•Technical Support -– Dell Technologies provides executive officers with computer technical support and, in some cases, certain home network equipment. The incremental cost to Dell Technologies of providing these services is limited to the cost of hardware provided and is not material.
•Security -– Dell Technologies provides executive officers with security services, including alarm installation and monitoring and, in some cases, certain home security upgrades in accordance with the recommendations of an independent security study. Mr. Dell reimburses the Company for costs related to his family’s personal security protection.protection provided to Mr. Dell and his family.
•Financial Counseling and Tax Preparation Services -– Under the terms of his employment agreement, Mr. Dell is entitled to reimbursement for financial counseling services (including tax preparation) up to $12,500 annually. Other executive officers are eligible forentitled to reimbursement of up to $15,000 annually for financial counseling services (including tax preparation).
•Travel Expenses -– Dell Technologies pays for reasonable travel expenses for the executive officer’s spouse or domestic partner to attend Dell Technologies-sponsored events if the travel is at the request of Dell Technologies.
•Other -– The executive officers participate in Dell Technologies’ other benefit plans on the same terms as other employees. These plans include medical, dental and life insurance benefits, and the Dell Inc. 401(k) retirement savings plan.Plan. For additional information, see “Compensation of Executive Officers - – Other Benefit Plans.”
For more information about Dell Technologies’ arrangements with Mr. Dell with respect to security, travel and certain other benefits, see “Additional Information -– Certain Relationships and Related Transactions - – Transactions with Michael S. Dell and Other Related Persons.”
Other Compensation Matters
Stock Ownership Guidelines; Prohibited TransactionsGuidelines
The Board of Directors has not adopted stock ownership requirements for our directors or executive officers. The Board of Directors and the Committee believe that at this time the design of Dell Technologies’ equity compensation strategy for executive officers links the interests of executive officers closely with those of other Dell Technologies stockholders. Additionally, Mr. Dell’s ownership in the company already reflects his full alignment with the long-term performance of Dell Technologies.
Policy on Hedging Transactions and Pledging of Securities
Dell Technologies maintains a securities trading policy that applies to our directors and employees, including executive officers and other officers, and prohibits certain activities relating to Company stock, includingspecified securities, as described below. The policy also generally applies to family members who reside with any director or employee, any other person who lives in the director or employee’s household, and any other family members whose transactions in securities are directed by, or subject to the influence or control of, the director or employee, as well as entities, such as a corporation, partnership or trust, controlled by the director or employee.
The activities prohibited by the policy include (1) hedging and monetization transactions that would permit any such person to continue to own the securities without the full risks and rewards of ownership, (2) transactions in put options, call options or other derivative securities on an exchange or in any other organized market and (3) the holding of Company stockthe securities in a margin account or other pledging of Company stockthe securities as collateral for a loan. The policy prohibits hedging and monetization transactions without regard to the means by which they are accomplished, whether through the use of financial instruments such as prepaid variable forwards, equity swaps, collars or exchange funds or otherwise, including short sales, option positions and pledges arising from certain types of hedging transactions.
The foregoing provisions of the securities trading policy apply to transactions in all securities, including equity securities, issued by Dell Technologies or specified subsidiaries, including VMware, Inc. and SecureWorks Corp., that are held by any person covered by the policy. Equity securities subject to the policy include awards granted under equity compensation plans, as well as derivative securities that are not issued by the foregoing entities, such as exchange-traded put or call options or swaps relating to those entities’ securities.
The administrator of the policy has the discretion, on a case-by-case basis and in appropriate circumstances, to waive or modify the restrictions and prohibitions on the hedging and other transactions described above.
Recoupment Policy for Performance-Based Compensation
If Dell Technologies restates its reported financial results, the Board of Directors will review the bonus and other cash or equity awards made to the executive officers, including the named executive officers, based on financial results during the period subject to the restatement and, to the extent practicable under applicable law, Dell Technologies will seek to recover or cancel any of these awards that were awarded as a result of achieving performance targets that would not have been met under the restated financial results.
Employment Agreements; Severance and Change-in-Control Arrangements
Employment Agreement with Michael S. Dell
On October 29, 2013,Mr. Dell’s employment is subject to an employment agreement with Dell Technologies and Dell Inc. entered into an employment agreement with Mr. Dell, pursuant to which Mr. Dell serves as Chief Executive Officer and as Chairman of the Board of Directors of Dell Technologies. Under the employment agreement, Mr. Dell may resign for any or no reason or the Board of Directors may terminate him at any time for “cause” (as defined below). In addition, following a change in control of Dell Technologies (as defined below) or a qualified initial public offering (as defined in the agreement), the Board of Directors may terminate Mr. Dell for any or no reason. Notwithstanding the termination provisions of the employment agreement, the Dell Technologies certificate of incorporation provides that, without the approval of the holders of a majority of the Class A common stock, voting separately as a series, and subject to specified conditions, Mr. Dell may not be removed as the Chief Executive Officer, and the Chief Executive Officer will serve as the Chairman of the Board. As described elsewhere in this proxy statement, Mr. Dell and the other MD stockholders beneficially owned, in aggregate, approximately 91.5%99.8% of the Class A common stock outstanding as of the record date for the annual meeting.
Under the employment agreement, Mr. Dell receivesis entitled to an annual base salary of $950,000 and is eligible for an annual bonus with a target opportunity equal to 200% of his base salary. Mr. Dell’s base salary is subject to annual review by the Board of Directors and subject to increase, but not decrease. In light of COVID-19, Mr. Dell voluntarily agreed to forgo his base salary for a portion of Fiscal 2021, as described above. Further, as discussed under “–Individual Compensation Components – Other Compensation Components – Benefits and Perquisites,” Dell Technologies reimburses Mr. Dell for financial counseling and tax preparation up to $12,500 per year, an annual physical (for himself and his spouse) up to $5,000 per person and all travel and business expenses reasonably incurred by Mr. Dell. Dell Technologies also provides Mr. Dell and his family with business-related security protection.
Pursuant to the agreement,As a result of his substantial stock ownership, Mr. Dell received a stock option to purchase 10,909,091 shares of the Class A common stock ofbelieves that he is appropriately incentivized and that his interests are appropriately aligned with stockholders’ interests. Mr. Dell Technologies (formerly Series A common stock) with a per share exercise price equal to $13.75. The option vested ratably over five yearsdid not receive any stock-based compensation from the grant date and was fully vestedCompany in Fiscal 2019.
2021.
Mr. Dell is subject to a covenant of indefinite duration not to disclose confidential information and an obligation to assign to Dell Technologies and Dell Inc. any intellectual property created by Mr. Dell during his employment.
Under the employment agreement, “cause” is generally defined as any of the following events:
•the conviction of Mr. Dell for a felony resulting in his incarceration; or
•the legal incapacity of Mr. Dell to serve as (1) a director of Dell Technologies or certain subsidiaries of Dell Technologies or (2) the chief executive officer of Dell Technologies or certain subsidiaries of Dell Technologies.
Under the employment agreement, a “change in control” is generally defined as any of the following events:
•a sale or disposition of all or substantially all of the assets of Dell Technologies and its subsidiaries, taken as a whole, to any person, entity or group;
•any person, entity or group (other than Mr. Dell, the SLP stockholders or certain related parties) becomes the beneficial owner of capital stock representing 50% or more of the total voting power of Dell Technologies’ outstanding capital stock, other than pursuant to a merger or consolidation of Dell Technologies with or into any other entity that does not constitute a “change in control” under the following change-in-control event; or
•any merger or consolidation of Dell Technologies with or into any other entity unless the holders of Dell Technologies’ outstanding voting securities immediately before the closing directly or indirectly beneficially own capital stock representing a majority of the total voting power of the resulting entity in substantially the same proportions as their ownership in Dell Technologies immediately before such a transaction.
Severance and Change-in-Control Arrangements with Other Named Executive Officers
Each of the other named executive officers, consisting of Messrs. Sweet, Clarke, Rothberg and Scannell, and Ms. Dew, has entered into a severance agreement with Dell Technologies pursuant to which, if the executive’s employment is terminated without “cause,” or if the executive resigns for “good reason” (each as defined below), the executive will receive a severance payment. The severance payment for each executive will be equal to 300% of the executive’s then-current annual base salary. Two-thirds of this severance amount will be payable following termination of employment and the remainder will be payable on the one-year anniversary of such termination. Each of thesethe severance agreements obligates the executive to comply with certain non-competition and non-solicitation obligations for a period of 12 months following termination of employment and also provides that each executive may not use or disclose certain confidential information of Dell Technologies as set forth in the agreement at any time during or after the executive’s employment.
The treatment of outstanding unvested equity awards held by oursuch named executive officers upon a termination of employment varies depending on the dates on which the awards were granted.
As of the end of Fiscal 2019, Ms. Dew and2021, Mr. Scannell held an unvested performance-based equity awards that wereaward granted under the Management Equity Program between the closing of the EMC merger in September 2016 and the end of Fiscal 2019. Except as indicated below, if either of such named executive officers is terminated without cause, or resigns for good reason, during the period beginning three months before and ending 18 months after a change in control of Dell Technologies (as defined below), which we refer to as the “change-in-control period,” the outstanding, unvested portion of such executive’s time-based vesting MEP awards will vest upon the executive’s termination of employment or, if later, upon the occurrence of the change in control. If such named executive officerMr. Scannell is terminated without cause or resigns for good reason during the change-in-control period or such executivehe dies or becomes disabled at any time, the outstanding, unvested portion of the executive’shis performance-based vesting MEP award will not be forfeited, but will remain outstanding (subject to expiration in accordance with its terms) and eligible to vest based on Dell Technologies’ achievement of
the return on equity target, as described above.above under “– Individual Compensation Components – Equity Incentives – Historical Management Equity Program.” If a termination without cause or a resignation for good reason occurs during the three-month period before a change in control, suchthe performance-based vesting MEP award will remain outstanding for the three-month period to determine whether the change in control occurs. If no change in control occurs on or before the expiration of that period, the performance-based vesting MEP award will be forfeited.
Equity awards granted to our named executive officers in March 2019 under our Fiscal 2020 and Fiscal 2021 equity compensation programprograms will be forfeited upon termination of employment, except in the case of termination due to death or disability, as described under “- Individual Compensation Components - Equity Incentives - Fiscal 2020 Equity Program.”disability. The awards provide no exception to this treatment in the case of a termination of employment following a change in control of Dell Technologies. In the case of termination due to death or disability, the outstanding, unvested portion of such named executive officer’s time-based vesting awards and the portion of such named executive officer’s performance-based awards for which performance has been determined will vest and the portion of such named executive officer’s performance-based awards for which performance has not been determined will vest at the target level.
Dell Technologies believes that the severance benefits it provides to the foregoing named executive officers are appropriate in light of the severance protections available to similarly-situated executive officers at companies that
compete with Dell Technologies for executive talent. Dell Technologies believes the severance benefits help it to attract and retain key executives who may be presented with alternative employment opportunities that might appear to be more attractive absent these protections.
Under the severance agreements, “cause” generally is defined as any of the following events:
•a violation of confidentiality obligations;
•acts resulting in being charged with a criminal offense that constitutes a felony or involves moral turpitude or dishonesty;
•conduct that constitutes gross neglect, insubordination, willful misconduct or breach of Dell Technologies’ code of conduct or the executive’s fiduciary duty; or
•a determination that the executive violated laws relating to the workplace environment.
Under the severance agreements, “good reason” generally is defined as any of the following events, if in each case not timely cured:
•a material reduction in base salary;
•a material adverse change in title or reduction in authority, duties or responsibilities; or
•a change in the executive’s principal place of work of more than 25 miles.
Under the severance agreements, “change in control” has the meaning set forth in the Dell Technologies Inc. 2013 Stock Incentive Plan, which generally defines the term to include any of the following events:
• the sale or disposition, in one or a series of related transactions, to any person or group (as such term is used for purposes of Section 14(d)(2) of the Exchange Act), other than to the Sponsor Stockholders or any of their respective affiliates or to any person or group in which any of the foregoing is a member, of all or substantially all of the consolidated assets of Dell Technologies;
• any person or group (as such term is used for purposes of Section 14(d)(2) of the Exchange Act), other than the Sponsor Stockholders or any of their respective affiliates or any person or group in which any of the foregoing is a member, is or becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the outstanding shares of Dell Technologies common stock, other than as described under “Proposal 4 - Approvala result of Share Increase Amendment Underany merger or consolidation that does not constitute a change in control pursuant to the event immediately set forth below;
• any merger or consolidation of Dell Technologies with or into any other person, unless the holders of the Dell Technologies Inc. 2013common stock immediately prior to such merger or consolidation beneficially own (within the meaning of Rule 13d-3 under the Exchange Act) a majority of the outstanding shares of the common stock (or equivalent voting securities) of the surviving or successor entity (or the parent entity thereof); or
• prior to an initial public offering of the Class C common stock that is registered under the Securities Act of 1933, the Sponsor Stockholders and their respective affiliates cease to have the ability to cause the election of that number of members of the Board who would collectively have the right to vote a majority of the aggregate number of votes represented by all of the members of the Board, and any person or group (as such term is used for purposes of Section 14(d)(2) of the Exchange Act), other than the Sponsor Stockholders and their respective affiliates or any person or group in which any of the foregoing is a member, beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) outstanding voting stock representing a greater percentage of voting power with respect to the general election of members of
the Board than the shares of outstanding voting stock which the Sponsor Stockholders and their respective affiliates collectively beneficially own (within the meaning of Rule 13d-3 under the Exchange Act).
For purposes of this provision of the Stock Incentive Plan, - Summary of Material Provisions of Plan.”the term Sponsor Stockholders refers collectively to the MD stockholders (as defined in Annex A to this proxy statement) and the SLP stockholders (as defined in Annex A to this proxy statement).
For more information about potential payments to Mr. Dell under his employment agreement and to our other named executive officers under their severance agreements, see “Compensation“Compensation of Executive Officers -– Potential Payments Upon Termination of Employment or Change in Control.”
Other Factors Affecting Compensation
Prior to December 22, 2017, when the Tax Cuts and Jobs Act
compensation paid to certain executive officers in excess of $1 million per officer in any year unless the compensation qualified as “performance-based.” Dell Technologies’ compensation programs for executive officers during Fiscal 2019 were not designed with the goal of qualifying as “performance-based” compensation under Section 162(m), in part because the performance-based compensation exemption under Section 162(m) was no longer available as a result of Tax Reform. Dell Technologies expects that in the future, as in previous periods, it will pay compensation in excess of $1 million to executive officers, including named executive officers, that will not be deductible under Section 162(m).
COMPENSATION OF EXECUTIVE OFFICERS
Fiscal 20192021 Summary Compensation Table
The following table summarizes the total compensation paid for the fiscal years indicated by Dell Technologies to the following persons, each of whom was serving as an executive officer of Dell Technologies as of February 1, 2019,January 29, 2021, which was the last day of Fiscal 2019:2021:
•Michael S. Dell, who served as our principal executive officer
•Thomas W. Sweet, who served as our principal financial officer
•Jeffrey W. Clarke, Allison DewRichard J. Rothberg and William F. Scannell, who are our three other most highly compensated employeesexecutive officers
We refer to these executive officers as our named executive officers.
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Name and principal position |
Fiscal Year | Salary ($) | Bonus ($) | Stock awards ($)(1) | Non-equity incentive plan compensation (2) ($) | All other compensation ($) | Total ($) |
Michael S. Dell Chairman and Chief Executive Officer | 2019 | 950,000 | — | — | 2,660,000 | 13,801 | 3,623,801 |
2018 | 950,000 | — | — | 1,786,000 | 19,901 | 2,755,901 |
2017 | 950,000 | — | — | 2,375,000 | 22,276 | 3,347,276 |
Thomas W. Sweet Chief Financial Officer | 2019 | 725,000 | 2,250,000(3) | — | 1,218,000 | 35,918 | 4,228,918 |
2018 | 725,000 | 2,000,000 | — | 783,725 | 61,034 | 3,569,759 |
2017 | 686,539 | 2,170,832 | — | 1,029,808 | 42,892 | 3,930,071 |
Jeffrey W. Clarke Vice Chairman, Products and Operations | 2019 | 851,160 | 4,000,000(3) | — | 1,549,111 | 45,798 | 6,446,068 |
2018 | 846,833 | 3,000,000 | — | 995,029 | 35,007 | 4,876,869 |
2017 | 826,160 | 3,000,000 | — | 1,239,240 | 36,402 | 5,101,802 |
Allison Dew Chief Marketing Officer | 2019 | 486,058 | 1,000,000(3) | 11,142,602 | 772,962 | 14,257 | 13,415,879 |
William F. Scannell President, Global Enterprise Sales and Customer Operations, Dell EMC | 2019 | 725,000 | 4,666,667(4) | — | 1,065,750 | 41,001 | 6,498,418 |
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Name and principal position |
Fiscal Year | Salary ($) | Bonus ($) | Stock awards ($)(1) | Non-equity incentive plan compensation ($)(2) | All other compensation ($) | Total ($) |
Michael S. Dell Chairman and Chief Executive Officer | 2021 | 255,769(3) | — | — | 665,000 | 9,646 | 930,415 |
2020 | 950,000 | — | — | 2,394,000 | 15,058 | 3,359,058 |
2019 | 950,000 | — | — | 2,660,000 | 13,801 | 3,623,801 |
Thomas W. Sweet Chief Financial Officer | 2021 | 750,000 | — | 5,241,221(4) | 1,267,500 | 44,472 | 7,303,193 |
2020 | 732,692 | — | 5,354,646 | 1,153,990 | 45,705 | 7,287,033 |
2019 | 725,000 | 2,250,000 | — | 1,218,000 | 35,918 | 4,228,918 |
Jeffrey W. Clarke Chief Operating Officer and Vice Chairman | 2021 | 881,160 | — | 12,637,502(4)(5) | 1,489,160 | 49,847 | 15,057,669 |
2020 | 860,391 | — | 7,072,202 | 1,355,115 | 46,391 | 9,334,099 |
2019 | 851,160 | 4,000,000 | — | 1,549,111 | 45,798 | 6,446,068 |
Richard J. Rothberg General Counsel | 2021 | 627,500 | — | 6,834,929(4)(5) | 1,060,475 | 39,383 | 8,562,287 |
William F. Scannell President, Global Sales and Customer Operations | 2021 | 750,000 | — | 10,241,206(4)(5) | 1,072,500 | 39,720 | 12,103,426 |
2020 | 732,692 | 4,666,667 | 13,640,018 | 877,033 | 27,239 | 19,943,649 |
2019 | 725,000 | 4,666,667 | — | 1,065,750 | 41,001 | 6,498,418 |
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(1) | The assumptions used by us to calculate this amount is incorporated herein by reference to Note 16 to our consolidated financial statements in our annual report on Form 10-K for the fiscal year ended February 1, 2019, filed with the SEC on March 29, 2019, which we refer to as our 2019(1) The assumptions used by us to calculate this amount are incorporated herein by reference to Note 16 to our consolidated financial statements in our annual report on Form 10-K for the fiscal year ended January 29, 2021, filed with the SEC on March 26, 2021, which we refer to as our 2021 Form 10-K. Stock awards shown include a time-based award of shares under the MEP. |
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(2) | Amounts represent payments under the IBP. |
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(3) | Amount represents award under the SIB for Fiscal 2019. |
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(4) | Amount represents award of $3,000,000 under the SIB for Fiscal 2019 and vesting of award of $1,666,667 under the long-term cash incentive award granted to Mr. Scannell on September 14, 2016. |
(2) Amounts represent payments under the IBP.
(3) Amount reflects Mr. Dell’s voluntary agreement to forgo receipt of his base salary for a portion of Fiscal 2021 in light of the COVID-19 pandemic and represents Mr. Dell’s eligible earnings as a result of such agreement for purpose of calculating Mr. Dell’s target incentive opportunity under the IBP, as described above under “Compensation Discussion and Analysis – Individual Compensation Components – IBP Target Incentive Opportunity.”
(4) Stock awards shown include awards granted in March 2020 consisting of (a) time-based RSUs, (b) performance-based RSUs based on rTSR for the three-year period including Fiscal 2021 through Fiscal 2023, or Fiscal 2021-2023, and (c) performance-based RSUs based on Fiscal 2021 non-GAAP revenue and non-GAAP operating income for Dell Technologies. Also includes awards granted in March 2019 consisting of
performance-based RSUs based on Fiscal 2021 non-GAAP revenue and non-GAAP operating income for Dell Technologies.
(5) The awards shown include retention time-based RSUs granted in August 2020 to Messrs. Clarke, Rothberg and Scannell.
All Other Compensation Table
The following table summarizes the information included in the All Other Compensation column for Fiscal 20192021 in the Fiscal 20192021 Summary Compensation Table.
| | Name | Retirement plans matching contribution(1) ($) | Benefit plans ($) | Annual physical ($) | Security ($) | Imputed income(2) ($) | Other ($) | Total ($) | Name | Air travel(1) ($) | Retirement plans matching contribution ($) | Benefit plans ($) | Annual physical ($) | Security ($) | Imputed income(2) ($) | Other ($) | Total ($) |
Michael S. Dell | 7,500 | 4,002 | — | 2,299 | — | 13,801 | Michael S. Dell | — | 2,740 | 6,906 | — | 9,646 |
Thomas W. Sweet | 7,500 | 7,521 | 3,057 | 99 | 5,929 | 11,812(3) | 35,918 | Thomas W. Sweet | — | 7,125 | 11,484 | 4,022 | 391 | 1,972 | 19,478(3) | 44,472 |
Jeffrey W. Clarke | 7,500 | 7,482 | 4,389 | 947 | — | 25,480(4) | 45,798 | Jeffrey W. Clarke | 1,551 | 7,125 | 7,482 | 4,318 | 4,652 | 275 | 24,444(4) | 49,847 |
Allison Dew | 8,077 | 1,725 | — | 99 | — | 4,356(5) | 14,257 | |
Richard J. Rothberg | | Richard J. Rothberg | — | 7,608 | 6,223 | — | 5,144 | — | 20,408(5) | 39,383 |
William F. Scannell | 10,500 | 7,234 | 4,280 | 99 | 3,938 | 14,950(5) | 41,001 | William F. Scannell | — | 7,125 | 7,482 | 4,413 | 200 | — | 20,500(6) | 39,720 |
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(1) | Includes any prior EMC supplemental matching contributions and subsequent Dell Inc. matching contributions. |
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(2) | Represents the incremental cost of spousal travel and executive and spousal attendance at various Dell Technologies-sponsored events. For additional information, see “Compensation Discussion and Analysis - Individual Compensation Components - Other Compensation Components - Benefits and Perquisites.” |
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(3) | Represents tax and financial planning expenses of $7,652, contribution by Dell Technologies to match the executive officer’s charitable contribution of $3,900, fitness reimbursements of $160 and earnings under the activity perquisites program of $100. |
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(4) | Represents tax and financial planning expenses of $15,000 and contribution by Dell Technologies to match the executive officer’s charitable contribution of $10,480. |
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(5) | Represents tax and financial planning expenses.(1) Represents the value of personal use of Dell-owned aircraft. Such use is valued based on the aggregate incremental cost to Dell determined on a per flight basis and includes the cost of fuel used, the hourly cost of aircraft maintenance, landing fees, trip-related hangar and parking costs, and crew-related costs. The incremental cost does not include “deadhead” flights (a return flight on which no passenger was on board). There were no associated deadhead flights for Fiscal 2021. (2) Represents the incremental cost of personal travel or travel by spouses and attendance by the executive officers and spouses at Dell Technologies-sponsored events, as applicable. For additional information, see “Compensation Discussion and Analysis – Individual Compensation Components – Other Compensation Components – Benefits and Perquisites.” (3) Represents tax and financial planning expenses of $15,000, contribution by Dell Technologies to match the executive officer’s charitable contribution of $4,320, and earnings under the activity perquisites and healthy rewards programs of $158. (4) Represents tax and financial planning expenses of $15,000, contribution by Dell Technologies to match the executive officer’s charitable contribution of $9,040, and earnings under the activity perquisites and healthy rewards programs of $404. (5) Represents tax and financial planning expenses of $10,000, contribution by Dell Technologies to match the executive officer’s charitable contribution of $10,000, fitness program reimbursements of $300 and earnings under the healthy rewards programs of $108. (6) Represents tax and financial planning expenses of $15,000 and contribution by Dell Technologies to match the executive officer’s charitable contribution of $5,500.
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Grants of Plan-Based Awards in Fiscal 20192021
The following table sets forth certain information about grants of plan-based awards that Dell Technologies made to the named executive officers during Fiscal 2019.2021. For more information about the plans under which these awards were granted, see “Compensation Discussion and Analysis -– Individual Compensation Components - Cash– Annual Bonus Plans” “- Special – Incentive Bonus Plan” and “-“– Equity Incentives.”
| | Name | Grant Date | Estimated future payouts under non-equity incentive plan awards (1) | All other stock awards: Number of shares of stock or units (#) | Grant date fair value of stock and option awards ($) | Name | Type of award (1) | Grant date | Award date (2) | Estimated future payouts under non-equity incentive plan awards (3) | Estimated future payouts under equity incentive plan awards (4) | All other stock awards: Number of shares of stock or units (#) | Grant date fair value of stock and option awards ($) |
Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
Michael S. Dell | — | 1,900,000 | — | Michael S. Dell | IBP | — | 511,538 | — | — |
Thomas W. Sweet | — | 725,000 | — | Thomas W. Sweet | IBP | — | 750,000 | — | — |
Thomas W. Sweet | | PSU-rTSR(5) | 3/15/2020 | — | 29,207 | 58,414 | 116,828 | — | 2,337,144 |
| PSU-FIN(6) | 3/15/2020 | — | 9,738 | 19,476 | 38,952 | — | 700,162 |
| PSU-FIN(6) | 3/15/2020 | 3/15/2019 | — | 5,618 | 11,235 | 22,470 | — | 403,898 |
| RSU | 3/15/2020 | — | 50,070(7) | 1,800,017 |
— | 851,160 | — | Jeffrey W. Clarke | IBP | — | 881,160 | — | — |
Allison Dew | 6/1/2018 | — | 460,096 | — | 226,108 | 11,142,602 | |
Jeffrey W. Clarke | | PSU-rTSR(5) | 3/15/2020 | — | 42,894 | 85,787 | 171,574 | — | 3,432,338 |
| PSU-FIN(6) | 3/15/2020 | — | 14,301 | 28,602 | 57,204 | — | 1,028,242 |
| PSU-FIN(6) | 3/15/2020 | 3/15/2019 | — | 7,419 | 14,838 | 29,676 | — | 533,426 |
| RSU | 3/15/2020 | — | 73,533(7) | 2,643,511 |
| Jeffrey W. Clarke | RSU | 8/20/2020 | — | 83,808(8) | 4,999,985 |
| IBP | — | 627,500 | — | — |
Richard J. Rothberg | | PSU-rTSR(5) | 3/15/2020 | — | 21,382 | 42,764 | 85,528 | — | 1,710,988 |
| PSU-FIN(6) | 3/15/2020 | — | 7,129 | 14,258 | 28,516 | — | 512,575 |
| PSU-FIN(6) | 3/15/2020 | 3/15/2019 | — | 4,085 | 8,169 | 16,338 | — | 293,676 |
| RSU | 3/15/2020 | — | 36,655(7) | 1,317,747 |
| Richard J. Rothberg | RSU | 8/20/2020 | — | 50,284(8) | 2,999,943 |
— | 725,000 | — | IBP | — | 750,000 | — | — |
William F. Scannell | | PSU-rTSR(5) | 3/15/2020 | — | 29,207 | 58,414 | 116,828 | — | 2,337,144 |
| PSU-FIN(6) | 3/15/2020 | — | 9,738 | 19,476 | 38,952 | — | 700,162 |
| PSU-FIN(6) | 3/15/2020 | 3/15/2019 | — | 5,618 | 11,235 | 22,470 | — | 403,898 |
| RSU | 3/15/2020 | — | 50,070(7) | 1,800,017 |
| William F. Scannell | RSU | 8/20/2020 | — | 83,808(8) | 4,999,985 |
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(1) | Each named executive officer participated in the IBP. Awards under this plan were funded at 140% based on the corporate modifier. An individual modifier was applied for Messrs. Sweet, Clarke and Scannell and Ms. Dew. |
(1) Of the awards shown in the table:
• “IBP” refers to the Dell Inc. Incentive Bonus Plan.
• “PSU–rTSR” refers to Fiscal 2021 performance-based stock units eligible to vest based on achievement measured against the rTSR performance goal for Fiscal 2021-2023.
• “PSU–FIN” refers to Fiscal 2021 performance-based stock units eligible to vest based on achievement measured against financial performance goals for Fiscal 2021. See note 6 below.
• “RSU” refers to time-based restricted stock units.
(2) This column reflects the date on which the Nominating and Governance Committee approved all material terms of each grant of performance-based stock units, except performance targets for subsequent fiscal years, which were approved at the later date reflected in the “Grant date” column. For financial reporting purposes, awards are measured at fair value on the grant date as defined by FASB ASC Topic 718.
(3) Each named executive officer participated in the IBP. Awards under this plan were funded at 130% based on the corporate modifier. An individual modifier was applied for Messrs. Sweet, Clarke, Rothberg and Scannell.
(4) The amounts shown in the Threshold, Target and Maximum columns reflect the minimum, target and maximum number, respectively, of Fiscal 2021 performance-based stock units that are eligible to vest subject to the achievement of Fiscal 2021-2023 performance goals. The threshold number of shares is 50% of the target number of shares and the maximum number of shares is 200% of the target number of shares. If any of these units become eligible to vest, they will vest in Fiscal 2023. For more information about these performance-based stock units, see “Compensation Discussion and Analysis – Individual Compensation Components – Equity Incentives – Fiscal 2021 Performance-Based RSUs.”
(5) The amounts shown represent the shares subject to restricted stock unit awards that may be eligible to vest based on rTSR for Fiscal 2021-2023. The weighted-average grant date fair value is $40.01 and is determined utilizing a Monte Carlo valuation model.
(6) The amounts shown represent the shares subject to restricted stock unit awards that may be eligible to vest upon achievement of the financial performance goals based on non-GAAP revenue and non-GAAP operating income for Fiscal 2021 only. The grant date fair value is based on the closing price of the Class C common stock of $35.95 as reported on the NYSE on March 15, 2020, which reflects only the foregoing Fiscal 2021 financial performance goals. Achievement with respect to these restricted stock units was fixed at 168% of the target number of shares covered by the awards based on performance for Fiscal 2021. The Fiscal 2022 financial performance goals were approved in March 2021 and will be presented in the proxy statement for the 2022 annual meeting of stockholders. The Fiscal 2023 financial performance goals for the March 2020 award will be approved in Fiscal 2023 and will be presented in the proxy statement for the 2023 annual meeting of stockholders.
(7) One-third of these restricted stock units vested on March 15, 2021 and the remaining two-thirds will vest in equal installments on March 15, 2022 and March 15, 2023.
(8) Of these restricted stock units, 20% will vest on August 20, 2021, 30% will vest on August 20, 2022 and 50% will vest on August 20, 2023.
Outstanding Equity Awards at End of Fiscal 20192021
The following table sets forth certain information about outstanding option and stock awards held as of the end of Fiscal 20192021 by the named executive officers.
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Name | Option Awards | Stock Awards |
Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock held that have not vested ($) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) |
Michael S. Dell | 10,909,091 | — | — | 13.75(1) | 11/25/2023 | — | — | — | — |
Thomas W. Sweet | 152,000 | — | — | 13.75(1) | 11/25/2023 | — | — | — | — |
290,909(2) | — | — | 13.75(1) | 11/25/2023 | — | — | — | — |
668,724(3) | 170,185(3) | — | 13.75(1) | 2/6/2024 | — | — | — | — |
800,000(2) | — | — | 13.75(1) | 2/6/2024 | — | — | — | — |
Jeffrey W. Clarke | 1,713,886 | — | — | 13.75(1) | 11/25/2023 | — | — | — | — |
2,467,996(2) | — | — | 13.75(1) | 11/25/2023 | — | — | — | — |
Allison Dew | 67,683 | — | — | 13.75(1) | 11/25/2023 | 226,108(6) | 11,226,262 | — | — |
152,728(2) | — | — | 13.75(1) | 11/25/2023 | — | — | — | — |
William F. Scannell | 24,474(4) | — | — | 27.50(5) | 9/14/2019 | 72,727(7) | 3,610,896 | 327,273(8) | 16,249,104 |
74,963(4) | — | — | 27.50(5) | 9/14/2019 | — | — | — | — |
94,222(4) | — | — | 27.50(5) | 9/14/2019 | — | — | — | — |
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Name | Option awards | Stock awards |
Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock held that have not vested ($) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) |
Michael S. Dell | — | — | — | — | — | — | — | — | — |
Thomas W. Sweet | 381,818 | — | — | 13.75(1) | 2/6/2024 | 136,089(2) | 9,919,527 | 142,290(3) | 10,371,518 |
500,000 | — | — | 13.75(1) | 2/6/2024 | — | — | — | — |
Jeffrey W. Clarke | 113,946 | — | — | 13.75(1) | 11/25/2023 | 275,787(4) | 20,102,114 | 202,325(5) | 14,747,469 |
Richard J. Rothberg | 346,374 | — | — | 13.75(1) | 11/25/2023 | 149,647(6) | 10,907,770 | 103,947(7) | 7,576,697 |
8,571 | — | — | 13.75(1) | 11/25/2023 | — | — | — | — |
William F. Scannell | — | — | — | — | — | 387,787(8) | 28,265,794 | 343,562(9) | 25,042,234 |
__________
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(1) | In approving this option award, the Board of Directors determined that the fair market value as of the grant date of each share of Class C common stock or (for Mr. Dell) Class A common stock underlying the option award was equal to the merger consideration of $13.75 per share of Dell Inc. common stock paid to Dell Inc. public stockholders in the going-private transaction. |
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(2) | Represents option award for Class C common stock that vested and became exercisable on October 29, 2018 based on the level of return achieved on the initial equity investment in Dell Technologies. |
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(3) | Represents option award exercisable for Class C common stock that vests and becomes exercisable with respect to 20% of the shares subject to the option on each of the first, second, third, fourth and fifth anniversaries of the grant date of February 6, 2014. |
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(4) | This option award was a voluntary rollover option award in which Mr. Scannell elected to receive for a specified portion of his EMC restricted stock units, which would have been accelerated in the EMC merger, (a) a fixed cash award and (b) a new grant of unvested options to purchase our Class C common stock. |
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(5) | In approving this option award, the Board of Directors determined that the fair market value as of the grant date of each share of Class C common stock underlying the option award was equal to $27.50 per share following the EMC merger. |
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(6) | Represents restricted stock award for Class C common stock that vests in three equal annual installments on the first, second and third anniversaries of the grant date of June 1, 2018. |
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(7) | Represents restricted stock award for Class C common stock that vests in three equal annual installments on the first, second and third anniversaries of the grant date of September 14, 2016. |
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(8) | Represents restricted stock award for Class C common stock that vests based on the level of return achieved on the initial equity investment in Dell Technologies calculated on specified measurement dates or upon the occurrence of specified events related to Dell Technologies. |
(1) In approving this option award, the Board of Directors determined that the fair market value as of the grant date of each share of Class C common stock underlying the option award was equal to the merger consideration of $13.75 per share of Dell Inc. common stock paid to Dell Inc. public stockholders in the going-private transaction.
(2) Mr. Sweet was granted a performance-based RSU award based on a target number of 19,476 shares on March 15, 2020. Of this award, 168% of the target (32,719 shares) became eligible to vest based on the achievement of Fiscal 2021 financial performance goals and will vest on March 15, 2023, subject to continued service. Mr. Sweet was also granted 50,070 time-based RSUs on March 15, 2020. One-third of the shares subject to those RSUs vested on March 15, 2021 and the remaining two-thirds will vest in equal installments on March 15, 2022 and March 15, 2023. In addition, Mr. Sweet was granted two separate performance-based RSU awards, each based on a target number of 11,235 shares, on March 15, 2019. One award was based on Fiscal 2021 financial performance goals and 168% of the target (18,874 shares) became eligible to vest based on the achievement of those goals. The second award was based on Fiscal 2020 financial performance goals and 135% of the target (15,167 shares) became eligible to vest based on the achievement of those goals. Both awards will vest on March 15, 2022, subject to continued service. Mr. Sweet was also granted 28,889 time-based RSUs on March 15, 2019. One-third of the shares subject to those RSUs vested on March 15, 2020 and March 15, 2021 and the remaining shares will vest on March 15, 2022.
(3) Mr. Sweet was granted a performance-based RSU award on March 15, 2020 with a target number of 58,414 shares based on the achievement of rTSR performance for Fiscal 2021-2023, which will vest on March 15, 2023, subject to such performance and continued service. In addition, Mr. Sweet was granted a performance-based RSU award on March 15, 2020 with a target number of 38,938 shares, with one-half based on the achievement of Fiscal 2022 financial performance goals and one-half based on the achievement of Fiscal 2023 financial performance goals. These shares will vest on March 15, 2023, subject to such performance and continued service. Mr. Sweet was also granted a performance-based RSU award on March 15, 2019 with a target number of 33,704 shares based on the achievement of rTSR performance for Fiscal 2020-2022, which will vest on March 15, 2022, subject to such performance and continued service. In addition, Mr. Sweet was granted a performance-based RSU award on March 15, 2019 with a target number of 11,234 shares based on the
achievement of Fiscal 2022 financial performance goals, which will vest on March 15, 2022, subject to such performance and continued service.
(4) Mr. Clarke was granted 83,808 time-based RSUs on August 20, 2020. Of the shares subject to this award, 20% will vest on August 20, 2021, 30% will vest on August 20, 2022 and 50% will vest on August 20, 2023. Mr. Clarke was also granted a performance-based RSU award based on a target number of 28,602 shares on March 15, 2020. Of this award, 168% of the target (48,051 shares) became eligible to vest based on the achievement of Fiscal 2021 financial performance goals and will vest on March 15, 2023, subject to continued service. In addition, Mr. Clarke was granted 73,533 time-based RSUs on March 15, 2020. One-third of the shares subject to those RSUs vested on March 15, 2021 and the remaining two-thirds will vest in equal installments on March 15, 2022 and March 15, 2023. Mr. Clarke was also granted two separate performance-based RSU awards, each based on a target number of 14,838 shares, on March 15, 2019. The vesting of one award was based on Fiscal 2021 financial performance goals and 168% of the target (24,927 shares) became eligible to vest based on the achievement of those goals. The vesting of the second award was based on Fiscal 2020 financial performance goals and 135% of the target (20,032 shares) became eligible to vest based on the achievement of those goals. Both awards will vest on March 15, 2022, subject to continued service. In addition, Mr. Clarke was granted 38,155 time-based RSUs on March 15, 2019. One-third of the shares subject to those RSUs vested on March 15, 2020 and March 15, 2021 and the remaining shares will vest on March 15, 2022.
(5) Mr. Clarke was granted a performance-based RSU award on March 15, 2020 with a target number of 85,787 shares based on the achievement of rTSR performance for Fiscal 2021-2023, which will vest on March 15, 2023, subject to such performance and continued service. In addition, Mr. Clarke was granted a performance-based RSU award on March 15, 2020 with a target number of 57,185 shares, with one-half based on the achievement of Fiscal 2022 financial performance goals and one-half based on the achievement of Fiscal 2023 financial performance goals. These shares will vest on March 15, 2023, subject to such performance and continued service. Mr. Clarke was also granted a performance-based RSU award on March 15, 2019 with a target number of 44,515 shares based on the achievement of rTSR performance for Fiscal 2020-2022, which will vest on March 15, 2022, subject to such performance and continued service. In addition, Mr. Clarke was granted a performance-based RSU award on March 15, 2019 with a target number of 14,838 shares based on the achievement of Fiscal 2022 financial performance goals, which will vest on March 15, 2022, subject to such performance and continued service.
(6) Mr. Rothberg was granted 50,284 time-based RSUs on August 20, 2020. Of the shares subject to those RSUs, 20% will vest on August 20, 2021, 30% will vest on August 20, 2022 and 50% will vest on August 20, 2023. Mr. Rothberg was also granted a performance-based RSU award based on a target number of 14,258 shares on March 15, 2020. Of this award, 168% of the target (23,953 shares) became eligible to vest based on the achievement of Fiscal 2021 financial performance goals and will vest on March 15, 2023, subject to continued service. In addition, Mr. Rothberg was granted 36,655 time-based RSUs on March 15, 2020. One-third of the shares subject to those RSUs vested on March 15, 2021 and the remaining two-thirds will vest in equal installments on March 15, 2022 and March 15, 2023. Mr. Rothberg was also granted two separate performance-based RSU awards, each based on a target number of 8,169 shares, on March 15, 2019. The vesting of one award was based on Fiscal 2021 financial performance goals and 168% of the target (13,723 shares) became eligible to vest based on the achievement of those goals. The vesting of the second award was based on Fiscal 2020 financial performance goals and 135% of the target (11,029 shares) became eligible to vest based on the achievement of those goals. Both awards will vest on March 15, 2022, subject to continued service. In addition, Mr. Rothberg was granted 21,006 time-based RSUs on March 15, 2019. One-third of the shares subject to those RSUs vested on March 15, 2020 and March 15, 2021 and the remaining shares will vest on March 15, 2022.
(7) Mr. Rothberg was granted a performance-based RSU award on March 15, 2020 with a target number of 42,764 shares based on the achievement of rTSR performance for Fiscal 2021-2023, which will vest on March 15, 2023, subject to such performance and continued service. In addition, Mr. Rothberg was granted a performance-based RSU award on March 15, 2020 with a target number of 28,506 shares, with one-half based on the achievement of Fiscal 2022 financial performance goals and one-half based on the achievement of Fiscal 2023 financial performance goals. These shares will vest on March 15, 2023, subject to such performance and continued service. Mr. Rothberg was also granted a performance-based RSU award on March 15, 2019 with a target number of 24,508 shares based on the achievement of rTSR performance for Fiscal 2020-2022, which will vest on March 15, 2022, subject to such performance and continued service. In addition, Mr. Rothberg was granted a performance-based RSU award on March 15, 2019 with a target number of 8,169 shares based on the
achievement of Fiscal 2022 financial performance goals, which will vest on March 15, 2022 subject to such performance and continued service.
(8) Mr. Scannell was granted 83,808 time-based RSUs on August 20, 2020. Of the shares subject to those RSUs, 20% will vest on August 20, 2021, 30% will vest on August 20, 2022 and 50% will vest on August 20, 2023. Mr. Scannell was also granted a performance-based RSU award based on a target number of 19,476 shares on March 15, 2020. Of this award, 168% of the target (32,719 shares) became eligible to vest based on the achievement of Fiscal 2021 financial performance goals and will vest on March 15, 2023, subject to continued service. In addition, Mr. Scannell was granted 50,070 time-based RSUs on March 15, 2020. One-third of the shares subject to those RSUs vested on March 15, 2021 and the remaining two-thirds will vest in equal installments on March 15, 2022 and March 15, 2023. Mr. Scannell was also granted 167,890 time-based RSUs on December 13, 2019 that vest in equal annual installments on December 9, 2021 and December 9, 2022. In addition, Mr. Scannell was granted two separate performance-based RSU awards, each based on a target number of 11,235 shares, on March 15, 2019. One award was based on Fiscal 2021 financial performance goals and 168% of the target (18,874 shares) became eligible to vest based on the achievement of those goals. The second award was based on Fiscal 2020 financial performance goals and 135% of the target (15,167 shares) became eligible to vest based on the achievement of those goals. Both awards will vest on March 15, 2022, subject to continued service. Mr. Scannell was also granted 28,889 time-based RSUs on March 15, 2019. One-third of the shares subject to those RSUs vested on March 15, 2020 and March 15, 2021 and the remaining shares will vest on March 15, 2022.
(9) Mr. Scannell was granted a performance-based RSU award on March 15, 2020 with a target number of 58,414 shares based on the achievement of rTSR performance for Fiscal 2021-2023, which will vest on March 15, 2023, subject to such performance and continued service. In addition, Mr. Scannell was granted a performance-based RSU award on March 15, 2020 with a target number of 38,938 shares, with one-half based on the achievement of Fiscal 2022 financial performance goals and one-half based on the achievement of Fiscal 2023 financial performance goals. These shares will vest on March 15, 2023, subject to such performance and continued service. Mr. Scannell was also granted a performance-based RSU award on March 15, 2019 with a target number of 33,704 shares based on the achievement of rTSR performance for Fiscal 2020-2022, which will vest on March 15, 2022, subject to such performance and continued service. In addition, Mr. Scannell was granted a performance-based RSU award on March 15, 2019 with a target number of 11,234 shares based on the achievement of Fiscal 2022 financial performance, which will vest on March 15, 2022, subject to such performance and continued service. As discussed under “Compensation Discussion and Analysis – Individual Compensation Components – Equity Incentives – Historical Management Equity Program,” Mr. Scannell was also granted a performance-based stock award for 327,273 shares under the MEP on September 14, 2016 that is subject to vesting based on the level of return achieved on the initial equity investment in Dell Technologies calculated on specified measurement dates or upon the occurrence of specified events related to Dell Technologies. Of the shares subject to this award, 38.5% (126,001 shares) vested on September 7, 2020 based on achievement of specified goals and the remaining 201,272 shares remain unvested at fiscal-year end.
Option Exercises and Stock Vested
The following table sets forth certain information about option exercises and vesting of restricted stock or restricted stock units during Fiscal 20192021 for each of the named executive officers on an aggregate basis.
| | Name | Option Awards | Stock Awards | Name | Option awards | Stock awards |
Number of shares acquired on exercise (#) | Value realized on exercise ($) | Number of shares acquired on vesting (#) | Value realized on vesting ($)(1) | Number of shares acquired on exercise (#) | Value realized on exercise ($)(1) | Number of shares acquired on vesting (#) | Value realized on vesting ($)(2) |
Michael S. Dell | — | Michael S. Dell | — | — |
Thomas W. Sweet | — | Thomas W. Sweet | 600,000 | 30,408,937 | 9,630 | 346,199 |
Jeffrey W. Clarke | — | Jeffrey W. Clarke | 2,813,372 | 146,355,832 | 12,719 | 457,248 |
Allison Dew | — | |
Richard J. Rothberg | | Richard J. Rothberg | 493,785 | 24,596,768 | 7,003 | 251,758 |
William F. Scannell | — | 72,727 | 5,801,433 | William F. Scannell | — | 135,631 | 8,492,163 |
__________
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(1) | Calculated based upon the good faith determination by the Board of Directors of the fair market value of a share of Class C common stock most immediately preceding such vesting date. |
(1) Represents the difference between the exercise price and the price of our Class C common stock, as reported on the NYSE, at the time of exercise for each option.
(2) Represents the closing price of our Class C common stock as reported on the NYSE on the immediately preceding trading date, multiplied by the number of shares of stock vesting on the applicable vesting date.
Stock Incentive Plan
Dell Technologies Inc. 2013 Stock Incentive Plan
The purpose of the Dell Technologies Inc. 2013 Stock Incentive Plan referred(as amended and restated as of July 9, 2019), which we refer to as the 2013Stock Incentive Plan, is to aid Dell Technologies in recruiting and retaining employees, directors and other service providers of outstanding ability and to motivate these persons to exert their best efforts on behalf of the Company by providing incentives through the granting of stock-based awards with respect to shares of Class C common stock and the granting of cash-denominated awards. For a description
The maximum number of shares of Class C common stock issuable under the materialStock Incentive Plan is 110,500,000, subject to adjustment under the terms of the 2013plan. As of January 29, 2021, a total of 31,650,562 shares remained available for issuance for future awards under the plan.
Employees, consultants, non-employee directors, and other service providers of the Company and its affiliates approved by the Committee are eligible to receive stock awards under the Stock Incentive Plan, see “Proposal 4 - Approvalsubject to certain limits provided by law with respect to the granting of Share Increase Amendment Underincentive stock options. The Nominating and Governance Committee has the full authority to determine who will be granted awards under the Stock Incentive Plan.
The Stock Incentive Plan provides for the grant of any of the following types of stock awards (or any combination thereof): options to purchase shares (incentive or nonqualified); stock appreciation rights to acquire shares; or other stock-based awards providing for the delivery of shares. Other stock-based awards the Company may grant include restricted stock, restricted stock units, deferred stock units and dividend equivalent rights.
Shares of Class C common stock acquired pursuant to awards granted under the Stock Incentive Plan are subject to transfer restrictions set forth in the Stock Incentive Plan, and for the named executive officers and certain other senior members of Dell Technologies, Inc. 2013sale (put) provisions set forth in a management stockholders agreement with Dell Technologies.
If Dell Technologies undergoes a change in control, as defined in the Stock Incentive Plan.”Plan, the Nominating and Governance Committee, at its discretion, may accelerate the vesting or cause any restrictions to lapse with respect to outstanding awards, may cancel such awards for fair value, or may provide for the issuance of substitute awards.
Subject to certain limitations specified in the Stock Incentive Plan, the Board of Directors may amend or terminate the Stock Incentive Plan. Unless earlier terminated, the Stock Incentive Plan will terminate ten years following its effective date, or October 29, 2023, but any awards outstanding under the Stock Incentive Plan as of the termination date will remain outstanding in accordance with their terms.
Other Benefit Plans
401(k) Retirement Plans
During Fiscal 2019,2021, all named executive officers were eligible to participate in the Dell Inc. 401(k) planPlan and receive matching contributions of up to 6% of the participant’s eligible compensation, withup to a maximum amount for the Dell Inc. 401(k) Plan year. Due to the suspension of the matching contribution of $7,500 per year.described below, the matching contribution limit for the Dell Inc. 401(k) Plan year 2020 was $7,125. Participants in the planDell Inc. 401(k) Plan may invest their contributions and the matching contributions in a variety of investment choices.
Effective June 1, 2020, the Company suspended the Dell Inc. 401(k) Plan employer matching contribution for U.S. employees, including our named executive officers, as a precautionary measure to preserve financial flexibility in light of COVID-19. On January 1, 2021, the Dell Inc. 401(k) Plan employer matching contributions were reinstated, with no change to the matching contribution policy or participant eligibility requirements.
Deferred Compensation Plans
Dell Technologies maintains a nonqualified deferred compensation plan pursuant to which designated managerial or highly compensated employees, including the named executive officers, may elect to defer the receipt of a portion of the base salaries and/or cash bonuses that they otherwise would have received when earned.
Dell Technologies does not make any matching or other contributions under the plan. The plan is intended to give participants the ability to defer receipt of certain income to a later date, which may be an attractive tax planning feature and the availability of which assists in the attraction and retention of executive talent. Participants’ account balances reflect gains and losses in the plan’s investment funds.
The following table shows the executive contributions, earnings and account balances in the deferred compensation plans for the named executive officers for Fiscal 2019.2021.
Fiscal 20192021 Nonqualified Deferred Compensation Plan Table
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Name | Executive contributions in last FY ($) | Registrant contributions in last FY ($) | Aggregate earnings in last FY(1) ($) | Aggregate withdrawals/ distributions ($) | Aggregate balance at last FYE ($) |
Michael S. Dell | — | — | — | — | — |
Thomas W. Sweet | — | — | — | — | — |
Jeffrey W. Clarke | — | — | — | — | — |
Richard J. Rothberg | 276,783 | — | 282,680 | — | 1,159,165 |
William F. Scannell | — | — | 52 | — | 27,733 |
__________
(1) The aggregate earnings have been reduced to reflect the deduction of an annual administrative fee of $37.
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Name | Executive contributions in last FY ($) | Registrant contributions in last FY ($) | Aggregate earnings in last FY ($) | Aggregate withdrawals/ distributions ($) | Aggregate balance at last FYE ($) |
Michael S. Dell | — | — | — | — | — |
Thomas W. Sweet | — | — | — | — | — |
Jeffrey W. Clarke | — | — | — | — | — |
Allison Dew | — | — | — | — | — |
William F. Scannell | — | — | 498 | — | 27,119 |
Potential Payments Upon Termination of Employment or Change in Control
The following table sets forth the amount of compensation that would become payable to each named executive officer under existing plans and arrangements if one of the events described in the table had occurred on February 1, 2019, givenJanuary 29, 2021, based on the named executive officer’s compensation as of such date and, if applicable, based on the amount of outstanding stock-based awards held by the named executive officer as of such date and the fair market value as of such date of the Class C common stock. These benefits are in addition to benefits available before the occurrence of any termination of employment or change in control of Dell Technologies, including then-exercisable stock options, and benefits available generally to salaried employees, such as distributions under the Dell Inc. 401(k) plan.Plan. In addition, in connection with any actual termination of employment or change-in-control transaction, Dell Technologies may determine to enter into an agreement or to establish an arrangement providing additional benefits or amounts, or altering the terms of benefits described below, as the Board of Directors determines appropriate.
The actual amounts that would be paid upon a named executive officer’s termination of employment or in connection with a change in control can be determined only at the time of any such event. Because of the number of factors that affect the nature and amount of any benefits, any actual amounts paid or distributed may be higher or lower than reported below. Factors that could affect these amounts include the timing during the year of any such event, the named executive officer’s current position and salary, the amount of stock-based awards held by the named executive officer and the fair market value of the Class C common stock.
For information about the events that constitute a “change in control” under Mr. Dell’s employment agreement, see “Compensation Discussion and Analysis -– Other Compensation Matters -– Employment Agreements; Severance and Change-in-Control Arrangements -– Employment Agreement with Michael S. Dell.” For information about the events that constitute a “change in control” or a qualifying termination of employment under the severance agreements with the other named executive officers, see “Compensation Discussion and Analysis -– Other Compensation Matters -– Employment Agreements; Severance and Change-in-Control Arrangements -– Severance and Change-in-Control Arrangements with Other Named Executive Officers.”
| | Name | Severance payment(1) ($) | Acceleration benefit upon death or disability(2) ($) | Acceleration upon change in control ($) | Acceleration upon change in control and qualifying termination(3) ($) | Acceleration upon qualifying termination(4) ($) | Name | Severance payment(1) ($) | Acceleration benefit upon death or disability(2) ($) | Acceleration upon change in control ($) | Acceleration upon change in control and qualifying termination(3) ($) | Acceleration upon qualifying termination(4) ($) |
Michael S. Dell | — | Michael S. Dell | — | — |
Thomas W. Sweet | 2,175,000 | 6,109,642 | — | 6,109,642 | Thomas W. Sweet | 2,250,000 | 20,291,045 | — | — |
Jeffrey W. Clarke | 2,553,480 | — | Jeffrey W. Clarke | 2,643,480 | 34,849,584 | — | — |
Allison Dew | 1,575,000 | 11,226,262 | — | 11,226,262 | 3,742,121 | |
Richard J. Rothberg | | Richard J. Rothberg | 1,882,500 | 18,484,467 | — | — |
William F. Scannell | 2,175,000 | 5,277,563 | — | 5,277,563 | 3,472,140 | William F. Scannell | 2,250,000 | 38,637,313 | — | — |
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(1) | (1) Represents estimated lump sum severance payments payable by Dell Technologies. |
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(2) | Represents the in-the-money value of unvested stock options to purchase Class C common stock or the value of unvested restricted shares that are subject to vesting acceleration in the event of death or permanent disability, based on the closing price of $49.65 per share of Class C common stock as of February 1, 2019 as reported on the NYSE. For Mr. Scannell, the amount also includes acceleration of the long-term cash incentive award granted to Mr. Scannell on September 14, 2016. |
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(3) | Represents the in-the-money value of unvested stock options or the value of unvested restricted shares that are subject to vesting acceleration in the event of a qualifying termination during a change-in-control period, based on the closing price of $49.65 per share of Class C common stock as of February 1, 2019 as reported on the NYSE. For Mr. Scannell, the amount also includes acceleration of the long-term cash incentive award granted to Mr. Scannell on September 14, 2016. For more information, see “Compensation Discussion and Analysis - Other Compensation Matters - Employment Agreements; Severance and Change-in-Control Arrangements - Severance and Change-in-Control Arrangements with Other Named Executive Officers.” |
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(4) | Represents the in-the-money value of unvested stock options or the value of unvested restricted shares that are subject to vesting acceleration in the event of a qualifying termination outside of a change-in-control period, based on the closing price of $49.65 per share of Class C common stock as of February 1, 2019 as reported on the NYSE. For Mr. Scannell, the amount also includes acceleration of the long-term cash incentive award granted to Mr. Scannell on September 14, 2016. In the event of a qualifying termination outside of a change-in-control period, a portion of the named executive officer’s unvested MEP performance-based awards would remain outstanding and eligible to vest in accordance with their terms. |
(2) Represents the value of unvested restricted shares that are subject to vesting acceleration in the event of death or permanent disability, based on the closing price of $72.89 of the Class C common stock on January 29, 2021 as reported on the NYSE. The unvested MEP performance-based award for Mr. Scannell would remain outstanding and eligible to vest in accordance with its terms. For information about this award, see “Compensation Discussion and Analysis – Individual Compensation Components – Equity Incentives – Historical Management Equity Program.”
(3) The unvested MEP performance-based award for Mr. Scannell would remain outstanding and eligible to vest in accordance with its terms.
(4) A portion of the unvested MEP performance-based award for Mr. Scannell would remain outstanding and eligible to vest in accordance with its terms.
Pay Ratio Disclosure
In accordance with SEC rules, we are providing the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee, excluding our CEO. For Fiscal 2019,2021, as determined under Item 402 of the SEC’s Regulation S-K, the annual total compensation for our CEO was $3,623,801,$930,416, the annual total compensation for our median employee was $88,459,$67,496, and the ratio of our CEO’s annual total compensation to our median employee’s annual total compensation for Fiscal 20192021 was 4114 to 1. The ratio for Fiscal 2021 was lower than the ratio calculated in prior fiscal years as a result of Mr. Dell’s voluntary waiver of a portion of his Fiscal 2021 base salary, as described above. under “Compensation Discussion and Analysis – Individual Compensation Components – Base Salary.” Mr. Dell’s waiver resulted in a 73% reduction in actual salary received relative to his annual base salary rate. This reduction affected incentive arrangements applicable to Mr. Dell that are determined by reference to his base salary.
We believe the ratio presented above is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. In identifying our median employee, we calculated annual total target cash compensation of each employee as of November 14, 201713, 2020 for the 12-month period that ended on February 2, 2018.January 29, 2021. Total target cash compensation for this purpose consisted of base salary and target annual bonus and commission incentive and was calculated using internal human resources records. Based on the Company’s belief that there have not been any
changes to either our workforce or the Fiscal 2018 median employee’s circumstances that would result in a significant change to the pay ratio, we used the same median employee used for our Fiscal 2018 pay ratio calculation to calculate our Fiscal 2019 pay ratio.
Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents as of May 13, 2019,April 26, 2021, except as otherwise indicated below, certain information based on our records and filings with the SEC regarding the beneficial ownership of our common stock by:
•each director and director nominee;
•each executive officer named in the Fiscal 20192021 Summary Compensation Table under “Compensation of Executive Officers”;
•all of our directors and executive officers as a group; and
•each person known by us to own beneficially more than 5% of the outstanding shares of any class of our common stock.
We are authorized under our certificate of incorporation to issue shares of the following classes of common stock that were outstanding as of May 13, 2019:April 26, 2021:
•600,000,000 shares of Class A common stock, of which 408,479,708384,416,886 shares were issued and outstanding as of May 13, 2019;April 26, 2021;
•200,000,000 shares of Class B common stock, of which 136,986,858101,685,217 shares were issued and outstanding as of May 13, 2019;April 26, 2021; and
•7,900,000,000 shares of Class C common stock, of which 173,096,985277,577,182 shares were issued and outstanding as of May 13, 2019.April 26, 2021.
The Class C common stock is registered under the Exchange Act and listed on the NYSE. No other class of our common stock is registered under the Exchange Act or listed on any securities exchange.
The calculation of beneficial ownership is made in accordance with SEC rules. Under such rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. Beneficial ownership as of any date includes any shares as to which a person has the right to acquire voting or investment power as of such date or within 60 days thereafter through the exercise of any stock option or other right or the vesting of any RSU, without regard to whether such right expires before the end of such 60-day period or continues thereafter. Under our certificate of incorporation, any holder of Class A common stock or Class B common stock has the right at any time to convert all or any of the shares of such Class A common stock or Class B common stock into shares of Class C common stock on a one-to-one basis. The numbers of shares beneficially owned and applicable percentage ownership amounts set forth in the following table under the heading “Class C Common Stock” do not reflect conversion of any shares of Class A common stock or Class B common stock into shares of Class C common stock. If two or more persons share voting power or investment power with respect to specific securities, all of such persons may be deemed to be beneficial owners of such securities.
The percentage of beneficial ownership as to any person as of May 13, 2019April 26, 2021 (except as otherwise indicated below) is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power as of or within 60 days after May 13, 2019,April 26, 2021, by the sum of the number of shares outstanding as of May 13, 2019April 26, 2021 plus the number of shares as to which such person has the right to acquire voting or investment power as of or within 60 days after May 13, 2019.April 26, 2021. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, Dell Technologies believes that the beneficial owners of the common stock listed below, based on information furnished by suchthe beneficial owners in SEC filings or otherwise, have sole voting and investment power with respect to the shares shown.
Table of Elliott Associates, that Hambledon, Inc. (“Hambledon”) is the general partner of Elliott International and that International Advisors is the investment manager for Elliott International. The address of each of Elliott Associates, International Advisors, Capital Advisors, Mr. Singer and Special GP is 40 West 57th Street, 30th Floor, New York, New York 10019. The address of each of Elliott International and Hambledon is c/o Maples & Calder, P.O. Box 309, Ugland House, South Church Street, George Town, Cayman Islands, British West Indies.Contents
REPORT OF THE AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in its oversight of the financial reporting process of Dell Technologies Inc. (the “Company”). The Audit Committee’s responsibilities are more fully described in its charter, which is accessible on the Company’s website.
Management has the primary responsibility for the preparation and integrity of the Company’s financial statements, accounting and financial reporting principles and internal controls and procedures. The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion thereon.
The Audit Committee reports that it has:
•reviewed and discussed with the Company’s management the audited consolidated financial statements for the fiscal year ended February 1, 2019;January 29, 2021;
•discussed with PwC the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC;
•received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee concerning independence, and has discussed with PwC its independence from the Company; and
•based on the review and discussions referred to herein, recommended to the Board of Directors, and the Board of Directors has approved, that the audited consolidated financial statements be included in the Company’s annual report on Form 10-K for the fiscal year ended February 1, 2019,January 29, 2021, for filing with the Securities and Exchange Commission.
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| | | AUDIT COMMITTEE |
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| | | AUDIT COMMITTEE |
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| | | Ellen J. Kullman,William D. Green, Chair
David W. Dorman William D. GreenEllen J. Kullman
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ADDITIONAL INFORMATION
Director Nomination Process
Director Qualifications -– The Board of Directors has adopted guidelines for qualifications of director candidates, which are described above under “Proposal 1 -– Election of Directors -– Director Qualifications and Information.” In addition, all candidates must possess the aptitude or experience to understand fully the legal responsibilities of a director and the governance processes of a public company, as well as the personal qualities to be able to make a substantial active contribution to Board deliberations. Further, each candidate must be willing to commit sufficient time to discharge the duties of Board membership and should have sufficient years available for service to make a significant contribution to Dell Technologies over time.
Selection and Nomination Process -– Whenever a vacancy occurs on the Board of Directors with respect to a Group I director, either because of a newly created director position or a serving director’s death, resignation, removal or retirement, the Board will select a person to fill the vacancy, including, to the extent applicable, in accordance with the terms of the Sponsor Stockholders Agreements, as described under “Proposal 1 -– Election of Directors -– Stockholder Arrangements -Stockholder– Stockholder Rights to Nominate Directors.” The new director will serve as a Group I director until the annual meeting of stockholders at which the director’s term expires and until the director’s successor is duly elected and qualified or until the director’s earlier death, resignation, disqualification or removal.
The Board of Directors may use any methods it deems appropriate to identify candidates for Board membership, including recommendations from current Board members and recommendations from stockholders. The Board also may engage outside search firms to identify suitable candidates.
The Board of Directors may engage in any investigation and evaluation processes it deems appropriate, including, in addition to a review of a candidate’s background, characteristics, qualities and qualifications, personal interviews with the candidate.
Stockholder Recommendations to the Board of Directors -– Dell Technologies stockholders may recommend individuals to the Board of Directors for consideration as director candidates by submitting candidates’ names and appropriate background and biographical information to the Board of Directors, c/o Board Liaison, Dell Technologies Inc., One Dell Way, Round Rock, Texas 78682. If the appropriate information is provided in a timely manner, the Board generally will consider these candidates in substantially the same manner as it considers other Board candidates. Dell Technologies stockholders also may nominate director candidates by following the advance notice provisions of the Dell Technologies bylaws, as described below under “-“– Stockholder Proposals for Next Year’s Annual Meeting - Proposal– Proposals for Consideration at Next Year’s Annual Meeting -– Bylaw Provisions.”
Stockholder Nominations -– Stockholders who wish to nominate an individual for election as a director, rather than recommending a candidate for nomination by the Board of Directors, must follow the procedures described in the Dell Technologies bylaws. Those procedures are described below under “-“– Stockholder Proposals for Next Year’s Annual Meeting - Proposal– Proposals for Consideration at Next Year’s Annual Meeting -– Bylaw Provisions.”
Re-Election of Existing Directors -– In considering whether to recommend directors who are eligible to stand for re-election, the Board of Directors may consider a variety of factors, including a director’s past contributions to the Board and ability to continue to contribute productively, attendance at Board and committee meetings and compliance with our Corporate Governance Principles (including satisfying the expectations for individual directors), as well as whether the director continues to possess the attributes, capabilities and qualifications considered necessary or desirable for Board service, the results of the annual Board self-evaluation, the independence of the director and the nature and extent of the director’s activities on behalf of companies other than Dell Technologies. No candidate will be nominated for election to the Board if the candidate’s service for the new term would begin after the candidate’s 72nd birthday.
Stockholder Proposals for Next Year’s Annual Meeting
Stockholder proposals will be eligible for consideration for inclusion in the proxy statement and form of proxy for the 20202022 annual meeting of stockholders in accordance with Rule 14a-8 under the Exchange Act, or Rule 14a-8.
Further, in accordance with the Dell Technologies bylaws, nominations of persons for election to the Board or other stockholder proposals will be eligible for consideration at the 20202022 annual meeting without inclusion in the proxy materials.
Inclusion in Next Year’s Proxy Statement -– A stockholder who wishes to present a proposal (other than a nomination of persons for election to the Board) for inclusion in next year’s proxy statement in accordance with Rule 14a-8 must deliver the proposal to Dell Technologies’ principal executive offices no later than the close of business on February 5, 2020.January 19, 2022. Submissions must be addressed to Dell Technologies Inc., One Dell Way, Round Rock, Texas 78682, Attn: Corporate Secretary. The submission by a stockholder of a proposal for inclusion in the proxy statement is subject to regulation by the SEC under Rule 14a-8.
ProposalProposals for Consideration at Next Year’s Annual Meeting -–
•Bylaw Provisions – - In accordance with the Dell Technologies bylaws, a stockholder who desires to present a nomination of persons for election to the Board or other proposal for consideration at next year’s annual meeting, but not for inclusion in next year’s proxy statement, must deliver the proposal no earlier than March 11, 2020February 22, 2022 and no later than the close of business on April 10, 2020March 24, 2022 unless we publicly announce a different submission deadline in accordance with our bylaws.
The submission must contain the information specified in the our bylaws, including a description of the proposal and a brief statement of the reasons for the proposal, the name and address of the stockholder (as they appear in Dell Technologies’ stock transfer records), the number of Dell Technologies shares beneficially owned by the stockholder, and a description of any material direct or indirect financial or other interest that the stockholder (or any affiliate or associate) may have in the proposal. For information about these requirements, you should refer to our bylaws, which we have filed with the SEC. Proposals must be addressed to Dell Technologies Inc., One Dell Way, Round Rock, Texas 78682, Attn: Corporate Secretary.
The provisions of our bylaws concerning notice of proposals by stockholders are not intended to affect any rights of stockholders to seek inclusion of proposals in our proxy statement under Rule 14a-8.
•Voting by Company’s Proxy Holders on Proposals Presented at Meeting – - For any proposal a stockholder does not submit for inclusion in next year’s proxy statement, but instead seeks to present directly at next year’s annual meeting in accordance with the advance notice provisions of our bylaws described above, the Company’s proxy holders may vote their proxies in their discretion, notwithstanding the stockholder’s compliance with such advance notice provisions, if the Company advises the stockholders in next year’s proxy statement about the nature of the matter and how the Company’s proxy holders intend to vote on such matter, except where the stockholder solicits proxies in the manner contemplated by, and complies with, specified provisions of the SEC’s proxy rules.
Certain Relationships and Related Transactions
Review, Approval or Ratification of Transactions with Related Persons
The Audit Committee, in accordance with its charter and with a written policy adopted by the Board of Directors as of September 7, 2016, is charged with the responsibility to review and approve or ratify any transactions with related persons. Under our policy, a related person transaction is any transaction, arrangement or relationship (1) in an amount exceeding $120,000 in which Dell Technologies or any of its subsidiaries is a participant and in which a related person has a direct or indirect material interest within the meaning of Item 404 of the SEC’s Regulation S-K and (2) that would be required to be disclosed by Dell Technologies in its SEC filings under Item 404. For purposes of the
policy, a related person is a director (including a director nominee) or executive officer of
Dell Technologies, a person known by us to be the beneficial owner of more than 5% of any class of our voting securities at the time of the occurrence or existence of the transaction, or an immediate family member (as defined in Item 404) of any of the foregoing persons.
In determining whether to approve a related person transaction, the Audit Committee is required to consider, among other factors, the following factors to the extent relevant to the transaction:
•whether the terms are fair to Dell Technologies or its subsidiary and on the same basis that would apply if the transaction did not involve a related person;
•whether there are business reasons for Dell Technologies or its subsidiary to enter into the transaction;
•whether a transaction in which a director has a direct or indirect material interest would impair the independence of a non-employee director under NYSE and SEC standards or, to the extent applicable, the director’s status as an “outside director” under Section 162(m) of the Internal Revenue Code or a “non-employee director” pursuant to Rule 16b-3 under the Exchange Act; and
•whether the transaction would present an improper conflict of interest for any director or executive officer.
Related persons referred to in the following description of certain relationships and transactions include Michael S. Dell, the MD stockholders (as defined in Annex A to this proxy statement), the SLP stockholders (as defined in Annex A to this proxy statement) and the Icahn Stockholders, the Temasek Entities and The Vanguard Group (as defined in “Security Ownership of Certain Beneficial Owners and Management”)following persons based on the basis of their beneficial ownership of more than 5% of a class of our outstanding common stock.stock during Fiscal 2021, or their affiliates or other related entities: Michael S. Dell; the MD stockholders (as defined in Annex A to this proxy statement); the SLP stockholders (as defined in Annex A to this proxy statement); Dodge & Cox; affiliates of GIC Private Limited, or the GIC Entities; BlackRock, Inc.; and The Vanguard Group. See “Security Ownership of Certain Beneficial Owners and Management” for information about the beneficial ownership of our outstanding common stock as of May 13, 2019April 26, 2021 (except as otherwise indicated) by these stockholders.. Mr. Dell also serves as the Chairman and Chief Executive Officer of Dell Technologies.
The agreements and arrangements described below under “- Transactions Under Stockholder Agreements and Arrangements Before As of December 31, 2020, the Class V Transaction” were entered into before or asGIC Entities reported that they had ceased to beneficially own more than 5% of September 7, 2016, which was the date on whicha class of our Class Voutstanding common stock was listed on the NYSE, the Audit Committee composed solely of independent directors was constituted, and the written policy summarized above became effective.stock.
Unless the context indicates otherwise, reference in this section to “we,” “us,” “our,” the “Company” and “Dell Technologies” means Dell Technologies Inc. and its consolidated subsidiaries.
Transactions with Michael S. Dell and Other Related Persons
Under a long-standing Dell Technologies policy, Mr. Dell is required to fly privately when traveling. Mr. Dell owns a private aircraft through a wholly-owned limited liability company. For Mr. Dell’s business flights, Dell Technologies leases the plane from the limited liability company and engages a third-party flight services company to act as its agent in operating the aircraft, providing flight personnel and performing other services. Dell Technologies pays the flight services company a fee attributable to Mr. Dell’s business travel on the aircraft and also pays monthly rent to the limited liability company that owns the aircraft. During Fiscal 2019,2021, Dell Technologies paid approximately $436 thousand$0.84 million for Mr. Dell’s business travel through these arrangements. Mr. Dell directly pays all of the costs of operating the aircraft for all personal flights.
Mr. Dell reimburses Dell Technologies for costs related to his or his family’s personal security protection. Reimbursements for this purpose in Fiscal 20192021 totaled approximately $1.6 million.
million.
Entities affiliated with MSD Capital, L.P., the investment firm that exclusively manages the capital of Mr. Dell and his family, including portfolio companies of MSD Capital, L.P. or its affiliates, the Michael & Susan Dell Foundation and other entities affiliated with Mr. Dell purchase services or products from Dell Technologies on standard commercial terms available to comparable unrelated customers. These transactions totaled approximately $2.0 million for services and products in Fiscal 2021.
Entities affiliated with Silver Lake, Partners, including portfolio companies of the SLP stockholders or their affiliates, purchase services or products from Dell Technologies on standard commercial terms available to comparable unrelated customers. These entities paid Dell Technologiestransactions totaled approximately $3.9$17.3 million for services and
products in Fiscal 2019.
2021. In addition, Dell Technologies paid these entities approximately $2.3 million for the purchase ofpurchases products and services from these entities in the ordinary course of business and reimburses certain expenses under the SLP Stockholders Agreement, as described below. These transactions totaled approximately $68.5 million in Fiscal 2019.2021.
Dodge & Cox purchases services or products from Dell Technologies on standard commercial terms available to comparable unrelated customers. These transactions totaled approximately $4.2 million for services and products in Fiscal 2021.
The GIC Entities affiliated with the Icahn Stockholders purchase services or products from Dell Technologies on standard commercial terms available to comparable unrelated customers. These entities paid Dell Technologiestransactions totaled approximately $3.7$4.8 million for services and products in Fiscal 2019.2021.
The Temasek Entities
BlackRock, Inc. and certain of its affiliates purchase services or products from Dell Technologies on standard commercial terms available to comparable unrelated customers. The Temasek Entities paid Dell TechnologiesThese transactions totaled approximately $4.6$17.5 million for services and products in Fiscal 2019. In addition, Dell Technologies paid entities affiliated with the Temasek Entities approximately $1.3 million for the purchase of products and services in the ordinary course of business in Fiscal 2019.2021.
The Vanguard Group purchases services or products from Dell Technologies on standard commercial terms available to comparable unrelated customers. The Vanguard Group paid Dell TechnologiesThese transactions totaled approximately $26.1$25.2 million for services and products in Fiscal 2019.2021.
Relationships and Transactions Under Stockholder Agreements and Arrangements Before the Class V Transaction
Before the Class V transaction described under “Important Corporate Developments in Fiscal 2019,” Dell Technologies was a party to various agreements and arrangements with Mr. Dell, the MD stockholders, the MSD Partners stockholders, the SLP stockholders and our executive officers entered into before or as of September 7, 2016 that, among other matters:
required Dell Technologies to obtain the approval of the MD stockholders and the SLP stockholders before Dell Technologies or certain of Dell Technologies’ subsidiaries could take specified actions;
obligated Dell Technologies to purchase or offer to purchase shares of the Class C common stock owned by its employees, including its executive officers, in specified circumstances;
obligated Dell Inc. to pay directly or reimburse the ongoing reasonable out‑of‑pocket costs and expenses incurred by the MD stockholders in connection with their investment in the Company, including fees, expenses and reasonable out‑of‑pocket disbursements of independent accountants, outside legal counsel, consultants and other independent professionals and organizations and other services retained by the MD stockholders or any of their affiliates; and
obligated Dell Inc. to pay directly or reimburse (1) the ongoing reasonable out‑of‑pocket costs and expenses incurred by the SLP stockholders in connection with their investment in the Company, including fees, expenses and reasonable out‑of‑pocket disbursements of independent accountants, outside legal counsel, consultants and other independent professionals and organizations and other services retained by the SLP stockholders or any of their affiliates, (2) the reasonable out‑of‑pocket costs and expenses of the SLP stockholders or their affiliates for their “value creation” personnel and/or employees, to the extent that the Company has requested such personnel and/or employees to provide such services to the Company, and (3) the costs and expenses for such “value creation” personnel and/or employees.
In Fiscal 2019, in connection with the Class V transaction, Dell Inc. paid directly or reimbursed a total of $5 million of costs and expenses incurred by Dell Technologies and the MD stockholders or their affiliates pursuant to the contractual obligations described above and pursuant to similar provisions of the MD Stockholders Agreement described below under “-Transactions Under Stockholder Agreements and Arrangements After the Class V Transaction.”
As described below under “-Transactions Under Stockholder Agreements and Arrangements After the Class V Transaction,” the foregoing stockholder agreements and arrangements were substantially revised in connection with the Class V transaction.
Transaction Under Stockholder Agreements and Arrangements After the Class V Transaction
Before the registration of the Class C common stock under Section 12(b) of the Exchange Act in connection with the Class V transaction described under “Important Corporate Developments in Fiscal 2019,” Dell Technologies and certain of its wholly-owned subsidiaries were parties to an Amended and Restated Sponsor Stockholders Agreement, dated as of September 7, 2016, with the MD stockholders, the MSD Partners stockholders, the SLP stockholders and other named stockholders. This stockholders agreement was terminated effective as of December 25, 2018 in connection with the Class V transaction.
In connection with the Company’s Class V transaction, which was completed on December 28, 2018, the Company entered into new stockholders agreements and amended and restated some existing stockholders agreements and other arrangements with the MD stockholders, the SLP stockholders, the MSD Partners stockholders, Venezio Investments Pte. Ltd., an affiliate of Temasek Holdings (Private) Limited, referred to as Temasek, and the Company’s executive officers, among others. For more information about the Class V transaction, see “Proposal 1 – Election of Directors – Class C Vote for Group IV Director.”
MD Stockholders Agreement; SLP Stockholders Agreement -– Effective as of December 25, 2018, Dell Technologies entered into the MD Stockholders Agreement and the SLP Stockholders Agreement described under “Proposal 1 -– Election of Directors -– Stockholder Arrangements.” The MD stockholders are parties to the SLP Stockholders Agreement solely with respect to the specified provisions relating to the tag-along rights described below, certain representations, and provisions relating to certain tax matters. The Sponsor Stockholders Agreements contain provisions relating to rights, obligations and agreements of the parties as the owners of Dell Technologies common stock, including provisions relating to the composition of the boardBoard of directorsDirectors and its committees and provisions relating to transfers of Dell Technologies securities.
Under the Sponsor Stockholders Agreements, as described under “Proposal 1 -– Election of Directors -– Stockholder Arrangements,” each of the MD stockholders and the SLP stockholders have specified rights to nominate directors and to have their nominees serve on Board committees and have specified obligations to vote for director nominees.
The SLP Stockholders Agreement permits the SLP stockholders to terminate certain governance-related provisions of the agreement, including the director nomination and support obligations, in their sole discretion at any time at which they beneficially own less than 5% of the issued and outstanding shares of Class C common stock (after giving effect to the conversion of all shares of common stock owned by the SLP stockholders into Class C common stock). The MD Stockholders Agreement permits the MD stockholders to terminate the agreement if the SLP Stockholders Agreement is terminated. The MD Stockholders Agreement also provides that any termination, amendment or waiver of certain of Dell Technologies’ rights under the agreement will require the consent of each Group I director.
Under the Sponsor Stockholders Agreements, for 180 days following the completion of the Class V transaction, the MD stockholders and the SLP stockholders generally are subject to provisions that, with specific exceptions, restrict theirthe sale or other transfer of “DTI securities,” which consist of
outstanding shares of the Class A common stock, Class B common stock, Class C common stock and (if and when issued) Class D common stock, any equity or debt securities of Dell Technologies exercisable or exchangeable for, or convertible into, our common stock, or any option, warrant or other right to acquire any of our common stock or such equity or debt securities.
Under the SLP Stockholders Agreement, if the MD stockholders propose to (1) transfer all or a portion of their DTI securities equal to 10% or more of the then-outstanding common stock to any person (other than their permitted transferees) or (2) enter into a sale or business combination transaction with any person not affiliated with the MD stockholders or Dell Technologies involving the transfer of a majority of the fully-diluted common stock or of the aggregate voting power of the common stock or substantially all of the assets of Dell Technologies and its subsidiaries (subject to specified qualifications and exceptions), the SLP stockholders may exercise tag-along rights
to sell their DTI securities on the same terms, conditions and price as the MD stockholders, subject to certain limitations. The tag-along rights willwere specified to expire on the earlier to occur of (a) 18 months after the completion of the Class V transaction and (b) such date as the MD stockholders no longer beneficially own common stock representing a majority of the common stock beneficially owned by them immediately following the closing of Dell Inc.’s going-private transaction on October 29, 2013. As result, no such rights remained in effect for any period after June 28, 2020.
The Sponsor Stockholders Agreements provide for a renunciation of corporate opportunities presented to any director or officer of Dell Technologies or any of its subsidiaries who is also a director, officer, employee, managing director or other affiliate of (1) MSD Partners L.P. or its affiliates or other MSD Partners stockholders (as defined in Annex A to this proxy statement) (other than Michael Dell for so long as he is an executive officer of Dell Technologies or any specified subsidiary), under the MD Stockholders Agreement, or (2) Silver Lake Management Company III, L.L.C., Silver Lake Management Company IV, L.L.C. and their respective affiliated management companies and investment vehicles, or the SLP stockholders, under the SLP Stockholders Agreement. Further, Dell Technologies has agreed, subject to certain exceptions, to indemnify the MD stockholders and specified affiliated persons under the MD Stockholders Agreement and the SLP stockholders and specified affiliated persons under the SLP Stockholders Agreement from certain losses arising out of the indemnified persons’ investment in, or actual, alleged or deemed control of or ability to influence, Dell Technologies.
Under the MD Stockholders Agreement, Dell Inc. is obligated to pay directly or reimburse the ongoing reasonable out‑of‑pocketout-of-pocket costs and expenses incurred by the MD stockholders in connection with their investment in the Company, including fees, expenses and reasonable out‑of‑pocketout-of-pocket disbursements of independent accountants, outside legal counsel, consultants and other independent professionals and organizations and other services retained by the MD stockholders or any of their affiliates. In Fiscal 2021, Dell Inc. paid directly or reimbursed a total of $0.7 million of costs and expenses incurred by the MD stockholders or their affiliates pursuant to the MD Stockholders Agreement.
Under the SLP Stockholders Agreement, Dell Inc. is obligated to pay directly or reimburse (1) the ongoing reasonable out‑of‑pocketout-of-pocket costs and expenses incurred by the SLP stockholders in connection with their investment in the Company, including fees, expenses and reasonable out‑of‑pocketout-of-pocket disbursements of independent accountants, outside legal counsel, consultants and other independent professionals and organizations and other services retained by the SLP stockholders or any of their affiliates, (2) the reasonable out‑of‑pocketout-of-pocket costs and expenses of the SLP stockholders or their affiliates for their “value creation” personnel and/or employees, to the extent that the Company has requested such personnel and/or employees to provide such services to the Company, and (3) the costs and expenses for such “value creation” personnel and/or employees.
MSD Partners Stockholders Agreement -
Effective as of December 25, 2018, Dell Technologies entered into the MSD Partners Stockholders Agreement described under “Proposal 1 - Election of Directors - Stockholder Arrangements.” The MSD Partners Stockholders Agreement contains provisions relating to rights, obligations and agreements of the MSD Partners stockholders as the owners of the common stock, including provisions relating to the election of directors described above and provisions relating to transfers of DTI securities.
The MSD Partners Stockholders Agreement provides that the MSD Partners stockholders are subject to provisions restricting their transfer of DTI securities, subject to limited exceptions, for 180 days following the completion of the Class V transaction. In addition, the MSD Partners Stockholders Agreement grants the MSD Partners stockholders tag-along rights with respect to a transfer of DTI securities by the MD stockholders substantially similar to those granted to the SLP stockholders under the SLP Stockholders Agreement, as described above under “- MD Stockholders Agreement; SLP Stockholders Agreement.” The MD stockholders are parties to the MSD Partners Stockholders Agreement solely with respect to those provisions related to the MSD Partners stockholders’ tag-along rights.
The MSD Partners Stockholders Agreement provides for a renunciation of corporate opportunities presented to any director or officer of Dell Technologies or any of its subsidiaries who is also a director, officer, employee, managing director or other affiliate of the MSD Partners stockholders, unless such corporate opportunity is offered to such person solely in his or her capacity as a director or officer of Dell Technologies or any of its subsidiaries. Further, Dell Technologies has agreed, subject to certain exceptions, to indemnify the MSD Partners stockholders
and specified affiliated persons from certain losses arising out of the indemnified persons’ investment in, or actual, alleged or deemed control of or ability to influence, Dell Technologies.
The MSD Partners Stockholders Agreement will terminate on, among the occurrence of other events, the earlier of the date on which the MSD Partners stockholders beneficially own less than 1% of Dell Technologies’ issued and outstanding shares of common stock or the termination of the Sponsor Stockholders Agreements.
Amended Registration Rights Agreement - –Before the Class V transaction, Dell Technologies was a party to an Amended and Restated Registration Rights Agreement, dated as of September 7, 2016, with the MD stockholders, the MSD Partners stockholders (as defined in Annex A to this proxy statement), the SLP stockholders, Temasek and the management stockholders party thereto, referred to as the Registration Rights Agreement. The Registration Rights Agreement provided that the stockholder parties thereto, their affiliates and certain of their transferees had the right, under certain circumstances and subject to certain restrictions, to require Dell Technologies to register for resale the shares of the Class C common stock (including shares of Class C common stock issuable upon any
conversion of the Class A common stock, the Class B common stock and the Class D common stock) to be sold by them. The Registration Rights Agreement required that, if requested by the managing underwriter or underwriters in an underwritten offering, each of Dell Technologies and each stockholder party thereto would agree, and Dell Technologies would cause its executive officers to agree, during the period beginning seven days before the effective date of Dell Technologies’ registration statement filed in connection with an IPO (as defined in the agreement), and ending 180 days thereafter, not to offer, sell, pledge, transfer, loan, grant any option to purchase or short sell, or otherwise dispose of, any securities of Dell Technologies or securities convertible or exchangeable into such securities.
Effective as of December 25, 2018, Dell Technologies entered into a Second Amended and Restated Registration Rights Agreement with the MD stockholders, the MSD Partners stockholders, the SLP stockholders, Temasek and the management stockholders parties thereto, referred to as the Amended Registration Rights Agreement, which amended and restated the Registration Rights Agreement. Under the Amended Registration Rights Agreement, the completion of the Class V transaction is treated as an IPO for which a lock-up of securities is requested or required. As a result, the parties thereto arewere subject to the transfer restrictions described in the preceding paragraph for 180 days following the completion of the Class V transaction, subject to the exceptions set forth in the Amended Registration Rights Agreement. IfDell Technologies and the lock-up provisions relatedparties to the 180-day period immediately followingAmended Registration Rights Agreement have entered into amendments to the Amended Registration Rights Agreement to extend the deadline, most recently to June 30, 2021, by which Dell Technologies is required, under certain circumstances and subject to certain restrictions, to register for resale the shares of the Class V transaction are waived in whole or in part with respect to the MD stockholders, the MSD Partners stockholders or the SLP stockholders, each other stockholderC common stock (including shares of Dell Technologies that is subject to such lock-up provision or subject to the 180-day lock-up described above under “- MSD Partners Stockholders Agreement” or below under “- Amended Management Stockholders Agreement,” “- Amended Class C Stockholders Agreement” or “- Amendedcommon stock issuable upon any conversion of the Class A Stockholders Agreement” will be correspondingly released with respect to a pro rata portion of shares of vestedcommon stock, the Class B common stock and number of shares underlying vested, in-the-money stock optionsthe Class D common stock) held by such other stockholder. During such 180-day lock-up period, any waiverspecified stockholder parties. Under the Amended Registration Rights Agreement, as amended in December 2020, the deadline may be extended for additional periods of such transfer restrictions will requireup to three months each upon the written consent of Dell Technologies, with the approval ofCompany and the special committee of the Board of Directors, or Special Committee, formed to evaluate the Class V transaction solely on behalf of, and solely in the interests of, the holders of the Class V common stock.SLP stockholders.
Amended Management Stockholders Agreement -– Effective as of December 25, 2018, Dell Technologies entered into a Second Amended and Restated Management Stockholders Agreement, referred to as the Amended Management Stockholders Agreement, with the MD stockholders, the SLP stockholders and the management stockholders parties thereto, which amended and restated the Amended and Restated Management Stockholders Agreement, dated as of September 7, 2016, by and among the Company, the MD stockholders, the MSD Partners stockholders, the SLP stockholders and the management stockholders, referred to as the Management Stockholders Agreement.
The Management Stockholders Agreement provided that, before an IPO (as defined in the agreement) of common stock or a change in control of Dell Technologies, any shares of Class C common stock held by an executive officer (other than Michael S. Dell) and certain other employees were subject to post-termination repurchase (call) and sale (put) rights and to an in-service liquidity program, as well as clawback and forfeiture provisions. The Amended Management Stockholders Agreement terminated the call rights of Dell Technologies and
eliminated the employee liquidity program. In addition,Under the Amended Management Stockholders Agreement, removed the MSD Partners stockholders as parties to the agreement, eliminated certain drag-along rights formerly held by the MD stockholders, the MSD Partners stockholders and the SLP stockholders, and removed the clawback and forfeiture obligations. Substantially similar clawback and forfeiture provisions, however, are expected to remain in the individual equity award agreements of the executive officers where permitted by law.
The transfer restrictions applicable to the management stockholders have beenunder the Management Stockholders Agreement were amended to enable such parties, following the 180-day period after the completion of the Class V transaction, to sell shares of common stock, subject to certain volume limitations. Such transfer restrictions, along with the putspecified sale (put) rights, willwere specified to terminate after 18 months following the end of the lock-up period or earlier upon consummation of any underwritten registered offering of shares of Class C common stock (subject to any applicable underwriter lock-up). As result, no such limitations remained in effect for any period after June 28, 2020. Equity awards granted after the completion of the Class V transaction willwere not be subject to such transfer restrictions, but rather to the terms of such awards.
Amended Class C Stockholders Agreement - –Effective as of December 25, 2018, Dell Technologies entered into an Amended and Restated Class C Stockholders Agreement with the MD stockholders, the SLP stockholders and Temasek, referred to as the Amended Class C Stockholders Agreement, which amended and restated the Class C Stockholders Agreement, dated as of September 7, 2016, among the Company, the MD stockholders, the MSD Partners stockholders, the SLP stockholders and Temasek, referred to as the Class C Stockholders Agreement.
The Class C Stockholders Agreement provided for certain rights and obligations of Temasek and its permitted transferees, referred to as the Existing Class C Stockholders, with respect to the common stock and other DTI securities, including transfer restrictions, tag-along and drag-along provisions, and participation rights that would permit Temasek to purchase securities in certain financings by Dell Technologies. The Amended Class C Stockholders Agreement provides that the completion of the Class V transaction will be treated as an “IPO” under that agreement, which has resulted in the termination of such drag-along and participation rights. Under the Amended Class C Stockholders Agreement, the Existing Class C Stockholders’ tag-along rights with respect to a transfer of DTI securities by the MD stockholders willwere specified to survive for up to 18 months following the completion of the Class V transaction, solely in respect of a transfer of DTI securities by the MD stockholders equal to 10% or more of the then-outstanding common stock.
Under the Amended Class C Stockholders Agreement, As result, no such rights remained in effect for any period after June 28, 2020. Further, the Existing Class C Stockholders continue to bewere subject to provisions restricting the transfer of DTI securities held by them, subject to certain exceptions, for 180 days following the
completion of the Class V transaction. Although the Class C Stockholders Agreement would not have prohibited Temasek from making transfers of Class C Common Stockcommon stock in accordance with the terms and conditions of the agreement after October 29, 2018, subject to the MD stockholders’ right of first offer prior tobefore the end of the lock-up period, the Amended Class C Stockholders Agreement prohibitsprohibited Temasek from making transfers of Class C common stock during the full 180-day lock-up period following the completion of the Class V transaction and has eliminated the MD stockholders’ right of first offer. During such 180-day period, any waiver of such transfer restrictions will requirewould have required the consent of Dell Technologies, with the approval of the Special Committee. The AmendedCommittee of the Board of Directors formed to evaluate the Class C Stockholders Agreement also removedV transaction and other potential alternatives solely on behalf of, and solely in the MSD Partners stockholdersinterests of, the holders of Class V common stock, which we refer to as parties to the agreement.Special Committee.
Amended Class A Stockholders Agreement - –Effective as of December 25, 2018, Dell Technologies entered into a Second Amended and Restated Class A Stockholders Agreement, referred to as the Amended Class A Stockholders Agreement, with the MD stockholders, the SLP stockholders and certain holders of Class A Common Stock,common stock, referred to as the New Class A Stockholders, representing less than 1% of the outstanding common stock, which amended and restated the First Amended and Restated Class A Stockholders Agreement, dated as of September 7, 2016, among Dell Technologies, the MD stockholders, the MSD Partners stockholders, the SLP stockholders and the New Class A Stockholders, referred to as the Class A Stockholders Agreement. The Class A Stockholders Agreement provided for certain transfer restrictions and other rights and obligations of the New Class A Stockholders with respect to the DTI securities held by them.
The Amended Class A Stockholders Agreement terminated the tag-along and drag-along provisions of the Class A Stockholders Agreement and terminated substantive restrictions on transfers of DTI securities by the New
Class A Stockholders under that agreement following the 180-day period after the completion of the Class V transaction. During such 180-day period, any waiver of such transfer restrictions will requirewould have required the consent of Dell Technologies, with the approval of the Special Committee. The Amended Class A Stockholders Agreement also removed the MSD Partners stockholders as parties to the agreement.
Code of Ethics for Senior Financial Officers
Dell Technologies maintains a Code of Ethics for Senior Financial Officers that is applicable to our Chief Executive Officer, our Chief Financial Officer and our Chief Accounting Officer and is available on our website at http://investors.delltechnologies.com under the Corporate Governance & Leadership – Governance Documents section. The Code of Ethics for Senior Financial Officers, which satisfies the requirements of a “code of ethics” under SEC rules, addresses matters specific to those senior financial positions in the Company, including responsibility for the disclosures made in our filings with the SEC, reporting obligations with respect to certain matters and a general obligation to promote honest and ethical conduct within the Company. The Chief Executive Officer, the Chief Financial Officer and the Chief Accounting Officer are also required to comply with our Code of Conduct.Conduct referred to below. We will post any waivers of, or amendments to, the Code of Ethics for Senior Financial Officers on our website at http://investors.delltechnologies.com under the Corporate Governance & Leadership – Governance Documents section in the circumstances and within the time period required under SEC rules.
In addition, Dell Technologies maintains a Code of Conduct that is applicable to all of our employees and officers worldwide and to our Board of Directors. A copy of the Code of Conduct is available on our website at http://investors.delltechnologies.com under the Corporate Governance & Leadership – Governance Documents section.
Stockholders Sharing the Same Last Name and Address
Only one copy of the proxy statement and annual report on Form 10-K for Fiscal 20192021 or Notice of Internet Availability of Proxy for this annual meeting is being sent to stockholders who share the same last name and address, unless they have notified Dell Technologies that they want to continue receiving multiple packages. This practice, known as “householding,” is intended to eliminate duplicate mailings, conserve natural resources and help reduce printing and mailing costs.
If you received a householding“householded” mailing this year and would like to receive a separate copy of the proxy materials, Dell Technologies will deliver a copy promptly upon your request submitted to Dell Technologies in one of the following ways:
•E-mail Dell Technologies’ Investor Relations department at investor_relations@dell.com
•Send your request by mail to Dell Technologies Inc., Investor Relations, One Dell Way, Round Rock, Texas 78682
•Call Dell Technologies’ Investor Relations department at (512) 728-7800
You also may download a copy of any of these materials on our website at http://investors.delltechnologies.com under the News & Events -– Upcoming Events & Presentations section.
To opt out of householding for future distributions of proxy materials, you may notify Dell Technologies using the contacts for the Investor Relations department described above.
If you received multiple copies of the proxy materials and would prefer to receive a single copy in the future, you may notify Dell Technologies of your preference using the contacts for the Investor Relations department provided above.
Householding for bank and brokerage accounts is limited to accounts within the same bank or brokerage firm. For example, if you and your spouse share the same last name and address, and you and your spouse each have two
accounts containing Dell Technologies stock at two different brokerage firms, your household will receive two copies of the annual meeting materials, one from each brokerage firm. If you are a beneficial owner, you may request information about householding from your bank, brokerage firm or other nominee.
Availability of Annual Report on Form 10-K
This proxy statement is accompanied by our annual report on Form 10-K for Fiscal 2019,2021, which is our annual report to stockholders for the fiscal year. The Form 10-K report is available without exhibitson our website at http://investors.delltechnologies.com under the News & Events - Events & PresentationsFinancials – SEC Filings section and with exhibits at the website maintained by the SEC at www.sec.gov. You may obtain free of charge a printed version of the Form 10-K report, without exhibits, upon request submitted to Dell Technologies in one of the following ways:
•E-mail Dell Technologies’ Investor Relations department at investor_relations@dell.com
•Send your request by mail to Dell Technologies Inc., Investor Relations, One Dell Way, Round Rock, Texas 78682
•Call Dell Technologies’ Investor Relations department at (512) 728-7800
Other Matters
To the extent that this proxy statement is incorporated by reference into any other filing by Dell Technologies under the Exchange Act or the Securities Act of 1933, the sections of this proxy statement entitled “Compensation Committee Report” and “Report of the Audit Committee,” to the extent permitted by the rules of the SEC, will not be deemed incorporated in such a filing, unless specifically provided otherwise in the filing. In addition, such sections will not be deemed to be soliciting material for purposes of the solicitation of proxies in connection with the annual meeting.
All website addresses contained in this proxy statement are intended to be inactive, textual references only. The information on, or accessible through, any website (including the Dell Technologies website) identified in this proxy statement is not a part of, and is not incorporated by reference into, this proxy statement.
Annex A
Selected Definitions
A reference in this proxy statement to:
“•Class V Group” or“DHI Group” means (1) the assets and liabilities of Dell Technologies that were intended to be tracked by the authorized Class V common stock, which initially consisted solely of Dell Technologies’ economic interest in the VMware business as of the completion of the acquisition by merger of EMC Corporation by Dell Technologies, which are referred to as the “Class V Group,” and (2) the remaining assets and liabilities of Dell Technologies that were intended to be tracked by the DHI Group common stock (including a retained interest in the Class V Group), which are referred to as the “DHI Group.”
“Dell Technologies Certificate” means the Fifth Amended and Restated Certificate of Incorporation of Dell Technologies.
“•DHI Group common stock” means collectively the series of Dell Technologies common stock, each with a par value $0.01 per share, designated as Class A common stock, Class B common stock, Class C common stock and Class D common stock.
“MD stockholders” means Michael S. Dell and Susan Lieberman Dell Separate Property Trust and any person to whomwhich either of them would be permitted to transfer any equity securities of Dell Technologies under the Dell Technologies Certificate.
•“MSD Partners stockholders” means MSDC Denali Investors, L.P., a Delaware limited partnership, and MSDC Denali EIV, LLC, a Delaware limited liability company, and any person to whomwhich either of them would be permitted to transfer any equity securities of Dell Technologies under the Dell Technologies Certificate.
•“SLP stockholders” means Silver Lake Partners III, L.P., a Delaware limited partnership, Silver Lake Technology Investors III, L.P., a Delaware limited partnership, Silver Lake Partners IV, L.P., a Delaware limited partnership, Silver Lake Technology Investors IV, L.P., a Delaware limited partnership, and SLP Denali Co-Invest, L.P., a Delaware limited partnership, and any person to whomwhich any of them would be permitted to transfer any equity securities of Dell Technologies under the Dell Technologies Certificate.
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DELL TECHNOLOGIES INC.
2013 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED AS OF, 2019)
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1. Purpose of the Plan.
The purpose of this Dell Technologies Inc. 2013 Stock Incentive Plan (as it may be amended and restated from time to time, the “Plan”), is to aid Dell Technologies Inc., a Delaware corporation formerly known as Denali Holding Inc. (the “Company”), and its Affiliates in recruiting and retaining employees, directors and other service providers of outstanding ability and to motivate such persons to exert their best efforts on behalf of the Company and its Affiliates by providing incentives through the granting or selling of Awards. The Company expects that it will benefit from aligning the interests of such persons with those of the Company and its Affiliates by providing them with equity-based awards with respect to shares of Class C Common Stock and cash-denominated awards.
2. Definitions.
(a) “Absolute Share Limit” shall have the meaning given to such term in Section 4(a) of the Plan.
(b) “Affiliate” shall have the meaning given to such term in the Management Stockholders Agreement.
(c) “Applicable Law” shall mean the legal requirements relating to the administration of an equity compensation plan under applicable U.S. federal and state corporate and securities laws, the Code, any stock exchange rules or regulations, and the applicable laws of any other country or jurisdiction, as such laws, rules, regulations and requirements shall be in place from time to time.
(d) “Award” shall mean any Stock Award or any cash-denominated award designated by the Committee as an award under the Plan, which in either case may, but need not, be designated by the Committee as a Performance Compensation Award.
(e) “Award Agreement” shall mean a written agreement between the Company and a holder of an Award, executed by the Company, evidencing the terms and conditions of such Award.
(f) “Board” shall mean the Board of Directors of the Company.
(g) “Cause” with respect to a Participant shall mean “Cause” as defined in the applicable Award Agreement or, if “Cause” is not defined therein, the occurrence of any of the following: (i) a violation of the Participant’s obligations regarding confidentiality or the protection of sensitive, confidential or proprietary information, or trade secrets, or a violation of any other restrictive covenant by which the Participant is bound; (ii) an act or omission by the Participant resulting in the Participant being charged with a criminal offense which constitutes a felony or involves moral turpitude or dishonesty; (iii) conduct by the Participant which constitutes gross neglect, insubordination, willful misconduct, or a breach of any Code of Conduct of the Subsidiary that employs the Participant or a fiduciary duty to the Company, any of its Affiliates or the stockholders of the Company; or (iv) a determination by the Company’s senior management that the Participant violated state or federal law relating to the workplace environment, including, without limitation, laws relating to sexual harassment or age, sex, race or other prohibited discrimination.
(h) “Change in Control” shall mean the occurrence of any one or more of the following events:
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(i) | the sale or disposition, in one or a series of related transactions, to any Person or group (as such term is used for purposes of Section 14(d)(2) of the Exchange Act), other than to the Sponsor Stockholders or any of their respective Affiliates or to any Person or group in |
which any of the foregoing is a member, of all or substantially all of the consolidated assets of the Company;
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(ii) | any Person or group (as such term is used for purposes of Section 14(d)(2) of the Exchange Act), other than the Sponsor Stockholders or any of their respective Affiliates or any Person or group in which any of the foregoing is a member, is or becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the outstanding shares of Common Stock, excluding as a result of any merger or consolidation that does not constitute a Change in Control pursuant to clause (iii); |
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(iii) | any merger or consolidation of the Company with or into any other Person, unless the holders of the Common Stock immediately prior to such merger or consolidation beneficially own (within the meaning of Rule 13d-3 under the Exchange Act) a majority of the outstanding shares of the common stock (or equivalent voting securities) of the surviving or successor entity (or the parent entity thereof); or |
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(iv) | prior to an IPO, the Sponsor Stockholders and their respective Affiliates cease to have the ability to cause the election of that number of members of the Board who would collectively have the right to vote a majority of the aggregate number of votes represented by all of the members of the Board, and any Person or group (as such term is used for purposes of Section 14(d)(2) of the Exchange Act), other than the Sponsor Stockholders and their respective Affiliates or any Person or group in which any of the foregoing is a member, beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) outstanding voting stock representing a greater percentage of voting power with respect to the general election of members of the Board than the shares of outstanding voting stock which the Sponsor Stockholders and their respective Affiliates collectively beneficially own (within the meaning of Rule 13d-3 under the Exchange Act). |
(i) “Class C Common Stock” shall mean the Class C common stock, par value $0.01 per share, of the Company and any class or series of Common Stock into which the Class C Common Stock may be converted or exchanged.
(j) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. Reference in the Plan to any section of the Code shall be deemed to include any regulations or other interpretative guidance under such section, and any amendments or successor provisions to such section, regulations or guidance.
(k) “Committee” shall mean the Compensation Committee of the Board (or a subcommittee thereof), or such other committee of the Board to which the Board has delegated power to act pursuant to the provisions of the Plan; provided, that in the absence of any such committee, the term “Committee” shall mean the Board. For the avoidance of doubt, the Board shall at all times be authorized to act as the Committee under or pursuant to any provisions of the Plan.
(l) “Common Stock” shall mean the Class C Common Stock and any other class or series of common stock of the Company.
(m) “Consultant” shall mean any person engaged by the Company or any of its Affiliates as a consultant or independent contractor to render consulting, advisory or other services and who is compensated for such services and who may be offered securities registrable on Form S-8 under the Securities Act, or offered under any available exemption from Securities Act registration, as applicable.
(n) “Designated Foreign Subsidiaries” shall mean the Company or any of its Affiliates that are organized under the laws of any jurisdiction or country other than the United States of America that may be designated by the Board or the Committee from time to time.
(o) “Disability” shall have the meaning given to such term in the Management Stockholders Agreement.
(p) “Effective Date” shall mean October 29, 2013.
(q) “Employment” shall mean (i) a Participant’s employment if the Participant is an employee of the Company or any of its Affiliates, (ii) a Participant’s services as a Consultant, if the Participant is a Consultant, and (iii) a Participant’s services as a non-employee member of the Board or the board of directors (or equivalent governing body) of any Affiliate of the Company.
(r) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and any successor thereto. Reference in the Plan to any section of (or rule promulgated under) the Exchange Act shall be deemed to include any rules, regulations or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations or guidance.
(s) “Fair Market Value” shall mean, as of any date, the value of a share of Class C Common Stock determined as follows: (i) if there should be a public market for the Class C Common Stock on such date, the closing price of such share as reported on such date on the composite tape of the principal national securities exchange on which such share is listed or admitted to trading, or if such share is not listed or admitted on any national securities exchange, the arithmetic mean of the per share closing bid price and per share closing asked price on such date as quoted on any established U.S. interdealer quotation system on which such prices are regularly quoted (a “Quotation System”), or, if no sale of such share shall have been reported on the composite tape of any national securities exchange or quoted on a Quotation System on such date, then the immediately preceding date on which sales of such share has been so reported or quoted shall be used; and (ii) if there should not be a public market for a share of Class C Common Stock on such date, then Fair Market Value shall be the price determined in good faith by the Board (or a committee thereof).
(t) “GAAP” shall mean generally accepted accounting principles.
(u) “Good Reason” with respect to a Participant shall mean “Good Reason” as defined in the applicable Award Agreement or if “Good Reason” is not defined therein and the Participant is an employee of the Company or any of its Affiliates, “Good Reason” shall mean the occurrence of any of the following: (i) a material reduction in the Participant’s base salary; or (ii) a change in the Participant’s principal place of work to a location of more than fifty (50) miles from the Participant’s principal place of work immediately prior to such change; provided, that the Participant provides written notice to the Company or any Affiliate employing such Participant of the existence of any such condition within ninety (90) days of the Participant having actual knowledge of the initial existence of such condition and the Company or any Affiliate employing such Participant fails to remedy the condition within thirty (30) days of receipt of such notice (the “Cure Period”). If the Good Reason condition remains uncured following the Cure Period, in order to resign for Good Reason a Participant must actually terminate Employment no later than thirty (30) days following the end of such Cure Period. If a Participant is not an employee of the Company or any of its Affiliates, Good Reason shall be inapplicable to such Participant, unless such Participant’s Award Agreement contains a definition of Good Reason.
(v) “Initial Director Grant” shall mean the Stock Award granted to a Participant who is a non-employee member of the Board upon commencement of such Participant’s initial service on the Board.
(w) “IPO” shall have the meaning given to such term in the Management Stockholders Agreement.
(x) “ISO” shall mean a stock option to acquire shares of Class C Common Stock that is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code and the regulations promulgated thereunder, as amended from time to time.
(y) “Management Stockholders Agreement” shall mean the Dell Technologies Inc. Second Amended and Restated Management Stockholders Agreement dated as of December 25, 2018 by and among the Company and the other parties thereto, as may be amended from time to time, including, without limitation, any such amendment that may be made in an Award Agreement.
(z) “Negative Discretion” shall mean the discretion authorized by the Plan to be applied by the Committee to eliminate or reduce the size of a Performance Compensation Award.
(aa) “Option” shall mean a stock option granted pursuant to Section 6 of the Plan.
(bb) “Option Price” shall mean the purchase price per share of an Option, as determined pursuant to Section 6(a) of the Plan.
(cc) “Other Stock-Based Awards” shall have the meaning given to such term in Section 8 of the Plan.
(dd) “Participant” shall mean a person eligible to receive an Award pursuant to Section 4 of the Plan and who actually receives an Award or, if applicable, such other person who holds an outstanding Award.
(ee) “Performance Compensation Award” shall mean any Award designated by the Committee as a Performance Compensation Award subject to achievement of Performance Goals over a Performance Period specified by the Committee, pursuant to Section 9 of the Plan.
(ff) “Performance Criteria” shall mean the criterion or criteria that the Committee shall select for purposes of establishing the Performance Goals for a Performance Period with respect to any Performance Compensation Award under the Plan.
(gg) “Performance Formula” shall mean, for a Performance Period, the one or more objective formulae applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion less than all, or none of the Performance Compensation Award has been earned for the Performance Period.
(hh) “Performance Goals” shall mean the one or more goals established by the Committee for the Performance Period of Performance Compensation Awards, based upon the Performance Criteria.
(ii) “Performance Period” shall mean the one or more periods of time of not less than twelve (12) months, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to, and the payment of, a Performance Compensation Award.
(jj) “Person” shall mean an individual, any general partnership, limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and shall include any successor (by merger or otherwise) of such entity, or a government or any agency or political subdivision thereof.
(kk) “Prior Section 162(m)” shall mean Section 162(m) of the Code as in effect prior to its amendment by the Tax Cuts and Jobs Act, P.L. 115-97, including the regulations and guidance promulgated in respect of Section 162(m) of the Code as in effect prior to such amendment.
(ll) “Qualifying Director” shall mean a person who is, with respect to actions intended to obtain an exemption from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 under the Exchange Act, a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act.
(mm) “Section 162(m) Grandfather” shall mean the regulations or other guidance promulgated in respect of transition rules under Section 162(m) of the Code, as Section 162(m) of the Code is in effect from time to time on or after the amendment and restatement of the Plan as of December 28, 2018, extending the deductibility of Awards intended to be “qualified performance-based compensation” under Prior Section 162(m).
(nn) “Securities Act” shall mean the Securities Act of 1933, as amended, and any successor thereto. Reference in the Plan to any section of (or rule promulgated under) the Securities Act shall be deemed to include any rules, regulations or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations or guidance.
(oo) “Share Limit” shall have the meaning given to such term in Section 4(a) of the Plan.
(pp) “shares” shall mean shares of Class C Common Stock.
(qq) “Sponsor Stockholders” shall have the meaning given to such term in the Management Stockholders Agreement.
(rr) “Stock Appreciation Right” shall mean a stock appreciation right granted pursuant to Section 7 of the Plan.
(ss) “Stock Award” shall mean (i) an Option, Stock Appreciation Right or Other Stock-Based Award granted (or sold) pursuant to the Plan or (ii) a cash-denominated Award that the Committee determines to settle in shares of Class C Common Stock.
(tt) “Sub-Plans” shall mean any sub-plan to the Plan that has been adopted by the Board or the Committee for the purpose of permitting the offering of Awards to employees of certain Designated Foreign Subsidiaries or otherwise outside the United States of America, with each such sub-plan designed to comply with local laws applicable to offerings in such foreign jurisdictions. Although any Sub-Plan may be designated a separate and independent plan from the Plan in order to comply with applicable local laws, the Absolute Share Limit, the Share Limit and the other limits specified in Section 4(a) and Section 5 of the Plan shall apply in the aggregate to the Plan and any and all Sub-Plans adopted hereunder.
(uu) “Subsidiary” shall mean with respect to any Person, any entity of which (i) a majority of the total voting power of shares of stock or equivalent ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, trustees or other members of the applicable governing body thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if no such governing body exists at such entity, a majority of the total voting power of shares of stock or equivalent ownership interests of the entity is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other similar business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or such other business entity gains or losses or shall be or control the managing member or general partner of such limited liability company, partnership, association or such other business entity.
3. Administration by Committee.
(a) The Plan shall be administered by the Committee, which may delegate its duties and powers in whole or in part to any subcommittee thereof, and, to the extent required by Applicable Law, the Committee shall be composed exclusively of members who are independent directors in accordance with the rules of any stock
exchange on which the Company’s stock is listed. To the extent the Company deems it necessary to comply with the provisions of Rule 16b-3 promulgated under the Exchange Act (if the Board is not acting as the Committee under the Plan), it is intended that each member shall, at the time such member takes any action with respect to a Stock Award under the Plan that is intended to qualify for the exemptions provided by Rule 16b-3 promulgated under the Exchange Act, be a Qualifying Director. However, the fact that a Committee member shall fail to qualify as a Qualifying Director shall not invalidate any Stock Award granted by the Committee that is otherwise validly granted under the Plan.
(b) Stock Awards may, in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by any entity acquired by the Company or with which the Company combines. The number of shares of Class C Common Stock underlying such substitute awards shall be counted against the aggregate number of such shares available for Stock Awards under the Plan.
(c) Except as provided in Section 3(b) and Section 10 of the Plan, the Committee may not: (i) amend the terms of an outstanding Option or Stock Appreciation Right to reduce the Option Price or exercise price, as applicable, of such Option or Stock Appreciation Right; (ii) cancel an outstanding Option or Stock Appreciation Right in exchange or substitution for an Option or Stock Appreciation Right with an Option Price or exercise price, as applicable, that is less than the Option Price or exercise price, as applicable, of the original Option or Stock Appreciation Right; or (iii) cancel an outstanding Option or Stock Appreciation Right with an Option Price or exercise price, as applicable, above the current Fair Market Value per share of Class C Common Stock covered by such Award in exchange for cash or other securities, in the case of each of clauses (i), (ii) and (iii), unless such action is subject to and approved by the Company’s stockholders or would not be deemed to be a repricing under the rules of the national securities exchange or securities market on which Class C Common Stock is listed or publicly traded.
(d) Subject to the terms of the Plan and each Award Agreement, the Committee is authorized to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations that it deems necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems necessary or desirable. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned (including, without limitation, Participants and their beneficiaries or successors), whether or not discretion is referenced with respect to such interpretation or administrative action and except for an express reference to the contrary. The Committee shall have the full power and authority to establish the terms and conditions of any Award consistent with the provisions of the Plan and to waive any such terms and conditions at any time (including, without limitation, accelerating or waiving any vesting conditions, such as any minimum vesting condition imposed by the Plan).
(e) The Committee may delegate the authority to grant Awards under the Plan to any employee or group of employees of the Company or an Affiliate; provided, that such delegation and grants are consistent with Applicable Law and guidelines established by the Board from time to time; and, provided, further, that the Committee may not delegate authority hereunder to (i) make awards to members of the Board, (ii) make awards to employees who are officers of the Company or who are delegated authority to make awards under this Section 3(d), or (iii) interpret the Plan, any Award or any Award Agreement.
4. Shares Subject to the Plan and Participation.
(a) Available Shares. Subject to such additional shares of Class C Common Stock as shall be available for issuance pursuant to Section 10 of the Plan, the maximum number of shares of Class C Common Stock which may be issued under the Plan is 110,500,000 (the “Absolute Share Limit”); provided, that, with respect to Awards granted on or after July 9, 2019, subject to such additional shares as shall be available for issuance pursuant to Section 10 of the Plan, the maximum number of shares of Class C Common Stock which may be issued under the Plan is equal to the sum of (i) 35,000,000, plus (ii) the number of shares of Class C Common Stock available for future Stock Awards under the Plan as of July 8, 2019, plus (iii) the number of shares of Class C Common Stock
subject to outstanding Stock Awards under the Plan as of July 8, 2019 that thereafter terminate or lapse without the payment of consideration (the “Share Limit”). The maximum number of shares for which ISOs may be granted under the Plan is 110,000,000; provided, that, with respect to Stock Awards granted on or after July 9, 2019, the maximum number of shares for which ISOs may be granted under the Plan is equal to the Share Limit. The shares of Class C Common Stock may consist, in whole or in part, of authorized and unissued shares, shares held in the treasury of the Company, shares purchased on the open market or by private purchase or a combination of the foregoing. The issuance of shares or the payment of cash upon the exercise of a Stock Award or in consideration of the cancellation or termination of a Stock Award shall reduce the total number of shares of Class C Common Stock available under the Plan. Shares of Class C Common Stock which are subject to Stock Awards which terminate or lapse without the payment of consideration may be granted again under the Plan, unless prohibited by Applicable Law.
(b) Participation. Employees, Consultants, non-employee members of the Board and other service providers of the Company and its Affiliates shall be eligible to be selected to receive Awards under the Plan; provided, that ISOs may be granted only to employees of the Company or any subsidiary corporation, as defined in Section 424(f) of the Code, of the Company.
5. General Limitations.
(a) Tenth Anniversary. No Award may be granted under the Plan after the tenth anniversary of the Effective Date, but Awards theretofore granted may extend beyond such date.
(b) Award Limitations for Participants who are not Non-Employee Members of the Board.
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(i) | Subject to Section 10 of the Plan, grants of Options or Stock Appreciation Rights under the Plan in respect of no more than 10,000,000shares of Class C Common Stock may be made to any individual Participant who is not a non-employee member of the Board during any single fiscal year of the Company (for this purpose, if a Stock Appreciation Right is granted in tandem with an Option (such that the Stock Appreciation Right expires with respect to the number of shares for which the Option is exercised), only the shares underlying the Option shall count against each limitation);
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(ii) | Subject to Section 10 of the Plan, no more than 3,000,000 shares of Class C Common Stock may be issued in respect of Other Stock-Based Awards denominated in such shares granted pursuant to Section 8 or Section 9 of the Plan to any individual Participant who is not a non-employee member of the Board for a single fiscal year of the Company; provided, that, with respect to Other Stock-Based Awards granted as Performance Compensation Awards for a Performance Period that extends beyond a single fiscal year, the limitation for the Performance Period is the sum of the limitations for each constituent fiscal year in the Performance Period; provided, further, that in the event an Other Stock-Based Award is paid in cash, other securities, other Stock Awards or other property, the value of such payment shall be no more than the Fair Market Value of the shares after any reduction for the share limitation described in this Section 5(b)(ii);
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(iii) | The maximum amount that may be paid to any individual Participant who is not a non-employee member of the Board for a single fiscal year of the Company during a Performance Period (or with respect to each single fiscal year in the event a Performance Period extends beyond a single fiscal year) pursuant to a Performance Compensation Award denominated in cash (described in Section 9(a) of the Plan) shall not exceed 0.5% of the Company’s aggregate consolidated operating income in the fiscal year immediately preceding the fiscal year in which the date of grant of such Performance Compensation Award occurs.
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(c) Stock Award Limitations for Participants who are Non-Employee Members of the Board. Except for the Initial Director Grant, subject to Section 10 of the Plan, the maximum number of shares of Class C Common Stock subject to Stock Awards granted during a single fiscal year of the Company to any non-employee member of the Board, taken together with any cash fees paid to such non-employee member of the Board during the fiscal year, shall not, in each case, exceed $1,000,000 in total value (calculating the value of any such Stock Awards based on the grant date fair value of such Stock Awards for financial reporting purposes and excluding, for this purpose, the value of any dividend equivalent payments paid pursuant to any Stock Award granted in a previous fiscal year).
(d) Minimum Vesting Applicable to Stock Awards. Except with respect to Stock Awards granted in assumption of, or in substitution for, outstanding awards as described in Section 3(b) of the Plan or as is provided in this Section 5(d) or Section 5(e) of the Plan, (i) the retention, vesting and, if applicable, issuance or exercise of Stock Awards granted on or after July 9, 2019 that are Performance Compensation Awards shall be subject to a Performance Period of not less than twelve (12) months, and (ii) any Stock Award granted on or after July 9, 2019 based solely on a Participant’s continued Employment may not provide for vesting or, if applicable, exercisability prior to such Participant’s satisfaction of twelve (12) months of continued Employment from the date of grant of such Stock Award. Notwithstanding the foregoing, the Committee may provide in an Award Agreement for earlier vesting and, if applicable, exercisability in the event of the Participant’s death or disability or in connection with a Change in Control.
(e) Five Percent Exception to Minimum Vesting for Stock Awards. Notwithstanding the limitation under Section 5(d) of the Plan, up to 5% of the Share Limit in the aggregate may be granted under the Plan as Other Stock-Based Awards consisting of unrestricted shares of Class C Common Stock or as Stock Awards pursuant to Award Agreements the term and conditions of which do not comply with the limitations set forth in Section 5(d) of the Plan.
(f) Dividend Equivalent Rights. Dividend equivalent rights on Class C Common Stock may be granted under the Plan as Other Stock-Based Awards; provided, that the Committee may not grant dividend equivalent rights in connection with, or related to, Options or Stock Appreciation Rights. Notwithstanding any contrary provision in the Plan, any dividend equivalent right granted as a component of another Stock Award shall be subject to the same restrictions and risk of forfeiture as the underlying Stock Award and shall be paid only upon satisfaction of the vesting conditions and/or achievement of the Performance Goals applicable to such Stock Award.
6. Terms and Conditions of Options.
Options granted under the Plan shall be, as determined by the Committee, non-qualified or ISOs for federal income tax purposes, as evidenced by the related Award Agreements, and shall be subject to the foregoing and the following terms and conditions and to such other terms and conditions, not inconsistent therewith, as the Committee shall determine.
(a) Option Price. The Option Price per share shall be determined by the Committee, but, in the case of an Option over Class C Common Stock, shall not be less than 100% of the Fair Market Value of a share of Class C Common Stock on the date an Option is granted (other than in the case of Options granted in substitution for previously granted awards, as described in Section 3 of the Plan).
(b) Exercisability. Options granted under the Plan shall be exercisable at such time and upon such terms and conditions as may be determined by the Committee consistent with the Plan (including, but not limited to, Section 5(d) of the Plan), but in no event shall an Option be exercisable more than ten (10) years after the date it is granted.
(c) Exercise of Options. Except as otherwise provided in the Plan or in the applicable Award Agreement, an Option may be exercised for all, or from time to time any part, of the shares of Class C Common Stock for which it is then exercisable. For purposes of this Section 6, the exercise date of an Option shall be the latest of (i) the date a notice of exercise is received by the Company, (ii) the date payment is received by the Company pursuant to clause (A) or (B) of the following sentence, and (iii) the date on which any condition for
exercise imposed by the Committee that is consistent with the terms of the Plan and the applicable Award Agreement is satisfied. The purchase price for the shares of Class C Common Stock to which an Option is exercised shall be paid to the Company as designated by the Committee or as specified in the applicable Award Agreement, pursuant to one or more of the following methods: (A) in cash or its equivalent (e.g., by personal check or wire transfer); or (B) in each case to the extent explicitly permitted by the Committee in the applicable Award Agreement or otherwise: (1) in shares of Class C Common Stock having a Fair Market Value equal to the aggregate Option Price for the shares being purchased and satisfying such other reasonable requirements as may be imposed by the Committee; provided, that such shares have been held by the Participant for no less than six (6) months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying GAAP), (2) partly in cash and partly in such shares, (3) if the Class C Common Stock is registered under the Exchange Act and traded on a national securities exchange, through the delivery of irrevocable instructions to a broker to sell such shares obtained upon the exercise of such Option and to deliver promptly to the Company an amount out of the proceeds of such sale equal to the aggregate Option Price for the shares being purchased, (4) by delivering (on a form prescribed by the Company) a full-recourse promissory note, or (5) through net settlement in shares of Class C Common Stock. No Participant shall have any rights to dividends or other rights of a stockholder with respect to shares subject to an Option until the Company has issued the shares issuable in accordance with the exercise of such Option to such Participant following the exercise date of such Option. No fractional shares of Class C Common Stock will be issued upon exercise of an Option, but instead cash will be paid for a fraction or, if the Committee should so determine, the number of shares will be rounded downward to the next whole share. Notwithstanding the foregoing, the Committee may, in its discretion, elect at any time to pay cash or part cash and part shares of Class C Common Stock in lieu of issuing only shares in respect of such exercise. If a cash payment is made in lieu of issuing any shares in respect of the exercise of an Option, the amount of such payment shall be equal to the product of the number of shares subject to the Option for which a cash payment is being made multiplied by the excess of the Fair Market Value per share of Class C Common Stock as of the date of exercise over the Option Price.
(d) ISOs. The Committee may grant Options exercisable for Class C Common Stock under the Plan that are intended to be ISOs. Such ISOs shall comply with the requirements of Section 422 of the Code (or any successor section thereto). No ISO may be granted to any Participant who, at the time of such grant, owns more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, unless (i) the Option Price for such ISO is at least 110% of the Fair Market Value of a share on the date the ISO is granted and (ii) the date on which such ISO terminates is a date not later than the day preceding the fifth anniversary of the date on which the ISO is granted. Any Participant who disposes of shares acquired upon the exercise of an ISO either (i) within two (2) years after the date of grant of such ISO or (ii) within one (1) year after the transfer of such shares to the Participant, shall notify the Company of such disposition and of the amount realized upon such disposition. All Options granted under the Plan are intended to be nonqualified stock options, unless the applicable Award Agreement expressly states that the Option is intended to be an ISO. If an Option is intended to be an ISO, and if for any reason such Option (or portion thereof) shall not qualify as an ISO, then, to the extent of such non-qualification, such Option (or portion thereof) shall be regarded as a nonqualified stock option granted under the Plan; provided, that such Option (or portion thereof) otherwise complies with the Plan’s requirements relating to nonqualified stock options. In no event shall any member of the Committee, the Company or any of its Affiliates (or their respective employees, officers or directors) have any liability to any Participant (or any other Person) due to the failure of an Option to qualify for any reason as an ISO.
(e) Attestation. Wherever in the Plan or any Award Agreement a Participant is permitted to pay the exercise price of an Option or taxes relating to the exercise of an Option by delivering shares of Class C Common Stock, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such shares, in which case the Company shall treat the Option as exercised without further payment and/or shall withhold such number of shares from the shares acquired by the exercise of the Option, as appropriate.
(f) Compliance With Laws, Etc. Notwithstanding the foregoing, in no event shall a Participant be permitted to exercise an Option in a manner in which the Committee determines would violate the Sarbanes-Oxley Act of 2002, as it may be amended from time to time, or any other Applicable Law or the applicable rules and
regulations of the Securities and Exchange Commission or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded.
7. Terms and Conditions of Stock Appreciation Rights.
(a) Grants. The Committee may grant (i) a Stock Appreciation Right independent of an Option or (ii) a Stock Appreciation Right in connection with an Option or a portion thereof. A Stock Appreciation Right granted pursuant to clause (ii) of the preceding sentence (A) may be granted at the time the related Option is granted or at any time prior to the exercise or cancellation of the related Option, (B) shall cover the same number of shares of Class C Common Stock covered by such Option (or such lesser number of shares as the Committee may determine), and (C) shall be subject to the same terms and conditions as such Option except for such additional limitations as are contemplated by this Section 7 (or such additional limitations as may be included in the applicable Award Agreement).
(b) Terms. The exercise price per share of a Stock Appreciation Right shall be an amount determined by the Committee but in no event shall such amount be less than the Fair Market Value of a share of Class C Common Stock covered by the Stock Appreciation Right on the date the Stock Appreciation Right is granted (other than in the case of Stock Appreciation Rights granted in substitution of previously granted awards, as described in Section 3 of the Plan); provided, that in the case of a Stock Appreciation Right granted in conjunction with an Option, or a portion thereof, the exercise price may not be less than the Option Price of the related Option. Each Stock Appreciation Right granted independent of an Option shall entitle a Participant upon exercise to an amount equal to (i) the excess of (A) the Fair Market Value on the exercise date of one share of the Class C Common Stock over (B) the exercise price per share, multiplied by (ii) the number of shares of Class C Common Stock covered by the Stock Appreciation Right. Each Stock Appreciation Right granted in conjunction with an Option, or a portion thereof, shall entitle a Participant to surrender to the Company the unexercised Option, or any portion thereof, and to receive from the Company in exchange therefor an amount equal to (i) the excess of (A) the Fair Market Value on the exercise date of one share of the Class C Common Stock over (B) the Option Price per share, multiplied by (ii) the number of shares of Class C Common Stock covered by the Option, or portion thereof, which is surrendered. In addition, each Stock Appreciation Right that is granted in conjunction with an Option or a portion thereof shall automatically terminate upon the exercise of such Option or portion thereof, as applicable. Payment shall be made in shares or in cash, or partly in shares and partly in cash (any such shares valued at such Fair Market Value), all as shall be determined by the Committee. For purposes of this Section 7, the exercise date of a Stock Appreciation Right shall be the later of (i) the date on which a notice of exercise is received by the Company stating the number of shares with respect to which the Stock Appreciation Right is being exercised, and (ii) the date on which any condition for exercise imposed by the Committee that is consistent with the terms of the Plan and the applicable Award Agreement is satisfied. No Participant shall have any rights to dividends or other rights of a stockholder with respect to shares issuable under an Award of Stock Appreciation Rights until the Company has issued the shares issuable in accordance with the exercise of such Stock Appreciation Rights to such Participant following the exercise date of such Stock Appreciation Rights. No fractional shares of Class C Common Stock shall be issued in payment for Stock Appreciation Rights, but instead cash shall be paid for a fraction of a share or, if the Committee shall so determine, the number of shares shall be rounded downward to the next whole share. Notwithstanding the foregoing, the Committee may, in its discretion, elect at any time to pay cash or part cash and part shares of Class C Common Stock in lieu of issuing only shares in respect of such exercise. If a cash payment is made in lieu of issuing any shares in respect of the exercise of an Award of Stock Appreciation Rights, the amount of such payment shall be equal to the product of the number of shares subject to such Award of Stock Appreciation Rights for which a cash payment is being made multiplied by the excess of the Fair Market Value per share of Class C Common Stock as of the date of exercise over the exercise price of such Stock Appreciation Rights.
(c) Limitations. The Committee may impose, in its discretion, such conditions upon the exercisability of Stock Appreciation Rights as it may deem fit consistent with the Plan (including, but not limited to Section 5(d) of the Plan), but in no event shall a Stock Appreciation Right be exercisable more than ten (10) years after the date it is granted.
8. Other Stock-Based Awards.
The Committee, in its discretion, may grant or sell Stock Awards of unrestricted shares of Class C Common Stock, Stock Awards of restricted shares of Class C Common Stock, Stock Awards of restricted share units over shares of Class C Common Stock and Stock Awards that are valued in whole or in part by reference to, or are otherwise based on the Fair Market Value of, shares of Class C Common Stock (“Other Stock-Based Awards”), in each case subject to Section 5(d) of the Plan, except that the grant of unrestricted shares shall be subject to Section 5(e) of the Plan. Such Other Stock-Based Awards shall be in such form, and dependent on such conditions (subject to Section 5(d) and Section 5(e) of the Plan), as the Committee shall determine, including, without limitation, the attainment of Performance Goals pursuant to Section 9 of the Plan. Other Stock-Based Awards may be granted alone or in addition to any other Stock Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine to whom and when Other Stock-Based Awards will be made; the number and class of shares to be awarded under (or otherwise related to) such Other Stock-Based Awards; whether such Other Stock-Based Awards shall be settled in cash, shares or a combination of cash and shares; and all other terms and conditions of such Other Stock-Based Awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all shares so awarded and issued shall be fully paid and non-assessable). The Committee may, in its discretion, elect at any time to pay cash or part cash and part shares in lieu of issuing any shares in respect of such Other-Stock Based Awards; provided, that, if a cash payment is made in lieu of issuing any shares in respect of an Other Stock-Based Award, the amount of such payment shall be equal to the product of the number of shares for which a cash payment is being made multiplied by the Fair Market Value per share of the Class C Common Stock covered by the Other Stock-Based Award. Unless the Committee provides otherwise in the Award Agreement, a Participant granted an Other Stock-Based Award consisting of restricted shares of Class C Common Stock shall have the right to vote such shares and the right to receive any dividend payments or distributions declared or paid with respect to such shares; provided, that all cash, stock dividends and other property declared or paid with respect to such shares shall be subject to the same restrictions and risk of forfeiture as the related Other Stock-Based Award and shall be paid only upon satisfaction of the vesting conditions and/or achievement of the Performance Goals applicable to such Other Stock-Based Award.
9. Performance Compensation Awards.
(a) General. The Committee shall have the authority to make a Stock Award and/or a cash bonus Award to any Participant and designate such award as a Performance Compensation Award. Any Stock Award or cash bonus Award designated by the Committee as a Performance Compensation Award shall be subject to achievement of Performance Goals over a Performance Period, as established by the Committee in accordance with the provisions of this Section 9.
(b) Discretion of Committee with Respect to Performance Compensation Awards. For Performance Compensation Awards, the Committee shall have discretion to select the length of Performance Periods, the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goal(s) that is (are) to apply and the Performance Formula(e). Within the first ninety (90) days of a Performance Period, the Committee shall, with regard to the Performance Compensation Awards issued or to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence and record the same in writing.
(c) Performance Criteria. The Performance Criteria that will be used to establish the Performance Goal(s) for Performance Compensation Awards may be based on the attainment of specific levels of performance of the Company (and/or one or more of the Company or any of its Affiliates, divisions or operational and/or business units, product lines, brands, business segments, administrative departments or any combination of the foregoing) and shall be limited to the following, which may be determined in accordance with GAAP or on a non-GAAP basis: (i) net earnings, net income (before or after taxes) or consolidated net income; (ii) basic or diluted earnings per share (before or after taxes); (iii) net revenue or net revenue growth; (iv) gross revenue or gross revenue growth, gross profit or gross profit growth; (v) net operating profit (before or after taxes); (vi) return measures (including, without limitation, return on investment, assets, capital, employed capital, invested capital, equity or sales); (vii) cash flow
measures (including, without limitation, operating cash flow, free cash flow or cash flow return on capital), which may but are not required to be measured on a per share basis; (viii) actual or adjusted earnings before or after interest, taxes, depreciation and/or amortization (including EBIT and EBITDA); (ix) gross or net operating margins; (x) productivity ratios; (xi) share price (including, without limitation, growth measures and total stockholder return); (xii) expense targets or cost reduction goals, general and administrative expense savings; (xiii) operating efficiency; (xiv) objective measures of customer/client satisfaction; (xv) working capital targets; (xvi) measures of economic value added or other ‘value creation’ metrics; (xvii) enterprise value; (xviii) sales; (xix) stockholder return; (xx) customer/client retention; (xxi) competitive market metrics; (xxii) employee retention; (xxiii) objective measures of personal targets, goals or completion of projects (including, without limitation, succession and hiring projects, completion of specific acquisitions, dispositions, reorganizations or other corporate transactions or capital-raising transactions, expansions of specific business operations and meeting divisional or project budgets); (xxiv) comparisons of continuing operations to other operations; (xxv) market share; (xxvi) cost of capital, debt leverage year-end cash position or book value; (xxvii) strategic objectives; or (xxviii) any combination of the foregoing. Any one or more of the Performance Criteria may be stated as a percentage of another Performance Criteria, or used on an absolute or relative basis to measure the performance of the Company and/or one or more of the Company and/or any of its Affiliates, or any divisions or operational and/or business units, product lines, brands, business segments or administrative departments of the Company and/or any of its Affiliates or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Criteria may be compared to the performance of a selected group of comparison companies, or a published or special index that the Committee, in its discretion, deems appropriate, or as compared to various stock market indices. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of Performance Goals pursuant to the Performance Criteria specified in this paragraph.
(d) Modification of Performance Goal(s). In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Criteria without obtaining stockholder approval of such alterations, the Committee shall have sole discretion to make such alterations without obtaining stockholder approval. Unless otherwise determined by the Committee at the time a Performance Compensation Award is granted, the Committee may at any time specify adjustments or modifications to be made to the calculation of a Performance Goal for such Performance Period, based on and in order to appropriately reflect the following events: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring programs; (v) acquisitions or divestitures; (vi) any other specific, unusual or nonrecurring events or objectively determinable category thereof; (vii) foreign exchange gains and losses; (viii) discontinued operations and nonrecurring charges; and (ix) a change in the Company’s fiscal year.
(e) Payment of Performance Compensation Awards.
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(i) | Condition to Receipt of Payment. Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period.
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(ii) | Limitation. Unless otherwise provided in the applicable Award Agreement, a Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that (A) the Performance Goals for such Performance Period are achieved, and (B) all or some portion of such Participant’s Performance Compensation Award has been earned for the Performance Period based on the application of the Performance Formula to such achieved Performance Goals.
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(iii) | Certification. Following the completion of a Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine the amount of each
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Participant’s Performance Compensation Award actually payable for the Performance Period and, in so doing, unless otherwise provided in the applicable Award Agreement, may apply Negative Discretion.
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(iv) | Use of Negative Discretion. In determining the actual amount of an individual Participant’s Performance Compensation Award for a Performance Period, unless otherwise provided in the applicable Award Agreement, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Formula in the Performance Period through the use of Negative Discretion. Unless otherwise provided in the applicable Award Agreement, the Committee shall not have the discretion to (A) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained, or (B) increase a Performance Compensation Award above the applicable limitations set forth in Section 4 of the Plan.
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(f) Timing of Performance Compensation Award Payments. Unless otherwise provided in the applicable Award Agreement, Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon as administratively practicable following completion of the certifications required by this Section 9 of the Plan.
(g) Prior Section 162(m). Notwithstanding anything to the contrary herein, no provision of the Plan is intended to result in non-deductibility of Performance Compensation Awards that were intended to be deductible in accordance with Prior Section 162(m). The Company intends to avail itself of transition relief applicable to such Stock Awards, if any, in connection with Section 162(m) of the Code (including, without limitation, in accordance with the Section 162(m) Grandfather) to the maximum extent permitted by regulations and other guidance promulgated to implement such transition relief. The determination by the Company regarding whether transition relief is available shall be made in its discretion.
10. Adjustments upon Certain Events.
Notwithstanding any other provision in the Plan to the contrary, the following provisions shall apply to all Stock Awards granted hereunder:
(a) Generally. In the event of any change in the outstanding shares of the Class C Common Stock by reason of any stock dividend, stock split, reverse stock split, share combination, extraordinary cash dividend, reorganization, recapitalization, merger, consolidation, stock rights offering, spin-off, combination, transaction or exchange of such shares or other corporate exchange, or any transaction similar to the foregoing, the Committee shall make such substitution or adjustment, if any, as it deems to be equitable in order to prevent the enlargement or diminution of the benefits or potential benefits intended to be made available under the Plan (subject to Section 19 of the Plan), as to (i) the number or kind of shares or other securities issued or reserved for issuance pursuant to the Plan or pursuant to outstanding Stock Awards, (ii) the Option Price or exercise price of any Stock Appreciation Right and/or (iii) any other affected terms of such Stock Awards; provided, that, for the avoidance of doubt, in the case of the occurrence of any of the foregoing events that is an “equity restructuring” (within the meaning of the Financial Accounting Standards Board Accounting Standard Codification (ASC) Section 718, Compensation - Stock Compensation (FASB ASC 718) or any successor guidance), the Committee shall make an equitable adjustment to outstanding Stock Awards to reflect such event.
(b) Change in Control. In the event of a Change in Control after the Effective Date, the Committee may (subject to Section 19 of the Plan and any Participant’s rights under an Award Agreement), but shall not be obligated to, (i) accelerate, vest or cause the restrictions to lapse with respect to all or any portion of a Stock Award, (ii) subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code and the regulations promulgated thereunder, cancel such Stock Awards for fair value (as determined by the Committee in its sole discretion in good faith) which, in the case of Options and Stock Appreciation Rights, may, if so determined by the Committee, equal the excess, if any, of value of the consideration to be paid in the Change in Control
transaction, directly or indirectly, to holders of the same number of shares of Class C Common Stock subject to such Options or Stock Appreciation Rights (or, if no consideration is paid in any such transaction, the Fair Market Value of the shares of Class C Common Stock subject to such Options or Stock Appreciation Rights) over the aggregate Option Price of such Options or exercise price of such Stock Appreciation Rights (it being understood that, in such event, any Option or Stock Appreciation Right having a per share Option Price or exercise price equal to, or in excess of, such Fair Market Value may be canceled and terminated without any payment or consideration therefor), (iii) subject to any limitations or reductions as may be necessary to comply with Section 409A of the Code and the regulations promulgated thereunder, provide for the issuance of substitute Stock Awards that will preserve the rights under, and the otherwise applicable terms of, any affected Stock Awards previously granted hereunder as determined by the Committee in its sole discretion in good faith, and/or (iv) provide that for a period of at least fifteen (15) days prior to the Change in Control, Options and Stock Appreciation Rights shall be exercisable as to all shares subject thereto (whether or not vested) and that upon the occurrence of the Change in Control, such Options and Stock Appreciation Rights shall terminate and be of no further force and effect.
11. No Right to Employment or Awards.
The granting of an Award under the Plan shall impose no obligation on the Company or any of its Affiliate to continue the Employment of a Participant and shall not lessen or affect the Company’s right or any of its Affiliates’ rights to terminate the Employment of such Participant. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).
12. Successors and Assigns.
The Plan shall be binding on all successors and assigns of the Company and each Participant, including without limitation, the estate of each such Participant and the executor, administrator or trustee of any such estate and, if applicable, any receiver or trustee in bankruptcy or representative of the creditors of any such Participant.
13. Nontransferability of Awards.
Unless expressly permitted by the Committee in an Award Agreement or otherwise in writing, and, in each case, to the extent permitted by Applicable Law, an Award shall not be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or by operation of law, by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, that this Section 13 shall not prevent transfers by will or by the laws of descent and distribution or, if permitted by the Committee, in the case of a Participant’s death, by beneficiary designation. A Stock Award exercisable after the death of a Participant may be exercised by the legatees, personal representatives or distributees of the Participant, subject to any conditions or qualifications imposed by the Board.
14. Tax Withholding.
(a) The Company or any of its Affiliates shall have the authority, in its discretion, to deduct from any cash compensation or other cash amounts owing to a Participant any income, employment and/or other applicable taxes that are statutorily required to be withheld in respect of an Award. Alternatively, the Company or such Affiliate may require a Participant to pay to the Company or one or more of its Affiliates, as applicable, an amount in cash (by check or wire transfer) equal to the aggregate amount of any income, employment and/or other applicable taxes that are statutorily required to be withheld in respect of an Award.
(b) Without limiting the generality of Section 14(a) of the Plan, with respect to any Stock Award, the Committee may (but is not obligated to), in its discretion, in an Award Agreement or otherwise, permit or require a Participant to satisfy, all or any portion of the minimum income, employment and/or other applicable taxes that are
statutorily required to be withheld with respect to a Stock Award by (i) the delivery of shares of Class C Common Stock (which are not subject to any pledge or other security interest) that have been both held by the Participant and vested for at least six (6) months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment under applicable accounting standards) having an aggregate Fair Market Value equal to such minimum statutorily required withholding liability (or portion thereof); or (ii) having the Company withhold from the shares of Class C Common Stock otherwise issuable or deliverable to, or that would otherwise be retained by, the Participant upon the grant, exercise, vesting or settlement of the Stock Award, as applicable, a number of shares of Class C Common Stock with an aggregate Fair Market Value equal to an amount, subject to Section 14(c) of the Plan below, not in excess of such minimum statutorily required withholding liability (or portion thereof).
(c) The Committee, subject to its having considered the applicable accounting impact of any such determination, may allow Participants to satisfy, in whole or in part, any additional income, employment and/or other applicable taxes payable by them with respect to a Stock Award by electing to have the Company withhold from the shares of the Class C Common Stock otherwise issuable or deliverable to, or that would otherwise be retained by, a Participant upon the grant, exercise, vesting or settlement of the Stock Award, as applicable, shares of Class C Common Stock having an aggregate Fair Market Value that is greater than the applicable minimum required statutory withholding liability (but such withholding may in no event be in excess of the maximum statutory withholding amount(s) in a Participant’s relevant tax jurisdictions).
15. Amendments or Termination.
The Board may amend, alter or discontinue the Plan, but no amendment, alteration or discontinuation shall be made, (a) without the approval of the requisite stockholders of the Company, if such action would (except as provided in Section 10 of the Plan) (i) increase the total number of shares reserved for the purposes of the Plan, (ii) change the maximum number of shares for which Stock Awards may be granted to any Participant, (iii) materially modify the requirements for participation in the Plan, (iv) rescind the limitation on amendment or cancellation of Options and Stock Appreciation Rights described in Section 3(c) of the Plan to the extent provided therein, or (v) otherwise require stockholder approval under Applicable Law, or (b) without the consent of a Participant, if such action would diminish the rights of such individual Participant under any Stock Award theretofore granted to such Participant under the Plan; provided, that anything to the contrary notwithstanding, the Committee may amend the Plan in such manner as it deems necessary to cause a Stock Award to comply with the requirements of the Code or other Applicable Laws (including, without limitation, to avoid adverse tax consequences) or for changes in GAAP or new accounting standards; provided, further, that such amendment shall not adversely affect the rights or potential benefits of the Participant under the Stock Award, unless the Participant consents thereto in writing.
16. Choice of Law.
The Plan and the Awards granted hereunder shall be governed by and construed in accordance with the law of the State of Delaware, without regard to conflicts of laws principles thereof.
17. Effective Date.
The Plan was first effective as of the Effective Date. The Plan was amended and restated effective as of September 7, 2016 and as of December 28, 2018. The Plan is hereby amended and restated effective as of , 2019.
18. Foreign Law.
The Committee may grant Stock Awards to eligible individuals who are foreign nationals, who are located outside the United States or who are not compensated from a payroll maintained in the United States, or who are otherwise subject to (or could cause the Company to be subject to) legal or regulatory provisions of countries or jurisdictions outside the United States on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes
of the Plan, and, in furtherance of such purposes, the Committee may make such modifications, amendments, procedures or Sub-Plans as may be necessary or advisable to comply with such legal or regulatory provisions.
19. Section 409A.
The Plan is intended to comply with the requirements of Section 409A of the Code or an exemption or exclusion therefrom and, with respect to amounts that are subject to Section 409A of the Code, it is intended that the Plan be administered in all respects in accordance with Section 409A of the Code. Each payment under any Award shall be treated as a separate payment for purposes of Section 409A of the Code. A Participant may not, directly or indirectly, designate the calendar year of any payment to be made under any Award that is considered “nonqualified deferred compensation” within the meaning of Section 409A of the Code. Notwithstanding any provision of the Plan or any Award Agreement to the contrary, in the event that a Participant is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the methodology established by the Company), amounts that constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code that would otherwise be payable on account of a “separation from service” within the meaning of Section 409A of the Code and during the six-month period immediately following a Participant’s “separation from service” within the meaning of Section 409A of the Code (“Separation from Service”) shall instead be paid or provided on the first business day after the date that is six months following the Participant’s Separation from Service. If the Participant dies following the Separation from Service and prior to the payment of any amounts delayed on account of Section 409A of the Code, such amounts shall be paid to the personal representative of the Participant’s estate within thirty (30) days after the date of the Participant’s death. The Company shall use commercially reasonable efforts to implement the provisions of this Section 19 in good faith; provided, that neither the Company, the Committee nor any of the Company’s employees, directors or representatives shall have any liability to any Participant with respect to this Section 19.
20. Clawback / Repayment.
All Awards shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or other similar policy adopted by the Board or the Committee and as in effect from time to time, and (ii) Applicable Law. Further, to the extent that the Participant receives any amount in excess of the amount that the Participant should otherwise have received under the terms of the Award for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the Participant shall be required to repay any such excess amount to the Company.
Originally adopted by the Board of Directors of Denali Holding Inc. on October 29, 2013.
Amended and restated by the Board of Directors of Dell Technologies Inc. on September 2, 2016, approved by the stockholders of Dell Technologies Inc. on September 5, 2016 and effective as of September 7, 2016.
Further amended and restated by the Board of Directors of Dell Technologies Inc. effective as of December 28, 2018.
Further amended and restated by the Board of Dell Technologies Inc. on May 25, 2019, subject to approval of the increase in the Absolute Share Limit by the stockholders of Dell Technologies Inc. on , 2019.
Annex CB
Reconciliation of Non-GAAP Financial Measures
| | | | Fiscal Year Ended February 1, 2019 | | | | | | | |
| (in billions) | | Fiscal Year Ended January 29, 2021 |
Net revenue | $ | 90.6 |
| Net revenue | $ | 94.2 |
Non-GAAP adjustments: | | | Non-GAAP adjustments: | |
Impact of purchase accounting | | 0.7 |
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Impact of purchase accounting (a) | | Impact of purchase accounting (a) | | 0.2 |
Non-GAAP net revenue | $ | 91.3 |
| Non-GAAP net revenue | $ | 94.4 |
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Operating loss | $ | (0.2) |
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Operating income | | Operating income | $ | 5.1 |
Non-GAAP adjustments: | | | Non-GAAP adjustments: | | |
Amortization of intangibles | | 6.1 |
| Amortization of intangibles | | 3.4 |
Impact of purchase accounting (a) | | 0.8 |
| Impact of purchase accounting (a) | | 0.2 |
Transaction costs (b) | | 0.8 |
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Transaction-related expenses (b) | | Transaction-related expenses (b) | | 0.3 |
Stock-based compensation expense | | Stock-based compensation expense | | 1.6 |
Other corporate expenses (c) | | 1.3 |
| Other corporate expenses (c) | | 0.2 |
Non-GAAP operating income | $ | 8.8 |
| Non-GAAP operating income | $ | 10.8 |
| | | | |
Net income | | Net income | $ | 3.5 |
Non-GAAP adjustments: | | Non-GAAP adjustments: | |
Amortization of intangibles | | Amortization of intangibles | | 3.4 |
Impact of purchase accounting (a) | | Impact of purchase accounting (a) | | 0.2 |
Transaction-related expenses (b) | | Transaction-related expenses (b) | | (0.2) | |
Stock-based compensation expense | | Stock-based compensation expense | | 1.6 |
Other corporate expenses (c) | | Other corporate expenses (c) | | 0.1 |
Fair value adjustments on equity investments | | Fair value adjustments on equity investments | | (0.6) | |
Aggregate adjustment for income taxes | | Aggregate adjustment for income taxes | | (1.2) | |
Non-GAAP net income | | Non-GAAP net income | $ | 6.8 |
__________
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(a) | This amount(a) Impact of purchase accounting includes non-cash purchase accounting adjustments that are primarily related to the EMC merger transaction. |
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(b) | Consists of acquisition, integration, and divestiture-related costs, as well as the costs incurred in the Class V transaction. |
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(c) | Consists of goodwill impairment charges, severance and facility action costs, and stock-based compensation expense. |
(b) Transaction-related expenses consist of acquisition, integration, and divestiture related costs.
(c) Other corporate expenses consist of severance, facility action, and other costs as well as derecognition of a previously accrued litigation loss.
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| May 20192021 |
Dear stockholders, customers, partners and friends, As I amwrite this year’s letter, we are still battling the COVID-19 virus in communities and countries around the world. The rapid development of vaccines has given us a light at the end of the tunnel, but there is still a long way to go. Through it all, I’ve been grateful for the role Dell Technologies has played in serving our customers and in helping to keep our society and our economy running. In Fiscal Year 2021, we faced challenges like never before and I’m pleased to report that our Dell Technologies enjoyed an outstanding Fiscal 2019. We capped a remarkable six-year period with the listing of the Dell Technologies Class C common stock on the NYSE. From our going-private transaction in 2013 to now, we have undergone a massive evolution, creating the essential infrastructure company through the combination of Dell, EMCteam executed and VMware. Our momentum is strong. The opportunity ahead is enormous. I am thrilled to havedelivered results for all of you joinlike never before. Our strategy for long-term value creation remains the right one, as you can see from our results:
• Record revenue of $94.2 billion • Record cash flow from operations of $11.4 billion • Paid down $5.5 billion in core debt • Ended the potential of Dell Technologiesyear with $15.8 billion total cash and participate along with us in this incredible time for technology, innovation and human progress in the Data Age.investments When we formed Dell Technologies, we believed that bringing together the leaders in servers, storage and virtualization would be great for customers and partners, and they have responded. We are growing, gaining share, investing in the future, paying down debt and innovating across our family of businesses.
For Fiscal 2019, we reported over $90 billion of revenue, adding more than $11 billion to our top line. All three of our business units delivered double-digit revenue growth for the full year and profitable share gains across our portfolio.
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We’ve invested more than $20 billionThrough the year, we prioritized the health and safety of our team members and their families. I’m proud of how our Dell team members adapted and kept their focus, deepening our customer and partner relationships as digital transformation accelerated. In the midst of adapting to new ways of living, learning and working, we delivered new innovations in researchhybrid cloud, edge infrastructure, storage, servers, PCs and development overservices. Our midrange storage business returned to growth, and PowerStore became the last five years with more than 20,000 engineers, scientists and PhDs innovating every day to enable the digital future. Andfastest growing new architecture we have invested in bringing all that innovationreleased. With the launch of APEX, we’re offering the ease and scale of cloud delivered as-a-Service. We are integrating and innovating our own leading capabilities with VMware and across our ecosystem to market with a 40,000-person salesforce and growing partner program. These investments are paying off in our results. We have consistently delivered competitive wins, including with manydevelop the highly automated, intelligent infrastructure for the Data Era.
All of our largest customers, who represent 98 percentthis was made possible because of the Fortune 500. In Fiscal 2020,company culture we have built over 37 years, the big goals we set for ourselves, and our determination to strive for them every day. This was never more important than in this past year. We listened to our team members to understand their concerns and how we can do better. We took concrete steps to be part of the solutions that will continue to run thedrive our society forward. It is through our scale and technology – backed by our incredible talent - that we drive business with discipline. We will remain focused on generating long-term growth, share gain and cash flow while drivingcreate long-term value for all our stockholders, customersstakeholders and partners.drive a positive impact in the world.
Looking
When it comes to the longer term, theleading in environmental, social, and governance (ESG), we marry who we are with what we do. We take this opportunity is generational in scope. Our world is undergoing a digital transformation that will change every aspectand responsibility seriously, making effective governance and transparency an essential part of how we live, work and operate as a society.our ESG strategy. Data is now our greatest asset and our most important resource, but data is not like any other resource. It is completely renewable and inexhaustible, and we keep making more of it, at a faster and faster rate. The number of intelligent and connected nodes, devices and sensors continues to increase exponentially, and turning all that data into action and progress is the heart of digital transformation.
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The world of businessOur Social Impact Plan for 2030 serves as an important tool to drive measurable change and technology is mergingensure we win the right way with key performance indicators in a fourth Industrial Revolution, enabled by a perfect storm of technology tipping points. Edge computing and the Internet of Things, ubiquitous connectivity through broadband and 5G, along with AI and machine learning, have come together to transform the wayfour areas:
• Advancing sustainability – we use data. But realizing all these possibilities will require a massive build-out inrecently announced a new typecommitment to achieve net zero greenhouse gas (GHG) emissions across scopes 1, 2 and 3 by 2050. • Cultivating inclusion – last year we promoted underrepresented minorities and women at a higher rate than current representation, accelerating our pipeline for leadership. Additionally, we instituted a talent acquisition policy aimed at ensuring that at least one candidate from an underrepresented ethnicity or gender is included in external candidate interview slates, including at the executive officer level. • Transforming lives – with the Government of India’s Ministry of Health and Family Welfare and Tata Trusts, we continue to grow Digital LifeCare – a technology infrastructure.platform for screening and managing noncommunicable diseases and ultimately serving as digital rails to support all future primary health care programs. To date, 100 million people have enrolled. At• Upholding ethics and privacy – we launched our privacy trust center for registered Dell My Account users to be able to easily manage their data. This self-service center allows users to access and delete their data and deactivate and re-activate their My Account when they no longer want to access their data.
Looking ahead, we will continue our focus on delivering long-term value, including through the recently announced spin-off of our equity ownership of VMware. As part of this transaction, Dell Technologies and VMware will retain a strong commercial agreement that is unique and differentiated, preserving our relationship while allowing strategic flexibility for both companies. Our joint momentum in road maps and innovation and in sales and support are full steam ahead. We believe deeply in the better-together power of these two great companies as the foundation for the digital future. With this announcement, we believe thatwill be even stronger. By simplifying our ownership and capital structures, we will unlock shareholder value and unlock new opportunities to serve our customers by innovating and investing in our companies and across our ecosystems.
It is my honor to spend a great deal of my time with our customers, and everyone is eager to put the pandemic behind us. However, we have also seen the possibilities of a more digital, equitable and sustainable future, and we are unique in our ability to offer secure, integrated solutions that span from the intelligent edge to the multi-cloud ecosystem and enable the software revolution of AI and machine learning that is transforming our world.not going backwards. We are combining innovations from VMware, Pivotal Software and DellEMC to deliver developer-friendly, highly-automated, intelligent, efficient cloud architectures. By spanning existing and emerging infrastructure and the multi-cloud world, Dell Technologies can maximize the value of today’s investments, while also enabling the business needs of tomorrow.
Today, technology has become the enabler of progress for every part of the organization. In this way, its impact is now far beyond what it used to be,go to school, to work, to entertainment, to shop. Now everything comes to us, wherever we are. The economy and I believeour society move on data highways. New infrastructure investments are needed to support all this will only increase. Every organization - business, government, healthcare - needs to reimagine itself in this new Data Age -activity, and Dell Technologies was createdstands ready to becapture our customers’ bestshare of the opportunities ahead. We were there for our customers when they needed us during times of crisis. Now they are turning to us as their strategic partner to build on last year’s investments and most trusted partner onaccelerate their digital journey.future. This creates huge opportunity for our customers, team members, communities and shareholders.
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I am incredibly excited for our data-fueled future and for the amazing role Dell Technologies will play.
Michael S. Dell
Chairman of the Board and Chief Executive Officer
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Use the Internet to submit your proxy and for electronic delivery of information up until 11:59 p.m. Eastern Time (10:59 p.m. Central Time) on Monday, July 8, 2019.June 21, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to submit your proxy. Alternatively, you may submit your proxy by scanning the QR code provided on page 1 of the proxy statement with your mobile device (you will need your 16-digit control number).
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DELL TECHNOLOGIES INC. ONE DELL WAY ROUND ROCK, TX 78682
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: x |
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DELL TECHNOLOGIES INC. | For All
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| The Board of Directors recommends that you vote FOR each of the Group I nominees listed under Proposal 1: | ¨ | ¨ | ¨ | | | | |
| 1. Election of Group I Directors | | | | | | | |
| Nominees: | | | | | | | | |
| 01) Michael S. Dell 02) David W. Dorman 03) Egon Durban | 04) William D. Green | 05) Ellen J. Kullman 06) Simon Patterson
07)06) Lynn M. Vojvodich
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| The Board of Directors recommends that you vote FOR Proposals 2 3 and 4:3: | | For | Against | Abstain |
| 2. Ratification of the appointment of PricewaterhouseCoopers LLP as Dell Technologies Inc.'s independent registered public accounting firm for fiscal year ending January 31, 202028, 2022 | ¨ | ¨ | ¨ |
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| 3. Approval, on an advisory basis, of the compensation of Dell Technologies Inc.'s named executive officers as disclosed in the proxy statement | ¨ | ¨ | ¨ |
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| 4. Approval of amendment to the Dell Technologies Inc. 2013 Stock Incentive Plan to increase the number of shares of Class C common stock issuable under the plan | ¨ | ¨ | ¨ |
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| NOTE: Such other business as may properly come before the meeting or any adjournment or postponement thereof. | | | |
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| NOTE: Please sign as name appears hereon. Joint owners must each sign. When signing as attorney, executor, administrator, trustee, guardian or corporate officer, or in any other representative capacity, please give full title as such. | | | | | |
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| Signature [PLEASE SIGN WITHIN BOX] | Date | | | Signature (Joint Owners) | Date | | |
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CLASS A COMMON STOCK PROXY Dell Technologies Inc.
Annual Meeting of Stockholders
July 9, 2019, June 22, 2021, 10:00 a.m. Central Time
To be held at www.virtualshareholdermeeting.com/DELL2019 DELL2021 |
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DELL TECHNOLOGIES INC.
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The undersigned hereby appoints Richard J. Rothberg, and Robert Potts and James Williamson, and each of them, with power to act without the other and with power of substitution and resubstitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the reverse side of this form, all the shares of Dell Technologies Inc. Class A Common Stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Stockholders of the Company to be held on July 9, 2019June 22, 2021 and any adjournment or postponement thereof, with all powers which the undersigned would possess if present at the meeting. |
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THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR THE ELECTION OF ALL GROUP I NOMINEES UNDER PROPOSAL 1, FOR PROPOSALS 2 3 AND 43 AND IN THE DISCRETION OF THE PROXY HOLDERS WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF. |
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