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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.           )

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

Equinix, Inc.

(Name of Registrant as Specified In Its Charter)

 

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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

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NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders (the "Annual Meeting") of Equinix, Inc., a Delaware corporation ("Equinix"). The meeting will be held at our headquarters, located at One Lagoon Drive, Redwood City, Calif., on Thursday, May 30, 2019, at 10:30 a.m. PDT, for the purposes of considering and voting on:

    1.
    Election of directors to the board of directors (the "Board") to serve until the next Annual Meeting or until their successors have been duly elected and qualified;

    2.
    Approval, by a non-binding advisory vote, of the compensation of our named executive officers;

    3.
    Approval of the Equinix French Sub-Plan under our 2000 Equity Incentive Plan;

    4.
    Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending Dec. 31, 2019;

    5.
    A stockholder proposal, related to political contributions, if properly presented at the Annual Meeting; and

    6.
    Such other business as may properly come before the meeting or any adjournments or postponements thereof.

The foregoing items of business are more fully described in the attached proxy statement.

Only stockholders of record at the close of business on Apr. 15, 2019 are entitled to notice of, and to vote at, the Annual Meeting and at any adjournments or postponements thereof. A list of such stockholders will be available for inspection at our headquarters, during ordinary business hours, for the 10-day period prior to the Annual Meeting.

BY ORDER OF THE BOARD OF DIRECTORS,

GRAPHIC

Peter Van Camp
Executive Chairman

Redwood City, California
April 19, 2019

TO BE HELD

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Thursday, May 30, 2019

LOCATION

GRAPHIC

Equinix Corporate Headquarters
One Lagoon Drive
Redwood City, CA 94065
+1.650.598.6000

ATTENDANCE

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Whether or not you plan to attend the Annual Meeting, please complete, sign, date and promptly return the accompanying proxy in the enclosed postage-paid envelope or follow the instructions in "Additional Information" (page 56) to submit your proxy by telephone or on the internet. You may revoke your proxy at any time prior to the Annual Meeting. If you decide to attend the Annual Meeting and wish to change your proxy vote, you may do so automatically by voting in person at the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.

Important notice regarding the availability of proxy materials for the Annual Meeting to be held on May 30, 2019:

The proxy statement and annual report to stockholders on Form 10-K are available at: proxy.equinix.com.

 

 

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PROXY SUMMARY

This summary highlights some of the topics discussed in this proxy statement. It does not cover all the information you should consider before voting, and you are encouraged to read the entire proxy statement before casting your vote.

General information

   


     


   
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  GRAPHIC  


  GRAPHIC
MEETING: Annual Meeting of Stockholders

DATE: Thursday, May 30, 2019

TIME: 10:30 a.m. PDT

LOCATION: Equinix Corporate Headquarters,
One Lagoon Drive, Redwood City, CA 94065

RECORD DATE: Apr. 15, 2019

      STOCK SYMBOL: EQIX

EXCHANGE: NASDAQ

COMMON STOCK OUTSTANDING: 84,070,029 shares as of Apr. 15, 2019

REGISTRAR & TRANSFER AGENT: Computershare

STATE OF INCORPORATION: Delaware

YEAR OF INCORPORATION: 1998

PUBLIC COMPANY SINCE: 2000

      CORPORATE WEBSITE:
Equinix.com

INVESTOR RELATIONS WEBSITE: investor.equinix.com

2019 ANNUAL MEETING MATERIALS: proxy.equinix.com

Governance

DIRECTOR NOMINEES: 9

GRAPHIC   Thomas Bartlett
(Independent Director)
  GRAPHIC   Nanci Caldwell
(Independent Director)
  GRAPHIC   Gary Hromadko
(Independent Director)

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Scott Kriens
(Independent Director)

 

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William Luby
(Independent Director)

 

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Irving Lyons III
(Independent Director)

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Charles Meyers
(Chief Executive Officer and President)

 

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Christopher Paisley
(Lead Independent Director)

 

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Peter Van Camp
(Executive Chairman)


DIRECTOR TERM: One year

DIRECTOR ELECTION STANDARD: Majority votes cast

BOARD MEETINGS IN 2018: 18

STANDING BOARD COMMITTEES (MEETINGS IN 2018): Audit (9), Compensation (4), Finance (2), Governance (5), Nominating (1), Real Estate (11)

SUPERMAJORITY VOTING REQUIREMENTS: No

STOCKHOLDER RIGHTS PLAN: No

STOCKHOLDER RIGHT TO CALL SPECIAL MEETINGS: Yes

STOCKHOLDER RIGHT TO ACT BY WRITTEN CONSENT: Yes

STOCKHOLDER PROXY ACCESS RIGHTS: Yes

CORPORATE GOVERNANCE MATERIALS: governance.equinix.com

 

 

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Performance and compensation highlights

REVENUES ($M):
  AFFO ($M)(1):
  2016 - 2018 STOCK PRICE PERFORMANCE ($):

 

 

 

 

 
GRAPHIC   GRAPHIC   GRAPHIC

2018 EXECUTIVE COMPENSATION MIX(2):

GRAPHIC   2018 CEO: Charles Meyers (Age 53; CEO from Sept. 2018)

PERCENTAGE 2018 EXECUTIVE INCENTIVE COMPENSATION AT RISK: 100% of Annual and 75% of Long Term

METRICS USED FOR 2018 INCENTIVE COMPENSATION: Revenues, AFFO, Total Stockholder Return

TAX GROSS-UPS: No

STOCK OWNERSHIP GUIDELINES: Yes

ANTI-HEDGING POLICY: Yes

RECOUPMENT POLICY: Yes

CEO PAY RATIO: 130:1

Items to be voted on and our Board's recommendation

GRAPHIC DIRECTORS:

Election of directors

GRAPHIC COMPENSATION:

Advisory vote to approve named executive officer compensation

GRAPHIC COMPENSATION:

Approval of the Equinix French Sub-Plan under our 2000 Equity Incentive Plan


GRAPHIC   AUDIT:

Ratification of independent registered public accountants

  GRAPHIC   STOCKHOLDER PROPOSAL:

Stockholder proposal related to political contributions

1.
Funds from operations ("FFO") and adjusted funds from operations ("AFFO") are non-GAAP financial measures commonly used in the REIT industry. FFO is calculated in accordance with the standards established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income (loss), excluding gains (losses) from the disposition or real estate assets, depreciation and amortization on real estate assets and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items. AFFO represents FFO, excluding depreciation and amortization expense on a non-real estate assets, accretion, stock-based compensation, restructuring charges, impairment charges, acquisition costs, an installation revenue adjustment, a straight-line rent expense adjustment, amortization of deferred financial costs, gains (losses) on debt extinguishment, an income tax expense adjustment, recurring capital expenditures and adjustments from FFO to AFFO for unconsolidated joint ventures' and non-controlling interests' share of these items. For additional definitions of non-GAAP terms and a detailed reconciliation between non-GAAP financial results and the corresponding GAAP measures, please refer to pages 56-60 of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on Feb. 22, 2019.

2.
Reflects the market value of the RSU awards on the grant date of Feb. 27, 2018. Assumes the maximum size award is earned under the 2018 annual incentive plan and the maximum number of shares is earned under the performance-based RSU awards. Excludes a time-based award granted to Mr. Meyers in connection with his appointment as chief executive officer in Sept. 2018.

 

 

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NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
  1

PROXY SUMMARY

 

2

General information

 

2

Governance

 

2

Performance and compensation highlights

 

3

Items to be voted on and our Board's recommendation

 

3


GOVERNANCE


 


5

Election of directors

 

5

Board composition

 

9

Board operations

 

10

Other governance policies and practices

 

14

2018 Director compensation

 

15

Equinix stock ownership

 

18

Related party transactions

 

19

Executive officers

 

20


COMPENSATION


 


21

PROPOSAL 2 — Advisory non-binding vote on executive compensation

 

21


EXECUTIVE COMPENSATION AND RELATED INFORMATION


 


22

Compensation discussion and analysis

 

22

Compensation policies and practices risk assessment

 

40

Compensation committee interlocks and insider participation

 

41

Equity compensation plan information

 

41

Section 16(a) beneficial ownership reporting compliance

 

42

CEO to median employee pay ratio

 

42

PROPOSAL 3 — Approval of the Equinix French Sub-Plan under our 2000 Equity Incentive Plan

 

44


AUDIT


 


52

PROPOSAL 4 — Ratification of independent registered public accountants

 

52


STOCKHOLDER PROPOSAL


 


54

PROPOSAL 5 — Stockholder proposal related to political contributions

 

54


ADDITIONAL INFORMATION


 


56

Voting information and attending the meeting

 

56

Delivery of documents to stockholders sharing an address

 

59

Stockholder proposals for 2020 annual meeting

 

59

Other matters

 

60

APPENDIX A

 

A-1

 

 

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GOVERNANCE

Election of directors

All directors will be elected at the Annual Meeting to serve for a term expiring at the next annual meeting of stockholders and until his or her successor is elected, or until the director's death, resignation or removal. If you sign your proxy card but do not give instructions with respect to the voting of directors, your shares will be voted for the nine persons recommended by the Board. If you wish to give specific instructions with respect to the voting of directors, you must do so with respect to the individual nominee. If any nominee becomes unavailable for election because of an unexpected occurrence, your shares will be voted for the election of a substitute nominee proposed by Equinix's Board. Each person nominated for election has agreed to serve if elected, and our Board has no reason to believe that any nominee will be unable to serve.

The nine directors who are being nominated for election by the holders of common stock to the Board; their ages as of Apr. 1, 2019; their positions and offices held with Equinix; and certain biographical information, including directorships held with other public companies during the past five years, are set forth below. In addition, we have provided information concerning the particular experience, qualifications, attributes and/or skills that led the Nominating Committee and the Board to determine that each nominee should serve as a director of Equinix.

 

 

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NOMINEES


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Thomas Bartlett
Age 60
Independent director since: Apr. 2013
Committees: Audit and Finance
Current role

Executive vice president and chief financial officer since 2009, American Tower, an owner and operator of wireless and broadcast communications sites that operates as a real estate investment trust ("REIT")

Prior business experience

Treasurer, American Tower (July 2017–Nov. 2018, 2012–2013)

Various operations and business development roles with predecessor companies and affiliates, including most recently senior vice president and corporate controller, Verizon Communications (1983–2009)

Began career at Deloitte, Haskins & Sells

Qualifications

Experience at American Tower with its conversion to and operation as a REIT

Experience in telecommunications and wireless infrastructure fields

Accounting and financial expertise, including as a public company chief financial officer

   

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Nanci Caldwell
Age 61
Independent director since: Dec. 2015
Committee: Governance
Current role

Corporate director (since 2005)

Prior business experience

Executive vice president and chief marketing officer, PeopleSoft (2001–2004)

Various senior and executive sales and marketing roles in Canada and the U.S., Hewlett-Packard (1982–2001)

Current public company boards (in addition to Equinix)

CIBC

Citrix Systems

Donnelley Financial Solutions

Talend

Past public company boards

Tibco Software

Deltek

Qualifications

Expertise in enterprise sales, marketing and technology, which brings a valuable perspective to our Board to support our current sales and marketing strategy

Experience as an operating executive at major public companies

Experience with public company M&A

Experience on multiple Governance Committees

   

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Gary Hromadko
Age 66
Independent director since: June 2003
Committees: Audit, Nominating and Real Estate
Current role

Private investor

Prior Business Experience

Venture partner, Crosslink Capital, a venture capital firm (2002–2017)

Past public company boards

Carbonite

Qualifications

Active private investor since 1993

Experience as an investor in the networking, cloud and infrastructure service sectors, important customer segments to Equinix, and sectors where trends are closely watched as important to our future strategy and positioning

Experience with financial and capital markets

Experience with Equinix since 2003

 

 

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Scott Kriens
Age 61
Independent director since: July 2000
Committees: Compensation and Nominating
Current role

Corporate director

Prior business experience

Chief executive officer and chairman of the board of directors, Juniper Networks, a publicly-traded internet infrastructure solutions company (1996–2008)

Vice president of sales and vice president of operations, StrataCom, a telecommunications equipment company, which Mr. Kriens co-founded (1986–1996)

Current public company boards (in addition to Equinix)

Juniper Networks

Qualifications

Extensive experience in the sectors of communications services and internet infrastructure

Executive leadership and management experience leading Juniper Networks, a leading technology company

   

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William Luby
Age 59
Independent director since: Apr. 2010
Committees: Compensation and Nominating
Current role

Managing partner, Seaport Capital, a private equity firm, and its predecessor companies (since 1996)

Prior business experience

Managing director, Chase Capital, the private equity affiliate of Chase Manhattan

Past public company boards

Switch & Data Facilities Company, prior to its acquisition by Equinix in 2010

Qualifications

Active investor in the telecommunications industry for 25 years

Experience as a director at Switch & Data

Familiarity with data center industry

   

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Irving Lyons
Age 69
Independent director since: Feb. 2007
Committees: Compensation, Finance, Real Estate and Stock Award
Current role

Principal, Lyons Asset Management, a California-based private investment firm (since 2005)

Prior business experience

Chief investment officer, Prologis, a global provider of distribution facilities and services (1997–2004)

Current public company boards (in addition to Equinix)

ESSEX Property Trust

Prologis

Qualifications

Experience with global real estate, including as a chief investment officer at a real estate concern, which provides valuable insight to discussions of site selection and negotiations as Equinix conducts expansion planning and management of its real estate portfolio

Experience with REITs, as well as knowledge of capital markets and executive leadership and management experience

 

 

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Charles Meyers
Age: 53
Director since: Sept. 2018
Committee: Stock Award
Current role

Chief executive officer and president, Equinix (since Sept. 2018)

Prior business experience

President, strategy, services and innovation, Equinix (2017–Sept. 2018)

Chief operating officer, Equinix (2013–2017)

President, Equinix Americas (2010–2013)

Various positions, including group president of messaging and mobile media, and product group executive for the security and communications portfolio, VeriSign, an Internet security company now part of Symantec (2006–2010)

Qualifications

Perspective and experience as Equinix's chief executive officer

Long history with Equinix dating back to 2010 in various leadership roles

Extensive executive leadership experience prior to joining Equinix at technology companies

   

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Christopher Paisley
Age 66
Independent director since: July 2007 (and lead independent director since Feb. 2012)
Committees: Audit, Finance, Governance and Real Estate
Current role

Dean's Executive Professor of Accounting, Leavey School of Business at Santa Clara University (since 2001)

Prior business experience

Senior vice president of finance and chief financial officer, 3Com (1985–2000)

Current public company boards (in addition to Equinix)

Ambarella

Fitbit

Fortinet

Past public company boards

Bridge Capital

Control4

YuMe

Qualifications

Expertise in accounting and finance

Experience as a chief financial officer at a technology company

Extensive public company board and audit committee experience

   

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Peter Van Camp
Age 63
Director since: May 2000
Committee: Governance
Current role

Executive chairman, Equinix (since 2007)

Prior business experience

Interim chief executive officer and president, Equinix (Jan. 2018–Sept. 2018)

Chief executive officer, Equinix (2000–2007)

President, Equinix (2006–2007)

President, UUNET, the internet division of MCI (formerly known as WorldCom) (1997–2000)

Past public company boards

Silver Spring Networks

Qualifications

Long history with Equinix dating back to 2000

Experience acquired as Equinix's former chief executive officer and president bring valuable perspective to the Board

Extensive career history at technology services, communication services, and critical infrastructure companies

   


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Board composition

BOARD SIZE

Equinix's Board currently consists of nine directors. Equinix's bylaws provide that the number of directors will be determined by the Board, and the number of directors is currently set at 10. Thus, there is currently one vacant seat on Equinix's Board. Equinix does not intend to fill the vacant seat at the Annual Meeting.

MAJORITY VOTE STANDARD

Our bylaws provide that a director nominee must receive a majority of the votes cast with respect to such nominee in uncontested director elections (i.e., the number of shares voted "for" a director nominee must exceed the number of shares voted "against" such nominee). If an incumbent director nominee fails to receive a majority of the votes cast in an uncontested election, the director shall immediately tender his or her resignation to the Board. The Governance Committee of the Board, or such other committee designated by the Board, shall make a recommendation to the Board as to whether to accept or reject the resignation of such incumbent director, or whether other action should be taken. The Board shall act on the resignation, taking into account the committee's recommendation, and publicly disclose its decision regarding the resignation within 90 days following certification of the election results. If the Board accepts a director's resignation, or if a nominee for director is not elected and the nominee is not an incumbent director, the remaining members of the Board may fill the resulting vacancy or may decrease the size of the Board.

DIRECTOR INDEPENDENCE

The Board is currently composed of nine directors, seven of whom qualify as independent directors pursuant to the rules adopted by the Securities and Exchange Commission applicable to the corporate governance standards for companies listed on The NASDAQ Stock Market ("NASDAQ"). The Board has determined that all the Equinix director nominees are independent within the meaning of the applicable NASDAQ listing standards, except for Mr. Meyers, Equinix's chief executive officer and president and Mr. Van Camp, Equinix's executive chairman. The Audit, Compensation, Finance, Nominating and Real Estate committees of the Board currently consist entirely of independent directors.

NOMINATION OF DIRECTORS

The Nominating Committee of the Board operates pursuant to a written charter and has the exclusive right to recommend candidates for election as directors to the Board. The Nominating Committee believes that candidates for director should have certain minimum qualifications, including being able to read and understand basic financial statements, having high moral character, having business experience, and being over 21 years of age. The Nominating Committee's process for identifying and evaluating nominees is as follows. In the case of incumbent directors whose annual terms of office are set to expire, the Nominating Committee reviews such directors' overall service to Equinix during their term, including the number of meetings attended, level of participation, quality of performance, and any transactions of such directors with Equinix during their term. In the case of new director candidates, the Nominating Committee first determines whether the nominee must be independent for NASDAQ purposes, which determination is based upon the Equinix, Inc. Board of Directors Guidelines on Significant Corporate Governance Issues (the "Guidelines"), the rules and regulations of the Securities and Exchange Commission, the rules of NASDAQ, and the advice of counsel, if necessary. The Nominating Committee may then use its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating Committee will then meet to discuss and consider such candidates' qualifications and choose candidate(s) for recommendation to the Board.

There is no fixed set of qualifications that must be satisfied before a candidate will be considered. Rather, the Nominating Committee has the flexibility to consider such factors as it deems appropriate. In evaluating potential nominees for Board membership, the Nominating Committee considers qualification criteria, such as independence, character, ability to exercise sound judgment, demonstrated leadership ability, skills, including

 

 

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financial literacy, educational background, diversity and experience, in the context of the current and anticipated needs of the Board and of Equinix as a whole. In practice, the Nominating Committee has sought members with experience relevant to our industry and current strategy. For example, in 2007 the addition of Mr. Lyons to our Board was the result of a specific search designed to add experience in real estate to our Board as we embarked on a period of major expansion; in 2013 the addition of Mr. Bartlett was designed to add further REIT experience to our Board in advance of our REIT conversion; and in 2015 the addition of Ms. Caldwell was designed to add further experience in enterprise technology to our Board as we continue to pursue the enterprise customer. The Nominating Committee understands the importance and value of diversity on the Board. Both the Guidelines and the Nominating Committee Charter require the Nominating Committee to ensure qualified women and individuals from minority groups are included in the pool from which the Board nominees are chosen.

The Nominating Committee will consider candidates recommended by stockholders. Stockholders wishing to recommend candidates for consideration by the Nominating Committee may do so in writing to the corporate secretary of Equinix and by providing the candidate's name, biographical data and qualifications. The Nominating Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether the candidate was recommended by a stockholder.

In addition, in Mar. 2016, our bylaws were amended to provide for proxy access for director nominations by stockholders (the "Proxy Access Bylaw"). Under the Proxy Access Bylaw, any eligible stockholder, or eligible group of up to 20 stockholders, owning 3% or more of Equinix's outstanding common shares continuously for at least three years, may nominate and include in Equinix's annual meeting proxy materials for director nominees, up to a total number not to exceed the greater of 20% of the directors then serving on the Board or two directors, provided that the eligible stockholder or eligible group of stockholders and the director nominee(s) satisfy the requirements in the Proxy Access Bylaw. The Proxy Access Bylaw was first available to stockholders for Equinix's 2017 Annual Meeting of Stockholders.

A more detailed description on the functions of the Nominating Committee can be found in the Nominating Committee Charter, published on the corporate governance section of Equinix's website at Equinix.com.

Board operations

BOARD LEADERSHIP STRUCTURE

From 2000 to 2007, Mr. Van Camp served as both our chief executive officer and as chairman of the board. In Apr. 2007, Mr. Van Camp stepped down as Equinix's chief executive officer but retained the chairmanship of the Board as executive chairman. Following the resignation of Stephen Smith in Jan. 2018, Mr. Van Camp was appointed our interim chief executive officer and president. In Sept. 2018, Mr. Meyers was unanimously elected chief executive officer and president by the Board and Mr. Van Camp resigned from these interim roles. Mr. Van Camp continues to serve as our executive chairman. Our chief executive officer is responsible for the day-to-day leadership of Equinix and its performance, and for setting the strategic direction of Equinix. Mr. Van Camp, with his depth of experience and history with Equinix dating back to 2000, provides support and guidance to management and to Mr. Meyers as executive chairman. He also provides leadership to the Board and works with the Board to define its structure and activities needed to fulfill its responsibilities, facilitates communication among directors and between directors and senior management, provides input to the agenda for Board meetings, works to provide an appropriate information flow to the Board, and presides over meetings of the full Board. Thus, while our chief executive officer is positioned as the leader of Equinix and is free to focus on day-to-day challenges, our Board also has a strong leader with deep knowledge of Equinix in Mr. Van Camp. We believe this structure is best for both Equinix and our stockholders.

In Feb. 2012, Mr. Paisley was designated by the Board as its lead independent director. In this role, Mr. Paisley's duties may include presiding at all meetings of the Board at which the executive chairman is not present; calling and chairing all sessions of the independent directors; preparing the agenda and approving materials for meetings of the independent directors; briefing management directors about the results of deliberations among independent directors; consulting with the executive chairman regarding agendas, pre-read materials and proposed meeting calendars and schedules; collaborating with the executive chairman and acting as liaison between the executive

 

 

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chairman and the independent directors; and serving as the Board's liaison for consultation and communication with stockholders as appropriate, including on request of major stockholders. In addition, the number of independent directors on our Board and our committee structure provide additional independent oversight of Equinix. For example, the Audit, Compensation, Finance and Nominating Committees of the Board, and the Real Estate Committee of the Board, where decisions regarding our expansion and capital deployment are vetted, consist entirely of independent directors. Our independent directors regularly hold private sessions and have direct access to management. A self-assessment of the Board is also conducted annually, at which time each member is free to evaluate and comment as to whether they feel this leadership structure continues to be appropriate.

DIRECTOR ATTENDANCE

During the fiscal year ended Dec. 31, 2018, the Board held 18 meetings. For the fiscal year, each of the incumbent directors attended or participated in at least 83% of the aggregate of (i) the total number of meetings of the Board and (ii) the total number of meetings held by all committees of the Board on which each such director served. In the event any director missed a meeting, that individual would separately discuss material items with Mr. Van Camp or Mr. Meyers.

BOARD COMMITTEES

The Board has seven standing committees: the Audit Committee, the Compensation Committee, the Finance Committee (formed in May 2018), the Governance Committee, the Nominating Committee, the Real Estate Committee and the Stock Award Committee, in addition to special committees that may be formed from time to time. The following table provides membership information for the incumbent directors for fiscal 2018 for such standing committees of the Board:

Name

    Audit       Compensation       Finance       Governance       Nominating       Real Estate       Stock Award
 

Thomas Bartlett

    X                 X(1)                                
 

Nanci Caldwell

                            X(2)                        
 

Gary Hromadko

    X                                 X         X          
 

Scott Kriens

            X                         X(1)                
 

William Luby

            X                         X                  
 

Irving Lyons III

            X(1)       X                         X         X  
 

Charles Meyers

                                                    X(3)
 

Christopher Paisley

    X(1)               X         X                 X          
 

Peter Van Camp

                            X(4)                       X(5)
 
(1)
Committee chair.
(2)
Appointed chair in Mar. 2018.
(3)
Mr. Meyers joined the Stock Award Committee in Sept. 2018.
(4)
Mr. Van Camp was removed from the Governance Committee in Mar. 2018 while serving as interim chief executive officer and president and reinstated in Sept. 2018.
(5)
Mr. Van Camp joined the Stock Award Committee in Jan. 2018 while serving as interim chief executive officer and president and was removed from the committee in Sept. 2018.

A detailed description of the Audit Committee can be found in the section entitled, "Report of the Audit Committee of the Board of Directors," elsewhere in this proxy statement. The members of the Audit Committee in 2018 were Mr. Bartlett, Mr. Hromadko and Mr. Paisley. Mr. Paisley is chairperson of the Audit Committee and both Mr. Bartlett and Mr. Paisley are considered financial experts. During the fiscal year ended Dec. 31, 2018, the Audit Committee held nine meetings.

The Compensation Committee oversees, reviews and administers all of Equinix's compensation, equity and employee benefit plans and programs relating to executive officers, including the named executive officers; approves the global guidelines for the compensation program for Equinix's non-executive employees; and approves Equinix's projected global equity usage. The Compensation Committee also acts periodically to evaluate the effectiveness of the compensation programs at Equinix and considers recommendations from its consultant, Compensia, Inc. ("Compensia"), and from management regarding new compensation programs and changes to those already in existence. In addition, the Compensation Committee is consulted to approve the compensation

 

 

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package of a newly hired executive or of an executive whose scope of responsibility has changed significantly. A more detailed description of the functions of the Compensation Committee can be found in the Compensation Committee Charter, published on the corporate governance section of Equinix's website at Equinix.com and in the "Compensation Discussion and Analysis" section below. The members of the Compensation Committee are Mr. Kriens, Mr. Luby and Mr. Lyons. Mr. Lyons is chairperson of the Compensation Committee. During the fiscal year ended Dec. 31, 2018, the Compensation Committee held four meetings.

The Finance Committee was established in May 2018 to assist the Board in fulfilling its responsibilities across the principal areas of corporate finance for Equinix. The Finance Committee provides oversight and assistance to management in considering such matters as Equinix's balance sheet, capital planning, and cash flow, financing needs, use of hedges and Equinix's credit ratings agency strategy and discussions with such agencies. A more detailed description of the functions of the Finance Committee can be found in the Finance Committee Charter, published on the corporate governance section of Equinix's website at Equinix.com. The members of the Finance Committee are Mr. Bartlett, Mr. Lyons and Mr. Paisley. Mr. Bartlett is chairperson of the Finance Committee. During the fiscal year ended Dec. 31, 2018, the Finance Committee held two meetings.

The Governance Committee was established to (i) oversee the evaluation of the Board; (ii) review and consider developments in corporate governance practices and to recommend to the Board a set of effective corporate governance policies and procedures applicable to Equinix; and (iii) review and consider developments related to the Equinix Governance Risk and Compliance ("GRC") Program and to report out to the Board on GRC Program activities and recommendations. A more detailed description on the functions of the Governance Committee can be found in the Governance Committee Charter, published in the corporate governance section of Equinix's website at Equinix.com. The members of the Governance Committee are Ms. Caldwell, Mr. Paisley, and Mr. Van Camp. Ms. Caldwell is chairperson of the Governance Committee. Mr. Van Camp ceased serving on the Governance Committee while serving as interim chief executive officer and president but resumed membership after resigning from those roles. During the fiscal year ended Dec. 31, 2018, the Governance Committee held five meetings.

The Nominating Committee's functions are described above in the section entitled "Nomination of Directors." The members of the Nominating Committee are Mr. Hromadko, Mr. Kriens and Mr. Luby. Mr. Kriens is chairperson of the Nominating Committee. During the fiscal year ended Dec. 31, 2018, the Nominating Committee held one meeting.

The Real Estate Committee approves capital expenditures in connection with real estate development, expansion or acquisition within parameters set by the full Board. All decisions are made considering a projected 10-year internal rate of return and within the context of a multi-year capital expenditure development pipeline and cash flow analysis provided by management to the Real Estate Committee. In approving real estate capital expenditures, the Real Estate Committee also considers an overview of the project and the market, including the competition, strategy, current capacity and sales pipeline. In addition, the Real Estate Committee has the authority to analyze, negotiate and approve the purchase, sale, lease or sublease of real property, approve guarantees related to real property transactions and, subject to any limitations or terms imposed by the full Board, if any, analyze, negotiate and approve real estate-related financing transactions. The members of the Real Estate Committee are Mr. Hromadko, Mr. Lyons and Mr. Paisley. During the fiscal year ended Dec. 31, 2018, the Real Estate Committee held 11 meetings.

The Stock Award Committee has the authority to approve the grant of stock awards to non-Section 16 officer employees and other individuals. The members of the Stock Award Committee are Mr. Lyons and Mr. Meyers. The Stock Award Committee typically does not hold meetings but acts by written consent.

BOARD RISK OVERSIGHT

Our Board's oversight of risk management is designed to support the achievement of organizational objectives, including strategic objectives, to improve Equinix's long-term organizational performance and enhance stockholder value. The involvement of the full Board in setting Equinix's business strategy is a key part of its assessment of what risks Equinix faces, what steps management is taking to manage those risks, and what constitutes an appropriate level of risk for Equinix. Our senior management attends the quarterly Board meetings,

 

 

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presents to the Board on strategic and other matters, and is available to address any questions or concerns raised about risk-management-related issues, or any other matters. Board members also have ongoing and direct access to senior management between regularly scheduled board meetings for any information requests or issues they would like to discuss. In addition, in Sept. 2018 the Board held a strategy meeting with senior management to discuss strategies, key challenges, and risks and opportunities for Equinix. The Board typically holds a meeting focused solely on strategy annually, to set the stage for the planning and development of Equinix's operating plan for the coming year.

Equinix has completed a global risk assessment to identify key strategic, operational, financial and regulatory compliance risks and will continue to evaluate such risks. These risks have been communicated to and assessed by Equinix's executive management, the Governance Committee and the full Board. The Board received an enterprise risk briefing in Sept. 2018 in connection with its strategy meeting and is scheduled to receive its next enterprise risk briefing in Sept. 2019. Additionally, in 2018 the full Board received a briefing on cybersecurity. Briefings on cybersecurity, as well as other enterprise risks, will also be provided in 2019.

While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management. In particular, the Governance Committee oversees Equinix's GRC Program, formally launched in 2013. In connection with this oversight, the Governance Committee receives quarterly updates on key issues, such as enterprise risk management, business continuity and disaster recovery planning, cybersecurity and regulatory compliance. The Governance Committee evaluates the effectiveness of risk mitigation capabilities identified in these areas and monitors for emerging risks. Equinix's chief compliance officer, as leader of the GRC Program, reports on the program to the Governance Committee.

In addition, the Audit Committee's charter mandates that it discuss guidelines and policies governing the process by which management and other persons responsible for risk management assess and manage Equinix's exposure to risk, including Equinix's major financial risk exposures and the steps management has taken to monitor and control such exposures, based on consultation with management and the independent auditors. The Audit Committee also receives an annual assessment of the adequacy of the controls over financial reporting, including an assessment of the risks associated with the controls over the financial reporting process.

In setting compensation, the Compensation Committee strives to manage risks arising from our compensation policies and programs by setting compensation at levels that maximize stockholder long-term value without encouraging excessive risk-taking. For more information, please read "Compensation policies and practices risk assessment."

Finally, the Real Estate Committee manages risk by evaluating real estate expansion opportunities and the deployment of capital within the context of Equinix's overall business and financial strategy and financial picture, and the newly formed Finance Committee oversees risks related to Equinix's balance sheet.

The Board believes that the risk management processes in place for Equinix are appropriate.

BOARD ONBOARDING PROGRAM

Equinix has an onboarding program, overseen by the Governance Committee, to introduce new Board members to Equinix and the Board. The program includes orientation sessions on the Board's structure and processes, Equinix's compliance environment, and the business.

INVESTOR ENGAGEMENT

Equinix pursues engagement with stockholders throughout the year to best understand and address the issues that matter to our stockholders.

During 2018, we met with numerous investors around the world by attending or hosting over 30 investor conferences, non-deal roadshows, and investor group events, including our biennial Analyst Day in New York City in June. Certain investors also requested engagement meetings to discuss topics related to environmental, social and governance ("ESG") issues, including our two largest stockholders, Vanguard, who met with Mr. Lyons and

 

 

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Mr. Paisley, as Compensation Committee Chair and lead independent director, respectively, and Blackrock, who met with Mr. Van Camp, our executive chairman. Additionally, we proactively reached out for meetings with our 25 largest stockholders in the fall of 2018 to discuss our corporate governance model and other ESG topics and solicit feedback; all meetings that resulted were attended by Mr. Van Camp. We plan to conduct a similar outreach in 2019.

For information about how to contact our Board please see the section below entitled "Stockholder communications with the Board of Directors."

Other governance policies and practices

CORPORATE GOVERNANCE GUIDELINES

The Board follows its Guidelines published on the corporate governance section of Equinix's website at Equinix.com. The Guidelines reflect the Board's dedication to monitoring the effectiveness of policy and decision-making at the Board level. In conjunction with the Governance Committee, the Board will continue to monitor the effectiveness of the Guidelines.

CODE OF ETHICS AND BUSINESS CONDUCT

The Board has adopted (1) a Code of Business Conduct which applies to all directors, officers and employees and (2) an additional Code of Ethics for Chief Executive Officer and Senior Financial Officers. These documents can be found on the corporate governance section of Equinix's website at Equinix.com. In addition, anonymous reporting hotlines have been established to facilitate reporting of violations of financial and non-financial policies. Should the Board ever choose to amend or waive a provision of the Code of Ethics for Chief Executive Officer and Senior Financial Officers, we may disclose such amendment or waiver on the corporate governance section of Equinix's website at Equinix.com.

STOCK OWNERSHIP GUIDELINES

In its Guidelines, the Board has established a stock ownership requirement for Equinix's non-employee directors to encourage them to have a significant financial stake in Equinix. The Guidelines state that each non-employee director should own not less than six times their cash annual retainer for general service on the Board in shares of Equinix's common stock, including exercised stock options, vested restricted stock units ("RSUs") and deferred RSUs. Non-employee directors serving on the Board as of Nov. 17, 2010 had until Dec. 31, 2015 to comply with the requirement, and new non-employee directors will have five years from the date of their election to the Board to comply. Compliance with this requirement is measured annually at the end of each fiscal year. All directors subject to the guidelines were in compliance as of Dec. 31, 2018.

Stock ownership guidelines for our chief executive officer and his direct reports have also been established and require that these executives achieve target ownership levels, expressed as a multiple of salary. The target ownership level for our chief executive officer is three times his annual salary; for all others, the target ownership level is one time their annual salary. Newly hired or promoted executives have up to five years to obtain compliance. Compliance with this requirement is measured annually at the end of each fiscal year. All executives subject to the guidelines were in material compliance as of Dec. 31, 2018.

NO HEDGING POLICY

Equinix's Securities Trading Policy prohibits our Board members, officers, employees and consultants from engaging in hedging transactions related to Equinix's common stock.

 

 

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RECOUPMENT POLICY

In Nov. 2016, the Compensation Committee adopted a policy on recoupment of incentive compensation which applies to our executive officers (as defined by applicable securities laws). The policy states that the Board may require the return, repayment or forfeiture of any cash or equity-based incentive compensation payment or award received by any current or former executive officer during the three completed fiscal years immediately preceding the date on which we are required to prepare a restatement of our financial statements due to material noncompliance with any financial reporting requirements under the securities laws and if certain other conditions are met.

STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS

Interested parties may contact the Board by sending correspondence to the attention of Equinix's corporate secretary, c/o Equinix, Inc., One Lagoon Drive, Redwood City, CA, 94065. Any mail received by the corporate secretary, except improper commercial solicitations, will be forwarded to the members of Equinix's Audit Committee for further action, if necessary. Equinix does not have a policy requiring attendance by members of the Board at Equinix's annual stockholder meetings. At Equinix's 2018 Annual Meeting, Mr. Van Camp was in attendance and available for questions.

2018 Director compensation

Equinix uses a combination of cash and equity-based incentive compensation to attract and retain qualified candidates to serve on the Board.

In setting director compensation, Equinix considers the competitive compensation market for directors in the high-technology market, the demands of the various roles that directors hold, and the time required to fulfill their duties to Equinix. Compensia conducts a detailed review of Equinix's director compensation program every two years, with an abbreviated review in the off years, and presents its findings to the Compensation Committee. The most recent detailed review occurred in Dec. 2018 and covered the design of the current program as compared to peer practices, using the same peers used for executive compensation decisions, and the alignment of total compensation and individual pay elements to this market. Based on this review, certain changes to the 2018 program were recommended by the Compensation Committee to the full Board as described further below.

Non-employee directors receive a retainer in connection with their service on the Board. For fiscal 2018, the annual retainer was $60,000. In addition, in lieu of regular meeting fees, committee chairs (if any) and members received the following annual retainers for fiscal 2018, payable quarterly in arrears:

Committee


  Chairperson       Member
 

Audit

    $30,000       $15,000
 

Compensation

    $25,000       $12,500
 

Finance

    $12,500       $5,000
 

Governance

    $12,500       $5,000
 

Nominating

    $12,500       $5,000
 

Real Estate

    $15,000       $5,000
 

 

 

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Currently, non-employee directors only receive meeting fees for attendance at committee meetings in excess of a specified number of meetings in a calendar year. For 2018, the committee meeting fees and the threshold number of meetings that must be attended before any meeting fees are paid were:

Committee


  Chairperson       Member       Threshold
Number of
Meetings
 

Audit

    $5,000       $3,000       12
 

Compensation

    $5,000       $3,000       8
 

Finance

    $5,000       $3,000       4
 

Governance

    $5,000       $3,000       5
 

Nominating

    $5,000       $3,000       5
 

Real Estate

    $5,000       $3,000       6
 

Other

    $5,000       $3,000       6
 

The Board has also designated a lead independent director who earned a $25,000 annual retainer in 2018.

Non-employee directors receive automatic grants of RSUs. At our annual meeting of stockholders, each non-employee director who will continue to be a director after that meeting is automatically granted an award of RSUs. For fiscal 2018, the grant date fair value of these annual awards was $250,000. The automatic RSU awards become fully vested on the earlier of (i) the first anniversary of Equinix's immediately preceding annual meeting of stockholders or (ii) in the case of a non-employee director not standing for reelection, the date of the first annual meeting of stockholders held subsequent to the date of grant. In addition, each non-employee director receives a prorated award of RSUs upon joining the Board with a grant date fair value of $250,000. The proration is based upon a fraction equal to (x) the number of days from the start date of the non-employee director until the first anniversary of the date of Equinix's immediately preceding annual meeting of stockholders divided by (y) 365. The number of shares subject to each RSU award is determined by dividing the specified dollar value of the award by the closing price of Equinix's common stock on the date of grant. The RSUs granted to our directors will become fully vested if Equinix is subject to a change-in-control; in the event of the non-employee director's death, the portion of the RSUs that would have become vested on the next scheduled vesting date will become fully vested. Directors accrue dividend equivalent units on their RSUs. We allow our non-employee directors to elect to defer settlement of their RSUs. Directors are also eligible to receive discretionary awards under Equinix's 2000 Equity Incentive Plan. Our stock ownership guidelines for non-employee directors are described above.

The following table sets forth all of the compensation awarded to, earned by or paid to each non-employee director who served during fiscal year 2018.

Name


  Fees Earned or Paid
in Cash(1) ($)
      Stock Awards(2)(3)(4) ($)       Total ($)
 

Thomas Bartlett

      83,333       249,977       333,310
 

Nanci Caldwell

      70,667       249,977       320,644
 

Gary Hromadko

    100,000       249,977       349,977
 

Scott Kriens

      85,000       249,977       334,977
 

William Luby

      77,500       249,977       327,477
 

Irving Lyons III

    105,333       249,977       355,310
 

Christopher Paisley

    140,333       249,977       390,310
 
1.
Amounts listed in this column include the annual retainers for Board and committee service. Board and committee retainers are prorated based on the number of days the director served during the year. Mr. Hromadko, Mr. Lyons and Mr. Paisley received additional fees for their attendance at real estate committee meetings in 2018. The amount in this column for Mr. Paisley also includes a $25,000 retainer for service as lead independent director.
2.
Reflects RSUs covering 629 shares granted to each non-employee director on the date of our annual stockholders' meeting in June 2018.
3.
Reflects the aggregate grant date fair value of the RSU awards granted to the director in 2018 computed in accordance with FASB ASC Topic 718. See Note 12 of the notes to our consolidated financial statements in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on Feb. 22, 2019 for a discussion of the assumptions made by Equinix in determining the values of our equity awards.
4.
As of Dec. 31, 2018, Mr. Bartlett, Ms. Caldwell, Mr. Hromadko, Mr. Kriens, Mr. Luby, Mr. Lyons and Mr. Paisley each held 629 unvested RSUs (including accrued dividend equivalent units).

 

 

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In 2018, Mr. Van Camp was our executive chairman and also served as our interim chief executive officer and president from Jan. to Sept. Mr. Van Camp's compensation for 2018 is reflected in the 2018 Summary Compensation Table elsewhere in this proxy statement. Mr. Van Camp did not receive any additional compensation for services provided as a director. Mr. Meyers, our chief executive officer and president from Sept. 2018 through Dec. 2018 also did not receive any additional compensation for services provided as a director.

In Dec. 2018, Compensia presented its detailed review of Equinix's director compensation program to the Compensation Committee. Based on this review, changes to the current program were recommended by the Compensation Committee to the full Board, which approved such changes in Dec. 2018. The changes, which were effective as of Jan. 1, 2019 and will be reflected in 2019 director compensation, were as follows:

    An increase in the annual retainer from $60,000 to $70,000;
    An increase in the lead independent director annual retainer from $25,000 to $30,000;
    An increase in the Governance Committee annual retainers to $20,000 (chairperson) and $10,000 (member);
    An increase in the Real Estate Committee annual retainers to $25,000 (chairperson) and $12,500 (member);
    An increase in the Real Estate Committee threshold number of meetings from 6 to 8; and
    An increase in the Finance Committee threshold number of meetings from 4 to 6.

 

 

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Equinix stock ownership

The following table sets forth, as of Apr. 1, 2019, certain information with respect to shares beneficially owned by (i) each person who is known by Equinix to be the beneficial owner of more than 5% of Equinix's outstanding shares of common stock, (ii) each of Equinix's directors and nominees, (iii) each of the executive officers named in Executive Compensation and Related Information, and (iv) all current directors and executive officers (as defined by applicable securities laws) as a group. Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon exercise of an option or warrant) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person's actual voting power at any particular date. Unless otherwise indicated, the address for each listed stockholder is c/o Equinix, Inc., One Lagoon Drive, Redwood City, CA 94065.

Name of Beneficial Owner

 
 

Number of Shares

     

Percentage of Total

 

Thomas Bartlett

    5,742       *
 

Nanci Caldwell(1)

    2,267       *
 

Mike Campbell

    3,828       *
 

Gary Hromadko

    169,822       *
 

Scott Kriens(2)

    86,788       *
 

William Luby(3)

    46,254       *
 

Irving Lyons III(4)

    23,669       *
 

Charles Meyers

    6,164       *
 

Christopher Paisley(5)

    19,712       *
 

Eric Schwartz

    3,491       *
 

Karl Strohmeyer

    3,791       *
 

Keith Taylor

    25,745       *
 

Peter Van Camp

    6,544       *
 

The Vanguard Group(6)
100 Vanguard Blvd, Malvern, PA 19355


 
  10,172,249       12.10%
 

BlackRock Fund Advisors(7)
Park Avenue Plaza, 55 East 52nd Street, New York, NY 10055


 
  5,953,126       7.08%
 

All current directors and executive officers as a group (14 persons)(8)

    412,763       *
 

 

*
Less than 1%.
1.
Includes 629 unvested shares and 566 vested shares pursuant to RSUs as to which Ms. Caldwell has deferred the settlement of until a later date.
2.
Includes 629 unvested shares and 6,239 vested shares pursuant to RSUs as to which Mr. Kriens has deferred the settlement of until a later date.
3.
Includes 629 unvested shares and 8,428 vested shares pursuant to RSUs as to which Mr. Luby has deferred the settlement of until a later date. Mr. Luby disclaims beneficial ownership of 5,000 shares held in the Luby Family Trust except to the extent of his pecuniary interest therein.
4.
Includes 629 unvested shares and 2,208 vested shares pursuant to RSUs as to which Mr. Lyons has deferred the settlement of until a later date.

 

5.
Includes an aggregate of 845 shares held in trusts for Mr. Paisley's children and a brother.
6.
Based on a Schedule 13D filed with the Securities and Exchange Commission as of Dec. 31, 2018. Includes 10,172,249 shares that are owned directly, 98,422 shares with sole voting power and 10,054,866 shares with dispositive power by The Vanguard Group Inc., an investment advisor. The total amount beneficially owned by The Vanguard Group is 10,172,249 shares.
7.
Based on a Schedule 13D filed with the Securities and Exchange Commission as of Dec. 31, 2018. Includes 5,953,126 shares that are owned directly, 5,286,017 shares with sole voting power and 5,953,126 shares with dispositive power by BlackRock Inc., an investment advisor. The total amount beneficially owned by BlackRock Fund Advisors is 5,953,126 shares.
8.
Includes 17,441 shares pursuant to RSUs as to which settlement has been deferred until a later date.

 

 

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Related party transactions

APPROVAL OF RELATED PARTY TRANSACTIONS

Per its written charter, Equinix's Audit Committee is responsible for reviewing all related party transactions in accordance with the rules of NASDAQ. Related parties include any of our directors or executive officers, our greater than 5% stockholders, and their immediate family members.

We review related party transactions due to the potential for a conflict of interest. A conflict of interest occurs when an individual's private interest interferes, or appears to interfere, with our interests. To identify related party transactions, each year we require our directors and executive officers to complete a questionnaire identifying any transactions with us in which the executive officer or director or their family members have an interest. We seek updates to this information from our directors and executive officers on a quarterly basis. We also ask our directors to update their list of companies they are affiliated with on a quarterly basis to help us identify related party transactions.

Finally, our Code of Business Conduct establishes corporate standards of behavior for all our employees, officers and directors and sets our expectations of contractors and agents. Our Code of Business Conduct seeks to deter wrongdoing and to promote honest and ethical conduct and encourages the reporting of illegal or unethical behavior. Waivers of the Code of Business Conduct may be granted by Equinix's chief executive officer, chief legal officer or chief compliance officer, provided that waivers for executive officers or directors may only be granted by the Board or by one of its committees.

The Audit Committee Charter and the Code of Business Conduct are available on the corporate governance section of Equinix's website at Equinix.com.

RELATED PARTY TRANSACTIONS FOR 2018

The Vanguard Group, Inc. was a holder of greater than 5% of our outstanding common stock during the 2018 fiscal year. In 2018, revenues from entities affiliated with The Vanguard Group, Inc. totaled approximately $2,623,000.

BlackRock Inc. was a holder of greater than 5% of our outstanding common stock during the 2018 fiscal year. In 2018, revenues from entities affiliated with BlackRock Inc. totaled approximately $1,126,000.

Our independent director, Mr. Bartlett, is the executive vice president and chief financial officer of American Tower Corporation. In 2018, revenues from American Tower totaled approximately $408,000.

A son of our independent director, Mr. Paisley, is employed by Equinix. In 2018, Mr. Paisley's son received total compensation ranging between $125,000 and $150,000, including salary, incentive plan compensation and RSU vesting income. This amount is consistent with the compensation and benefits provided to other employees with equivalent qualifications, experience and responsibilities.

 

 

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Executive officers

The following are our executive officers (as defined by applicable securities laws) of Equinix, their ages as of Apr. 1, 2019, their positions and offices held with Equinix, and certain biographical information. All serve at the discretion of the Board.

LOGO

 

Mike Campbell
Age 53
Chief Sales Officer (since 2016)

    
Prior business experience

Senior vice president of sales, Equinix Americas (2015–2016)

Various sales management positions, most recently as senior vice president of sales, Symantec (2010–2015)

Vice president, sales, Verisign Americas, Verisign, prior to its merger into Symantec (2004–2010)

            

LOGO

 

Brandi Galvin Morandi
Age 46
Chief Legal and Human Resources Officer and Corporate Secretary
(since 2019)

    
Prior business experience

Chief legal officer, general counsel and secretary, Equinix (2003–2019)

Corporate attorney, Gunderson Dettmer (1997–2003)

            

LOGO

 

Karl Strohmeyer
Age 47
Chief Customer and Revenue Officer
(since 2019)

    
Prior business experience

President, Equinix Americas (2013–2019)

Various roles, including group vice president, Level 3 North American enterprise group, Level 3, a communications services company (2001–2013)

Various executive positions, NetRail, an internet services company (1998–2001)

            

LOGO

 

Keith Taylor
Age 57
Chief Financial Officer
(since 2005)

    
Prior business experience

Various roles, including vice president, finance and chief accounting officer, Equinix (2001–2005)

Director of finance and administration, Equinix (1999–2001)

Vice president finance and interim chief financial officer, International Wireless Communications, an operator, owner and developer of wireless communications networks (1996–1999)

            

 

 

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COMPENSATION

PROPOSAL 2 — Advisory non-binding vote on executive compensation

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") contains a provision that is commonly known as "Say-on-Pay." Say-on-Pay gives our stockholders an opportunity to vote on an advisory, non-binding basis to approve the 2018 compensation of our named executive officers as disclosed in this proxy statement. We are asking our stockholders to indicate their support for the compensation of our named executive officers as described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the executive compensation program and practices described in this proxy statement. Our executive compensation program is tied directly to the performance of the business to ensure strong growth and value creation for stockholders using metrics we believe best indicate the success of our business. Please read "Compensation discussion and analysis" and the executive compensation tables and narrative disclosure for a detailed explanation of our executive compensation program and practices.

Accordingly, we ask that you vote "FOR" the following resolution:

"RESOLVED, that the stockholders of Equinix, Inc., hereby approve, on an advisory basis, the compensation of the named executive officers as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission in Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement."

This advisory vote on executive compensation is not binding on us. However, the Board and the Compensation Committee highly value the opinions of our stockholders. To the extent there is a significant vote against this proposal, we will seek to determine the reasons for our stockholders' concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns when making future executive compensation decisions.

GRAPHIC   The Board recommends a vote "FOR" proposal 2

 

 

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EXECUTIVE COMPENSATION AND RELATED INFORMATION

Compensation roadmap

   

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Executive Compensation and Related Information
 
How did we perform and what are our practices?
  
    Compensation Discussion and Analysis
  
       Introduction
  
       Executive Summary
  
       2018 Executive Compensation Program
  
       Principal Elements of Executive Compensation
  
       Accounting and Tax Considerations
  
       Compensation Committee Report
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22
  
22
  
23
  
25
  
27
  
32
  
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How were our CEO and NEOs compensated?
 
    Summary Compensation Table
  
    2018 Grants of Plan-Based Awards
  
    Outstanding Equity Awards at 2018 Fiscal Year-End
  
    2018 Option Exercises and Stock Vested
  
    Potential Payments Upon Termination or Change-in-Control
  
       Severance Agreements
  
       Equity Vesting Acceleration
  
    CEO to Median Employee Pay Ratio


  
  
33
  
34
  
36
  
37
  
37
  
37
  
39
  
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What are our policies and compliance?
 
Compensation Policies and Practices Risk Assessment
 
Compensation Committee Interlocks and Insider Participation
  
Equity Compensation Plan Information
  
Section 16(a) Beneficial Ownership Reporting Compliance


 
 
40
 
41
 
41
  
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Compensation discussion and analysis

Introduction

This Compensation Discussion and Analysis ("CD&A") describes Equinix's executive compensation policies and decisions for the individuals who served as our chief executive officer and chief financial officer during 2018, as well as the other individuals included in the 2018 Summary Compensation Table in this proxy statement, who are collectively referred to as the named executive officers.

Those individuals are:

Charles Meyers—Chief Executive Officer (Sept.–Dec. 2018)
Stephen Smith—Chief Executive Officer (Jan. 2018)
Peter Van Camp—Interim Chief Executive Officer (Jan.–Sept. 2018)
Keith Taylor—Chief Financial Officer
Mike Campbell—Chief Sales Officer
Eric Schwartz—President, EMEA for 2018
Karl Strohmeyer—President, Americas for 2018

 

 

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In Sept. 2018, Mr. Meyers was appointed chief executive officer, following the departure of Mr. Smith in Jan. 2018. Mr. Van Camp served as chief executive officer in the interim. Prior to his appointment, Mr. Meyers served as Equinix's president, strategy, services and innovation.

Effective Apr. 12, 2019, Mr. Strohmeyer was appointed Chief Revenue and Customer Officer of Equinix and is no longer President, Americas. Also effective Apr. 12, 2019, Mr. Schwartz was appointed Chief Strategy and Development Officer of Equinix and is no longer President, EMEA.

Executive Summary

Overview

Our executive compensation program is tied to the performance of the business to drive strong growth and value creation for stockholders using metrics we believe best indicate the success of our business.

In 2018, our compensation program for the named executive officers consisted primarily of base salary, annual incentive compensation, and long-term incentive compensation in the form of time and performance-based restricted stock units ("RSUs"), for total potential compensation approved in Feb. 2018 as illustrated on the graphic below.

All NAMED EXECUTIVE OFFICERS
AVERAGED1
   
GRAPHIC

For 2018, excluding a time-based award granted to Mr. Meyers in connection with his appointment as chief executive officer, 100% of our short-term and 75% of our long-term incentives (assuming the maximum award sizes were earned) for our named executive officers were performance-based and at-risk, dependent on annual revenue and adjusted funds from operations2 ("AFFO") growth, along with relative total stockholder return ("TSR") achievement against the IWB Russell 1000 Index Fund (the "Russell 1000"). Annual revenue and AFFO were used as performance metrics in both short and long-term incentives as we believed these measures to be the most critical in driving stockholder value and reflect the current strategy of Equinix – sensible growth. This emphasis on annual revenue and AFFO was also mitigated by the addition of TSR as a metric under the long-term program.

2018 Results

The 4th quarter of 2018 was our 64th consecutive quarter of revenue growth. For the full year of 2018, we delivered revenue growth of 16% and AFFO growth of 15%, on an as-reported basis, over strong 2017 results. Our revenue growth was 9% and our AFFO growth was 6% on a normalized and constant currency basis. These results are reflected in the 2018 compensation of our named executive officers.


1
Reflects the market value of the RSU awards on the grant date of Feb. 27, 2018. Assumes the maximum size award is earned under the 2018 annual incentive plan and the maximum number of shares is earned under the performance-based RSU awards. Excludes a time-based award granted to Mr. Meyers in connection with his appointment as chief executive officer in Sept. 2018.
2
AFFO represents funds from operations ("FFO"), excluding depreciation and amortization expense on non-real estate assets, accretion, stock-based compensation, restructuring charges, impairment charges, acquisition costs, an installation revenue adjustment, a straight-line rent expense adjustment, amortization of deferred financing costs, gains (losses) on debt extinguishment, an income tax expense adjustment, recurring capital expenditures and adjustments from FFO to AFFO for unconsolidated joint ventures' and non-controlling interests' share of these items. FFO represents net income (loss), excluding gains (losses) from the disposition of real estate assets, depreciation and amortization on real estate assets and adjustments for unconsolidated joint ventures' and non-controlling interests' share of these items. For a reconciliation of our GAAP to non-GAAP financial measures, please refer to pages 56-60 of our Annual Report on Form 10-K filed with the Securities Exchange Commission on Feb. 22, 2019.

 

 

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REVENUES
  AFFO

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Governance

Our executive compensation philosophy is complemented by the following governance best practices:

We have a policy on recoupment of incentive compensation which applies to those persons who are designated by the Board as "officers" for purposes of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder. The policy states that the Board may require the return, repayment or forfeiture of any cash or equity-based incentive compensation payment or award received by any such current or former officer during the three completed fiscal years immediately preceding the date on which we are required to prepare a restatement of our financial statements due to material noncompliance with any financial reporting requirements under the securities laws and if certain other conditions are met
Our chief executive officer and his direct reports are subject to stock ownership guidelines, at a level of three times and one time base salary, respectively
We have a policy prohibiting all employees, including the named executive officers and members of the Board, from engaging in transactions involving options on Equinix's securities, such as puts, calls and other derivative securities, whether on an exchange or in any other market, or in hedging transactions, such as collars and forward sale contracts
Our executives and members of the Board are prohibited from holding Equinix securities in a margin account or pledging Equinix securities as collateral for a loan, absent an exception granted by the Compensation Committee on a case-by-case basis
Named executive officers at Equinix are not offered any significant perquisites or tax gross-ups, other than in connection with a relocation or international assignment
Our Compensation Committee is comprised solely of independent members
An independent compensation consultant, Compensia, is retained directly by the Compensation Committee and performs no other work for Equinix
The Compensation Committee reviews tally sheets when making executive compensation decisions
In Mar. 2019, we conducted a risk assessment of our compensation programs and presented the results to the Compensation Committee. The Compensation Committee considered the findings of the assessment and agreed with our conclusion that our compensation programs do not create excessive or inappropriate risks for Equinix

Say on Pay 2018

In 2018, we held our annual stockholder advisory vote on executive compensation. The proposal received significant stockholder support, with more than 95% of shares represented in person or by proxy at the meeting, and entitled to vote on the matter, voting in favor of our program. The voting results did not result in any material changes to our executive compensation program design for 2019.

 

 

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AFFO/Share Added as Performance Metric for 2019

In Feb. 2019, our Compensation Committee approved 2019 compensation for our executives, including our named executive officers. In a change for 2019, the metric of AFFO per share of common stock ("AFFO/Share") will be used instead of AFFO as a performance metric under our 2019 incentive plan, applying to all eligible employees, and 50% of our executive performance RSUs. This change was made to further align executive and employee incentives with the interests of our stockholders.

2018 Executive Compensation Program

2018 Program Philosophy and Objectives

Our executive compensation philosophy for 2018 was to provide competitive total rewards programs globally to attract and retain top talent, utilizing a pay-for-performance strategy at both the company and the individual level. Consistent with our compensation philosophy, a significant percentage of each executive officer's total compensation is tied to performance, as illustrated by the potential pay mix described above.

2018 Pay Positioning

In making compensation decisions for 2018, the Compensation Committee assessed compensation levels against data provided by its consultant, Compensia, and approved compensation plans and arrangements taking into account our competitive market for talent, including a peer group of companies against which we compare our performance and executive compensation programs.

For 2018 executive compensation, our goal was to provide base salary targeted at the 50th percentile and total cash compensation targeted between the 50th and 75th percentiles of market competitive pay practices, if targeted levels of performance were achieved under the annual cash incentive plan. We generally targeted executive long-term equity compensation between the 75th-90th percentiles of market competitive pay practices, to aggressively align executive performance and rewards to company results and stockholder interests. We believe our company's strong performance in recent years, and the fact that a significant percentage of each executive officer's total compensation is tied to performance and thus "at risk," supports our target pay positioning.

We use peer group survey data, proxy statement data and technology industry survey data to define our competitive market. With the assistance of Compensia, a preliminary list of peer group companies was selected to establish the competitive market for the 2018 compensation of our executive officers in June of 2017. In developing the peer group, the Compensation Committee decided to retain its prior approach to peer group selection, and oriented the peer group primarily towards technology companies with similar financial characteristics (to reflect Equinix's competitive market), but included some "technology REITs" to provide a more balanced market perspective. Technology companies and REITs with revenue of approximately 0.5-2.0x Equinix's last four quarters of revenue and market capitalization of approximately 0.33-3.0x Equinix's then-current market capitalization were considered in developing the peer group. Our peer group is reviewed annually to ensure it reflects changes in our market and competitors for business and talent. For 2018 compensation decisions, our peer group consisted of the following 16 companies:

 
                
   

Adobe Systems

 

Cerner

 

Electronic Arts

 

Juniper Networks

 
   

Akamai Technologies

 

Citrix Systems

 

F5 Networks

 

Prologis

 
   

American Tower

 

Crown Castle Intl.

 

Intuit

 

Red Hat

 
   

Autodesk

 

Digital Realty Trust

 

Iron Mountain

 

Synopsys

 
                
 

 

 

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In addition, recognizing the importance of considering REIT industry pay practices, with the assistance of Compensia, a REIT-only list was developed to review REIT-specific practices regarding compensation plan design, consisting of the five REITs in the peer group plus 16 additional REITs of comparable size:

 
              
   

American Tower

 

General Growth Properties

 

Simon Property Group

 
   

AvalonBay Communities

 

HCP

 

SL Green Realty

 
   

Boston Properties

 

Host Hotels & Resorts

 

The GEO Group

 
   

CoreCivic

 

Iron Mountain

 

Ventas

 
   

Crown Castle

 

Prologis

 

Vornado Realty Trust

 
   

Digital Realty Trust

 

Public Storage

 

Welltower

 
   

Equity Residential

 

SBA Communications

 

Weyerhaeuser

 
         
 

The Compensation Committee reviews the executive compensation levels of our executive officers at least annually to determine positioning to the competitive market. If an element of compensation is found to be below the desired target level, a recommendation may be made by the chief executive officer, or by the executive chairman in the case of the chief executive officer, to adjust that element of compensation in light of our compensation philosophy and individual performance. Likewise, if the review shows an element of our compensation to be above the desired target level, that data is also taken into consideration in determining compensation position and movement for that individual. Our philosophy is not to reduce compensation, but instead to work with the various elements comprising total compensation to slow or freeze an element's growth to achieve the desired level of targeted total compensation. In 2017, we participated in the AON/Radford High Technology compensation survey and used peer market data from a subset of the survey to benchmark our executive positions for 2018 compensation decisions.

2018 Compensation-Setting Process

In addition to reviewing executive officers' total target compensation against the competitive market, the Compensation Committee also considers recommendations from the chief executive officer regarding each compensation element for the executive officers who report directly to him based on the competitive market data for such roles, or the market data for comparable roles when exact matches are not available, internal team comparisons, and his assessment of individual performance. The chief executive officer, as the manager of the executive team, assesses the named executive officers' contributions to Equinix's performance and makes a recommendation to the Compensation Committee with respect to any merit increase in base salary, target annual incentive compensation opportunity and equity awards for each named executive officer, other than himself. Each element of compensation is recommended to the Compensation Committee based upon the individual's performance, as well as internal equity within the framework established through the competitive market data. The Compensation Committee meets to evaluate, discuss and modify or approve these recommendations based on their own judgment. For 2018, the Compensation Committee, conducted a similar evaluation for Mr. Van Camp as the then-current interim chief executive officer, and approved his compensation elements for 2018.

Members of management support the Compensation Committee in its work by preparing periodic analysis and modeling related to the compensation programs and providing frequent updates on programs that fall under the Compensation Committee's responsibility. In addition, the Compensation Committee has the exclusive authority under its charter to engage the services of independent outside counsel, consultants, accountants and other advisers to assist it in carrying out its duties. Since 2006, the Compensation Committee has engaged the services of Compensia as its independent consultant to advise it on matters related to compensation for executive officers and other key employees, and on best practices to follow as they review and make decisions on Equinix's compensation programs. Equinix's chief executive officer attends most Compensation Committee meetings and reviews and provides input on agendas and compensation proposals and recommendations brought before the Compensation Committee for review and approval.

In connection with the 2018 compensation decisions, in Oct. 2017, Compensia presented to the Compensation Committee a detailed executive compensation analysis, assessing Equinix's current executive pay and financial performance as compared to our peer group. For our executive officers, including the named executive officers, Compensia identified any gaps between the current and target pay positioning and presented market competitive data for each position for base salary, target annual incentive compensation opportunity, long-term incentive

 

 

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compensation and target total direct compensation, to provide a framework and guide for making individual compensation decisions. Compensia also presented to the Compensation Committee an equity compensation market review, comparing the practices of our peer group in terms of equity usage and equity program design.

In Dec. 2017, Compensia provided the Compensation Committee with "tally sheets" outlining the total dollar compensation paid to each named executive officer in 2014, 2015, 2016 and 2017, including base salary, annual incentive compensation, long-term equity compensation and other compensation. The Compensation Committee used the tally sheet information as a basis for understanding the potential impact of recommended changes to the elements of our executive compensation program and to evaluate the degree to which unvested shares held by a named executive officer encouraged retention.

In Feb. 2018, the Compensation Committee considered executive compensation program design considerations and recommendations and approved compensation for the named executive officers, including the compensation elements for then-current interim chief executive officer, Mr. Van Camp and for Mr. Meyers who was at that time serving as president, strategy, services and innovation.

In Sept. 2018, the Compensation Committee, after consultation with Mr. Van Camp and Compensia, approved the following compensation package for Mr. Meyers in connection with his appointment as chief executive officer and president: a base salary of $1,000,000, a target bonus under the 2018 incentive plan of up to 130% of his new base salary, pro-rated to reflect his service for 2018, and a grant of 11,567 RSUs. These RSUs are subject to forfeiture in the event that Mr. Meyers's service with Equinix terminates before the shares vest, measured as follows: 16.667% of the RSUs vested on Mar. 1, 2019 and an additional 16.667% of the RSUs shall vest on each Sept. 1st and Mar. 1st thereafter until fully vested. Mr. Meyers was also granted relocation assistance to assist with his move to our headquarters in Redwood City, CA in an amount of $300,000.

Compensia continues to advise the Compensation Committee on an ongoing basis, and a representative from the firm attends most Compensation Committee meetings. In 2018, Compensia performed its annual market review of executive pay practices, perquisites and benefits, as discussed above, and director compensation. Compensia also provides routine updates to the Compensation Committee regarding legal and regulatory trends. In 2018, Compensia also provided the Compensation Committee with modeling and recommendations for Equinix's equity program. The Compensation Committee has assessed the independence of Compensia pursuant to Securities and Exchange Commission rules and concluded that Compensia's work for the Compensation Committee does not raise a conflict of interest.

Principal Elements of Executive Compensation

Base Salary

Base salary for the named executive officers is established based on the underlying scope of their respective responsibilities, taking into account competitive market compensation data and individual performance. In Feb. 2018, based on the executive compensation assessment from Oct. 2017 and the recommendations of the then-current interim chief executive officer (except with respect to his own salary which was decided by the Compensation Committee)), base salaries for our named executive officers were approved by the Compensation Committee, effective Feb. 18, 2018, as follows:

Name

    Prior Salary       New Salary       Increase
 

Charles Meyers

    $632,000       $660,0001       4.4%
 

Peter Van Camp

    $350,000       $750,0002       114%
 

Keith Taylor

    $650,000       $680,000       4.6%
 

Mike Campbell

    $450,000       $485,000       7.8%
 

Eric Schwartz

    $511,000       $540,0003       5.7%
 

Karl Strohmeyer

    $475,000       $510,000       7.4%
 
1
Note that this salary was approved for Mr. Meyers in connection with his then current role of president, strategy, services and innovation. His salary increased from $660,000 to $1,000,000 in connection with his appointment as chief executive officer and president in Sept. 2018. His prorated salary for the year can be found in the Summary Compensation Table elsewhere in this proxy statement.
2
Mr. Van Camp's prior salary was for his role of executive chairman; his new salary was for his role as interim chief executive officer and president.
3
Salary presented to the Compensation Committee in Feb. 2018. Actual salary paid in local currency.

 

 

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For 2018, named executive officer salaries were positioned at the 50th market percentile based on our philosophy for cash compensation. The base salary increases were based primarily on the aggressive continued upward movement of base salaries in the competitive market (which reflects continued growth by us and the peer group), along with our desire to keep total cash compensation aligned to our philosophy and individual performance considerations.

Annual Incentive Compensation

Annual incentive compensation for the named executive officers is linked to the attainment of Equinix's corporate growth goals and is not tied to individual performance (although the Committee retains discretion to adjust payouts). This focus on team performance at the executive level is designed to align senior leaders towards common goals. Accordingly, in Feb. 2018, the Compensation Committee adopted the 2018 incentive plan, pursuant to which the named executive officers were eligible to earn an annual cash bonus. Under the 2018 incentive plan, the Compensation Committee assigned each named executive officer an annual target bonus opportunity tied to the achievement of specific goals related to revenue and AFFO that tied to the 2018 operating plan approved by the Board. These goals included results from certain recently closed acquisitions and were reflective of projected bookings growth based on an assessment of our addressable market, together with what we had experienced in prior years, while taking into account the available inventory in each of our markets. The goals also contemplated strong growth in the U.S., Europe and Asia, investment in headcount and key areas to scale Equinix to the appropriate operating level, continued expansion in key markets where inventory was limited or would become limited during the year, and where we saw customer demand, and distributions to our stockholders. Because there would be no incentive plan pool if revenue and AFFO were 95% or less than the operating plan target, annual incentive compensation was 100% at risk. Additionally, the payout for each named executive officer was capped at 100% of the annual target bonus.

Achievement under the 2018 incentive plan was adjusted for fluctuations in foreign currencies against the foreign currency rates used in the 2018 operating plan and for certain acquisitions and other normalizing items not contemplated by Equinix at the time of grant. Achievement was also adjusted for approved incremental spend in 2018. All adjustments were authorized under the 2018 incentive plan.

Based on the results below, Equinix funded the 2018 incentive plan at 95% for all employees, including the named executive officers.

Metric

    Weighting       Target       Reported
Results
      Adjusted
Results*
 

Revenue

    50%       $5,037 million       $5,072 million       $5,010 million
 

AFFO

    50%       $1,681 million       $1,659 million       $1,675 million
 
*
Adjusted for certain acquisitions and one-time events and excluding the impact of fluctuations in foreign currencies against the foreign currency rates applied in the 2018 operating plan as described above. For a reconciliation of GAAP to non-GAAP financial measures, please refer to pages 56-60 of our Annual Report on Form 10-K filed with the Securities Exchange Commission on Feb. 22, 2019.

The target bonus opportunity set for each named executive officer was based on the target bonuses for comparable positions in our competitive market, targeting the 50th–75th percentiles for total cash compensation, and was stated in terms of a percentage of the named executive officer's base salary. For 2018, the Compensation Committee approved increases in the target bonus opportunities for each of the named executive officers to keep their target total cash compensation, including salary and variable pay mix, on pace with the

 

 

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competitive market. Under the 2018 annual incentive plan, target bonus opportunities, as a percentage of base salary, and bonus awards (calculated based on salary in effect at year-end) were as follows:

Name

    2017 Bonus Opportunity
(% Base Salary)
      2018 Bonus Opportunity
(% Base Salary)
      Bonus Award Paid
(95% of Target)
 

Charles Meyers

    100%       110%1       $859,8341
 

Peter Van Camp

    75%       130%2       $926,250
 

Keith Taylor

    100%       110%       $710,600
 

Mike Campbell

    85%       90%       $414,675
 

Eric Schwartz

    85%       90%       $450,3883
 

Karl Strohmeyer

    85%       90%       $436,050
 
1
Note that this bonus opportunity was approved for Mr. Meyers in connection with his then current role of president, strategy, services and innovation. His bonus opportunity increased from 110% to 130% in connection with his appointment as chief executive officer and president. The bonus awarded reflects proration based on the two roles he served in 2018.
2
Mr. Van Camp's prior bonus opportunity was for his role of executive chairman; his new bonus opportunity was for his role as interim chief executive officer and president.
3
Mr. Schwartz's bonus award paid in local currency has been converted from euro to US dollars using an exchange rate of 1.1404.

Long-Term Equity Compensation

The Compensation Committee believes that stock awards with performance-based vesting encourage executive performance by focusing on long-term growth and profitability, which it believes are the primary drivers of stockholder value creation. Generally, a market competitive equity award is made in the year that an executive officer commences employment with Equinix. Thereafter, additional "refresh" awards are generally made during the first quarter of each year. The size of each award is based upon consideration of a number of factors, including consideration of the individual's position with Equinix, their potential for future responsibility and promotion, their individual performance in the recent period, Equinix's performance in the recent period, the competitive marketplace trends, internal equity and the retention value of unvested shares held by the individual at the time of the new grant. In general, given the heavy at-risk performance orientation, the desired pay position for long-term equity compensation for executives is between the 75th-90th percentiles of the competitive market data.

Our equity awards also accrue dividend equivalents, which vest on the same schedule as the underlying award and are settled in cash, and therefore no dividend equivalents are paid on awards unless and until the underlying award becomes earned and vested.

In Feb. 2018, the Compensation Committee discussed long-term incentive compensation awards in the form of RSUs for the executive officers, including the named executive officers, and determined that for 2018, relative TSR would be kept as a performance metric for 25% of long-term incentive compensation for executive officers (the "TSR Performance-Based Award") as a means of further aligning management incentives and stockholder interests. Additionally, a time-based award (the "Time-Based Award") represented 25% of long-term incentive compensation. The Compensation Committee believed that having a limited percentage of long-term compensation allocated to time-based awards was an appropriate retention balance with our performance-based awards, while still tying executives' interests to our stock price performance over the vesting schedule. The remaining 50% of long-term incentive compensation would be based on revenue and AFFO performance (the "Revenue-AFFO Performance-Based Award"). The allocations between the types of awards assumed maximum performance was attained under the performance awards.

In Feb. 2018, the Compensation Committee considered proposals for RSU awards, including proposed award sizes, and granted a Revenue-AFFO Performance-Based Award, a TSR Performance-Based Award and a Time-Based Award to each of the executive officers. While the Compensation Committee approved maximum award amounts at or near the top end of the market, the Compensation Committee believed this was appropriate because achieving maximum payout under both the Revenue-AFFO Performance-Based Award and the TSR

 

 

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Performance-Based Award would/will require significant over-performance by Equinix. The following table presents the maximum number of RSUs that could/can be earned under each RSU award, as follows:

Name


  Revenue-AFFO
Performance-Based
Award (#)
      TSR Performance-
Based Award (#)
      Time-Based Award (#)
 

Charles Meyers

    7,439       3,720       3,719
 

Peter Van Camp

    6,199       3,100       3,099
 

Keith Taylor

    7,439       3,720       3,719
 

Mike Campbell

    4,712       2,356       2,355
 

Eric Schwartz

    4,712       2,356       2,355
 

Karl Strohmeyer

    4,957       2,478       2,478
 

Revenue-AFFO Performance-Based Awards

The Revenue-AFFO Performance-Based Awards were 100% at risk and could be earned only if Equinix achieved revenues greater than $4,785 million and AFFO greater than $1,596 million in 2018. The number of RSUs earned would then be determined linearly based on the degree of achievement of the revenue and AFFO targets, from 0% of the award at or below the foregoing thresholds to 100% of the award (upon achievement of both revenue and AFFO goals of at least $5,037 million and $1,681 million, respectively, tied to the Board-approved operating plan). Fifty percent of any earned RSUs would vest upon certification that Equinix had achieved at least the minimum revenue and AFFO goals for 2018; 25% of the earned RSUs will vest on Feb. 15, 2020; and the remaining 25% of the earned RSUs will vest on Feb. 15, 2021. The Compensation Committee deemed the one-year performance period, followed by time-based vesting over the following two years, appropriate given the high growth orientation of the business and the practices of peer companies with whom we compete for talent.

The revenue and AFFO goals were determined as described above under "Annual Incentive Compensation" and performance against the goals was similarly adjusted, including for the approved incremental spend in 2018. However, the adjustment for the approved incremental spend was not delineated in the form of award agreement for the Revenue-AFFO Performance-Based Awards and thus required a modification to the awards resulting in an immaterial stock-based compensation charge.

As described above, in calculating performance under the Revenue-AFFO Performance-Based Awards, we achieved adjusted revenues of approximately $5,010 million and AFFO of approximately $1,675 million for 2018. The certification of this performance triggered the Revenue-AFFO Performance-Based Awards at 90% of the maximum award, with 50% vesting immediately and the remainder vesting into 2021 as described above.

TSR Performance-Based Awards

The number of shares earned under the TSR Performance-Based Awards will be determined based on the TSR of Equinix's common stock ("EQIX") against the Russell 1000 over a three-year period, calculated using the 30-day trading averages for both EQIX and the Russell 1000 prior to the start (Jan. 1, 2018) and end (Dec. 31, 2020) of the performance period. The number of RSUs vesting under the TSR Performance-Based Awards scale up or down such that the target shares increase or decrease by 2% for every 1% that Equinix's TSR exceeds or falls below the Russell 1000. Vesting will occur in early 2021 upon certification of TSR over the performance period.

Time-Based Awards

Shares issuable under the Time-Based Awards vest in three equal tranches on the first trading day that coincides with or follows Jan. 15th in each of 2019, 2020 and 2021.

In addition, Mr. Meyers was granted an additional Time-Based Award for 11,567 RSUs upon his appointment as chief executive officer and president as described elsewhere in this proxy statement.

 

 

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Severance, Change-in-Control and Other Post-Employment Programs

As described in detail under "Potential Payments Upon Termination or Change-in-Control" in this proxy statement, we have entered into a severance agreement as a part of each named executive officer's offer of employment which provides for a cash severance payment and benefits in the event his or her employment is terminated for any reason other than cause or he or she voluntarily resigns under certain circumstances as described in the agreement. In the case of Mr. Campbell, Mr. Schwartz and Mr. Strohmeyer, these agreements provide for severance payments and benefits only if the termination or voluntary resignation occurs in connection with a change-in-control of Equinix. In the case of Mr. Meyers, Mr. Taylor and Mr. Van Camp, the severance benefits are not contingent upon a change-in-control. The severance agreements of Mr. Campbell, Mr. Schwartz and Mr. Strohmeyer also specify that they cannot voluntarily resign for four months following a change-in-control of Equinix and still trigger the benefits under the severance agreement. This "stay-put" clause was requested by the Compensation Committee to require that these named executive officers stay to assist with any transition after a change-in-control. All of the severance agreements have a three-year term and none provide for tax gross-ups. The severance program is a competitive element of executive recruitment and compensation and allows for a temporary source of income in the event of an executive officer's involuntary termination of employment. In addition, in the case of executive officers with agreements contingent on a change-in-control, the program is also designed to keep these executive officers focused on a transaction designed to benefit stockholders, even if a job loss may result. Mr. Schwartz also has an employment agreement with our Netherlands subsidiary in connection with his international assignment.

RSU awards granted to our named executive officers vest as to 50% of the outstanding unvested portion of such awards in connection with an involuntary termination or voluntary resignation for good reason under certain circumstances, within 12 months following a change-in-control, in the case of an involuntary termination, and between the date that is four months following a change-in-control and the date that is 12 months following a change-in-control, in the case of a voluntary resignation for good reason. We believe some provision for acceleration of equity awards in connection with employment terminations around a change-in-control protects the stockholders' interests by encouraging our executive officers to continue to devote their attention to their duties and to facilitate an acquisition with minimized distraction, and by neutralizing bias the executive officers might have in evaluating acquisition proposals that could result in a loss of equity compensation. In addition, we believe that the events triggering payment, both a change-in-control and an involuntary termination of employment, and then only when there is no misconduct by the executive officer, are reasonable hurdles for the ensuing rewards.

RSU awards granted to our employees, including our named executive officers, shall vest as to the next unvested tranche of the award in the event of the death of the individual as a benefit to his or her estate; provided however, in the case of performance RSUs, that the RSUs have been earned based on actual performance results as certified by the Board or a committee thereof.

Benefits and Perquisites

Retirement, life, health and other welfare benefits at Equinix are the same for all eligible employees, including the named executive officers, and are designed to be aligned to our competitive market. Equinix shares the cost of health and welfare benefits with all of our eligible employees and offers an employer matching contribution to participant contributions to our 401(k) plan, for which all employees, including the named executive officers, are eligible. In 2018, the maximum match was $7,950.

The Compensation Committee has approved an Executive Physical Program to proactively manage health risks for our executive officers.

In May 2016, the Compensation Committee approved an extension of the expatriate agreement for Mr. Schwartz in connection with his leadership role of our European business and his assignment to our EMEA headquarters in Amsterdam, the Netherlands. The term of the expatriate agreement extends through June 2019. Effective Apr. 12, 2019, Mr. Schwartz was appointed chief strategy and development officer, a role which shall be based in the U.S. For a complete discussion of the benefits and perquisites incurred under the expatriate agreement in 2018, see the 2018 Summary Compensation Table elsewhere in this proxy statement.

 

 

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In Oct. 2018, the Compensation Committee approved relocation benefits for Mr. Meyers in connection with his appointment as chief executive officer and president to facilitate his relocation to our corporate headquarters located in Redwood City, CA. Mr. Meyers has also been reimbursed for certain expenses relating to travel to our headquarters pending his permanent move. For a complete summary of these perquisites related to his role change, see the 2018 Summary Compensation Table elsewhere in this proxy statement.

Certain of our named executive officers are offered Global Services membership with United Airlines at no additional cost to Equinix.

None of our named executive officers received tax gross-ups or other amounts during 2018 for the payment of taxes in connection with other compensation payments, with the exception of Mr. Schwartz in connection with his overseas assignment. For further information, see the 2018 Summary Compensation Table elsewhere in this proxy statement.

Accounting and Tax Considerations

Accounting Considerations

Base salary and annual incentive compensation are recorded as an expense for financial reporting purposes by Equinix over the period the services are rendered by the individual employees. In terms of long-term equity compensation, the fair value of RSU awards, determined as of their grant date, is amortized as an expense for financial reporting purposes over the awards' vesting period.

Tax Considerations

Section 162(m) of the Internal Revenue Code ("Section 162(m)") places a limit of $1 million on the amount of compensation that we may deduct for federal income tax purposes in any one year with respect to certain "covered employees." Prior to the passage of the Tax Cuts and Jobs Act on Dec. 22, 2017, there was an exemption to the $1 million limitation for performance-based compensation meeting certain requirements.

With the enactment of the Tax Cuts and Jobs Act, the Section 162(m) performance-based compensation exemption has been repealed, subject to limited transition relief for certain written binding contracts in effect on Nov. 2, 2017, and the covered employees include our chief executive officer, chief financial officer and three other most highly compensated executive officers, as well as any individual who is a covered employee for 2017 or any subsequent calendar year. Accordingly, for 2018 and later years, compensation in excess of $1 million paid to our covered named executive officers generally will not be deductible and no assurances can be given that compensation payable under certain of our compensation programs which were intended to qualify for the performance-based exception will in fact be deductible.

While the Compensation Committee may consider tax deductibility as one of several relevant factors in determining executive compensation, to maintain flexibility in compensating our named executive officers, the Compensation Committee has not adopted a policy requiring all compensation to be deductible. We do not expect that the elimination of Section 162(m)'s performance-based compensation exemption to cause a substantial impact to our income tax provision.

COMPENSATION COMMITTEE REPORT

Equinix's Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

The Compensation Committee:

Irving Lyons III, Chairperson
Scott Kriens
William Luby

 

 

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SUMMARY COMPENSATION TABLE

The following table sets forth the compensation awarded to, earned by, or paid to each individual who served as Equinix's "principal executive officer" or Equinix's "principal financial officer" during the fiscal year, and Equinix's three other most highly compensated executive officers for the fiscal year (collectively, our "named executive officers").

Name and Principal
Position


  Year   Salary
($)
  Bonus
($)
  Stock
Awards(1)
($)
  Non-Equity
Incentive Plan
Compensation(2)
($)
  All Other
Compensation
($)
  Total
($)

Charles Meyers

2018   760,308     10,017,345   859,834