Relations.
The Audit and Finance Committee has reviewed and discussed with management and
PricewaterhouseCoopers LLP,PwC, Keysight’s independent registered public accounting firm, Keysight’s audited consolidated financial statements and Keysight’s internal control over financial reporting. The Audit and Finance Committee has discussed with
PricewaterhouseCoopers LLP,PwC, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight
Board.Board and the SEC.
The Audit and Finance Committee has received and reviewed the written disclosures and the letter from PricewaterhouseCoopers LLP required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit and Finance Committee concerning independence and has discussed with
PricewaterhouseCoopers LLPPwC its independence from Keysight. Based on the review and discussions noted above, the Audit and Finance Committee recommended to the Board that Keysight’s audited consolidated financial statements be included in Keysight’s Annual Report on Form 10-K for the
fiscal year ended October 31, 2019,Fiscal Year 2021 and be filed with the
U.S. Securities and Exchange Commission.SEC.
Audit and Finance Committee
Charles J. Dockendorff, ChairpersonChair
Paul N. Clark
Paul A. Lacouture
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| | COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 21Common Stock Ownership of
Certain Beneficial Owners
and Management |
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTStock Ownership of Certain Beneficial Owners
The following table sets forth information, as of
December 31, 2019,January 18, 2022, concerning each person or group known by Keysight, based on filings pursuant to Section 13(d) or (g) under the Exchange Act, to own beneficially more than 5% of the outstanding shares of our Common Stock. As of
December 31, 2019,January 18, 2022, there were
195,021,161182,762,654 shares of common stock outstanding.
Name and Address of Beneficial Owner | Amount and Nature | Percent of Class |
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202 | | 23,455,841 | (1) | | 12.50 | % |
The Vanguard Group - 23-1945930
PO Box 2600 V26
Valley Forge, PA 19482-2600 | | 20,499,647 | (2) | | 10.92 | % |
BlackRock, Inc.
55 East 52nd Street
New York, NY 10022 | | 12,680,218 | (3) | | 6.80 | % |
| | The Vanguard Group - 23-1945930
PO Box 2600 V26
Valley Forge, PA 19482-2600 | | | 20,308,370(1) | | | 10.91% | |
| | BlackRock, Inc.
55 East 52nd Street
New York, NY 10022 | | | 19,361,210(2) | | | 10.4% | |
| | T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202 | | | 10,299,751(3) | | | 5.4% | |
(1)
| Based solely on information contained in a Schedule 13G/A filed with the SEC on February 14, 2019,10, 2021 by The Vanguard Group. The Schedule 13G/A indicates that the Vanguard Group has shared voting power with respect to 350,548 shares, sole dispositive power with respect to 19,499,379 shares and shared dispositive power with respect to 858,991 shares |
(2)
| Based solely on information contained in a Schedule 13G/A filed with the SEC on January 27, 2021, by BlackRock, Inc. The Schedule 13G indicates that BlackRock, Inc. has sole voting power with respect to 16,824,722 shares and sole dispositive power with respect to 19,361,210 shares. |
(3)
| Based solely on information contained in a Schedule 13G/A filed with the SEC on February 16, 2021, by T. Rowe Price Associates, Inc. The Schedule 13G/A indicates that T. Rowe Price Associates, Inc. has sole voting power with respect to 8,606,2254,085,627 shares and sole dispositive power with respect to 23,455,84110,299,751 shares. |
STOCK OWNERSHIP OF DIRECTORS AND OFFICERS | (2) | Based solely on information contained in a Schedule 13G/A filed with the SEC on February 11, 2019 by The Vanguard Group. The Schedule 13G/A indicates that the Vanguard Group has sole voting power with respect to 215,766 shares, shared voting power with respect to 36,600 shares, sole dispositive power with respect to 20,252,204 shares and shared dispositive power with respect to 247,443 shares. |
| (3) | Based solely on information contained in a Schedule 13G/A filed with the SEC on February 6, 2019, by BlackRock, Inc. The Schedule 13G indicates that BlackRock, Inc. has sole voting power with respect to 11,039,435 shares and sole dispositive power with respect to 12,680,218 shares. |
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| COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 22
|
Stock Ownership of Directors and Officers
The following table sets forth, as of December 31, 2019,January 18, 2022, the beneficial ownership of Keysight’s common stock by each director and each of the named executive officersNEOs included in the “Summary Compensation Table” on page 45 and the beneficial ownership of Keysight’s common stock by all directors and executive officers as a group.
The number of shares beneficially owned by each entity, person, director or executive officer is determined under the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has the sole or shared voting power or investment power and also any shares that the individual has the right to acquire as of March
1, 2020, 6019, 2022 (60 days after
December 31, 2019,January 18, 2022) through the exercise of any
vested stock options or the vesting of
applicable stock unit awards. Unless otherwise indicated, each person has sole investment and voting power, or shares such powers with his or her spouse, with respect to the shares set forth in the following table. As of
December 31, 2019,January 18, 2022, there were
195,021,161182,762,654. shares of common stock outstanding.
Name of Beneficial Owners | Number of
Shares of
Common Stock | Number of
Shares Subject
to Stock
Awards (1) | Deferred Stock(2) | Total Shares
Beneficially
Owned | Percentage of
Class |
Ronald S. Nersesian | | 30,621 | | | — | | | 132,007 | | | 162,629 | | | | * |
Jay Alexander | | 48,891 | | | — | | | 3,227 | | | 52,118 | | | | * |
Paul N. Clark | | 382 | | | — | | | 67,273 | | | 67,655 | | | | * |
James G. Cullen | | 12,312 | | | — | | | 10,522 | | | 22,834 | | | | * |
Satish Dhanasekaran | | 12,968 | | | — | | | 16,993 | | | 29,961 | | | | * |
Charles J. Dockendorff | | 15,561 | | | — | | | 45,215 | | | 60,776 | | | | * |
Neil P. Dougherty | | 17,096 | | | 79,374 | | | 48,019 | | | 144,489 | | | | * |
Soon Chai Gooi | | 179,738 | | | — | | | — | | | 179,738 | | | | * |
Jean M. Halloran | | 41,700 | | | — | | | — | | | 41,700 | | | | * |
Richard P. Hamada | | — | | | — | | | 42,160 | | | 42,160 | | | | * |
Paul A. Lacouture | | 2,351 | | | — | | | — | | | 2,351 | | | | * |
Joanne B. Olsen | | 1,763 | | | — | | | — | | | 1,763 | | | | * |
Robert A. Rango | | — | | | — | | | 19,493 | | | 19,493 | | | | * |
All directors and executive officers as a group (18 persons) | | 506,360 | | | 89,636 | | | 416,847 | | | 827,667 | | | 0.52 | % |
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| | Ronald S. Nersesian | | | 682 | | | — | | | 132,007 | | | 132,689 | | | * | |
| | James G. Cullen | | | 9,381 | | | — | | | 10,522 | | | 19,903 | | | * | |
| | Satish Dhanasekaran | | | 18,972 | | | — | | | 17,845 | | | 36,817 | | | * | |
| | Charles J. Dockendorff | | | 19,630 | | | — | | | 45,215 | | | 64,845 | | | * | |
| | Neil P. Dougherty | | | 16,380 | | | — | | | 48,019 | | | 64,399 | | | * | |
| | Soon Chai Gooi | | | 233,520 | | | — | | | — | | | 233,520 | | | * | |
| | Richard P. Hamada | | | — | | | — | | | 42,160 | | | 42,160 | | | * | |
| | Michelle J. Holthaus | | | 1,223 | | | | | | | | | 1,223 | | | | |
| | Paul A. Lacouture | | | 6,420 | | | — | | | — | | | 6,420 | | | * | |
| | Jean M. Nye | | | 45,769 | | | — | | | — | | | 45,769 | | | * | |
| | Joanne B. Olsen | | | — | | | — | | | 5,832 | | | 5,832 | | | * | |
| | Robert A. Rango | | | — | | | — | | | 23,562 | | | 23,562 | | | * | |
| | Mark A. Wallace | | | 33,106 | | | — | | | 16,625 | | | 49,730 | | | * | |
| | All directors and executive officers as a group
(20 persons) | | | 641,270 | | | 13,080 | | | 431,935 | | | 1,086,824 | | | 0.55% | |
| (1)
| Includes stock optionsany shares as to which the individual has the sole or shared voting power or investment power and also any shares that may be exercisedthe individual has the right to acquire as of March 1, 202021, 2022 (60 days after January 18, 2022) through the exercise of any vested stock options or the vesting of applicable stock unit awards that will vest within 60 days of December 31, 2019, if any.awards. |
| (2)
| Represents the number of deferred shares or share equivalents held by Fidelity Management Trust Company under the Keysight Technologies, Inc. 2014 Deferred Compensation Plan (the “Deferred Compensation Plan”) or similar arrangement to which voting or investment power exists. |
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires Keysight’s directors, executive officers and holders of more than 10% of Keysight common stock to file reports with the SEC regarding their ownership and changes in ownership of Keysight stock. Keysight believes that during the 2019 fiscal year, its executive officers, directors and holders of 10% or more of our common stock complied with all Section 16(a) filing requirements.
In making these statements, Keysight has relied upon examination of copies of Forms 3, 4 and 5 provided to Keysight and the written representations of its directors and officers.
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| | COMPENSATION OF NON-EMPLOYEE DIRECTORS | 23Compensation of
Non-Employee Directors |
DIRECTOR COMPENSATION HIGHLIGHTS COMPENSATION OF NON-EMPLOYEE DIRECTORS
Director Compensation Highlights
Fees for committee service to differentiate individual pay based on workload.
Emphasis on equity in the overall compensation mix.
Full-value equity grants under a fixed-value annual grant policy with immediate vesting.
A robust stock ownership guideline set at five times the annual cash retainer to support stockholder alignment.
Deferral provisionsoptions to facilitate stock ownership.
An annual limit on total director compensation.
SUMMARY OF NON-EMPLOYEE DIRECTOR PROGRAM Keysight’s director compensation program is designed to attract and retain highly qualified non-employee directors and to address the time, effort, expertise, and accountability required of active board membership. Our Compensation
and Human Capital Committee believes that annual compensation for non-employee directors should consist of both cash to compensate members for their services on the Board of Directors and its committees, and equity to align the interest of directors and stockholders. The non-employee director’s compensation plan year begins on March 1
st and ends on the last day of February of the following calendar year (the “Plan Year”).
Decisions regarding our non-employee director compensation program are approved by the full Board based on recommendations by the Compensation
and Human Capital Committee. In making such recommendations, the Compensation
and Human Capital Committee takes into consideration the director compensation practices of peer companies and whether such
recommendation alignsrecommendations align with the interests of our stockholders. Like compensation for our executive officers, the Compensation
and Human Capital Committee reviews the total compensation of our non-employee directors and each element of our director compensation program annually. At the direction of the Compensation
and Human Capital Committee,
F.W. Cook, the Compensation
and Human Capital Committee’s independent consultant annually analyzes the competitive position of
the Company’sKeysight’s director compensation program against the peer group used for executive compensation purposes (see pages
30-64-3165 for more information about the peer group).
In September 2018, F.W. Cook2020, Meridian reviewed the competitive position of the compensation for Keysight’s non-employee directors relative to its peers, company performance, and the program adjustments made in the prior year. Meridian found that the compensation of our non-employee directors was well aligned to our peer group and our performance of the company and did not recommend making any changes given Keysight’s competitive positioning relative to its peers and its program adjustments made in the prior year. F.W. Cook also advised that it is typical to refresh the Board compensation program biennially. As a result, ournon-employee director compensation program remained unchanged for fiscalthe Plan year 2019.beginning on March 1, 2021.
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The compensation to our non-employee directors for
fiscal year 2019the Fiscal Year 2021 is set forth below:
Summary of Non-Employee Director Annual Compensation
| Cash
Retainer(1) | Equity Grant(2) | Committee
Chair Premium(3) | Audit and Finance
Committee Member
Premium(4) |
Non-Employee Director | $ | 100,000 | | $200,000 in value of a stock grant | $15,000 - $30,000 | $ | 10,000 | |
Non-Executive Chairman | $ | 255,000 | | $200,000 in value of a stock grant | Not eligible | $ | 10,000 | |
| | Non-Employee Director | | | $100,000 | | | $225,000 in value of a stock grant | | | $15,000 - $30,000 | | | $10,000 | |
| | Non-Executive Lead Independent Director | | | $150,000 | | | $225,000 in value of a stock grant | | | $15,000 | | | $10,000 | |
| (1)
| Each non-employee director or chairmanChair may elect to defer all or part of thetheir cash compensation to the Keysight Technologies, Inc. Deferred Compensation Plan for Non-Employee Directors.Directors (the “Deferred Compensation Plan for Non-Employee Directors”). Any deferred cash compensation is converted into shares of Keysight common stock. In the event that a director does not serve for the entire year, the cash retainer will be pro-rated. |
| (2)
| The stock will be granted on the later of (i) March 1 or (ii) the first trading day after each Annual Meeting. The number of shares underlying the stock grant is determined by dividing $200,000$225,000 by the average fair market value of Keysight’s common stock over 20 consecutive trading days up to and including the day prior to the grant date. The stock grant is fully vested upon grant. Each non-employee director may elect to defer all or part of the equity grant to the Deferred Compensation Plan for Non-Employee Directors. |
| (3)
| Non-employee directors (excluding(including the Non-Executive Chairman)Lead Independent Director) who serveserved as the chairpersonChair of a Board Committee receivecommittee received a “Committee chair premium”committee Chair premium in cash, paid at the beginning of each Plan Year. The Audit and Finance Committee Chair receivesreceived $30,000; the Compensation and Human Capital Committee Chair receivesreceived $20,000; and the Nominating and Corporate Governance Committee Chair receivesreceived $15,000. |
| (4)
| Non-employee directors (including the Non-Executive Chairman)Lead Independent Director) who serve as the chairpersonChair or a member of the Audit and Finance Committee receive an additional $10,000 in cash, paid at the beginning of each Plan Year. |
NON-EMPLOYEE DIRECTOR COMPENSATION EARNED DURING FISCAL YEAR 2021
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| COMPENSATION OF NON-EMPLOYEE DIRECTORS | 24
|
Non-Employee Director Compensation Earned During Fiscal Year 2019
The table below sets forth information regarding the regular compensation earned by each of our non-employee directors during the fiscal year ended October 31, 2019:
Name | Cash Retainer ($)(1) | Committee Fees ($) | Stock Awards ($)(2) | Total ($) |
Paul N. Clark | $ | 255,000 | | $ | 10,000 | | $ | 199,270 | (3) | $ | 464,270 | |
James G. Cullen | $ | 100,000 | | $ | 20,000 | | $ | 199,270 | | $ | 319,270 | |
Charles J. Dockendorff | $ | 100,000 | | $ | 40,000 | | $ | 199,270 | | $ | 339,270 | |
Jean M. Halloran | $ | 100,000 | | | — | | $ | 199,270 | | $ | 299,270 | |
Richard P. Hamada | $ | 100,000 | | | — | | $ | 199,270 | (3) | $ | 299,270 | |
Paul A. Lacouture | $ | 100,000 | | $ | 7,500 | (4) | $ | 199,270 | | $ | 306,770 | |
Joanne B. Olsen | $ | 75,000 | (5) | | — | | $ | 129,686 | (3) | $ | 204,686 | |
Robert A. Rango | $ | 100,000 | | $ | 10,000 | | $ | 199,270 | (3) | $ | 309,270 | |
Fiscal Year 2021:
| | Paul N. Clark | | | 112,500 | | | 25,000 | | | 253,575 | | | 391,075 | |
| | James G. Cullen | | | 100,000 | | | 20,000 | | | 219,810 | | | 339,810 | |
| | Charles J. Dockendorff | | | 100,000 | | | 40,000 | | | 219,810 | | | 359,810 | |
| | Richard P. Hamada | | | 100,000 | | | — | | | 219,810 | | | 319,810 | |
| | Michelle J. Holthaus | | | 50,000 | | | — | | | 172,479 | | | 222,479 | |
| | Paul A. Lacouture | | | 100,000 | | | 10,000 | | | 219,810 | | | 329,810 | |
| | Jean M. Nye | | | 100,000 | | | — | | | 219,810 | | | 319,810 | |
| | Joanne B. Olsen | | | 100,000 | | | — | | | 219,810(3) | | | 319,810 | |
| | Robert A. Rango | | | 100,000 | | | 10,000 | | | 219,810(3) | | | 329,810 | |
(1)
| (1) | Mr.Paul N. Clark deferred $265,000 and Mr. Hamada deferred $100,000$37,500 of theirhis respective cash compensation into the Deferred Compensation Plan for non-employee director deferred compensation plan.directors. |
| (2)
| Reflects the grant date fair value for stock awards granted in fiscal year 2019the Plan Year beginning in March 2021 calculated in accordance with FASB ASCFinancial Accounting Standard Board Accounting Standards Codification Topic 718. |
(3)
| (3) | Ms.Joanne B. Olsen and Messrs. Clark, Hamada, andRobert A. Rango deferred their respective stock award into the Deferred Compensation Plan for non-employee director deferred compensation plan.directors. |
42 2022 Proxy Statement | (4) | Mr. Lacouture was appointed to the Audit and Finance Committee in May 2019. Committee fees were prorated in accordance with the time served on the Audit and Finance Committee in Fiscal Year 2019. |
| (5) | Ms. Olsen joined the Board in May 2019. Ms. Olsen received a prorated share of the standard Non-Employee Director compensation to reflect the time served on the Board in Fiscal Year 2019. |
TABLE OF CONTENTSNon-Employee Director Reimbursement Practice for Fiscal Year 2019
NON-EMPLOYEE DIRECTOR REIMBURSEMENT PRACTICE FOR FISCAL YEAR 2021
Non-employee directors are reimbursed for travel and other out-of-pocket expenses in connection with attendance at Board of Directors and committee meetings.
Non-Employee Director Compensation Limit
In addition, in March 2018, our
NON-EMPLOYEE DIRECTOR COMPENSATION LIMIT
Our stockholders
previously approved a limit on the total value of cash and equity compensation that may be paid or granted to a non-employee director during each
fiscal year.Fiscal Year. Currently, the maximum amount of total compensation payable to a non-employee director for services in a
fiscal year of the CompanyFiscal Year may not exceed $750,000, calculated as the sum of (a) the grant date fair value (determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718) of all awards payable in shares and the maximum amount payable pursuant to cash-based awards that may be granted under the 2014 Equity Plan, plus (b) cash compensation in the form of Board and committee retainers and meeting or similar fees. Compensation counts towards this limit for the
fiscal yearFiscal Year in which it is granted or earned by a non-employee director, and not later when distributed, in the event it is deferred.
Non-Employee Director Stock Ownership Guidelines
In 2014, the Company
NON-EMPLOYEE DIRECTOR STOCK OWNERSHIP GUIDELINES
Keysight has adopted the guidelines to require each non-employee director to own Keysight shares having a value of at least five times the director’s annual board cash retainer (currently $100,000), based on the recommendation of the Committee’s independent compensation
consultant, F.W. Cook.consultant. The shares counted toward the ownership guidelines include shares owned outright and the shares of Keysight stock in the non-employee director’s deferred compensation account. These ownership levels must be attained within five years from the date of their initial election or appointment to the Board. As of October 31,
2019,2021, each of our
incumbent non-employee directors
havehas achieved
at least the recommended ownership level. Mr. Lacouture and Ms. Olsen, who joined the Board in March 2019 and May 2019 respectively, areor is on track to
meetachieve at least the recommended ownership level within the allotted
five yearfive-year time frame.
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| | NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF KEYSIGHT’S NAMED EXECUTIVE OFFICERS | 25Proposal 3:
Advisory Vote on
Executive Compensation
|
PROPOSAL 3—NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF KEYSIGHT’S NAMED EXECUTIVE OFFICERSPursuant to Section 14A of the Exchange Act, the stockholders of Keysight are entitled to cast an advisory vote at the 2022 Annual Meeting to approve the compensation of Keysight’s NEOs, as described in the Company’s named executive officers, as disclosed in this proxy statement. Compensation Discussion and Analysis and the Summary Compensation Table and subsequent tables on pages 69 to 86 of the Proxy Statement.
The stockholder vote is an annual advisory vote
only and is not binding on Keysight or its Board. Although the vote is non-binding, the Compensation
and Human Capital Committee and the Board value your opinions and
will consider the outcome of the vote in establishing Keysight’s compensation philosophy and
making future compensation decisions. It is expected that the next such advisory vote will occur at the
20202023 Annual
Meeting.As described more fully in the “Compensation Discussion & Analysis” on pages 27 to 44 and in the Summary Compensation Table and subsequent tables on pages 45 to 60, the Company’s named executive officers, as identified on page 28 are compensated in a manner consistent with our business strategy, competitive practice, sound compensation governance principles, and stockholder interests and concerns. We structure our compensation to support our business objectives with appropriate rewards for short-term operating results and long-term stockholder value creation.
In fiscal year 2019, we saw the benefitMeeting of our industry-focused strategy and deliberate investment in key market growth themes and opportunities. As demand for our solutions accelerated, we achieved double-digit revenue growth for the full year across nearly all our end markets. In addition to driving revenue growth, we increased profitability and cash flow through both margin expansion and continued operational discipline.
For fiscal year 2019:
Approximately 70% of our CEO’s and about 56% on average of our NEO’s target total direct compensation consisted of long-term incentives and was “at-risk” – which means that the component would vary from year to year depending on Keysight’s stock price and total shareholder return (“TSR”) measured against the S&P 400 Total Return Index and on non-GAAP operating margin (“Non-GAAP OM” or “OM”) as measured against our incentive plan target. Threshold metrics for TSR and OM must be achieved in order for the long-term incentive plan to payout.Stockholders.
VOTE REQUIRED
Our CEO earned 157.89% of his target bonus based on the following:
| First Half Fiscal Year 2019
Achievement Percent of Target | Second Half Fiscal Year 2019
Achievement Percent of Target |
Non-GAAP EPS (weighted 75%) | | 131.1 | % | | 127.5 | % |
Non-GAAP Revenue Growth (weighted 25%) | | 148.8 | % | | 150.0 | % |
With respect to performance stock units (“PSUs”) granted in fiscal 2017, Keysight TSR was 181.5 percentage points higher than the S&P 400 TSR, resulting in a 200% payout. Non-GAAP OM was 24% compared to our incentive plan target of 19% for the same period, resulting in a 132% payout.,
Keysight also maintains several compensation governance programs in place as described on pages 29, and 41 to 42 to manage compensation risk and align Keysight’s executive compensation with long-term stockholder interests. These programs include:
a compensation recoupment policy;
an independent compensation committee and compensation consultant
a hedging and insider trading policy;
stock ownership guidelines; and
an annual risk assessment
We are requesting your non-binding vote to approve the compensation of the Company’s named executive officers as described on pages 27 to 60, including the Summary Compensation Table and subsequent tables on pages 45 to 60 of the proxy statement.
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| NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF KEYSIGHT’S NAMED EXECUTIVE OFFICERS | 26
|
Vote Required
The affirmative vote by the holders of a majority of the shares of Keysight common stock present or represented by proxy and voting at the 2022 Annual Meeting together with the affirmative vote of a majority of the required quorum, is required for approval of this proposal.proposal, provided sufficient shares are represented for the required quorum. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your shares so that your vote can be counted on this proposal.
KEYSIGHT’S BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION OF KEYSIGHT’S NAMED EXECUTIVE OFFICERS.
Keysight’s Board recommends a vote FOR the approval of the compensation of44 2022 Proxy Statement
| Keysight’s named executive officers for fiscal year 2019. |
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| | COMPENSATION DISCUSSION AND ANALYSIS | 27
Executive Compensation |
COMPENSATION DISCUSSION AND ANALYSISExecutive Summary
Keysight Technologies, Inc. (NYSE: KEYS) is a leading technology company that helps enterprises, service providers, and governments accelerateenabling leading-edge disruptive innovation to connect and securearound the world. Keysight’s solutions optimize networks and bring electronic products to market faster and at a lower cost with offerings from design simulation, to prototype validation, to manufacturing test, to optimization in networks and cloud environments. Customers span the worldwide communications ecosystem, aerospace and defense, automotive, energy, semiconductor, electronic industrials and services end markets.
In fiscal year 2019, we continued to expandSolid industry dynamics are accelerating demand for our technology leadership with a broad portfolio of differentiated solutions, that were comprisedand we continue to capitalize on broad-based technology investments across a diverse set of software, hardware and services,growing markets. Our solutions contribute significant value to customers which strengthenedis fueling our competitive position in fast-growing, high-margin target markets. We are executing on our strategy of providing first-to-market solutions and insights that have created new opportunities and valuegrowth for our customers. By building on our heritage and being able to innovate ahead of emerging technology trends, Keysight achieved strong results and returns for our stockholders.
| the long term. Fiscal Year 2019 Business Highlights
|
In fiscal year 2019,Fiscal Year 2021, we saw the benefit of our strategy to invest in leading-edge technologies and differentiated solutions that fueledwhich helped fuel our growth across a broad portfolio of customers. With the acquisition of Prisma Telecom Testing, ourdespite managing longer lead times. Our ability to deliver solutions across the entire communications ecosystem has been enhanced. As overall demand for our solutions accelerated, we achieved double-digit revenue growth for the full year across nearly all of our end markets, including communications, aerospacebe resilient and defense, energy, semiconductor, electronic industrials and services. In additionadapt quickly to driving revenue growth, we increased profitability and cash flow through both margin expansion and our relentless focus on execution and commitment to operational excellence.
Our key financial metrics for measuring Keysight’s success are non-GAAP revenue (“Non-GAAP Revenue”) growth, non-GAAP operating margin (“Non-GAAP OM” or “OM”) and non-GAAP earnings per share (“Non-GAAP EPS”). These metrics are tied directlyexternal changes was critical to our short and long-term incentive compensation programs. In fiscal year 2019, we achieved total Non-GAAP Revenue growthcreation of 10% compared to our incentive plan target of 7%. Through the sound financial and operational discipline principals of the Keysight Leadership Model, we generated Non-GAAP OM of 24%, compared to our incentive plan target of 19%, and grew 5ppts year-over-year. Non-GAAP EPS for fiscal year 2019 was $4.72, compared to our incentive plan target of $3.64, and grew 46% year-over-year.
Our strong execution and financial performance also resulted in a 77% appreciation in Keysight’s share price over the past year increasing from $57.08 per share on October 31, 2018, to $100.91 per share on October 31, 2019. Our share price appreciation outperformed the S&P 400 total return index, resulting in a 200%TSR under our long-term incentive plan program for the fiscal year 2017 through fiscal year 2019 performance period. Additionally, Non-GAAP OM performance delivered a 132% OM payout under the long-term incentive plan program for the same period.
Our commitment to excellence is deep within our DNA and extends beyond our financial performance. Employing a global business framework of ethical, environmentally sustainable and socially responsible operations is core to our Corporate Social Responsibility (“CSR”) vision. Our continued efforts on natural resource conservation, education programs on next generation technology and local community outreach have been recognized within the industry, most recently with Keysight’s inclusion in several CSR-focused indices.
We are pleased with our financial success and with our fiscal year 2019 accomplishments. Keysight is committed to helping our customers accelerate innovation to connect and secure the world. Our diversified portfolio of solutions and services as well as our strategic execution and operational excellence allow us to continue to create long-term value for our stockholders.
stockholders, customers, and employees in spite of the challenges presented by the pandemic. Our accomplishments included:COMPANY PERFORMANCE
| | GAAP Revenue | | | $4.9B | | | 17.1% YoY growth | |
| | GAAP Net Income | | | $894M | | | 42.6% YoY growth | |
| | Non-GAAP Net Income | | | $1.164M | | | 26.7% YoY growth | |
| | GAAP EPS | | | $4.78 per share | | | 44.64% YoY growth | |
| | Non-GAAP EPS | | | $6.23 per share | | | 28.45% YoY growth | |
LONG-TERM STOCKHOLDER VALUE CREATION
(1)
| Measured using the closing stock price on October 29, 2021 as compared to the closing stock price on October 31, 2016, and October 31, 2018, for the 5 year and 3 year TSR, respectively. |
* | 2022 Proxy Statement Orders growth, revenue growth, GAAP operating margin and GAAP earnings per share are reported in the Company’s Form 10-K Annual Report for the year ended October 31, 2019, filed on December 18, 2019. Non-GAAP Revenue growth, Non-GAAP OM and Non-GAAP EPS are reported in the Company’s Form 8-K Current Report filed with the SEC on November 26, 2019, which includes additional information regarding how Non-GAAP Revenue growth, Non-GAAP OM and Non-GAAP EPS are calculated and reconciled to GAAP revenue growth, GAAP operating margin and GAAP earnings per share.45 |
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Fiscal Year 2021 SAY-ON-PAY
 | COMPENSATION DISCUSSION AND ANALYSIS | 28 |
TABLE OF CONTENTS
PAY-FOR-PERFORMANCE ALIGNMENT
Fiscal Year 2019 - Fiscal Year 2021 Long Term Performance Plan PSU Grants: TSR
| | Threshold
(25% Payout) | | | Target
(100% Payout) | | | Maximum
(200% Payout) | | | | |
| | 40 percentage
points below index | | | Equals Index | | | 40 percentage
points above index | | | | |
| | | | | S&P 500 TSR Total Return Index
65.3% | | | Keysight TSR
173.7% | | | 108.4 ppts
above Index | |
| | | | | | | | | | | 200% Payout | |
Fiscal Year 2019 - Fiscal Year 2021 Long Term Performance Plan PSU Grants: Non-GAAP OM
| | Year | | | Threshold
(50% Payout) | | | Target
(100% Payout) | | | Maximum
(200% Payout) | | | | |
| | | | | 5 points below annual Non-GAAP OM plan | | | Achievement of annual Non-GAAP OM plan | | | 5 points above annual Non-GAAP OM plan | | | | |
| | 2019 | | | 14.5% | | | 19.5% | | | 24.5% | | | 24.0% | |
| | 2020 | | | 19.6% | | | 24.6% | | | 29.6% | | | 25.4% | |
| | 2021 | | | 20.9% | | | 25.9% | | | 30.9% | | | 27.8% | |
| | | | | | | | | | | | | | 148% Payout | |
Fiscal Year 2021 Short-Term Cash Incentive Plan
| | Non-GAAP EPS | | | 113.9% | | | 118.7% | |
| | Keysight Non-GAAP Revenue Growth
| | | 143.0% | | | 226.9% | |
| | Keysight Non-GAAP ARR Growth
| | | 210.0% | | | 137.8% | |
| | WWQ | | | 108.0% | | | 110.9% | |
(1)
| See the Compensation Discussion and Analysis below for how these metrics are defined |
TABLE OF CONTENTSResults of 2018 Stockholder Advisory Vote on Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS Our executive compensation program is well aligned with the interests of our stockholders and is instrumental to achieving our business strategy. In November 2018, the Compensation Committee set the upcoming fiscal year 2019 executive compensation after considering, among other things, the strong stockholder support (96% approval of votes cast) that our “Say-on-Pay” proposal received at its 2018 Annual Meeting of Stockholders.
During the 2019 Annual Meeting of Stockholders, our “Say-on-Pay” proposal received 97% approval of votes cast, which was taken into consideration by the Compensation Committee in determining our executive compensation for fiscal year 2020.
The Compensation Committee believes that the results of the 2019 vote confirm the philosophy and objective of linking our executive compensation to our operating objectives and the enhancement of stockholder value. As a result, following the 2019 Annual Meeting of Stockholders, the Committee retained its general program approach to executive compensation and continued to apply the same general principles and philosophy as in prior fiscal years in determining the compensation of our executives.
Named Executive Officers
NAMED EXECUTIVE OFFICERS
In this Compensation Discussion and Analysis, we discuss our compensation philosophy and executive compensation program, as well as describe and analyze the compensation actions and decisions for our named executive officers for fiscal year 2019 (collectively, the “Named Executive Officers” or “NEOs”).NEOs. For the fiscal year ended October 31, 2019,Fiscal Year 2021, our NEOs and their designated titles arewere as follows:
| | Ronald S. Nersesian | | | Chair, President and Chief Executive Officer | |
| | Neil P. Dougherty | | | Senior Vice President and Chief Financial Officer | |
| | Jay AlexanderSatish C. Dhanasekaran
| | | Senior Vice President and Chief TechnologyOperating Officer | |
| | Satish DhanasekaranSoon Chai Gooi
| | | Senior Vice President, President of Communications Solutions Group (“CSG”)Order Fulfilment and Digital Operations | |
| | Soon Chai GooiMark A. Wallace
| | | Senior Vice President, PresidentHead of Electronic Industrial Solutions Group (“EISG”)Global Sales | |
FISCAL YEAR 2021 PERFORMANCE AND COMPENSATION OVERVIEW
Pay
SUMMARY OF INCENTIVE PLAN RESULTS
For Fiscal Year 2021, our key financial metrics for
Performance AlignmentOur executive compensation programmeasuring achievement under Keysight’s short-term performance based incentive plan (“STI”), which is designed to align the interests of our executive officers with the interests of our stockholders. For this reason, a significant portion of our executive officers’ target total direct compensation is variable in nature and at risk and is subject to companysemi-annual cash based performance measured against certain financial objectives, includingincentive, were non-GAAP Revenue growth, Non-GAAP EPS, and Non-GAAP Revenue, Non-GAAPARR Growth and WWQ.
| | Non-GAAP EPS | | | 128.0% | | | 138.0% | |
| | Keysight Non-GAAP Revenue Growth | | | 200.0% | | | 200.0% | |
| | Keysight Non-GAAP ARR Growth | | | 200.0% | | | 167.9% | |
| | WWQ | | | 180.0% | | | 200.0% | |
(1)
| See Short-Term Incentives below for how these metrics are defined. |
Our long-term performance-based incentives (“LTI”) consist of Performance Stock Units (“PSU”) granted under our Long-Term Performance Plan (“LTP Plan”) and Restricted Stock Units (“RSU”). Performance under our LTP Plan is measured using two metrics, three-year non-GAAP OM and relative TSR.
Short-Term Incentives
For fiscal year 2019, Through sound financial and operational discipline, we generated Non-GAAP OM of 27.8%, compared to our Performance-Based CompensationLTP Plan was based on the achievementtarget of pre-established semi-annual financial objectives. These awards were paid25.9% for Fiscal Year 2021, which grew 103.8 ppts year-over-year. Three-year Non-GAAP OM performance delivered an average of 2.4% above target resulting in cash and designed to reward achievement of critical short-term financial goals. The financial objectives are described in more detail beginning on page 32.
Short-Term Performance Incentive Results:
| First Half Fiscal Year 2019
Achievement Percent of Target | Second Half Fiscal Year 2019
Achievement Percent of Target |
Non-GAAP EPS | | 131.1 | % | | 127.5 | % |
Keysight Non-GAAP Revenue Growth | | 148.8 | % | | 150.0 | % |
EISG Non-GAAP Revenue Growth | | 118.0 | % | | 97.1 | % |
CSG Non-GAAP Revenue Growth | | 176.2 | % | | 233.7 | % |
These results, combined with an evaluation of individual performance, determined the annual short-term incentivea 148.0% OM payout for the majorityFiscal Year 2019 to Fiscal Year 2021 performance period.
We measured TSR against the S&P 500 total return index as Keysight was included in the S&P 500 at the time grants were made. Measuring share price appreciation over the past three Fiscal Years, we outperformed the S&P 500 total return index by 108.4 percentage points above the index resulting in a 200% payout for the Fiscal Year 2019 to Fiscal Year 2021 performance period.
RSUs are time-based grants, vesting over four years on the anniversary of
the grant date. Our strong execution and financial performance in Fiscal Year 2021 was also reflected in our
executive officers, includingstock price which increased 72% over the
NEOs. For fiscalpast year
2019, the annual incentive payouts for our NEOs rangedincreasing from
146.88%$104.87 per share on October 30, 2020, to
164.84% of their target award opportunities.$180.02 per share on October 29, 2021.
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FISCAL YEAR 2022 DESIGN REVISIONS
| COMPENSATION DISCUSSION AND ANALYSIS | 29
|
Long-Term Incentives
Each year the Compensation and Human Capital Committee sets short-term incentive plan metrics which align to our commitments and priorities for that fiscal year. In fiscal year 2019,November 2021, the awardsCompensation and Human Capital Committee approved the addition of an Environmental, Social and Governance (“ESG”) metric to our annual short-term incentive plan for Fiscal Year 2022.
The selected ESG metric aligns with our executive officers under our Long-Term Incentive Programcommitment to Corporate Social Responsibility (“LTI”) consist of PSUs under our Long-Term Performance Program (“LTP Program”CSR”) and restricted stock units (“RSUs”). PSUsour CEO’s determination that diversity and inclusion are linked to achievement of pre-established objective performance thresholds while RSUs are time-based and vest annually over four years. The PSUs settle at the end of a three-year performance period and areamong our top priorities. Our ESG metric for Fiscal Year 2022 is intended to reward multi-year stockholder value creation asdrive improvement in workforce diversity which will be measured by the performancepercentage of our stock as compared toincrease in women hired globally and the relative TSRpercentage of our peers and by our profitability as measured by Non-GAAP OM, both important indicators of our success. The combination of relative TSR and Non-GAAP OM provide a comprehensive measure of our success relative to our peers.increase in URMs hired in the United States.
TABLE OF CONTENTSCompensation Policies and Practices
COMPENSATION POLICIES AND PRACTICES
Our executive compensation and corporate governance programs are designed to link pay with operational performance and increase in long-term stockholder value while striking a responsible balance between risk and reward. To accomplish these objectives, we have adopted the following policies and practices over time:time.
•
| An• The Compensation and Human Capital Committee is comprised 100% of independent Compensation Committeedirectors
|
• | An Retain an independent compensation consultant to the Compensation and Human Capital Committee F.W. Cook
|
• Balance short- and long-term incentives, cash, and equity and fixed and variable pay elements
| Robust• Measurable ESG metric as a component of executive short-term incentive plan
• Grant performance-based equity awards comprising approximately 60% of the overall equity allocation to executive officers
• Maximum limits on the amount of annual cash incentives and performance-based restricted stock units (“PSUs”) that may be paid out
• Maintain a clawback policy that applies to both cash incentives and equity awards
• Annually assess and mitigate compensation risk
• Solicit an annual advisory vote on executive compensation
• Maintain robust stock ownership guidelines | | | • No employment agreements providing for executive officers and non-employee membersmulti-year guarantees for salary increases, non-performance-based bonuses, or equity compensation
• No repricing or repurchasing of our Board of Directorsunderwater stock options without stockholder approval
|
• No dividends or dividend equivalents on unearned awards
| •Prohibitions on executive officers engaging in hedging transactions or pledging our securities as collateral for loans
|
• | A compensation recoupment (“Clawback”) policy that applies to our executive officers
|
•
| Use of “double trigger” No single trigger change of control agreements and a prohibition on exciseacceleration of vesting for equity awards
• No excessive perquisites or severance benefits
• No golden parachute tax gross-ups |
•
| An annual review and assessment of potential compensation-related risks, conducted independently for the Compensation Committee by F.W. Cook
|
•
| Maximum limits on the amount of annual cash incentives and PSUs that may be paid out
|
•
| No provision for payment of dividend equivalents on unvested awards
|
RESULTS OF 2021 STOCKHOLDER ADVISORY VOTE ON EXECUTIVE COMPENSATION
Process for Determining Executive Compensation
Our executive compensation program is well aligned with the interests of our stockholders and is instrumental to achieving our business strategy. In November 2020, the Compensation and Human Capital Committee with the assistance of F.W. Cook and our management team, determines the target total directset Fiscal Year 2021 executive compensation opportunities for all of our executive officers, including our NEOs, based on,after considering, among other things, a thorough reviewfactors, the strong stockholder support (97% approval of their individual performance andvotes cast) that our say-on-pay proposal received at its 2020 Annual Meeting of Stockholders.
During the
following additional factors (collectively, “Compensation Factors”):Compensation Factors
|
•
| Responsibilities and capabilities of each executive officer
|
•
| Competitive market data provided by F.W. Cook
|
•
| “Tally sheets” describing the total compensation received by each executive officer
|
•
| Each executive officer’s self-evaluation and evaluation by the CEO and the Chief Administrative Officer
|
•
| Qualitative evaluation of each executive officer’s overall and corporate performance by the Compensation Committee or the independent members of our Board of Directors
|
•
| Objective assessment of each executive officer’s actual performance against pre-established goals and financial targets
|
The CEO and the Chief Administrative Officer do not provide recommendations to the Compensation Committee for his/her own compensation. Our CEO’s target total direct compensation opportunity is reviewed annually2021 Annual Meeting of Stockholders, our say-on-pay proposal received 91% approval of votes cast, which was taken into consideration by the Compensation and Human Capital Committee which then presents its recommendation to the independent members ofin determining our Board of Directors for discussion. The Compensation Committee then makes the final determination on the target total directexecutive compensation for Fiscal Year 2022. While the Compensation and Human Capital Committee believes that the results of the 2020 and 2021 votes confirm the philosophy and objective of linking our CEO.
executive compensation to our operating objectives and the enhancement of stockholder value and largely retained its approach to executive compensation, it also approved the addition of an ESG metric to our annual short-term incentive plan for Fiscal Year 2022. The ESG metric is intended to drive improvement in workplace diversity which will be measured by the increase in women hired globally and the percentage increase in URMs hired in the U.S.. Keysight believes that increasing diversity in our global workforce is a competitive advantage that helps drive long-term value for our stockholders.
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COMPENSATION PHILOSOPHY
The principal objectives of our executive compensation programs are as follows:
| | Offer a total compensation program that flexibly adapts to changing economic, regulatory, and organizational conditions, and takes into consideration the compensation practices of peer companies based on an objective set of criteria | | | Provide a significant portion of compensation through variable, performance-based components that are at-risk and based on satisfaction of designated objectives | |
| | Align the interests of our executives with our stockholders by tying a significant portion of their total compensation to Keysight’s overall financial and operating performance and the creation of long- term stockholder value | | | Compensate for achievement of short-term and long-term company financial and operating goals and refrain from providing special benefits except in limited circumstances | |
Keysight’s Peer Groups
As part of its compensation deliberations, the Compensation Committee conducts an annual review of the compensation practices of the competitive market using one or more groups of peer companies. The Compensation Committee annually reviews our peer group to ensure the companies are suitable peers for compensation comparison purposes. In fiscal year 2018, the Compensation Committee, with the assistance of F.W. Cook, approved a compensation peer group for consideration for fiscal year 2019 compensation decisions based on the following criteria:
Peer Group Determining Criteria for Fiscal Year 2019 |
•
| Revenue between approximately $2.1 billion and $10.3 billion, which were approximately 0.5 times and 2.5 times our projected fiscal year 2019 revenue
|
•
| A market capitalization between approximately $4.5 billion and $40.5 billion, which were approximately 0.33 times and 3 times our projected fiscal year 2019 market capitalization
|
•
| A market capitalization to revenue ratio greater than 1.02022 Proxy Statement 51
|
These criteria resulted in the selection of 33 companies, all members of the Russell 3000 Information Sector, including four new companies. The selected companies compete with us either in the same business and capital markets or in the executive talent arena, or similarly operate complex business operations with significant global reach. The Compensation Committee used compensation data drawn from the compensation peer group as one of the Compensation Factors that were considered in setting the compensation of the executive officers.
Keysight’s Peer Group for Fiscal Year 2019
|
Acuity Brands
| Coherent*
| Juniper Networks
| NetApp
| Symantec
|
AMETEK
| CommScope
| KLA-Tencor
| Nuance Communications
| Synopsis
|
CA Technologies
| EchoStar
| Lam Research
| Palo Alto Networks
| Teradyne
|
Cadence Design Systems
| F5 Networks
| MKS Instruments*
| Red Hat
| Trimble Navigation
|
CDK Global*
| FLIR Systems
| Motorola Solutions
| Regal Beloit
| Zebra Technologies
|
Ciena Corporation
| Fortive*
| National Instruments
| Rockwell Automation
| |
Citrix Systems
| Hubbell
| NCR Corporation
| Roper Technologies
| |
* Companies added to the fiscal year 2019 compensation peer group based on the selection criteria.
Competitive Positioning to Peer Group
At the time of the Compensation Committee’s approval of the compensation peer group for fiscal year 2019, we were slightly above the median of our compensation peer group based on revenue, market capitalization, and number of employees.
| Revenues as of each
company’s most
recent four quarters
ended on 10/31/2018
(in millions) ($) | Market
Capitalization on
10/31/2018
(in millions) ($) | Employees
as of
10/31/2018
(#) |
25th Percentile | $ | 2,125 | | $ | 4,988 | | | 6,550 | |
Median | $ | 3,516 | | $ | 10,092 | | | 10,300 | |
75th Percentile | $ | 4,739 | | $ | 17,263 | | | 14,236 | |
Keysight Technologies, Inc.(1) | $ | 4,115 | | $ | 13,500 | | | 12,600 | |
| (1) | Fiscal Year 2019 estimates as of 10/31/2018 |
Peer Group for the Long-Term Incentives Program
The Compensation Committee believes that a larger peer group is more appropriate for evaluating TSR performance under the Keysight’s LTP Program, as a larger peer group provides a broader index for comparison and better alignment with stockholder investment choices. For fiscal year 2019, the Compensation Committee selected the S&P 500 Total Return Index for determining relative TSR as one of the performance criteria for LTP Program awards granted for the
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ELEMENTS OF FISCAL YEAR 2021 COMPENSATION
| COMPENSATION DISCUSSION AND ANALYSIS | 31
|
three-year performance period ending October 31, 2021. This index has a strong correlation with Keysight’s stock price. The S&P 500 constituent list is maintained by the S&P Index Committee, which is available at www.standardandpoors.com/indices/main/en/us. Any change in the expanded peer group is solely due to Standard & Poor’s criteria for inclusion in the index.
Elements of Fiscal Year 2019 Compensation
This section describes the elements of Fiscal Year 2021 compensation for our executive officers, including NEOs,NEOs. The key elements and how they relate to our compensation for fiscal year 2019, which consists ofphilosophy are summarized in the following:
table below.•
| Base Salary | | | • | | | Attract and retain | | | • | | | Provide fixed compensation to attract and retain key executives | |
| | STI | | | • | | | Pay-for-Performance | | | • | | | Establish appropriate short-term performance conditions that the Compensation and Human Capital Committee believes will drive our future growth and profitability | |
| | | | | • | | | Reward Achievement | | | • | | | Reward achievement of short-term performance metrics | |
| | | | | • | | | Align Interests with Stockholders | | | • | | | Bonus payout tied to Company performance consistent with FY21 financial plan | |
| | | | | • | | | Attract and Retain Executives | | | • | | | Offer market competitive incentive opportunities | |
| | RSUs | | | • | | | Attract and Retain Executives | | | • | | | Promote retention of our executives through long-term service vesting period | |
| | | | | • | | | Align Interests with Stockholders | | | • | | | Align the interests of executives with those of stockholders by issuing equity awards, the value of which is correlated to our stock price | |
| | PSUs | | | • | | | Pay-for-Performance | | | • | | | Establish appropriate performance conditions that the Compensation and Human Capital Committee believes will drive our future growth and profitability | |
| | | | | • | | | Reward Achievement | | | • | | | Provide meaningful and appropriate incentives for achieving annual and performance period financial goals that the Compensation and Human Capital Committee believes are important for the company’s short- and long-term success | |
| | | | | • | | | Align Interests with Stockholders | | | • | | | Tie payout of awards to TSR performance and profitability | |
| | | | | • | | | Attract and Retain Executives | | | • | | | Service required through the applicable three-year performance period to encourage retention of our executives | |
| | Other Employee Benefits (Termination Agreements) |
| | | • | | | Short-Term IncentivesAttract and Retain Executives
|
| | | • | | | Long-Term IncentivesIntended to ease an NEO's transition due to an unexpected employment termination and retain and encourage our NEOs to remain focused on our business and the interests of our stockholders when considering strategic alternatives
| |
| | | | | • | | | Align Interests with Stockholders | | | • | | | Mitigate any potential employer liability and avoid future disputes or litigation | |
| | Retirement Benefits | | | • | | | Attract and Retain Executives | | | • | | | Retain and encourage our employees, including executives, to remain focused on our business for the long term | |
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TARGET DIRECT COMPENSATION MIX
In
fiscal year 2019,Fiscal Year 2021, approximately
91%94% of our CEO’s and approximately
81%83% of our average NEO’s total direct compensation
consisting of long-term incentives (70%was at-risk, with LTI comprising 84% of our
CEO’s compensationCEO and
56%68% of our average NEO’s
compensation)total target compensation and
short-term incentives (21%STI comprising 10% of our CEO’s
compensation and
25% of15% for our average NEO’s
compensation), was “at-risk”– which means that the compensation varies year-to-year. Short term incentives are based on achievement of Non- GAAP EPS and Non-GAAP Revenue growth measured against established performance metrics. Payout of long-term incentives depend on our stock price and TSR measured against the S&P 400 and on our Non-GAAP OM as measured against our incentive plan target.
| | Base Salary | | | — | | | — | |
| | STI
85%-150% of Base Salary | | | Non-GAAP EPS
(75.0%) | | | Earned based on annual earnings compared to targets directly tied to the approved financial plan | |
| | Non-GAAP
Revenue Growth
(12.5%) | | | Earned based on revenue achievement on a year-over-year basis | |
| | Non-GAAP ARR Growth
(12.5%) | | | Earned based on annual recurring revenue achievement on a year-over-year basis, excluding the sale of instruments | |
| | WWQ
(87.5%)* | | | Earned based on global order generation | |
| | LTI: PSUs
60% of target LTI value | | | 3-Year Relative TSR
(50.0%) | | | Earned based on share price performance relative to comparator group over time | |
| | 3-Year Average Non- GAAP OM
(50.0%) | | | Earned based on annual profit generation over a
three-year period | |
| | LTI: RSUs
40% of target LTI value | | | — | | | Value directly aligns with value delivered to stockholders | |
*
| WWQ is applicable to Mr. Wallace only. |
TABLE OF CONTENTSBase Salary
BASE SALARY
The Compensation
and Human Capital Committee
regularlyannually reviews base salaries for our executive officers to reflect changes in market conditions or other factors, including changing responsibilities as our executive officers’ positions evolve. Base salaries are set at levels intended to be competitive and commensurate with each executive officer’s position, performance, skills, and experience
in order to attract and retain the best talent.
The base salaries of our NEOs are set annually by the Compensation and Human Capital Committee, who considers the Compensation Factors (as defined in the section entitled “Factors for Determining Compensation”) for each NEO and the Company’sKeysight’s expected operating budget. Base salary is a fixed component of our NEOs’ compensation and does not vary with Company performance. TheAfter reviewing market trends, Company and individual performance of our NEOs, the Compensation and Human Capital Committee approved the following adjustments to base salaries, effective December 1, 2018 based on the factors described above:2020:
| | Ronald S. Nersesian | | | $1,000,000 | | | $1,000,000 | | | 0.0% | |
| | Neil P. Dougherty | | | $650,000 | | | $650,000 | | | 0.0% | |
| | Satish C. Dhanasekaran | | | $650,000 | | | $675,000 | | | 3.8% | |
| | Soon Chai Gooi(1) | | | $518,907 | | | $520,4112 | | | 0.0% | |
| | Mark A. Wallace | | | $575,000 | | | $600,000 | | | 4.3% | |
NEO
| Fiscal Year 2019 Base Salary
|
Ronald S. Nersesian
| $1,000,000 (no increase)
|
Neil Dougherty
| Increased from $550,000 to $570,000
|
Jay Alexander
| Increased from $475,000 to $520,000
|
Satish Dhanasekaran
| $600,000(2)
|
Soon Chai Gooi(1)
| Increased from $455,550 to $491,868
|
| (1)
| Mr. Gooi is paid in Malaysian Ringgit, and his 20192021 base salary was converted to U.S. dollars based on the currency exchange rate as of October 31, 2019.2021 for reporting purposes. |
| (2)
| Mr. Dhanasekaran became a NEOGooi’s Malaysian Ringgit base salary was not increased in Fiscal Year 2019.2021. The U.S. dollar equivalent changes in Mr. Gooi’s base salary reflect the variation in currency exchange rates between the reporting periods. |
SHORT-TERM INCENTIVES
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| COMPENSATION DISCUSSION AND ANALYSIS | 32
|
Short-Term Incentives
The Performance-Based CompensationSTI Plan for our NEOs and others in executive and senior manager roles provides cash awards every six months depending on Company performance. The awards are directly linked to the achievement of semi-annual financial objectives established by the Compensation and Human Capital Committee atshortly after the beginning of each performance period, based on the financial plan approved by the Board for that year.period. Semi-annual financial objectives are chosen instead of annual objectives to account for the cyclical nature and volatility of our markets. In addition, the Compensation and Human Capital Committee reviews and approves the short-term incentive plan threshold and maximum tied to each objective, benchmarking our internal historical achievement against external market data to ensure alignment with the market compensation practices. The short-term cash incentives are tied to the financial objectives with each objective weighted depending on the executive’s role and responsibilities. Depending upon the Company’sKeysight’s performance, the payout ranges from 0% to 200% of target. The Compensation and Human Capital Committee may exercise negative discretion to determine the final award payout.
At the end of
After each performance period, the Compensation
and Human Capital Committee certifies our actual performance against the objectives and to the extent earned, the cash incentive awards are paid. Performance measures and target performance goals cannot be changed after they are established by the Compensation
and Human Capital Committee.
Financial Objectives for Fiscal Year 20192021
For fiscal year 2019,Fiscal Year 2021, we retained Non-GAAP EPS as one of the financial objectives for the short-term cash incentives of our NEOs for the following reasons:
Strengthen line of sight with stockholders
Drive leadership to focus on the enterprise rather than at a segment level
Create value through growth and cost efficiency priorities
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The Compensation
and Human Capital Committee believes that Non-GAAP EPS is a transparent, operations-based measure, which is computed on the basis of Non-GAAP
earningsnet income and
weighted-average diluted shares. Non-GAAP
EPS earnings are calculated by excludingnet income excludes primarily the
impactimpacts of
amortization of acquisition-related balances, share-based compensation,
restructuring costs, separation costs, transformational costs, acquisition, and integration costs,
asset impairmentsrestructuring and
non-cash intangible amortization. We also exclude anyrelated costs, non-recurring items such as goodwill impairment, legal settlement, gain/loss on divestitures and others. Also excluded are tax benefits or expenses that are not directly related to ongoing operations and which are either isolated or
which could notcannot be expected to occur again with any regularity or predictability.
Non-GAAP EPS is the same metric that we use for our quarterly earnings announcements.Non-GAAP EPS targets are determined by our semi-annual financial planning process. Management prepares a financial plan, which is reviewed and approved by the Board of Directors. The Non-GAAP EPS targets are directly tied to the approved financial plan and do not change during the performance period. The threshold and maximum are designed to account for the cyclical nature and volatility of our markets.
DilutedWeighted-average diluted shares
are defined asrepresent the total number of shares that would be outstanding if all possible sources of conversion are exercised.
Non-GAAP Revenue
growthGrowth remained our second financial objective for the short-term cash incentives of our NEOs for
fiscal year 2019. For segment presidents, revenue growth is tied solely to their respective business groups, and for other NEOs, revenue growth is measured at the Keysight level. Aligning compensation incentives to the revenue growth of specific business groups creates direct accountability for our segment presidents.Fiscal Year 2021. Non-GAAP Revenue growth is based on reported Non-GAAP Revenue,
which is Keysight’s GAAP reported revenue, but includes recognition of acquired deferred revenue that was written down to fair value in purchase accounting and excludes incremental revenue from acquisitions completed within the applicable period.
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| COMPENSATION DISCUSSION AND ANALYSIS | 33
|
For our sales organization we believe the best indication of performance is achievement of quota, therefore WWQ is applied as the remaining financial metric for our Senior Vice President, Head of Global Sales. WWQ is based on orders, which are recognized based on Company policy that defines how purchase commitments are to be accepted.Short-Term Cash Incentive AwardsAward Calculations and Awards Measures
For fiscal year 2019,Fiscal Year 2021, the award payouts under the Performance-Based CompensationSTI Plan for the NEOs were calculated by multiplying the individual’s base salary for the performance period by the individual target award, financial target award, and attainment percentage.
| | | | | | | | | |
| First Half Financial Objectives
| | Earned Base Salary for Period
| ×
| Individual Target Award (% varies by Individual)
| ×
| Financial Target Award
| ×
| Attainment % (Based on actual performance)
| |
| |
| Second Half Financial Objectives
|
The following tables describe the threshold, target, and maximum financial measures for the financial objectives of Non-GAAP EPS, Keysight Non-GAAP Revenue growth, EISGKeysight Non-GAAP RevenueARR growth, and CSG Non-GAAP Revenue growthWWQ as well as reportsreporting the actual results and attainment percentage. Based on the attainmentpayout percentage payoutsin Fiscal Year 2021. Payouts could have ranged from 0% to 200%.
Non-GAAP EPS(1)
(Messrs. Nersesian, Dougherty, Alexander, Gooi & Dhanasekaran)
First Half Fiscal Year 2019 | Second Half Fiscal Year 2019 |
Threshold $ | Target $ | Max $ | Results $ | Attainment % | Payout % | Threshold $ | Target $ | Max $ | Results $ | Attainment % | Payout % |
$0.82 | $1.64 | $2.46 | $2.15 | 131.1% | 162.0% | $1.00 | $2.00 | $3.00 | $2.55 | 127.5% | 156.0% |
Keysight Non-GAAP Revenue Growth(2)
(Messrs. Nersesian, Dougherty, Alexander)
First Half Fiscal Year 2019 | Second Half Fiscal Year 2019 |
Threshold % | Target % | Max % | Results % | Attainment % | Payout % | Threshold % | Target % | Max % | Results % | Attainment % | Payout % |
5.0% | 9.0% | 15.0% | 13.3% | 148.8% | 173.1% | 0.3% | 4.3% | 10.3% | 6.5% | 150.0% | 136.0% |
EISG Non-GAAP Revenue Growth(2)
(Mr. Gooi)
First Half Fiscal Year 2019 | Second Half Fiscal Year 2019 |
Threshold % | Target % | Max % | Results % | Attainment % | Payout % | Threshold % | Target % | Max % | Results % | Attainment % | Payout % |
3.5% | 7.5% | 13.5% | 8.9% | 118.0% | 122.5% | 0.1% | 3.3% | 9.3% | 3.2% | 97.1% | 98.5% |
CSG Non-GAAP Revenue Growth(2)
(Mr. Dhanasekaran)
First Half Fiscal Year 2019 | Second Half Fiscal Year 2019 |
Threshold % | Target % | Max % | Results % | Attainment % | Payout % | Threshold % | Target % | Max % | Results % | Attainment % | Payout % |
4.6% | 8.6% | 14.6% | 15.2% | 176.2% | 200.0% | 0.1% | 3.6% | 9.6% | 8.5% | 233.7% | 180.7% |
| (1) | Excludes certain items, primarily share-based compensation expense, goodwill impairment, legal settlement, gain on divestitures, amortization of acquisition-related balances, pension curtailment and settlement gains, separation and related costs, restructuring and related costs, and costs associated with the Northern California wildfire.2022 Proxy Statement 55 |
| (2) | Based on reported Non-GAAP Revenue Growth, which is Keysight’s GAAP reported revenue but includes recognition of acquired deferred revenue that was written down to fair value in purchase accounting and excludes incremental revenue from acquisitions completed within the applicable period. Also excludes acquisition revenue not included in the original Performance-Based Compensation Plan metric. |
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| | H1 FY21 | | | H2 FY21 | |
| | Threshold | | | Target | | | Max | | | Results | | | Payout | | | Threshold | | | Target | | | Max | | | Results | | | Payout | |
| | $1.26 | | | $2.52 | | | $3.50 | | | $2.87 | | | 128.0% | | | $1.42 | | | $2.83 | | | $4.25 | | | $3.36 | | | 138.0% | |
| | H1 FY21 | | | H2 FY21 | |
| | Threshold | | | Target | | | Max | | | Results | | | Payout | | | Threshold | | | Target | | | Max | | | Results | | | Payout | |
| | 10.3% | | | 14.3% | | | 20.3% | | | 20.4% | | | 200.0% | | | 2.1% | | | 6.1% | | | 12.1% | | | 13.8% | | | 200% | |
| | H1 FY21 | | | H2 FY21 | |
| | Threshold | | | Target | | | Max | | | Results | | | Payout | | | Threshold | | | Target | | | Max | | | Results | | | Payout | |
| | 7.0% | | | 12.0% | | | 17.0% | | | 25.2% | | | 200.0% | | | 4.0% | | | 9.0% | | | 14.0% | | | 12.4% | | | 167.9% | |
| | H1 FY21 | | | H2 FY21 | |
| | Threshold | | | Target | | | Max | | | Results | | | Payout | | | Threshold | | | Target | | | Max | | | Results | | | Payout | |
| | $2,123 | | | $2,359 | | | $2,595 | | | $2,548 | | | 180.0% | | | $2,273 | | | $2,525 | | | $2,778 | | | $2,801 | | | 200.0% | |
(1)
| Half-yearly non-GAAP EPS is the sum of reported quarters. Reconciliations to comparable GAAP metrics are available at investor.keysight.com under quarterly reports in financial information. |
(2)
| Reconciliations to comparable GAAP metrics are available at investor.keysight.com under quarterly reports in financial information. The impact of incremental revenue from acquisitions for the periods reported is not material. |
(3)
| Non-GAAP ARR is revenue that is likely to continue in the future, albeit with some level of volatility. This includes service contracts including KeysightCare and extended warranty, technical support, per-incident repair and calibration services, trade part sales, subscription software and software support contracts. |
(4)
| Mr. Wallace’s short-term cash incentive is based on Keysight Non-GAAP ARR and WWQ. |
| COMPENSATION DISCUSSION AND ANALYSIS | 34 |
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The following table sets forth the mix and weight of the financial objectives as applied to calculating the short-term cash
incentive for the NEOs.Weight Allocation of Financial Objectives |
Name | Non-GAAP EPS | Revenue Growth(1) |
Ronald S. Nersesian | | 75 | % | | 25 | % |
Neil P. Dougherty | | 75 | % | | 25 | % |
Jay Alexander | | 75 | % | | 25 | % |
Satish Dhanasekaran | | 75 | % | | 25 | % |
Soon Chai Gooi | | 75 | % | | 25 | % |
| | Ronald S. Nersesian | | | 75.0% | | | 12.5% | | | 12.5% | | | | |
| | Neil P. Dougherty | | | 75.0% | | | 12.5% | | | 12.5% | | | | |
| | Satish C. Dhanasekaran | | | 75.0% | | | 12.5% | | | 12.5% | | | | |
| | Soon Chai Gooi | | | 75.0% | | | 12.5% | | | 12.5% | | | | |
| | Mark A. Wallace | | | | | | | | | 12.5% | | | 87.5% | |
| (1) | Mr. Gooi’s short-term cash incentive is based specifically on the EISG Non-GAAP Revenue Growth and Mr. Dhanasekaran’s short-term cash incentive is based specifically on the CSG Non-GAAP Revenue Growth. |
Short-Term Cash Incentive for Each NEO
The Compensation and Human Capital Committee set the fiscal year 2019Fiscal Year 2021 target short-term cash incentiveSTI award opportunities as a percentage of base salary for each NEO. Each NEO’s target short-term cash incentiveSTI for fiscal year 2019Fiscal Year 2021 was set between 80%90% and 150% of base salary, as follows:
Fiscal Year 2019 Target Short-Term Cash Incentive Award Opportunities
(Expressed as a Percentage of Base Salary) |
Name | First Half
Financial
Target Award | Second Half
Financial
Target Award | Total Target
Short-Term
Cash Incentives |
Ronald S. Nersesian | | 75.0 | % | | 75.0 | % | | 150.0 | % |
Neil P. Dougherty | | 42.5 | % | | 42.5 | % | | 85.0 | % |
Jay Alexander | | 40.0 | % | | 40.0 | % | | 80.0 | % |
Satish Dhanasekaran | | 40.0 | % | | 40.0 | % | | 80.0 | % |
Soon Chai Gooi | | 45.0 | % | | 45.0 | % | | 90.0 | % |
| | Ronald S. Nersesian | | | 75.0% | | | 75.0% | | | 150.0% | |
| | Neil P. Dougherty | | | 45.0% | | | 45.0% | | | 90.0% | |
| | Satish C. Dhanasekaran | | | 50.0% | | | 50.0% | | | 100.0% | |
| | Soon Chai Gooi | | | 45.0% | | | 45.0% | | | 90.0% | |
| | Mark A. Wallace | | | 45.0% | | | 45.0% | | | 90.0% | |
Fiscal Year 20192021 Short-Term Cash Incentive PayoutsPayout Table
The payouts under the
Performance-Based CompensationSTI Plan for
fiscal year 2019Fiscal Year 2021 are provided in the table below and in the “Non-Equity Incentive Plan Compensation” column in the “Summary Compensation Table”. The Compensation
and Human Capital Committee determined that the awards earned based on actual performance results for
fiscal year 2019Fiscal Year 2021 fairly reflected the
performancesperformance of each of our executive officers and did not exercise negative discretion with respect to the awards.
| First Half Financial | Second Half Financial | Total Actual Short-Term
Cash Incentives |
Name | Target
Incentive(1) | Actual
Award | Actual
Award | Target
Incentive(1) | Actual
Award | Actual
Award |
| ($) | ($) | (%) | ($) | ($) | (%) | ($) | (%) |
Ronald S. Nersesian | $ | 750,000 | | $ | 1,235,813 | | | 164.78 | % | $ | 750,000 | | $ | 1,132,500 | | | 151.00 | % | $ | 2,368,313 | | | 157.89 | % |
Neil P. Dougherty | $ | 240,841 | | $ | 396,846 | | | 164.78 | % | $ | 242,250 | | $ | 365,798 | | | 151.00 | % | $ | 762,644 | | | 157.89 | % |
Jay Alexander | $ | 205,017 | | $ | 337,816 | | | 164.78 | % | $ | 208,000 | | $ | 314,080 | | | 151.00 | % | $ | 651,896 | | | 157.89 | % |
Satish Dhanasekaran | $ | 233,370 | | $ | 400,230 | | | 171.50 | % | $ | 240,000 | | $ | 389,220 | | | 162.18 | % | $ | 789,450 | | | 166.84 | % |
Soon Chai Gooi(2) | $ | 221,102 | | $ | 336,362 | | | 152.13 | % | $ | 221,534 | | $ | 313,748 | | | 141.63 | % | $ | 650,110 | | | 146.88 | % |
| | Ronald S. Nersesian | | | 750,000 | | | 1,095,000 | | | 146.0 | | | 750,000 | | | 1,121,156 | | | 149.49 | | | 2,216,156 | | | 147.74 | |
| | Neil P. Dougherty | | | 292,500 | | | 427,050 | | | 146.0 | | | 292,500 | | | 437,251 | | | 149.49 | | | 864,301 | | | 147.74 | |
| | Satish C. Dhanasekaran | | | 337,500 | | | 492,750 | | | 146.0 | | | 337,500 | | | 504,520 | | | 149.49 | | | 997,270 | | | 147.74 | |
| | Soon Chai Gooi(2) | | | 236,248 | | | 344,922 | | | 146.0 | | | 234,160 | | | 350,040 | | | 149.49 | | | 694,962 | | | 147.74 | |
| | Mark A. Wallace | | | 265,753 | | | 484,999 | | | 182.5 | | | 270,000 | | | 529,166 | | | 195.99 | | | 1,014,165 | | | 189.24 | |
| (1)
| Target incentive has been pro-rated for the period considering salary changes. |
| (2)
| Mr. Gooi is normally paid in Malaysian Ringgit. His target incentive and payout for the first half of fiscal year 2019Fiscal Year 2021 was converted tofrom U.S. dollars based on the currency exchange rate as of April 30, 2019.2021. His target incentive and payout for the second half of fiscal year 2019Fiscal Year 2021 was converted tofrom U.S. dollars based on the currency exchange rate as of October 31, 2019.2021. |
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| COMPENSATION DISCUSSION AND ANALYSIS | 35
|
LONG-TERM INCENTIVES
Long-Term Incentives
2019 Long-Term IncentiveLTI Award Mix
for Fiscal Year 2021
We use the following vehicles to ensure that our LTI programProgram remains balanced, performance-focusedperformance- focused and supportive of its objectives over a three-year period:objectives:
PSUs granted under our LTPLTI Program support the objectives of linking realized value to the achievement of critical performance objectives and stockholder alignment. Earning shares of our common stock under our LTPLTI Program is based on achievement over a three year period of long-term returns to stockholders as measured by Keysight’s TSR against the S&P 500 Total Return Indexrelative to our peers and Non-GAAP OM as measured against our incentiveannual plan target.
RSUs are used to keep our executive officers focused on the absolute performance of the Company’sKeysight’s stock price.price over time. We believe RSUs encourage behavior and initiatives that support sustained long-term stock price growth and have retentive value, which benefits all stockholders.
The mix of long-term incentive awards for our NEOs by value, 60% of which is delivered in performance-based equity and 40% delivered in time-vested shares, places a greater emphasis on at-risk compensation and therefore aligns NEOs compensation with long-term stockholder value. The mix is represented in the following chart.
PSU Performance Measures
for Grants Made in Fiscal Year 2021
The Compensation and Human Capital Committee has established rolling three-year performance periods for LTP Plan PSU awards under our LTP ProgramLTI Program. For grants made in Fiscal Year 2021, for the performance period beginning November 1, 2020 and for fiscal year 2019, usedending October 31, 2023, relative TSR and Non-GAAP OM asare the performance measuresmeasures. Keysight considers relative TSR and Non-GAAP OM to be equally important for thelong-term performance, period ending October 31, 2021,balancing internal operational goals with a portion of each NEO’s PSUs earned based on the attainment of each performance measure.market performance. The target numbergrant of PSUs subject to each performance measure was equal to approximately 50% of the grant date fair value of each NEO’s PSUs since Keysight considers relative total PSU grant.
TSR and Non-GAAP OM to be equally important for long-term performance by balancing internal operational goals with market performance.For fiscal year 2019,
. TSR reflects the aggregate change in the 90-day average closing price of our stock versusrelative to the S&P 500 Total Return Index. The beginning average is the 90-day period prior to the performance period and the ending average will be the final 90-day period of the performance period, and per S&P’s methodology, the price of this index reflects reinvestment of dividends into the entire index on the ex-dividend date and also includes adjustments based on their proprietary formula (which includes additions/deletions to the index, rights issues, share buybacks/issuances, and spin-offs).The Non-GAAP OM performance measure is set at the beginning of each fiscal year and following the completion of the applicable fiscal year, the Non-GAAP OM payout achievement percentage is calculated for such fiscal year. Following the completion of the three-year performance period, the Non-GAAP OM payout achievement percentage for each fiscal year is then averaged and used to determine the total number of PSUs that are earned based on Non-GAAP OM. For fiscal year 2019, Non-GAAP OM excludes, among other things, the impacts of share-based compensation, restructuring and related costs, separation and related costs, acquisition and integration costs, amortization of
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| COMPENSATION DISCUSSION AND ANALYSIS | 36
|
acquisition-related balances, acquisition-related compensation expense, pension curtailment and settlement gains. Because the Non-GAAP OM target is set at the beginning of each fiscal year, income and expenses related to an acquisition are excluded for the fiscal year in which the acquisition occurs but are included in both target and actual results in subsequent years.
Long-Term Incentives Granted in Fiscal Year 2019
The target value of the long-term incentive awards granted is determined by the Compensation Committee at the beginning of the then-current fiscal year for each of our NEOs after considering the Compensation Factors. Grant values were determined as follows:
To determine the number of PSUs with a TSR metric, we divided 30% of the total target dollar award amount by the product of the 20-day trailing average closing price of our common stock prior to the date of grant multiplied by a Monte-Carlo valuation (the “TSR PSUs”).
To determine the number of PSUs with a Non-GAAP OM metric, we divided 30% of the total target dollar award amount by the 20-day trailing average stock price of our common stock prior to the date of grant (the “OM PSUs”).
The remaining total target dollar award amount of the long-term awards was in the form of RSUs calculated by using a 20-day trailing average stock price.
The following table shows the long-term incentive awards granted in fiscal year 2019 to the NEOs.
Name | Performance
Stock Units (TSR)
(#) | Performance
Stock Units (OM)
(#) | Restricted
Stock Units
(#) | Total Target Value of Long-
Term Incentive Awards
($) |
Ronald S. Nersesian | | 34,763 | | | 42,063 | | | 56,084 | | $ | 8,400,000 | |
Neil P. Dougherty | | 6,931 | | | 8,387 | | | 11,183 | | $ | 1,675,000 | |
Jay Alexander | | 6,679 | | | 8,082 | | | 10,776 | | $ | 1,614,000 | |
Satish Dhanasekaran | | 5,876 | | | 7,110 | | | 9,480 | | $ | 1,420,000 | |
Soon Chai Gooi | | 8,574 | | | 10,375 | | | 13,834 | | $ | 2,072,000 | |
Performance Stock Units Granted in Fiscal Year 2019
The TSR PSUs granted in fiscal year 2019 will be measured and paid out based on TSR for the fiscal year 2019 through fiscal year 2021 performance period. The OM PSUs will be measuredCompensation and paid out based on Non-GAAP OM for the fiscal years 2019, 2020, and 2021. The PSUs are wholly “at risk” compensation as our performance must be at or above the threshold of the TSR and Non-GAAP OM, as applicable, for the award recipients to earn any of the shares of our common stock subject to their PSUs.
PSUs Based on TSR
With respect to the fiscal year 2019 TSR based PSU grants, such grants are earned based on Keysight’s TSR performance relative to the S&P 500 Total Return Index. TSR relative performance is measured as the difference in basis points between Keysight’s TSR and the S&P 500 Total Return Index.
The CompensationHuman Capital Committee did not establish an absolute TSR target as it believed that performance would be best measured on a relative basis against the S&P 500 Total Return Index. The payout matrix determined by the Compensation Committee for TSR was:
| | Payout as a
% of Target
|
Threshold:
| 40 percentage points below S&P 500 Total Return Index
| | 25
| %
|
Target:
| Equals S&P 500 Total Return Index
| | 100
| %
|
Maximum:
| 40 percentage points above S&P 500 Total Return Index
| | 200
| %
|
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| COMPENSATION DISCUSSION AND ANALYSIS | 37
|
The PSUs will be settled linearly for each level of performance as illustrated below.
Performance Share Payout Schedule (TSR)
PSUs Based on Non-GAAP OM
. Non-GAAP OM is an internal financial metric that complements the external market-conditioned metric, TSR. Having an internal financial objective linked directly to our long-term incentive program creates more accountability and line of sight to our financial plan, which focuses on our internal growth and profitability metrics. The performance measure for OM is set at the beginning of each Fiscal Year and achievement is calculated following the completion of the applicable Fiscal Year. Following completion of the three-year performance period, the OM achievement percentage for each Fiscal Year is averaged and used to determine the total number of PSUs that are earned.
| Non-GAAP OM excludes, primarily the impacts of amortization of acquisition-related balances, share-based compensation, acquisition and integration costs, restructuring and related costs, non-recurring items such as goodwill impairment, legal settlement, gain/loss on divestitures and others. Because the OM target is set at the beginning of each Fiscal Year, income and expenses related to an acquisition are excluded for the Fiscal Year in which the acquisition occurs but are included in both target and actual results in subsequent years. |
LTI Granted in Fiscal Year 2021
The target value of the LTI awards granted in Fiscal Year 2021 to each of our NEOs was determined by the Compensation and Human Capital Committee after considering Factors for Determining Compensation. Fiscal Year 2021 Grant values were calculated as follows:
To determine the number of PSUs with a TSR metric, we divided 30% of the total target dollar award amount by the product of the 90-day trailing average closing price of our common stock prior to the date of grant multiplied by a Monte-Carlo valuation (the “TSR PSUs”).
To determine the number of PSUs with an OM metric, we divided 30% of the total target dollar award amount by the 90-day trailing average stock price of our common stock prior to the date of grant (the “OM PSUs”).
To determine the number of RSUs, we divided the remaining 40% of the total target dollar award amount by the 90-day trailing average stock price of our common stock prior to the date of grant.
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PSUs Granted in Fiscal Year 2021
The PSUs are wholly “at risk” compensation as our performance must be at or above the threshold of the TSR and OM targets, as applicable, for the award recipients to earn any shares of our common stock subject to their PSUs.
PSUs Based on TSR. The TSR PSUs granted in Fiscal Year 2021 will be measured and paid out based on TSR for the Fiscal Year 2021 through Fiscal Year 2023 performance period. The payout matrix determined by the Compensation and Human Capital Committee for TSR was:
| | Threshold: | | | 40 percentage points below S&P 500 Total Return Index | | | 25% | |
| | Target: | | | Equals S&P 500 Total Return Index | | | 100% | |
| | Maximum: | | | 40 percentage points above S&P 500 Total Return Index | | | 200% | |
The PSUs will be settled linearly for each level of performance as illustrated below.
PSU Payout Schedule (TSR)
PSUs Based on OM. The OM PSUs will be measured and paid out based on OM for the Fiscal Years 2021, 2022, and 2023. The payout matrix determined by the Compensation and Human Capital Committee for OM is below.
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The table below sets forth the threshold, target and maximum Non-GAAP OM goals for
fiscal year 2019Fiscal Year 2021 and the actual results for
fiscal year 2019.Fiscal Year 2019 Operating Margin |
Fiscal Year | Threshold % | Target % | Max % | Results % |
2019 | | 14.5 | % | | 19.5 | % | | 24.5 | % | | 24.0 | % |
Fiscal Year 2021.
| | 2021 | | | 20.9% | | | 25.9% | | | 30.9% | | | 27.8% | |
| | Threshold: | | | 5 points below annual Non-GAAP OM plan | | | 50% | 50
| %
|
| | Target: | | | Achievement of annual Non-GAAP OM plan | | | 100% | 100
| %
|
| | Maximum: | | | 5 points above annual Non-GAAP OM plan | | | 200% | 200
| %
|
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| COMPENSATION DISCUSSION AND ANALYSIS | 38
|
The OM PSUs will be settled linearly for each level of performance as illustrated below:
Performance Share
PSU Payout Schedule (OM)
Restricted Stock Units Granted in Fiscal Year 2017 -2021
The Compensation & Human Capital Committee grants RSU awards for retention purposes as they provide payout opportunity to the NEOs only if they remain employed through the applicable vesting dates or are retirement eligible. The payout opportunity is directly linked with stockholder value and executive efforts over a multi-year time frame. Subject to continued service to the Company through the applicable vesting date or retirement eligibility, RSUs vest in four equal installments beginning on the first anniversary of the grant date.
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The following table shows the long-term incentive awards granted in Fiscal Year 2021 to the NEOs.
| | Ronald S. Nersesian | | | 29,630 | | | 38,906 | | | 51,875 | | | $13,000,000 | |
| | Neil P. Dougherty | | | 6,302 | | | 8,275 | | | 11,033 | | | $2,765,000 | |
| | Satish C. Dhanasekaran | | | 8,319 | | | 10,923 | | | 14,565 | | | $3,650,000 | |
| | Soon Chai Gooi | | | 5,470 | | | 7,182 | | | 9,577 | | | $2,400,000 | |
| | Mark A. Wallace | | | 4,330 | | | 5,686 | | | 7,581 | | | $1,900,000 | |
Fiscal Year 2019
LTP− Fiscal Year 2021 LTI Program Payout
The
In November 2018, the Compensation
and Human Capital Committee granted our NEOs long-term incentive awards in the form of PSUs that would be earned, if at all, based on Keysight’s relative TSR and OM for the performance period that began on November 1,
20162018 and concluded on October 31,
2019.2021.
PSUs Payout Based on TSR. Approximately 50% of the grant date value of the PSUs were earned based on Keysight’s TSR performance relative to companies in the S&P 400500 Total Return Index. TSR relative performance is measured as the difference in basispercentage points between Keysight’s TSR and the S&P 400500 Total Return Index. The payout matrix for TSR was: | | Threshold: | | | 40 percentage points below S&P 400500 Total Return Index | | | 25% | 25
| %
|
| | Target: | | | Equals S&P 400500 Total Return Index | | | 100% | 100
| %
|
| | Maximum: | | | 40 percentage points above S&P 400500 Total Return Index | | | 200% | 200
| %
|
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| COMPENSATION DISCUSSION AND ANALYSIS | 39
|
After the threshold was reached, payouts were determined by a straight line with a slope of 1.875 until the target payout of 100% was reached.
After the target was achieved, payouts were determined by a straight line with a slope of 2.5 until 200% max payout, as illustrated below:
Performance Share Payout Schedule (TSR)
On November 20, 2019,17, 2021, the Compensation and Human Capital Committee certified that Keysight’s TSR was more than 40 percentage points greater thanabove the S&P 400500 Total Return Index.Index and resulted in a 200% payout. The table below sets forth the actual results for the fiscal year 2017 through fiscal yearFiscal Year 2019 - Fiscal Year 2021 performance period as well as the calculated payout percentage:
| | Keysight Total Shareholder ReturnTSR | | | 211.4%173.7%
| |
| | S&P 400500 Total Shareholder Return Index | | | 29.9%65.3%
| |
| | TSR Outperformance vs Total Return Index | | | 181.5108.4 ppts
| |
| | Calculated Payout | | | 200% of Target Shares | |
PSUs Payout Based on OM. Approximately 50% of the grant date value of the PSUs for the fiscal year 2017 through fiscal yearFiscal Year 2019 - Fiscal Year 2021 performance period werewas earned based on OM. At the end of the performance period, Keysight’s OM payout achievement for each fiscal yearFiscal Year during the three-year period was averaged with each yearFiscal Year weighted equally. The payout matrix for OM was:
| | Threshold: | | | 5 points below annual Non-GAAP OM plan | | | 50% | 50
| %
|
| | Target: | | | Achievement of annual Non-GAAP OM plan | | | 100% | 100
| %
|
| | Maximum: | | | 5 points above annual Non-GAAP OM plan | | | 200% | |
| 200
| %2022 Proxy Statement 61
|
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| COMPENSATION DISCUSSION AND ANALYSIS | 40
|
After threshold was reached, payouts were determined by a straight line with a slope of 10 until the target payout of 100% was reached. After target was achieved, payouts were determined by a straight line with a slope of 20 until 200% max payout as illustrated below:
Performance Share Payout Schedule (OM)
The table below sets forth the actual results for the fiscal year 2017 through fiscal yearFiscal Year 2019 – Fiscal Year 2021 performance period, as well as the calculated average payout percentage:
Fiscal Year 2017 - 2019 Operating Margin Metrics and Results |
Fiscal Year | Threshold % | Target % | Max % | Results % | Fiscal Year Payout % |
2017 | | 14 | % | | 19 | % | | 24 | % | | 19.3 | % | | 106 | % |
2018 | | 15 | % | | 20 | % | | 25 | % | | 20 | % | | 100 | % |
2019 | | 14.5 | % | | 19.5 | % | | 24.5 | % | | 24 | % | | 190 | % |
| | 2019 | | | 14.5 | | | 19.5 | | | 24.5 | | | 24.0 | | | 4.5% | | | 190.0 | |
| | 2020 | | | 19.6 | | | 24.6 | | | 29.6 | | | 25.4 | | | 0.8% | | | 116.0 | |
| | 2021 | | | 20.9 | | | 25.9 | | | 30.9 | | | 27.8 | | | 1.9% | | | 138.0 | |
| | Calculated Payout | | | | | | | | | | | | | | | | | | 148.0 | |
(1)
| Non-GAAP OM excludes primarily the impacts of amortization of acquisition-related balances, share-based compensation, acquisition and integration costs, restructuring and related costs, non-recurring items such as goodwill impairment, legal settlement, gain/loss on divestitures and others. Because the OM target is set at the beginning of each Fiscal Year, income and expenses related to an acquisition are excluded for the Fiscal Year in which the acquisition occurs but are included in both target and actual results in subsequent years. Reconciliations to comparable GAAP metrics are available on investor.keysight.com under quarterly reports in financial information. The impact of acquisitions for the periods reported is not material. |
Based on the average of the fiscal yearFiscal Year payout percentages shown above, the Compensation and Human Capital Committee, inon November 2019,17, 2021 certified that Keysight’s OM 11% of target, resultingresulted in a 132%148.0% payout.
The following table sets forth
for the Fiscal Year 2019 - Fiscal Year 2021 performance period the targeted number of shares,
for the fiscal year 2017 through fiscal year 2019 performance period, the shares earned, and the cash value of the earned shares.
Name | TSR Target Award
(in shares) | TSR Payout at 200%
(in shares) | OM Target Award
(in shares) | OM Payout at 132%
(in shares) | Cash Value of Payout
in $(1) |
Ronald S. Nersesian | | 43,859 | | | 87,718 | | | 53,076 | | | 70,060 | | $ | 16,891,713 | |
Neil P. Dougherty | | 9,153 | | | 18,306 | | | 11,076 | | | 14,620 | | $ | 3,525,058 | |
Jay Alexander | | 7,627 | | | 15,254 | | | 9,230 | | | 12,183 | | $ | 2,937,405 | |
Satish Dhanasekaran(2) | | 5,618 | | | 11,236 | | | 6,799 | | | 8,974 | | $ | 2,163,683 | |
Soon Chai Gooi | | 10,892 | | | 21,784 | | | 13,181 | | | 17,398 | | $ | 4,194,825 | |
| | Ronald S. Nersesian | | | 34,763 | | | 69,526 | | | 42,063 | | | 62,253 | | | 25,611,249 | |
| | Neil P. Dougherty | | | 6,931 | | | 13,862 | | | 8,387 | | | 12,412 | | | 5,106,352 | |
| | Satish C. Dhanasekaran | | | 5,876 | | | 11,752 | | | 7,110 | | | 10,522 | | | 4,328,952 | |
| | Soon Chai Gooi | | | 8,574 | | | 17,148 | | | 10,375 | | | 15,355 | | | 6,316,958 | |
| | Mark Wallace | | | 5,537 | | | 11,074 | | | 6,700 | | | 9,916 | | | 4,079,407 | |
| (1)
| Reflects the fair market value of the shares based on the closing stock price of Keysight’s common stock on November 20, 2019.17, 2021. |
OTHER BENEFITS
| (2) | Mr. Dhanasekaran deferred 95% of these shares under the Keysight Technologies, Inc. 2014 Deferred Compensation Plan. |
TERMINATION ARRANGEMENTS – SEVERANCE PLAN, CHANGE OF CONTROL SEVERANCE AGREEMENTS AND EQUITY AWARD ACCELERATION
Consistent with the practice of many of our peers, the Compensation and Human Capital Committee has adopted an Officer and Executive Severance Plan (the “Severance Plan”) for our U.S. based officers and executives, which provides for specified severance payments and benefits in cases where the officer is terminated other than for Cause, misconduct, death, or physical or mental incapacity or resigns for Good Reason (each, as defined in the Severance Plan). A more detailed description of the Severance Plan is provided in the “Officer and Executive Severance Plan” section below.
In addition, we have entered into Change of Control Agreements (each, a “Change of Control Agreement”) with our officers designed to provide protection to the officers, so they are not distracted by their personal, professional, and financial situations at a time when we need
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them to remain focused on their responsibilities, Keysight’s best interests and those of our stockholders. These agreements provide for double-trigger payments and benefits, which means that they are eligible to receive such payments and benefits only in the event of a change of control of Keysight and if the officer is terminated other than for Cause or resigns for Good Reason (each, as defined in the Change of Control Agreement) within a limited period of time after the change of control. Such benefits will not become payable unless both such events occur. A more detailed description of the Change of Control Agreements with the NEOs is provided in the “Change of Control Severance Agreements” section below.
Additionally, to encourage our employees to remain employed with Keysight through the date of the applicable vesting event, our stock award agreements, including those of our NEOs, provide for certain vesting benefits in the event of death, disability, or retirement or in certain circumstances involving a change in control. A more detailed description of the vesting benefits provided in our stock award agreements is provided in the “Acceleration and Continued Vesting of Equity Awards” section below.
The potential payments that would be received by our NEOs under the Severance Plan and the Change of Control Agreements are disclosed in the “Termination and Change of Control Table” below.
BENEFITS AND LIMITED PERQUISITES
Our global benefits philosophy is to provide our executive officers, including our NEOs, with protection and security through health and welfare, retirement, and life insurance programs.
In addition to these Company-wide benefits, our NEOs are offered Company-paid financial counseling through a third-party service to assist with their personal finances. Providing this service gives our NEOs a better understanding of their compensation and benefits, allowing them to concentrate on their responsibilities and our future success. Our executive officers, including our NEOs, are also offered physical examinations, for which we cover the costs that are not otherwise covered under each of our NEOs’ chosen health plan. We believe that the executive physical is a prudent measure to help ensure the health of our executive officers.
In connection with Mr. Gooi’s relocation from Malaysia to Singapore and his business travel to the U.S. on behalf of Keysight, Mr. Gooi received Company-paid relocation services and tax restoration benefits. Our executive officers also had access to Company drivers to transport them and their families to the airport for personal travel, as do other Company executives.
NON-QUALIFIED DEFERRED COMPENSATION
Our NEOs are eligible to voluntarily defer base salary, short-term cash incentives, and performance shares earned under the LTI Program. The deferrals are made through the Keysight Technologies Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan is a standard management benefit plan offered by many public companies.
Deferred compensation is distributed to eligible participants in January of the year following termination of their employment, if termination occurs during the first six months of the calendar year. Otherwise, payouts are distributed to participants in July of the year following termination of employment. No early distributions or withdrawals are allowed.
The specific benefits and an additional description of plan features are set forth in the section entitled “Non-Qualified Deferred Compensation” below.
PENSION PLANS
Our pension plans are designed to promote long-term employment retention, support the employee’s career-employment strategy, and provide employee retirement savings. Additional information on the plans for which certain of the NEOs are eligible is set forth below in “Pension Benefits”.
| 2022 Proxy Statement COMPENSATION DISCUSSION AND ANALYSIS 63| 41 |
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PROCESS FOR DETERMINING EXECUTIVE COMPENSATION
ROLE OF THE COMPENSATION AND HUMAN CAPITAL COMMITTEE
The Compensation and Human Capital Committee reviews and discusses the Board of Directors’ evaluation of the CEO and makes preliminary determinations about base salary, annual short-term incentive, and long-term incentive compensation. The Compensation and Human Capital Committee then discusses the compensation recommendations with the full Board, and the Compensation and Human Capital Committee approves final compensation decisions after this discussion.
ROLE OF THE CHIEF EXECUTIVE OFFICER
For other NEOs, the CEO and CAO consider performance and make individual recommendations to the Compensation and Human Capital Committee on base salary, annual short-term incentive, and long-term incentive compensation. The Compensation and Human Capital Committee reviews, discusses, modifies, and approves, as appropriate, these compensation recommendations.
COMPENSATION AND HUMAN CAPITAL COMMITTEE RESOURCES AND TOOLS
The Compensation and Human Capital Committee uses several resources and tools to determine compensation, including competitive market information and tally sheets, which quantify each of the compensation elements for each executive officer, as well as accumulated outstanding long-term equity awards and deferred compensation.
FACTORS FOR DETERMINING COMPENSATION (“COMPENSATION FACTORS”)
Responsibilities and capabilities of each executive officer
Competitive market data provided by the independent compensation consultant
Tally sheets describing the total compensation received by each executive officer
Each executive officer’s self-evaluation and evaluation by the CEO and the Chief Administrative Officer
Qualitative evaluation of each executive officer’s overall and corporate performance by the Compensation and Human Capital Committee or the independent members of the Board of Directors
Objective assessment of each executive officer’s actual performance against pre-established goals and financial targets
Compensation Benchmarking Peer Group
As part of its compensation deliberations, the Compensation and Human Capital Committee conducts an annual review of the compensation practices of the competitive market against a group of peer companies. The Compensation and Human Capital Committee annually reviews our peer group to ensure the companies are suitable peers for compensation comparison purposes. At the end of Fiscal Year 2020, the Compensation and Human Capital Committee, with the assistance of the Committee’s independent executive compensation consultant Meridian, approved a compensation peer group for consideration for Fiscal Year 2021 compensation decisions based on the following criteria:
| | • | Revenue between approximately $2.2 billion and $11.0 billion, which were between approximately 0.5 times and 2.5 times our projected Fiscal Year 2021 revenue | |
| | • | A market capitalization between approximately $6.0 billion and $54.8 billion, which were between approximately 0.33 times and 3 times our projected Fiscal Year 2021 market capitalization | |
| | • | A market capitalization to revenue ratio greater than 1.0 | |
TABLE OF CONTENTSPolicies
These criteria resulted in the selection of 31 companies, all members of the Russell 3000 Information Sector. The selected companies compete with us either in the same business and capital markets or in the executive talent arena or operate similarly complex business operations with significant global reach. The Compensation and Human Capital Committee used compensation data drawn from the compensation peer group as one of the Compensation Factors considered in setting the compensation of the executive officers.
| | Acuity Brands | | | Ciena Corporation | | | Juniper Networks | | | NortonLifeLock(1) | | | Teradyne | |
| | Agilent
Technologies | | | Citrix Systems | | | KLA-Tencor | | | Palo Alto Networks | | | Trimble Navigation | |
| | AMETEK | | | CommScope | | | Lam Research | | | Rockwell Automation | | | Zebra Technologies | |
| | Arista Networks | | | F5 Networks | | | Motorola Solutions | | | Roper Technologies | | | | |
| | Autodesk | | | FLIR Systems | | | National Instruments | | | Sensata Technologies Holdings PLC | | | | |
| | Cadence Design Systems | | | Fortive | | | NCR Corporation | | | SS&C Technologies Holdings, Inc. | | | | |
| | CDK Global | | | Hubbell | | | NetApp | | | Synopsis | | | | |
(1)
| Formerly known as Symantec. The company’s name was revised in November 2020, following the completion of a sale of its enterprise security business. |
At the time of the Compensation and Human Capital Committee’s approval of the compensation peer group for Fiscal Year 2021, we were above the median of our compensation peer group based on revenue, market capitalization, and number of employees.
| | 25th Percentile | | | 3,001 | | | 6,709 | | | 8,057 | |
| | Median | | | 3,672 | | | 14,586 | | | 10,800 | |
| | 75th Percentile | | | 5,448 | | | 27,146 | | | 17,550 | |
| | Keysight Technologies, Inc.(1) | | | 4,121 | | | 19,625 | | | 13,900 | |
(1)
| Fiscal Year 2021 estimates as of 10/31/2020 |
Peer Group for the Long-Term Incentive Program The Compensation Risk Mitigationand Human Capital Committee believes that a larger peer group is more appropriate for evaluating TSR performance under Keysight’s LTI Program, as a larger peer group provides a broader index for comparison and better alignment with stockholder investment choices. For Fiscal Year 2021, the Compensation and Human Capital Committee selected the S&P 500 Total Return Index for determining relative TSR as one of the performance criteria for LTI Program awards granted for the three-year performance period ending October 31, 2023. This index has a strong correlation with Keysight’s stock price and the Committee views the S&P 500 as a possible investment alternative to Keysight. The S&P 500 constituent list is maintained by the S&P Index Committee, which is available at standardandpoors.com/indices/main/en/us. Any change in the expanded peer group is solely due to Standard & Poor’s criteria for inclusion in the index.
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POLICIES FOR COMPENSATION RISK MITIGATION
RECOUPMENT POLICY
Our Executive Compensation Recoupment Policy applies to all executive officers who are subject to Section 16 of the
Securities Exchange Act. Under this Policy, in the event of (A) a material restatement of financial results (wherein results were incorrect at the time published due to mistake, fraud or other misconduct), or (B) fraud or misconduct by an executive officer, the Compensation
and Human Capital Committee will, in the case of a restatement, review all short-term and long-term incentive compensation awards that were paid or awarded to the executive officers for performance periods beginning after October 31, 2014 that occurred, in whole or in part, during the restatement period. In the case of fraud or misconduct, the Compensation
and Human Capital Committee will consider actions to remedy the fraud or misconduct, prevent its recurrence, and impose discipline on the wrongdoers, in each case, as it deems appropriate.
These actions may include, without limitation and to the extent permitted by governing law, requiring reimbursement of compensation, causing the cancellation of outstanding PSUs, RSUs, stock options, and other equity incentive awards, limiting future awards or compensation, and requiring the disgorgement of profits realized from the sale of shares of our common stock to the extent such profit was, in part or in whole, the result of the fraud or misconduct.
The Compensation
and Human Capital Committee will amend the Policy, as necessary, to comply with the final SEC rules regarding the recoupment policy required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Hedging and Insider Trading Policy
HEDGING AND INSIDER TRADING POLICY
Our Insider Trading Policy expressly bars hedging transactions such as purchasing or writing derivative securities, including puts and calls, and entering into short sales or short positions, with respect to Keysight securities by our executive officers, directors, and other employees. Under our Insider Trading Policy, we prohibit our general managers, executives, executive officers and the members of our Board from pledging our equity securities as collateral for loans, and we prohibit our executive officers, directors and all employees from purchasing or selling our securities while in possession of material, non-public information, or otherwise using such information for their personal benefit and we maintain a quarterly black-out window where applicable individuals may not trade.
Our executive officers and members of our Board are permitted to enter into trading plans that are intended to comply with the requirements of Exchange Act Rule 10b5-1 so they may make predetermined trades of Keysight stock or exercise stock options.
Indemnification Agreements
INDEMNIFICATION AGREEMENTS
These agreements indemnify our executive officers and the members of our Board of Directors, as well as those who act as directors and officers of other entities at our request, against expenses, judgments, fines, settlements, and other amounts, actually and reasonably incurred in connection with any proceedings arising out of their services to us and our subsidiaries.
A
Culture of OwnershipCULTURE OF OWNERSHIP
Our stock ownership guidelines are designed to encourage our executive officers, including our NEOs, to achieve and maintain a significant equity stake in
the CompanyKeysight to closely align their interests with those of our stockholders. The guidelines provide that our CEO should accumulate and hold, within five years
from electionof his appointment to
histhe position, an investment level in our common stock equal to six times his annual base salary. The guidelines further provide that our CFO, COO, and other executive officers should accumulate and hold, within five years from appointment to their respective executive officer positions, an investment level in our common stock equal to the lesser of
either (1) three times their annual base salary or (2) direct ownership of a certain level of shares of our common stock (40,000 or 80,000 shares).
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The investment levellevels as a multiple of annual base salary or direct ownership guidelines are as follows:
| | CEO | | | 6X | | | N/A | |
| | CFO/COO | | | 3X | | | 80,000 | |
| | All other executiveOther Executive Officers | | | 3X | | | 40,000 | |
The Compensation and Human Capital Committee conducts an annual review to assess compliance with the guidelines. As of the end of fiscal year 2019,Fiscal Year 2021, each of our NEOs met his stock ownership guideline requirement.
Compensation Risk Assessment
F.W. Cook As of the end of Fiscal Year 2021, our CEO held over 23 times his base salary in Keysight stock (well above his 6x guideline)
COMPENSATION RISK ASSESSMENT
Our independent compensation consultant conducts an annual review of our compensation related risks. The risk assessment conducted during
fiscal year 2019Fiscal Year 2021 by Meridian, concluded that our executive compensation program is well designed to encourage behaviors aligned with the long-term interests of our
stockholders. F.W. Cookstockholders and that our programs and policies are not reasonably likely to have a material adverse effect to the Company. Meridian also found
our executive compensation programs are well articulated containing an appropriate balance in fixed versus variable pay, cash,
and equity, and
appropriatea mix of financial metrics. Finally, it was determined that there are appropriate policies and practices in place to mitigate compensation-related risk, including stock ownership guidelines, insider-trading prohibitions, the Executive Compensation Recoupment Policy, and
an independent Compensation
and Human Capital Committee oversight of our executive compensation programs.
Other Compensation Practices and Policies
Benefits and Limited Perquisites
Our global benefits philosophy is to provide our executive officers, including our NEOs, with protection and security through health and welfare, retirement, and life insurance programs.
In addition to these Company-wide benefits, our NEOs are offered Company-paid financial counseling through a third-party service to assist with their personal finances. Providing this service gives our NEOs a better understanding of their compensation and benefits, allowing them to concentrate on their responsibilities and our future success. Our executive officers, including our NEOs, are also offered physical examinations, for which we cover the costs that are not otherwise covered under each of our NEOs’ chosen health plan. We believe that the executive physical is a prudent measure to help ensure the health of our executive officers.
In connection with Mr. Gooi’s relocation from Malaysia to Singapore and his frequent business travel to the U.S. on behalf of the Company, Mr. Gooi received Company paid relocation services and tax restoration benefits. Our executive officers also had access to Company drivers to transport them and their families to the airport for personal travel, as do other Company executives.
Non-Qualified Deferred Compensation
Our NEOs are eligible to voluntarily defer base salary, short-term cash incentives, and performance shares earned under the LTP Program. The deferrals are made through the Keysight Technologies, Inc. 2014 Deferred Compensation Plan (the “Deferred Compensation Plan”).
Deferred compensation is distributed to eligible participants in January of the year following termination of their employment, if termination occurs during the first six months of the calendar year. Otherwise, payouts are distributed to participants in July of the year following termination of employment. No early distributions or withdrawals are allowed. If an election is made to defer performance shares earned under the LTP Program, shares are deferred and released to the participants as indicated above.
The specific benefits and an additional description of plan features are set forth in the section entitled “Non-Qualified Deferred Compensation in Last Fiscal Year” below.
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Defined Contribution and Pension Plans
The Keysight Technologies, Inc. Retirement Plan (the “Retirement Plan”), the Keysight Technologies, Inc. Supplemental Benefit Retirement Plan (the “Supplemental Benefit Retirement Plan), the Keysight Technologies, Inc. Excess Benefit Retirement Plan (the “Excess Benefit Plan”), the Keysight Technologies, Inc. Deferred Profit-Sharing Plan (the “Deferred Profit-Sharing Plan”) and the Keysight Technologies, Inc. 401(k) Plan (the “401(k) Plan”) are designed to promote long-term employment retention, support the employee’s career-employment strategy, and provide employee retirement savings.
The Retirement Plan is a U.S. tax qualified defined benefit plan. The Retirement Plan was closed to new entrants on August 1, 2015.
The Supplemental Benefit Retirement Plan is an unfunded, non-qualified plan that pays amounts upon retirement that would be due under the regular Retirement Plan benefit formula but are limited under the tax-qualified Retirement Plan by the Internal Revenue Code of 1986, as amended (the “Code”).
The Excess Benefit Retirement Plan is a frozen, unfunded, non-qualified plan that pays amounts upon retirement that would be due under the regular Retirement Plan benefit formula (on accruals prior to December 31, 2004) but are limited under the tax-qualified Retirement Plan by the Code.
The Deferred Profit-Sharing Plan provides certain amounts to our NEOs and other employees who provided services to Agilent prior to August 1, 2014 and to Agilent’s predecessor company, Hewlett Packard Company, prior to November 1, 1993. It is a closed and frozen, defined contribution plan. The Deferred Profit-Sharing Plan is used as a floor offset for the Retirement Plan for service prior to November 1, 1993. There have been no contributions into the plan since October 31, 1993.
The 401(k) Plan is a U.S. tax qualified defined contribution plan. The 401(k) Plan provides eligible employees with an opportunity to defer eligible covered compensation under Section 401(k) of the Code. The Company provides a matching contribution up to 4% of covered deferred compensation for legacy participants and up to 6% of covered deferred compensation for participants hired on or after August 1, 2015. The 401(k) Plan also permits a discretionary employer contribution up to 2% of covered compensation for participants hired on or after August 1, 2015.
Additional information on the pension benefits for which certain of the NEOs are eligible is set forth in the “Fiscal Year 2019 Pension Benefits Table.”
In addition, all employees in Malaysia participate in the government mandatory retirement plan, managed by the Employer Provident Fund (“EPF”), a government agency. This plan requires contribution from both the employer and the employee. We contribute a fixed contribution rate of 12% of Mr. Gooi’s eligible compensation. Mr. Gooi participates in this plan with a contribution rate of 11% of his eligible compensation. In addition, Mr. Gooi also participates in a Company-wide EPF Top-up plan, for which we contribute 3% of monthly base earning. No employee contributions are accepted for this plan.
Accounting Considerations
We follow Financial Accounting Standard Board Accounting Standards Codification Topic 718, or ASC Topic 718, for our stock-basedstock- based compensation awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive officers may never realize any value from their awards (awards to directors are fully vested upon grant). ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based compensation awards in their income statements over the period that an executive officer is required to render service in exchange for the stock award.
TABLE OF CONTENTS
COMPENSATION AND HUMAN CAPITAL COMMITTEE REPORT | COMPENSATION DISCUSSION AND ANALYSIS | 44
|
Termination Arrangements – Severance Plan, Change of Control Severance Agreements and Equity Award Acceleration
Consistent with the practice of many of our peers, the Compensation Committee has adopted an Officer and Executive Severance Plan (the “Severance Plan”) for our U.S. based officers and executives, which provides for specified severance payments and benefits in cases where the officer is terminated other than for Cause, misconduct, death, or physical or mental incapacity or resigns for Good Reason (each, as defined in the Severance Plan). A more detailed description of the Severance Plan is provided in the “Officer and Executive Severance Plan” section below.
In addition, we have entered into Change-of-Control Agreements (each, a “Change of Control Agreement”) with our officers designed to provide protection to the officers so they are not distracted by their personal, professional and financial situations at a time when we need them to remain focused on their responsibilities, the Company’s best interests and those of our stockholders. These agreements provide for “double-trigger” payments and benefits, which means that they are eligible to receive such payments and benefits only in the event of a change of control of the Company and if the officer is terminated other than for Cause or resigns for Good Reason (each, as defined in the Change of Control Agreement) within a limited period of time after the change of control. Such benefits will not become payable unless both such events occur. A more detailed description of the Change of Control Agreements with the NEOs is provided in the “Change of Control Severance Agreements” section below.
Additionally, to encourage our employees to remain employed with the Company through the date of the applicable vesting event, our stock award agreements, including those of our NEOs, provide for certain vesting benefits in the event of death, disability or retirement or in certain circumstances involving a change in control. A more detailed description of the vesting benefits provided in our stock award agreements is provided in the “Acceleration and Continued Vesting of Equity Awards” section below.
The potential payments that would be received by our NEOs under the Severance Plan and the Change-of-Control Agreements are disclosed in the “Termination and Change of Control Table” below.
Compensation Committee Report
The information contained in this report shall not be deemed to be “soliciting material,” to be “filed” with the SEC, or to be subject to Regulation 14A or Regulation 14C (other than as provided in Item 407 of Regulation S-K) or to the liabilities of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed to be incorporated by reference in future filings with the SEC except to the extent that Keysight specifically incorporates it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Act.
November
20, 201917, 2021
Our executive compensation program is administered by the Compensation
Committee of the Board of Directors (the “Compensation Committee”). The Compensationand Human Capital Committee, which is composed entirely of independent, non-employee directors, is responsible for approving and reporting to our Board of Directors on all elements of compensation for our executive officers. In this regard, the Compensation
and Human Capital Committee has reviewed and discussed the “Compensation Discussion and Analysis” section of this Proxy Statement with management. Based on this review and discussion, the Compensation
and Human Capital Committee recommended to our Board of Directors that the “Compensation Discussion and Analysis” section be included in this Proxy Statement and incorporated by reference into our
20192021 Annual Report on Form 10-K.
Compensation and Human Capital Committee
James G. Cullen, Chairperson
Jean M. Halloran
Richard P. Hamada
Jean M. Nye
TABLE OF CONTENTS
SUMMARY COMPENSATION TABLE | | Ronald S. Nersesian
Chair, President and Chief Executive Officer | | | 2021 | | | 1,000,000 | | | 0 | | | 15,058,182 | | | 0 | | | 2,216,156 | | | 249,447 | | | 42,625 | | | 18,566,410 | |
| | 2020 | | | 833,333 | | | 0 | | | 12,380,746 | | | 0 | | | 1,770,000 | | | 230,837 | | | 36,064 | | | 15,250,980 | |
| | 2019 | | | 1,000,000 | | | 0 | | | 7,456,050 | | | 0 | | | 2,368,313 | | | 261,651 | | | 38,202 | | | 11,124,216 | |
| | Neil P. Dougherty
Senior Vice President and Chief Financial Officer | | | 2021 | | | 650,000 | | | 0 | | | 3,202,700 | | | 0 | | | 864,301 | | | 121,148 | | | 34,316 | | | 4,872,465 | |
| | 2020 | | | 589,167 | | | 0 | | | 2,406,004 | | | 0 | | | 684,958 | | | 148,500 | | | 29,291 | | | 3,857,920 | |
| | 2019 | | | 568,333 | | | 0 | | | 1,571,733 | | | 0 | | | 762,644 | | | 158,242 | | | 32,486 | | | 3,093,438 | |
| | Satish C. Dhanasekaran
Senior Vice President and Chief Operating Officer | | | 2021 | | | 675,000 | | | 0 | | | 4,227,785 | | | 0 | | | 997,270 | | | 93,869 | | | 37,292 | | | 6,031,216 | |
| | 2020 | | | 593,750 | | | 0 | | | 2,524,023 | | | 0 | | | 697,722 | | | 80,281 | | | 26,597 | | | 3,922,374 | |
| | 2019 | | | 591,667 | | | 0 | | | 1,332,426 | | | 0 | | | 789,450 | | | 97,698 | | | 33,619 | | | 2,844,860 | |
| | Soon Chai Gooi(5)
Senior Vice President, President – Order Fulfillment and Digital Operations | | | 2021 | | | 520,411 | | | 0 | | | 2,779,883 | | | 0 | | | 694,962 | | | 0 | | | 1,249,402 | | | 5,244,658 | |
| | 2020 | | | 477,149 | | | 0 | | | 2,406,004 | | | 0 | | | 544,078 | | | 0 | | | 1,761,411 | | | 5,188,643 | |
| | 2019 | | | 489,121 | | | 0 | | | 1,944,309 | | | 0 | | | 650,110 | | | 0 | | | 1,292,076 | | | 4,375,616 | |
| | Mark A. Wallace
Senior Vice President Head of Global Sales | | | 2021 | | | 597,917 | | | 0 | | | 2,200,613 | | | 0 | | | 1,014,165 | | | 105,082 | | | 27,135 | | | 3,944,912 | |
| | 2020 | | | 522,500 | | | 0 | | | 1,922,862 | | | 0 | | | 582,647 | | | 139,643 | | | 27,135 | | | 3,194,788 | |
| | 2019 | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | | | N/A | |
| EXECUTIVE COMPENSATION | 45
|
EXECUTIVE COMPENSATION
Fiscal Year 2019 Summary Compensation Table
|
Name and Principal Position | Year | Salary
($) | Bonus
($) | Stock
Awards(1)
($) | Option
Awards(1)
($) | Non-Equity
Incentive
Plan
Compensation(2)
($) | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings(3)
($) | All other
Compensation(4)
($) | Total
($) |
Ronald S. Nersesian
President and Chief Executive Officer | | 2019 | | $ | 1,000,000 | | $ | 0 | | $ | 7,456,050 | | $ | 0 | | $ | 2,368,313 | | $ | 261,651 | | $ | 38,202 | | $ | 11,124,216 | |
| 2018 | | $ | 995,833 | | $ | 0 | | $ | 7,052,205 | | $ | 0 | | $ | 2,037,491 | | $ | 116,340 | | $ | 38,384 | | $ | 10,240,253 | |
| 2017 | | $ | 975,000 | | $ | 0 | | $ | 6,456,903 | | $ | 0 | | $ | 1,289,612 | | $ | 236,997 | | $ | 49,583 | | $ | 9,008,095 | |
Neil P. Dougherty
Senior Vice President and Chief Financial Officer | | 2019 | | $ | 568,333 | | $ | 0 | | $ | 1,571,733 | | $ | 0 | | $ | 762,644 | | $ | 158,242 | | $ | 32,486 | | $ | 3,093,438 | |
| 2018 | | $ | 545,833 | | $ | 0 | | $ | 1,452,749 | | $ | 0 | | $ | 701,573 | | $ | 4,416 | | $ | 30,261 | | $ | 2,734,832 | |
| 2017 | | $ | 500,000 | | $ | 0 | | $ | 1,347,487 | | $ | 0 | | $ | 416,399 | | $ | 83,685 | | $ | 45,192 | | $ | 2,392,763 | |
Jay Alexander
Senior Vice President and Chief Technology Officer | | 2019 | | $ | 516,250 | | $ | 0 | | $ | 1,514,560 | | $ | 0 | | $ | 651,896 | | $ | 76,402 | | $ | 12,981 | | $ | 2,772,089 | |
| 2018 | | $ | 472,917 | | $ | 0 | | $ | 1,531,336 | | $ | 0 | | $ | 572,152 | | $ | 0 | | $ | 15,247 | | $ | 2,591,651 | |
| 2017 | | $ | 450,000 | | $ | 0 | | $ | 1,122,864 | | $ | 0 | | $ | 352,715 | | $ | 116,782 | | $ | 18,744 | | $ | 2,061,105 | |
Satish Dhanasekaran
| | 2019 | | $ | 591,667 | | $ | 0 | | $ | 1,332,426 | | $ | 0 | | $ | 789,450 | | $ | 97,698 | | $ | 33,619 | | $ | 2,844,860 | |
Senior Vice President, President - Communications Solutions Group | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Soon Chai Gooi(5)
Senior Vice President, President - Electronic Industrial Solutions Group | | 2019 | | $ | 489,121 | | $ | 0 | | $ | 1,944,309 | | $ | 0 | | $ | 650,110 | | $ | 0 | | $ | 1,292,076 | | $ | 4,375,616 | |
| 2018 | | $ | 442,065 | | $ | 0 | | $ | 1,618,969 | | $ | 0 | | $ | 636,968 | | $ | 0 | | $ | 816,859 | | $ | 3,514,861 | |
| 2017 | | $ | 407,920 | | $ | 0 | | $ | 1,603,522 | | $ | 0 | | $ | 438,552 | | $ | 0 | | $ | 689,409 | | $ | 3,139,403 | |
| (1)
| Reflects the aggregate grant date fair values of the stock and option awards, computed in accordance with Financial Accounting Standards Board, Accounting Standards Codification, Topic 718, and Stock Compensation (“FASB ASC Topic 718”). For information on the valuation assumptions used in our computations, see Note 4 to our consolidated financial statements in our Annual Report on Form 10-K for fiscal year 2019.Fiscal Year 2021. |
| (2)
| Amounts consist of incentiveSTI awards earned by our NEOs during fiscal year 2019Fiscal Year 2021 under the Performance-Based Compensation Plan for covered employees.Covered Employees. |
| (3)
| Amounts represent the change in pension value for the Retirement Plan, the Supplemental Benefit Retirement Plan, and the Excess Benefit Retirement Plan, as applicable. Please see the Section “Pension Benefits” below for greater detail regarding how such amounts were calculated. |
| (4)
| Amounts reflect (i) employer contributions of $11,200 to Mr. Nersesian, Mr. Dougherty, Mr. Alexander, and Mr. Dhanasekaran accounts with Keysight Technologies, Inc. 401(k) Plan in fiscal year 2019, as well as $160,473 to Mr. Gooi for the Malaysia defined contribution plan; (ii) $22,505 for Mr. Nersesian, $18,235 for Mr. Dougherty and $17,486 for Mr. Dhanasekaran for services provided by The Ayco Company, LP, a financial counseling provider; (iii) travel expenses of $548 for Mr. Nersesian, $1,131 for Mr. Alexander, and $420 for Mr. Dhanasekaran for use of Keysight drivers and vehicles for personal travel, as well as an annual car and gasoline allowance of $29,570 for Mr. Gooi; (iv) relocation benefits in the total amount of $222,326 in connection with Mr. Gooi’s relocation from Malaysia to Singapore due to his main office change and tax restoration benefits in the total amount of $879,396 in connection with Mr. Gooi’s relocation from Malaysia to Singapore and his extensive travel to the U.S. on Company business; (v) club membership fees of $311 for Mr. Gooi; (vi) $692 for Mr. Nersesian, $900 for Mr. Dougherty, $650 for Mr. Alexander, as well as $1,300 for Mr. Dhanasekaran for employer contribution to a health savings account; and (vii) $3,257 for Mr. Nersesian, $2,151 for Mr. Dougherty, and $3,213 for Mr. Dhanasekaran for a full physical exam.Fiscal Year 2021 reflected below. |
| (5)
| Amounts included for Mr. Gooi, with the exception of stock awards and option awards, are shown in U.S. Dollars but were paid to him in Malaysian Ringgit. To convert the amounts paid toin U.S. Dollars, we used the exchange rate as of the last business day of the applicable fiscal yearFiscal Year (for fiscal year 2019Fiscal Year 2021 amounts, an exchange rate of 4.17925357934.1411616362 Malaysian Ringgits per U.S. Dollar as of October 31, 2019)2021). |
TABLE OF CONTENTS
| EXECUTIVE COMPENSATION | 46
|
| | Ronald S. Nersesian | | | 11,600 | | | 22,205 | | | 8,170 | | | 0 | | | 0 | | | 0 | | | 650 | | | 0 | | | 42,625 | |
| | Neil P. Dougherty | | | 12,844 | | | 18,235 | | | 0 | | | 0 | | | 0 | | | 0 | | | 900 | | | 2,337 | | | 34,316 | |
| | Satish C. Dhanasekaran | | | 15,538 | | | 18,235 | | | 0 | | | 0 | | | 0 | | | 0 | | | 1,300 | | | 2,219 | | | 37,292 | |
| | Soon Chai Gooi | | | 178,750 | | | 0 | | | 29,390 | | | 94,036 | | | 946,936 | | | 290 | | | 0 | | | 0 | | | 1,249,402 | |
| | Mark A. Wallace | | | 8,000 | | | 18,235 | | | 0 | | | 0 | | | 0 | | | 0 | | | 900 | | | 0 | | | 27,135 | |
The following table itemizes the full grant date fair value of equity awards granted to our NEOs during fiscal year 2019 Fiscal Year 2021 in accordance with FASB ASC Topic 718 for the “Stock Awards” and “Option Awards” columns of the “Summary Compensation Table”.
Long-Term Incentive Awards |
| Total FY19 Expense | Total FY18 Expense | Total FY17 Expense |
Name | Stock
Awards | Option
Awards | Restricted Stock
Unit Awards | Stock
Awards | Option
Awards | Restricted Stock
Unit Awards | Stock
Awards | Option
Awards | Restricted Stock
Unit Awards |
Ronald S. Nersesian | $ | 4,407,885 | | $ | 0 | | $ | 3,048,165 | | $ | 4,236,152 | | $ | 0 | | $ | 2,816,053 | | $ | 3,970,788 | | $ | 0 | | $ | 2,486,115 | |
Neil P. Dougherty | $ | 929,158 | | $ | 0 | | $ | 642,575 | | $ | 872,654 | | $ | 0 | | $ | 580,095 | | $ | 828,652 | | $ | 0 | | $ | 518,835 | |
Jay Alexander | $ | 895,371 | | $ | 0 | | $ | 619,189 | | $ | 919,853 | | $ | 0 | | $ | 611,483 | | $ | 690,519 | | $ | 0 | | $ | 432,345 | |
Satish Dhanasekaran | $ | 787,705 | | $ | 0 | | $ | 544,721 | | $ | 499,269 | | $ | 0 | | $ | 331,884 | | $ | 552,768 | | $ | 0 | | $ | 346,081 | |
Soon Chai Gooi | $ | 1,149,407 | | $ | 0 | | $ | 794,902 | | $ | 972,497 | | $ | 0 | | $ | 646,472 | | $ | 986,112 | | $ | 0 | | $ | 617,410 | |
LONG-TERM INCENTIVE AWARDS | | Ronald S. Nersesian | | | 9,085,294 | | | 5,972,888 | | | 7,551,709 | | | 4,829,027 | | | 4,407,885 | | | 3,048,165 | |
| | Neil P. Dougherty | | | 1,932,360 | | | 1,270,340 | | | 1,467,547 | | | 938,455 | | | 929,158 | | | 642,575 | |
| | Satish C. Dhanasekaran | | | 2,550,771 | | | 1,677,014 | | | 1,539,556 | | | 984,465 | | | 787,705 | | | 544,721 | |
| | Soon Chai Gooi | | | 1,677,187 | | | 1,102,696 | | | 1,467,547 | | | 938,455 | | | 1,149,407 | | | 794,902 | |
| | Mark A. Wallace | | | 1,327,737 | | | 872,876 | | | 1,172,871 | | | 749,990 | | | 742,271 | | | 513,290 | |
(1)
| None of our NEOs received option awards in Fiscal Year 2019, Fiscal Year 2020 or Fiscal Year 2021. |
TABLE OF CONTENTS
GRANTS OF PLAN-BASED AWARDS | EXECUTIVE COMPENSATION | 47
|
Fiscal Year 2019 Grants of Plan-Based Awards in Last Fiscal Year
The following table sets forth certain information regarding grants of plan-based awards to each of our NEOs during fiscal year 2019.
Grants of Plan-Based Awards in Fiscal Year 2019 |
Name | Grant
Date | Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(1) | Estimated Payouts Under Equity
Incentive Plan Awards(2) | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(3) | Grant Date
Fair Value
of Stock
Awards(4) |
Threshold
($) | Target
($) | Maximum
($) | Threshold
($) | Target
($) | Maximum
($) | (#) | ($) |
Ronald S. Nersesian | | 11/14/2018 | | $ | 375,000 | | $ | 750,000 | | $ | 1,500,000 | | | | | | | | | | | | | | | | |
| 5/22/2019 | | $ | 375,000 | | $ | 750,000 | | $ | 1,500,000 | | | | | | | | | | | | | | | | |
| 11/20/2018 | | | | | | | | | | | $ | 571,531 | | $ | 2,286,124 | | $ | 4,572,248 | | | | | $ | 2,286,124 | |
| 11/20/2018 | | | | | | | | | | | $ | 530,440 | | $ | 2,121,761 | | $ | 4,243,523 | | | | | $ | 2,121,761 | |
| 11/20/2018 | | | | | | | | | | | | | | | | | | | | | 56,084 | | $ | 3,048,165 | |
Neil P. Dougherty | | 11/14/2018 | | $ | 121,125 | | $ | 242,250 | | $ | 484,500 | | | | | | | | | | | | | | | | |
| 5/22/2019 | | $ | 121,125 | | $ | 242,250 | | $ | 484,500 | | | | | | | | | | | | | | | | |
| 11/14/2018 | | | | | | | | | | | $ | 120,479 | | $ | 481,917 | | $ | 963,834 | | | | | $ | 481,917 | |
| 11/14/2018 | | | | | | | | | | | $ | 111,810 | | $ | 447,241 | | $ | 894,481 | | | | | $ | 447,241 | |
| 11/14/2018 | | | | | | | | | | | | | | | | | | | | | 11,183 | | $ | 642,575 | |
Jay Alexander | | 11/14/2018 | | $ | 104,000 | | $ | 208,000 | | $ | 416,000 | | | | | | | | | | | | | | | | |
| 5/22/2019 | | $ | 104,000 | | $ | 208,000 | | $ | 416,000 | | | | | | | | | | | | | | | | |
| 11/14/2018 | | | | | | | | | | | $ | 116,098 | | $ | 464,392 | | $ | 928,783 | | | | | $ | 464,392 | |
| 11/14/2018 | | | | | | | | | | | $ | 107,745 | | $ | 430,980 | | $ | 861,959 | | | | | $ | 430,980 | |
| 11/14/2018 | | | | | | | | | | | | | | | | | | | | | 10,776 | | $ | 619,189 | |
Satish Dhanasekaran | | 11/14/2018 | | $ | 120,000 | | $ | 240,000 | | $ | 480,000 | | | | | | | | | | | | | | | | |
| 5/22/2019 | | $ | 120,000 | | $ | 240,000 | | $ | 480,000 | | | | | | | | | | | | | | | | |
| 11/14/2018 | | | | | | | | | | | $ | 102,135 | | $ | 408,541 | | $ | 817,081 | | | | | $ | 408,541 | |
| 11/14/2018 | | | | | | | | | | | $ | 94,791 | | $ | 379,164 | | $ | 758,328 | | | | | $ | 379,164 | |
| 11/14/2018 | | | | | | | | | | | | | | | | | | | | | 9,480 | | $ | 544,721 | |
Soon Chai Gooi | | 11/14/2018 | | $ | 110,555 | | $ | 221,109 | | $ | 442,218 | | | | | | | | | | | | | | | | |
| 5/22/2019 | | $ | 110,767 | | $ | 221,534 | | $ | 443,068 | | | | | | | | | | | | | | | | |
| 11/14/2018 | | | | | | | | | | | $ | 149,037 | | $ | 596,148 | | $ | 1,192,295 | | | | | $ | 596,148 | |
| 11/14/2018 | | | | | | | | | | | $ | 138,315 | | $ | 553,259 | | $ | 1,106,519 | | | | | $ | 553,259 | |
| 11/14/2018 | | | | | | | | | | | | | | | | | | | | | 13,834 | | $ | 794,902 | |
Fiscal Year 2021.
| | Ronald S.
Nersesian | | | 11/18/2020 | | | 375,000 | | | 750,000 | | | 1,500,000 | | | | | | | | | | | | | | | | |
| | 5/19/2021 | | | 375,000 | | | 750,000 | | | 1,500,000 | | | | | | | | | | | | | | | | |
| | 11/18/2020 | | | | | | | | | | | | 1,119,909 | | | 4,479,637 | | | 8,959,274 | | | | | | 4,479,637 | |
| | 11/18/2020 | | | | | | | | | | | | 1,151,414 | | | 4,605,657 | | | 9,211,315 | | | | | | 4,605,657 | |
| | 11/18/2020 | | | | | | | | | | | | | | | | | | | | | 51,875 | | | 5,972,888 | |
| | Neil P.
Dougherty | | | 11/18/2020 | | | 146,250 | | | 292,500 | | | 585,000 | | | | | | | | | | | | | | | | |
| | 5/19/2021 | | | 146,250 | | | 292,500 | | | 585,000 | | | | | | | | | | | | | | | | |
| | 11/18/2020 | | | | | | | | | | | | 238,196 | | | 952,783 | | | 1,905,567 | | | | | | 952,783 | |
| | 11/18/2020 | | | | | | | | | | | | 244,894 | | | 979,577 | | | 1,959,153 | | | | | | 979,577 | |
| | 11/18/2020 | | | | | | | | | | | | | | | | | | | | | 11,033 | | | 1,270,340 | |
| | Satish C.
Dhanasekaran | | | 11/18/2020 | | | 168,750 | | | 337,500 | | | 675,000 | | | | | | | | | | | | | | | | |
| | 5/19/2021 | | | 168,750 | | | 337,500 | | | 675,000 | | | | | | | | | | | | | | | | |
| | 11/18/2020 | | | | | | | | | | | | 314,419 | | | 1,257,674 | | | 2,515,348 | | | | | | 1,257,674 | |
| | 11/18/2020 | | | | | | | | | | | | 323,274 | | | 1,293,097 | | | 2,586,194 | | | | | | 1,293,097 | |
| | 11/18/2020 | | | | | | | | | | | | | | | | | | | | | 14,565 | | | 1,677,014 | |
| | Soon
Chai Gooi | | | 11/18/2020 | | | 118,124 | | | 236,248 | | | 472,496 | | | | | | | | | | | | | | | | |
| | 5/19/2021 | | | 117,080 | | | 234,160 | | | 468,320 | | | | | | | | | | | | | | | | |
| | 11/18/2020 | | | | | | | | | | | | 206,734 | | | 826,936 | | | 1,653,871 | | | | | | 826,936 | |
| | 11/18/2020 | | | | | | | | | | | | 212,563 | | | 850,251 | | | 1,700,503 | | | | | | 850,251 | |
| | 11/18/2020 | | | | | | | | | | | | | | | | | | | | | 9,577 | | | 1,102,696 | |
| | Mark A.
Wallace | | | 11/18/2020 | | | 132,876 | | | 265,753 | | | 531,506 | | | | | | | | | | | | | | | | |
| | 5/19/2021 | | | 135,000 | | | 270,000 | | | 540,000 | | | | | | | | | | | | | | | | |
| | 11/18/2020 | | | | | | | | | | | | 163,672 | | | 654,686 | | | 1,309,372 | | | | | | 654,686 | |
| | 11/18/2020 | | | | | | | | | | | | 168,263 | | | 673,051 | | | 1,346,102 | | | | | | 673,051 | |
| | 11/18/2020 | | | | | | | | | | | | | | | | | | | | | 7,581 | | | 872,876 | |
| (1)
| Reflects the value of the threshold, target and maximum potential STI cash payout established for fiscal year 2019Fiscal Year 2021 pursuant to the Keysight’s Performance-Based Compensation Plan. The threshold payment is 25%, target is 100% and maximum payout is 200% of target. Actual payout amounts under this plan are disclosed in the “Summary Compensation Table.” Please see the section “Short-Term Incentives” for greater detail regarding the NEOs’ cash incentive award opportunities, including the applicable performance goals. |
| (2)
| Reflects the value of awards at threshold, target and maximum number of shares that could be earned with respect to PSUs. Actual payout of these awards, if any, will be in the form of Keysight common stock determined by the Compensation and Human Capital Committee after the end of the performance period depending on whether the performance criteria set forth inpursuant to Keysight’s LTP ProgramPlan were met, subject to the applicable NEO being employed through such determination date or being retirement eligible. For fiscal year 2019,Fiscal Year 2021, on November 14, 2018,18, 2020, each NEO received TSR PSUs and OM PSUs, which will be paid out, if at all, following the completion of the fiscal year 2019 through fiscal yearFiscal Year 2021 - Fiscal Year 2023 performance period. Each NEO’s TSR PSUs will be measured and paid out based on the performance of Keysight’s common stock as measured against the relative TSR of the S&P 500 Total Return Index and each NEO’s OM PSUs will be measured and paid out based on profitability as measured by Non-GAAP OM. Please see the section “Long-Term Incentives” for greater detail regarding the TSR and OM PSU grants made to NEOs in fiscal year 2019.Fiscal Year 2021. Each NEO’s TSROM PSUs appear above their respective OMTSR PSUs in this table. |
| (3)
| Reflects the number of shares subject to time-based RSUs, which vest annually over four years from the grant date, subject to the applicable NEO being employed through the applicable vesting date or being retirement eligible. |
| (4)
| Reflects the aggregate grant date fair values of the RSUs and PSUs, computed in accordance with FASB ASC Topic 718. |
TABLE OF CONTENTS
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | EXECUTIVE COMPENSATION | 48
|
Outstanding Equity Awards at Fiscal Year-End
The following table provides information on the stock options, performance-based stock awards and restricted stock units held by our NEOs as of October 31, 2019.
Outstanding Equity Awards at Fiscal Year 2019 Year-End |
| | Option Awards(1) | Stock Awards |
Name | Grant Date | Number of Securities
Underlying
Unexercised Options
(#) | Option
Exercise
Price ($) | Option
Vesting
Date | Option
Expiration
Date | Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(2) | Market
Value of
Shares or
Units That
Have Not
Vested ($)(3) | Number of
Unearned
Shares,
Units,
or Other
Rights
That Have
Not Vested
(#)(4) | Market or
Payout
Value of
Shares,
Units or
Other
Rights
That Have
Not Vested
($)(3) |
Exercisable | Unexercisable |
Ron S Nersesian | | 11/17/2015 | | | — | | | — | | | — | | | — | | | — | | | 15,135 | | $ | 1,527,273 | | | — | | | — | |
| 11/15/2016 | | | — | | | — | | | — | | | — | | | — | | | 34,553 | | $ | 3,486,743 | | | — | | | — | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | 48,111 | | $ | 4,854,881 | | | — | | | — | |
| 11/20/2018 | | | | | | | | | | | | | | | | | | 54,766 | | $ | 5,526,437 | | | | | | | |
| 11/15/2016 | | | | | | | | | | | | | | | | | | 70,060 | | $ | 7,069,755 | | | | | | | |
| 11/15/2016 | | | | | | | | | | | | | | | | | | 87,718 | | $ | 8,851,624 | | | | | | | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 48,110 | | $ | 4,854,780 | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 39,758 | | $ | 4,011,980 | |
| 11/20/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 42,063 | | $ | 4,244,577 | |
| 11/20/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 34,763 | | $ | 3,507,934 | |
Total | | | | | 0 | | | 0 | | | | | | | | | | | | 310,343 | | $ | 31,316,713 | | | 164,694 | | $ | 16,619,272 | |
Neil P. Dougherty | | 11/20/2013 | | | 28,348 | | | 0 | | $ | 29.83 | | | 11/20/2014 | | | 11/20/2023 | | | — | | | — | | | — | | | — | |
| 11/18/2014 | | | 51,026 | | | 0 | | $ | 31.00 | | | 11/18/2015 | | | 11/17/2024 | | | — | | | — | | | — | | | — | |
| 11/17/2015 | | | — | | | — | | | — | | | — | | | — | | | 3,410 | | $ | 344,103 | | | — | | | — | |
| 11/15/2016 | | | — | | | — | | | — | | | — | | | — | | | 7,385 | | $ | 745,220 | | | — | | | — | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | 9,911 | | $ | 1,000,119 | | | — | | | — | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | 11,183 | | $ | 1,128,477 | | | | | | | |
| 11/15/2016 | | | | | | | | | | | | | | | | | | 14,620 | | $ | 1,475,304 | | | | | | | |
| 11/15/2016 | | | | | | | | | | | | | | | | | | 18,306 | | $ | 1,847,259 | | | | | | | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,911 | | $ | 1,000,119 | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,190 | | $ | 826,453 | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,387 | | $ | 846,332 | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 6,931 | | $ | 699,407 | |
Total | | | | | 79,374 | | | 0 | | | | | | | | | | | | 64,815 | | $ | 6,540,482 | | | 33,419 | | $ | 3,372,311 | |
Jay Alexander | | 11/17/2015 | | | — | | | — | | | — | | | — | | | — | | | 2,517 | | $ | 253,990 | | | — | | | — | |
| 11/15/2016 | | | — | | | — | | | — | | | — | | | — | | | 6,154 | | $ | 621,000 | | | — | | | — | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | 10,447 | | $ | 1,054,207 | | | — | | | — | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | 10,522 | | $ | 1,061,775 | | | — | | | — | |
| 11/15/2016 | | | | | | | | | | | | | | | | | | 12,183 | | $ | 1,229,387 | | | | | | | |
| 11/15/2016 | | | | | | | | | | | | | | | | | | 15,254 | | $ | 1,539,281 | | | | | | | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 10,447 | | $ | 1,054,207 | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,633 | | $ | 871,156 | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,082 | | $ | 815,555 | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 6,679 | | $ | 673,978 | |
Total | | | | | 0 | | | 0 | | | | | | | | | | | | 57,077 | | $ | 5,759,640 | | | 33,841 | | $ | 3,414,895 | |
2021. None of our NEOs have outstanding stock option awards.
| | Ron S. Nersesian | | | 11/16/2017 | | | 16,037 | | | 2,886,981 | | | — | | | — | |
| | 11/20/2018 | | | 27,384 | | | 4,929,668 | | | — | | | — | |
| | 11/20/2019 | | | 32,896 | | | 5,921,938 | | | — | | | — | |
| | 11/18/2020 | | | 50,655 | | | 9,118,913 | | | — | | | — | |
| | 11/20/2018 | | | 62,253 | | | 11,206,785 | | | — | | | — | |
| | 11/20/2018 | | | 69,526 | | | 12,516,070 | | | — | | | — | |
| | 11/20/2019 | | | — | | | — | | | 67,376 | | | 12,129,028 | |
| | 11/20/2019 | | | — | | | — | | | 55,680 | | | 10,023,514 | |
| | 11/18/2020 | | | — | | | — | | | 77,812 | | | 14,007,716 | |
| | 11/18/2020 | | | — | | | — | | | 59,260 | | | 10,667,985 | |
| | Total | | | | | | 258,751 | | | 46,580,355 | | | 260,128 | | | 46,828,243 | |
| | Neil P. Dougherty | | | 11/16/2017 | | | 3,304 | | | 594,786 | | | — | | | — | |
| | 11/14/2018 | | | 5,592 | | | 1,006,672 | | | — | | | — | |
| | 11/20/2019 | | | 6,547 | | | 1,178,591 | | | — | | | — | |
| | 11/18/2020 | | | 11,033 | | | 1,986,161 | | | — | | | — | |
| | 11/14/2018 | | | 12,412 | | | 2,234,408 | | | — | | | — | |
| | 11/14/2018 | | | 13,862 | | | 2,495,437 | | | — | | | — | |
| | 11/20/2019 | | | — | | | — | | | 13,094 | | | 2,357,182 | |
| | 11/20/2019 | | | — | | | — | | | 10,820 | | | 1,947,816 | |
| | 11/18/2020 | | | — | | | — | | | 16,550 | | | 2,979,331 | |
| | 11/18/2020 | | | — | | | — | | | 12,604 | | | 2,268,972 | |
| | Total | | | | | | 52,750 | | | 9,496,055 | | | 53,068 | | | 9,553,301 | |
TABLE OF CONTENTS
| | Satish C. Dhanasekaran | | | 11/16/2017 | | | 1,890 | | | 340,238 | | | — | | | — | |
| | 11/14/2018 | | | 4,740 | | | 853,295 | | | — | | | — | |
| | 11/20/2019 | | | 6,547 | | | 1,178,591 | | | — | | | — | |
| | 10/1/2020 | | | 354 | | | 63,727 | | | — | | | — | |
| | 11/18/2020 | | | 14,565 | | | 2,621,991 | | | — | | | — | |
| | 11/14/2018 | | | 10,522 | | | 1,894,170 | | | — | | | — | |
| | 11/14/2018 | | | 11,752 | | | 2,115,595 | | | — | | | — | |
| | 11/20/2019 | | | — | | | — | | | 13,094 | | | 2,357,182 | |
| | 11/20/2019 | | | — | | | — | | | 10,820 | | | 1,947,816 | |
| | 10/1/2020 | | | — | | | — | | | 708 | | | 127,454 | |
| | 10/1/2020 | | | — | | | — | | | 586 | | | 105,492 | |
| | 11/18/2020 | | | — | | | — | | | 21,846 | | | 3,932,717 | |
| | 11/18/2020 | | | — | | | — | | | 16,638 | | | 2,995,173 | |
| | Total | | | | | | 50,370 | | | 9,067,607 | | | 63,692 | | | 11,465,834 | |
| | Soon Chai Gooi | | | 11/16/2017 | | | 3,682 | | | 662,834 | | | — | | | — | |
| | 11/14/2018 | | | 6,917 | | | 1,245,198 | | | — | | | — | |
| | 11/20/2019 | | | 6,547 | | | 1,178,591 | | | — | | | — | |
| | 11/18/2020 | | | 9,577 | | | 1,724,052 | | | — | | | — | |
| | 11/14/2018 | | | 15,355 | | | 2,764,207 | | | — | | | — | |
| | 11/14/2018 | | | 17,148 | | | 3,086,983 | | | — | | | — | |
| | 11/20/2019 | | | — | | | — | | | 13,094 | | | 2,357,182 | |
| | 11/20/2019 | | | — | | | — | | | 10,820 | | | 1,947,816 | |
| | 11/18/2020 | | | — | | | — | | | 14,364 | | | 2,585,807 | |
| | 11/18/2020 | | | — | | | — | | | 10,940 | | | 1,969,419 | |
| | Total | | | | | | 59,226 | | | 10,661,865 | | | 49,218 | | | 8,860,224 | |
| 2022 Proxy Statement EXECUTIVE COMPENSATION73 | 49 |
Outstanding Equity Awards at Fiscal Year 2019 Year-End |
Satish Dhanasekaran | | 11/25/2015 | | | — | | | — | | | — | | | — | | | — | | | 275 | | $ | 27,750 | | | — | | | — | |
| 11/15/2016 | | | — | | | — | | | — | | | — | | | — | | | 2,462 | | $ | 248,440 | | | — | | | — | |
| 7/20/2017 | | | — | | | — | | | — | | | — | | | — | | | 2,071 | | $ | 208,985 | | | — | | | — | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | 5,670 | | $ | 572,160 | | | — | | | — | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | 9,480 | | $ | 956,627 | | | — | | | — | |
| 11/15/2016 | | | | | | | | | | | | | | | | | | 4,873 | | $ | 491,734 | | | | | | | |
| 11/15/2016 | | | | | | | | | | | | | | | | | | 6,102 | | $ | 615,753 | | | | | | | |
| 7/20/2017 | | | | | | | | | | | | | | | | | | 4,101 | | $ | 413,832 | | | | | | | |
| 7/20/2017 | | | | | | | | | | | | | | | | | | 5,134 | | $ | 518,072 | | | | | | | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,670 | | $ | 572,160 | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,686 | | $ | 472,864 | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 7,110 | | $ | 717,470 | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,876 | | $ | 592,947 | |
Total | | | | | 0 | | | 0 | | | | | | | | | | | | 40,168 | | $ | 4,053,353 | | | 23,342 | | $ | 2,355,441 | |
Soon Chai Gooi | | 11/17/2015 | | | — | | | — | | | — | | | — | | | — | | | 4,030 | | $ | 406,667 | | | — | | | — | |
| 11/15/2016 | | | — | | | — | | | — | | | — | | | — | | | 8,788 | | $ | 886,797 | | | — | | | — | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | 11,045 | | $ | 1,114,551 | | | — | | | — | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | 13,834 | | $ | 1,395,989 | | | — | | | — | |
| 11/15/2016 | | | | | | | | | | | | | | | | | | 17,398 | | $ | 1,755,632 | | | | | | | |
| 11/15/2016 | | | | | | | | | | | | | | | | | | 21,784 | | $ | 2,198,224 | | | | | | | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 11,045 | | $ | 1,114,551 | |
| 11/16/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 9,127 | | $ | 921,006 | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 10,375 | | $ | 1,046,941 | |
| 11/14/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 8,574 | | $ | 865,202 | |
Total | | | | | 0 | | | 0 | | | | | | | | | | | | 76,879 | | $ | 7,757,860 | | | 39,121 | | $ | 3,947,700 | |
TABLE OF CONTENTS
| | Mark A. Wallace | | | 11/16/2017 | | | 2,103 | | | 378,582 | | | — | | | — | |
| | 11/14/2018 | | | 4,362 | | | 785,247 | | | — | | | — | |
| | 11/20/2019 | | | 5,109 | | | 919,722 | | | — | | | — | |
| | 11/18/2020 | | | 7,402 | | | 1,332,508 | | | — | | | — | |
| | 11/14/2018 | | | 9,916 | | | 1,785,078 | | | — | | | — | |
| | 11/14/2018 | | | 11,074 | | | 1,993,542 | | | — | | | — | |
| | 11/20/2019 | | | — | | | — | | | 10,464 | | | 1,883,729 | |
| | 11/20/2019 | | | — | | | — | | | 8,648 | | | 1,556,813 | |
| | 11/18/2020 | | | — | | | — | | | 11,372 | | | 2,047,188 | |
| | 11/18/2020 | | | — | | | — | | | 8,660 | | | 1,558,973 | |
| | Total | | | | | | 39,966 | | | $7,194,679 | | | 39,144 | | | 7,046,703 | |
| (2) | Amounts reflect unvested RSUs as of October 31, 2019. All other awards, unless specifically noted below,2021, which vest at the rate of 25% per year from the grant date, subject to the applicable NEO being employed through such determination date or being retirement eligible. Includes the number of PSUs granted in fiscal year 2017Fiscal Year 2019 that were earned based on Keysight’s relative TSR and Non-GAAP OM for the fiscal year 2017Fiscal Year 2019 through fiscal year 2019Fiscal Year 2021 performance period, subject to the applicable NEO being employed through the date that the Compensation and Human Capital Committee determined the payout. |
| (3)(2)
| The market values of the unvested RSUs and PSUs (whether earned but unvested or unearned and unvested) are calculated by multiplying the number of units shown in the table by $100.91,$180.02, the closing price of Keysight common stock as of October 31, 2019.29, 2021, which was the last business day of Fiscal Year 2021. |
| (4)(3)
| Amounts reflect multiple unearned and unvested PSU awards that are outstanding simultaneously as of the end of fiscal year 2019October 31, 2021 for each NEO under the LTP Program. The payout, if any, of the performance share awards granted onPlan. On November 16, 2017, and November 14, 2018 are determined in November 2020, and November 2021, respectively and are subject to the applicable NEO being employed through such determination date or being retirement eligible. In fiscal year 2018, on November 16, 2017,20, 2019, each NEO received TSR PSUs and OM PSUs, which will be paid out, if at all, following the completion of the fiscal year 2018Fiscal Year 2020 through fiscal year 2020Fiscal Year 2022 performance period. Each NEO’s TSR PSUs will be measured and paid out based on the performance of Keysight’s common stock as measured against the TSR of the S&P 400 Total Return Index and each NEO’s OM PSUs will be measured and paid out based on improving profitability as measured by Non-GAAP OM. In fiscal year 2019, onOn November 14, 2018,18, 2020, each NEO received TSR PSUs and OM PSUs, which will be paid out, if at all, following the completion of the fiscal year 2019Fiscal Year 2021 through fiscal year 2021Fiscal Year 2023 performance period. Each NEO’s TSR PSUs will be measured and paid out based on the performance of Keysight’s common stock as measured against the TSR of the S&P 500 Total Return Index and each NEO’s OM PSUs will be measured and paid out based on improving profitability as measured by Non-GAAP OM. The payout, if any, of the PSU awards granted on November 20, 2019 and November 18, 2020 are determined in November 2022 and November 2023, respectively and are subject to the applicable NEO being employed through such determination date or being retirement eligible. For PSUs granted in fiscal year 2018, the target number of PSUs that may be earned is shown based on Keysight’s performance through fiscal year 2020. For PSUs granted in fiscal year 2019,Fiscal Year 2020, the maximum number of PSUs that may be earned is shown based on Keysight’s performance through fiscal yearFiscal Year 2021. For PSUs granted in Fiscal Year 2021, the maximum number of PSUs that may be earned is shown based on Keysight’s performance through Fiscal Year 2021. |
Please see the section “Long-Term Incentives” for greater detail regarding the TSR and OM PSU grants made to NEOs in fiscal year 2019.
Fiscal Year 2021.
TABLE OF CONTENTS
OPTION EXERCISES AND STOCK VESTED | EXECUTIVE COMPENSATION | 50
|
Fiscal Year 2019 Option Exercises and Stock Vested at Fiscal Year-End Table
The following table sets forth information on stock option exercises and stock vesting in fiscal year 2019Fiscal Year 2021 and the value realized on the date of exercise or vesting, if any, by each of our NEOs, as calculated, in the case of stock options, based on the difference between the market price of Keysight’s common stock at exercise and the option exercise price, and as calculated, in the case of RSUs, based on the closing share price of Keysight’s common stock on the NYSE on the vesting date and, in the case of PSUs based on the closing share price of Keysight’s common stock on the NYSE on the date that the payout is confirmed by the Compensation Committee
Options Exercises and Stock Vested in Fiscal Year 2019 |
| Option Awards | Stock Awards |
Name | Number of Shares
Acquired on Exercise | Value Realized on
Exercise | Number of Awards
Acquired Upon Vesting(1) | Value Realized on
Vesting |
Ronald S. Nersesian | | 87,760 | | $ | 2,671,862 | | | 206,035 | | $ | 19,776,056 | |
Neil P. Dougherty | | 16,512 | | $ | 1,071,698 | | | 43,331 | | $ | 4,145,992 | |
Jay Alexander | | 47,778 | | $ | 2,474,617 | | | 36,103 | | $ | 3,454,821 | |
Satish Dhanasekaran | | — | | | — | | | 24,867 | | $ | 2,473,573 | |
Soon Chai Gooi | | 12,971 | | $ | 390,670 | | | 51,287 | | $ | 4,917,678 | |
and Human Capital Committee. None of our NEOs have outstanding stock option awards.
| | Ronald S. Nersesian | | | 190,969 | | | $32,523,568 | |
| | Neil P. Dougherty | | | 38,248 | | | $6,501,872 | |
| | Satish C. Dhanasekaran | | | 31,101 | | | $5,404,654 | |
| | Soon Chai Gooi | | | 46,219 | | | $7,915,318 | |
| | Mark A. Wallace | | | 30,194 | | | $5,156,545 | |
(1)
| Amounts reflect the shares issued pursuant to PSUs granted in fiscal year 2017Fiscal Year 2019 pursuant to the LTI Program for the fiscal year 2017-2019Fiscal Year 2019 through Fiscal Year 2021 performance period that were paid out in fiscal 2020Fiscal Year 2022 in addition to restricted stock units that vested during fiscal year 2019.Fiscal Year 2021. |
TABLE OF CONTENTS
The following table shows the estimated present value of accumulated benefits payable, including benefits payable on retirement to our NEOs under the
Keysight Technologies, Inc. Retirement Plan
(the “Retirement Plan”), the Deferred
Profit SharingProfit-Sharing Plan, the Supplemental Benefit Retirement Plan and the Excess Benefit Retirement Plan.
Years of service and years of credited service under the Retirement Plan includes years of service and years of credited service under the Hewlett Packard Retirement Plan and the Agilent Technologies, Inc. Retirement Plan. The present value of accumulated benefit is calculated using the assumptions under Accounting Standards Codification Topic 715: Compensation—Retirement Benefits for the fiscal year end measurement (as of October 31,
2019)2021). The present value is based on a lump sum interest rate of
5.50%4.5%. See also Note
1512 to Keysight’s consolidated financial statements in its Annual Report on Form 10-K for the
fiscal year ended October 31, 2019,Fiscal Year 2021 as filed with the SEC on December
18, 2019.Pension Benefits |
Name | Plan Name(1)(2) | Number of
Years of
Credited
Service
(#) | Present Value of
Accumulated
Benefit
($) | Payments
During Last
Fiscal Year
($) |
Ronald S. Nersesian | Retirement Plan | | 17.1 | | $ | 591,654 | | $ | 0 | |
Supplemental Benefit Retirement Plan | | 17.1 | | $ | 1,068,562 | | $ | 0 | |
Neil P. Dougherty | Retirement Plan | | 23.3 | | $ | 479,605 | | $ | 0 | |
Supplemental Benefit Retirement Plan | | 23.3 | | $ | 162,139 | | $ | 0 | |
Jay Alexander | Deferred Profit-Sharing Plan | | 30.0 | | $ | 89,7767 | | $ | 0 | |
Retirement Plan | | 30.0 | | $ | 645,677 | | $ | 0 | |
Supplemental Benefit Retirement Plan | | 30.0 | | $ | 117,215 | | $ | 0 | |
Satish Dhanasekaran | Retirement Plan | | 13.8 | | $ | 206,331 | | $ | 0 | |
Supplemental Benefit Retirement Plan | | 13.8 | | $ | 59,478 | | $ | 0 | |
Soon Chai Gooi(3) | N/A | | — | | | — | | | — | |
17, 2021.
| | Ronald S. Nersesian | | | Retirement Plan | | | 19.0 | | | 740,795 | | | 0 | |
| | | | | Supplemental Benefit Retirement Plan | | | 19.0 | | | 1,399,705 | | | 0 | |
| | Neil P. Dougherty | | | Retirement Plan | | | 25.3 | | | 637,259 | | | 0 | |
| | | | | Supplemental Benefit Retirement Plan | | | 25.3 | | | 274,133 | | | 0 | |
| | Satish C. Dhanasekaran | | | Retirement Plan | | | 15.8 | | | 300,883 | | | 0 | |
| | | | | Supplemental Benefit Retirement Plan | | | 15.8 | | | 139,076 | | | 0 | |
| | Soon Chai Gooi(3) | | | N/A | | | — | | | — | | | — | |
| | Mark A. Wallace | | | Deferred Profit-Sharing Plan | | | 30.0 | | | 123,652 | | | 0 | |
| | | | | Retirement Plan | | | 30.0 | | | 711,780 | | | 0 | |
| | | | | Supplemental Benefit Retirement Plan | | | 30.0 | | | 169,718 | | | 0 | |
| (1)
| Employees must be at least 65 years of age and older in order to receive the full benefit under the Retirement Plan. Benefit payments from the Retirement Plan received prior to age 65 are reduced for “early” distribution. None of the NEOs are eligible for full benefits under the Retirement Plan. |
| (2)
| To the extent applicable, a portion of each NEO’s Supplemental Benefit Retirement Plan benefits includes accrued benefits in the Excess Benefit Retirement Plan. |
| (3)
| Mr. Gooi does not live in the United States and is not eligible to participate in the Retirement Plan or Supplemental Benefit Retirement Plan but is a participant in the Malaysian Defined Contribution Plan. |
RETIREMENT PLAN
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Retirement Plan
The Retirement Plan provides full retirement benefits payable at the later of age 65 or termination.termination to employees who were hired before August 1, 2015. The benefits under the Retirement Plan are based on eligible compensation and years of credited service with Keysight, Agilent (as applicable) and HPHewlett Packard (“HP”) (as applicable). No more than 30 years of credited service are used in determining the benefits under the Retirement Plan.
For service beginning on or after November 1, 2009, benefits are determined using the
“20092009 Benefit
Formula.”Formula (as defined in the Retirement Plan). For service on or before October 31, 2009, Retirement Plan benefits are determined under the
“19931993 Benefit
Formula.”Formula (as defined in the Retirement Plan).
The total benefits under the Retirement Plan are equal to the sum of the 2009 Benefit Formula benefits (if any) plus the 1993 Benefit Formula benefits (if any).
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Benefits are accrued on a monthly basis as a lump sum payable at normal retirement age based on the participant’s pay rate and years of credited service up to a maximum of 30 years as follows:
For participants who have fewer than 15 years of service:
| | | | |
| 11% × pay rate at the end of the month | | | PLUS | | | 5% × pay rate pay at the end of the
month in excess of
50% of the Social Security Wage Base | |
| | | | |
For participants who have 15 or more years of service:
| | | | | |
| 14% × pay rate at the end of the month | | | PLUS | | | 5% × pay rate at the end of the month
in excess of
50% of the Social Security Wage Base | |
| | | | |
No more than 30 years of credited service is considered for purposes of determining the total benefits under the Retirement Plan. If an employee has more than 30 years of credited service before they retire, the 2009 Benefit Formula benefits will be based on their highest consecutive annual 2009 Benefit Formula accruals during their career.
Only employees who earned benefits under the Agilent Retirement Plan before November 1, 2009, have benefits under the 1993 Benefit Formula. Benefits under the 1993 Benefit Formula are calculated as of October 31, 2009 and are expressed as an annuity. The 1993 Benefit Formula was frozen, meaning that there were no additional accruals under the 1993 Benefit Formula after October 31, 2009.
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The 1993 Benefit Formula provides retirement benefits in the form of lifetime monthly payments beginning at age 65. These benefits are calculated using a formula that is based on the participant’s highest average pay rate, their final average compensation, and their total years of credited service during their career at Agilent and HP (if applicable) through October 31, 2009. The total years of credited service (which includes years of credited service under the HP Retirement Plan as of May 1, 2000) cannot exceed 30 in the 1993 Benefit Formula. The monthly retirement benefits beginning at age 65 (or later if the participant retires after age 65 but before they reach age 70 ½), or for participants that reach age 70.5 in or after 2020, age 72) are determined as follows:
| | 1.5% | | | | | | |
| 1.5%
| X | | | Highest Average Pay Rate
at October 31, 2009 | | | X | | | Years of
Credited Service at
October 31, 2009 not
to exceed 30 | |
Less Reduction for Social Security
The Social Security reduction based on 0.6% of the final average compensation recognizes the Company’s contribution through payroll taxes towards Social Security benefits.
| | 0.6% | | | | | | |
| 0.6%
| X | | | Final Average
Compensation at
October 31, 2009 | | | X | | | Years of
Credited Service at
October 31, 2009 not
to exceed 30 | |
Some participants will have Retirement Plan benefits that are comprised of both 2009 Benefit Formula benefits that are calculated as a lump sum payable at age 65 and 1993 Benefit Formula benefits that are calculated as monthly annuity payments beginning at age 65. In this case, the total Retirement Plan benefits payable at age 65 are equal to (a) the value of the accrued benefits under the 2009 Benefit formula plus, (b) the value of the accrued benefits under the 1993 Benefit Formula, both of which must be payable in the same form. By using actuarial conversion factors, both the 2009 Benefit Formula and the 1993 Benefit Formula benefits can be converted so that both are paid as either an annuity or a lump sum.
The normal form of benefits under the Retirement Plan are either a single life annuity for single
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participants or a 50% joint and survivor annuity for married participants. Participants may elect to receive payments at any time following termination or retirement in the above forms or as an actuarially equivalent 75% or 100% joint and survivor annuity, or as a one-time lump sum. Payments made prior to normal retirement age will be reduced in accordance with the plan provisions.
Retirement Plan Benefit Reductions If Paid Prior to Age 65
The benefits paid under the 2009 Benefit Formula will be reduced by 5% of compound interest for each year that the benefits are paid before the participant reaches age 65.
The benefits paid under the 1993 Benefit Formula will be
reducedpaid as set forth below:
Age 65: 100.00% of benefit
Age 64: 93.33% of benefit
Age 63: 86.67% of benefit
Age 62: 80.00% of benefit
Age 61: 73.33% of benefit
Age 60: 66.67% of benefit
Age 59: 63.33% of benefit
Age 58: 60.00% of benefit
Age 57: 56.67% of benefit
Age 56: 53.33% of benefit
Age 55: 50.00% of benefit
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If the 1993 Benefit is paid before age 55, an additional reduction is applied. The benefit reduced to 50% at age 55 (as(as described above), is further reduced based on an “actuarialactuarial equivalence factor.” The actuarial equivalence factor is determined based on the number of months the payment begins before age 55, applicable interest rates and applicable mortality table, and the participant’s life expectancy.
A different calculation is used for Participants who have less than 15 years of service, which may result in a larger reduction to their benefit.
All regular full-time or regular part-time employees
who were hired prior to August 1, 2015 automatically
becomebecame participants in the Retirement Plan on the May 1 or November 1 following the completion of two years of service.
Deferred Profit-Sharing Plan
DEFERRED PROFIT-SHARING PLAN
The Deferred Profit-Sharing Plan is a frozen, tax-qualified defined contribution plan. HP Inc. created and maintained a Deferred ProfitProfit- Sharing Plan to provide its employees benefits with respect to their service with HP prior to November 1, 1993. Agilent and then Keysight replicated the frozen HP Deferred ProfitDeferred-Profit Sharing Plan to continue to provide a retirement benefit to former HP employees for service with HP prior to November 1, 1993. The benefits under the Deferred Profit SharingProfit-Sharing Plan are used as a floor offset for the Retirement Plan for benefits accrued under the 1993 Benefit Formula but only with respect to service prior to November 1, 1993. There have been no contributions into the plan since October 31, 1993. For the benefits attributable to service after October 31, 1993 under both the 1993 Benefit Formula and the 2009 Benefit Formula, there is no Deferred ProfitProfit- Sharing Plan offset.
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For service prior to November 1, 1993 (if any), the benefit due is the
greater of (i) the benefit defined by the Retirement Plan formula, or (ii) the annuity value of the Deferred Profit-Sharing Plan account balance. Therefore, for service prior to November 1, 1993, the Retirement Plan determines a minimum retirement benefit amount.
The normal form of benefits under the Deferred Profit-Sharing Plan are payable at normal retirement age as either a single life annuity for single participants, or a 50% joint and survivor annuity for married participants. Participants may elect to receive payments at any time following termination or retirement and in the above forms or as 75% or 100% joint and survivor annuity, or as a one-time lump sum.
Supplemental Benefit Retirement Plan and the Excess Benefit Retirement Plan
SUPPLEMENTAL BENEFIT RETIREMENT PLAN AND THE EXCESS BENEFIT RETIREMENT PLAN
The Supplemental Benefit Retirement Plan and the Excess Benefit Retirement Plan (which was frozen December 31, 2004) are unfunded, non-qualified plans. Benefits payable under both plans are equal to the excess of the qualified Retirement Plan amount that would be payable in accordance with the terms of the Retirement Plan, disregarding the benefit and compensation limitations imposed pursuant to sections 415 and 401(a)(17) of the Code.
Participants in the Retirement Plan and/or Deferred Profit-Sharing Plan whose retirement benefits under those tax-qualified plans are limited by Sections 401(a)(17) or 415 of the Code automatically become a participant in the Supplemental Benefit Retirement Plan.
Benefits under the Supplemental Benefit Retirement Plan and the Excess Benefit Retirement Plan are payable upon termination or retirement as follows:
In general, accruals prior to January 1, 2005 are paid from the Excess Benefit Retirement Plan in a single lump sum in the January following the fiscal yearFiscal Year in which the participant takes his qualified Retirement Plan benefit.
In general, subject to certain applicable exceptions, accruals after December 31, 2004 are paid from the Supplemental Benefit Retirement Plan based on the date participants retire or terminate:terminate. Benefits are paid in January immediately following retirement or termination if termination occurs during the first six months of the year; or in July if termination occurs during the second six months of the year. Participants will receive a benefit in the form of either five annual installments (if the lump sum value is greater than $150,000); or in a single lump sum (if the lump sum value is $150,000 or less).
MALAYSIAN DEFINED CONTRIBUTION PLAN
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Malaysian Defined Contribution Plan
All employees in Malaysia participate in the government mandatory retirement plan, managed by the Employer Provident Fund (EPF), a government agency. This plan requires contribution from both the employee and the employer. Mr. Gooi participates in this plan with an 11% contribution rate of his eligible compensation. Keysight contributes a fixed contribution rate of 12% of Mr. Gooi’s eligible compensation. In addition, Mr. Gooi also participates in a Company-wide EPF Top-up plan, for which we make contributions equal to 3% of monthly base earnings. No employee contributions are accepted for this plan.
TABLE OF CONTENTSNon-Qualified Deferred Compensation in Last Fiscal Year
NON-QUALIFIED DEFERRED COMPENSATION The Deferred Compensation Plan is available to all active employees on our U.S. payroll with total target cash salary, including the short-term Performance-Based Compensation Plan, greater than or equal to
$280,000$290,000 for
2019.2021.
There are four types of earnings that may be deferred under the Deferred Compensation Plan:
Up to 100% of annual base pay earnings in excess of the IRSU.S. Internal Revenue Service qualified plan limit of $280,000$290,000 for 2019;
2021;
Up to 95% of cash incentive award earnings, discretionary and cash compensation paid under the STI Performance-Based Compensation Plan;
Up to 95% of performance-based compensation paid out in accordance with the terms of Keysight’s LTP Program. Awards under this program are paid out in the form of shares of our common stock; and
Up to 95% of New Executive Stock (“NES”)new executive stock awards.
Deferral elections may be made annually and can be part of overall tax planning for executives. There are several hypothetical investment options available under the Deferred Compensation Plan, which generally mirror the investment choices under the tax-qualified 401(k) Plan. All hypothetical investment choices are made by the participant. Based on market performance, dividends and interest are credited to participants’ hypothetical accounts from the investment funds that the participant has elected.
At the time participation is elected, employees must also elect payout in one of two forms that can commence upon termination or be delayed by an additional one, two, or three years following termination:
A single lump sum payment; or
Annual installments over a five-to-15-year period.
Unless a participant has elected to delay distribution of payments as described above, payouts are distributed to eligible participants in January of the year following termination, if termination occurs during the first six months of the calendar year or in July of the year following termination where termination occurs during the second half of the calendar year. No early distributions or withdrawals are allowed, except in the event of an unforeseeable emergency, death or where the participant elected to make an in-service distribution on a fixed date. When and if received, a participant in the LTP Program may elect to defer his or her shares through the Deferred Compensation Plan at the time the award is granted. The LTP Program shares are deferred in the form of shares of our common stock only. At the end of the deferral period, the shares are simply released to the participant.
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Although the Deferred Compensation Plan is unfunded, Keysight has established a rabbi trust as a source of funds to make payments under the Deferred Compensation Plan. The table below provides information on the non-qualified deferred compensation of our NEOs for fiscal year 2019.Fiscal Year 2021.
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Keysight also maintains a frozen Deferred Compensation Plan for deferrals made prior to January 1, 2005 pursuant to the Agilent Deferred Compensation Plan. The frozen Deferred Compensation Plan no longer accepts deferrals but allows the same investment choices and hypothetical investments as the Deferred Compensation Plan.
Non-Qualified Deferred Compensation |
Name | Executive
Contributions in Last
Fiscal Year(1)
($) | Registrant
Contributions in Last
Fiscal Year
($) | Aggregate
Earnings in Last
Fiscal Year(2)
($) | Aggregate
Withdrawals/
Distributions
($) | Aggregate
Balance at
Fiscal Year-End(3)
($) |
Ronald S. Nersesian | $ | 0 | | $ | 0 | | $ | 5,909,962 | | $ | 0 | | $ | 14,444,570 | |
Neil P. Dougherty | $ | 381,322 | | $ | 0 | | $ | 1,134,705 | | $ | 0 | | $ | 3,613,896 | |
Jay Alexander | $ | 382,672 | | $ | 0 | | $ | 2,048 | | $ | 0 | | $ | 384,720 | |
Satish Dhanasekaran | $ | 1,568,190 | | $ | 0 | | $ | 352,443 | | $ | 0 | | $ | 2,819,964 | |
Soon Chai Gooi | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | |
| | Ronald S. Nersesian | | | 109,500 | | | 0 | | | 10,169,917 | | | 0 | | | 25,453,624 | |
| | Neil P. Dougherty | | | 322,838 | | | 0 | | | 2,189,972 | | | 0 | | | 6,631,776 | |
| | Satish C. Dhanasekaran | | | 351,181 | | | 0 | | | 1,737,271 | | | 0 | | | 5,406,866 | |
| | Soon Chai Gooi(4) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| | Mark A. Wallace | | | 0 | | | 0 | | | 1,367,922 | | | 0 | | | 4,145,901 | |
| (1)
| The amounts include base pay deferrals, short-term cash incentive award deferrals paid under the Performance-Based Compensation Plan, as well as deferrals representing the value of the fully vested shares based on the closing share price of Keysight common stock on the vesting date paid out in accordance with the terms of Keysight’s LTP Program for fiscal year 2019.Fiscal Year 2021. The base pay portion of the amounts reflected above is included in the amount reported as “Salary” in the “SummarySummary Compensation Table.Table for Fiscal Year 2021 as follows: for Mr. Dhanasekaran $52,000. The short-term cash incentive award portion of the amounts reflected above is included in the amount reported as “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table for fiscal year 2019.Fiscal Year 2021 as follows: for Mr. Nersesian $109,500; for Mr. Dougherty $322,838; and for Mr. Dhanasekaran $299,181. The portion of the amounts reflected above that are attributed to performance shares under the LTI Program are based on grants that were made in Fiscal Year 2019 and are not reflected in the Summary Compensation Table for Fiscal Year 2021. |
| (2)
| The amounts reflected are not included in the Summary Compensation Table for fiscal year 2019.Fiscal Year 2021. These amounts consist of dividends, interest, and change in market value attributed to each executive officer’s entire account balance during fiscal year 2019,Fiscal Year 2021, which balance may include deferred compensation from previous periods. The amounts do not include the deferred compensation themselves. Such earnings were not preferential or above-market. |
(3)
| (3) | Includes theThe following amounts which previously wereincluded in this column have also been reported as compensation toin the NEO in our Summary Compensation Table as compensation for Fiscal Year 2021 or a prior fiscal years prior to fiscal year 2018:year: Mr. Nersesian: $1,260,461Nersesian, $109,500; Mr. Dougherty, $332,838; and Mr. Dougherty: $1,724,530.Dhanasekaran, $351,181. The aggregate grant date fair value of the fully vested deferred performance shares under the LTI Program included in this column that have been reported in the Summary Compensation Table as compensation for Fiscal Year 2021 or a prior Fiscal Year: Mr. Nersesian, $972,945 and Mr. Dougherty, $806,666. |
| (4)
| Mr. Gooi does not live in the United States and is not eligible to participate in the Deferred Compensation Plan. |
Termination Arrangements – Severance Plan, Change of Control Severance Agreements & Equity Award Acceleration
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Set forth below is a description of the plans and agreements that could result in potential payments to our NEOs in the case of their termination of employment and/or a change of control of Keysight.
Severance Plan
SEVERANCE PLAN
On March 18, 2015, the Compensation
and Human Capital Committee adopted the Keysight Technologies Inc. Officer and
ExecutiveDirector Severance Plan (the “Severance Plan”)
. The Severance Plan, which provides for severance payments and benefits (“Severance Benefits”) to our executive officers and vice presidents. The Severance Benefits do not apply in connection with a change of control of Keysight if an executive officer or vice president is covered under a change of control severance agreement or similar arrangement with Keysight. Accordingly, our NEOs who have each entered into a Change of Control Severance Agreement with us would only be entitled to the Severance Benefits in connection with a termination that occurs outside of the change of control context. The Severance Plan replaces any benefits provided by a workforce management program.
In general, in order to qualify for Severance Benefits, the executive officer’s or vice president’s employment must have been terminated either (i) by us other than for “cause”, misconduct, death, or physical or mental incapacity or (ii) by the executive officer or vice president for “good reason” (as these terms are defined in the Severance Plan). In addition to satisfying other conditions set forth in the Severance Plan, to qualify for Severance Benefits, the executive officer or vice president must execute a general release of claims in favor of Keysight and comply with certain post-termination restrictions, including, among other things, not soliciting our employees or the employees of our affiliates for a period of two years, continuing to comply with the terms his or her proprietary information and non-disclosure agreement,
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not making certain public statements concerning Keysight without first receiving Keysight’s written approval, and not taking actions that could cause Keysight or its employees or agents any embarrassment or humiliation or otherwise cause or contribute to Keysight or any such person being held in disrepute by the general public or Keysight’s employees, clients, or customers.
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The Severance Plan provides for: (i) a lump sum cash severance payment, (ii) a pro-rated annual cash incentive award, if any, for the performance period in which the executive officer’s or vice president’s employment terminates, subject to the achievement of the performance goals and other terms and conditions that apply to him or her for that performance period, provided that any individual goals will be deemed to have been earned at target, (iii) 12 months of accelerated vesting of stock awards that are subject only to service-based vesting conditions and are held by executive officers and vice presidents that are not retirement eligible, (iv) waiver of the service-vesting condition for restricted stock unit and/or restricted stock awards that are subject to performance-based vesting conditions, which will remain outstanding subject to the applicable performance conditions, and (v) a lump sum cash payment of $20,000 ($40,000 in the case of our CEO) to pay for the cost of COBRA health benefit continuation coverage or to be used for any other purpose the executive officer or vice president chooses. The amount of the lump sum severance payment in the case of our executive officers, equals 100% (200% in the case of our CEO) of the sum of (i) his or her current annual base salary and (ii) his or her average actual annual cash incentive award percentage as compared to the target percentage paid for the three fiscal yearsFiscal Year prior to the fiscal yearFiscal Year in which he or she terminates employment, applied to his or her current base salary. For our vice presidents, the amount of the lump sum severance payment equals 100% of his or her annual base salary only and does not take into account his or her cash incentive award.
Further, if the executive officer or vice president is retirement-eligible under the terms of the applicable stock award, the executive officer or vice president will not receive the benefits described above but will instead benefit from the retirement treatment set forth in such award in accordance with its terms and the requirements of Section 409A of the Code.
Change of Control Severance Agreements
CHANGE OF CONTROL SEVERANCE AGREEMENTS
As noted above, each of our NEOs has entered into a Change of Control Severance Agreement with us. Under the Change of Control Severance Agreements, if a change of control of Keysight occurs and an NEO is involuntarily terminated without “cause” or voluntarily terminates within 3 months following the occurrence of an event constituting “good reason”, and such involuntary termination or “good reason”
(as these terms are defined in the Change of Control Severance Agreements) event occurs (i) within three months prior to a change of control, (ii) at the time of or within 24 months following the occurrence of a change of control, or (iii) at any time prior to a change of control, if such termination is at the request of the acquirer, then the NEO will be entitled to: (i) two times, or with respect to Mr. Nersesian three times, the sum of his base salary and target cash incentive award, (ii) payment of $80,000 for medical insurance premiums, (iii) full vesting of all outstanding stock options, if any, and stock awards not subject to performance-based vesting, and (iv) a pro-rated cash incentive award under any cash incentive award plan applicable to the NEO, for the performance period in which the NEO’s termination of employment occurs equal to the amount, if any, of the cash incentive award the NEO would have been paid based on the achievement of performance goals under the terms of such cash incentive award plan had the NEO continued employment with Keysight until the end of such performance period. In addition, if the NEO experiences a qualifying termination prior to a change of control and any of his unvested stock awards terminate prior to the change of control before such awards would have otherwise vested on account of the qualifying termination, the NEO will receive a cash payment equal to the value of the shares that would have vested on the date of the change of control less any exercise price. The NEO’s stock awards that are subject to performance-based vesting will be governed by the applicable award agreement. The Change of Control Severance Agreements replace any benefits provided by a workforce management program.
As a condition to receiving such severance benefits, an NEO must execute a release of all of his rights and claims relating to his employment and comply with certain post-termination restrictions, including, among other things, not soliciting our employees or the employees of our affiliates for a period of two years, continuing to comply with the terms his proprietary information and
non-disclosurenon- disclosure agreement, not making certain public statements concerning Keysight without first receiving the Keysight’s written approval, and not taking actions that could cause Keysight or its employees or agents any embarrassment or humiliation or otherwise cause or contribute to Keysight or any such person being held in disrepute by the general public or Keysight’s employees, clients, or customers.
The Change of Control Severance Agreements with our NEOs do not provide for tax gross-ups of payments subject to the
“golden parachute”golden parachute excise tax under Section 4999 of the Code. Each Change of Control Severance Agreement instead contains a “better after-tax” provision, which provides that if any of the payments to the NEO constitutes a parachute payment under Section 280G of the Code, the payments will either be (i) reduced or (ii) provided in full to the NEO, whichever results in the NEO receiving the greater amount after taking into consideration the payment of all taxes, including the excise tax under Section 4999 of the Code.
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ACCELERATION AND CONTINUED VESTING OF EQUITY AWARDS
Acceleration and Continued Vesting of Equity Awards
Under each NEO’s stock award agreements, if an NEO dies or becomes fully disabled, his unvested stock options, if any, or stock awards that are subject only to service-based vesting conditions will fully vest and any performance awards will be earned, if at all, based on the satisfaction of the applicable performance measures and pro-rated if such death or disability occurs within the first 12 months of the vesting period. In addition, under each NEO’s stock award agreements when an NEO retires, his stock options, if any, and stock awards that are subject only to service-based vesting conditions continue to vest and any performance awards will be earned, if at all, based on the satisfaction of the applicable performance measures and pro-rated if such retirement occurs within the first 12 months of the vesting period. Currently, only Mr. Nersesian, Mr. AlexanderWallace and Mr. Gooi are entitled to retirement vesting based on Company-wide equity award agreement eligibility. In addition, in the event there is a change of control, under the Stock Plan, options or stock awards will fully vest immediately prior to the closing of the transaction unless such awards are assumed, converted, or replaced in full by the successor corporation or a parent or subsidiary of the successor. Stock options and stock awards that are subject only to service-based vesting conditions vest on a “double-trigger” basis in connection with a change of control of Keysight pursuant to the Severance Plan and each NEO’s Change of Control Severance Agreement as discussed above, while each NEO’s performance awards provide that in the event of a change of control, such awards will be paid out at the greater of the target award or the accrued amount of the payout but will be pro-rated if such change of control occurs within the first 12 months of the vesting period.
“
Cause,CAUSE,”
“Good Reason” and “Change of Control” Definitions“GOOD REASON” AND “CHANGE OF CONTROL” DEFINITIONS
For purposes of the Severance Plan, “good reason” means a material diminution in an executive officer’s or vice president’s authority, duties or responsibilities resulting in a significant diminution of position without the executive officer’s or vice president’s consent that is not cured by Keysight within 30 days of written notice to Keysight by the executive officer or the vice president of such diminution. “Good reason” will only exist if the executive officer or the vice president notifies Keysight of the occurrence of the events giving rise to such “good reason” within 30 days of their initial occurrence. An executive officer’s or vice president’s authority, duties or responsibilities will not be considered to be significantly diminished so long as the executive officer or the vice president continues to perform substantially the same functional role for Keysight as he or she performed immediately prior to the occurrence the events alleged to constitute “good reason” whether in the same location or another location assigned to him or her by Keysight. In addition, an executive officer’s or vice president’s authority, duties or responsibilities will not be considered to be significantly diminished solely by reason of a change to his or her title or compensation or benefits.
For purposes of the Change of Control Severance Agreements, “good reason” means (i) a more than $10,000 reduction of the NEO’s rate of compensation as in effect immediately prior to the effective date of the agreement or in effect immediately prior to the occurrence of a change of control, whichever is greater, other than reductions in base salary that apply broadly to employees of Keysight or reductions due to varying metrics and achievement of performance goals for different periods under variable pay programs; (ii) the failure to provide a package of benefits which, taken as a whole, provides substantially similar benefits to those in which the NEO is entitled to participate in the day prior to the occurrence of the change of control or any action by Keysight which would significantly and adversely affect the NEO’s participation or reduce the NEO’s benefits under any of such plans in existence the day prior to the Change of Control, other than changes that apply broadly to employees of Keysight; (iii) a change in the NEO’s duties, responsibilities, authority, job title, or reporting relationships resulting in a significant diminution of position, (excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith which is remedied by Keysight within 30 days after notice thereof is given by the NEO); (iv) the NEO relocates to a worksite that is more than 35 miles from the NEO’s prior worksite, unless the NEO consents to such relocation; (v) failure or refusal of a successor to Keysight to assume Keysight’s obligations under the Change of Control Service Agreement; or (vi) the material breach by Keysight or any successor to Keysight of any of the material provisions of the NEO’s Change of Control Severance Agreement. The NEO’s duties, responsibilities, authority, job title or reporting relationships will not be considered to be significantly diminished so long as the NEO continues to perform substantially the same functional role for Keysight as the NEO performed immediately prior to the occurrence of the change of control, even if Keysight becomes a subsidiary or division of another entity. In addition, to constitute “good reason”, the NEO must notify Keysight of any event purporting to constitute “good reason” within 60 days following the NEO’s knowledge of its existence, and Keysight will have 30 days in which to correct or remove such “good reason”, or such event will not constitute “good reason”.
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For purposes of the Severance Plan and the Change of Control Severance Agreements, “cause” means misconduct, including: (i) conviction of any felony or any crime involving moral turpitude or dishonesty that has a material adverse effect on Keysight’s business or reputation; (ii) repeated unexplained or unjustified absences from Keysight; (iii) refusal or willful failure to act in accordance with any specific directions or orders of Keysight that has a material adverse effect on Keysight’s business or reputation; (iv) a material and willful violation of any state or federal law that would materially injure the business or reputation of Keysight as reasonably determined by the
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Board; (v) participation in a fraud or act
of dishonesty against Keysight which has a material adverse effect on Keysight’s business or reputation; or (vi) intentional, material violation by the NEO of any contract between the NEO and Keysight or any statutory duty of the NEO to Keysight that is not corrected within 30 days after written notice to the officer; provided, however, that “cause”“cause” in the case of the Change of Control Severance Agreements also means conduct by the NEO that the Board determines demonstrates gross unfitness to serve, and the NEO’s refusal or willful failure to act in accordance with any written policies of Keysight that has a material adverse effect on Keysight’s business or reputation.For purposes of the Change of Control Severance Agreements and the Stock Plan, a “Change of Control” means the occurrence of any of the following events: (i) the sale, exchange, lease or other disposition or transfer of all or substantially all of the consolidated assets of Keysight to a person or group which will continue the business of Keysight in the future; (ii) a merger or consolidation involving Keysight in which the
shareholdersstockholders of Keysight immediately prior to such merger or consolidation are not the beneficial owners of more than 75% of the total voting power of the outstanding voting securities of the corporation resulting from such transaction in substantially the same proportion as their ownership of the total voting power of the outstanding voting securities of Keysight immediately prior to such merger or consolidation; or (iii) the acquisition of beneficial ownership of at least 25% of the total voting power of the outstanding voting securities of Keysight by a person or group. For purposes of the Change of Control Severance Agreements, a “Change of Control” also occurs if the incumbent members of the Board as of November 1, 2014 or their successors cease for any reason to constitute at least a majority of the Board.
Termination and Change of Control Table
TERMINATION AND CHANGE OF CONTROL TABLE
For each of our NEOs, the table below estimates the amount of compensation that would be paid in the event of the following:
a change of control of Keysight occurs and the NEO experiences a qualifying termination under his Change of Control Severance Agreement;
a qualified termination under the Severance Plan;
a voluntary termination by the NEO or an involuntary termination of the NEO by Keysight with cause;
the termination of the NEO due to death or disability;
the retirement of the NEO;
a change of control of Keysight in which stock awards are not assumed, converted, or replaced in full by the successor corporation or a parent or subsidiary of the successor; or
a change of control of Keysight in which stock awards are assumed, converted, or replaced in full by the successor corporation or a parent or subsidiary of the successor.
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The amounts shown assume that each of the terminations was effective as of October 31, 2019.
| | Involuntary
Termination or
Resignation
for Good
Cause in
Connection
with a Change
of Control(1)
($) | Qualifying
Termination
under
Severance
Plan(2)
($) | Voluntary
Termination
or
Involuntary
Termination
with Cause
($) | Death or
Disability(3)
($) | Retirement(4)
($) | Change of
Control with
No
Replacement
Equity(5)
($) | Change of
Control with
Replacement
Equity(6)
($) |
Ronald S. Nersesian | Cash Severance Payments | | 7,500,000 | | | 5,440,000 | | | — | | | — | | | — | | | — | | | — | |
| Continuation of Benefits(7) | | 80,000 | | | 40,000 | | | — | | | — | | | — | | | — | | | — | |
| Stock Award Acceleration(8) | | 15,395,334 | | | — | | | — | | | 15,395,334 | | | — | | | 15,395,334 | | | — | |
| Stock Award Cont’d Vesting(9) | | — | | | 15,395,334 | | | — | | | — | | | 15,395,334 | | | — | | | — | |
| Performance Awards(10) | | 26,400,982 | | | 26,400,982 | | | — | | | 26,400,982 | | | 26,400,982 | | | 26,400,982 | | | — | |
| Pension Benefits(11) | | 1,646,388 | | | 1,646,388 | | | 1,646,388 | | | 1,646,388 | | | 1,646,388 | | | — | | | — | |
| Total Termination Benefits: | | 51,022,704 | | | 48,922,704 | | | 1,646,388 | | | 43,442,704 | | | 43,442,704 | | | 41,796,316 | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
Neil P. Dougherty | Cash Severance Payments | | 2,109,000 | | | 1,125,560 | | | — | | | — | | | — | | | — | | | — | |
| Continuation of Benefits(7) | | 80,000 | | | 20,000 | | | — | | | — | | | — | | | — | | | — | |
| Stock Award Acceleration(8) | | 3,217,919 | | | 1,332,012 | | | — | | | 3,217,919 | | | — | | | 3,217,919 | | | — | |
| Stock Award Cont’d Vesting(9) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Performance Awards(10) | | 5,413,620 | | | 5,413,620 | | | — | | | 5,413,620 | | | — | | | 5,413,620 | | | — | |
| Pension Benefits(11) | | 604,337 | | | 604,337 | | | 604,337 | | | 604,337 | | | 604,337 | | | — | | | — | |
| Total Termination Benefits: | | 11,424,876 | | | 8,495,529 | | | 604,337 | | | 9,235,876 | | | 604,337 | | | 8,631,539 | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
Jay Alexander | Cash Severance Payments | | 1,872,000 | | | 1,067,733 | | | — | | | — | | | — | | | — | | | — | |
| Continuation of Benefits(7) | | 80,000 | | | 20,000 | | | — | | | — | | | — | | | — | | | — | |
| Stock Award Acceleration(8) | | 2,990,972 | | | — | | | — | | | 2,990,972 | | | — | | | 2,990,972 | | | — | |
| Stock Award Cont’d Vesting(9) | | — | | | 2,990,972 | | | — | | | — | | | 2,990,972 | | | — | | | — | |
| Performance Awards(10) | | 5,118,962 | | | 5,118,962 | | | — | | | 5,118,962 | | | 5,118,962 | | | 5,118,962 | | | — | |
| Pension Benefits(11) | | 914,549 | | | 914,549 | | | 914,549 | | | 914,549 | | | 914,549 | | | — | | | — | |
| Total Termination Benefits: | | 10,976,483 | | | 10,112,216 | | | 914,549 | | | 9,024,483 | | | 9,024,483 | | | 8,109,934 | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
Satish Dhanasekaran | Cash Severance Payments | | 2,160,000 | | | 1,161,600 | | | — | | | — | | | — | | | — | | | — | |
| Continuation of Benefits(7) | | 80,000 | | | 20,000 | | | — | | | — | | | — | | | — | | | — | |
| Stock Award Acceleration(8) | | 2,013,962 | | | 686,188 | | | — | | | 2,013,962 | | | — | | | 2,013,962 | | | — | |
| Stock Award Cont’d Vesting(9) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Performance Awards(10) | | 3,608,441 | | | 3,608,441 | | | — | | | 3,608,441 | | | — | | | 3,608,441 | | | — | |
| Pension Benefits(11) | | 234,324 | | | 234,324 | | | 234,324 | | | 234,324 | | | 234,324 | | | — | | | — | |
| Total Termination Benefits: | | 8,096,727 | | | 5,710,553 | | | 234,324 | | | 5,856,727 | | | 234,324 | | | 5,622,403 | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
Soon Chai Gooi | Cash Severance Payments(12) | | 1,869,098 | | | — | | | — | | | — | | | — | | | — | | | — | |
| Continuation of Benefits(7) | | 80,000 | | | — | | | — | | | — | | | — | | | — | | | — | |
| Stock Award Acceleration(8) | | 3,804,004 | | | — | | | — | | | 3,804,004 | | | — | | | 3,804,004 | | | — | |
| Stock Award Cont’d Vesting(9) | | — | | | — | | | — | | | — | | | 3,804,004 | | | — | | | — | |
| Performance Awards(10) | | 6,376,907 | | | — | | | — | | | 6,376,907 | | | 6,376,907 | | | 6,376,907 | | | — | |
| Pension Benefits(11) | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total Termination Benefits: | | 12,130,009 | | | — | | | — | | | 10,180,911 | | | 10,180,911 | | | 10,180,911 | | | — | |
| | Ronald S. Nersesian | | | Cash Severance | | | 7,500,000 | | | 6,271,400 | | | — | | | — | | | — | | | — | | | — | |
| | Benefit Continuation(7) | | | 80,000 | | | 40,000 | | | — | | | — | | | — | | | — | | | — | |
| | Stock Award Acceleration(8) | | | 22,857,139 | | | — | | | — | | | 22,857,139 | | | — | | | 22,857,139 | | | — | |
| | Stock Award Cont’d Vesting(9) | | | — | | | 22,857,139 | | | — | | | — | | | 22,857,139 | | | — | | | — | |
| | Performance Awards(10) | | | 69,334,214 | | | 70,551,098 | | | — | | | 69,334,214 | | | 69,334,214 | | | 70,551,098 | | | | |
| | Pension Benefits(11) | | | 2,155,650 | | | 2,155,650 | | | 2,155,650 | | | 2,155,650 | | | 2,155,650 | | | — | | | — | |
| | Total Termination Benefits: | | | 101,927,003 | | | 101,875,287 | | | 2,155,650 | | | 94,347,003 | | | 94,347,003 | | | 93,408,238 | | | — | |
| | Neil P. Dougherty | | | Cash Severance | | | 2,470,000 | | | 1,482,923 | | | — | | | — | | | — | | | — | | | — | |
| | Benefit Continuation(7) | | | 80,000 | | | 20,000 | | | — | | | — | | | — | | | — | | | — | |
| | Stock Award Acceleration(8) | | | 4,766,210 | | | 1,987,241 | | | — | | | 4,766,210 | | | — | | | 4,766,210 | | | — | |
| | Stock Award Cont’d Vesting(9) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Performance Awards(10) | | | 14,024,236 | | | 14,283,147 | | | — | | | 14,024,326 | | | — | | | 14,283,147 | | | | |
| | Pension Benefits(11) | | | 839,643 | | | 839,643 | | | 839,643 | | | 839,643 | | | 839,643 | | | — | | | — | |
| | Total Termination Benefits: | | | 22,180,179 | | | 18,612,954 | | | 839,643 | | | 19,630,179 | | | 839,643 | | | 19,049,356 | | | — | |
| | Satish C. Dhanasekaran | | | Cash Severance | | | 2,700,000 | | | 1,656,203 | | | — | | | — | | | — | | | — | | | — | |
| | Benefit Continuation(7) | | | 80,000 | | | 20,000 | | | — | | | — | | | — | | | — | | | — | |
| | Stock Award Acceleration(8) | | | 5,057,842 | | | 1,836,384 | | | — | | | 5,057,842 | | | — | | | 5,057,842 | | | — | |
| | Stock Award Cont’d Vesting(9) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Performance Awards(10) | | | 15,133,950 | | | 15,475,599 | | | — | | | 15,133,950 | | | — | | | 15,475,599 | | | | |
| | Pension Benefits(11) | | | 386,691 | | | 386,691 | | | 386,691 | | | 386,691 | | | 386,691 | | | — | | | — | |
| | Total Termination Benefits: | | | 23,358,483 | | | 19,374,877 | | | 386,691 | | | 20,578,483 | | | 386,691 | | | 20,533,441 | | | — | |
| | Soon
Chai Gooi | | | Cash Severance(12) | | | 1,977,353 | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Benefit Continuation(7) | | | 80,000 | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Stock Award Acceleration(8) | | | 4,810,674 | | | — | | | — | | | 4,810,674 | | | — | | | 4,810,674 | | | — | |
| | Stock Award Cont’d Vesting(9) | | | — | | | — | | | — | | | — | | | 4,810,674 | | | — | | | — | |
| | Performance Awards(10) | | | 14,486,773 | | | — | | | — | | | 14,486,773 | | | 14,486,773 | | | 14,711,414 | | | | |
| | Pension Benefits(11) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | Total Termination Benefits: | | | 21,354,800 | | | — | | | — | | | 19,297,448 | | | 19,297,448 | | | 19,522,089 | | | — | |
| | Mark A.
Wallace | | | Cash Severance | | | 2,280,000 | | | 1,311,000 | | | — | | | — | | | — | | | — | | | — | |
| | Benefit Continuation(7) | | | 80,000 | | | 20,000 | | | — | | | — | | | — | | | — | | | — | |
| | Stock Award Acceleration(8) | | | 3,416,060 | | | — | | | — | | | 3,416,060 | | | — | | | 3,416,060 | | | — | |
| | Stock Award Cont’d Vesting(9) | | | — | | | 3,416,060 | | | — | | | — | | | 3,416,060 | | | — | | | — | |
| | Performance Awards(10) | | | 10,647,485 | | | 10,825,323 | | | — | | | 10,647,485 | | | 10,647,485 | | | 10,825,323 | | | — | |
| | Pension Benefits(11) | | | 1,032,572 | | | 1,032,572 | | | 1,032,572 | | | 1,032,572 | | | 1,032,572 | | | — | | | — | |
| | Total Termination Benefits: | | | 17,456,117 | | | 16,604,955 | | | 1,032,572 | | | 15,096,117 | | | 15,096,117 | | | 14,241,383 | | | — | |
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| Under the Change of Control Severance Agreements, if a change of control of Keysight occurs and an NEO is involuntarily terminated without cause or voluntarily terminates within 3 months following the occurrence of an event constituting “good reason”, and such involuntary termination or “good reason” (as defined in the Change of Control Severance Agreements) event occurs (i) within three months prior to a change of control, (ii) at the time of or within 24 months following the occurrence of a change of control, or (iii) at any time prior to a change of control, if such termination is at the request of the acquirer, his or her unvested stock options, if any, and stock awards that are subject only to service-based vesting conditions will fully vest. In addition, pursuant to the terms of each NEO’s performance award agreement, following the end of the performance period (or any earlier performance period termination date in connection with the change of control), performance awards will be paid out at the greater of the target award or the accrued amount of the payout; except that if such change of control occurs during the first 12 months of the NEO’s vesting period, the payout for such performance period shall equal an amount calculated by multiplying (a) the amount determined under the performance award agreement times (b) a fraction, the numerator of which is the number of days from the beginning of the NEO’s vesting period to the date of such change of control, and the denominator of which is the number of days in the 12-month period. For purposes of determining the amounts earned under each NEO’s performance awards, the calculated values are based on the following: (x) for PSUs granted in fiscal year 2017,Fiscal Year 2019, the actual number of PSUs that were earned through fiscal year 2019,Fiscal Year 2021, (y) for PSUs granted in fiscal year 2018, the target number of PSUs that may be earned through fiscal yearFiscal Year 2020, and (z) for PSUs granted in fiscal year 2019, the maximum number of PSUs that may be earned based on Keysight’s performance through fiscal year 2020Fiscal Year 2021, and (z) for PSUs granted in Fiscal Year 2021, the maximum number of PSUs that may be earned based on Keysight’s performance through Fiscal Year 2021 (collectively, the “PSU Calculations”), subject to the pro-ration calculations for an assumed termination within the first 12 months of the NEO’s vesting period for the PSUs granted in fiscal year 2019.Fiscal Year 2021. Because fiscal year 2019Fiscal Year 2021 cash incentive awards would have been earned, if at all, as of October 31, 2019,2021, we have not included these amounts in this column. |
| (2)
| Under the Severance Plan, the vesting of stock options, if any, and stock awards which would have occurred during the 12-month period following termination of employment will accelerate; provided, however, if the NEO is retirement-eligible under the terms of the applicable award, the NEO will instead benefit from the retirement treatment set forth in such award agreement. As of October 31, 2019,2021, Messrs. Nersesian, Alexander,Gooi, and GooiWallace were retirement-eligible under the terms of their award agreements. Any remaining unvested stock options and stock awards, if any, will be forfeited. Unvested performance stock awards will no longer be subject to any service-based vesting requirements but will only be paid out based on actual performance at the end of the performance period. For purposes of determining the amounts earned under each NEO’s performance awards, the calculated values are based on the PSU Calculations. |
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(3)
| EXECUTIVE COMPENSATION | 60
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awards, if any, will be forfeited. Unvested performance stock awards will no longer be subject to any service-based vesting requirements but will only be paid out based on actual performance at the end of the performance period. For purposes of determining the amounts earned under each NEO’s performance awards, the calculated values are based on the PSU Calculations.
| (3) | Each NEO’s stock awards that are subject only to service-based vesting conditions provide that if a NEO dies or becomes disabled, his or her unvested stock options, if any, and stock awards will fully vest. Each NEO’s performance stock awards provide that any unvested awards will no longer be subject to any service-based vesting requirements but will only be paid out based on actual performance at the end of the performance period; except that, if such death or disability occurs during the first 12 months of the vesting period, the payout for such performance period shall equal an amount calculated by multiplying (a) the award determined under the performance award agreement for the full performance period times (b) a fraction, the numerator of which is the number of days from the beginning of the vesting period to the date of such death or disability, and the denominator of which is the number of days in the 12-month period. For purposes of determining the amounts earned under each NEO’s performance awards, the calculated values are based on the PSU Calculations, subject to the pro-ration calculations for an assumed termination within the first 12 months of the NEO’s vesting period for the PSUs granted in fiscal year 2019.Fiscal Year 2021. |
| (4)
| Each NEO’s stock awards that are subject only to service-based vesting provide that if ana NEO retires from Keysight, all unvested stock options, if any, and stock awards continue to vest per the original terms of the grant. Each NEO’s performance stock awards provide that any unvested awards will no longer be subject to any service-based vesting requirements but will only be paid out based on actual performance at the end of the performance period; except that, if such retirement occurs during the first 12 months of the vesting period, the payout for such performance period shall equal an amount calculated by multiplying (a) the amount determined under the performance award agreement for the full performance period times (b) a fraction, the numerator of which is the number of days from the beginning of the vesting period to the date of such retirement, and the denominator of which is the number of days in the 12-month period. As of October 31, 2019,2021, Messrs. Nersesian, Alexander,Gooi and GooiWallace were eligible for such continued vesting upon retirement. For purposes of determining the amounts earned under each NEO’s performance awards, the calculated values are based on the PSU Calculations, subject to the pro-ration calculations for an assumed termination within the first 12 months of the NEO’s vesting period for the PSUs granted in fiscal year 2019.Fiscal Year 2021. |
| (5)
| Under the Stock Plan in the event of a change of control of Keysight, all stock awards granted under the Stock Plan will accelerate if they are not assumed, converted, or replaced in full by the successor corporation or a parent or subsidiary of the successor. We have assumed that the NEOs have not been terminated for purposes of determining the amounts in this column. For purposes of determining the amounts paid out under each NEO’s performance awards, the calculated values are based on the PSU Calculations. |
| (6)
| Under the Stock Plan in the event of a change of control of Keysight, all stock awards granted under the Stock Plan will not accelerate if they are assumed, converted, or replaced in full by the successor corporation or a parent or subsidiary of the successor. We have assumed that the NEOs have not been terminated for purposes of determining the amounts in this column. |
| (7)
| Flat lump sum benefit for healthcare expenses, including additional health plan premium payments that may result from termination in the event of change of control or a qualified termination under the Severance Plan. |
| (8)
| Calculated the acceleration value of the time-based stock awards using $100.91,$180.02, the closing price of Keysight common stock as of October 31, 201929, 2021, which was the last business day of Fiscal Year 2021 (the “Fiscal Year End Price”). No vesting acceleration for stock options is included because, as of October 31, 2019, each of the NEOs had already fully vested in their outstanding stock options. |
| (9)
| For purposes of determining the value of the time-based stock awards, we have assumed that the Fiscal Year End Price remains constant through each applicable vesting date. No vesting continuation for stock options is included because, as of October 31, 2019, each of the NEOs had already fully vested in their outstanding stock options. |
| (10)
| To determine the value of performance-based stock awards in scenarios where such awards will continue to vest, we have assumed that the Fiscal Year End Price remains constant through each applicable vesting date. The value of performance-based stock awards that accelerate was calculated using the Fiscal Year End Price. Actual payments at vesting of the performance-based stock awards could be different based on final performance results. The performance period for the PSUs granted in fiscal year 2017Fiscal Year 2019 concluded on October 31, 2019,2021, but the award remained unvested, subject to the applicable NEO being employed through the date that the Compensation and Human Capital Committee determined the payout. |
| (11)
| For information regarding potential payments upon termination under the Deferred Compensation Plan and the Retirement Plan, and the Supplemental Benefit Retirement Plan, in which our NEOs participate, see “Non-Qualified Deferred Compensation in Last Fiscal Year”Compensation” and “Pension Benefits” above. |
| (12)
| The amounts for Mr. Gooi’s Cash Severance Payment are shown in U.S. Dollars but would be payable to him in Malaysian Ringgit. To convert the amount payable in U.S. Dollars, we used the exchange rate as of October 31, 2019,2021, or 4.17925357934.1411616362 Malaysian Ringgits per U.S. Dollar. |
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Pay Ratio Disclosure
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K,S- K, Keysight is providing the following information about the relationship of the annual total compensation of its employees to the annual total compensation of Mr. Nersesian, our CEO. To understand this disclosure, we believe that it is important to give context to Keysight’s operations. Keysight’s corporate headquarters is in Santa Rosa, California withand has employees in over 30 countries. As a global organization, approximately 65% of Keysight’s employees were located outside of the U.S. as of October 31, 2019.2021. The countries with the largest number of our employees are the United States, Malaysia, India, China, and Germany.
Keysight is engaged in a very competitive industry, and its success depends on its ability to attract, motivate, and retain highly qualified, talented, and creative employees. Consistent with our executive compensation program, Keysight’s global compensation program is designed to be competitive in terms of both the position and the geographic location in which an employee is located. Accordingly, our pay structures vary among our employees based on position, geographic location, and consideration of local competitive market practices.
For fiscal year 2019, Keysight’s last completed fiscal year:Fiscal Year 2021:
The median of the annual total compensation of all of Keysight’s employees, other than Mr. Nersesian, was $84,714.
$77,082.
Mr. Nersesian’s annual total compensation, as reported in the “Total” column of the Summary“Summary Compensation TableTable” was $11,124,216.$18,566,410.
Based on this information, the ratio of the annual total compensation of Mr. Nersesian to the median of the annual total compensation of all of Keysight’s employees other than Mr. Nersesian is estimated to be 1241 to 131.
Identification of Median Employee
We selected October 31, 2019, the last day of fiscal year 2019, as the date on which to determine our median employee. As of that date, Keysight had approximately 14,120 employees, including full-time and part-time employees, employees on leave of absence and temporary employees. 1.
IDENTIFICATION OF MEDIAN EMPLOYEE
For purposes of
identifying the
Fiscal Year 2021 CEO pay ratio set forth above, we used the same median employee
identified with respect to our Fiscal Year 2019 CEO pay ratio, as permitted by SEC rules as we
considered the aggregate of the followinghave not materially modified our employee compensation
elements for each ofprograms and our
employees, as compiledemployee population did not change significantly from
Keysight’s internal records as of October 31, 2019:Earned base salary or base wages for the period beginning on November 1, 2018 and ending on October 31,Fiscal Year 2019.
Target bonuses for fiscal year 2019.
We selected the above compensation elements because they represent Keysight’s principal broad-based compensation elements. For purposes of identifying the median employee, any compensation paid in foreign currencies was converted to U.S. dollars based on the accounting rates as of October 31, 2019. These rates are set on the last workday of each month for the following month using current market rates. For example, the February accounting rate is set using market rates on January 31st. In identifying the median employee, we have considered all employees who joined Keysight through acquisitions during the last fiscal year and we did not make any cost-of-living adjustments or exclude any foreign jurisdictions in accordance with Item 402(u) of Regulation S-K.
In determining the annual total compensation of the median employee, the employee’s compensation was calculated in accordance with Item 402(c)(2)(x) of Regulation S-K, as required pursuant to the SEC executive compensation disclosure rules. This calculation is the same calculation used to determine total compensation for purposes of the Summary Compensation Table with respect to each of Keysight’s NEOs.
KEYSIGHT’S BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE COMPENSATION OF KEYSIGHT’S NAMED EXECUTIVE OFFICERS.
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| | PROPOSAL 4:
APPROVE AN AMENDMENT TO THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
TO DECLASSIFY THE BOARD
|
Currently, our Amended and Restated Certificate of Incorporation (the “Restated Certificate”) provides that the Company’s directors are divided into three classes, with the term of one class expiring at each annual meeting and the directors in each class serving a three-year term. As part of our Nominating and Corporate Governance Committee’s periodic review of our corporate governance practices and periodic review of the size, structure, composition and functioning of our Board, and after reviewing the various considerations for and against maintaining a classified board structure and discussing such considerations with a number of the Company’s stockholders, the Nominating and Corporate Governance Committee recommended that the Board approve an amendment to the Restated Certificate to phase out the classification of our Board over a three-year period such that, beginning at the election of directors at the 2025 Annual Meeting of Stockholders, all directors would be up for election annually for a one-year term. Accordingly, on November 18, 2021, our Board adopted an amendment to our Restated Certificate (the “Declassification Amendment”) that would phase out the classification of our Board, subject to the approval of this proposal by our stockholders at the Annual Meeting. The Board recommends that stockholders approve the Declassification Amendment. The general description of the Declassification Amendment set forth below is qualified in its entirety by reference to the full text of the Declassification Amendment, which is attached to this Proxy Statement as Appendix A.
DECLASSIFICATION AMENDMENT
Pursuant to the Declassification Amendment, the annual election of directors will be phased in gradually to assure a smooth transition. If the Declassification Amendment is approved by our stockholders, directors will be elected to one-year terms of office beginning at the Company’s 2023 Annual Meeting of Stockholders. Directors who are elected to three-year terms prior to the 2023 Annual Meeting of Stockholders, including directors who are elected at the 2022 Annual Meeting of Stockholders as well as directors elected at the 2020 and 2021 Annual Meeting of Stockholders, would complete those three-year terms, and thereafter, would be eligible for annual re-election. Beginning with the 2025 Annual Meeting of Stockholders, the Board will be completely declassified, and all directors will be subject to annual election to one-year terms.
The Declassification Amendment will not change the present number of directors or our Board’s authority to fill any vacancies or newly created directorships. Under the Declassification Amendment, beginning with the 2025 Annual Meeting of Stockholders, any director elected to fill a vacancy or newly created directorship would serve for a term expiring at the next annual meeting of stockholders following his or her appointment. However, until the election of directors at the 2025 Annual Meeting of Stockholders, any director elected to fill a newly created directorship or vacancy would serve for the remainder of the full term of the class of directors for which the newly created directorship was created or the vacancy occurred.
Because our Board is currently classified, our Restated Certificate currently provides that directors may be removed only for cause, consistent with Delaware law. The Declassification Amendment provides that (i) prior to the election of directors at the 2025 Annual Meeting of Stockholders, directors may be removed only for cause, and (ii) from and after the 2025 Annual Meeting of Stockholders, when declassification is complete, all directors may be removed either with or without cause.
If the Declassification Amendment is approved, our Board intends to cause the Declassification Amendment to be filed with the Secretary of State of the State of Delaware following the Annual Meeting. In addition, the Board will adopt conforming amendments to our Amended and Restated Bylaws, subject to the filing and effectiveness of the Certificate of Amendment implementing the Declassification Amendment.
If the Declassification Amendment is not approved by our stockholders, then our Board will remain classified, and the conforming amendments to our Amended and Restated Bylaws will not be implemented.
| |
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CONSIDERATIONS OF OUR BOARD
Our Board has historically viewed the classified board structure as benefiting stockholders by promoting continuity and stability of strategy, reducing the Company’s vulnerability to coercive takeover tactics and special interest groups that may not be acting in the best interests of all stockholders, and encouraging directors to take a long-term perspective. While our Board continues to believe that these are important benefits, our Board has concluded that a classified board structure is not the only means to achieving them. Moreover, our Board believes the benefits of the classified board structure are outweighed by the advantages of a declassified board structure, which enables stockholders to evaluate the performance of all directors each year through the annual election process and, as a result, enhances the accountability of our Board to our stockholders. Furthermore, our Board is aware that the current trend in corporate governance is in favor of annual director elections. Accordingly, our Board has determined, upon the recommendation of the Nominating and Corporate Governance Committee, that the Declassification Amendment is in the best interests of the Company and its stockholders.
VOTE REQUIRED
The affirmative vote of holders of at least eighty percent (80%) of the voting power of the shares outstanding and entitled to vote. will be required to approve the Declassification Amendment. Abstentions and broker non-votes will have the same effect as votes “Against” this proposal.
KEYSIGHT’S BOARD RECOMMENDS A VOTE FOR DECLASSIFICATION OF THE BOARD.
| 2022 Proxy Statement FREQUENTLY ASKED QUESTIONS89 | 62 |
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| | Frequently Asked
Questions |
| WHAT IS THE DATE, TIME, AND PLACE OF THE 2022 ANNUAL MEETING?
|
A:
| The 2022 Annual Meeting will be a completely virtual meeting of stockholders. We will hold the 2022 Annual Meeting on March 17, 2022 at 8:00 a.m. Pacific Time, exclusively by webcast at https://meetnow.global/MQ7GZR6. No physical meeting will be held. We encourage you to access the meeting prior to the start time leaving ample time for the check-in. Access to the online meeting will begin at 7:30 a.m. Pacific Time. You will be able to attend the meeting, vote electronically, and submit questions during the meeting at https://meetnow.global/MQ7GZR6. |
A webcast replay of the 2022 Annual Meeting will also be available on our Investor Relations website at investor.keysight.com. Go to “News, Events, Presentations,” select “Prior Presentations and Webcasts,” and then select “Annual Keysight Stockholder Meeting.” The webcast will remain available on this website for 6 months after the Annual Meeting.
FREQUENTLY ASKED QUESTIONS
Q:
| Q:DO I NEED TO REGISTER IN ADVANCE TO ATTEND THE VIRTUAL 2022 ANNUAL MEETING?
|
A:
| Why didIf you are a stockholder of record, you do not need to register in advance to attend the 2022 Annual Meeting. If you are a beneficial owner, you may, but are not required to, register in advance to attend the 2022 Annual Meeting. Please see the FAQs below on how to register in advance if you are a beneficial owner. |
For information regarding differences between holding shares as a stockholder of record and as a beneficial owner, please see FAQ on pages 91-92 entitled “What is the difference between holding shares as a stockholder of record and as a beneficial owner?” Q:
| IF I AM A STOCKHOLDER OF RECORD, HOW DO I VIRTUALLY ATTEND THE 2022 ANNUAL MEETING WITH THE ABILITY TO ASK A QUESTION AND/OR VOTE?
|
A:
| The 2022 Annual Meeting will take place online at https://meetnow.global/MQ7GZR6. |
If you are a stockholder of record, you are entitled to participate in the 2022 Annual meeting if you were a stockholder of the Company as of the close of business on the Record Date. You will need to enter the control number included on your proxy card in order to enter the 2022 Annual Meeting, ask questions and/or vote.
Q:
| IF I AM A BENEFICIAL OWNER, HOW DO I VIRTUALLY ATTEND THE 2022 ANNUAL MEETING WITH THE ABILITY TO ASK A QUESTION AND/OR VOTE?
|
A:
| You are entitled to participate in the 2022 Annual meeting if you were a stockholder of the Company as of the close of business on the Record Date. If you are a Beneficial Owner and want to attend the 2022 Annual Meeting with the ability to ask questions and vote if you choose to do so, you have two options. |
1.
| Registration in Advance of the 2022 Annual Meeting |
To register in advance to attend, ask questions and/or vote at the virtual 2022 Annual Meeting, you must submit proof of your proxy power (“Legal Proxy”) from your broker or bank reflecting your Company holdings along with your legal name and email address to our virtual meeting provider, Computershare. Your request must be labeled as “Legal Proxy” and must be received by Computershare no later than 5:00 p.m. Eastern Time on March 14, 2022 at the email address or physical address below.
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By email: Forward the email from your broker granting you a Legal Proxy, or attach an image of your Legal Proxy to legalproxy@computershare.com
By mail, for regular delivery: Computershare, Keysight Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001
Upon receipt of your registration materials, Computershare will provide you with a confirmation of your registration by email and a control number. If you provided a valid email address, but you have not received a control number within 2 business days from your request, please contact Computershare by email at web.queries@computershare.com or by phone at (877) 373-6374 (toll-free) or +1 (781) 575-2879. If you provided a physical mailing address but not an email address, Computershare will ship, within 2 business days of receipt, a control number to you by first class mail. You will need to enter the control number that you received from Computershare to be able to enter the 2022 Annual Meeting.
2.
| Register at the 2022 Annual Meeting |
For the 2022 proxy season, an industry solution has been agreed upon to allow beneficial owners to register online at the 2022 Annual meeting to attend, ask questions and vote, if they choose. We expect the vast majority of beneficial owners will be able to fully participate using the control number received with their voting instruction form. Please note, however, that this option is intended to be provided as a convenience only, and there is no guarantee this option will be available for every type of beneficial owner voting control number. The inability to provide this option to any or all beneficial owners shall in no way impact the validity of the 2022 Annual Meeting. Beneficial owners may choose the “Register in Advance of the 2022 Annual Meeting” option above if they prefer to use this traditional option.
Please go to https://meetnow.global/MQ7GZR6 for more information on the available options and registration instructions. Q:
| HOW DO I REQUEST A LEGAL PROXY?
|
A:
| Your broker, bank, or nominee must provide you with information on how you can request a legal proxy. Most brokers, banks, or nominees allow a stockholder to request a legal proxy either online or by mail. If you have requested a legal proxy online, and you have not received an email with your legal proxy within 2 business days of your request, you should contact your broker, bank, or nominee. If you have requested a legal proxy by mail, and you have not received it within 5 business days of your request, you should contact your broker, bank, or nominee. Once you receive a one-page noticelegal proxy, you should submit it to Computershare by email or physical mail, as detailed in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?FAQ above. |
Please note that once you have requested a legal proxy from your broker, bank, or nominee, you will no longer be able to vote through your broker, bank, or nominee before the Annual Meeting, even if you do not submit the legal proxy to Computershare to receive a control number to attend and vote during the Annual Meeting.
| WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD AND AS A BENEFICIAL OWNER?
|
A:
| Most stockholders of Keysight hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially. |
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Stockholder of Record
If your shares are registered directly in your name with Keysight’s transfer agent, Computershare, you are considered the stockholder of record with respect to those shares.
As a stockholder of record on the Record Date, you are entitled to receive from Computershare a Notice of Internet Availability of Proxy Materials (the “Notice”), or, if requested, a printed set of proxy materials, directly in your own name. As a stockholder of record, you may grant your voting proxy to the persons named as proxy holders, Ronald S. Nersesian, Keysight’s Chair of the Board, President and Chief Executive Officer, and Jeffrey K. Li, Keysight’s Senior Vice President, General Counsel and Secretary, by submitting your proxy card and voting before the 2022 Annual Meeting. You may vote before the 2022 Annual Meeting by internet, telephone, or mail (if you requested printed copies of the proxy materials), as described below under the heading “How do I vote my shares?” Alternatively, you may vote during the 2022 Annual Meeting without advance registration.
Beneficial Owner
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner with respect to those shares, and those shares are considered to be held in “street name.” Your stockbroker, bank, or nominee is considered the stockholder of record with respect to those shares.
As a beneficial owner on Record Date, your stockbroker, bank, or nominee must forward to you a Notice or, if requested, a printed set of proxy materials. As a beneficial owner, you may direct your stockbroker, bank, or nominee to vote your shares by submitting your voting instruction form and voting before the 2022 Annual Meeting. You may vote before the 2022 Annual Meeting by internet, telephone, or mail (if you requested printed copies of the proxy materials), as described below under the heading “How do I vote my shares?” Alternatively, you may vote during the 2022 Annual Meeting as described above under the heading “If I am a beneficial owner, how do I virtually attend the 2022 Annual Meeting with the ability to ask a question and/or vote?”
| | By Internet Before the 2022
Annual Meeting*
(24 hours a day): | | | www.envisionreports.com/KEYS | | | Follow the voting instructions you receive from your stock brokerage firm, bank, or nominee. | |
| | By Internet During the 2022 Annual Meeting*: | | | https://meetnow.global/MQ7GZR6 | | | https://meetnow.global/MQ7GZR6 | |
| | By Telephone*
(24 hours a day, prior to 1:00 a.m. Central Time on March 17, 2022): | | | 1-800-652-8683 | | | Follow the voting instructions you receive from your stock brokerage firm, bank, or nominee. Telephone voting may be not available through your stock brokerage firm, bank, or nominee. | |
| | By Mail: | | | Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Proxy Services, c/o Computershare Investor Services, P.O. Box 43102, Providence, RI 02940-5068. | | | Follow the voting instructions you receive from your stock brokerage firm, bank, or nominee. | |
*
| While Keysight, Computershare, and Broadridge do not charge you any fees for voting by internet or telephone, there may be related costs from other parties, such as usage charges from internet access providers and telephone companies, for which you are responsible. |
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If you want to vote by telephone before the meeting, your votes must be submitted by 1:00 a.m. Central Time, on March 17, 2022. If you want to vote by internet, your votes can be submitted before and during the 2022 Annual Meeting. Voting prior to the 2022 Annual Meeting, whether by telephone, internet, or mail (if you requested a paper proxy card) will not affect your right to attend the virtual 2022 Annual Meeting.
Q:
| CAN I REVOKE MY PROXY OR CHANGE MY VOTE?
|
A:
| You may revoke your proxy card or change your voting instructions prior to the vote at the 2022 Annual Meeting. You may enter a new vote by using the internet or telephone (if available through your broker, bank, or nominee) or by mailing a new proxy card or new voting instruction form bearing a later date (which will automatically revoke your earlier voting instructions) or by attending and voting at the 2022 Annual Meeting. Your attendance at the 2022 Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically so request. |
Q:
| WILL I BE ABLE TO ASK A QUESTION DURING THE 2022 ANNUAL MEETING?
|
A:
| Yes, all stockholders attending the 2022 Annual Meeting will be able to submit a question during the meeting. You must be in logged in to the virtual meeting at https://meetnow.global/MQ7GZR6 and follow the instructions on the meeting page on how to post a question or comment. If your question is properly submitted during the meeting, your question may be answered in the meeting or we may hold your question and respond to it after the meeting. Questions on similar topics may be combined and answered together. |
Q:
| WHAT IF I ENCOUNTER TECHNICAL DIFFICULTIES OR HAVE TROUBLE ACCESSING THE 2022 ANNUAL MEETING?
|
A:
| If you are having trouble connecting to your meeting, please contact us via the following number(s): Local (888) 724-2416; International +1 (781) 575-2748. |
Q:
| WHAT IF THE COMPANY ENCOUNTERS TECHNICAL DIFFICULTIES DURING THE 2022 ANNUAL MEETING?
|
A:
| If we experience technical difficulties during the meeting (e.g., a temporary or prolonged power outage), our Chair will determine whether the meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the meeting will need to be reconvened at a later time or another day (if the technical difficulty is more prolonged). In any situation, we will promptly notify stockholders of the decision via https://meetnow.global/MQ7GZR6. |
Q:
| WHY DID I RECEIVE A ONE-PAGE NOTICE IN THE MAIL REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS INSTEAD OF A PRINTED SET OF PROXY MATERIALS?
|
A:
| In accordance with rules and regulations adopted by the SEC, instead of mailing a printed copy of our proxy materials to each stockholder of record, we are furnishing proxy materials, including this Proxy Statement and our 20192021 Annual Report to Stockholders, by providing access to such documents on the Internet.internet. Stockholders will not receive printed copies of the proxy materials unless they request them. Instead, commencingCommencing on or about January 31, 2020,28, 2022, a Notice of Internet Availability of Proxy Materials (the “Notice”) was sent to most of our stockholders which will instructwho did not request printed copies of the proxy materials. The Notice instructs you as to how to access and review the proxy materials on the Internet. The Notice also instructs you as tointernet and how to submit your proxy via the Internet.internet. If you would like to receive a paper or email copy of our proxy materials, please follow the instructions for requesting such.such materials in the Notice. |
Q:
| Q: | Why amWHY AM I receiving these materials?RECEIVING PROXY MATERIALS?
|
A:
| A: | Keysight is providing theseYou are receiving proxy materials to you because you were an owner of Keysight common stock as of the close of business on January 21, 2020 (the “Record Date”). Keysight is providing these proxy materials on the Internet or, upon your request, has delivered printed versions of these materials to you by mail, in connection with Keysight’s 2020 Annual Meeting, which will take place on March 19, 2020. StockholdersRecord Date. You are invited to attend the 2022 Annual Meeting and are requested to vote on the proposals described in this Proxy Statement. |
| Q: | Who is soliciting my proxy?2022 Proxy Statement 93 |
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Q:
| A: | Keysight is soliciting proxies to be used at the Annual Meeting on March 19, 2020, for the purposes set forth in the foregoing notice.WHAT IS INCLUDED IN THE PROXY MATERIALS?
|
A:
| Q: | What is included inThe proxy materials consist of the Proxy Statement and the 2021 Annual Report to Stockholders. If you requested printed versions of proxy materials by mail, these materials?materials also include the proxy card or voting instruction form. |
Q:
| A: | These materials include:WHAT INFORMATION IS CONTAINED IN THESE PROXY MATERIALS?
|
Proxy Statement for Keysight’s 2020 Annual Meeting; and
2019 Annual Report to Stockholders, which includes our audited consolidated financial statements.
If you requested printed versions of these materials by mail, these materials also include the proxy card for the Annual Meeting.
| Q: | What information is contained in these materials? |
| A:
| The information included in this Proxy Statement relates to the proposals to be voted on at the 2022 Annual Meeting, the voting process, the compensation of our directors and our most highlyhighest paid officers, and certain other required information. The information included in our 2021 Annual Report to Stockholders relates to our annual report for our last fiscal year, ended October 31, 2021, which was filed with the SEC and which contains our audited consolidated financial statements, management’s discussion and analysis, risk factors, and certain other required information. |
Q:
| Q: | What proposals will be voted on at the Annual Meeting?WHAT PROPOSALS WILL BE VOTED ON AT THE 2022 ANNUAL MEETING?
|
| A:
| There are threefour proposals scheduled to be voted on at the 2022 Annual Meeting: |
the election of threefour directors for a 3-year term;
the ratification of the Audit and Finance Committee’s appointment of PricewaterhouseCoopers LLP as Keysight’s independent registered public accounting firm for fiscal year 2020; and
firm;
an advisory vote to approve the compensation of Keysight’s named executive officers for fiscal year 2019.NEOs; and
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| FREQUENTLY ASKED QUESTIONS | 63
|
| Q: | What is the Keysight Board’s voting recommendation? |
approval of an amendment to Keysight’s Amended and Restated Certificate of Incorporation to declassify the Board of Directors.
Q:
| WHAT IS THE KEYSIGHT BOARD’S VOTING RECOMMENDATION?
|
A:
| Keysight’s Board recommends that you vote your shares: |
“FOR” each of the nominees to the Board;director nominees;
“FOR” the ratification of the Audit and Finance Committee’s appointment of PricewaterhouseCoopers LLP as Keysight’s independent registered public accounting firm for fiscal year 2020; andfirm;
“FOR” the approval of the compensation of Keysight’s named executive officers for fiscal year 2019.NEOs; and
FOR amending Keysight’s Amended and Restated Certificate of Incorporation to declassify the Board of Directors.
Q:
| Q: | What shares owned by me can be voted?WHAT SHARES OWNED BY ME CAN BE VOTED?
|
A:
| A: | All shares owned by you as of the Record Date, whether as a stockholder of record or as a beneficial owner, may be voted. You may cast one vote for each share of common stock that you held on the Record Date. These include shares that are: (1) held directly in your name as the stockholder of record, including shares received or purchased through the Keysight Technologies, Inc. 2014 Equity Plan and the Keysight Technologies, Inc. Employee Stock Purchase Plan, and (2) held for you as the beneficial owner through a stockbroker, bank or other nominee or held for your account by the Keysight Technologies, Inc. Deferred Compensation Plans. On the Record Date, Keysight had 188,125,041 182,762,654 shares of common stock issued and outstanding. |
Q:
| Q: | What is the difference between holding shares as a stockholder of record and as a beneficial owner?WHAT EFFECT DOES VOTING FOR, AGAINST, OR ABSTAIN HAVE ON EACH PROPOSAL?
|
A:
| A: | Most stockholdersFor proposal 1 (election of Keysight hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially. |
Stockholder of Record
If your shares are registered directly in your name with Keysight’s transfer agent, Computershare Trust Company, you are considered, with respect to those shares, the stockholder of record, and the Notice, or if requested, these proxy materials was sent directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to the persons named as proxy holders, Ronald S. Nersesian, Keysight’s Chairman of the Board, President and Chief Executive Officer, and Jeffrey K. Li, Keysight’s Senior Vice President, General Counsel and Secretary, or to vote in person at the Annual Meeting. If you requested printed copies of the proxy materials, Keysight has enclosed a proxy card for you to use. You may also vote on the Internet or by telephone, as described below under the heading “How can I vote my shares without attending the Annual Meeting?”
Beneficial Owner
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and these proxy materials were forwarded to you by your broker or nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you are invited to attend the Annual Meeting. You also have the right to direct your broker on how to vote these shares. Your broker or nominee should have enclosed a voting instruction card for you to direct your broker or nominee how to vote your shares. You may also vote by Internet or by telephone, as described below under “How can I vote my shares without attending the Annual Meeting?” However, shares held in “street name” may be voted in person by you only if you obtain a signed proxy from the record holder (stock brokerage, bank, or other nominee) giving you the right to vote the shares.
| Q: | How can I vote my shares in person at the Annual Meeting? |
| A: | Shares held directly in your name as the stockholder of record may be voted in person at the Annual Meeting. If you choose to vote your shares in person at the Annual Meeting, please bring proof of ownership of Keysight stock on the record date, such as the Notice of Internet Availability of Proxy Materials, legal proxy, voting instruction card provided by your broker, bank or nominee, or a proxy card as well as proof of identification. Even if you plan to attend the Annual Meeting, Keysight recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Annual Meeting. |
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| FREQUENTLY ASKED QUESTIONS | 64
|
| Q: | How can I vote my shares without attending the Annual Meeting? |
| A: | Whether you hold your shares directly as the stockholder of record or beneficially in “street name,” you may direct your vote without attending the Annual Meeting by proxy. You can vote by proxy over the Internet or by telephone. Please follow the instructions provided in the Notice, or, if you request printed copies of proxy materials, on the proxy card or voting instruction card. |
| Q: | Can I revoke my proxy or change my vote? |
| A: | You may revoke your proxy or change your voting instructions prior to the vote at the Annual Meeting. You may enter a new vote by using the Internet or the telephone or by mailing a new proxy card or new voting instruction card bearing a later date (which will automatically revoke your earlier voting instructions) or by attending the Annual Meeting and voting in person. Your attendance at the Annual Meeting in person will not cause your previously granted proxy to be revoked unless you specifically so request. |
| A: | In the election of directors,directors), your vote may be cast “FOR”FOR or “AGAINST”AGAINST one or more of the director nominees, or you may “ABSTAIN”ABSTAIN from voting with respect to one or more of the director nominees. Shares voting “ABSTAIN”to ABSTAIN have no effect on the election of directors. |
For proposals 2 (ratification of appointment of the independent registered public accounting firm), 3 (approval of the compensation of Keysight’s NEOs), and 3,4 (declassification of the Board) your vote may be cast “FOR”FOR or “AGAINST”AGAINST or you may “ABSTAIN.”
ABSTAIN. If you “ABSTAIN,”ABSTAIN, it has the same effect as a vote “AGAINST”AGAINST proposals 2, 3 and 3. If you sign your proxy card or broker voting instruction card with no further instructions, your shares will be voted as described below in “Abstentions and Broker Non-Votes.”4.
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Abstentions and Broker Non-Votes
Any shares represented by proxies that are marked to “ABSTAIN”ABSTAIN from voting on a proposal will be counted as present“present” in determining whether we have a quorum. They will also be counted in determining the total number of shares entitled to vote on
Q:
| WHAT HAPPENS IF I SUBMIT MY VOTING INSTRUCTION FORM WITH NO VOTING INSTRUCTIONS?
|
A:
| If you are a stockholder of record and you sign your proxy card with no voting instructions (meaning, you choose neither FOR, AGAINST, nor ABSTAIN), your shares will be voted in accordance with the management’s recommendations for such proposal. |
If you are a
proposal. Abstentionsbeneficial owner and
if applicable, broker non-votes will not be counted as votes “FOR” or “AGAINST” a director nominee. Accordingly, abstentions are not counted for the purpose of determining the number of votes cast in the election of directors.Ifyou sign your voting instruction form with no voting instructions (meaning, you choose neither FOR, AGAINST, nor ABSTAIN), your shares are held in street name and you do not instructwill be treated as follows:
On routine matters, your broker, on how to vote your shares, your broker,bank, or nominee may, in its discretion, may either leave your shares unvoted or vote your shares on routine matters.shares. Only Proposal 2 (ratifying the(ratification of appointment of ourthe independent registered public accounting firm) is considered a routine matter. In accordance with federal legislation adopted in 2010, the SEC has approved changes to NYSE Rule 452, the
On non-routine matters, your bank, broker,
vote rule, that make executive compensation matters, including say-on-pay, non-routine matters. If your broker returns a proxy card but doesor nominee may not vote your shares
this results in a “broker non-vote.” Broker non-votes will be counted as present for the purpose of determining a quorum.without your instruction (“broker non-vote”). Proposals 1 (election of directors) and, 3 (approval of the compensation of Keysight’s named executive officers)NEOs), and 4 (declassification of the Board) are not considered routine matters, and without your instruction, yournon-routine matters. A broker cannot vote your shares. Because brokers do not have discretionary authority to vote on these proposals, broker non-votesnon-vote will not be counted for or against Proposals 1 and 3 and will have no effect on the purposeoutcome of these matters. A broker non-vote on Proposal 4 will be counted as a vote against this proposal.
Whether you are a stockholder of record or a beneficial owner, if you sign your proxy card or voting instruction form but provide no voting instructions, your shares will be counted as “present” for the purposes of determining
the number of votes cast on these proposals. | Q: | What is the voting requirement to approve each of the proposals? |
a quorum.
Q:
| WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
|
A:
| Proposal 1, Election of Directors: Under our majority voting standard, in uncontested elections of directors, such as this election, each director must be elected by the affirmative vote of a majority of the votes cast by the shares present in personat the 2022 Annual Meeting or represented by proxy and entitled to vote. A “majority of the votes cast” means that the number of votes cast “FOR”FOR a director must exceed 50% of the votes cast with respect to that director. Abstentions and broker non-votes will not count as a vote “for”FOR or “against”AGAINST a nominee’s election and thus will have no effect in determining whether a director nominee has received a majority of the votes cast. |
Our Board has adopted a policy under which, in uncontested elections, an incumbent director nominee who does not receive the required votes for re-election is expected to tender his or her resignation to our Board. The Nominating and Corporate Governance Committee, or another duly appointed Committee of the Board, will
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| FREQUENTLY ASKED QUESTIONS | 65
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determine whether to accept or reject the tendered resignation generally within 90 days after certification of the election results. Keysight will publicly disclose the Committee’s determination regarding the tendered resignation and the rationale behind the decision in a Current Report on Form 8-K filed with the SEC.
Proposal 2, Ratification of Appointment of the Independent Registered Public Accounting Firm: The appointment of
PricewaterhouseCoopers LLPPwC as our independent registered public accounting firm requires the affirmative vote of a majority of shares present at the
2022 Annual Meeting
in person or by proxy, and entitled to vote on the proposal. Abstentions will have the same effect as a vote against this proposal. This proposal is a routine proposal on which a broker or other nominee is generally empowered to vote in the absence of voting instructions from the beneficial owner, so broker non-votes are unlikely to result from this proposal.
Proposal 3, Approval ofAdvisory Vote on the Compensation of Keysight’s Named Executive Officers: The advisory vote regarding approval of the compensation of Keysight’s named executive officersNEOs requires the affirmative vote of a majority of shares present at the 2022 Annual Meeting in person or by proxy, and entitled to vote on the proposal. Abstentions will have the same effect as votes against this proposal. Broker non-votes will have no effect on this proposal as brokers are not entitled to vote on this proposal in the absence of voting instructions from the beneficial owner.
Proposal 4, Approval of an Amendment to Keysight’s Amended and Restated Certificate of Incorporation to Declassify the Board of Directors: The approval of the Declassification Amendment requires the affirmative vote of eighty percent (80%) of the shares outstanding and eligible to vote. Abstentions and broker non-votes will have the same effect as votes against this proposal.
| Q: | What does it mean if I receive more than one Notice, proxy or voting instruction card?2022 Proxy Statement 95 |
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Q:
| WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE NOTICE, PROXY CARD, OR VOTING INSTRUCTION FORM?
|
A:
| It means your shares are registered differently or are in more than one account. For each Notice you receive, please enter your vote on the Internetinternet for each control number you have been assigned. If you receive paper copies of proxy materials, please provide voting instructions for all proxy cards and voting instruction cardsforms you receive. |
Q:
| Q: | Where canWHERE CAN I find the voting results of the Annual Meeting?FIND THE VOTING RESULTS OF THE 2022 ANNUAL MEETING?
|
| A:
| Keysight will announce preliminary voting results at the Annual Meeting and publish preliminary or, if available, final results if available, in a Form 8-K within four business days of the Annual Meeting. |
Q:
| Q: | What happens if additional proposals are presented at the Annual Meeting?WHAT HAPPENS IF ADDITIONAL PROPOSALS ARE PRESENTED AT THE 2022 ANNUAL MEETING?
|
| A:
| Other than the threefour proposals described in this Proxy Statement, Keysight does not expect any matters to be presented for a vote at the 2022 Annual Meeting. If you grant a voting proxy, the persons named as proxy holders, Ronald S. Nersesian, Keysight’s ChairmanChair of the Board, President and Chief Executive Officer, and Jeffrey K. Li, Keysight’s Senior Vice President, General Counsel and Secretary, will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting.meeting. If for any unforeseen reason, any one or more of Keysight’s nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board. |
Q:
| Q: | What is the quorum requirement for the Annual Meeting?WHAT IS THE QUORUM REQUIREMENT FOR THE 2022 ANNUAL MEETING?
|
| A:
| The quorum requirement for holding the Annual Meeting and transacting business is a majority of the outstanding shares entitled to be voted. TheYour shares may be present in person or represented by proxyare counted as “present” at the 2022 Annual Meeting if you vote through the internet during the 2022 Annual Meeting or properly submit your proxy card or voting instruction form before the 2022 Annual Meeting. Both abstentionsAbstentions and broker non-votes are counted as present“present” for the purpose of determining the presence of a quorum. Broker non-votes, however, are not counted as shares present and entitled to beVotes voted with respect to the matter on which the broker has expressly not voted. Thus, broker non-votes will not affect the outcome of any of the matters being voted on at the Annual Meeting. Generally, broker non-votes occur when shares held by a broker, for a beneficial owner are not voted with respect to a particular proposal because (1) the brokerbank, or nominee who has not received voting instructions from the beneficial owner and (2) the broker lacks discretionary voting power and exercises such discretion to vote such shares.your shares on a proposal where you did not provide voting instructions are counted as “present” for the purpose of determining the presence of a quorum. |
Q:
| Q: | Who will count the vote?WHO WILL COUNT THE VOTE?
|
| A:
| A representative of Computershare Trust Company will tabulate the votes and act as the inspector of election. |
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| FREQUENTLY ASKED QUESTIONS | 66
IS MY VOTE CONFIDENTIAL?
|
A:
| Q: | Is my vote confidential? |
| A: | Proxy instructions, ballots, and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Keysight or to third parties except (1)(i) as necessary to meet applicable legal requirements, (2)(ii) to allow for the tabulation of votes and certification of the vote, and (3)(iii) to facilitate a successful proxy solicitation by the Board. Occasionally, stockholders provide written comments on their proxy card, which are then forwarded to Keysight’s management. |
Q:
| Q:WHO IS SOLICITING MY PROXY?
|
A:
| Who will bearGeorgeson, Inc. (“Georgeson”) is soliciting proxies to be used at the cost of soliciting votes2022 Annual Meeting for the Annual Meeting?purposes set forth in the foregoing Notice. |
96 2022 Proxy Statement | A: |
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Q:
| WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE 2022 ANNUAL MEETING?
|
A:
| Keysight will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. Keysight has retained the services of Georgeson Inc. (“Georgeson”) to aid in the solicitation of proxies from banks, brokers, nominees and intermediaries. Keysight estimates that it will pay Georgeson a fee of $11,000$20,000 for its services. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by Keysight’s directors, officers and employees, who will not receive any additional compensation for such solicitation activities. In addition, Keysight may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. |
Q:
| Q:HOW MAY I ACCESS AN ELECTRONIC LIST OF STOCKHOLDERS OF RECORD ENTITLED TO VOTE AT THE 2022 ANNUAL MEETING?
|
A:
| May I propose actions for consideration at next year’s Annual MeetingWe will make available an electronic list of stockholders or nominateof record as of Record Date for inspection by stockholders from March 7, 2022 through March 17, 2022. To access the electronic list during these dates, please send your request, along with proof of ownership, individualswith the subject line “Stockholder List Request” by email to serve as directors?investor.relations@keysight.com. You will receive confirmation of your request and instructions on how to view the electronic list. The list will also be available to stockholders at https://meetnow.global/MQ7GZR6 during the live webcast of the 2022 Annual Meeting.
|
Q:
| MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR’S ANNUAL MEETING OR NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS?
|
A:
| YouStockholders of record may submit proposals for consideration at future annual stockholder meetings,Annual Meetings, including director nominations. If you are a beneficial owner, you can contact the bank or financial institution that holds your shares for information about how to register your shares directly in your name as a stockholder of record. |
Stockholder Proposals:Proposals for Inclusion in the Proxy Materials: In order for a stockholder proposal to be considered for inclusion in Keysight’s proxy statement for next year’san Annual Meeting, the written proposal must be received by Keysight not less than 120 calendar days before the date Keysight’s proxy statement was released to the stockholders in connection with the previous year’s Annual Meeting and should satisfy the requirements in Keysight’s Bylaws. Keysight’s proxy statement in connection with the 2022 Annual Meeting was released to the stockholders on January 28, 2022, and thus, a written stockholder proposal for inclusion in the proxy materials for the 2023 Annual Meeting must be received by Keysight no later than October 3, 2020the close of business on September 30, 2022. Such proposal also must satisfy the requirements in Keysight’s Bylaws and will need to comply with the SEC’s regulations regarding the inclusion of stockholder proposals in Keysight sponsoredKeysight-sponsored proxy materials.
Stockholder Proposals for Consideration at the 2023 Annual Meeting, but not for Inclusion in the Proxy Materials:materials. In order for a stockholder proposal to be raised from the floor during the 2020an Annual Meeting but not be included in the proxy statement, the written notice must have beenbe received by Keysight not less than 90 days before the first anniversary of the preceding year’s Annual Meeting orand not more than 120 days before the first anniversary of the precedingprevious year’s Annual Meeting and should contain such information as required undersatisfy the requirements in Keysight’s Bylaws. Keysight’s 20202022 Annual Meeting iswill take place on March 19, 202017, 2022 and thus, in order for sucha written notice of a stockholder proposal to be timely for next year’sconsidered at the 2023 Annual Meeting, itbut not included in the proxy materials, must be received by Keysight notno earlier than the close of business on November 17, 2022 and no later than the close of business on December 19, 2020 or earlier than November 19, 2020.2022. Such notice also must satisfy the requirements in Keysight’s Bylaws and comply with SEC’s regulations regarding the submission of notices to raise a stockholder proposal from the floor during an Annual Meeting.
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Nomination of Director Candidates:
Keysight’s Bylaws permit stockholders to nominate directors at an Annual Meeting. In order for a stockholder meeting. In order to make a director nomination at an annual stockholder meeting, it is necessary that you notifyAnnual Meeting, the written notice must be received by Keysight in writing not less than 90 days before the first anniversary of the preceding year’s Annual Meeting orand not more than 120 days before the first anniversary of the preceding year’s Annual Meeting. Keysight’s 2020 Annual Meeting is March 19, 2020, and thus, in order for such nomination notice to be timely for nextprevious year’s Annual Meeting itand should contain such information as required under Keysight’s Bylaws. Keysight’s 2022 Annual Meeting will take place on March 17, 2022, and thus, a written notice of a stockholder director nomination must be received by Keysight notno earlier than the close of business on November 17, 2022 and no later than the close of business on December 19, 2020 or earlier than November 19, 2020. In addition,2022. Such notice also must satisfy the notice must meet all other requirements contained in Keysight’s Bylaws and include any other information required pursuant to Regulation 14A under the Exchange Act.comply with SEC’s regulations regarding stockholder director nomination proposals.
Copy of Bylaw Provisions:
You may contact the Keysight Corporate Secretary at Keysight’s corporate headquarters for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. Additionally, a copy of Keysight’s Bylaws can be accessed on the Keysight Investor Relations Web sitewebsite at http://www.investor.keysight.com.investor.keysight.com. Click on “Corporate Governance” and then “Governance Policies” on the left handright-hand side of the screen. | Q: | How do I obtain a separate set of proxy materials if I share an address with other stockholders? |
| HOW DO I OBTAIN A SEPARATE SET OF PROXY MATERIALS IF I SHARE AN ADDRESS WITH OTHER STOCKHOLDERS?
|
A:
| To reduce expenses, in some cases, we are delivering one set of the proxy materials or, where applicable, one Notice to certain stockholders who share an address, unless otherwise requested by one or more of the stockholders. For stockholders receiving hard copies of the proxy materials, a separate proxy card for each stockholder is included with the proxy materials for each stockholder.materials. For stockholders receiving a Notice, the Notice will instruct you as to how you may access and review all of the proxy materials on the Internet.internet. The Notice also instructs you as to how you may submit your proxy on the Internet. If you have only received one set of the proxy materials or one Notice, you may request separate copies at no additional cost to you by calling us at (707) 577-3225 or by writing to us atinternet. |
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| FREQUENTLY ASKED QUESTIONS | 67
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If you are a stockholder of record and you received only one set of the proxy materials or one Notice, you may request separate copies at no additional cost to you by contacting Computershare by email at Keysight Technologies, Inc., 1400 Fountaingrove Parkway, Santa Rosa, California 95403, Attn: Stockholder web.queries@computershare.comRecords. or by phone at (877) 373-6374 (toll-free) or +1 (781) 575-2879. If you received a Notice and you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice.
You may also request separate paper
If you are a beneficial owner, and you would like to receive additional copies of proxy materials,
please notify your broker, bank, or
a separate Notice for future annual meetings by following the instructions for requesting such materials in the Notice, or by contacting us by calling or writing. | Q: | If I share an address with other stockholders of Keysight, how can we get only one set of voting materials for future meetings? |
other nominee. | A: | You may request that we send you and the other stockholders who share an address with you only one Notice or one set of proxy materials by calling us at (707) 577-3225 or by writing to us at: Keysight Technologies, Inc., 1400 Fountaingrove Parkway, Santa Rosa, California 95403, Attn: Stockholder Records. |
You may receive a copy of Keysight’s Annual Report on Form 10-K for the fiscal year ended October 31, 2019Fiscal Year 2021, without charge, by sending a written request to Keysight Technologies, Inc., 1400 Fountaingrove Parkway, Santa Rosa, California 95403, Attn: Investor Relations.
By Order of the Board,
Keysight Technologies, Inc.Jeffrey K. Li
1400 Fountaingrove Parkway
Senior Vice President, General Counsel
and Secretary
Santa Rosa, CA 95403
Dated: January
31, 202024, 2022
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| DIRECTIONS TO THE ANNUAL MEETING | 68
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DIRECTIONS TO THE ANNUAL MEETING
NOTE ABOUT FORWARD LOOKING STATEMENTS This Proxy Statement includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements may appear throughout this Proxy Statement. These forward-looking statements generally are identified by the words “committed to, “strive” “believe,” “expect,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in “Risk Factors,” “Quantitative and Qualitative Disclosures about Market Risk,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our Forms 10-K and 10-Q. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.
WEBSITES REFERENCED IN THIS PROXY STATEMENT The content of the websites referred to in this proxy statement are not incorporated by reference into this proxy statement.
| From the South
Take Highway 101 North towards Santa Rosa. Take the Bicentennial Way exit East in Santa Rosa (Exit 491B). Follow Bicentennial Way up the hill and merge with Fountaingrove Parkway. Turn right into the Keysight Technologies’ main entrance.
From the North
Take Highway 101 South towards Santa Rosa. Take the Mendocino Ave/ Hopper Ave exit (Exit 492). Turn left on Cleveland Avenue and turn left on Mendocino Overcrossing and merge with Fountaingrove Parkway. Turn right into Keysight Technologies’ main entrance.
Parking
Once you have entered the main entrance, follow the sign “Stockholder Meeting Parking” to the designated parking area.2022 Proxy Statement 99
|
Admission to the Annual Meeting will be limited to stockholders. You are entitled to attend the Annual Meeting only if you are a stockholder of record as of the close of business on January 21, 2020, the record date, or hold a valid proxy for the meeting. In order to be admitted to the Annual Meeting, you must present proof of ownership of Keysight stock as of the record date. This can be a brokerage statement or letter from a bank or broker indicating ownership as of January 21, 2020, the Notice of Internet Availability of Proxy Materials, a proxy card, or legal proxy or voting instruction card provided by your broker, bank or nominee. Any holder of a proxy from a stockholder must present the proxy card, properly executed, and a copy of the proof of ownership. Stockholders and proxyholders may also be asked to present a form of photo identification such as a driver’s license or passport. Backpacks, cameras, cell phones with cameras, recording equipment and other electronic recording devices will not be permitted at the Annual Meeting. Keysight reserves the right to inspect any persons or items prior to their admission to the Annual Meeting. Failure to follow the meeting rules or permit inspection will be grounds for exclusion from the Annual Meeting.
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Appendix A
KEYSIGHT TECHNOLOGIES, INC.
CERTIFICATE OF AMENDMENT TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
Keysight Technologies, Inc., (the “Corporation”) a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware, as the same may be amended and supplemented, hereby certifies that:
FIRST: The Corporation was originally incorporated under the name “Keysight Technologies, Inc.”
SECOND: The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on December 6, 2013. The Amended and Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on October 31, 2014.
THIRD: The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended as set forth below.
Article VI of the Amended and Restated Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows:
“ARTICLE VI
BOARD OF DIRECTORS
Section 1. Number of Directors. Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies (the “Whole Board”). No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director.
Section 2. Board Terms. Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, the Board of Directors shall until the annual meeting of stockholders to be held in 2025 (the “2025 Annual Meeting”) assign the directors, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as is reasonably possible. The directors assigned to the first class, who are elected at the 2022 annual meeting of stockholders, shall be elected for a three-year term ending in 2025. Commencing with the election of directors at the 2023 annual meeting of stockholders, the directors assigned to the class who are elected at the 2023 annual meeting of stockholders shall be elected for a one-year term ending at the next annual meeting of stockholders. The directors assigned to the class who are elected at the 2024 annual meeting of stockholders shall be elected for a one-year term ending at the next annual meeting of stockholders. Commencing with the election of directors at the 2025 Annual Meeting, the Board of Directors shall no longer be classified, and all of the directors shall be elected annually and shall hold office until the next annual meeting of stockholders, and until his or her successor is duly elected and qualified or until his or her earlier death, resignation, retirement, disqualification or removal.
Notwithstanding the foregoing, each director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation, retirement, disqualification or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
Section 3. Vacancies. Subject to applicable law and the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, and unless the Board of Directors otherwise determines, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, even if less than a quorum of the Board of Directors, and in the event that there is only one director remaining in office, by such sole remaining director, and directors so chosen at any time after the 2022 annual meeting of stockholders shall hold office (i) in the event of a newly created directorship or vacancy occurring prior to the election of directors at the 2025 Annual Meeting, until the next election of the class
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of directors for which such director shall have been chosen and (ii) in the event of a newly created directorship or vacancy occurring from and after the election of directors at the 2025 Annual Meeting, until the next annual meeting of stockholders and, in each case, until such director’s successor shall have been elected and qualified.
Section 4. Removal. Subject to the rights of any series of Preferred Stock to elect additional directors under specified circumstances, any individual director or directors may be removed from office at any time, by the affirmative vote of the holders of at least the majority of the voting power of all the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (the “Voting Stock”), voting together as a single class; provided that (i) until the election of directors at the 2025 Annual Meeting, such removal may be only for cause and (ii) commencing with the election of directors at the 2025 Annual Meeting, such removal may be with or without cause.
Section 5. Election by Ballot. The directors of the Corporation need not be elected by written ballot unless the Bylaws of the Corporation (the “Bylaws”) so provide.
Section 6. Notice. Advance notice of stockholder nominations for the election of directors shall be given in the manner and to the extent provided in the Bylaws.”
FOURTH: The foregoing amendment has been duly adopted by the Corporation’s Board of Directors and stockholders in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Keysight Technologies, Inc. has caused this Certificate of Amendment to Amended and Restated Certificate of Incorporation to be signed by a duly authorized officer of the Corporation on this day of , 2022.
| | | KEYSIGHT TECHNOLOGIES, INC. |
| | | | | | |
| | | By: | | | |
| | | Name: |
| | | Title: |
