TABLE OF CONTENTS
TABLE OF CONTENTS FOR 20162022 ANNUAL MEETING OF STOCKHOLDERS
To Be Held at 10:00 a.m. Pacific Time on Wednesday,Friday, June 1, 201624, 2022 This proxy statement and the enclosed form of proxy are furnished in connection with the solicitation of proxies by our board of directors for use at the 2016 annual meeting2022 Annual Meeting of stockholders of A10 Networks, Inc., a Delaware corporation (the “Company”), and any postponements, adjournments or continuations thereof (the “Annual Meeting”). The Annual Meeting will be held on Wednesday,Friday, June 1, 201624, 2022 at 10:00 a.m. Pacific Time, at 3 West Plumeria Drive,2300 Orchard Parkway, San Jose, California. The Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access this proxy statement and our annual report is first being mailed on or about April 15, 2016May 11, 2022 to all stockholders entitled to vote at the Annual Meeting. The information provided in the “question and answer” format below is for your convenience only and is merely a summary of the information contained in this proxy statement. You should read this entire proxy statement carefully. Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement and references to our website address in this proxy statement are inactive textual references only. QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING What matters am I voting on? the election of two Class II directorsthe director nominees named in this proxy statement, to serve until the 20192023 annual meeting of stockholders and until their successors are duly elected and qualified;qualified, subject to earlier resignation or removal; a proposal to approve, on an amendment toadvisory and non-binding basis, the compensation of our 2014 Employee Stock Purchase Plan to remove named executive officers as described in this proxy statement; the automatic annual share increase thereunder and increase the numberratification of shares available for issuance thereunder by 4,000,000 shares; a proposal to ratify the appointment of Deloitte & ToucheArmanino LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2016;2022; and
any other business as may properly come before the Annual Meeting. How does the board of directors recommend I vote on these proposals? Our board of directors recommends a vote: “FOR” the election of Peter Y. Chung and Robert Cochran as Class II directors;each of the director nominees; “FOR” the approval, on an advisory and non-binding basis, of an amendment tothe compensation of our 2014 Employee Stock Purchase Plan to remove the automatic annual share increase thereundernamed executive officers as described in this proxy statement; and increase the number of shares available for issuance thereunder by 4,000,000 shares; and “FOR” the ratification of the appointment of Deloitte & ToucheArmanino LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2016.2022. Holders of our common stock as of the close of business on April 7, 2016,29, 2022, the record date, may vote at the Annual Meeting. As of the record date, there were 64,486,090 shares75,824,501shares of our common stock outstanding. In deciding all matters at the Annual Meeting, each stockholder will be entitled to one vote for each share of our common stock held by them on the record date. We do not have cumulative voting rights for the election of directors.
Registered Stockholders. If shares of our common stock are registered directly in your name with our transfer agent, you are considered the stockholder of record with respect to those shares, and the Notice was provided to you directly by us. As the stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to vote in person at the Annual Meeting. TABLE OF CONTENTS Street Name Stockholders . If shares of our common stock are held on your behalf in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of those shares held in “street name,” and the Notice was forwarded to you by your broker or nominee, who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker or nominee how to vote your shares. Beneficial owners are also invited to attend the Annual Meeting. However, since a beneficial owner is not the stockholder of record, you may not vote your shares of our common stock in person at the Annual Meeting unless you follow your broker’s procedures for obtaining a legal proxy. If you request a printed copy of our proxy materials by mail, your broker or nominee will provide a voting instruction card for you to use. Throughout this proxy, we refer to stockholders who hold their shares through a broker, bank or other nominee as “street name stockholders.”How many votes are needed for approval of each proposal? | • | Proposal No. 1: The election of directors requires a plurality vote of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon to be approved. “Plurality” means that the nominees who receive the largest number of votes cast “for” are elected as the Class II directors. As a result, any shares not voted “for” a particular nominee (whether as a result of stockholder abstention or a broker non-vote) will not be counted in such nominee’s favor and will have no effect on the outcome of the election. You may vote “for” or “withhold” on each of the nominees for election as a director. |
| • | Proposal No. 2: The approval of an amendment to our 2014 Employee Stock Purchase Plan to remove the annual share increase thereunder and increase the number of shares available for issuance thereunder by 4,000,000 shares requires the affirmative vote of the holders of a majority of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon (provided that that vote also constitutes the affirmative vote of a majority of the required quorum). Abstentions are considered votes present and entitled to vote on this proposal, and thus, will have the same effect as a vote “against” the proposal. Broker non-votes will have no effect on the outcome of this proposal. |
| • | Proposal No. 3: The ratification of the appointment of Deloitte & Touche LLP requires the affirmative vote of a majority of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions are considered votes present and entitled to vote on this proposal, and thus, will have the same effect as a vote “against” the proposal. Broker non-votes will have no effect on the outcome of this proposal. |
Proposal No. 1: The election of directors requires a plurality of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote, meaning that the nominees who receive the largest number of votes cast “for” their election are elected as directors. As a result, any shares not voted “for” a particular nominee (whether as a result of “withhold” votes or broker non-votes) will not be counted in such nominee’s favor and will have no effect on the outcome of the election. You may vote “for” or “withhold” on each of the nominees for election as a director. Proposal No. 2: The approval, on an advisory and non-binding basis, of the compensation of our named executive officers as described in this proxy statement requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal. Abstentions are considered as a vote “against” the proposal because an abstention represents a share entitled to vote on this proposal. Broker non-votes will have no effect on the outcome of this proposal. You may vote “for,” “against” or abstain” on this proposal. Proposal No. 3: The ratification of the appointment of Armanino LLP requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal. Abstentions are considered as a vote “against” the proposal because an abstention represents a share entitled to vote on this proposal. Broker non-votes will have no effect on the outcome of this proposal. You may vote “for,” “against” or abstain” on this proposal. A quorum is the minimum number of shares required to be present at the Annual Meeting for the Annual Meeting to be properly held under our amended and restated bylaws and Delaware law. The presence, in person or represented by proxy, of a majority of all issued and outstanding shares of our common stock entitled to vote at the Annual Meeting will constitute a quorum at the Annual Meeting. Abstentions, withhold votes and broker non-votes are counted as shares present and entitled to vote for purposes of determining a quorum. If you are a stockholder of record, there are four ways to vote: | • | by Internet at http://www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. on May 31, 2016 (have your proxy card in hand when you visit the website); |
| • | by toll-free telephone at 1-800-690-6903 (have your proxy card in hand when you call); |
| • | by completing and mailing your proxy card (if you received printed proxy materials); or |
| • | by written ballot at the Annual Meeting. |
by Internet at http://www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on June 23, 2022 (have your proxy card in hand when you visit the website); by toll-free telephone at 1-800-690-6903 (have your proxy card in hand when you call); by completing and mailing your proxy card (if you received printed proxy materials); or by written ballot at the Annual Meeting. If you are a street name stockholder, you will receive voting instructions from your broker, bank or other nominee. You must follow the voting instructions provided by your broker, bank or other nominee in order to instruct your broker, bank or other nominee on how to vote your shares. Street name stockholders should generally be able to vote by returning an instruction card, or by telephone or on the Internet. However, the availability of telephone and Internet voting will depend on the voting process of your broker, bank or other nominee. As discussed above, if you are a street name stockholder, you may not vote your shares in person at the Annual Meeting unless you obtain a legal proxy from your broker, bank or other nominee.
TABLE OF CONTENTS Yes. If you are a stockholder of record, you can change your vote or revoke your proxy any time before the Annual Meeting by: | • | entering a new vote by Internet or by telephone; |
| • | returning a later-dated proxy card; |
| • | notifying the Secretary of A10 Networks, Inc., in writing, at A10 Networks, Inc., 3 West Plumeria Drive, San Jose, California 95134; or |
| • | completing a written ballot at the Annual Meeting. |
entering a new vote by Internet or by telephone; returning a later-dated proxy card; notifying the Secretary of A10 Networks, Inc., in writing, at A10 Networks, Inc., 2300 Orchard Parkway, San Jose, California 95131; or completing a written ballot at the Annual Meeting. If you are a street name stockholder, your broker, bank or other nominee can provide you with instructions on how to change your vote. What do I need to do to attend the Annual Meeting in person? If you plan to
To attend the meeting, you must be a holder of Company shares as of the record date of April 7, 2016. Please contact29, 2022. If you plan to attend, please notify the Company to notify of your intention to attend no later than May 31, 2016June 23, 2022 at 6:5:00 p.m. PST (jgarcia@a10networks.com/408-643-8105)Pacific Time by contacting Jaime Garcia (jgarcia@a10networks.com). On the day of the meeting, each stockholderyou may be required to present a valid picture identification such as a driver’s license or passport and you may be denied admission if you do not. Please note that seating is limited. Use of cameras, recording devices, computers and other personal electronic devices will not be permitted at the Annual Meeting. Photography We intend to hold our Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19) situation and video are prohibited atsensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. If we take this step, we will announce the decision to do so in advance by filing Definitive Additional Materials with the SEC along with notice of the change(s) to the Annual Meeting. Meeting, and details on how to participate will be available at www.proxydocs.com and http://investors.a10networks.com. What is the effect of giving a proxy? Proxies are solicited by and on behalf of our board of directors. Lee Chen, Greg StraughnDhrupad Trivedi, Brian Becker and Robert Cochran have been designated as proxies by our board of directors. When proxies are properly dated, executed and returned, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, however, the shares will be voted in accordance with the recommendations of our board of directors as described above. If any matters not described in this proxy statement are properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote the shares. If the Annual Meeting is adjourned, the proxy holders can vote the shares on the new Annual Meeting date as well, unless you have properly revoked your proxy instructions, as described above. Why did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials? In accordance with the rules of the Securities and Exchange Commission (“SEC”), we have elected to furnishprovide our proxy materials, including this proxy statement and our annual report, primarily via the Internet. The Notice containing instructions on how to access our proxy materials is first being mailed on or about April 15, 2016May 11, 2022 to all stockholders entitled to vote at the Annual Meeting. Stockholders may request to receive all future proxy materials in printed form by mail or electronically by e-mailemail by following the instructions contained in the Notice. We encourage stockholders to take advantage of the availability of our proxy materials on the Internet to help reduce the environmental impact of our annual meetingsstockholder meetings. All stockholders who have previously requested to receive a paper copy of stockholders.the materials, will receive a full set of paper proxy materials by U.S. mail. TABLE OF CONTENTS How are proxies solicited for the Annual Meeting? Our board of directors, isofficers and other employees may be soliciting proxies for use at the Annual Meeting. AllMeeting by personal interview, telephone, facsimile or electronic mail. No additional compensation will be paid to these persons for solicitation and all expenses associated with this solicitation will be borne by us. We will reimburse brokers or other nominees for reasonable expenses that they incur in sending our proxy materials to you if a broker or other nominee holds shares of our common stock on your behalf. At this time we have not engaged a proxy solicitor. If we do engage a proxy solicitor we will pay the customary costs associated with such engagement. How may my brokerage firm or other intermediary vote my shares if I fail to provide timely directions? Brokerage firms and other intermediaries holding shares of our common stock in street name for customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions, your broker will have discretion to vote your shares on our sole “routine” matter: the proposal to ratify the appointment of Deloitte & ToucheArmanino LLP. Your broker will not have discretion to vote on the election of directors or the amendment of our 2014 Employee Stock Purchase Plan, each of which is a “non-routine” matter,any other proposal absent direction from you. Where can I find the voting results of the Annual Meeting? We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four business days after the Annual Meeting, we will file a Current Report on Form 8-K to publish preliminary results and will provide the final results in an amendment to thissuch Current Report on Form 8-K as soon as they become available. I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials? We have adopted aan SEC-approved procedure called “householding,” which the SEC has approved. Under this procedure, weallows us to deliver a single copy of the Notice and, if applicable, our proxy materials to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing costs, mailing costs, and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will deliver promptly a separate copy of the Notice and, if applicable, our proxy materials to any stockholder at a shared address to which we delivered a single copy of any of these materials. To receive a separate copy or, if a stockholder is receiving multiple copies, to request that we only send a single copy of the Notice and, if applicable, our proxy materials, such stockholder may contact us at the following address: A10 Networks, Inc.
Attention: Investor Relations 3 West Plumeria Drive
2300 Orchard Parkway
San Jose, California 9513495131
(408) 325-8668 Stockholders who beneficially own shares of our common stock held in street
Street name stockholders may contact their brokerage firm, bank, broker-dealer or other similar organization to request information about householding. What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors?
Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at theour next annual meeting of stockholders by submitting their proposals in writing to our Secretary in a timely manner. For a stockholder proposal to be considered for inclusion inat our proxy statement for our 20172023 annual meeting of stockholders, our Secretary must receive the written proposal at our principal executive offices notprior to certain deadlines. Those deadlines vary based upon when we actually hold our 2023 annual meeting and also whether the stockholder intends the proposal to be included in our proxy statement for the meeting. TABLE OF CONTENTS Proposals Intended to be Included in our Proxy Statement For a stockholder proposal to be considered for inclusion in our proxy statement for the 2023 annual meeting, our Secretary must receive the written proposal at our principal executive offices no later than December 16, 2016.January 11, 2023. In addition, stockholder proposals must comply with the requirements of SEC Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Stockholder proposals should be addressed to: A10 Networks, Inc.
Attention: Secretary 3 West Plumeria Drive
2300 Orchard Parkway
San Jose, California 9513495131 Proposals Not Intended to be Included in our Proxy Statement Our amended and restated bylaws also establish an advance notice procedure for stockholders who wish to present a proposal beforeat an annual meeting of stockholders but who do not intend for the proposal to be included in our proxy statement.statement for the meeting. Our amended and restated bylaws provide that the only business that may be conducted at an annual meeting is business that is (i) specified in our proxy materials with respect to such meeting, (ii) otherwise properly brought before the annual meeting by or at the direction of our board of directors, or (iii) properly brought before the annual meeting by a stockholder of record entitled to vote at the annual meeting who has delivered timely written notice to our Secretary, which notice must contain the information specified in our amended and restatedthe bylaws. To be timely for our 2017 If we hold the 2023 annual meeting no more than 30 days before or after the one-year anniversary of stockholders,this year’s Annual Meeting, then, for a stockholder proposal to be considered at the 2023 annual meeting, our Secretary must receive the written notice at our principal executive offices: | • | not earlier than January 30, 2017; and |
| • | not later than the close of business on March 1, 2017. |
Inoffices at the event thatabove address:
no earlier than February 25, 2023; and no later than the close of business on March 27, 2023. If we hold our 2017the 2023 annual meeting of stockholders more than 30 days before or more than 30 days after the one-year anniversary of thethis year’s Annual Meeting, then notice of a stockholder proposal that is not intended to be included in our proxy statementSecretary must be receivedreceive the written notice no earlier than the close of business on the 120th day before suchthe actual date of the 2023 annual meeting and no later than the close of business on the latterlater of the following two dates: | • | • | the 90th90th day prior to suchthe 2023 annual meeting; or |
| • | • | the 10th10th day following the day on which public announcement ofwe first announce publicly the date of suchthe 2023 annual meeting is first made.meeting. |
If a stockholder who has notified us of his, her or its intention to present a proposal at an annual meeting does not appear to present his, her or its proposal at such annual meeting to present such proposal, we are not required to present the proposal for a vote at such annual meeting.
Nomination of Director Candidates You may propose director candidates for consideration by our nominating and corporate governance committee. Any such recommendations should include the nominee’s name and qualifications for membership on our board of directors and should be directed to our Secretary at the address set forth above. For additional information regarding stockholder recommendations for director candidates, see “Board of Directors and Corporate Governance—Stockholder Recommendations for Nominations to the Board of Directors.” In addition, our amended and restated bylaws permit stockholders to nominate directors for election at an annual meeting of stockholders. To nominate a director, thea stockholder must provide the information required by our amendedbylaws and restated bylaws. In addition, the stockholder must give timely notice to our Secretary in accordance with our amended and restated bylaws, which, in general, require that the notice be received by our Secretary within the time period described above under “Stockholder Proposals” for stockholder proposals that are not intended“—Proposals Not Intended to be includedIncluded in a proxy statement.our Proxy Statement.” You may contact our Secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates. TABLE OF CONTENTS BOARD OF DIRECTORS AND CORPORATE GOVERNANCE Our business affairs are managed under the direction of our board of directors, which is currently composed of five members. Threemembers and has the following characteristics: Director Independence. 4 of ourthe 5 individuals currently serving as directors are independent within the meaning of the listing standards of the New York Stock Exchange. Director Diversity. 60% of our directors currently self-identify as being from one or multiple diverse groups, including gender. Director Tenure. Our directors are not long service. 3 of 5 directors have less than 3 years of tenure. The average tenure of our directors is approximately 4 years. Director Age. Average age of our directors is approximately 57 years. Director Skills. Our directors have the following diverse experiences and perspectives in areas that are critical to the success of our business and to the creation of sustainable stockholder value: industry, finance, supply chain: human rights and environmental sustainability, operations, risk management including cybersecurity, executive compensation and human capital management, ESG, global leadership, banking and M&A, and public board experience. On April 26, 2021, director Mary Dotz notified our board of directors is divided into three staggered classesthat she would not stand for re-election at the Annual Meeting. Following receipt of directors. At eachsuch notice, on April 26, 2021, our board of directors nominated Dana Wolf to stand for election to the Board at the Annual Meeting, to serve until the 2023 annual meeting of stockholders a classand until her successor is duly elected and qualified, subject to earlier resignation or removal. Four of the five individuals currently serving as directors will be elected for a three-year term to succeedare independent within the same class whose termmeaning of the listing standards of the New York Stock Exchange, as is then expiring.nominee Dana Wolf. The following table sets forth the names, ages as of April 7, 2016, and certain other information for each of theour directors with terms expiring at the annual meeting (who are alsoand director nominees for election as a director at the annual meeting) and for each of the continuing members of our board of directors:| | | | | | | | | | | | | | | | | Class | | Age | | Position | | Director
Since | | Current
Term
Expires | | Expiration
of Term
For Which
Nominated | | Directors with Terms expiring at the Annual Meeting/Nominees | | | | | | | | | | | | | | | | | | | | | | | | | | | | Peter Y. Chung(1)(2)(3) | | II | | 48 | | Director | | 2013 | | 2016 | | 2019 | | Robert Cochran | | II | | 58 | | Vice President, Legal and CorporateCollaboration and Secretary and Director | | 2012 | | 2016 | | 2019 | | Continuing Directors | | | | | | | | | | | | | | Lee Chen | | III | | 62 | | Chief Executive Officer, President and Chairman | | 2004 | | 2017 | | | | Alan S. Henricks(1)(2)(3) | | III | | 65 | | Director | | 2014 | | 2017 | | | | Phillip J. Salsbury(1)(2)(3) | | I | | 73 | | Director | | 2013 | | 2018 | | |
Dhrupad Trivedi | | | 55 | | | 2019 | | | President, Chief Executive Officer and Chairperson | Tor R. Braham(1)(2) | | | 64 | | | 2018 | | | Director | Peter Y. Chung(1)(2)(3) | | | 54 | | | 2013 | | | Director | Mary Dotz(1) | | | 64 | | | 2020 | | | Director | Eric Singer(2)(3) | | | 48 | | | 2019 | | | Director | Dana Wolf | | | 47 | | | | | | Director Nominee |
| (1)
| Member of our audit committee |
| (2)
| Member of our compensation committee |
| (3)
| Member of our nominating and corporate governance committee |
Dhrupad Trivedi joined A10 Networks in December 2019 as president and chief executive officer. Mr. Trivedi was also appointed as a member of our board of directors in December 2019 and as Chairperson of the board in September 2020. From March 2013 to November 2019, Dr. Trivedi served as President, Network Solutions – Industrial IT/IOT and Cybersecurity at Belden Inc., a manufacturer of networking, connectivity, and cable products, and also served as a corporate vice president from January 2010 to March 2013. Prior to this, he held multiple general management and corporate development roles at JDS Uniphase. Trivedi holds a Ph.D. in electrical engineering from University of Massachusetts, Amherst, a master’s degree in electrical engineering from University of Alabama and an MBA in finance from Duke University. Trivedi brings global leadership experience across multiple businesses and is passionate about driving leading technology businesses to win by creating value for customers. Tor R. Braham has served as a member of our board of directors since March 2018. He is currently also a director of Viavi Solutions Inc., a network and service enablement and optical coatings company. Mr. Braham is also Of Counsel to the law firm of King, Holmes, Paterno and Soriano. He previously served as a member of the board of directors of Yahoo!, a provider of web services from April 2016 to June 2017, Altaba, Inc a publicly traded
TABLE OF CONTENTS investment company from June 2017 to December 2021, NetApp, Inc., a computer storage and data management company, from September 2013 to March 2016, Sigma Designs, Inc., an integrated circuit provider for the home entertainment market, from June 2014 to August 2016, Live Oak Acquisition Corp from February 2020 to December 2020, and Live Oak Acquisition Corp II, from December 2020 to October 2021. Mr. Braham served as Managing Director and Global Head of Technology Mergers and Acquisitions for Deutsche Bank Securities Inc., an investment bank, from 2004 until November 2012. From 2000 to 2004, he served as Managing Director and Co-Head of West Coast U.S. Technology, Mergers and Acquisitions for Credit Suisse First Boston, an investment bank. Prior to that role, Mr. Braham served as an investment banker with Warburg Dillon Read LLC and as an attorney at Wilson Sonsini Goodrich & Rosati. Mr. Braham has specific attributes that qualify him to serve as a member of our board of directors, including his extensive financial experience and knowledge of the technology industry gained through his service as an investment banker and lawyer to technology companies, as well as his service on public and private company boards. Peter Y. Chung has served as a member of our board of directors since June 2013. Mr. Chung is a managing directorManaging Director and the chief executive officerChief Executive Officer of Summit Partners, L.P., where he has been employed since 1994. He is currently a director of M/A-COMMACOM Technology Solutions Holdings, Inc., a provider of semiconductor solutions for use in radio frequency, microwave and millimeter wave applications, as well as several privately-held companies. Previously, Mr. Chung previously served as a directormember of Ubiquiti Networks, Inc., a company that develops networking technology.the board of directors of Acacia Communications. Mr. Chung has an M.B.A. from the Stanford University Graduate School of Business and an A.B. in Economics from Harvard University. Mr. Chung has specific attributes that qualify him to serve as a member of our board of directors, including his experience in investment banking, private equity and venture capital investing and in the communications technology sector, as well as his prior service on public and private company boards.Robert Cochran has served as our Vice President, Legal and Corporate Collaboration since January 2012 and as a member of our board of directors since April 2012. Mr. Cochran has served as our Secretary since August 2004, and previously served on our board of directors from August 2004 to October 2004. From January 1993 to January 2012, Mr. Cochran was an attorney in private practice in Woodside, California, where he had served as our outside legal counsel since our incorporation. From 2004 to 2010, Mr. Cochran served as a director of Techwell, Inc., a fabless semiconductor public company that was acquired by Intersil Corporation. Mr. Cochran also serves as a director of two privately-held companies. Mr. Cochran has a J.D. from Harvard Law School and an A.B. in Economics from Harvard University. Mr. Cochran has specific attributes that qualify him to serve as a member of our board of directors, including the perspective and experience he has acquired from counseling growth companies over the last thirty years, and his prior service on public and private company boards.
Continuing Directors
Lee Chen has served as our President, Chief Executive Officer and as a member of our board of directors since July 2004, and as the Chairman of our board of directors since March 2014. From 1996 to August 2004, Mr. Chen served in a variety of positions, including as Vice President of Software Engineering and Quality Assurance at Foundry Networks, Inc., a company that designed, manufactured and sold high-end enterprise and service provider switches and routers, as well as wireless, security, and traffic management solutions. Mr. Chen has previously held management and senior technical positions at OTS, Apple Computer, Convergent Technologies, Inc. and InSync Group, and was a co-founder of Centillion Networks, Inc. Mr. Chen has an M.S.E.E. from San Jose State University and a B.S. in Electrophysics from National Chiao-Tung University in Taiwan. Mr. Chen is a technology pioneer, especially in the area of Internet Protocol Multicast and System & System Security and holds numerous patents. Mr. Chen has specific attributes that qualify him to serve as a member of our board of directors, including the perspective and experience he brings as our Chief Executive Officer and President, one of our founders and a significant stockholder.
Eric SingerAlan S. Henricks has served as a member of our board of directors since March 2014. Since May 2015 he has servedJuly 2019 and as our lead independent director since September 2021. Mr. Singer is a founder and Managing Member of VIEX Capital Advisors, a securities investment firm. In addition to a long track record as a membersuccessful investor in technology companies, Mr. Singer has substantial experience serving on public boards and in assisting them in creating and expanding shareholder value. Mr. Singer is currently a director of Immersion Corporation , a developer and licensor of touch feedback technology company, and previously served on the boardboards of directors of Quantum Corporation, a video data storage and audit committee of Model N, Inc. (NYSE: MODN)management company, Numerex Corp., a provider of cloud-based Revenue Management solutions. From November 2014 to May 2015 he has served asmanaged machine-to-machine enterprise solutions enabling the Internet of Things, RhythmOne plc and YuMe, Inc., each a memberprovider of the board of directorsbrand video advertising software and audit committee chairman of APT Software Holdings.From April 2010 to June 2015 he served as a member of the board of directors of Ellie Mae, Inc. (NYSE: ELLI)audience data, Support.com , a SaaS Company, and as its lead independent director from November 2012 to May 2014. Since May 2012 he has served as a member of the board of directors and audit committee chairman of Roku, Inc., a consumer electronics company. From May 2009 toprovider of tech support and support center services, Meru Networks, Inc., a Wi-Fi network solutions company, PLX Technology, Inc., a PCI Express and ethernet semiconductor company, and Sigma Designs, Inc., an integrated circuit provider for the present,home entertainment market, among other companies. Mr. HenricksSinger has been a board member, advisor and consultant to a variety of private technology companies. His consulting CFO roles included Tile, Inc., Livescribe Inc. and Santur Corporation. From September 2006 to May 2009, Mr. Henricks served as Chief Financial Officer of Pure Digital Technologies, Inc. Prior to September 2006, Mr. Henricks served as Chief Financial Officer of several private and public companies including Traiana Inc., Informix Software, Inc., Documentum, Inc., Borland International, Inc., Cornish & Carey and Maxim Integrated Products, Inc. Mr. Henricks holds a Bachelor of Science in EngineeringB.A. from the Massachusetts Institute of Technology and a Master of Business Administration from StanfordBrandeis University. Mr. HenricksSinger has specific attributes that qualify him to serve as a member of our board of directors, including his extensive financial and operating experience serving as chief financial officerand knowledge of both public and private companies, as well asthe technology industry gained through his prior service on numerous public and private company boards.Dr. Phillip J. Salsbury has
Dana Wolf is an entrepreneur in the security space. From August 2017 to November 2021 she served as a memberSenior Vice President of our board of directors since May 2013. Dr. Salsbury is also our Lead Independent Director. From 2005 to April 2010, Dr. Salsbury served as a director of Techwell,Product & Marketing at Fastly Inc., a fabless semiconductor publicglobal edge cloud network provider. From August 2013 to August 2017, she was the Head of Product for the cloud security product lines at OpenDNS, Inc. (acquired by Cisco Systems, Inc.), a company that was acquired by Intersil Corporation. Dr. Salsbury was a founder,providing domain name system resolution services. Ms. Wolf has over 18 years of experience in the Chief Technology Officer,security space, holding both product and later the president and Chief Executive Officer of SEEQ Technology,engineering leadership roles at both Rapid7, Inc., a non-volatile memorycyber security analytics and Ethernet communications semiconductorautomation services company, from January 1981 until its acquisition by LSI Logic Corporation,and RSA Security LLC, a large semiconductorcomputer and network security company in June 1999. Hewith a focus on protecting and managing online identities and digital assets. Ms. Wolf holds a Ph.D.B.A. from Lawrence University in Mathematics, Computer Science and Theatre and an M.S. in Electrical EngineeringM.B.A. (High Tech) from Stanford University and a B.S. in Electrical Engineering from theUniversity of Michigan. Dr. SalsburyNortheastern University. Ms. Wolf has specific attributes that qualify himher to serve as a member of our board of directors, including his strong technical backgroundher extensive experience in the cyber security industry and management experience as chief executive officer of a public company, and his prior service as a director of a public company.
cloud-based businesses. Our common stock is listed on the New York Stock Exchange. Under the listing standards of the New York Stock Exchange, independent directors must comprise a majority of a listed company’s board of directors. In addition, the listing standards of the New York Stock Exchange require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent. Under the listing standards of the New York Stock Exchange, a director will only qualify as an “independent director” if, in the opinion of that listed company’s board of directors, that director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
TABLE OF CONTENTS Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the listing standards of the New York Stock Exchange. In addition, Compensationcompensation committee members must also satisfy the independence criteria set forth under the listing standards of the New York Stock Exchange. Our board of directors has undertaken a review of the independence of each director. Based on information provided by each director concerning his background, employment and affiliations, our board of directors has determined that Messrs. Chung, Henricksall of our directors other than Mr. Trivedi, our chief executive officer, are “independent” as that term is defined under the listing standards of the New York Stock Exchange and Salsbury do not have a relationshipany relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the listing standards of the New York Stock Exchange.director. In making these determinations, our board of directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director, and the transactions involving them described in the section titled “Related PartyPerson Transactions.”
Board Leadership Structure The Board is committed to strong, independent Board leadership and oversight of management’s performance. In addition to having substantially all of its members be independent under applicable listing standards and SEC standards, our current Board includes an affiliate from our largest stockholder as of March 31, 2022. The Board believes that whether to have the same person occupy the offices of Chairperson of the Board and Chief Executive Officer should be decided by the Board, from time to time, in its business judgment after considering relevant factors, including the specific needs of the business and what is in the best interests of our stockholders. If the Chairperson is an employee, the Board may appoint a lead independent director to help ensure robust independent leadership on the Board. The Chairperson of the Board has the powers and duties customarily and usually associated with the office of the chairperson of the board, including setting the schedule and agenda for Board meetings and presiding at meetings of the Board and meetings of our stockholders, unless a Chairperson of a stockholder meeting is otherwise appointed by the Board. The Chairperson also has the authority to call special meetings of our stockholders. If our Chairperson is an independent, non-employee director, the Chairperson has the responsibilities of the lead independent director. Mr. ChenTrivedi currently serves as both chairChairperson of our Boardboard of Directorsdirectors and our chief executive officer.Chief Executive Officer. Our Boardboard believes that the current Boardboard leadership structure provides effective independent oversight of management while allowing our Board of Directorsboard and management to benefit from Mr. Chen’sTrivedi’s leadership and years of experience as an executive in themultiple global high technology industries including networking, industry.cloud, IOT and cybersecurity. Mr. ChenTrivedi is best positioned to identify strategic priorities, lead critical discussion and execute our strategy and business plans. Mr. ChenTrivedi possesses detailed in-depth knowledge of the issues, opportunities, and challenges facing us.our company. Lead Independent Director Our Board determined that it would be beneficiallead independent director has the responsibility to have a Lead Independent Director to, among other things, preside over executive sessionsschedule and prepare agendas for meetings of the outside directors. The lead independent directors, which providesdirector may communicate with our Chief Executive Officer, disseminate information to the rest of the Board in a timely manner, raise issues with management on behalf of the benefitoutside directors when appropriate, and facilitate communications between management and the outside directors. In addition, the lead independent director may have other responsibilities, including calling meetings of havingoutside directors when necessary and appropriate, being available, when appropriate, for consultation and direct communication with our stockholders, building a productive relationship between the perspective of entirely independent directors. Independent directorsBoard and management sometimes have different perspectivesthe Chief Executive Officer, ensuring the Board fulfills its oversight responsibilities in our strategy, risk oversight and roles in strategy development.Oursuccession planning, and performing such other duties as the Board appointed Phillip J. Salsbury, Ph.D.may from time to servetime designate.
Mr. Singer serves as our lead independent director. As lead independent director, Dr. SalsburyIn this role, Mr. Singer presides over periodic meetings of our independent directors, serves as a liaison between our Chairmanchairperson of the board of directors and the independent directors, and performs such additional duties as our board of directors may otherwise determine and delegate.
Board Meetings and Committees During our fiscal year ended December 31, 2015,2021, the board of directors held five (5) meetings (including regularly scheduled and special meetings) and acted by written consent one (1) time. Eachfour (4) times. Throughout the year, directors met frequently to discuss our operations, the impact of Covid-19 on our business, strategic matters and other business. TABLE OF CONTENTS In many instances, these meetings resulted in formal board action approved by unanimous written consent. In other instances, these meetings resulted in our board of directors providing input to our management team throughout the year. No director attended at least 85%fewer than 75% of the aggregate of (i) the total number of meetings of our board of directors held during the period for which he or she has been a director and (ii) the total number of meetings held by all committees of our board of directors on which he or she served during the periods that he or she served. Although we do not have a formal policy regarding attendance by members of our board of directors at annual meetings of stockholders, we encourage, but do not require, our directors to attend. Four (4)All five of our directors attended our 20152021 annual meeting of stockholders. Our board of directors has established three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and responsibilities of each of thethese committees of our board of directors is described below. Members will serve on these committees until their resignation or until as otherwise determined by our board of directors.
The audit committee is currently comprised of Messrs. Braham, Chung Henricks and Salsbury, each of whomMs. Dotz. Ms. Dotz is a non-employee member of our board of directors. Mr. Henricks iscurrently the chair of ourthe audit committee. Our board of directors has determined that each of the members of our auditthis committee satisfies the requirements for independence and financial literacy under the applicable rules and regulations of the New York Stock Exchange and the SEC. Our board of directors has also determined that Mr. Henricks qualifiesChung and Ms. Dotz each qualify as an “audit committee financial expert” as defined in the SEC rules and satisfieseach satisfy the financial sophistication requirements of the New York Stock Exchange. The audit committee is responsible for, among other things: selecting and hiring our registered public accounting firm; evaluating the performance and independence of our registered public accounting firm; approving the audit and pre-approving any non-audit services to be performed by our registered public accounting firm; reviewing our financial statements and related disclosures and reviewing our critical accounting policies and practices; reviewing the adequacy and effectiveness of our internal control policies and procedures and our disclosure controls and procedures; overseeing procedures for the treatment of complaints on accounting, internal accounting controls, or audit matters; overseeing, monitoring and coordinating with regard to risk management, including those relating to enterprise risk management (ERM) and cybersecurity; reviewing and discussing with management and the independent registered public accounting firm the results of our annual audit, our quarterly financial statements, and our publicly filed reports; reviewing and approving in advance any proposed related person transactions; and preparing the audit committee report to be included in our annual proxy statement as required by the SEC. The audit committee operates under a written charter that satisfies the applicable standards of the SEC and the New York Stock Exchange. A copy of the charter of ourthe audit committee is available on our website at http://investors.a10networks.com. During 2015, our2021, the audit committee held seven (7)four (4) meetings and did not actacted by written/electronic consent.written consent one (1) time. Compensation Committee Our
The compensation committee currently consists of Messrs. Braham, Chung, Henricks and Salsbury.Singer. Mr. Chung is the chairmanchair of ourthe compensation committee. Our board of directors has determined that each member of this committee is independent under the applicable rules and regulations of the New York Stock Exchange and the SEC, a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act, and an outside director, as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended, or Section 162(m).amended. TABLE OF CONTENTS The compensation committee is responsible for, among other things: reviewing and approving our Chief Executive Officer’s and other executive officers’ annual base salaries, incentive compensation plans, including the specific goals and amounts, equity compensation, employment agreements, severance arrangements and change in control agreements, and any other benefits, compensation or arrangements; evaluating director compensation and making recommendations to the board of directors regarding such compensation; administering our equity compensation plans; overseeing our overall compensation philosophy, compensation plans, and benefits programs; and preparing the compensation committee report to be included in our form 10-K or annual proxy statement as required by the SEC. Our
The compensation committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange. A copy of the charter of ourthe compensation committee is available on our website at http://investors.a10networks.com. During 2015, our2021, the compensation committee held six (6)four (4) meetings and acted by written/electronicwritten consent one (1) time.eight (8) times. Nominating and Corporate Governance Committee Our
The nominating and corporate governance committee currently consists of Messrs. Chung, Henricks and Salsbury, each of whom is a non-employee member of our board of directors. Dr. SalsburySinger. Mr. Singer is the chairmanchair of ourthe nominating and corporate governance committee. Our board of directors has determined that each member of our nominating and corporate governancethis committee meets the requirements for independence under the rules of the New York Stock Exchange. The nominating and corporate governance committee is responsible for, among other things: evaluating and making recommendations regarding the composition, organization, and governance of our board of directors and its committees; evaluating and making recommendations regarding the development, oversight, and implementation of the Company’s Environmental, Social, and Governance (“ESG”) policies, programs, and practices; evaluating and making recommendations regarding the policies, programs, practices, and reports concerning ESG, including sustainability, environmental protection, community and social responsibility, and human rights; evaluating and making recommendations regarding the creation of additional committees or the change in mandate or dissolution of committees; reviewing and making recommendations with regard to our corporate governance guidelines and compliance with laws and regulations; and reviewing actual and potential conflicts of interest of our directors and corporate officers, other than related person transactions reviewed by the audit committee and approving or prohibiting any involvement of such persons in matters that may involve a conflict of interest. Our
The nominating and corporate governance committee operates under a written charter that satisfies the applicable listing standards of the New York Stock Exchange. A copy of the charter of ourthe nominating and corporate governance committee is available on our website at http://investors.a10networks.com. During 2015, our2021, the nominating and corporate governance committee held twothree (3) meetings and did not act by written/electronic consent. Our nominating and corporate governance committee held a meeting in the first quarter of 2016 and acted by written consent in April of 2016 in connection with its recommendation of Messrs. Chung and Cochran as nominees for election as the Class II directors at the Annual Meeting.one (1) time. Compensation Committee Interlocks and Insider Participation Messrs. Braham, Chung Henricks and SalsburySinger are the current members of our compensation committee. None of the members of our compensation committee is or has been one of our officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the compensation committee or director (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of any entity that has one or more executive officers serving on our compensation committee or our board of directors. TABLE OF CONTENTS Considerations in Evaluating Director Nominees Our nominating and corporate governance committee uses a variety of methods for identifying and evaluating director nominees. In its evaluation of director candidates, our nominating and corporate governance committee will consider the current size and composition of our board of directors and the needs of our board of directors and the respective committees of our board of directors. Some of the qualifications that our nominating and corporate governance committee considers include, without limitation, issues of character, integrity, judgment, diversity (including, but not limited to, diversity of experience,gender, ethnicity, race, international background and life experience), independence, area of expertise, corporate experience, length of service, potential conflicts of interest and other commitments. Nominees must also have the ability to offer advice and guidance to our Chief Executive Officer based on past experience in positions with a high degree of responsibility and be leaders in the companies or institutions with which they are affiliated. Director candidates must have sufficient time available in the judgment of our nominating and corporate governance committee to perform all board of director and committee responsibilities. Members of our board of directors are expected to prepare for, attend, and participate in all board of director and applicable committee meetings. Other than the foregoing, there are no stated minimum criteria for director nominees, although our nominating and corporate governance committee may also consider such other factors as it may deem, from time to time, are in our and our stockholders’ best interests. Although our board of directors does not maintain a specific policy with respect to board diversity, our board of directors believes that our board of directors should be a diverse body, and our nominating and corporate governance committee considers a broad range of backgrounds and experiences. In making determinations regarding nominations of directors, our nominating and corporate governance committee may take into account the benefits of diverse viewpoints. Our nominating and corporate governance committee also considers these and other factors as it oversees the annual board of director and committee evaluations. After completing its review and evaluation of director candidates, our nominating and corporate governance committee recommends to our full board of directors the director nominees for selection. The Company is committed to diversity at all levels, including with our directors, and our nominating and corporate governance committee is committed to considering diversity, including gender diversity, in identifying future candidates for nomination to the board. Sixty percent of our directors self-identify as being from one or multiple diverse groups. Stockholder Recommendations for Nominations to the Board of Directors Our nominating and corporate governance committee will consider candidates for director recommended by stockholders holding at least one percent (1%) of the fully diluted capitalization of the company continuously for at least twelve (12) months prior to the date of the submission of the recommendation, so long as such recommendations comply with our amended and restated certificate of incorporation currently in effect and amended and restated bylaws and applicable laws, rules and regulations, including those promulgated by the SEC. The nominating and corporate governance committee will evaluate such recommendations in accordance with its charter, our amended and restated bylaws, our policies and procedures for director candidates, as well as the regular director nominee criteria described above. This process is designed to ensure that our board of directors includes members with diverse backgrounds, skills and experience, including appropriate financial and other expertise relevant to our business. Eligible stockholders wishing to recommend a candidate for nomination should contact our General Counsel or our Legal DepartmentSecretary in writing. Such recommendations must include, amongst other things provided in our Bylaws, information about the candidate, a statement of support by the recommending stockholder, evidence of the recommending stockholder’s ownership of our common stock and a signed letter from the candidate confirming willingness to serve on our board of directors. Our nominating and corporate governance committee has discretion to decide which individuals to recommend for nomination as directors. Any nomination should be sent in writing to our General Counsel or our Legal DepartmentSecretary at A10 Networks, Inc., 3 West Plumeria Drive,2300 Orchard Parkway, San Jose, CA 95134. To be timely for our 201795131. If we hold the 2023 annual meeting of stockholders no more than 30 days before or after the one-year anniversary of this year’s Annual Meeting, then our General Counsel or Legal DepartmentSecretary must receive the written nomination; no earlier than February 25, 2023; and no later than the close of business on March 27, 2023.
TABLE OF CONTENTS If we hold the 2023 annual meeting more than 30 days before or after the one-year anniversary of this year’s Annual Meeting, then our Secretary must receive the written nomination no earlier than January 30, 2017the close of business on the 120th day before the actual date of the 2023 annual meeting and no later than March 1, 2017.the close of business on the later of the following two dates: | • | the 90th day prior to the 2023 annual meeting; or |
| • | the 10th day following the day on which we first announce publicly the date of the 2023 annual meeting. |
Communications with the Board of Directors Interested parties wishing to communicate with our board of directors or with an individual member or members of our board of directors may do so by writing to our board of directors or to the particular member or members of our board of directors, and mailing the correspondence to our General Counsel at A10 Networks, Inc., 3 West Plumeria Drive,2300 Orchard Parkway, San Jose, CA 95134,95131, Attn: General Counsel. Each communication should set forth (i) the name and address of the stockholder, as it appears on our books, and if the shares of our common stock are held by a nominee, the name and address of the beneficial owner of such shares, and (ii) the number of shares of our common stock that are owned of record by the record holder and beneficially by the beneficial owner. Our General Counsel, in consultation with appropriate members of our board of directors as necessary, will review all incoming communications and, if appropriate, forward such communications will be forwarded to the member or members of our board of directors to whom such communication wascommunications were directed, or if none is specified, to the ChairmanChairperson of our board of directors.
Corporate Governance Guidelines and Code of Business Conduct and Ethics Our board of directors has adopted Corporate Governance Guidelines that address items such as the qualifications and responsibilities of our directors and director candidates and corporate governance policies and standards applicable to us in general. In addition, our board of directors has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer, and other executive and senior financial officers. The full text of our Corporate Governance Guidelines and our Code of Business Conduct and Ethics is posted on the Corporate Governance portion of our website under Governance Documents at http://investors.a10networks.com. We will post amendments to our Code of Business Conduct and Ethics or waivers of our Code of Business Conduct and Ethics for directors and executive officers on the same website.
Hedging and Pledging Pursuant to our Insider Trading Policy, all employees (including directors) are prohibited from engaging in transactions in publicly traded options and other derivative securities with respect to our common stock, including any hedging or similar transaction designed to decrease the risks associated with holding company securities. Our directors and named executive officers are also prohibited from pledging company securities as collateral or holding company securities in a margin account. Risk is inherent with every business, and we face a number of risks, including strategic, financial, business and operational, legal and compliance, and reputational. We have designed and implemented processes to manage risk in our operations. Management is responsible for the day-to-day management of risks the company faces, while our board of directors, as a whole and assisted by its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are appropriate and functioning as designed. Our board of directors believes that open communication between management and our board of directors is essential for effective risk management and oversight. Our board of directors meets with our Chief Executive Officer and other members of the senior management team at quarterly meetings of our board of directors, where, among other topics, they discuss strategy and risks facing the company, as well as at such other times as they deemed appropriate. TABLE OF CONTENTS While our board of directors is ultimately responsible for risk oversight, our board committees assist our board of directors in fulfilling its oversight responsibilities in certain areas of risk. Our audit committee assists our board of directors in fulfilling its oversight responsibilities with respect to risk management in the areas of internal control over financial reporting, and disclosure controls and procedures, legal and regulatory compliance and cybersecurity, and discusses with management and the independent auditor guidelines and policies with respect to risk assessment and risk management. Our audit committee also reviews our major financial risk exposures and the steps management has taken to monitor and control these exposures. Our audit committee also monitors certain key risks on a regular basis throughout the fiscal year, such as riskrisks associated with internal control over financial reporting and liquidity risk. Our nominating and corporate governance committee assists our board of directors in fulfilling its oversight responsibilities with respect to the management of risk associated with board organization, membership and structure, and corporate governance. Our compensation committee assesses risks created by the incentives inherent in our compensation policies. Finally, our full board of directors reviews strategic and operational risk in the context of reports from the management team, receives reports on all significant committee activities at each regular meeting, and evaluates the risks inherent in significant transactions. Cybersecurity A10 is committed to providing networking solutions that enable next-generation networks focused on reliability, availability, scalability and cybersecurity. As cyber-attacks increase in volume and complexity, we integrate security as a key attribute in our solutions that further enable our customers to continue to adapt to market trends in cloud, internet of things and the ever increasing need for more data, building upon our strong global footprint and leadership in application and network infrastructure. Our board of directors is responsible for overseeing cybersecurity and data protection strategy. Management regularly reports any risk exposure to the Board as well as the steps taken to monitor and control them. Corporate Social Responsibility We are committed to maintaining the highest standards of ethics and corporate governance, to fostering a diverse and inclusive workforce, and to reducing our environmental impact. We believe these practices will deliver the highest value for our employees, customers, partners and shareholders. For this reason, we have an ESG policy to ensure that our Company is working towards continuing to a sustainable future in the following areas: Environment We are committed to business practices that preserve the environment upon which our society and economy depend. We are committed to meeting or exceeding all legal and compliance guidelines for our people, products, and operations. In addition, we strive to deliver products and services that minimize the impact to the environment throughout our value chain. We are evaluating environmental initiatives to further develop the Company’s policy and objectives. One such initiative is a sustainability project for reducing carbon emissions. We have engaged with a sustainability expert and set a baseline target year in 2019 for a 10-year carbon reduction plan. The strategy for this project is aligned with the 1.5°C initiative scope protocols. Our corporate headquarters in San Jose, California is compliant with the California Building Energy Efficiency Standards - Title 24 to reduce wasteful and unnecessary energy consumption. We have planned for greater use of renewable energy in partnership with the local utility, PG&E. At our headquarters, we offer EV charging stations to our employees and visitors, and where applicable according to local requirements, we offer recycling and properly dispose of e-waste, Under our Conflicts Material Supply Chain Policy, we expect our suppliers to comply with our policy on responsible sourcing of minerals from conflict-affected and high-risk areas and to cooperate with our diligence inquiries and requests for information and certification as may be required to comply with reporting and disclosure obligations. TABLE OF CONTENTS Social We believe in fostering a diverse and inclusive environment for employees, as well as encouraging diversity and inclusion within the customer and partner ecosystem, and our community at large. We strive to create a corporate culture that values diverse backgrounds and innovative thinking. We have implemented Diversity, Equal Opportunity, and Inclusion action planning teams focused on analysis from diversity surveys and focus groups. We offer a variety of training programs, such as engineering and product line management training, individual career development and coaching, training for sales and marketing and internship programs. Our training and employment opportunities aim to address both our business needs as well as employee growth. We are committed to providing a work environment free from unlawful harassment and we prohibit all employees from engaging in harassment whether directed toward other employees or non-employees with whom we have a business, service, or professional relationship. Periodic training on our code of conduct and harassment policies is required. We strive to be compliant with data privacy statutes globally. As a network security vendor, we are constantly reviewing and applying security best practices. This includes onsite physical security of buildings and employees. The health and well-being of our employees has always been and continues to be a top priority. To ensure the health and well-being of all of our employees during the COVID-19 pandemic, we have taken the following measures: | ○ | Implemented work-from-home and social distancing policies for our organization; |
| ○ | Taken steps to ensure employee’s ability to remotely work-from-home when feasible; |
| ○ | Placed restrictions on travel by our employees and in-person meetings; and |
| ○ | Prepared our San Jose, CA headquarters facility to be compliant with all local and statewide COVID-19 requirements for those essential workers that are unable to work-from-home. |
We offer an attractive and competitive mix of compensation and benefit plans to support our employees and their families’ physical, mental, and financial well-being. We believe that we employ a fair and merit-based total compensation system for our employees. Employees are generally eligible for medical, dental, vision, wellness and other comprehensive benefits, most of which become effective on their start date. It is important that all employees have an opportunity to have an ownership interest in our Company, and there are several programs that provide employees with the ability to own our stock. Generally, more than 75% of our employees participates in at least one of our stock programs, which almost all employees can participate in. Our discounted stock purchase program helps to build an employee ownership and inclusion mentality. Governance We are committed to building strong corporate governance guidelines based on best practices, changing requirements, and feedback from employees, customers, partners, vendors and shareholders. We have an independent and diverse board comprised of members from variety of industries and backgrounds that aspires to best practice corporate governance features. We have established standards and practices to which our board members, executives and employees are obligated to adhere, as outlined in the Code of Business Conduct and Ethics, Corporate Governance Guidelines, Conflicts Mineral Supply Chain Policy, Whistleblower Policy, the Employee Handbook, and our Insider Trading Policy. Shareholder input is important to us in designing our executive compensation philosophy and program. See “Listening to Our Shareholders.” TABLE OF CONTENTS Equity Compensation.Compensation Each non-employee director who first joins usour board of directors will be granted an initial equity award with a value of $225,000 and$225,000. On the date of each annual meeting of stockholders, each continuing non-employee director will be granted an annual equity award with a value of $150,000 on each of our annual stockholder meetings.$150,000. However, a continuing non-employee director who, as of the date of our annual stockholder meeting, has not served as a board member for the entire 12-month period prior to the annual stockholder meeting will receive an annual award with a value that is prorated based on the number of months the director served during the prior year. The initial and annual equity awards will be granted in the form of restricted stock units, and the number of shares to be granted pursuant to such equity awards will be determined by the closing price of a share of our sharescommon stock on the New York Stock Exchange on the grant date. However, aA non-employee director who is not continuing as a director following an annual stockholder meeting will not receive an annual equity award at such meeting. The initial equity award will be scheduled to vest in three, equal, annual installments from the date the non-employee director joins our board of directors, subject to continued service as a board memberwith us through each such date. Each annual equity award will vest as to 100% of the underlying shares on the earlier of the one yearone-year anniversary of the award’s grant date or the date of our next annual stockholder meeting, subject to continued service as a board memberwith us through such date.
Cash Compensation.Compensation Our board of directors approved the following annual compensation package for our non-employee directors: | | | | | | | Annual Cash
Retainer | | | Annual retainer | | $ | 30,000 | | | Additional retainer for audit committee chair | | $ | 20,000 | | | Additional retainer for audit committee member | | $ | 7,500 | | | Additional retainer for compensation committee chair | | $ | 12,000 | | | Additional retainer for compensation committee member | | $ | 5,000 | | | Additional retainer for nominating and governance committee chair | | $ | 7,500 | | | Additional retainer for nominating and governance committee member | | $ | 3,500 | | | Additional retainer for non-executive chairman of the board of directors | | $ | 30,000 | | | Additional retainer for independent lead director | | $ | 15,000 | |
Annual retainer | | | 30,000 | Additional retainer for audit committee chair | | | 20,000 | Additional retainer for audit committee member | | | 7,500 | Additional retainer for compensation committee chair | | | 12,000 | Additional retainer for compensation committee member | | | 5,000 | Additional retainer for nominating and governance committee chair | | | 7,500 | Additional retainer for nominating and governance committee member | | | 3,500 | Additional retainer for non-executive chairperson of the board of directors(1) | | | 30,000 | Additional retainer for independent lead director | | | 15,000 |
(1)
| During 2021, we had an executive chairperson of the board. Accordingly, no payment was made in relation to this position in 2021. |
Director Compensation for 20152021 The following table provides information regarding the total compensation that was paid by the Company to each of our non-employee directors who was not serving as an executive officer in 2015.| | | | | | | | | | | | | | | | | | | Director | | Fees
Earned
or Paid in
Cash ($) | | | Option
Awards
($)(1) | | | Stock
Awards
($)(1)(2) | | | Total ($) | | | Peter Y. Chung | | $ | 39,750 | | | | — | | | $ | 149,999.70 | | | $ | 189,749.70 | | | Alan S. Henricks | | $ | 58,500 | | | | — | | | $ | 149,999.70 | | | $ | 208,499.70 | | | Phillip J. Salsbury | | $ | 65,000 | | | | — | | | $ | 149,999.70 | | | $ | 214,999.70 | |
Tor R. Braham | | | 42,500 | | | 149,999 | | | 192,499 | Peter Y. Chung | | | 53,000 | | | 149,999 | | | 202,999 | J. Michael Dodson(3) | | | 16,667 | | | 0 | | | 16,667 | Mary Dotz | | | 45,859 | | | 49,994 | | | 95,853 | Eric Singer | | | 57,500 | | | 149,999 | | | 207,499 |
TABLE OF CONTENTS | (1)
| The aggregate number of option awards andshares of our common stock subject to stock awards outstanding at December 31, 20152021, for each non-employee director is as follows:below. There were no outstanding stock options held by non-employee directors as of December 31, 2021: |
| | | | | | | | | | | Aggregate Number
of Option Awards
Outstanding at
December 31, | | | Aggregate Number
of Stock Awards
Outstanding at
December 31, | | | Name | | 2015(#) | | | 2015(#) | | | Peter Y. Chung | | | — | | | | 23,622 | | | Alan S. Henricks | | | 30,000 | | | | 23,622 | | | Phillip J. Salsbury | | | — | | | | 37,789 | * |
Tor R. Braham | | | 16,949 | Peter Y. Chung | | | 16,949 | Mary Dotz | | | 20,515 | Eric Singer | | | 26,989 |
| (2)
| The amount reported in the Stock Awards column is the aggregate grant date fair value of the stock award, computed in accordance with equity compensation provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. As required by the rules of the SEC, the amount shown excludes the impact of estimated forfeitures related to service-based vesting conditions. Note that the amount reported in this column does not correspond to the actual economic value that may be received by the director from the award. |
(3)
| Mr. Dodson resigned from the board of directors in May 2021. |
TABLE OF CONTENTS Our board of directors is currently composed of five members. In accordance with our amended and restated certificate of incorporation,On April 26, 2021, director Mary Dotz notified our board of directors is divided into three staggered classesthat she would not stand for re-election at the Annual Meeting. Following receipt of directors.such notice, on April 26, 2021, our board of directors nominated Dana Wolf to stand for election to the Board at the Annual Meeting. At the Annual Meeting, two Class II directorseach of the five recommended nominees, if elected, will be electedserve for a three-year term to succeed the same class whose term is then expiring.one-year term. Each director’s term continues until the election and qualification of his or her successor, or such director’s earlier death, resignation, or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of our board of directors may have the effect of delaying or preventing changes in control of our company.
As recommended by the nominating and corporate governance committee, has recommended, and ourthe board’s nominees for election to the board are the following current members of directors has approved,the board: Tor R. Braham, Peter Y. Chung, Eric Singer, Dhrupad Trivedi and Robert Cochran as nominees for election as the Class II directors at the Annual Meeting.Dana Wolf. If elected, Messrs. Chung and Cochran will serve as Class II directorseach nominee would hold office until the 2019 annual meeting of stockholdersto be held in 2023 and until their successors are dulysuccessor is elected and qualified. The nominees are currently directors of our company.qualified or until their earlier death, resignation or removal. For information concerning the nominees,nominee, please see the section titled “Board of Directors and Corporate Governance.” If you are a stockholder of record and you sign your proxy card or vote by telephone or over the Internet but do not give instructions with respect to the voting of directors, your shares will be voted “FOR” the re-electionelection of Messrs. Chung and Cochran. We expectthe nominees listed above. Each nominee has advised us that Messrs. Chung and Cochran will accept such nomination;they are willing to serve on our board of directors, if elected; however, in the event that a director nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by our board of directors to fill such vacancy. If you are a street name stockholder and you do not give voting instructions to your broker or nominee, your broker will leave your shares unvoted on this matter. The election of directorseach director requires a plurality vote of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon to be approved. Broker non-votes will have no effect on this proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
EACH OF THE NOMINEES NAMED ABOVE.
TABLE OF CONTENTS ADVISORY VOTE TO APPROVE COMPENSATION OF AN AMENDMENT TO OUR 2014 EMPLOYEE STOCK PURCHASE PLAN TOREMOVE THE AUTOMATIC ANNUAL SHARE INCREASE THEREUNDER AND INCREASE THE
NUMBER OF SHARES AVAILABLE FOR ISSUANCE THEREUNDER BY 4,000,000 SHARES
Our 2014 Employee Stock Purchase Plan,NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or ESPP, is a benefit that we make available on a broad basisthe Dodd-Frank Act, requires us to the employees of the Company and our participating subsidiary corporations and other participating affiliates, and allows employees to purchase shares of our common stock at a discountobtain an advisory vote (non-binding) from fair market value. The ESPP assists us in recruiting, retaining and motivating our employees, which helps us achieve our business goals, including creating long-term value for our stockholders.We are asking our stockholders to approve an amendment to our ESPP that (i) removes the automatic annual increase in the share reserve under the ESPP (the “Annual Share Increase”), and (ii) increases by 4,000,000 shares the maximum number of shares of our common stock that will be made available for sale under the ESPP (collectively referred to as the “Amendment”). As such, following the effectiveness of the Amendment, any additional increases to the ESPP’s share reserve in future years will require additional stockholder approval. Our compensation committee and our board of directors have approved the Amendment, subject to the approval of our stockholders at the Annual Meeting.
Our board of directors adopted, and our stockholders approved, the ESPP in March 2014. Currently, a maximum of 2,857,971 shares of our common stock have been reserved for issuance under the ESPP, which includes the initial 1,600,000 shares that were reserved under the ESPP plus a total of 1,257,971 shares of our common stock that were added to the ESPP pursuant to the Annual Share Increases that occurred on the first day of each of our fiscal years 2015 and 2016. Before the Amendment, the ESPP limits each Annual Share Increase to the least of (i) 3,500,000 shares of our common stock, (ii) one percent (1%) of the outstanding shares of our common stock on the last day of our immediately preceding fiscal year, or (iii) an amount determined by the administrator of the ESPP. As of April 1, 2016, 1,184,272 shares of our common stock remained available for issuance under the ESPP. We currently expect that approximately 590,000 shares will be purchased in our May 2016 purchase leaving approximately 594,272 shares remaining available for issuance under the ESPP.
If stockholders approve this Amendment, the number of shares of our common stock issuable under the ESPP would increase by 4,000,000, bringing the maximum number of shares of our common stock under the ESPP’s share reserve to 6,857,971, of which an aggregate of 1,673,699 shares have been issued since March 2014 through April 1, 2016. We have not made any other material amendments to the ESPP since it became effective in March 2014. Following the next scheduled purchase of shares under the ESPP in May 2016, the number of shares of our common stock remaining available for sale under the ESPP, if stockholders approve this Amendment, is expected to be approximately 4,594,272 shares.
Without stockholder approval of the Amendment, we believe our ability to use the ESPP as a tool to assist us to attract and retain the individuals necessary to drive our performance and increase long-term stockholder value will be limited. We believe that the approval of the Amendment is important to our continued success. If stockholders do not approve the Amendment, the ESPP will continue without any increase in the share reserve and the Annual Share Increases will remain in effect. In that case, it is likely that the shares reserved for issuance under the ESPP may be insufficient to cover full grants under the ESPP during fiscal year 2016 and each fiscal year thereafter while the ESPP remains in effect, and enrollments under the ESPP may need to be reduced annually to eliminate overenrollment. If the shares available for issuance under the ESPP run out, it will be more difficult for us to meet our goals of recruiting, retaining and motivating talented employees.
In approving the Amendment and recommending that our board of directors approve the Amendment, our compensation committee reviewed: (1) current and anticipated employee participation, expected levels of contribution and pricing available under the ESPP to purchase shares of our common stock, (2) the period of time the current balance would last based on the number of shares of our common stock currently available under the ESPP, (3) the historical number of shares actually purchased under the ESPP since its adoption, (4) the
percent of eligible participants who participated, (5) the expected period of time that the increased share reserve will last, (6) the percent of our common stock outstanding that the 4,000,000 share increase proposed by the Amendment would represent, which was approximately 6.2 percent, (7) the analysis and recommendations of the independent compensation consultant retained by our compensation committee, (8) key components of the ESPP design, and (9) the recommendations of management.
Description of the ESPP
The following paragraphs provide a summary of the principal features of the ESPP and its operation. However, this summary is not a complete description of all of the provisions of the ESPP and is qualified in its entirety by the specific language of the ESPP. A copy of the ESPP as amended is provided as Appendix A to this proxy statement.
Purpose. The purpose of the ESPP is to provide our employees and employees of our participating subsidiaries with an opportunity to purchase shares of our common stock through accumulated payroll deductions or other contributions that we may permit. The ESPP is intended to qualify as an employee stock purchase plan under Section 423 (“Section 423”) of the Internal Revenue Code of 1986, as amended (the “423 component”). In addition, the ESPP authorizes the grant of purchase rights that do not qualify under Section 423 pursuant to rules, procedures or sub-plans adopted by the Administrator (as defined below) designed to achieve desired tax, securities laws or other objectives (the “non-423 component”).
Authorized Shares.Initially, a maximum of 1,600,000 shares of our common stock were made available for sale under the ESPP. In addition, our ESPP provides for an Annual Share Increase that makes available an additional number of shares of our common stock under the ESPP on the first day of each fiscal year of the Company beginning in fiscal year 2015, equal to the least of:
3,500,000 shares;
1% of the outstanding shares on the last day of the immediately preceding fiscal year; or
such other amount the administrator of the ESPP determines.
As of April 1, 2016, 1,184,272 shares of our common stock remained available for issuance under the ESPP. We currently expect that approximately 590,000 shares will be purchased in our May 2016 purchase, leaving approximately 594,272 shares remaining available for issuance under the ESPP. As of April 1, 2016, the per share closing price of our common stock as quoted on the New York Stock Exchange was $6.13. If our stockholders approve the Amendment, then the maximum number of shares of our common stock that will remain available for sale under the ESPP will be approximately 4,594,272 shares.
Administration.Our board of directors or a committee appointed by our board of directors (currently the Compensation Committee is the Administrator) administers the ESPP (referred to as the “Administrator”). The Administrator may interpret the terms of the ESPP, designate separate offerings under the ESPP, designate subsidiaries and affiliates as participating in the 423 component or the non-423 component of the ESPP, determine eligibility, adjudicate all disputed claims filed under the ESPP, and establish such procedures that it deems necessary for the administration of the ESPP.
Eligibility.Generally, all employees are eligible to participate if they are employed by us, or any participating subsidiary or affiliate of ours, for customarily at least 20 hours per week and more than five months in any calendar year. However, an employee may not be granted rights to purchase stock under the ESPP if such employee:
immediately after the grant would own stock and/or hold options to purchase stock possessing 5% or more of the total combined voting power or value of all classes of our stock (or of any parent or subsidiary of ours); or
holds rights to purchase stock under all of our (or any parent or subsidiary of ours) employee stock purchase plans that accrue at a rate exceeding $25,000 worth of stock for each calendar year in which such option is outstanding at any time.
As of April 1, 2016, approximately 780 of our employees and our subsidiaries (including four executive officers) were eligible to participate in the ESPP.
Offering Periods.Our ESPP provides for consecutive, overlapping 24-month offering periods that are scheduled to start on the first trading day on or after May 21 and November 21 of each year and terminating on the last trading day on or before May 20 and November 20, approximately 24 months later. Each purchase period within an offering period will be approximately six months and will begin after one exercise date and will end with the next exercise date approximately six months later (except that the first purchase period in the offering period will begin on the first trading day of the offering period and end with the next exercise date). The Administrator may modify the terms of future offering periods, provided that no offering period may last more than 27 months. If the fair market value of our common stock on the exercise date is less than the fair market value on the first trading day of an offering period, all participants will be withdrawn from the offering period in which such exercise date occurred, as of immediately following their purchase of shares on the exercise date, and automatically will be enrolled in the immediately following offering period. Any eligible employee may participate in an offering period under the ESPP by timely submitting a properly completed subscription agreement on or before a date determined by the Administrator prior to the first day of the offering period or by following such other procedure the Administrator determines.
Contributions. Our ESPP permits participants to purchase shares of our common stock through payroll deductions (or any additional forms of payment that we may permit) of up to 15% of their eligible compensation, which includes base straight time gross earnings, but exclusive of payments for incentive compensation, bonuses, payments for overtime and shift premium, equity compensation income and other similar compensation. During a purchase period, a participant may not increase the rate of his or her contributions, but may decrease his or her rate of contributions one time to a rate of 0%.
Exercise of Purchase Right.Participants’ contributions to the ESPP are used to purchase shares on each exercise date (the last trading day of each six-month purchase period) during the offering period. The purchase price of the shares will be 85% of the lower of the fair market value of a share of our common stock on the first trading day of the applicable offering period or on the applicable exercise date. The Administrator may determine a different purchase price for future offering periods subject to applicable laws. A participant may purchase a maximum of 1,500 shares of our common stock during each purchase period. The Administrator may change the maximum number of shares of our common stock that a participant may purchase in any future offering periods.
Withdrawal. A participant may end his or her participation in the ESPP at any time and participation automatically will end upon termination of a participant’s employment with us. If a participant withdraws or is deemed to have withdrawn from the ESPP, all accrued contributions, if any, that have not yet been used to purchase shares will be returned to the participant.
Non-Transferability.A participant may not transfer contributions to the ESPP or purchase rights granted under the ESPP other than by will, the laws of descent and distribution, or, if the Administrator permits, by designation of a beneficiary.
Adjustments.In the event of certain changes in our capitalization, to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP, the Administrator will adjust the number and class of common stock that may be delivered under the ESPP, the purchase price per share and the number of shares covered by each unexercised purchase right under the ESPP, and the numerical share limits under the ESPP. In the event of our proposed dissolution or liquidation, any offering period then in progress will be shortened by setting a new exercise date and will terminate immediately before the completion of such
proposed dissolution or liquidation unless determined otherwise by the Administrator. Prior to the new exercise date, the Administrator will provide notice to participants that the exercise date has been changed to the new exercise date and that the participant’s purchase right will be exercised automatically on the new exercise date unless the participant already has withdrawn from the offering period.
Merger or Change in Control.In the event of our merger or change in control, as defined under the ESPP, a successor corporation (or its parent or subsidiary) may assume or substitute each outstanding purchase right. If any outstanding purchase rights are not assumed or substituted, the offering period to which such purchase rights relate will be shortened by setting a new exercise date on which the offering period will end. The new exercise date will occur before the date of the proposed merger or change in control. The Administrator will notify each participant that the exercise date has been changed and that the participant’s purchase right will be exercised automatically on the new exercise date unless before such date the participant has withdrawn from the offering period.
Amendment; Termination.Our ESPP will terminate automatically in 2034, unless we terminate it sooner. The Administrator has the authority to amend, suspend, or terminate our ESPP at any time and for any reason, subject to the terms of the ESPP.
Number of Shares Purchased by Certain Individuals and Groups
Participation in the ESPP is voluntary and dependent on each eligible employee’s election to participate and his or her determination as to the level of contributions to be made. In addition, the number of shares that may be purchased under the ESPP generally is determined, in part, by the price of a share of our common stock on the first trading day of each offering period and the last trading day of the applicable purchase period. Accordingly, the actual number of shares of our common stock that may be purchased by any individual is not determinable in advance. The following table sets forth (i) the number of shares of our common stock that were purchased during fiscal year 2015 under the ESPP, and (ii) the weighted average per share purchase price paid for such shares, for each of our named executive officers as disclosed pursuant to Section 14A of the Exchange Act. This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all currentof our named executive officers as a group, all non- employee directors as a group, and all other employees who participatedthe philosophy, policies and practices described in this proxy statement.
The Say-on-Pay vote is advisory, and therefore is not binding on us, the ESPP as a group:Name and Position or Group | | Number of Shares Purchased (#) | | | Weighted Average Purchase Price Per Share ($) | | Lee Chen(1) Chief Executive Officer | | | — | | | | — | | Sanjay Kapoor Vice President of Global Marketing | | | — | | | | — | | Ray Smets Vice President of Worldwide Sales | | | 2,775 | | | $ | 3.451 | | | All current executive officers as a group | | | 11,775 | | | $ | 3.451 | | | All current directors who are not executive officers as a group(1) | | | — | | | | — | | | All employees (including all current officers who are not executive officers, as a group) | | | 1,093,240 | | | $ | 3.5643 | |
| (1) | These individuals are not eligible to participate in the ESPP. |
U.S. Federal Income Tax Consequences
The following paragraphs are intended as a summarycompensation committee or our board of directors. However, the Say-on-Pay vote will provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which the compensation committee will be able to consider when determining executive compensation for the remainder of the U.S. federal income tax consequences to U.S. taxpayerscurrent fiscal year and to the Company of the purchase of shares of our common stock under the ESPP. This summary does not attempt to describe all possible U.S. federal tax consequences or other tax consequences of such participation or address any individual’s particular circumstances. In addition, it does not describe any state, local or nonU.S. tax consequences.
The ESPP is intended to be an employee stock purchase plan within the meaning of Section 423. Under an employee stock purchase plan which so qualifies, no taxable income will be recognized by a participant, and no deductions will be allowable to the Company upon either the grant or the exercise of purchase rights. Taxable income will not be recognized until there is a sale or other disposition of the shares acquired under the ESPP or in the event the participant should die while still owning the purchased shares.
If the participant sells or otherwise disposes of the purchased shares within two years after the start date of the offering period in which the shares were acquired, or within one year after the actual purchase date of those shares, then the participant generally will recognize ordinary income in the year of sale or disposition equal to the amount by which the fair market value of the shares on the purchase date exceeded the purchase price paid for those shares, and the Company will be entitled to an income tax deduction for the taxable year in which such disposition occurs equal in amount to such excess. The amount of this ordinary income will be added to the participant’s basis in the shares, and any resulting gain or loss recognized upon the sale or disposition will be a capital gain or loss. If the shares have been held for more than one year since the date of purchase, the gain or loss will be long-term.
If the participant sells or disposes of the purchased shares more than two years after the start date of the offering period in which the shares were acquired and more than one year after the purchase date of those shares, then the participant generally will recognize ordinary income in the year of sale or disposition equal to the lesser of (i) the amount by which the fair market value of the shares on the sale or disposition date exceeded the purchase price paid for those shares, or (ii) 15 percent of the fair market value of the shares on the start date of that offering period. Any additional gain upon the sale or disposition will be taxed as a longterm capital gain. Alternatively, if the fair market value of the shares on the date of the sale or disposition is less than the purchase price, there will be no ordinary income and any loss recognized will be a long-term capital loss. The Company will not be entitled to an income tax deduction with respect to such disposition.
If the participant still owns the purchased shares at the time of death, the lesser of (i) the amount by which the fair market value of the shares on the date of death exceeds the purchase price or (ii) 15 percent of the fair market value of the shares on the start date of the offering period in which those shares were acquired will constitute ordinary income in the year of death.
Summary
beyond. Our board of directors believesand our compensation committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will endeavor to communicate with stockholders to better understand the concerns that it isinfluenced the vote, consider our stockholders’ concerns and the compensation committee will evaluate whether any actions are necessary to address those concerns. We believe that the information provided in the best“Executive Compensation” section of this proxy statement, and in particular the information discussed in “Executive Compensation—Compensation Discussion and Analysis” beginning on page 23 below, demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests of the Company andare aligned with our stockholders’ interests to support long-term value creation. Accordingly, we ask our stockholders to continuevote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that the stockholders approve, on an advisory basis, the compensation paid to provide employees with the opportunity to acquire an ownership interestnamed executive officers, as disclosed in the Company underproxy statement for the ESPP2022 Annual Meeting pursuant to Item 402 of Regulation S-K and thereby encourage them to remain in our serviceother compensation disclosure rules of the SEC, including the compensation discussion and more closely align their interests with thoseanalysis, compensation tables and narrative discussion, and other related disclosure.” The approval, on an advisory and non-binding basis, of the compensation of our stockholders.Vote Required
The approval of the ESPP Amendmentnamed executive officers as described in this proxy statement requires the affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the Annual Meeting and entitled to vote thereon.on this proposal. Abstentions will have the effect ofare considered as a vote against“against” the proposal and brokerbecause an abstention represents a share entitled to vote on this proposal. Broker non-votes will have no effect.
effect on the outcome of this proposal. You may vote “for,” “against” or abstain” on this proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF ANAMENDMENT TOTHE COMPENSATION OF OUR 2014 EMPLOYEE STOCK PURCHASE PLAN TO REMOVE THENAMED EXECUTIVE OFFICERS AS DESCRIBED IN THIS PROXY STATEMENT.
TABLE OF CONTENTS AUTOMATIC ANNUAL SHARE INCREASE THEREUNDER AND INCREASE THE NUMBER OF
SHARES AVAILABLE FOR ISSUANCE THEREUNDER BY 4,000,000 SHARES.
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM Our
The audit committee of the board of directors has appointed Deloitte & ToucheArmanino LLP (“ Deloitte”Armanino”), an independent registered public accounting firm, to audit our consolidated financial statements for our fiscal year ending December 31, 2016. During our fiscal year ended December 31, 2015, Deloitte2022. Armanino has served as our independent registered public accounting firm.Notwithstanding the appointment of Deloittefirm since September 2019 and even ifaudited our stockholders ratify the appointment, our audit committee, in its discretion, may appoint another independent registered public accounting firm at any time during our fiscal year if our audit committee believes that such a change would be in the best interests of A10 Networks, Inc. and its stockholders. At the Annual Meeting, our stockholders are being asked to ratify the appointment of Deloitte as our independent registered public accounting firmconsolidated financial statements for our fiscal year endingended December 31, 2016. Our audit committee is submitting the appointment of Deloitte to our stockholders because we value our stockholders’ views on our independent registered public accounting firm2019, 2020 and as a matter of good corporate governance.2021. Representatives of DeloitteArmanino will be present at the Annual Meeting, and they will have an opportunity to make a statement and will be available to respond to appropriate questions from our stockholders.
At the Annual Meeting, our stockholders are being asked to ratify the appointment of Armanino as our independent registered public accounting firm for our fiscal year ending December 31, 2022. The audit committee is submitting the appointment of Armanino to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. If our stockholders do not ratify the appointment of Deloitte,Armanino, our board of directors may reconsider the appointment.
Notwithstanding the appointment of Armanino and even if our stockholders ratify the appointment, the audit committee, in its discretion, may appoint another independent registered public accounting firm at any time during our fiscal year if the audit committee believes that such a change would be in the best interests of the Company and its stockholders. Fees Paid to the Independent Registered Public Accounting Firm The following table presents fees for professional audit services and other services rendered to our companythe Company by DeloitteArmanino for our fiscal yearsyear ended December 31, 20142021 and 2015.| | | 2015 | | | 2014 | | | | | (In Thousands) | | | Audit Fees(1) | | $ | 987,560 | | | $ | 974,102 | | | Audit-Related Fees(2) | | | — | | | | — | | | Tax Fees(3) | | | 70,546 | | | | — | | | All Other Fees(4) | | | 14,000 | | | | 19,500 | | | Total Fees | | $ | 1,072,106 | | | $ | 993,602 | |
Audit Fees(1) | | | $897,763 | | | $806,950 | Audit-Related Fees(2) | | | — | | | — | Tax Fees(3) | | | — | | | — | All Other Fees(4) | | | — | | | — | Total Fees | | | $897,763 | | | $806,950 |
| (1)
| Audit Fees consist of professional services rendered in connection with the audit of our annual consolidated financial statements, including audited financial statements presented in our Annual Report on Form 10-K, quarterly reports on Form 10-Q, and services that are normally provided by the independent registered public accountants in connection with statutory and regulatory filings or engagements for those fiscal years. |
| (2)
| Audit-Related Fees consist of fees for professional services for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include accounting consultations concerning financial accounting and reporting standards. |
| (3)
| Tax Fees consist of fees for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance. |
| (4)
| All Other Fees consist of permitted services other than those that meet the criteria above. |
In our fiscal year ended December 31, 2015,2021, there were no other professional services provided by Deloitte,Armanino, other than those listed above, that would have required ourthe audit committee to consider their compatibility with maintaining the independence of Deloitte.Armanino. Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm Our
The audit committee has established a policy governing our use of the services of our independent registered public accounting firm. Under the policy, ourthe audit committee is required to pre-approve all audit and non-audit services performed by our independent registered public accounting firm in order to ensure that the provision of such services does not impair the public accountants’ independence. All fees paid to DeloitteArmanino for our fiscal yearsyear ended December 31, 20142021 and 20152020 were pre-approved by ourthe audit committee.
TABLE OF CONTENTS The ratification of the appointment of DeloitteArmanino requires the affirmative vote of a majority of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote AGAINST the proposal and broker non-votes will have no effect. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF
THEAPPOINTMENT OF DELOITTE & TOUCHEARMANINO LLP.
TABLE OF CONTENTS REPORT OF THE AUDIT COMMITTEE The audit committee is a committee of the board of directors comprised solely of independent directors as required by the listing standards of the New York Stock Exchange and rules and regulations of the SEC. The audit committee operates under a written charter approved by the board of directors, which is available on our web sitewebsite at http://investors.a10networks.com. The composition of the audit committee, the attributes of its members and the responsibilities of the audit committee, as reflected in its charter, are intended to be in accordance with applicable requirements for corporate audit committees. The audit committee reviews and assesses the adequacy of its charter and the audit committee’s performance on an annual basis. With respect to the company’sour financial reporting process, theour management of the company is responsible for (1) establishing and maintaining internal controls and (2) preparing the company’sour consolidated financial statements. Our independent registered public accounting firm Deloitte & Touche LLP (“Deloitte”), is responsible for auditing these financial statements. It is the responsibility of the audit committee to oversee these activities. It is not the responsibility of the audit committee to prepare our financial statements. These are the fundamental responsibilities of management. In the performance of its oversight function, the audit committee has: | · | reviewed and discussed the audited financial statements with management and Deloitte; |
| · | discussed with Deloitte the matters required to be discussed by the statement on Auditing Standards No. 16, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), and as adopted by the Public Company Accounting Oversight Board in Rule 3200T; and |
| · | received the written disclosures and the letter from Deloitte required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with Deloitte its independence. |
reviewed and discussed the audited financial statements with management and Armanino; discussed with Armanino the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board; and received the written disclosures and the letter from Armanino required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with Armanino its independence. Based on the audit committee’s review and discussions with management and Deloitte,Armanino, the audit committee recommended to the board of directors that the audited financial statements be included in theour Annual Report on Form 10-K for the fiscal year ended December 31, 20152021 for filing with the Securities and Exchange Commission. Respectfully submitted by the members of the audit committee of the board of directors: Alan S. Henricks
Tor R. Braham
Peter Y. Chung Phillip J. Salsbury
This report of the audit committee is required by the SEC and, in accordance with the SEC’s rules, will not be deemed to be part of or incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (“Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act.
TABLE OF CONTENTS The following table identifies certain information about our executive officers as of April 7, 2016.May 11, 2022. Officers are elected by our board of directors to hold office until their successors are elected and qualified. There are no family relationships among any of our directors or executive officers. Lee ChenDhrupad Trivedi | | 62 | 55 | Chief | | President, Chief Executive Officer President and ChairmanChairperson | Rajkumar JalanBrian Becker | | 54 | 49 | Chief Technology Officer | | Greg Straughn | | 58 | | Chief Financial Officer | | Matthew Bruening | | | 56 | | | Executive Vice President, Worldwide Sales and Marketing | Robert Cochran | | 58 | 64 | | | Executive Vice President, Legal and Corporate Collaboration, SecretaryChief Risk Compliance Officer and Director | Ray Smets | | 52 | | Vice President of Worldwide Sales | Neil Wu Becker | | 44 | | Vice President, Worldwide Marketing and CommunicationsSecretary |
Lee Chen
Dhrupad Trivedi is also a director of our company. Please see the section titled “Board of Directors and Corporate Governance” for his background and experience. Brian Beckerhas served as our Chief Financial Officer since February 2021. He was appointed Interim Chief Financial Officer in September 2020 and served as Vice President and Corporate Controller from January 2018 until such appointment. Prior to joining our company, Mr. Becker served as Vice President, Accounting and Corporate Controller for YuMe, Inc., a provider of brand video advertising software and audience data, from June 2014 to December 2017, and as Director, Revenue and Cost Accounting, from August 2013 to June 2014. He also served in various roles within Revenue Accounting at Symantec Corporation, a cybersecurity software and services company, from 2010 through 2012. Mr. Becker began his career in public accounting at Ernst & Young, LLP in San Jose, California. Mr. Becker is a certified public accountant licensed by the California Board of Accountancy and holds a B.A. in Business Economics from the University of California, Santa Barbara. Matt Bruening has served as our Executive Vice President, Worldwide Sales and Marketing since January 2021, and, prior to that, served as our Executive Vice President, Worldwide Sales since April 2020. Mr. Bruening was previously Senior Vice President of Sales at Endgame, an endpoint security company since September 2017. Prior to Endgame, from July 2009 to June 2017 he served as Vice President, Enterprise Security Sales/ Americas at SecureWorks Corporation, an internet security company. From 2001-2004, Mr. Bruening was Vice President, Global Sales at Applied Innovation, a publicly traded company delivering network management solutions to major service providers. Mr. Bruening is a graduate of John Carroll University and holds numerous executive and sales leadership certifications. Robert Cochran has served as our Executive Vice President, Legal and Corporate Collaboration since November 2016, our Chief ExecutiveRisk Compliance Officer since October 2016 and Secretary since August 2004. He previously served as our Vice President, Legal and Corporate Collaboration from January 2012 to November 2016 and as a member of our board of directors since July 2004, andfrom April 2012 to November 2018. Mr. Cochran currently serves as the Chairmana director of our board of directors since March 2014. From 1996 to August 2004, Mr. Chen served in a variety of positions, including as Vice President of Software Engineering and Quality Assurance at Foundry Networks,Techpoint, Inc., a fabless semiconductor company that designed, manufactureddesigns, markets, and sold high-end enterprise and service provider switches and routers, as well as wireless, security, and traffic management solutions. Mr. Chen has previously held management and senior technical positions at OTS, Apple Computer, Convergent Technologies, Inc. and InSync Group, and was a co-founder of Centillion Networks, Inc. Mr. Chen has an M.S.E.E. from San Jose State University and a B.S. in Electrophysics from National Chiao-Tung University in Taiwan. Mr. Chen is a technology pioneer, especiallysells mixed-signal integrated circuits for HD video applications in the area of Internet Protocol Multicastsecurity surveillance and System & System Security and holds numerous patents.Rajkumar Jalanhas served as our Chief Technology Officer since November 2008. From 2005 to 2008, he served as a consultant to the Company. From 1996 to 2002, Mr. Jalan served in various capacities, including as a Director of IP Routing, for Foundry Networks, Inc., a company that designed, manufactured and sold high- end enterprise and service provider switches and routers, as well as wireless, security, and traffic management solutions. Prior to Foundry, he worked on a wide range of networking technologies from Ethernet, Token-Ring, ATM and Digital Switching Systems. Mr. Jalan’s prior employers included Bay Networks, Inc. and Network Equipment Technologies Inc. Mr. Jalan holds a number of patents related to Layer 2/Layer 3 as well as Layer 4/ Layer 7 switching. He has a B.Tech from the Indian Institute of Technology Bombay.
Greg Straughnhas served as our Chief Financial Officer since July 2011 and brings to us more than 30 years of executive leadership and financial expertise. From September 1998 to June 2010, Mr. Straughn served as the Chief Financial Officer for Kabira Technologies, Inc., a provider of high-performance software products to the telecommunications and financial services market. During his tenure at Kabira, Mr. Straughn was instrumental in helping grow the company from startup through its eventual acquisition by Tibco Software, Inc. Previously, he served as the Chief Financial Officer of AT&T, Inc./Pacific Bell Internet Services, Inc., an Internet company, Principal and General Manager for Meridian Business Systems, and the Chief Financial Officer of PacTel Finance. Mr. Straughn has a B.S. in Finance from the University of California at Berkeley and is the author of two books on financial and general management of small businesses.
Robert Cochranhas served as our Vice President, Legal and Corporate Collaboration since January 2012 and as a member of our board of directors since April 2012. Mr. Cochran has served as our Secretary since August 2004, and previously served on our board of directors from August 2004 to October 2004.automotive markets. From January 1993 to January 2012, Mr. Cochran was an attorney in private practice in Woodside, California, where he had served as our outside legal counsel since our incorporation.incorporation until he joined us in 2012. From 2004 to 2010, Mr. Cochran served as a director of Techwell, Inc., a fabless semiconductor public company that was acquired by Intersil Corporation. Mr. Cochran also serves as a director of two privately held companies.designed, marketed, and sold mixed-signal integrated circuits. Mr. Cochran has a J.D. from Harvard Law School and an A.B. in Economics from Harvard University.
TABLE OF CONTENTS Ray Smetshas served
Compensation Discussion and Analysis This Compensation Discussion and Analysis provides an overview of the material components of our executive compensation program. The following persons are collectively referred to in this Compensation Discussion and Analysis and the accompanying compensation tables as our “named executive officers”: Dhrupad Trivedi | | | President and Chief Executive Officer | Brian Becker | | | Chief Financial Officer | Matthew Bruening | | | Executive Vice President, Worldwide Sales and Marketing | Robert Cochran | | | Executive Vice President, Legal and Corporate Collaboration, Chief Risk Compliance Officer and Secretary |
Our products and services address networking and security technology requirements. We are well positioned to help our customers address the emerging themes of Worldwide Sales since July 2013. From December 2011an increasingly complex cybersecurity landscape and new technology to July 2013, Mr. Smetssupport changing consumption trends. We have navigated challenges related to the pandemic and associated economic disruptions and have positioned A10 Networks for consistent organic growth and increased profitability. Our business philosophy is to build long-term value and we are committed to drive growth and improve profitability. Our executive compensation philosophy is focused on real pay delivery through revenue and operating margin growth that drives total shareholder return (“TSR”) and aligns employees with customers and stockholders. Financial Summary and Compensation Highlights Our 2021 fiscal year was Senior Vice President of Field Operations, Salesa year focused on driving growth and International Development for Metaswitch Networks, Inc.profitability with consistent operational excellence and execution amidst a challenging environment. Our compensation decisions were consistent with our financial performance, including the following: Our 2021 fiscal year revenue was $250 million (up 10.9% from last year), a telecommunications company. From December 2008 to November 2011, he was Vice President and General Manager at Cisco Systems, Inc., a designer and manufacturer of computer networking devices. From September 2007 to August 2008, Mr. Smets was Executive Vice President of Sales and Marketing for Packeteer Inc., an application classification and traffic prioritization systems provider. Mr. Smets has also held executive positions at Netopia Inc., a provider of carrier-class broadband customer premise equipment, McAfee Security, Inc., a security software company, and Bellsouth Telecommunications/ AT&T, Inc., a telecommunications company. Mr. Smets has an M.B.A. from Nova-Southeastern University, and a B.S. in Computer Engineering fromwhich exceeded the University of Florida, and is an alumnusmaximum threshold of the Stanford Universityrevenue portion of our corporate performance goals under our 2021 Executive Program.Neil Wu Beckerhas served asCash Incentive Plan. As a result, bonuses were earned at 140% based on the revenue portion of our Vice Presidentcorporate performance, which accounts for 70% of Worldwide Marketingthe payout under the 2021 Executive Cash Incentive Plan.
Our 2021 fiscal year adjusted EBITDA was $62.4 million (up approximately 37% from last year), which exceeded the maximum threshold corporate performance goals under our 2021 Executive Cash Incentive Plan. As a result, bonuses were earned at 140% based on the adjusted EBITDA portion of our corporate performance, which accounts for 30% of the payout under the 2021 Executive Cash Incentive Plan. 70% of the 2021 long-term equity incentive awards to our current named executive officers were performance-based with rigorous performance goals and Communications since April 2016. From May 2015targets. Our one-year and three-year absolute TSR are 69% and 167%, respectively. Based on the foregoing, we believe our increase in NEO compensation is in line with our improved financial and stock performance. TABLE OF CONTENTS Compensation Practices We are committed to March 2016, Mr. Becker was Head of Worldwide Public Relations for Micron Technology, a memory chip maker. From February 2014 to May 2015, Mr. Becker was Vice President of Marketing Communications at Armor Defense, a secure managed cloud provider. From March 2006 to February 2014, Mr. Beckerserved in a variety of positions, including asDirector of Public Relations at Cisco Systems, Inc., a designer and manufacturer of computer networking devices. Mr. Becker has an M.S. in Mass Communications from San Jose State University, and a B.A. in English from the University of California, Davis.EXECUTIVE COMPENSATION
Processes and Procedures for Compensation Decisions
Our compensation committee is responsible for thesound executive compensation programspolicies and practices, as highlighted in the following table.
Prohibition of hedging, pledging, and short sales | | | We prohibit short sales, transactions in derivatives, hedging, and pledging of our securities by our named executive officers. | Double-trigger and retention-oriented change in control provisions | | | We have double-trigger change in control provisions in place with our named executive officers that encourage retention. | At-will employment | | | We employ our named executive officers at will. | No retirement vesting | | | We do not include retirement vesting provisions in equity awards. | No pension or other special benefits | | | We do not provide pensions or supplemental executive retirement, health, or insurance benefits. | No change in control payments | | | We do not offer change of control payments or gross-up payments for related excise taxes. | No perquisites | | | We generally do not provide any perquisites to our named executive officers. | No repricing | | | We do not allow repricing of stock options without shareholder approval. | Annual compensation risk assessment | | | Our compensation committee conducts an annual risk assessment of our compensation program. | Independent compensation consultant | | | When needed, our compensation committee has directly retained an independent compensation consultant that performs no services for us other than services for our compensation committee. |
Listening to Our Shareholders In 2021, our executive officers and reports to our board of directors on its discussions, decisions and other actions. Typically, our Chief Executive Officer makes recommendationssay-on-pay proposal passed by 81%. As a result, we made no changes to our compensation committee, often attends committee meetings and is involved in the determinationphilosophy or programs. We compensate for achievement of compensation for the respective executive officers that report to him, except that our Chief Executive Officer does not make recommendations as to his own compensation. Our Chief Executive Officer makes recommendations to our compensation committee regarding short-short-term and long-term compensation for all executive officers (other than himself) based on our results, an individual executive officer’s contribution toward these resultsfinancial and performance toward individual goal achievement.operating goals and have reasonable base salaries, limited perquisites, and no pensions or gross-up payments. Our compensation committee then reviewsprogram is designed to attract and retain the recommendationsbest available personnel for positions of substantial responsibility, provide incentives for such persons to perform to the best of their abilities, and other data and makes decisions as to total compensation for each executive officer other thanpromote the Chief Executive Officer, as well as each individual compensation component. Our compensation committee makes recommendations to our board of directors regarding compensation for our Chief Executive Officer. The independent memberssuccess of our board of directors make the final decisions regarding executive compensation for our Chief Executive Officer.Our compensation committee is authorized to retain the services of one or more executive compensation advisors, as it sees fit, in connection with the establishment of our compensation programs and related policies. In 2015, Radford, a national compensation consultant, was retained by our compensation committee to provide information, recommendations and other advice relating to executive compensation on an ongoing basis. Radford was engaged to assist our compensation committee in developing an appropriate group of peer companies to help us determine the appropriate level of overall compensation for our executive officers, as well as assess each separate element of compensation, with a goal of ensuring that the compensation we offer to our executive officers is competitive and fair.
Fiscal 2015 Summary Compensation Table
business. The following table provides information regardingidentifies the totalmain elements of our executive compensation program and the rationale for services rendered in all capacities that was earned byeach: Base Salary | | | To provide compensation to our named executive officers for services based on their experience and past performance | | | | | Non-Equity Incentive Plan Compensation | | | To motivate and reward our named executive officers for focusing on individual and company objectives that drive increased stockholder value | | | | | Equity Compensation | | | To align our named executive officers’ interests with the long-term interests of our stockholders and to promote the retention of our named executive officers |
TABLE OF CONTENTS The following sections describe each individual who served ascomponent of our principal executive officer at any time in 2015,compensation program, provide the rationale for each component, and explain how the compensation amounts and awards were determined for 2021. Base Salary Base salary is the primary fixed component of our two other most highly compensatednamed executive officers who were serving as executive officers as of December 31, 2015. These individuals wereofficers’ compensation. We use base salary to compensate our named executive officers (each,for services rendered during the fiscal year and to ensure that we remain competitive in attracting and retaining executive talent. We typically review and consider adjustments to our named executive officers’ base salaries on an “NEO”annual basis, and together, the “NEOs”) for 2015.| | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary
($) | | | Bonus
($) | | Stock
Awards
($)(1) | | Option
Awards
($)(1) | | Non-Equity
Incentive Plan Compensation
($) | | Non-Qualified
DeferredCompensation
Earnings ($) | | All Other Compensation
($) | | Total ($) | | Lee Chen | | 2015 | | — | | | — | | — | | — | | — | | — | | — | | — | | Chief Executive Officer | | 2014 | | — | | | — | | 205,600 | | — | | — | | — | | 80,185(2) | | 285,785 | | | | 2013 | | — | | | — | | — | | — | | — | | — | | 6 | | 6 | | Sanjay Kapoor(3) | | 2015 | | 196,806 | | | — | | 432,250 | | — | | 65,442 | | — | | 3,141(4) | | 697,639 | | Vice President of | | | | | | | | | | | | | | | | | | | | | Global Marketing | | | | | | | | | | | | | | | | | | | | | Ray Smets(5) | | 2015 | | 585,791 | (6) | | — | | — | | — | | — | | — | | 3,811(7) | | 589,602 | | Vice President of | | 2014 | | 285,000 | | | — | | 85,666 | | 144,528 | | 230,911 | | — | | 1,311(8) | | 747,416 | | Worldwide Sales | | | | | | | | | | | | | | | | | | | |
| (1) | The amounts reported in the Stock Awards and the Option Awards columns represent the grant date fair value of the stock award and the stock option award as computed in accordance with FASB ASC Topic 718. As required by the rules of the SEC, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Note that the amount reported in this column does not correspond to the actual economic value that may be received by the NEO from the award. The assumptions that we used to calculate these amounts are discussed in Note 7 to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed with the SEC on March 1, 2016. |
| (2) | The amount reported represents a Hart-Scott-Rodino filing fee paid on behalf of the executive ($45,000) and associated tax reimbursement ($35,185). |
| (3) | Mr. Kapoor became a named executive officer in 2015. Mr. Kapoor’s employment with the Company terminated in March 2016. |
| (4) | This amount represents group term life insurance premiums paid on behalf of the executive ($641) and 401(k) matching contribution ($2,500). |
| (5) | Mr. Smets became a named executive officer in 2014. |
| (6) | Includes earned commission of $294,408. |
| (7) | This amount represents group term life insurance premiums paid on behalf of the executive ($1,311) and 401(k) matching contribution ($2,500). |
| (8) | This amount represents group term life insurance premiums paid on behalf of the executive. |
Non-Equity Incentive Plan Compensation For our 2015 fiscal year, Mr. Kapoor was eligible to receive a non-equity incentive plan bonus based on corporate performance goals approved by the Compensation Committee. The bonus opportunity for Mr. Kapoor was based on corporate performance goals related to our 2015 revenue. In early 2016, our Chief Executive Officer evaluated the progress made towards achieving the corporate performance goals and made a recommendation to our Compensation Committee regarding his bonus amount based on this evaluation. The bonus as recommended was approved in early 2016. For the 2015 fiscal year, Mr. Kapoor earned a cash bonus of $65,442.
Executive Officer Employment Agreements
Offer Letters
We have entered into offer letters with each of our NEOs.
Lee Chen Offer Letter
Under Mr. Chen’s offer letter dated July 30, 2004, we hired Mr. Chen as our CEO. The letter provided for no base salary for Mr. Chen and an initial equity award grant to be determined. Mr. Chen’s current annual base salary is $0.
Sanjay Kapoor Offer Letter
Under Mr. Kapoor’s offer letter dated March 15, 2015, we hired Mr. Kapoor as our Vice President of Global Marketing. The letter provided for Mr. Kapoor’s initial base salary and bonus opportunity, plus an initial restricted stock unit grant covering 95,000 shares which was to vest over four years subject to his continued service with us through each applicable vesting date. His award was eligible for accelerated vesting under his Change in Control and Severance Agreement, described below. Under the terms of his offer, his base salary was $260,000.
Ray Smets Offer Letter
Under Mr. Smets’ offer letter dated July 18, 2013, we hired Mr. Smets as our Vice President, Global Sales. The letter provided for Mr. Smets’ initial base salary and bonus opportunity, plus an initial option grant covering 200,000 shares which vest over four years subject to his continued service with us through each applicable vesting date. His award is eligible for accelerated vesting under his Change in Control and Severance Agreement, described below. Mr. Smets’ current annual base salary is $305,000 and he earned a commission of $294,408 for 2015.
Change in Control and Severance Agreements
We entered into a Change in Control and Severance Agreement (each, an “Agreement” and together, the “Agreements”) with each of our NEOs.
Each NEO’s Agreement provides that if, after the executive completes at least one year of employment with us and (a) we terminate the executive’s employment with us for any reason other than for cause and not due to the executive’s death or disability, or (b) the executive resigns for Good Reason (as defined in the Agreement), and in each case the termination does not occur during the Change in Control Period (as defined in the Agreement), the executive will receive the following severance benefits: (i) continuing payments of salary severance for a period of 12 months (in the case of Mr. Chen) or nine months (in the case of the other NEOs), and (ii) continuing payments to reimburse the executive for COBRA continuation coverage for a period of up to 12 months (in the case of Mr. Chen) or nine months (in the case of the other NEOs).
Each Agreement further provides that if we terminate the executive’s employment with us for any reason other than cause and not due to the executive’s death or disability, or the executive resigns for Good Reason, and in each case the termination occurs during the Change in Control Period, the executive will receive the following severance benefits: (i) a lump sum cash payment equal to 150% (in the case of Mr. Chen) or 100% (in the case of the other NEOs) of the greater of the executive’s salary in effect as of immediately prior to his employment termination or the Change in Control, (ii) a lump sum cash payment equal to 150% (in the case of Mr. Chen) or 100% (in the case of the other NEOs) of the greater of the executive’s target bonus in effect for the year in which the executive’s employment terminates or the Change in Control occurs, (iii) continuing payments to reimburse the executive for COBRA continuation coverage for a period of up to 18 months (in the case of Mr. Chen) or 12 months (in the case of the other NEOs), and (iv) 100% accelerated vesting of the executive’s outstanding equity awards, with any applicable performance goals considered achieved at the target levels.
In order to receive the severance benefits under the Agreement, the executive must sign and not revoke a release of claims in our favor and comply with confidentiality obligations.
As defined in the Agreements, “Cause” generally means the executive’s (i) repeated failure to perform his duties and responsibilities to the Company or abide in all material respects with the Company’s policies after receiving written notice, (ii) engagement in illegal conduct injurious to the Company in any material respect, (iii) material violation or material breach of his confidential information and invention agreement with the Company that is not cured within 20 days of written notice or is incapable of cure, or (iv) conviction or plea of no contest to a felony (other than motor vehicle offenses that do not materially impair the executive’s performance of his employment duties) or any crime involving fraud, embezzlement or other offense involving moral turpitude, and/or committing any act of embezzlement, dishonesty or fraud against or the misappropriation of material property belonging to the Company.
As defined in the Agreements, “Change in Control Period” generally means, subject to the occurrence of a Change in Control, the period beginning on the date that an agreement to enter into such Change in Control is signed and executed, and ending on the date 12 months following such Change in Control. As will be defined in the Agreements, “Change in Control” generally means the occurrence of any of the following events: (i) a change in our ownership that occurs on the date that any one person or persons acting as a group (“Person”), acquires ownership of our stock that, together with the stock already held by such Person, constitutes more than 50% of the total voting power of our stock; or (ii) a change in our effective control that occurs on the date that a majority of members of our board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of our board of directors prior to the date of the appointment or election; or (iii) a change in the ownership of a substantial portion of our assets that occurs on the date that any Person acquires (or has acquired during a 12-month period) assets from us with a total gross fair market value equal to or more than 50% of the total gross fair market value of all of our assets immediately prior to such acquisition(s), excluding any transfer to an entity that is controlled by our stockholders immediately after the transfer and any transfer of assets by us to an entity, 50% or more of the total value or voting power
of which is owned, directly or indirectly, by us. For purposes of this definition, gross fair market value means the value of our assets, or the value of our assets being disposed of, determined without regard to any liabilities associated with such assets.
As defined in the Agreements, “Good Reason” generally means the executive’s voluntary termination of employment with us within 90 days following the expiration of our cure period following one or more of the following occurring without the executive’s prior consent: (i) a material reduction in the executive’s gross base salary other than in connection with a similar reduction for all similarly-situated employees; (ii) a material reduction in the executive’s authority, duties, or responsibilities; or (iii) a relocation of the executive’s principal place of work to a location that is more than 50 miles from his current principal work site for us. The executive may not resign for Good Reason without first providing us with notice within 60 days of the initial existence of the condition that he believes constitutes Good Reason identifying the grounds for Good Reason and a reasonable cure period of at least 30 days following the date of such notice, during which such grounds must not have been cured.
Executive Incentive Compensation Plan
In March 2014, our board of directors adopted an Executive Incentive Compensation Plan, referred to as our Bonus Plan. Our Bonus Plan allows our compensation committee to provide cash incentive awards to selected employees, including our NEOs,named executive officers, based upon performance goals established by our compensation committee. Under the Bonus Plan, our compensation committee determines the performance goals applicable to awards, which goals may include, without limitation: attainment of research and development milestones, sales bookings, business divestitures and acquisitions, cash flow, cash position, earnings (which may include any calculation of earnings, including but not limited to earnings before interest and taxes, earnings before taxes, earnings before interest, taxes, depreciation and amortization and net earnings), earnings per share, net income, net profit, net sales, operating cash flow, operating expenses, operating income, operating margin, overhead or other expense reduction, product defect measures, product release timelines, productivity, profit, return on assets, return on capital, return on equity, return on investment, return on sales, revenue, revenue growth, sales results, sales growth, stock price, time to market, total stockholder return, working capital, and individual objectives such as peer reviews or other subjective or objective criteria. Performance goals that include the Company’s financial results may be determined in accordance with U.S. generally accepted accounting principles, or GAAP, or such financial results may consist of non-GAAP financial measures and any actual results may be adjusted by our compensation committee for one-time items or unbudgeted or unexpected items when determining whether the performance goals have been met. The goals may be on the basis of any factors our compensation committee determines relevant, and may be adjusted on an individual, divisional, business unit or company-wide basis. Any criteria used may be measured on such basis as our compensation committee determines. The performance goals may differ from participant to participant and from award to award. Our compensation committee may, in its sole discretion and at any time, increase, reduce or eliminate a participant’s actual award, and/or increase, reduce or eliminate the amount allocated to the bonus pool for a particular performance period. The actual award may be below, at or above a participant’s target award, in our compensation committee’s discretion. Our compensation committee may determine the amount of any reduction on the basis of such factors as it deems relevant, and it is not required to establish any allocation or weighting with respect to the factors it considers. Actual awards are paid in cash (or its equivalent) in a single lump sum only after they are earned and approved by our compensation committee. Unless otherwise determined by our compensation committee, to earn an actual award, a participant must be employed by the Company (or an affiliate of the Company) through the date the bonus is paid. Payment of bonuses occurs as soon as administratively practicable after they are earned, but no later than the dates set forth in the Bonus Plan. Our board of directors has the authority to amend, alter, suspend or terminate the Bonus Plan provided such action does not alter or impair the existing rights of any participant with respect to any earned bonus.
For 2021, Messrs. Trivedi, Becker, Bruening and Cochran were eligible to receive annual cash bonuses based 100% on corporate performance goals under our 2021 Executive Cash Incentive Plan (the “Cash Incentive Plan”), as approved by our compensation committee. The Cash Incentive Plan was established under and subject to the terms
TABLE OF CONTENTS of our Executive Incentive Compensation Plan. The corporate performance goal under the Cash Incentive Plan was based on achievement of two financial measures, 1) revenue with a 70% weighting and 2) adjusted net earnings before interest, taxes, depreciation and amortization (“net EBITDA”) with a 30% weighting, which is a non-GAAP measure[1]. Generally, the portion of the corporate performance based on the revenue would result in funding of bonuses at 60% upon the achievement of a minimum threshold level of revenue of $234 million, 100% upon the achievement of a target level of revenue of $239 million and a maximum capped at140% upon the achievement of $249 million, as specified in the Cash Incentive Plan. The portion of the corporate performance goal based on adjusted net EBITDA would result in funding of bonuses at 60% upon the achievement of a threshold level of adjusted net EBITDA of $52.6 million, 100% upon the achievement of a target level of adjusted net EBITDA of $54.6 million and a maximum of 140% upon the achievement of net EBITDA of $59.6 million. Mr. Trivedi’s and Mr. Bruening’s target bonus opportunity for our 2021 fiscal year was equal to 100% of their 2021 base salary and Mr. Becker’s and Mr. Cochran’s target bonus opportunity for our 2021 fiscal year was equal to 50% of their 2021 base salary, in each case subject to proration for the amount of time they served in their roles. Our 2021 financial goals are based on our operating plan approved by our board of directors, are in line with analysts estimates, and exceeded our 2020 financial results. In early 2022, our compensation committee reviewed our achievement against our corporate performance goals. Based on 2021 revenue of $250 million (a $24.5 million, or 10.9 percent, improvement year-over-year) and adjusted net EBITDA of $62.4 million (a $16.8 million, or 36.9 percent, improvement year-over-year), the compensation committee determined a bonus payout at 140% of target for each performance goal. Accordingly, the bonuses were earned pursuant to the corporate performance goals under the Cash Incentive Plan were equal to: $840,000 for Mr. Trivedi, $210,000 for Mr. Becker, $448,000 for Mr. Bruening, and $211,220 for Mr. Cochran. Equity Compensation In February of 2021,our compensation committee approved the grant to certain of our named executive officers of time-based restricted stock unit awards (“RSUs”) covering the following number of shares of our common stock and the grant of performance-based restricted stock unit awards (“PSUs”) covering the following target number of shares of our common stock: Dhrupad Trivedi | | | 50,898 | | | 118,762 | Brian Becker | | | 11,976 | | | 27,944 | Matthew Bruening | | | 17,964 | | | 41,916 | Robert Cochran | | | 14,970 | | | 34,930 |
The PSUs comprised 70% of the annual equity awards to each of the above-named executive officers and include both performance-based vesting and service-based vesting. The PSUs will become eligible to vest upon the achievement of certain stock price targets as set forth below (the “Performance Milestones”), as well as continued service to the Company, with vesting of any portion for which the Performance Milestone is achieved (an “Eligible Portion”) to be scheduled to occur in three equal installments, with the first one-third (1/3rd) of the Eligible Portion to vest within thirty (30) days of achievement of the Performance Milestone and one-third (1/3) of the Eligible Portion to vest on each of the first and second anniversaries of achievement of the Performance Milestone, subject in each case to continued service on each such date. $10.25 Performance Milestone: One-third (1/3rd) of the shares of the Company’s common stock subject to the PSU Award will become an Eligible Portion upon the achievement of $10.25 or greater 100-Day Stock Price occurring in the period beginning on the date of grant of the PSU Award and ending on the four (4) year anniversary of such date (the “Performance Period”). $11.00 Performance Milestone: One-third (1/3rd) of the shares of the Company’s common stock subject to the PSU Award will become an Eligible Portion upon the achievement of $11.00 or greater with respect to the 100-Day Stock Price during the Performance Period. TABLE OF CONTENTS $11.75 Performance Milestone: One-third (1/3rd) of the shares of the Company’s common stock subject to the PSU Award will become an Eligible Portion upon the achievement of $11.75 or greater with respect to the 100-Day Stock Price during the Performance Period. The RSUs comprised the remaining 30% of the annual equity awards to each of the above-named executive officers and vest in three equal, annual installments with a first vest date of February 2, 2022, subject in each case to the named executive officer’s continued service through each vesting date. We maintain a tax-qualified 401(k) retirement plan for all employees who satisfy certain eligibility requirements under the plan. The plan provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis. Participants of our 401(k) plan are able to defer a percentage of their eligible compensation, subject to applicable annual Internal Revenue Code and plan limits. All participants’ interests in their deferrals are 100% vested when contributed. Beginning in January 2015, weWe also provide matching contributions under our 401(k) plan that generally vest over a 4-year period based on the participant’s employment. TheIn February 2021, the Company matchesreinstated its previously suspended match of 50% of the first 6% of eligible compensation contributed, for up to $2,500 per year. Pre-tax contributions are allocated to the participant’s individual account and are then invested in selected investment alternatives according to the participant’s directions. The 401(k) plan is intended to qualify under Internal Revenue Code Section 401(a) with the plan’s related trust intended to be tax exempt under Internal Revenue Code Section 501(a). As a tax-qualified retirement plan, the 401(k) plan allows contributions, and earnings on those contributions, not to be taxable to the employees until distributed from the 401(k) plan. Perquisites and Other Personal Benefits We generally do not provide perquisites or other personal benefits to our named executive officers. Hedging and Pledging Pursuant to our Insider Trading Policy, all employees (including executives) are prohibited from engaging in transactions in publicly traded options and other derivative securities with respect to our common stock, including any hedging or similar transaction designed to decrease the risks associated with holding company securities. Our named executive officers are also prohibited from pledging company securities as collateral or holding company securities in a margin account. Compensation Program Risk Assessment Our compensation committee is required to assess whether our compensation policies and practices and, in particular, our performance-based compensation practices, encourage executives or other employees to take unnecessary or unreasonable risks that could threaten the long-term value of the Company or that are reasonably likely to have a material adverse effect on the Company. Our compensation committee does not believe that our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. Management believes that our practices adequately manage this risk because: our executive compensation is benchmarked by our independent compensation consultant to our peers; annual cash bonuses are capped at 140% of target, which would represent a year-over-year improvement of approximately 16% on revenue and 27% on EBITDA; our Executive Incentive Compensation Plan preserves discretion to permit our compensation committee to elect not to pay otherwise achieved bonus amounts for any reason; and a meaningful component of compensation is equity grants with extended vesting periods designed to ensure that our executives value and focus on our long term performance. Our compensation committee is responsible for the executive compensation programs for our executive officers. In order to decide how to compensate our executive officers, our compensation committee considers the recommendations of our Chief Executive Officer regarding compensation for the respective executive officers that report to him based on our results and each executive officer’s contribution toward these results and overall performance. Our Chief Executive Officer does not make recommendations as to his own compensation. TABLE OF CONTENTS Our compensation committee also decides how to compensate our executive officers, including the Chief Executive Officer, by considering competitive market data. While our compensation committee is authorized to retain the services of executive compensation advisors to establish compensation programs and related policies, it did not retain an advisor during 2021. During 2021, we used information from Radford-AON to help us determine the appropriate level of overall compensation for our executive officers Tax and Accounting Considerations In determining executive compensation, the compensation committee also considers, among other factors, the possible tax consequences to us and to our executives. To maintain maximum flexibility in designing compensation programs, the compensation committee, while considering company tax deductibility as one of its factors in determining compensation, will not limit compensation to those levels or types of compensation that are intended to be deductible. Notes The discussion of performance targets in this Compensation Discussion and Analysis section is exclusively in the context of executive compensation, and you should not use these targets for any other purpose or regard them as an indication of management’s expectations of future results. Compensation Committee Report The compensation committee has reviewed and discussed with management the section titled “Compensation Discussion and Analysis” above. Based on such review and discussion, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement. Respectfully submitted by the members of the compensation committee of the board of directors: Peter Y. Chung (Chair)
Tor R. Braham
Eric Singer TABLE OF CONTENTS Fiscal 2021 Summary Compensation Table The following table provides information regarding the compensation paid to, or earned by, our named executive officers (each, an “NEO” and together, the “NEOs”) for each of our fiscal years ended December 31, 2021, 2020 and 2019. Dhrupad Trivedi(3)
Chief Executive Officer
& President
| | | 2021 | | | 591,667 | | | — | | | 1,699,993 | | | 840,000 | | | 3,590 | | | 3,135,250 | | | 2020 | | | 500,000 | | | 75,500 | | | — | | | 424,500 | | | 3,890 | | | 1,003,890 | | | 2019 | | | 41,667 | | | — | | | 3,215,000 | | | — | | | 109 | | | 3,256,776 | Brian Becker(4)
Chief Financial Officer
| | | 2021 | | | 297,917 | | | — | | | 399,998 | | | 210,000 | | | 3,963 | | | 911,878 | | | 2020 | | | 263,750 | | | — | | | 122,955 | | | 93,390 | | | 2,861 | | | 482,956 | Matthew Bruening(5)
Executive Vice President
Worldwide Sales & Marketing
| | | 2021 | | | 320,000 | | | 50,000 | | | 599,998 | | | 448,000 | | | 4,951 | | | 1,422,949 | | | 2020 | | | 206,515 | | | 25,601 | | | 925,000 | | | 174,399 | | | 1,736 | | | 1,333,251 | Robert Cochran(6)
EVP, Legal & Corporate
Collaboration & Secretary
| | | 2021 | | | 301,744 | | | — | | | 499,998 | | | 211,220 | | | 18,139 | | | 1,031,101 | | | 2020 | | | 301,744 | | | — | | | 599,991 | | | 128,090 | | | 6,342 | | | 1,036,167 | | | 2019 | | | 301,744 | | | 60,400 | | | 702,500 | | | 30,174 | | | 6,262 | | | 1,101,080 |
(1)
| The amounts reported in the Stock Awards column represent the grant date fair value of the stock award as computed in accordance with FASB ASC Topic 718. As required by the rules of the SEC, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Note that the amount reported in this column does not correspond to the actual economic value that may be received by the NEO from the award. The assumptions that we used to calculate these amounts are discussed in Note [7] to our audited financial statements included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2021. There were no stock options granted to our NEOs in fiscal year 2021. |
(2)
| The amounts reported in this column represent life insurance premiums paid on behalf of the executive, 401(k) matching contributions and non-cash gifts. |
(3)
| Mr. Trivedi was appointed to be our President and Chief Executive Officer in December 2019. The amount reported as Bonus represents a discretionary amount awarded by the compensation committee for Mr. Trivedi’s overall positive contributions to the company’s 2020 success in terms of revenue and adjusted EBITDA. |
(4)
| Mr. Becker was appointed as our Interim Chief Financial Officer in September 2020 and as our Chief Financial Officer in February 2021. |
(5)
| Mr. Bruening was appointed as our EVP Worldwide Sales in April 2020 and as our EVP, Worldwide Sales and Marketing in January 2021. The amount reported as Bonus represents a discretionary amount awarded by the compensation committee for Mr. Bruening’s overall positive contributions to the company’s 2020 and 2021 success in terms of revenue and adjusted EBITDA. |
(6)
| The amount reported as Bonus represents a discretionary amount awarded by the compensation committee for Mr. Cochran's overall positive contributions to the company’s 2019 success in terms of revenue and adjusted EBITDA. |
TABLE OF CONTENTS Grants of Plan-Based Awards in 2021 The following table shows information regarding cash incentive and equity awards granted to our NEOs during our fiscal year ended December 31, 2021. Dhrupad Trivedi | | | 2/16/2021 | | | Bonus Plan | | | 360,000 | | | 600,000 | | | 840,000 | | | — | | | — | | | — | | | — | | | — | | | | 2/2/2021 | | | 2014 EIP | | | — | | | — | | | — | | | 39,586 | | | 118,762 | | | 118,762 | | | — | | | 1,189,995 | | | | 2/2/2021 | | | 2014 EIP | | | — | | | — | | | — | | | — | | | — | | | — | | | 50,898 | | | 509,998 | Brian Becker | | | 2/16/2021 | | | Bonus Plan | | | 90,000 | | | 150,000 | | | 210,000 | | | — | | | — | | | — | | | — | | | — | | | | 2/2/2021 | | | 2014 EIP | | | — | | | — | | | — | | | 9,314 | | | 27,944 | | | 27,944 | | | — | | | 279,999 | | | | 2/2/2021 | | | 2014 EIP | | | — | | | — | | | — | | | — | | | — | | | — | | | 11,976 | | | 120,000 | Matthew Bruening | | | 2/16/2021 | | | Bonus Plan | | | 192,000 | | | 320,000 | | | 448,000 | | | — | | | — | | | — | | | — | | | — | | | | 2/2/2021 | | | 2014 EIP | | | — | | | — | | | — | | | 13,971 | | | 41,916 | | | 41,916 | | | — | | | 419,998 | | | | 2/2/2021 | | | 2014 EIP | | | — | | | — | | | — | | | — | | | — | | | — | | | 17,964 | | | 179,999 | Robert Cochran | | | 2/16/2021 | | | Bonus Plan | | | 90,523 | | | 150,872 | | | 211,220 | | | — | | | — | | | — | | | — | | | — | | | | 2/2/2021 | | | 2014 EIP | | | — | | | — | | | — | | | 11,643 | | | 34,930 | | | 34,930 | | | — | | | 349,999 | | | | 2/2/2021 | | | 2014 EIP | | | — | | | — | | | — | | | — | | | — | | | — | | | 14,970 | | | 149,999 |
(1)
| Awards granted under the “Bonus Plan” represent cash incentives granted under our 2021 Executive Cash Incentive Plan. Awards granted under the “2014 Plan” represent awards granted under our 2014 Equity Incentive Plan. |
(2)
| Our non-equity incentive plan awards, and how they were determined, are based on corporate performance; 70% revenue and 30% adjusted EBITDA, as discussed above in the “Compensation Discussion and Analysis.” The amounts listed in this table represent the threshold, target and maximum amounts that would have been earned under the 2021 Executive Cash Incentive Plan assuming each NEO met the minimum thresholds, the target and the maximum of both revenue and adjusted EBITDA portions of the bonus that was awarded to the individual for fiscal year 2021. No amount of the corporate performance portion is earned for failure to achieve both minimum threshold levels for revenue and adjusted EBITDA. |
(3)
| The amounts shown represent shares potentially issuable pursuant to performance-based restricted stock units (or PSUs) granted under our 2014 Equity Incentive Plan, as discussed above in the “Compensation Discussion and Analysis”. These awards have both performance-based vesting and service-based vesting. The PSUs will become eligible to vest upon the achievement of certain stock price targets (the “Performance Milestones”), as well as continued service to the Company. The service-based vesting of any portion of the PSUs for which the Performance Milestone is achieved (an “Eligible Portion”) is scheduled to occur in three equal installments, with the first one-third (1/3rd) of the Eligible Portion to vest within thirty (30) days of achievement of the respective Performance Milestone and an additional one-third (1/3) to vest on each of the first and second anniversaries of achievement of the respective Performance Milestone, subject in each case to the NEO’s continued service on each such date. |
(4)
| These restricted stock units (RSUs) are scheduled to vest in three equal annual installments on the first, second and third year anniversaries of February 2, 2021, subject in each case to the NEO's continued service to the Company through each applicable vesting date. |
(5)
| Amounts reported in this column represent the grant date fair value of RSU and PSU awards, calculated in accordance with FASB ASC Topic 718. |
TABLE OF CONTENTS Outstanding Equity Awards at 20152021 Year-End The following table sets forth information regarding outstanding stock options and stock awards held by our named executive officersNEOs as of December 31, 2015.| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Name | | | Grant
Date | | | | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(3) | | | | Option
Exercise
Price
($) | | | | Option
Expiration
Date | | | Number of
Shares or
Units of Stock
That Have
Not
Vested (#) | | | Market Value
of Shares or
Units of Stock
That Have Not
Vested ($) | | | Lee Chen | | | 12/22/2014 | (1) | | | | | | | | | | | | | | | | | | 240,000 | (7) | | 1,574,400 | | | Ray Smets | | | 7/23/2013 | (2)(3)(4) | | | 80,553 | | | | 52,779 | | | | 6.19 | | | | 7/23/2023 | | | | | | | | | | | | 10/24/2013 | (2)(5)(4) | | | 21,665 | | | | 18,334 | | | | 8.51 | | | | 10/24/2023 | | | | | | | | | | | | 12/22/2014 | (1)(6)(4) | | | 24,000 | | | | 72,000 | | | | 4.40 | | | | 12/22/2024 | | | | | | | | | | | | 12/22/2014 | (1) | | | | | | | | | | | | | | | | | | 100,000 | (7) | | 656,000 | | | Sanjay Kapoor | | | 4/30/15 | (1) | | | | | | | | | | | | | | | | | | 95,000 | (4)(8) | | 623,200 | |
Dhrupad Trivedi | | | 12/12/2019(1)(2) | | | — | | | — | | | — | | | — | | | 62,500 | | | 1,036,250 | | | — | | | — | | | 12/12/2019(1)(3) | | | — | | | — | | | — | | | — | | | 375,000 | | | 6,217,500 | | | — | | | — | | | 2/2/2021(1)(4) | | | — | | | — | | | — | | | — | | | 50,898 | | | 843,889 | | | — | | | — | | | 2/2/2021(1)(5) | | | — | | | — | | | — | | | — | | | 79,176 | | | 1,312,738 | | | — | | | — | Brian Becker | | | 10/22/2018(1)(6) | | | — | | | — | | | — | | | — | | | 10,125 | | | 167,873 | | | — | | | — | | | 7/23/2019(1)(7) | | | — | | | — | | | — | | | — | | | 7,500 | | | 124,350 | | | — | | | — | | | 7/20/2020(1)(8) | | | — | | | — | | | — | | | — | | | 2,437 | | | 40,405 | | | — | | | — | | | 7/20/2020(1)(9) | | | — | | | — | | | — | | | — | | | 1,625 | | | 26,943 | | | — | | | — | | | 10/19/2020(1)(5) | | | — | | | — | | | — | | | — | | | 6,667 | | | 110,539 | | | — | | | — | | | 2/2/2021(1)(5)(10) | | | — | | | — | | | — | | | — | | | 11,976 | | | 198,562 | | | — | | | — | | | 2/2/2021(1)(6)(10) | | | — | | | — | | | — | | | — | | | 18,630 | | | 308,885 | | | — | | | — | Matthew Bruening | | | 4/29/2020(1)(11) | | | — | | | — | | | — | | | — | | | 18,750 | | | 310,875 | | | — | | | — | | | 4/29/2020(1)(3) | | | — | | | — | | | — | | | — | | | 100,000 | | | 1,658,000 | | | — | | | — | | | 2/2/2021(1)(4) | | | — | | | — | | | — | | | — | | | 17,964 | | | 297,843 | | | — | | | — | | | 2/2/2021(1)(5) | | | — | | | — | | | — | | | — | | | 27,945 | | | 463,328 | | | — | | | — | Robert Cochran | | | 10/24/2013(12)(13) | | | 106,665 | | | — | | | $8.51 | | | 10/24/2023 | | | — | | | — | | | — | | | — | | | 12/22/2014(1)(13) | | | 80,000 | | | — | | | $4.40 | | | 12/22/2024 | | | — | | | — | | | — | | | — | | | 2/12/2016(1)(13) | | | 85,000 | | | — | | | $5.52 | | | 2/12/2026 | | | — | | | — | | | — | | | — | | | 10/22/2018(1)(14) | | | — | | | — | | | — | | | — | | | 9,719 | | | 161,141 | | | — | | | — | | | 4/22/2019(1)(15) | | | — | | | — | | | — | | | — | | | 15,032 | | | 249,231 | | | — | | | — | | | 7/2/2020(1)(16)(17) | | | — | | | — | | | — | | | — | | | 19,736 | | | 327,223 | | | — | | | — | | | 7/2/2020(1)(5)(17) | | | — | | | — | | | — | | | — | | | 40,936 | | | 678,719 | | | — | | | — | | | 2/2/2021(1)(4) | | | — | | | — | | | — | | | — | | | 14,970 | | | 248,203 | | | — | | | — | | | 2/2/2021(1)(5) | | | — | | | — | | | — | | | — | | | 23,287 | | | 386,098 | | | — | | | — |
| (1)
| Each of the outstanding stock option awards, or unitsRSU awards and PSU awards was granted under our 2014 StockEquity Incentive Plan. |
(2)
| (2) | Each of the outstanding stock option awards was granted under our 2008 Stock Plan. |
| (3) | One-fourthOne quarter (1/4)4th) of the shares of our common stock subject to the stock optionRSU award vested on July 22, 2014, and the balance vestsis scheduled to vest in 36four successive, equal, monthlyyearly installments thereafter,commencing on the one-year anniversary of December 5, 2019, in each case subject to continuedNEO remaining a service with usprovider through each applicable vesting date. |
(3)
| All three performance milestones of this PSU have been met, therefore, one third (1/3rd) of the shares subject to the respective milestone is scheduled to vest in equal, annual installments over a three-year period following January 28, 2021, March 12, 2021 and August 5, 2021, as applicable, subject in each case subject to NEO remaining a service provider through the applicable vesting date. |
(4)
| One third (1/3rd) of the shares of our common stock subject to the RSU award is scheduled to vest in three successive, equal, yearly installments commencing on the one-year anniversary of February 2, 2021, subject in each case subject to NEO remaining a service provider through the applicable vesting date. |
(5)
| All three performance milestones of this PSU have been met, therefore, the first one-third (1/3rd) of the shares subject to each performance milestone vested within 30 days of the date of achievement of the corresponding milestone and an additional one-third (1/3rd) of the shares subject to each performance milestone on each of the first and second annual anniversaries of July 30, 2021, August 17, 2021 and September 2, 2021, as applicable, subject in each case subject to NEO remaining a service provider through the applicable vesting date. |
(6)
| One quarter (1/4th) of the shares of our common stock subject to the RSU award is scheduled to vest in four successive, equal, yearly installments commencing on the one-year anniversary of January 5, 2018, subject in each case subject to NEO remaining a service provider through the applicable vesting date. |
(7)
| One quarter (1/4th) of the shares of our common stock subject to the RSU award is scheduled to vest in four successive, equal, yearly installments commencing on the one-year anniversary of August 5, 2019, subject in each case subject to NEO remaining a service provider through the applicable vesting date. |
TABLE OF CONTENTS (8)
| One quarter (1/4th) of the shares of our common stock subject to the RSU award is scheduled to vest in four successive, equal, yearly installments commencing on the one-year anniversary of August 5, 2020, subject in each case subject to NEO remaining a service provider through the applicable vesting date. |
(9)
| The performance milestone for this PSU has been met, therefore, fifty percent (50%) of the shares of our common stock subject to the PSU vested within 30 days of achievement of the milestone and one fourth (1/4th) of the shares subject to the PSU are scheduled to vest in two successive, equal, yearly installments commencing on the one-year anniversary of January 28, 2021, subject in each case subject to NEO remaining a service provider through the applicable vesting date. |
(10)
| In the event that we terminate the NEO’sMr. Becker’s employment without cause (not including due to death or the NEOdisability) or he resigns for good reason at any time during the period beginning on the date that we enter into an agreement resulting in our change in control and ending on the date 12 months after the change in control, the award will accelerate vesting in full as provided under the terms of each NEO’s Change in Control and Severance Agreement.full. |
(11)
| (5) | One-forty-eighthOne quarter (1/48)4th) of the shares of our common stock subject to the RSU award is scheduled to vest in four successive, equal, yearly installments commencing on the one-year anniversary of May 5, 2020, subject in each case subject to NEO remaining a service provider through the applicable vesting date. |
(12)
| This outstanding stock option award vests in 48 successive, equal, monthly installments (with the first installment having vested on November 24, 2013), subject to continued service with us through each applicable vesting.was granted under our 2008 Equity Incentive Plan, as amended. |
(13)
| (6)This stock option grant is fully vested. |
(14)
| One-forty-eighthOne quarter (1/48)4th) of the shares of our common stock subject to the stock optionRSU award vestsis scheduled to vest in 48four successive, equal, monthlyyearly installments (withcommencing on the first installment having vested on January 22, 2015),one-year anniversary of April 26, 2018, subject in each case subject to continuedNEO remaining a service with usprovider through eachthe applicable vesting date. |
(15)
| (7) | If the ATEN Stock Price is at least $10.00 on each of twenty (20) consecutive trading days that occurs during the Performance Period (4 years from the date of grant) (the “$10 Performance Goal”), then the $10 Stock Price PSUs will immediately vest asOne quarter (1/4th) of the date that the $10 Performance Goal is achieved,shares of our common stock subject to Participantthe RSU award is scheduled to vest in four successive, equal, yearly installments commencing on the one-year anniversary of May 5, 2019, subject in each case subject to NEO remaining a Service Providerservice provider through such vesting date. For the avoidance of doubt, if the $10 Performance Goal is achieved more than once during the Performance Period, Restricted Stock Units may vest only upon the first instance that the $10 Performance Goal is achieved, and thereafter, no additional Restricted Stock Units will vest. If the ATEN Stock Price is at least $15.00 on each of twenty (20) consecutive trading days that occurs during the Performance Period (the |
| | “$15 Performance Goal” and together with the $10 Performance Goal, the “Stock Price Goals”), the $15 Stock Price PSUs will vest immediately as of the date that the $15 Performance Goal is achieved, subject to Participant remaining a Service Provider through such vesting date. 1/3 of the total PSUs are $10 Stock Price PSU and the balance are $15 Stock Price PSUs. | | | | | (8) | One-fourth (1/4) of the RSUs awarded vested on March 30, 2015, and the balance vests in 3 successive, equal, annual installments thereafter, subject to continued service with us through each applicable vesting date. |
(16)
| One quarter (1/4th) of the shares of our common stock subject to the RSU award is scheduled to vest in four successive, equal, yearly installments commencing on the one-year anniversary of April 1, 2020, subject in each case subject to NEO remaining a service provider through the applicable vesting date. |
(17)
| The contractual vesting acceleration in the NEO’s Change in Control and Severance Agreement does not apply to this award. |
TABLE OF CONTENTS Option Exercises and Stock Vested in 2021 The following table sets forth the number of shares of common stock acquired during 2021 by our NEOs upon the exercise of stock options and the vesting of stock awards and the value realized upon such exercise or vesting. Dhrupad Trivedi | | | — | | | — | | | 70,836 | | | 1,026,441 | Brian Becker | | | — | | | — | | | 28,960 | | | 340,826 | Matthew Bruening | | | — | | | — | | | 20,221 | | | 251,001 | Robert Cochran | | | 173,333(3) | | | 2,074,389 | | | 67,567 | | | 715,208 |
(1)
| The value realized upon exercise was determined by multiplying (i) the number of shares exercised by (ii) the difference between the exercise price per share and the closing price per share on the NYSE of our common stock on the day of exercise. |
(2)
| The value realized upon vesting was determined by multiplying (i) the number of shares of our common stock acquired on vesting by (ii) the closing price per share on the NYSE of our common stock on the day of vesting. |
(3)
| The option was net exercised and the shares withheld for purposes of the exercise price were 83,937 shares. |
Pension Benefits & Nonqualified Deferred Compensation Committee Report We do not provide a pension plan for our employees, and none of our NEOs participated in a nonqualified deferred compensation plan during 2021. Executive Officer Employment Agreements We entered into employment offer letters with certain of our NEOs in connection with commencement of employment with us. Mr. Trivedi, Mr. Bruening and Mr. Cochran are eligible to receive certain severance payments and/or benefits in connection with their termination of employment under various circumstances, including following a change in control, pursuant to written change in control and severance arrangements described below. Change in Control and Severance Agreements We entered into a Change in Control and Severance Agreement (each, an “Agreement” and together, the “Agreements”) with each of Mr. Trivedi, Mr. Bruening and Mr. Cochran. Each Agreement provides that upon completion of at least one year of employment in an executive role, except in the case of Mr. Trivedi who did not have a one year threshold, if (a) we terminate the executive’s employment with us for any reason other than for cause and not due to the executive’s death or disability, or (b) the executive resigns for Good Reason (as defined in the Agreement), and in each case the termination does not occur during the Change in Control Period (as defined in the Agreement), the executive will receive the following severance benefits: (i) continuing payments of salary at a rate equal to executive’s base salary rate in effect immediately prior to the executive’s termination for a period of 12 months in the case of Mr. Trivedi or 9 months in the case of the other NEOs, and (ii) continuing payments to reimburse the executive for COBRA continuation coverage for a period of up to 12 months in the case of Mr. Trivedi or 9 months in the case of the other NEOs. Each agreement further provides that if we terminate the executive’s employment with us for any reason other than cause and not due to the executive’s death or disability, or the executive resigns for Good Reason, and in each case the termination occurs during the Change in Control Period, the executive will receive the following severance benefits: (i) a lump sum cash payment equal to 100% of the greater of the executive’s salary in effect as of immediately prior to his employment termination or the Change in Control, (ii) a lump sum cash payment equal to 100% of the greater of the executive’s target bonus in effect for the year in which the executive’s employment terminates or the Change in Control occurs, (iii) continuing payments to reimburse the executive for COBRA continuation coverage for a period of up to 12 months, and (iv) 100% accelerated vesting of the executive’s outstanding equity awards, with any applicable performance goals considered achieved at the target levels (with certain exceptions as listed below). The RSU equity awards granted to Mr. Cochran in 2020 specifically do not have any accelerated vesting. TABLE OF CONTENTS In order to receive the severance benefits under the Agreement, the executive must sign and not revoke a release of claims in our favor and comply with confidentiality obligations. As defined in the Agreements, “Cause” generally means the executive’s (i) repeated failure to perform his duties and responsibilities to the Company or abide in all material respects with the Company’s policies after receiving written notice, (ii) engagement in illegal conduct injurious to the Company in any material respect, (iii) material violation or material breach of his confidential information and invention agreement with the Company that is not cured within 20 days of written notice or is incapable of cure, or (iv) conviction or plea of no contest to a felony (other than motor vehicle offenses that do not materially impair the executive’s performance of his employment duties) or any crime involving fraud, embezzlement or other offense involving moral turpitude, and/or committing any act of embezzlement, dishonesty or fraud against or the misappropriation of material property belonging to the Company. As defined in the Agreements, “Change in Control Period” generally means, subject to the occurrence of a Change in Control, the period beginning on the date that an agreement to enter into such Change in Control is signed and executed and ending on the date 12 months following such Change in Control. As defined in the Agreements, “Change in Control” generally means the occurrence of any of the following events: (i) a change in our ownership that occurs on the date that any one person or persons acting as a group (“Person”), acquires ownership of our stock that, together with the stock already held by such Person, constitutes more than 50% of the total voting power of our stock; or (ii) a change in our effective control that occurs on the date that a majority of members of our board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of our board of directors prior to the date of the appointment or election; or (iii) a change in the ownership of a substantial portion of our assets that occurs on the date that any Person acquires (or has acquired during a 12-month period) assets from us with a total gross fair market value equal to or more than 50% of the total gross fair market value of all of our assets immediately prior to such acquisition(s), excluding any transfer to an entity that is controlled by our stockholders immediately after the transfer and any transfer of assets by us to an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by us. For purposes of this definition, gross fair market value means the value of our assets, or the value of our assets being disposed of, determined without regard to any liabilities associated with such assets. As defined in the Agreements, “Good Reason” generally means the executive’s voluntary termination of employment with us within 90 days following the expiration of our cure period following one or more of the following occurring without the executive’s prior consent: (i) a material reduction in the executive’s gross base salary other than in connection with a similar reduction for all similarly situated employees; (ii) a material reduction in the executive’s authority, duties, or responsibilities; or (iii) a relocation of the executive’s principal place of work to a location that is more than 50 miles from his current principal work site for us. The executive may not resign for Good Reason without first providing us with notice within 60 days of the initial existence of the condition that he believes constitutes Good Reason identifying the grounds for Good Reason and a reasonable cure period of at least 30 days following the date of such notice, during which such grounds must not have been cured. Mr. Becker’s 2021 RSU and PSU Agreements Each of Mr. Becker’s 2021 RSU and PSU agreements provides that if we terminate the Mr. Becker’s employment with us for any reason other than cause and not due to the executive’s death or disability, or the executive resigns for Good Reason, and in each case the termination occurs during the Change in Control Period, Mr. Becker will receive 100% accelerated vesting of the outstanding equity awards for the RSU and PSU grants made to him on February 2, 2021. Potential Payments Upon Termination or Change in Control The following table provides an estimate of the payments and benefits that would be provided in the circumstances described above for each of the NEOs, assuming the triggering event took place on December 31, 2021 (the last business day of 2021) and based on the $16.58 closing price per share of our common stock on the NYSE on that date. A number of factors may affect the nature and amount of any potential payments or benefits, and as a result, the payments and benefits actually paid (if any) may be different. For example, a triggering event may occur on a date other than December 31, 2021, the price per share of our common stock on the date of the triggering event may be higher or lower than $16.58 or the assumptions relied upon in the estimate of potential payments and benefits below may not reflect the actual circumstances of the triggering event. Accordingly, there is no guarantee that a triggering event would produce the same or similar results as those estimated below. TABLE OF CONTENTS Termination of Employment Unrelated to a Change in Control Dhrupad Trivedi | | | 600,000 | | | 28,296 | | | 628,296 | Matthew Bruening | | | 240,000 | | | 13,716 | | | 253,716 | Robert Cochran | | | 226,308 | | | 21,222 | | | 247,530 |
Termination of Employment in Connection with a Change in Control Dhrupad Trivedi | | | 600,000 | | | 600,000 | | | 9,410,377 | | | 28,296 | | | 10,638,673 | Matthew Bruening | | | 320,000 | | | 320,000 | | | 2,730,046 | | | 18,288 | | | 3,388,334 | Robert Cochran | | | 301,744 | | | 150,872 | | | 1,044,673 | | | 28,296 | | | 1,525,585 |
(1)
| The amounts reported in the table reflect the aggregate market value of the unvested shares of our common stock underlying outstanding restricted stock unit awards that would have vested had the NEO been terminated in connection with a Change in Control. The aggregate market value is computed by multiplying (i) the number of unvested shares of our common stock subject to outstanding restricted stock unit awards at December 31, 2021, that would become vested by (ii) $16,58 (the closing market price of our common stock on the NYSE on December 31, 2021, the last trading day in the fiscal year ended December 31, 2021). |
Assumptions and Explanations of Numbers in Tables The compensation committee has reviewed and discussedretains discretion to provide additional benefits to executive officers upon termination or resignation if it determines the section titled “Executive Compensation” with management. Based on such review and discussion, the compensation committee has recommended to the board of directors that the section titled “Executive Compensation” be included in this proxy statement.Respectfully submitted by the members of the compensation committee of the board of directors:
Peter Y. Chung (Chair)
Alan S. Henricks
Phillip J. Salsbury
circumstances so warrant. Equity Compensation Plan Information The following table summarizes our equity compensation plan information as of December 31, 2015.2021. Information is included for equity compensation plans approved by our stockholders and equity compensation plans not approved by our stockholders. We will not grant equity awards in the future under any of the equity compensation plans not approved by our stockholders included in the table below. Plan Category | | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | | (b) Weighted Average
Exercise
Price of
Outstanding Options, Warrants and Rights | | | (c) Number of
Securities
Remaining
Available for
Future
Issuance Under
Equity
Compensation Plans(1)
(Excluding
Securities
Reflected in
Column
(a)) | | | Equity compensation plans approved by stockholders | | | 12,742,556 | | | $ | 4.78 | | | | 6,188,900 | | | Equity compensation plans not approved by stockholders | | | 0 | | | | 0 | | | | 0 | | | Total | | | 12,742,556 | | | $ | 4.78 | | | | 6,188,900 | |
Equity compensation plans approved by stockholders | | | 4,587,780(2) | | | $6.13(3) | | | 11,636,454 | Equity compensation plans not approved by stockholders | | | — | | | — | | | — | Total | | | 4,587,780(2) | | | $6.13(3) | | | 11,636,454 |
(1)
| Includes 10,249,815 shares under our 2014 Equity Incentive Plan (the “2014 Plan”) which provides that the number of shares of our common stock that were subject to awards(“Shares”) available for issuance under our 2008 Stock Plan that since our IPO on March 21, 2104 have terminated, been cancelled or otherwise forfeited or repurchased by the Company through December 31, 2015 and which were returned to the 2014 Plan reserve.will be increased on the first day of each fiscal year (the “Evergreen”) in an amount equal to the least of (i) 8,000,000 Shares, (ii) five percent (5%) of the outstanding Shares on the last day of the immediately preceding fiscal year or (iii) such number of Shares determined by our board of directors; provided, however, that such determination under |
TABLE OF CONTENTS clause (iii) will be made no later than the last day of the immediately preceding fiscal year. In November 2020, the board of directors determined that the Evergreen under the 2014 Plan shall be zero (0) Shares for 2021 and for each subsequent year during the term of the 2014 Plan, unless otherwise determined by the board of directors for a given year prior to the commencement of such given year. Also, includes 1,386,639 shares available for issuance under our 2014 Employee Stock Purchase Plan, including shares subject to purchase during the current purchase period. (2)
| Consists of 3,716,875 shares granted as RSUs or PSUs and options to purchase 870,905 shares and excludes purchase rights under the 2014 Employee Stock Purchase Plan. |
(3)
| The weighted average exercise price does not take into account outstanding restricted stock units or restricted stock awards, which have no exercise price. |
Presented below is the ratio of annual total compensation of our Chief Executive Officer to the annual total compensation of our median employee. The ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Exchange Act. SEC rules for identifying the median employee allow companies to apply various methodologies and assumptions and, as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies. As determined in accordance with SEC rules, the fiscal year 2021 annual total compensation was $3,135,250 for our Chief Executive Officer, as reported in the “Summary Compensation Table” above. We estimate that the fiscal year 2021 annual total compensation for the median of all employees, excluding our Chief Executive Officer, was $178,144. The resulting ratio of our Chief Executive Officer’s annual total compensation to that of the median of all employees, excluding our Chief Executive Officer, for fiscal year 2021 is 17.6 to 1. As permitted by SEC rules, to identify our median employee, we elected to use the annual total cash compensation of each employee for fiscal year 2021. For these purposes, annual total cash compensation included annual base salary or hourly wages, cash incentives, commissions, comparable cash elements of compensation in non-U.S. jurisdictions and grant date fair market value of equity compensation granted in fiscal year 2021. We utilized internal human resources records with all foreign currencies converted to U.S. dollars. All amounts were annualized for permanent employees who did not work for the entire year. We identified the employee with the median compensation calculated as described above. We calculated annual total compensation for the median employee using the same methodology used to calculate the “Total” column of the “Summary Compensation Table.” We selected the median employee from among our global population of employees as of the end of fiscal year 2021. We did not exclude any employees whether pursuant to the de minimis exemption for foreign employees or any other permitted exclusion. TABLE OF CONTENTS SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information with respect to the beneficial ownership of our common stock as of April 7, 201629, 2022 for: each of our directors and nominees for director; each of our named executive officers; all of our current directors and executive officers as a group; and each person or group, who beneficially owned more than 5% of our common stock. We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to community property laws where applicable. We have based our calculation of the percentage of beneficial ownership on 64,486,090 shares75,824,501shares of our common stock outstanding as of April 7, 2016.29, 2022. We have deemed shares of our common stock subject to stock options that are currently exercisable or exercisable within 60 days of April 7, 201629, 2022 or issuable pursuant to RSUs which are subject to vesting conditions expected to occur within 60 days of April 7, 201629, 2022 to be outstanding and to be beneficially owned by the person holding the stock option or RSU for the purpose of computing the percentage ownership of that person. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o A10 Networks, Inc., 3 West Plumeria Drive,2300 Orchard Parkway, San Jose, California 95134.95131. The information provided in the table is based on our records, information filed with the SEC and information provided to us, except where otherwise noted. | | | | | | | | | | | Name of Beneficial Owner | | | Number of
Shares
Beneficially
Owned | | | | Percentage of
Shares
Beneficially
Owned | | | 5% Stockholders: | | | | | | | | | | Lee Chen(1) | | | 10,858,982 | | | | 16.84 | % | | Entities affiliated with Summit Partners, L.P.(2) | | | 9,427,846 | | | | 14.62 | % | | Named Executive Officers and Directors: | | Peter Y. Chung(3) | | | 9,427,846 | | | | 14.62 | % | | Robert Cochran(4) | | | 452,780 | | | | * | | | Ray Smets(5) | | | 225,214 | | | | * | | | Phillip J. Salsbury(6) | | | 65,000 | | | | * | | | Alan S. Henricks(7) | | | 40,000 | | | | * | | | Sanjay Kapoor | | | 0 | | | | * | | | All current executive officers and directors as a group (9 persons)(8) | | | 21,955,015 | | | | 34.05 | % |
5% Stockholders:
| | | | | | | Entities affiliated with Summit Partners, L.P.(1) | | | 8,877,890 | | | 11.71% | The Vanguard Group(2) | | | 5,695,441 | | | 7.51% | Entities affiliated with Blackrock, Inc.(3) | | | 4,417,012 | | | 5.83% | Entitles affiliated with First Trust Portfolios(4) | | | 4,101,308 | | | 5.41% | NEOs and Directors:
| | | | | | | Dhrupad Trivedi | | | 109,438 | | | * | Brian Becker | | | 21,718 | | | * | Matthew Bruening(5) | | | 25,940 | | | * | Robert Cochran(6) | | | 529,626 | | | * | Tor R. Braham | | | 135,558 | | | * | Peter Y. Chung(1) | | | 8,877,890 | | | 11.71% | Mary Dotz | | | 13,082 | | | * | Eric Singer(7) | | | 1,070,211 | | | 1.41% | All current executive officers and directors as a group (8 persons)(8) | | | 10,783,013 | | | 14.22% |
| *
| Represents beneficial ownership of less than one percent (1%). |
(1)
| (1) | As of December 31, 2015, based on information set forth in a Schedule 13G filed with the SEC by Mr. Chen on February 16, 2016.Includes (i)10,855,782shares of common stock held by Mr. Chen; and (ii) 3,200 shares of common stock held by the U/A DTD 07/25/2000 Lee Chen Family Trust, for which Mr. Chen serves as a trustee. |
| (2) | As of December 31, 2014, based on information set forth in a Schedule 13G filed with the SEC by individuals and entities affiliated with Summit Partners, L.P. on February 4, 2015. Includes (i) 6,873,1366,362,818 shares of common stock held of record by Summit Partners Growth Equity Fund VIII-A, L.P.; (ii) 2,510,9892,324,553 shares of common stock held of record by Summit Partners Growth Equity Fund VIII-B, L.P.; |
| | (iii) 40,18637,202 shares of common stock held of record by Summit Investors I, LLC, and (iv) 3,5353,273 shares of common stock held of record by Summit Investors I (UK), L.P., and (v) 150,044 shares held in the name of Peter Y. Chung. Peter Y. Chung holds shares and any RSUs for the benefit of Summit Partners, L.P., which he has empowered to determine when the underlying shares will be sold and which is entitled to the proceeds of any such sales. Summit Partners, L.P. is (i) the managing member of Summit Partners GE VIII, LLC, which is the general partner of Summit Partners GE VIII, L.P., which is the general partner of each of Summit Partners Growth Equity Fund VIII-A, L.P. and Summit Partners Growth Equity Fund VIII-B, L.P., and (ii) Summit Master Company, LLC is the managing member of Summit Investors Management, LLC, which is the manager of Summit Investors I, LLC.,LLC, and the general partner of Summit Investors I (UK), L.P. Summit Master Company, LLC, as the managing member of Summit Investors Management, LLC, has delegated investment decisions, including voting and dispositive power, to Summit Partners, L.P. and its Investment Committee. Summit Partners, L.P., through a two- person investment committee,two-person Investment Committee currently composed of Martin J. Mannion and Mr. Chung, has voting and dispositive authority over the shares held by each of these entities and therefore beneficially owns such shares. Each of the funds affiliated with Summit Partners, L.P., Mr. Mannion and Mr. Chung disclaim beneficial ownership of the shares, except, in each case, to the extent of such person or entity’s |
TABLE OF CONTENTS Peter Y. Chung, has voting and dispositive authority over the shares held by each of these entities and therefore may be deemed to beneficially owns such shares. In addition, Mr. Chung is a member of Summit Master Company, LLC. Each of the Summit entities mentioned herein, Summit Partners, L.P., Summit Master Company, LLC, Mr. Mannion and Mr. Chung disclaim beneficial ownership of the shares of common stock and the RSUs in each case, to the extent of it or his pecuniary interest therein. The address for each of these entities and persons is 222 Berkeley Street, 18th Floor, Boston, MA 02116. (2)
| A Schedule 13G/A was filed with the SEC on February 9, 2022 by The Vanguard Group (“Vanguard”). Vanguard is a parent holding company with the following subsidiaries who are also beneficial owners: Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited and Vanguard Investments UK, Limited. This Schedule 13G/A reports that Vanguard has shared voting power with respect to 104,721 shares beneficially owned as of December 31, 2021, sole dispositive power with respect to 5,544,153 shares beneficially owned as of December 31, 2021 and shared dispositive power with respect to 151,288 shares beneficially owned as of December 31, 2021. The address for each of these entities is 222 Berkeley100 Vanguard Blvd., Malvern, PA 19355. |
(3)
| A Schedule 13G/A was filed with the SEC on February 3, 2022 by BlackRock, Inc. (“BlackRock”). BlackRock is a parent holding company with the following subsidiaries who are also beneficial owners: BlackRock International Limited, BlackRock Advisors, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Netherlands) B.V., BlackRock Fund Advisor, BlackRock Asset Management Ireland Limited, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Investment Management, LLC. This Schedule 13G/A reports that BlackRock has sole voting power with respect to 4,296,128 shares and sole dispositive power with respect to 4,417,012 shares beneficially owned as of December 31, 2021. The address for each of these entities is 55 East 52nd Street, 18th Floor, Boston, MA 02116.New York, NY 10055. |
(4)
| (3)A Schedule 13G was filed with the SEC on January 28, 2022 by First Trust Portfolios L.P.(“FT Portfolios”), First Trust Advisors L.P. (“FT Advisors”) and The Charger Corporation (“Charger”). This Schedule 13G reports that FT Portfolios has shared dispositive power with respect to 393,894 shares beneficially owned as of December 31, 2021 and FT Advisors and Charger each have shared voting power and shared dispositive power with respect to 4,101,308 shares beneficially owned as of December 31, 2021. The address for each of these entities is 120 East Liberty Drive, Suite 400, Wheaton, IL 60187. |
(5)
| Includes 9,427,8466,250 shares issuable pursuant to RSUs which are subject to vesting conditions expected to occur within 60 days of common stock held of record by funds affiliated with Summit Partners, L.P., where Mr. Chung is general partner. Mr. Chung disclaims beneficial ownership of the shares, except to the extent of his pecuniary interest therein.April 29, 2022. |
| (4)(6)
| Includes 270,552271,665 shares issuable upon exercise of options exercisable within 60 days afterof April 7, 2016. |
| (5) | Includes 154,27329, 2022 and 7,516 shares issuable upon exercise of options exercisablepursuant to RSUs which are subject to vesting conditions expected to occur within 60 days afterof April 7, 2016 and 26,389 acquired upon an early exercise, which29, 2022. |
(7)
| Includes (i) 645,541 shares are subject to a right of repurchase by us if Mr. Smets does not satisfy the option’s vesting requirements. Shares acquired upon an early exercise may not be disposed of until the vesting period has been satisfied. |
| (6) | Consists of 40,000 shares acquired upon an early exercise andcommon stock held of record by Dr. Salsbury,VIEX Opportunities Fund, LP – Series One, (ii) 183,036 shares of common stock held of record by VIEX Opportunities Fund, LP – Series Two and (iii) 241,634 shares of common stock held of record by Eric Singer (of which, 14,16763,099 shares are subjectwere issued to a righthim as his role as an outside director). Eric Singer is the managing member of repurchase by us if Dr. Salsbury does not satisfyVIEX Capital Advisors, LLC (“VIEX Capital”). VIEX Capital is the option’s vesting requirements. Shares acquired upon an early exercise may not be disposedinvestment manager and Eric Singer is the managing member of until the vesting period has been satisfied.following affiliated entities: VIEX Opportunities Fund, LP – Series One, VIEX Opportunities Fund, LP – Series Two, VIEX Special Opportunities Fund II, LP, VIEX Special Opportunities Fund III, LP, VIEX GP, LLC, VIEX Special Opportunities GP II, LLC and VIEX Special Opportunities GP III, LLC. The address for each of these entities and Mr. Singer is 745 Boylston Street, 3rd Floor, Boston, MA 02116. |
| (7)(8)
| Includes 30,000 shares issuable upon exercise of options exercisable within 60 days after April 7, 2016, of which 18,334 shares may be acquired upon an early exercise and are subject to a right of repurchase by us if Mr. Henricks does not satisfy the option’s vesting requirements. Shares acquired upon an early exercise may not be disposed of until the vesting period has been satisfied. |
| (8) | Includes 1,033,889(i) 271,665 shares issuable upon exercise of options held by our current executive officers and directors exercisable within 60 days after April 7, 2016.29, 2022 and (ii) 13,766 shares issuable pursuant to RSUs which are subject to vesting conditions expected to occur within 60 days of April 29, 2022. |
TABLE OF CONTENTS RELATED PERSON TRANSACTIONS We describe below all transactions and series of similar transactions, since the beginning of our last fiscal year, to which we were a party or will be a party, in which: the amounts involved exceeded or will exceed $120,000; and any of our directors, nominees for director, executive officers or holders of more than 5% of our outstanding capital stock, or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material interest. Other than as described below, there has not been, nor is there any currently proposed, transactions or series of similar transactions to which we have been or will be a party.
Investors Rights Agreement We are party to an investors rights agreement which provides, among other things, that certain holders of our common stock have the right to demand that we file a registration statement, or request that the shares of such stock be covered by a registration statement that we are otherwise filing, subject to certain exceptions. Lee Chen, our President and Chief Executive Officer, Robert Cochran, our Executive Vice President, Legal and Corporate Collaborations, and certain entities affiliated with Summit Partners, L.P., which hold more than 5% of our outstanding capital stock and one of whose managing directors, Peter Y. Chung, is a member of our board of directors, are parties to the investors rights agreement. Revenue
From January 1, 2015 until December 31, 2015, we have recognized revenue of $2,224,946 from reseller contracts entered into with companies affiliated with Mitsui & Co., Ltd., which held more than 5% of our outstanding capital stock prior to May 27, 2015.
Employment Arrangements and Indemnification Agreements We have entered into employment and consulting arrangements with certain of our current and former executive officers. See “Executive Officer Employment Agreements.” We have also entered into indemnification agreements with certain of our officers and directors and officers of ours. The indemnification agreements and our restated certificate of incorporation and bylaws in effect upon the completion of this offeringthat require us to indemnify our directorsofficers and officersdirectors to the fullest extent permitted by Delaware law. Stock Option Grants to Executive Officers and Directors
We have granted stock options to our executive officers and our non-employee directors. See the sections entitled “Executive Compensation” above.
Other Transactions
Other than as described above under this section titled “Related Party Transactions,” since January 1, 2015, we have not entered into any transactions, nor are there any currently proposed transactions, between us and a related party where the amount involved exceeds, or would exceed, $120,000, and in which any related person had or will have a direct or indirect material interest. We believe the terms of the transactions described above were comparable to terms we could have obtained in arm’s-length dealings with unrelated third parties.
Policies and Procedures for Related Party Transactions The audit committee of our board of directors has the primary responsibility for reviewing and approving transactions with related parties. OurThe audit committee charter provides that the audit committee shallmay review and approve in advance any related party transactions. We have adopted a formal written policy providing that our executive officers, directors, nominees for election as directors, beneficial owners of more than 5% of any class of our common stock, any member of the immediate family of any of the foregoing persons, and any firm, corporation, or other entity in which any of the foregoing persons is employed, is a general partner or principal or in a similar position, or in which such person has a 5% or greater beneficial ownership interest, is not permitted to enter into a related party transaction with us without the consent of ourthe audit committee, subject to the exceptions described below. In approving or rejecting any such proposal, ourthe audit committee is to consider the relevant facts and circumstances available and deemed relevant to ourthe audit committee, including, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, and the extent of the related party’s interest in the transaction. OurThe audit committee has determined that certain transactions will not requireshall be deemed to be pre-approved by the audit committee, approval,even if the aggregate amount involved will exceed $120,000, including certain employment arrangements of executive officers, director compensation, transactions with another company at which a related party’s only relationship is as a non- executivenon-executive employee or beneficial owner of less than 5% of that company’s shares, transactions where a related party’s interest arises solely from the ownership of our common stock and all holders of our common stock received the same benefit on a pro rata basis, and transactions available to all employees generally.
TABLE OF CONTENTS Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires that our executive officers and directors, and persons who own more than 10% of our common stock, file reports of ownership and changes of ownership with the SEC. Such directors, executive officers and 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.SEC regulations require us to identify in this proxy statement anyone who filed a required report late during the most recent fiscal year. Based on our review of forms we received, or written representations from reporting persons stating that theyall reportable transactions were not required to file these forms, we believereported, the Company believes that during our fiscal ended December 31, 2015,2021, all Section 16(a) filing requirements were satisfied on a timely basis.
basis, except that Mr. Becker filed one report late with respect to a sales transaction and each of Mr. Becker, Mr. Bruening, Mr. Cochran and Mr. Trivedi made a late filing with respect to a performance-based award converting into a time-based award upon achievement of a milestone, in each case due to administrative error and corrected as soon as the error was detected. Fiscal Year 20152021 Annual Report and SEC Filings Our financial statements for our fiscal year ended December 31, 20152021 are included in our Annual Report on Form 10-K, which we will make available to stockholders at the same time as this proxy statement.10-K. This proxy statement and our annual report are posted on our website at http://investors.a10networks.com and are available from the SEC at its website at www.sec.gov. You may also obtain a copy of our annual report without charge by sending a written request to A10 Networks, Inc., Attention: Investor Relations, 3 West Plumeria Drive,2300 Orchard Parkway, San Jose, California 95134.95131. The board of directors does not know of any other matters to be presented at the Annual Meeting. If any additional matters are properly presented at the Annual Meeting, the persons named in the enclosed proxy card will have discretion to vote the shares of our common stock they represent in accordance with their own judgment on such matters. It is important that your shares of our common stock be represented at the Annual Meeting, regardless of the number of shares that you hold. You are, therefore, urged to vote by telephone or by using the Internet as instructed on the enclosed proxy card or execute and return, at your earliest convenience, the enclosed proxy card in the envelope that has also been provided.THE BOARD OF DIRECTORS
San Jose, California
April 15, 2016
APPENDIX A
A10 NETWORKS, INC.
2014 EMPLOYEE STOCK PURCHASE PLAN
(As amended [June 1], 2016)
1. Purpose. The purpose of the Plan is to provide employees of the Company and its Designated Companies with an opportunity to purchase Common Stock through accumulated Contributions. The Company intends for the Plan to have two components: a Code Section 423 Component (“423 Component”) and a non-Code Section 423 Component (“Non-423 Component”). The Company’s intention is to have the 423 Component of the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of the 423 Component, accordingly, will be construed so as to extend and limit Plan participation in a uniform and nondiscriminatory basis consistentprovided with the requirements of Section 423 of the Code. In addition, this Plan authorizes the grant of an option to purchase shares of Common Stock under the Non-423 Component that does not qualify as an “employee stock purchase plan” under Section 423 of the Code; such an option will be granted pursuant to rules, procedures, or sub-plans adopted by the Administrator designed to achieve tax, securities laws, or other objectives for Eligible Employees and the Company. Except as otherwise provided herein, the Non-423 Component will operate and be administered in the same manner as the 423 Component.
2. Definitions.
(a) “Administrator” means the Board or any Committee designated by the Board to administer the Plan pursuant to Section 14.
(b) “Affiliate” means any entity, other than a Subsidiary, in which the Company has an equity or other ownership interest.
(c) “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where options are, or will be, granted under the Plan.
(d) “Board” means the Board of Directors of the Company.
(e) “Change in Control” means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, the acquisition of additional stock by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not be considered a Change in Control; or
(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair
market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection, the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final U.S. Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.
Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(f) “Code” means the U.S. Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or U.S. Treasury Regulation thereunder will include such section or regulation, any valid regulation or other official applicable guidance promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
(g) “Committee” means a committee of the Board appointed in accordance with Section 14 hereof.
(h) “Common Stock” means the common stock of the Company.
(i) “Company” means A10 Networks, Inc., a Delaware corporation, or any successor thereto.
(j) “Compensation” means an Eligible Employee’s base straight time gross earnings, but exclusive of payments for incentive compensation, bonuses, payments for overtime and shift premium, equity compensation income and other similar compensation. The Administrator, in its discretion, may, on a uniform and nondiscriminatory basis, establish a different definition of Compensation for a subsequent Offering Period.
(k) “Contributions” means the payroll deductions and other additional payments that the Company may permit to be made by a Participant to fund the exercise of options granted pursuant to the Plan.
(l) “Designated Company” means any Subsidiary or Affiliate that has been designated by the Administrator from time to time in its sole discretion as eligible to participate in the Plan. For purposes of the 423 Component, only the Company and its Subsidiaries may be Designated Companies, provided, however that at any given time, a Subsidiary that is a Designated Company under the 423 Component will not be a Designated Company under the Non-423 Component.
(m) “Director” means a member of the Board.
(n) “Eligible Employee” means any individual who is a common law employee providing services to the Company or a Designated Company and is customarily employed for at least twenty (20) hours per week and more than five (5) months in any calendar year by the Employer, or any lesser number of hours per week and/ or number of months in any calendar year established by the Administrator (if required under applicable local law) for purposes of any separate Offering or for Eligible Employees participating in the Non-423 Component. For purposes of the Plan, the employment relationship will be treated as continuing intact while the individual is on sick leave or other leave of absence that the Employer approves or is legally protected under Applicable Laws. Where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated three (3) months and one (1) day following the commencement of such leave.The Administrator, in its discretion, from time to time may, prior to an Enrollment Date for all options to be granted on such Enrollment Date in an Offering, determine (on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.4232) that the definition of Eligible Employee will or will not include an individual if he or she: (i) has not completed at least two (2) years of service since his or her last hire date (or such lesser period of time as may be determined by the Administrator in its discretion), (ii) customarily works not more than twenty (20) hours per week (or such lesser period of time as may be determined by the Administrator in its discretion), (iii) customarily works not more than five (5) months per calendar year (or such lesser period of time as may be determined by the Administrator in its discretion), (iv) is a highly compensated employee within the meaning of Section 414(q) of the Code, or (v) is a highly compensated employee within the meaning of Section 414(q) of the Code with compensation above a certain level or is an officer or subject to the disclosure requirements of Section 16(a) of the Exchange Act, provided the exclusion is applied with respect to each Offering in an identical manner to all highly compensated individuals of the Employer whose Employees are participating in that Offering. Each exclusion will be applied with respect to an Offering in a manner complying with U.S. Treasury Regulation Section 1.4232(e)(2)(ii).
(o) “Employer” means the employer of the applicable Eligible Employee(s).
(p) “Enrollment Date” means the first Trading Day of each Offering Period.
(q) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.
(r) “Exercise Date” means the last Trading Day of the Purchase Period, provided that the first Exercise Date under the Plan will be the first Trading Day on or before November 20, 2014. Notwithstanding the foregoing, in the event that an Offering Period is terminated prior to its expiration pursuant to Section 20(a), the Administrator, in its sole discretion, may determine that any Purchase Period also terminating under such Offering Period will terminate without options being exercised on the Exercise Date that otherwise would have occurred on the last Trading Day of such Purchase Period.
(s) “Fair Market Value” means, as of any date and unless the Administrator determines otherwise, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the New York Stock Exchange, NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market of The NASDAQ Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as reported inThe Wall Street Journalor such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value will be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or if no bids and asks were reported on that date, as applicable, on the last Trading Day such bids and asks were reported), as reported inThe Wall Street Journalor such other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof will be determined in good faith by the Administrator; or
(iv) For purposes of the Enrollment Date of the first Offering Period under the Plan, the Fair Market Value will be the initial price to the public as set forth in the final prospectus included within the registration statement on Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Common Stock (the “Registration Statement”).
(t) “Fiscal Year” means the fiscal year of the Company.
(u) “New Exercise Date” means a new Exercise Date if the Administrator shortens any Offering Period then in progress.
(v) “Offering” means an offer under the Plan of an option that may be exercised during an Offering Period as further described in Section 4. For purposes of the Plan, the Administrator may designate separate Offerings under the Plan (the terms of which need not be identical) in which Employees of one or more Employers will participate, even if the dates of the applicable Offering Periods of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. To the extent permitted by U.S. Treasury Regulation Section 1.4232(a)(1), the terms of each Offering need not be identical provided that the terms of the Plan and an Offering together satisfy U.S. Treasury Regulation Section 1.4232(a)(2) and (a)(3).
(w) “Offering Periods”means the periods of approximately twenty-four (24) months during which an option granted pursuant to the Plan may be exercised, (i) commencing on the first Trading Day on or after May 21 and November 21 of each year and terminating on the last Trading Day on or before May 20 and November 20, approximately twenty-four (24) months later; provided, however, that the first Offering Period under the Plan will commence with the first Trading Day on or after the date on which the Securities and Exchange Commission declares the Company’s Registration Statement effective and will end on the last Trading Day on or before May 20, 2016, and provided, further, that the second Offering Period under the Plan will commence on the first Trading Day on or after November 21, 2014. The duration and timing of Offering Periods may be changed pursuant to Sections 4, 20 and 30.
(x) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(y) “Participant” means an Eligible Employee that participates in the Plan.
(z) “Plan” means this A10 Networks, Inc. 2014 Employee Stock Purchase Plan.
(aa) “Purchase Period” means the period during an Offering Period and during which shares of Common Stock may be purchased on a Participant’s behalf in accordance with the terms of the Plan. Unless the Administrator provides otherwise, Purchase Periods will be approximatelysix (6) monthperiod commencing after one Exercise Date and ending with the next Exercise Date, except that the first Purchase Period of any Offering Period will commence on the Enrollment Date and end with the next Exercise Date.
(bb)“Purchase Price”means an amount equal to eighty-five percent (85%) of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower; provided however, that the Purchase Price may be determined for subsequent Offering Periods by the Administrator subject to compliance with Section 423 of the Code (or any successor rule or provision or any other Applicable Law, regulation or stock exchange rule) or pursuant to Section 20.
(cc) “Registration Date” means the effective date of the first registration statement that is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Company’s securities.
(dd) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(ee) “Trading Day” means a day on which the national stock exchange upon which the Common Stock is listed is open for trading.
(ff) “U.S. Treasury Regulations” means the Treasury regulations of the Code. Reference to a specific Treasury Regulation or Section of the Code will include such Treasury Regulation or Section, any valid regulation promulgated under such Section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such Section or regulation.
3. Eligibility.
(a) First Offering Period. Any individual who is an Eligible Employee immediately prior to the first Offering Period will be automatically enrolled in the first Offering Period.
(b) Subsequent Offering Periods. Any Eligible Employee on a given Enrollment Date subsequent to the first Offering Period will be eligible to participate in the Plan, subject to the requirements of Section 5.
(c) Non-U.S. Employees. Eligible Employees who are citizens or residents of a non-U.S. jurisdiction (without regard to whether they also are citizens or residents of the United States or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) may be excluded from participation in the Plan or an Offering if the participation of such Eligible Employees is prohibited under the laws of the applicable jurisdiction or if complying with the laws of the applicable jurisdiction would cause the Plan or an Offering to violate Section 423 of the Code. In the case of the Non-423 Component, Eligible Employees may be excluded from participation in the Plan or an Offering if the Administrator has determined that participation of such Eligible Employees is not advisable or practicable.
(d) Limitations. Any provisions of the Plan to the contrary notwithstanding, no Eligible Employee will be granted an option under the Plan (i) to the extent that, immediately after the grant, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company or any Parent or Subsidiary of the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Parent or Subsidiary of the Company, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company or any Parent or Subsidiary of the Company accrues at a rate, which exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the Fair Market Value of the stock at the time such option is granted) for each calendar year in which such option is outstanding at any time, as determined in accordance with Section 423 of the Code and the regulations thereunder.
4. Offering Periods. The Plan will be implemented by consecutive, overlapping Offering Periods with a new Offering Period commencing on the first Trading Day on or after May 21 and November 21 each year, or on such other date as the Administrator will determine; provided, however, that the first Offering Period under the Plan will commence with the first Trading Day on or after the date upon which the Company’s Registration Statement is declared effective by the Securities and Exchange Commission and end onthe last Trading Day on or beforeMay 20, 2016, and provided, further, that the second Offering Period under the Plan will commence on the first Trading Day on or afterNovember 21, 2014. The Administrator will have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future Offerings without stockholder approval if such change is announced prior to the scheduled beginning of the first Offering Period to be affected thereafter; provided, however, that no Offering Period may last more than twenty-seven (27) months.
5. Participation.
(a) First Offering Period. An Eligible Employee will be entitled to continue to participate in the first Offering Period pursuant to Section 3(a) only if such individual submits a subscription agreement authorizing Contributions in a form determined by the Administrator (which may be similar to the form attached hereto asExhibit A) to the Company’s designated plan administrator (i) no earlier than the effective date of the Form S-8 registration statement with respect to the issuance of Common Stock under this Plan and (ii) no later than ten (10) business days following the effective date of such S-8 registration statement or such other period of time as the Administrator may determine (the “Enrollment Window”). An Eligible Employee’s failure to submit the subscription agreement during the Enrollment Window will result in the automatic termination of such individual’s participation in the first Offering Period.
(b) Subsequent Offering Periods. An Eligible Employee may participate in the Plan pursuant to Section 3(b) by (i) submitting to the Company’s stock administration office (or its designee), on or before a date determined by the Administrator prior to an applicable Enrollment Date, a properly completed subscription agreement authorizing Contributions in the form provided by the Administrator for such purpose, or (ii) following an electronic or other enrollment procedure determined by the Administrator.
6. Contributions.
(a) At the time a Participant enrolls in the Plan pursuant to Section 5, he or she will elect to have Contributions (in the form of payroll deductions or otherwise, to the extent permitted by the Administrator) made on each pay day during the Offering Period in an amount not exceedingfifteenpercent (15%) of the Compensation, which he or she receives on each pay day during the Offering Period. The Administrator, in its sole discretion, may permit all Participants in a specified Offering to contribute amounts to the Plan through payment by cash, check or other means set forth in the subscription agreement prior to each Exercise Date of each Purchase Period. A Participant’s subscription agreement will remain in effect for successive Offering Periods unless terminated as provided in Section 10 hereof.
(b) In the event Contributions are made in the form of payroll deductions, such payroll deductions for a Participant will commence on the first pay day following the Enrollment Date and will end on the last pay day on or prior to the last Exercise Date of such Offering Period to which such authorization is applicable, unless sooner terminated by the Participant as provided in Section 10 hereof; provided, however, that for the first Offering Period, payroll deductions will commence on the first pay day on or following the end of the Enrollment Window.
(c) All Contributions made for a Participant will be credited to his or her account under the Plan and Contributions will be made in whole percentages only. A Participant may not make any additional payments into such account.
(d) A Participant may discontinue his or her participation in the Plan as provided under Section 10. Unless otherwise determined by the Administrator, during a Purchase Period, a Participant may not increase the rate of his or her Contributions and may only decrease the rate of his or her Contributions one (1) time and such decrease must be to a Contribution rate of zero percent (0%). Any such decrease during a Purchase Period requires the Participant (i) properly completing and submitting to the Company’s stock administration office (or its designee), on or before a date determined by the Administrator prior to an applicable Exercise Date, a new subscription agreement authorizing the change in Contribution rate in the form provided by the Administrator for such purpose, or (ii) following an electronic or other procedure prescribed by the Administrator. If a Participant has not followed such procedures to change the rate of Contributions, the rate of his or her Contributions will continue at the originally elected rate throughout the Purchase Period and future Offering Periods and Purchase Periods (unless the Participant’s participation is terminated as provided in Sections 10 or 11). The Administrator may, in its sole discretion, amend the nature and/or number of Contribution rate changes that may be made by Participants during any Offering Period or Purchase Period and may establish other conditions or limitations
as it deems appropriate for Plan administration. Any change in payroll deduction rate made pursuant to this Section 6(d) will be effective as of the first (1st) full payroll period following five (5) business days after the date on which the change is made by the Participant (unless the Administrator, in its sole discretion, elects to process a given change in payroll deduction rate more quickly).
(e) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(d), a Participant’s Contributions may be decreased to zero percent (0%) at any time during a Purchase Period. Subject to Section 423(b)(8) of the Code and Section 3(d) hereof, Contributions will recommence at the rate originally elected by the Participant effective as of the beginning of the first Purchase Period scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 10.
(f) Notwithstanding any provisions to the contrary in the Plan, the Administrator may allow Eligible Employees to participate in the Plan via cash contributions instead of payroll deductions if (i) payroll deductions are not permitted under applicable local law, (ii) the Administrator determines that cash contributions are permissible under Section 423 of the Code; or (iii) for Participants participating in the Non-423 Component.
(g) At the time the option is exercised, in whole or in part, or at the time some or all of the Common Stock issued under the Plan is disposed of (or any other time that a taxable event related to the Plan occurs), the Participant must make adequate provision for the Company’s or Employer’s federal, state, local or any other tax liability payable to any authority including taxes imposed by jurisdictions outside of the U.S., national insurance, social security or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock (or any other time that a taxable event related to the Plan occurs). At any time, the Company or the Employer may, but will not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company or the Employer to meet applicable withholding obligations, including any withholding required to make available to the Company or the Employer any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Eligible Employee. In addition, the Company or the Employer may, but will not be obligated to, withhold from the proceeds of the sale of Common Stock or any other method of withholding the Company or the Employer deems appropriate to the extent permitted by U.S. Treasury Regulation Section 1.4232(f).
7. Grant of Option. On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period will be granted an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of Common Stock determined by dividing such Eligible Employee’s Contributions accumulated prior to such Exercise Date and retained in the Eligible Employee’s account as of the Exercise Date by the applicable Purchase Price; provided that in no event will an Eligible Employee be permitted to purchase during each Purchase Period more than 1,500 shares of Common Stock (subject to any adjustment pursuant to Section 19) and provided further that such purchase will be subject to the limitations set forth in Sections 3(d) and 13. The Eligible Employee may accept the grant of such option (i) with respect to the first Offering Period by submitting a properly completed subscription agreement in accordance with the requirements of Section 5 on or before the last day of the Enrollment Window, and (ii) with respect to any subsequent Offering Period under the Plan, by electing to participate in the Plan in accordance with the requirements of Section 5. The Administrator may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum number of shares of Common Stock that an Eligible Employee may purchase during each Purchase Period or Offering Period. Exercise of the option will occur as provided in Section 8, unless the Participant has withdrawn pursuant to Section 10. The option will expire on the last day of the Offering Period.
8. Exercise of Option.
(a) Unless a Participant withdraws from the Plan as provided in Section 10, his or her option for the purchase of shares of Common Stock will be exercised automatically on the Exercise Date, and the maximum number of full shares subject to the option will be purchased for such Participant at the applicable Purchase Price
with the accumulated Contributions from his or her account. No fractional shares of Common Stock will be purchased; any Contributions accumulated in a Participant’s account, which are not sufficient to purchase a full share will be retained in the Participant’s account for the subsequent Purchase Period or Offering Period, subject to earlier withdrawal by the Participant as provided in Section 10. Any other funds left over in a Participant’s account after the Exercise Date will be returned to the Participant. During a Participant’s lifetime, a Participant’s option to purchase shares hereunder is exercisable only by him or her.
(b) If the Administrator determines that, on a given Exercise Date, the number of shares of Common Stock with respect to which options are to be exercised may exceed (i) the number of shares of Common Stock that were available for sale under the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the number of shares of Common Stock available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company will make a pro rata allocation of the shares of Common Stock available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all Participants exercising options to purchase Common Stock on such Exercise Date, and continue all Offering Periods then in effect or (y) provide that the Company will make a pro rata allocation of the shares available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 20. The Company may make a pro rata allocation of the shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment Date.
9. Delivery. As soon as reasonably practicable after each Exercise Date on which a purchase of shares of Common Stock occurs, the Company will arrange the delivery to each Participant of the shares purchased upon exercise of his or her option in a form determined by the Administrator (in its sole discretion) and pursuant to rules established by the Administrator. The Company may permit or require that shares be deposited directly with a broker designated by the Company or to a designated agent of the Company, and the Company may utilize electronic or automated methods of share transfer. The Company may require that shares be retained with such broker or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares. No Participant will have any voting, dividend, or other stockholder rights with respect to shares of Common Stock subject to any option granted under the Plan until such shares have been purchased and delivered to the Participant as provided in this Section 9.
10. Withdrawal.
(a) A Participant may withdraw all but not less than all the Contributions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by (i) submitting to the Company’s stock administration office (or its designee) a written notice of withdrawal in the form determined by the Administrator for such purpose (which may be similar to the form attached hereto as Exhibit B), or (ii) following an electronic or other withdrawal procedure determined by the Administrator. All of the Participant’s Contributions credited to his or her account will be paid to such Participant promptly after receipt of notice of withdrawal and such Participant’s option for the Offering Period will be automatically terminated, and no further Contributions for the purchase of shares will be made for such Offering Period. If a Participant withdraws from an Offering Period, Contributions will not resume at the beginning of the succeeding Offering Period, unless the Participant re-enrolls in the Plan in accordance with the provisions of Section 5.
(b) A Participant’s withdrawal from an Offering Period will not have any effect upon his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or in succeeding Offering Periods that commence after the termination of the Offering Period from which the Participant withdraws.
11. Termination of Employment. Upon a Participant’s ceasing to be an Eligible Employee, for any reason, he or she will be deemed to have elected to withdraw from the Plan and the Contributions credited to such Participant’s account during the Offering Period but not yet used to purchase shares of Common Stock under the Plan will be returned to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15, and such Participant’s option will be automatically terminated. A Participant whose employment transfers between entities through a termination with an immediate rehire (with no break in service) by the Company or a Designated Company will not be treated as terminated under the Plan; however, if a Participant transfers from an Offering under the 423 Component to the Non-423 Component, the exercise of the option will be qualified under the 423 Component only to the extent it complies with Section 423 of the Code.
12. Interest. No interest will accrue on the Contributions of a participant in the Plan, except as may be required by Applicable Law, as determined by the Company, and if so required by the laws of a particular jurisdiction, will apply to all Participants in the relevant Offering under the 423 Component, except to the extent otherwise permitted by U.S. Treasury Regulation Section 1.4232(f).
13. Stock.
(a) Subject to adjustment upon changes in capitalization of the Company as provided in Section 19 hereof, the maximum number of shares of Common Stock that will be made available for sale under the Plan will be6,857,971shares of Common Stock.
(b) Until the shares of Common Stock are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), a Participant will have only the rights of an unsecured creditor with respect to such shares, and no right to vote or receive dividends or any other rights as a stockholder will exist with respect to such shares.
(c) Shares of Common Stock to be delivered to a Participant under the Plan will be registered in the name of the Participant or in the name of the Participant and his or her spouse.
14. Administration. The Plan will be administered by the Board or a Committee appointed by the Board, which Committee will be constituted to comply with Applicable Laws. The Administrator will have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to designate separate Offerings under the Plan, to designate Subsidiaries and Affiliates as participating in the 423 Component or Non-423 Component, to determine eligibility, to adjudicate all disputed claims filed under the Plan and to establish such procedures that it deems necessary for the administration of the Plan (including, without limitation, to adopt such procedures and sub-plans as are necessary or appropriate to permit the participation in the Plan by employees who are foreign nationals or employed outside the U.S., the terms of which sub-plans may take precedence over other provisions of this Plan, with the exception of Section 13(a) hereof, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan will govern the operation of such sub-plan). Unless otherwise determined by the Administrator, the Employees eligible to participate in each sub-plan will participate in a separate Offering or in the Non-423 Component. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt rules and procedures regarding eligibility to participate, the definition of Compensation, handling of Contributions, making of Contributions to the Plan (including, without limitation, in forms other than payroll deductions), establishment of bank or trust accounts to hold Contributions, payment of interest, conversion of local currency, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures and handling of stock certificates that vary with applicable local requirements. The Administrator also is authorized to determine that, to the extent permitted by U.S. Treasury Regulation Section 1.4232(f), the terms of an option granted under the Plan or an Offering to citizens or residents of a non-U.S. jurisdiction will be less favorable than the terms of options granted under the Plan or the same Offering to employees resident solely in the U.S. Every finding, decision and determination made by the Administrator will, to the full extent permitted by law, be final and binding upon all parties.
15. Designation of Beneficiary.
(a) If permitted by the Administrator, a Participant may file a designation of a beneficiary who is to receive any shares of Common Stock and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such Participant of such shares and cash. In addition, if permitted by the Administrator, a Participant may file a designation of a beneficiary who is to receive any cash from the Participant’s account under the Plan in the event of such Participant’s death prior to exercise of the option. If a Participant is married and the designated beneficiary is not the spouse, spousal consent will be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the Participant at any time by notice in a form determined by the Administrator. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company will deliver such shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.
(c) All beneficiary designations will be in such form and manner as the Administrator may designate from time to time. Notwithstanding Sections 15(a) and (b) above, the Company and/or the Administrator may decide not to permit such designations by Participants in non-U.S. jurisdictions to the extent permitted by U.S. Treasury Regulation Section 1.4232(f).
16. Transferability. Neither Contributions credited to a Participant’s account nor any rights with regard to the exercise of an option or to receive shares of Common Stock under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15 hereof) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition will be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. The Company may use all Contributions received or held by it under the Plan for any corporate purpose, and the Company will not be obligated to segregate such Contributions except under Offerings or for Participants in the Non-423 Component for which Applicable Laws require that Contributions to the Plan by Participants be segregated from the Company’s general corporate funds and/or deposited with an independent third party. Until shares of Common Stock are issued, Participants will have only the rights of an unsecured creditor with respect to such shares.
18. Reports. Individual accounts will be maintained for each Participant in the Plan. Statements of account will be given to participating Eligible Employees at least annually, which statements will set forth the amounts of Contributions, the Purchase Price, the number of shares of Common Stock purchased and the remaining cash balance, if any.
19. Adjustments, Dissolution, Liquidation, Merger or Change in Control.
(a) Adjustments.In the event that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, or other change in the corporate structure of the Company affecting the Common Stock occurs, the Administrator, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjust the number and class of Common Stock that may be delivered under the Plan, the Purchase Price per share and the number of shares of Common Stock covered by each option under the Plan that has not yet been exercised, and the numerical limits of Sections 7 and 13.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, any Offering Period then in progress will be shortened by setting a New Exercise Date, and will terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date will be before the date of the Company’s proposed dissolution or liquidation. The Administrator will notify each Participant in writing or electronically, prior to the New Exercise Date, that the Exercise Date for the Participant’s option has been changed to the New Exercise Date and that the Participant’s option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.
(c) Merger or Change in Control. In the event of a merger or Change in Control, each outstanding option will be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the option, the Offering Period with respect to which such option relates will be shortened by setting a New Exercise Date on which such Offering Period will end. The New Exercise Date will occur before the date of the Company’s proposed merger or Change in Control. The Administrator will notify each Participant in writing or electronically prior to the New Exercise Date, that the Exercise Date for the Participant’s option has been changed to the New Exercise Date and that the Participant’s option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.
20. Amendment or Termination.
(a) The Administrator, in its sole discretion, may amend, suspend, or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the Administrator, in its discretion, may elect to terminate all outstanding Offering Periods either immediately or upon completion of the purchase of shares of Common Stock on the next Exercise Date (which may be sooner than originally scheduled, if determined by the Administrator in its discretion), or may elect to permit Offering Periods to expire in accordance with their terms (and subject to any adjustment pursuant to Section 19). If the Offering Periods are terminated prior to expiration, all amounts then credited to Participants’ accounts that have not been used to purchase shares of Common Stock will be returned to the Participants (without interest thereon, except as otherwise required under Applicable Laws, as further set forth in Section 12 hereof) as soon as administratively practicable.
(b) Without stockholder consent and without limiting Section 20(a), the Administrator will be entitled to change the Offering Periods or Purchase Periods, designate separate Offerings, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit Contributions in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed Contribution elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with Contribution amounts, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable that are consistent with the Plan.
(c) In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable, modify, amend or terminate the Plan to reduce or eliminate such accounting consequence including, but not limited to:
(i) amending the Plan to conform with the safe harbor definition under the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto), including with respect to an Offering Period underway at the time;
(ii) altering the Purchase Price for any Offering Period or Purchase Period including an Offering Period or Purchase Period underway at the time of the change in Purchase Price;
(iii) shortening any Offering Period or Purchase Period by setting a New Exercise Date, including an Offering Period or Purchase Period underway at the time of theAdministratoraction;
(iv) reducing the maximum percentage of Compensation a Participant may elect to set aside as Contributions; and
(v) reducing the maximum number of Shares a Participant may purchase during any Offering Period or Purchase Period.
Such modifications or amendments will not require stockholder approval or the consent of any Participants.
21. Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan will be deemed to have been duly given when received in the form and manner specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares of Common Stock will not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto will comply with all applicable provisions of law, domestic or foreign, including, without limitation, the U.S. Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and will be further subject to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.
23. Code Section 409A. The 423 Component of the Plan is exempt from the application of Code Section 409A and any ambiguities herein will be interpreted to so be exempt from Code Section 409A. In furtherance of the foregoing and notwithstanding any provision in the Plan to the contrary, if the Administrator determines that an option granted under the Plan may be subject to Code Section 409A or that any provision in the Plan would cause an option under the Plan to be subject to Code Section 409A, the Administrator may amend the terms of the Plan and/or of an outstanding option granted under the Plan, or take such other action the Administrator determines is necessary or appropriate, in each case, without the Participant’s consent, to exempt any outstanding option or future option that may be granted under the Plan from or to allow any such options to comply with Code Section 409A, but only to the extent any such amendments or action by the Administrator would not violate Code Section 409A. Notwithstanding the foregoing, the Company will have no liability to a Participant or any other party if the option to purchase Common Stock under the Plan that is intended to be exempt from or compliant with Code Section 409A is not so exempt or compliant or for any action taken by the Administrator with respect thereto. The Company makes no representation that the option to purchase Common Stock under the Plan is compliant with Code Section 409A.
24. Term of Plan. The Plan will become effective upon the later to occur of (a) its adoption by the Board or (b) the business day immediately prior to the Registration Date. It will continue in effect for a term of twenty (20) years, unless sooner terminated under Section 20.
25. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
26. Governing Law. The Plan will be governed by, and construed in accordance with, the laws of the State of California (except its choice-of-law provisions).
27. No Right to Employment. Participation in the Plan by a Participant will not be construed as giving a Participant the right to be retained as an employee of the Company or a Subsidiary or Affiliate, as applicable. Further, the Company or a Subsidiary or Affiliate may dismiss a Participant from employment at any time, free from any liability or any claim under the Plan.
28. Severability. If any provision of the Plan is or becomes or is deemed to be invalid, illegal, or unenforceable for any reason in any jurisdiction or as to any Participant, such invalidity, illegality or unenforceability will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as to such jurisdiction or Participant as if the invalid, illegal or unenforceable provision had not been included.
29. Compliance with Applicable Laws. The terms of this Plan are intended to comply with all Applicable Laws and will be construed accordingly.
30. Automatic Transfer to Low Price Offering Period. To the extent permitted by Applicable Laws, if the Fair Market Value of the Common Stock on any Exercise Date in an Offering Period is lower than the Fair Market Value of the Common Stock on the Enrollment Date of such Offering Period, then all Participants in such Offering Period automatically will be withdrawn from such Offering Period immediately after the exercise of their option on such Exercise Date and automatically re-enrolled in the immediately following Offering Period as of the first day thereof.
A-13proxy card.
A10 NETWORKS, INC.
3 WEST PLUMERIA DRIVE
SAN JOSE, CA 95134
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on May 31, 2016. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on May 31, 2016. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| | | THE BOARD OF DIRECTORS | | | KEEP THIS PORTION FOR YOUR RECORDS
| | | | DETACH AND RETURN THIS PORTION ONLY
| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR
proposals 1, 2 and 3.
| | | | For
| Against
| Abstain
| | | | | | | | | | | | | | | | | | 1. | To elect two Class II directors to serve until the 2019 annual meeting of stockholders and until their successors are duly elected and qualified. | | ☐
| ☐
| ☐
| | | | | | | | | 2.
| To approve an amendment to our 2014 Employee Stock Purchase Plan to remove the automatic annual share increase thereunder and increase the number of shares available for issuance thereunder by 4,000,000 shares.
| | ☐
| ☐
| ☐
| | | | | | | | | | | | | 3.
| To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2016.
| | ☐
| ☐
| ☐
| | | | | | | | | | | NOTE: To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX]
| Date
| | | | Signature (Joint Owners)
| Date
| | | |
0000287336_1 R1.0.1.25
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement, Annual Report is/ are available atwww.proxyvote.com
| | | | A10 NETWORKS, INC.
Annual Meeting of Stockholders
June 1, 2016
This proxy is solicited by the Board of Directors
| | | | | | The undersigned hereby appoints Lee Chen, Greg Straughn and Robert Cochran, and each of them, with full power of substitution and power to act alone, as proxies to vote all the shares of Common Stock which the undersigned would be entitled to vote if personally present and acting at the Annual Meeting of Stockholders of A10 Networks, Inc., to be held on Wednesday, June 1, 2016 at 10:00 a.m. Pacific time, at the Company’s executive offices located at 3 West Plumeria Drive, San Jose, California 95134, and at any adjournments or postponements thereof, as follows:
| | | | | | This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Continued and to be signed on reverse side
| | | |
0000287336_2 R1.0.1.25
| 
