DEF 14A 1 a20170307def14a.htm DEF 14A Document


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
Filed by the Registrant  þ
Filed by a Party other than the Registrant  ¨
Check the appropriate box:
¨
Preliminary Proxy Statement
¨
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
¨
Definitive Additional Materials
¨
Soliciting Material under Rule 14a-12
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Commvault Systems, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ
No fee required.
¨
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
 
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Title of each class of securities to which transaction applies:
 
(2)
Aggregate number of securities to which transaction applies:
 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
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Fee paid previously with preliminary materials.
o
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.
 
(1)
Amount Previously Paid:
 
(2)
Form, Schedule or Registration Statement No.:
 
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(4)
Date Filed:








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Commvault Systems, Inc.
1 Commvault Way
Tinton Falls, NJ 07724
(732) 870-4000
July 5, 2017
To the Stockholders of Commvault Systems, Inc.:
You are cordially invited to attend the 2017 Annual Meeting of Stockholders of Commvault Systems, Inc. (“Commvault” or the “Company”). The Annual Meeting will be held Thursday, August 24, 2017, at 9:00 a.m., local time, at the Company’s offices located at 1 Commvault Way, Tinton Falls, New Jersey.
We are taking advantage of the Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders via the Internet. This electronic process gives you fast, convenient access to the materials, reduces the impact on the environment and reduces our printing and mailing costs. If you received a Notice Regarding the Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials, unless you specifically request one. The Notice Regarding the Availability of Proxy Materials instructs you on how to access and review all of the important information contained in the Proxy Statement and Annual Report, as well as how to submit your proxy over the Internet or by telephone. If you would still like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials which are included in the Notice Regarding the Availability of Proxy Materials.
In the materials accompanying this letter, you will find a Notice of Annual Meeting of Stockholders and a Proxy Statement relating to the proposals you will be asked to consider and vote upon at the Annual Meeting. The Proxy Statement includes general information about Commvault as well as information on the specific proposals you will be asked to consider and vote upon at the Annual Meeting. A record of our activities for the year ended March 31, 2017 is contained in the Annual Report to stockholders, a copy of which is available on the Internet as described in the Notice Regarding the Availability of Proxy Materials and a printed copy is available upon request and without charge to stockholders entitled to vote at the Annual Meeting.
All stockholders are invited to attend the Annual Meeting in person. Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented and voted at the meeting. Therefore, I urge you to promptly vote by either using our telephone or internet voting procedures or by completing, executing and returning the proxy card which you have received from us. In order to assure that your votes, as a record holder, are tabulated in time to be voted at the Annual Meeting, you must complete your voting over the Internet or by telephone so that it is received by 3:00 a.m. Eastern Standard Time on August 24, 2017. Similarly, in order to assure that your votes, as a beneficial holder, are tabulated in time to be voted at the Annual Meeting, you must submit your voting instructions, so that your broker will be able to vote, by 11:59 p.m. Eastern Standard Time on August 23, 2017. If you attend the Annual Meeting, you may vote in person even if you have previously submitted your proxy.
 
Very truly yours,
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N. ROBERT HAMMER
Chairman, President and Chief Executive Officer









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Commvault Systems, Inc.
1 Commvault Way
Tinton Falls, NJ 07724
(732) 870-4000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 24, 2017

Important Notice Regarding the Availability of Proxy Materials for the Meeting to Be Held on August 24, 2017
The Annual Meeting of Stockholders of Commvault Systems, Inc. will be held at the Company’s offices located at 1 Commvault Way, Tinton Falls, New Jersey on Thursday, August 24, 2017, at 9:00 a.m., local time.
The purposes of the meeting are:
1. To elect three Class II Directors for a term to expire at the 2020 Annual Meeting of Stockholders;
2. To ratify the appointment of Ernst & Young LLP as independent public accountants for the fiscal year ending March 31, 2018;
3. To approve the Company’s Omnibus Incentive Plan (the “2016 Incentive Plan”) as amended by the First Amendment;
4. To vote, on an advisory basis, on executive compensation; and
5. To vote, on an advisory basis, on whether executive compensation should be submitted to stockholders for an advisory vote every one, two or three years; and
6. To transact such other business as may properly come before the meeting, or any adjournment or postponement thereof.
Only stockholders of record as of the close of business on June 30, 2017 are entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. Stockholders of record have been mailed a Notice Regarding the Availability of Proxy Materials on or around July 5, 2017, which provides stockholders with instructions on how to access the proxy materials on the Internet, and if they prefer, how to request paper copies of these materials.
Each stockholder is urged to either to utilize our telephone or Internet voting procedures to submit a proxy or to complete, date and sign the proxy card which you have received from us and return it to us in the envelope which we have provided and which requires no postage if mailed in the United States. Utilizing our telephone or Internet voting procedures to submit your proxy or sending in your proxy card will not prevent you from voting in person at the Annual Meeting.
This proxy statement and our annual report to stockholders are available at www.edocumentview.com/CVLT.
 
By Order of the Board of Directors
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WARREN H. MONDSCHEIN
Vice President, General Counsel and Secretary
Chief Compliance Officer

Tinton Falls, New Jersey
July 5, 2017





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Commvault Systems, Inc.
1 Commvault Way
Tinton Falls, NJ 07724
(732) 870-4000

PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this proxy statement and does not contain all of the information that you should consider before voting. For more complete information about the following topics, please review the complete proxy statement and the Annual Report on Form 10-K of Commvault Systems, Inc. (which we refer to as we, us, our, Commvault or our company).
We intend to begin distribution of the Notice Regarding the Availability of Proxy Materials to shareholders on or about July 5, 2017.
Annual General Meeting of Shareholders
 
 
 
Time and Date
  
9:00 a.m. Eastern Daylight Time, August 24, 2017
 
 
Place
  
1 Commvault Way
Tinton Falls, New Jersey
 
 
Record Date
  
June 30, 2017
 
 
Voting
  
Stockholders as of the record date are entitled to vote. Each share of common Stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on.
 
Agenda Item
 
Board Vote
Recommendation
 
Page Reference
(for More Detail)
Election of three Class II Directors for a term expiring at Commvault’s 2020 Annual Meeting of Stockholders
    
For each director nominee
    
Page 2
Ratification of the appointment of Ernst & Young LLP as Commvault’s independent public accountants for the fiscal year ending March 31, 2018
    
For
    
Page 39
To approve the Company’s Omnibus Incentive Plan, as amended by the First Amendment
    
For
    
Page 40
To approve, on an advisory basis, the compensation paid to Commvault’s named executive officers
    
For
    
Page 49 (See also Executive Compensation, beginning Page 13)
To approve, on an advisory basis, the frequency of the advisory vote on the compensation paid to Commvault’s named executive officers
    
For one year
    
Page 50

We will also transact any other business that may properly come before the meeting.  
Summary Director Information
The following table provides summary information about each director nominee and each director whose current term of office continues beyond the 2017 Annual Meeting of Shareholders. Each director nominee will be elected for a one-year term by a majority of votes cast.




Director Nominees
Name
Age
Director
Since
Class
Principal Occupation
Committees
Audit
Compensation
Nomination
and
Governance
Alan G. Bunte
63
2008
II
Executive Vice President and Chief Operating Officer, Commvault
 
 
 
Frank J. Fanzilli Jr.
60
2002
II
Former Managing Director and Global Chief Information Officer of Credit Suisse First Boston
 
 
Daniel Pulver(1)
48
1999
II
Founder and Managing member of Pulver Capital Management
 
(1) Lead Director
Continuing Directors
Name
Age
Director
Since
Class
Principal Occupation
Committees
Audit
Compensation
Nomination
and
Governance
N. Robert Hammer
75
1998
III
Chairman, President and Chief Executive Officer, Commvault
 
 
 
Joseph F. Eazor
54
2015
I
Chief Executive Officer, Rackspace
 
Armando Geday
55
2000
I
Former Chief Executive Officer of Globespan Virata, Inc. and of Conexant Systems, Inc.
 
 
Keith Geeslin
64
1996
III
Partner, Francisco Partners
 
r
 
F. Robert Kurimsky
78
2001
I
Former Senior Vice President of Technology Solutions Company
 
Gary B. Smith
56
2004
III
President, Chief Executive Officer and Director, Ciena Corporation
 
 
r
David F. Walker
63
2006
I
Former Director of the Accountancy Program and the Program for Social Responsibility and Corporate Reporting at the University of South Florida St. Petersburg
r
 
 
 
 
 
2016 Meetings
5
41
3
rChair : Member
                                                               
1In addition, the Compensation Committee acted by unanimous written consent 15 times during fiscal year 2017.





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Commvault Systems, Inc.
1 Commvault Way
Tinton Falls, NJ 07724
(732) 870-4000
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 24, 2017
July 5, 2017

This statement is furnished in connection with the solicitation on behalf of the Board of Directors of Commvault Systems, Inc. (which we refer to as we, us, our, Commvault or our company) of proxies to be voted at the Annual Meeting of Stockholders on August 24, 2017, or at any adjournment or postponement thereof. This proxy statement and the associated proxy card are first being made available at www.edocumentview.com/CVLT, and we intend to begin distribution of the Notice Regarding the Availability of Proxy Materials to stockholders, on or about July 5, 2017. A copy of our annual report on form 10-K for the fiscal year ended March 31, 2017, which includes audited financial statements, is also being made available concurrently with the proxy statement at www.edocumentview.com/CVLT.
Voting Rights and Solicitation
June 30, 2017 was the record date for the determination of stockholders entitled to vote at the Annual Meeting. On that date, 45,353,693 shares of common stock were outstanding and entitled to vote. Each stockholder is entitled to one vote for each share of common stock held of record. A list of stockholders entitled to vote at the Annual Meeting will be available for examination by stockholders during regular business hours at our principal executive offices located at 1 Commvault Way, Tinton Falls, New Jersey, 07724 for 10 days preceding the meeting and also will be available for examination at the Annual Meeting.
Stockholders may provide voting instructions by completing, executing and returning the proxy card which we have provided. Alternatively, stockholders may submit a proxy over the Internet or by telephone in accordance with the instruction set forth on the proxy card or the Notice Regarding Availability of Proxy Materials. All properly completed, unrevoked proxies received prior to the close of voting at the Annual Meeting will be voted in accordance with the instructions provided. If a properly executed, unrevoked written proxy card submitted by a record holder does not specifically direct the voting of shares, the shares represented by such proxy will be voted (i) FOR the election of all nominees for election as director described in this proxy statement, (ii) FOR the ratification of the appointment of Ernst & Young LLP as our independent public accountants for the fiscal year ending March 31, 2018, (iii) FOR the approval of the 2016 Incentive Plan as amended by the First Amendment, (iv) FOR approval, on an advisory basis, of executive compensation, (v) FOR approval, on an advisory basis, of a frequency of one year for future advisory votes on executive compensation, and (vi) in accordance with the judgment of the persons named in the proxy as to such other matters as may properly come before the Annual Meeting. If you are a beneficial owner of shares, the broker will ask you how you want your shares to be voted. If you give the broker instructions, the broker will vote your shares as you direct. If your broker does not receive instructions from you about how your shares are to be voted, one of two things can happen, depending on the type of proposal. Brokers have discretionary power to vote your shares with respect to “routine” matters, but they do not have discretionary power to vote your shares on “non-routine” matters. Brokers holding shares beneficially owned by their clients do not have the ability to cast votes with respect to the election of directors or executive compensation unless they have received instructions from the beneficial owner of the shares. It is therefore important that you provide instructions to your broker so that your vote with respect to directors and executive compensation is counted.
A proxy may be revoked at any time prior to the voting at the Annual Meeting by submitting a later-dated proxy (including a later-dated proxy via the Internet or telephone), giving timely written notice of such revocation to the Secretary of our company or by attending the Annual Meeting and voting in person.




The presence at the Annual Meeting, in person or by proxy, of holders of a majority of the issued and outstanding shares of common stock as of the record date is considered a quorum for the transaction of business. If you submit a properly completed proxy or if you appear at the Annual Meeting to vote in person, your shares of common stock will be considered part of the quorum. Once a quorum is present, voting on specific proposals may proceed.
Assuming the presence of a quorum, the affirmative vote of a majority of the votes cast at the Annual Meeting (in person or by proxy) is required (1) to elect directors, (2) to ratify Ernst & Young LLP as our independent public accountants for the fiscal year ending March 31, 2018, and (3) approval of the 2016 Incentive Plan as amended by the First Amendment. As a non-binding, advisory vote, there is no specific approval requirement for the advisory vote on executive compensation and frequency of future advisory votes on executive compensation proposals. However, the Board of Directors will consider that the stockholders have approved executive compensation and frequency of future advisory votes on executive compensation on an advisory basis if the advisory vote on executive compensation receives the affirmative vote of a majority of the votes cast (in person or by proxy) on such proposal and will consider that stockholders have selected, on an advisory basis, whichever frequency submission receives the highest number of votes cast (in person or by proxy) on frequency of future advisory votes on executive compensation.
If you choose to vote your shares in person at the Annual Meeting, please bring the Notice Regarding the Availability of Proxy Materials containing your control number. Shares held in “street name” through your broker, bank or other nominee may be voted in person by you only if you obtain a signed proxy from the shareholder of record giving you the right to vote the shares. You must bring such signed proxy to the Annual Meeting, along with an account statement or letter from the broker, bank or other nominee indicating that you are the beneficial owner of the shares and that you were the beneficial owner of the shares on June 30, 2017.
Effect of Abstentions and Broker Non-Votes
Abstentions will be counted for the purposes of establishing a quorum, but will not be counted as a vote cast either for or against a nominee or other matter and accordingly will be disregarded for the purpose of determining whether a nominee was elected as director or a matter was approved. As a result, abstentions have no effect on the outcome of the election of directors, the ratification of the appointment of Ernst & Young LLP as our independent public accountants, or approval of the 2016 Incentive Plan as amended by the First Amendment. Similarly, abstentions have no effect on the proposal to approve executive compensation and frequency of future advisory votes on executive compensation.
If you hold shares through a broker or other nominee, your broker or nominee is permitted to exercise voting discretion only with respect to certain, routine matters. Broker non-votes are shares held by brokers or other nominees that do not have discretionary voting authority with respect to a matter and have not received specific voting instructions from the beneficial owner. Broker non-votes will be counted for purposes of establishing a quorum, but will not be counted as a vote cast either for or against a nominee or other matter. As a result, broker non-votes have no effect on the outcome of the vote on any of the matters presented for your vote.
Brokers who have not received voting instructions from beneficial owners may vote in their discretion with respect to Proposal No. 2 (the ratification of the appointment of our independent auditors).





PROPOSAL NO. 1

ELECTION OF DIRECTORS
Our Board of Directors is divided into three classes, with one class of directors elected for a three-year term at each annual meeting. Each Class consists of three, except for Class I which consists of four, directors. Each director holds office until the third annual meeting after the meeting at which such director is elected and until his or her successor is duly elected and qualified or until his or her earlier resignation, removal or death. The terms of the Class II Directors will expire at the 2017 Annual Meeting.
Upon the recommendation of the Nominations and Governance Committee, the Board of Directors has nominated Alan G. Bunte, Frank J. Fanzilli Jr., and Daniel Pulver to hold office as Class II Directors until the annual meeting in 2020.
The persons named as proxy voters in the proxy card for our 2017 Annual Meeting, or their substitutes, will vote your proxy for all the nominees, each of whom has been designated as such by the Board of Directors, unless otherwise indicated in your proxy. Commvault has no reason to believe that the nominees named herein will be unavailable to serve as directors. However, in the event that any nominee for director withdraws or for any reason is not able to serve as a director, we will vote your proxy for the remainder of those nominated for director, except as otherwise indicated in your proxy, and for any replacement nominee designated by the Nominations and Governance Committee of the Board of Directors.
You may vote for or against, or you may abstain from voting on, any or all of the director nominees. Assuming a quorum is present, the affirmative vote of a majority votes cast at the Annual Meeting (in person or by proxy) will be required for the election of directors.
OUR BOARD OF DIRECTORS
The following table shows information as of June 30, 2017 with respect to each person who is an executive officer, continuing director or director nominee. Biographical information for each continuing director is set forth immediately following the table. Biographical information for each director nominee appears under “Election of Directors” above.
 
Name
 
Age
 
Position
 
Director Since
N. Robert Hammer
 
75
 
Chairman, President and Chief Executive Officer
 
1998
Alan G. Bunte
 
63
 
Director, Executive Vice President and Chief Operating Officer
 
2008
Joseph F. Eazor(2)(3)
 
54
 
Director
 
2015
Frank J. Fanzilli Jr.(1)
 
60
 
Director
 
2002
Armando Geday(1)
 
55
 
Director
 
2000
Keith Geeslin(1)
 
64
 
Director
 
1996
F. Robert Kurimsky(2)(3)
 
78
 
Director
 
2001
Daniel Pulver(2)(3)(4)
 
48
 
Director
 
1999
Gary B. Smith(3)
 
56
 
Director
 
2004
David F. Walker(2)(3)
 
63
 
Director
 
2006
 

(1)
Member of the Compensation Committee

(2)
Member of the Audit Committee

(3)
Member of the Nominations and Governance Committee

(4)
Lead Director

Nominees for Election
Alan G. Bunte has served as a director of our company since January 2008, as our Executive Vice President and Chief Operating Officer since October 2003 and as our senior vice president from December 1999 until October 2003. Prior to joining our company, Mr. Bunte was with Norand Corporation from 1986 to January 1998, serving as its senior vice president of planning and business development from 1991 to January 1998. Mr. Bunte obtained his bachelor’s and master’s degrees in business administration from the University of Iowa.

2



Mr. Bunte’s detailed knowledge of the operational aspects of Commvault’s business, obtained through his role as chief operating officer, is a valuable resource for Board discussions and decision-making. The Board benefits from Mr. Bunte’s long experience with our company and its management. Mr. Bunte has a strong financial background. In addition, his industry experience provides the Board with valuable insights.
Frank J. Fanzilli, Jr. has served as a director of our company since July 2002.  Mr. Fanzilli was previously a Managing Director and the Global Chief Information Officer of Credit Suisse First Boston, where he worked from 1985 until his retirement in 2002. Prior to joining Credit Suisse, Mr. Fanzilli was an engineer with IBM, where he managed systems engineering and software development for Fortune 50 accounts. Mr. Fanzilli has served on the boards of a number of notable companies in the software industry, including PeopleSoft, nLayers, Avaya and InterWoven, where he served as chairman of the board and chairman of its strategy committee. Mr. Fanzilli has also been a member of the compensation, nominating and governance committee and audit committee on several public and private company boards. In addition to Commvault, Mr. Fanzilli currently serves on the boards of directors of Calypso Technology, Inc., SugarCRM and EnterpriseDB. He obtained his bachelor’s degree in management, cum laude, from Fairfield University and his master’s in business administration, with distinction, from New York University.  He also completed the Stanford University Directors College for corporate directors and officers.
Mr. Fanzilli has extensive experience in information technology, both from the perspective of a corporate user of information systems and services, as well from the perspective of an engineer and software developer.  He has served in executive operational positions at large financial and technology companies, which has provided him with experience and knowledge in the information technology industry.  Mr. Fanzilli’s insights in this core area of Commvault’s business is very useful to the Board, and Mr. Fanzilli also contributes a customer perspective to the Board, which enables him to assist the company in sales and customer engagements.  In addition, Mr. Fanzilli has held various public company directorships and brings that experience to Commvault as well.
Daniel Pulver has served as a director of our company since October 1999 and as our lead independent director since July 2013. Prior to serving as our lead director, Mr. Pulver served as the chairman of our Nominations and Governance Committee. Mr. Pulver is a founder and managing member of Pulver Capital Management. Mr. Pulver served as a director at Credit Suisse First Boston LLC from November 2000, when Credit Suisse First Boston LLC (now Credit Suisse Securities (USA) LLC) merged with Donaldson, Lufkin & Jenrette, until April 2005. Mr. Pulver obtained his bachelor’s degree from Stanford University and his master’s in business administration from Harvard Business School. Mr. Pulver also serves on the board of directors of Data Center Infrastructure Holdings, Endstream Communications, First Point Communications and Pulver Capital Management. In addition, he served on the board of directors of the NeuroMatrix Group from 2009 to 2012 and Accellent Inc. from 2005 to 2006. Prior to May 24, 2007, Mr. Pulver served on the Compensation Committee of our company.
Mr. Pulver has extensive private equity and investment banking experience in technology industries, which has given him both business and finance expertise which is valuable to the board. He brings financial management and financial analysis perspective to Board. In addition, Mr. Pulver has held directorships, including a public company directorship, and brings that experience to the Board. The combination of his experience makes him well suited to serve as our company’s lead independent director.
The Board of Directors recommends that you vote FOR each of the nominees listed above.



3



Continuing Directors
Class III Directors Whose Terms Expire in 2018
N. Robert Hammer has served as our Chairman, President and Chief Executive Officer since March 1998. Mr. Hammer was also a venture partner from 1997 until December 2003 of the Sprout Group, the venture capital arm of Credit Suisse’s asset management business, which conducts its activities through affiliates of Credit Suisse Securities (USA) LLC. Prior to joining the Sprout Group, Mr. Hammer served as the chairman, president and chief executive officer of Norand Corporation, a portable computer systems manufacturer, from 1988 until its acquisition by Western Atlas, Inc. in 1997. Mr. Hammer led the leveraged buy-out of Norand from Pioneer Hi-Bred International, Inc. and then served as Norand’s Chairman through its initial public offering in 1993. Prior to joining Norand, Mr. Hammer also served as chairman, president and chief executive officer of publicly-held Telequest Corporation from 1987 until 1988 and of privately-held Material Progress Corporation from 1982 until 1987. Prior to joining Material Progress Corporation, Mr. Hammer spent 15 years in various sales, marketing and management positions with Celanese Corporation, rising to the level of vice president and general manager of the structural composites materials business. Mr. Hammer obtained his bachelor’s degree and master’s degree in business administration from Columbia University.
As the chief executive officer of our company, Mr. Hammer is able to bring his comprehensive knowledge about Commvault’s business strategies, financial position and operations into Board deliberations. In addition, he has prior leadership experience in both public and private companies. He has expertise in both industry and finance matters. Mr. Hammer’s vision and business acumen are critical assets to the Board.
Keith Geeslin has served as a director of our company since May 1996 and is chairman of our Compensation Committee. Mr. Geeslin has been a partner at Francisco Partners, a global private equity firm, since January 2004, prior to which Mr. Geeslin spent 19 years with the Sprout Group, the venture capital arm of Credit Suisse’s asset management business, which conducts its activities through affiliates of Credit Suisse Securities (USA) LLC. Prior to joining the Sprout Group, Mr. Geeslin was the general manager of a division of Tymshare, Inc, a provider of public computer and network services and held various positions at its Tymnet subsidiary from 1980 to 1984. He was also previously a staff member of the U.S. Senate Commerce Committee. Mr. Geeslin obtained his bachelor’s degree in electrical engineering from Stanford University and master’s degrees from Stanford University and Oxford University. Mr. Geeslin also serves on the board of directors of Synaptics, Inc.
Mr. Geeslin’s private equity and venture capital experience, with a focus on technology sector companies, has given him an understanding of finance and of growth strategies, as well as experience in evaluating businesses in our company’s industry, all of which is very helpful to the Board of Directors. Mr. Geeslin has a keen business sense. Originally representing one of our company’s initial investors, Mr. Geeslin has a long history with Commvault and its management, providing continuity to Board deliberations. Mr. Geeslin has held various public company directorships and brings that experience to the Board.
Gary B. Smith has served as a director of our company since May 2004 and is chairman of our Nominations and Governance Committee. Prior to serving as chairman of our Nominations and Governance Committee, Mr. Smith served as our lead independent director. Mr. Smith is currently the president, chief executive officer and a director of Ciena Corporation, a global supplier of telecommunications networking equipment, software and services. Mr. Smith began serving as chief executive officer of Ciena in May 2001, in addition to his existing responsibilities as president and director, positions he has held since October 2000. Mr. Smith joined Ciena in November 1997, and previously served as the company’s chief operating officer and senior vice president, worldwide sales. From 1995 through 1997, Mr. Smith served as vice president of sales and marketing for INTELSAT. He also previously served as vice president of sales and marketing for Cray Communications, Inc. Mr. Smith received his master’s in business administration from Ashridge Management College, United Kingdom. Mr. Smith currently serves on the board of directors of Avaya Inc., is a member of the National Security Telecommunications Advisory Committee (NSTAC), and participates in initiatives with the Center for Corporate Innovation.
Mr. Smith is an experienced chief executive officer of a company in the information technology industry. As such, he has leadership skills and industry experience, as well as perspectives on the operations, challenges and complex issues facing growing technology-based companies. He also has global sales and marketing experience which is useful to the Board. Mr. Smith’s experience as a director of a public company also benefits the Board. The combination of his experience makes him well suited to serve as the chairman of our Nominations and Governance Committee.


4



Class I Directors Whose Terms Expire in 2019
Armando Geday has served as a director of our company since July 2000. From April 1997 until February 2004, Mr. Geday served as president, chief executive officer and a director of GlobespanVirata, Inc., a digital subscriber line chipset design company. After GlobespanVirata was acquired by Conexant Systems, Inc. in 2004, Mr. Geday served as chief executive officer of Conexant from February 2004 until November 2004. Prior to joining GlobespanVirata, Mr. Geday served as vice president and general manager of the multimedia communications division of Rockwell Semiconductor Systems. Prior to joining Rockwell, Mr. Geday held several other marketing positions at Harris Semiconductor. Mr. Geday serves on the board of TagSys. Mr. Geday obtained his bachelor’s degree in electrical engineering from the Florida Institute of Technology. Mr. Geday has also advised leading private equity firms such as Texas Pacific Group, Francisco Partners and Index Ventures and is currently an entrepreneur involved with various internet and technology ventures.
From his chief executive officer experience in the technology industry, Mr. Geday has insightful perspectives on the operations, challenges and complex issues facing growing companies. Mr. Geday also brings extensive M&A, fundraising and international viewpoints to Board deliberations.
F. Robert Kurimsky has served as a director of our company since February 2001. Mr. Kurimsky served as senior vice president of Technology Solutions Company, a systems integrator, from 1994 through 1998 and again from January 2002 through June 2003. Mr. Kurimsky served as senior vice president of The Concours Group, a consulting and executive education provider, from 1998 through December 2001. Prior to his service with Technology Solutions Company, Mr. Kurimsky spent 20 years leading numerous information systems and administration functions at the Philip Morris Companies, Inc. (now Altria Group, Inc.), rising to the level of vice president. Mr. Kurimsky served on the Board of the Advisory Council, a private IT research, education and consulting firm, from 2002 to 2007. Mr. Kurimsky obtained a bachelor of science at Fairfield University and a master of engineering degree from Yale University and attended the Stanford Executive Program at Stanford University.
In particular, Mr. Kurimsky brings a customer focus to the Board with an understanding of what features, products and services are important to our customers.  Mr. Kurimsky’s engineering education also gives him perspectives on the technical side of our business, while his extensive management experience makes him a valuable member of our Nominations and Governance and Audit Committees.
David F. Walker has served as a director of our company since February 2006 and is chair of our Audit Committee. Mr. Walker also serves on the boards of directors of Chico’s FAS, Inc. and CoreLogic, Inc., currently chairing the board and the executive and audit committees at Chico’s, and chairing the audit committee and participating on the acquisition and strategic planning committee at CoreLogic. In addition, Mr. Walker previously served on the boards of directors of Atlantic Blue Group, Inc. during 2012, First Advantage Corporation from 2003 to 2009, Paradyne Networks from 2003 to 2005 and Technology Research Corporation from 2004 to 2010.
Mr. Walker was employed as the Director of the Accountancy Program and the Program for Social Responsibility and Corporate Reporting at the University of South Florida St. Petersburg from 2002 through 2009. Prior to joining the University of South Florida, Mr. Walker was with Arthur Andersen LLP, having served as a partner in that firm from 1986 through 2002 and as partner in charge of the firm’s assurance and business advisory services practice for the Florida and Caribbean region. Mr. Walker earned a master’s of business administration from the University of Chicago Booth School of Business with concentrations in accounting, finance and marketing, and a bachelor of arts degree from DePauw University with majors in economics and mathematics and a minor in business administration. Mr. Walker is an NACD Board Leadership Fellow, a certified public accountant and a certified fraud examiner.
Mr. Walker’s governance, accounting and finance qualifications include an in depth understanding of risk oversight, accounting and financial reporting which is valuable to the Board of Directors, and he is an audit committee financial expert.

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Joseph F. Eazor has served as a director of our company since October 2015. Since June 2017, Mr. Eazor has served as the chief executive officer of Rackspace Inc. and from January 2014 until February 2017, Mr. Eazor served as chief executive officer and a director of Earthlink Holdings Corp. Prior to joining Earthlink, Mr. Eazor worked as a consultant. From August 2011 until February 2013, he was Executive Vice President and COO of Global Sales and Customer Operations at EMC Corporation, a global leader in IT and business transformation. Beginning in 2003 he held executive level positions at Electronic Data Systems Corporation, an information technology equipment and services company, until Hewlett- Packard's acquisition of Electronic Data Systems Corporation in August 2008. Mr. Eazor went on to serve as Senior Vice President and General Manager of HP Enterprise Services at Hewlett-Packard, an information technology corporation, from August 2008 to July 2010. From September 2010 to August 2011 he was a Director at McKinsey & Company, Inc., a management consulting firm. Mr. Eazor also serves on the Board of Discover Financial Services.
Mr. Eazor's extensive experience in technology and IT services is valuable to the Board of Directors in directing our future. Mr. Eazor's experience as a senior technology executive at other IT services companies, as well as his prior consulting experience, provides the Board of Directors with substantial sales, strategic planning, and operational experience and industry insight.
CORPORATE GOVERNANCE
Overview
We have established a comprehensive corporate governance plan for the purpose of defining responsibilities, setting high standards of professional and personal conduct and assuring compliance with such responsibilities and standards. As part of its annual review process, the Board of Directors monitors developments in the area of corporate governance. Listed below are some of the key elements of our corporate governance plan. Many of these matters are described in more detail elsewhere in this proxy statement.
Independence of Directors

Eight of our ten current directors are independent under the listing standards of The Nasdaq Stock Market, Inc. (“Nasdaq”).

We have a lead independent director, Mr. Pulver.
Majority Voting for Directors

We have adopted a majority vote standard for the election of directors in an uncontested election.

If an incumbent directors does not receive a majority of the votes cast in an uncontested election, that director must promptly tender his or her irrevocable resignation to the Board of Directors, contingent upon acceptance by the Board of Directors.
Audit Committee

All members meet the independence standards for audit committee membership under the Nasdaq listing standards and applicable Securities and Exchange Commission (“SEC”) rules.

Two members of the Audit Committee, Messrs. Walker and Eazor, qualify as an “audit committee financial expert,” as defined in the SEC rules, and the remaining members of the Audit Committee satisfy Nasdaq’s financial literacy requirements.

The Audit Committee operates under a written charter that governs its duties and responsibilities, including its sole authority to appoint or replace our independent auditors.

The Audit Committee has adopted policies and procedures governing the pre-approval of all audit and non-audit services provided by our independent auditors.
Compensation Committee

All members meet the independence standards for compensation committee membership under the Nasdaq listing standards and applicable SEC rules.

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The Compensation Committee operates under a written charter that governs its duties and responsibilities, including the responsibility for executive compensation.
Nominations and Governance Committee

All members meet the independence standards for nominating committee membership under the Nasdaq listing standards.

The Nominations and Governance Committee operates under a written charter that governs its duties and responsibilities, including the responsibility for nominating directors and developing corporate governance guidelines.
Corporate Governance Policies

We have adopted Corporate Governance Policies, including qualification and independence standards for directors.
Codes of Business Ethics and Conduct

We have adopted a Code of Ethics for Senior Financial Managers that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Controller.

We also operate under an omnibus Code of Business Ethics and Conduct that applies to all directors, officers and employees and includes provisions ranging from restrictions on gifts to conflicts of interests.

We have established a process for confidential and anonymous submissions by our employees, as well as submissions by other interested parties, regarding questionable accounting or auditing matters.
Our Audit Committee, Nominations and Governance Committee and Compensation Committee Charters, Code of Ethics for Senior Financial Officers, Corporate Governance Policies, Code of Business Ethics and Conduct, Amended and Restated Bylaws, Charter of the Commvault Systems Disclosure Committee, Insider Trading Policy and Policy of Fair Disclosure to Investors may be accessed on our website at www.commvault.com. The contents of the website are not, however, a part of this proxy statement. In addition, we will make a copy of any of these documents available to any person, without charge, upon written request to Commvault Systems, Inc., 1 Commvault Way, Tinton Falls, New Jersey 07724, Attn: General Counsel. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K and applicable Nasdaq rules regarding amendments to or waivers of our Code of Ethics for Senior Financial Officers and Corporate Governance Principles by posting this information on our website at www.commvault.com.
Majority Vote Standard and Resignation Policy in Director Elections
A majority vote standard, as described in our Bylaws, applies to the election of directors. In uncontested elections, if a quorum is present or represented, directors are elected by an affirmative vote of a majority of the votes cast.
If an incumbent director fails to receive the affirmative vote of a majority of votes cast in an uncontested election, such director shall promptly tender his or her irrevocable resignation to the Board of Directors, contingent upon acceptance by the Board of Directors. Within 90 days after certification of the results of the stockholder vote, the Board of Directors shall act on the resignation, taking into account, among other things, a recommendation of the Company’s Nominations and Governance Committee. Within four business days after the Board of Directors formally decides whether or not to accept the resignation, the Company will publicly disclose that decision, together with an explanation of the process (and the reasons for rejecting the resignation, if applicable) in a press release, in Form 8-K or other filing with the Securities and Exchange Commission or by other public announcement. Any director whose resignation is being so considered may not participate in the Nominations and Governance Committee’s recommendation or the Board of Director’s decision on the resignation. If the resignations of a majority of the members of the Nominations and Governance Committee were to become effective as a result of this procedure, the remaining independent directors will appoint a special committee among themselves for the purpose of considering the resignations and recommending whether to accept or reject them.
The Board of Directors and Its Committees
General. Our Board of Directors currently comprises ten members, eight of whom are not officers of our company and two of whom are officers of our company. Our Board of Directors believes that our ratio of outside directors to inside directors represents a commitment to the independence of our Board of Directors and a focus on matters of importance to our stockholders.

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Our Board of Directors has determined that Messrs. Joseph F. Eazor, Frank J. Fanzilli, Jr., Armando Geday, Keith Geeslin, F. Robert Kurimsky, Daniel Pulver, Gary B. Smith and David F. Walker, all of the outside directors, are “independent” as that term is defined under the applicable listing standards of Nasdaq. In making this determination for each director, the Nominations and Governance Committee, on behalf of our Board of Directors, considered the standards of independence set forth in the Nasdaq corporate governance listing standards and all relevant facts and circumstances to ascertain whether there was any relationship between a director and our company that, in the opinion of the Nominations and Governance Committee, would interfere with the exercise of independent judgment in carrying out the responsibilities of the director, or any material relationship with our company (either directly, or as a partner, stockholder or other officer of an organization that has a relationship with our company).
During the year ended March 31, 2017, our Board of Directors held five meetings. All of our directors who served in the year ended March 31, 2017, attended all of the meetings of the Board of Directors and all meetings of the committees of the Board held and on which the director served. The Board of Directors is scheduled to meet in executive session, without management, at every Board meeting that the directors attend in person. Mr. Pulver acts as lead independent director to chair these executive sessions and as primary spokesperson in communicating matters arising out of these sessions to our management.
Because we do not schedule a Board of Directors meeting to coincide with our Annual Meeting, attendance at our Annual Meeting by our directors is encouraged but not required. All of our directors attended our 2016 Annual Meeting telephonically or in person. The Board of Directors has three standing committees. These committees have the responsibilities and authority described later in this section.
Board Leadership Structure. Commvault's policy regarding its leadership structure is to adopt the practice which best serves our company's needs at any particular time. Our Board has currently determined that the most effective leadership structure for our company is for N. Robert Hammer to serve as both Chairman and Chief Executive Officer.
Mr. Hammer has consistently provided strong leadership to our company and Board since becoming Chairman and Chief Executive Officer in March 1998. His strategic vision and financial discipline have been integral to our company's growth. Mr. Hammer's dual role provides the opportunity for better decision making and Board leadership given the greater level of information provided through his access to both management and the Board. The dual role provides a high level of communication between management and the Board on all matters and capitalizes on Mr. Hammer's successful history in leading both our company and the Board. The Board currently believes having on person serve as both Chief Executive Officer and Chairman of the Board also eliminates the potential of duplication of efforts and inconsistent actions, enabling the Board and management to work effectively toward the same goals and strategy.
While Mr. Hammer serves as Chairman, strong independent Board leadership is exerted by our lead independent director, Daniel Pulver, who provides additional support to the corporate governance structure. Under our Corporate Governance Policies, the lead independent director is responsible to coordinate the activities of the other independent directors and to fulfill other responsibilities established by the Board or the independent directors. Currently, our lead independent director's specific responsibilities include presiding at executive sessions of the Board and facilitating communication between Board members and the Chairman. Our lead director also communicates to the CEO on issues identified by the other independent directors. As a member of the Nominations and Governance Committee, Mr. Pulver participates in the annual Board performance evaluation process and in the assessment of our company’s Governance Policies. The lead independent director, and many of the other directors, communicates with the Chairman and Chief Executive Officer regarding appropriate agenda topics and other board related matters. In accordance with our Corporate Governance Policies, no director may serve as lead independent director for more than seven consecutive years.
Board Oversight of Risk. Our company’s policies and procedures relating to risk assessment and risk management are overseen by its Board of Directors. A fundamental part of risk assessment and risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for our company. The involvement of the Board in setting our company’s business strategy is a key part of its assessment of management’s risk tolerance and what constitutes an appropriate level of risk for our company. The Board of Directors considers risk management to varying degrees regularly at its meetings. The Board will adjust its practices with respect to risk oversight whenever it determines it needs to do so and will involve itself in particular areas or business circumstances where its proper exercise of oversight requires it.

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While the Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk assessment and risk management. The Audit Committee is required under its charter to inquire of management and the independent auditor concerning significant financial risks or exposures and to assess the steps management has taken to minimize such risks. The Audit Committee also oversees our company’s internal audit function, compliance matters and reviews with the General Counsel any legal matters, including litigation, that may have a material impact on our company’s financial statements, financial condition or results of operations. In addition, the Compensation Committee assesses compensation related risk and the Nominations and Governance Committee addresses management and governance risk, including through its oversight of the succession planning process. Each of these Board committees reports to the full Board with respect to its risk oversight functions.
At the management level, our company has appointed our General Counsel as our Chief Compliance Officer to oversee risk related matters, and we have established a disclosure committee to monitor our company’s compliance with its disclosure obligations under law and Nasdaq regulations and an executive review committee to monitor and approve certain transactions or other corporate matters that deviate from our company’s standard practices. The senior management of our company, including the Chief Compliance Officer, report to the Board or Board committees regarding risk issues, including those identified by the foregoing committees. In accordance with our company’s Corporate Governance Policies, the Board has complete and open access to any member of our company’s management and any of our company’s employees, as well as any outside advisors or independent advisors retained by the Board. In addition, our company’s Chief Financial Officer and General Counsel and Chief Compliance Officer are available at Board and committee meetings to answer questions relating to risk oversight. Further, because the Chief Executive Officer and Chief Operating Officer are directors, they bring a unique perspective on our company’s risk profile and risk assessment to Board deliberations based on their day to day management responsibilities.
Audit Committee. The Audit Committee is responsible for the appointment of, compensation of and oversight over the work of our independent auditor. Additionally, the Audit Committee monitors the integrity of our financial statements, our independent auditor’s qualifications and independence, our compliance with legal and regulatory requirements and the performance of our internal audit function and independent auditor. The Audit Committee relies on the knowledge and expertise of our management, the internal auditors and the independent auditor in carrying out its oversight responsibilities. The members of the Audit Committee are Messrs. Walker (Chairman), Kurimsky, Pulver and Eazor. The Audit Committee is comprised solely of directors who meet all of the independence standards for audit committee membership as set forth in the applicable listing standards of Nasdaq. The Board of Directors has determined that Messrs. Walker and Eazor qualify as an “audit committee financial expert” as that term is defined in the SEC rules, and that each Audit Committee member has sufficient knowledge in financial and auditing matters to serve on the Audit Committee.
The Audit Committee operates under a written charter. The Audit Committee held five meetings in the year ended March 31, 2017. A report of the Audit Committee appears elsewhere in this proxy statement.
Compensation Committee. The Compensation Committee is responsible for overseeing our compensation and benefit plans, including all compensation arrangements for executive officers and directors. The members of the Compensation Committee are Messrs. Geeslin (Chairman), Fanzilli and Geday. The Compensation Committee is comprised solely of outside directors who meet the independence standards for compensation and nominating committee members as set forth in Nasdaq listing standards.
Management assists the Compensation Committee in the performance of its duties. Each year, the Chief Executive Officer reviews the performance and compensation of each of the other executive officers and makes recommendations to the Compensation Committee with respect to such executive officers’ compensation.
The Compensation Committee has the authority to engage its own independent advisors to assist in carrying out its responsibility. From time to time, consultants, including Compensia, also provide additional services at the request of our company. In fiscal year 2017, the Compensation Committee and management jointly engaged Compensia for services that included assistance and advice in the formulation of our company’s cash and equity compensation programs. The Compensation Committee reviewed the independence of Compensia under SEC and Nasdaq rules and concluded that its works had not raised any conflict of interest.
The Compensation Committee operates under a written charter. The Compensation Committee held four meetings and the Committee, or a sub-committee thereof, acted by unanimous written consent 15 times during fiscal year 2017. A report of the Compensation Committee appears elsewhere in this proxy statement. For a more detailed discussion of the Compensation Committee’s processes and procedures for considering and determining executive compensation, see “Executive Compensation - Compensation Discussion and Analysis.”
Nominations and Governance Committee. The Nominations and Governance Committee is responsible for identifying and recommending to our Board of Directors appropriate director nominee candidates and providing oversight with respect to corporate

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governance matters, including reviewing our corporate governance policy. The members of the Nominations and Governance Committee are Messrs. Smith (Chairman), Eazor, Kurimsky, Pulver and Walker. The Nominations and Governance Committee is comprised solely of outside directors who meet the independence standards for compensation and nominating committee members as set forth in Nasdaq listing standards.
The Nominations and Governance Committee is responsible for assessing the appropriate balance of experience, skills and characteristics required of our Board of Directors and for carrying out adequate due diligence with respect to prospective board members. The Nominations and Governance Committee will consider nominees that are recommended by members of the Board of Directors, management or other stockholders. Nominees for director shall be selected on the basis of depth and breadth of experience, integrity, ability to make independent analytical inquiries, understanding of our business environment, the willingness of the candidate to devote adequate time to board duties, the interplay of the candidate’s experience and skills with those of other board members, and the extent to which the candidate would be a desirable addition to our Board of Directors and any committees of the Board.
If the Nominations and Governance Committee receives, prior to the date that is 120 days before the anniversary of the date of mailing for the prior year’s proxy statement, a nominee recommendation from a stockholder or group of stockholders that has beneficially owned more than 5% of our company’s voting common stock for at least one year as of the date of the recommendation, the name of the candidate, the name(s) of the stockholder(s) who recommended the candidate and whether the Nominations and Governance Committee chose to nominate the candidate will be disclosed in the proxy statement, if the consent of both the stockholder and the candidate has been received.
If a stockholder desires to nominate persons for election as director at any stockholders’ meeting duly called for the election of directors, written notice of the stockholder’s intent to make such a nomination must be given and received by the Secretary at our principal executive offices either by personal delivery or by United States mail not later than (i) with respect to an annual meeting of stockholders, 90 days prior to the anniversary date of the date on which notice of the prior year’s annual meeting was mailed to stockholders, and (ii) with respect to a special meeting of stockholders, the close of business on the tenth day following the date on which notice of such meeting is first sent or given to stockholders.
Each notice shall describe the nomination in sufficient detail for the nomination to be summarized on the agenda for the meeting and shall set forth:
the name and address, as it appears on our books, of the stockholder who intends to make the nomination;

a representation that the stockholder is a holder of record of our stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to present such nomination;

whether the stockholder plans to deliver or solicit proxies from other stockholders;

the class and number of our shares which are beneficially owned by the stockholder;

the name and address of any person to be nominated;

a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder;

such other information regarding such nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; and

the consent of each nominee to serve as a Director of our company if so elected.

The Nominations and Governance Committee operates under a written charter. The Nominations and Governance Committee met three times in the year ended March 31, 2017.

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Stockholder Communication Policy. Stockholders can contact our Board of Directors to provide comments, to report concerns, or to ask a question, at the following address.
Corporate Secretary
Commvault Systems, Inc.
1 Commvault Way
Tinton Falls, New Jersey 07724

You may submit your concern anonymously or confidentially by postal mail.
Communications are distributed to our Board of Directors, or to any individual directors as appropriate, depending on the facts and circumstances outlined in the communication. You may also communicate online with our Board of Directors as a group through the Investor Relations section of our website at www.commvault.com. The Secretary will forward all communications to the Board to the Chairman of the Audit Committee or the Chairman of the Nominations and Governance Committee, who will determine when it is appropriate to distribute such communications to other members of the Board or to management.
Board Diversity. The Board of Directors has adopted a policy on Board diversity to be implemented by the Nominations and Governance Committee.  This policy requires the Nominations and Governance Committee to consider diversity in professional experience, skills, broad-based business knowledge, understanding of our company’s business environment and training when recommending Director nominees to the Board, with the objective of achieving a board with diverse business and educational backgrounds. It is the goal of this policy for the Board to be composed of members with individual backgrounds that, when combined, provide a portfolio of experience and knowledge that will serve our company's governance and strategic needs. In accordance with our company’s Corporate Governance Guidelines, the Nominations and Governance Committee will consider the interplay of the director candidate’s experience and skills with those of other Board members, as well as the extent to which the candidate would be a desirable addition to the Board and any Committees of the Board. When recommending nominees for Director, the Nominations and Governance Committee does not discriminate against candidates based on gender, ethnicity, religion or national origin. Our company’s Board diversity policy specifies that the Nominations and Governance Committee will review the skills and attributes of Board members within the context of the current make-up of the full Board from time to time as the Nominations and Governance Committee deems appropriate. In connection with its deliberations with respect to Director nominations for our company’s 2017 annual meeting, the Nominations and Governance Committee assessed that it effectively nominates candidates for Director in accordance with the above described standards, with the current Board being composed of individuals with finance, accounting, technology, management and international experience. See each nominee's and director's biography appearing earlier in this proxy statement for a description of the specific experiences that each such individual brings to the Board.
Transactions with Related Persons
The Board of Directors recognizes that transactions between us and certain related persons present a heightened risk of conflicts of interest. It is our policy to have the Audit Committee review and approve, ratify or disapprove of proposed transactions or courses of dealings with respect to which executive officers or directors or members of their immediate families have an interest (including all transactions required to be disclosed pursuant to the SEC’s related persons disclosure requirements (“Related Persons Transactions”). The Audit Committee is to review such transaction based upon the rules of Nasdaq and upon the our ethics and governance guidelines. There were no Related Persons Transactions during the year ended March 31, 2017.
We have a Code of Business Ethics and Conduct, a copy of which is posted on the Investor Relations portion of our web page at www.commvault.com, which applies to all of our employees. The Code, among other things, has a policy governing conflicts of interests generally and, in particular, prohibiting employment or other activities in certain other businesses, soliciting clients for any other purpose or relationships that may be perceived as impairing the ability of the individual or our company from performing his or its duties, as the case may be, in an impartial manner, and use of corporate property for improper personal gain. Any complaints or concerns require disclosure to the Vice President, General Counsel or Vice President, Worldwide Human Resources and, if warranted, to the Audit Committee or Nominations and Governance Committee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and beneficial owners of 10 percent or more of a registered class of our equity securities to file with the SEC initial reports of beneficial ownership (Form 3) and reports on changes in beneficial ownership (Form 4 or 5). SEC rules adopted pursuant to Section 16(a) require that such persons furnish us with copies of all such forms they file with the SEC.

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Based solely upon our review of such forms furnished to us during the year ended March 31, 2017, and upon the written representations received by us from certain of our directors and executive officers, we believe that our officers and 10% stockholders complied with all Section 16(a) filing requirements on a timely basis during the year ended March 31, 2017.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Management
The following table shows, as of June 30, 2017, the number of shares of our common stock, par value $.01 per share (the only class of voting securities outstanding), beneficially owned by: (1) each director and nominee for director; (2) each named executive officer (defined below); and (3) all directors and executive officers as a group. The number of shares of our common stock beneficially owned by a person includes shares of common stock issuable with respect to options, restricted stock units (including performance-based stock units), and convertible securities held by the person which are exercisable, convertible or will vest within 60 days. The percentage of our common stock beneficially owned by a person assumes that the person has exercised all options, vested in restricted stock units and converted all convertible securities, the person holds which are exercisable, convertible or will vest within 60 days, and that no other persons exercised any of their options, vested in any of their restricted stock units or converted any of their convertible securities. 
 
 
Shares of Common  Stock Owned
 
Percent of Common Stock Outstanding
Directors
 
 
 
 
N. Robert Hammer(1)
 
3,802,019

 
8.2
%
Alan G. Bunte(2)
 
1,454,264

 
3.1
%
Frank J. Fanzilli, Jr.(3)
 
140,905

 
*

Armando Geday(4)
 
119,389

 
*

Keith Geeslin(5)
 
52,711

 
*

Joseph F. Eazor (10)
 
8,638

 
*

F. Robert Kurimsky(6)
 
104,182

 
*

Daniel Pulver(7)
 
135,055

 
*

Gary B. Smith(8)
 
84,055

 
*

David F. Walker(9)
 
78,043

 
*

Named Executive Officers that are not Directors
 
 
 
 
Brian Carolan(11)
 
232,377

 
*

Ron Miiller(12)
 
295,816

 
*

All directors and named executive officers and directors as a group
 
6,507,454

 
13.4
%
 
*
Less than 1%.
(1)
Includes options to acquire 1,263,295 shares of common stock which are exercisable within 60 days of June 30, 2017 and 7,452 restricted stock units which vest within 60 days of June 30, 2017.
(2)
Includes options to acquire 1,018,366 shares of common stock which are exercisable within 60 days of June 30, 2017 and 5,454 restricted stock units which vest within 60 days of June 30, 2017.
(3)
Includes options to acquire 35,750 shares of common stock which are exercisable within 60 days of June 30, 2017 and 3,888 restricted stock units which vest within 60 days of June 30, 2017.
(4)
Includes options to acquire 50,750 shares of common stock which are exercisable within 60 days of June 30, 2017 and 3,888 restricted stock units which vest within 60 days of June 30, 2017.
(5)
Includes options to acquire 24,500 shares of common stock which are exercisable within 60 days of June 30, 2017 and 3,888 restricted stock units which vest within 60 days of June 30, 2017.
(6)
Includes options to acquire 50,750 shares of common stock which are exercisable within 60 days of June 30, 2017 and 3,888 restricted stock units which vest within 60 days of June 30, 2017.
(7)
Includes options to acquire 43,250 shares of common stock which are exercisable within 60 days of June 30, 2017 and 3,888 restricted stock units which vest within 60 days of June 30, 2017.
(8)
Includes options to acquire 50,750 shares of common stock which are exercisable within 60 days of June 30, 2017 and 3,888 restricted stock units which vest within 60 days of June 30, 2017.
(9)
Includes options to acquire 39,500 shares of common stock which are exercisable within 60 days of June 30, 2017 and 3,888 restricted stock units which vest within 60 days of June 30, 2017.
(10)
Includes 3,888 restricted stock units which vest within 60 days of June 30, 2017.

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(11)
Includes options to acquire 198,968 shares of common stock which are exercisable within 60 days of June 30, 2017 and 4,126 restricted stock units which vest within 60 days of June 30, 2017.
(12)
Includes options to acquire 259,044 shares of common stock which are exercisable within 60 days of June 30, 2017 and 4,284 restricted stock units which vest within 60 days of June 30, 2017.

Certain Other Stockholders

The following table sets forth, as of June 30, 2017 (except to the extent otherwise indicated), certain information regarding the persons known by us to be the beneficial owner of more than 5% of our outstanding common stock (the only class of voting securities outstanding).
 
Name and Address of Beneficial Owner
Shares of
Common  Stock
Owned
 
Percent of Common
Stock  Outstanding
BlackRock, Inc. (2)
55 East 52nd Street
New York, NY 10022
4,201,785

 
9.3
%
The Vanguard Group, Inc. (3)
100 Vanguard Blvd.
Malvern, PA 19355
3,191,497

 
7.0
%
 
(1)
Based solely on a Schedule 13G/A filed on January 23, 2017, by BlackRock, Inc., except for Percent of Common Stock Outstanding.
(2)
Based solely on a Schedule 13G filing on February 10, 2017, except for Percent of Common Stock Outstanding. Vanguard Fiduciary Trust Company (“VFTC”), a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 76,096 shares or 0.168% of the Common Stock outstanding of the Company as a result of its serving as investment manager of collective trust accounts. VFTC directs the voting of these shares. Vanguard Investments Australia, Ltd. ("VIA"), a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 7,217 shares or .016% of the Common Stock outstanding of the Company as a result of its serving as investment manager of Australian investment offerings.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This section discusses the compensation of our executive officers who were serving as executive officers as of March 31, 2017. As of March 31, 2017 the Company had four executive officers.

N. Robert Hammer
Chairman, President and Chief Executive Officer
Alan G. Bunte
Executive Vice President and Chief Operating Officer
Brian Carolan
Vice President and Chief Financial Officer
Ron Miiller
Senior Vice President of Worldwide Sales

Compensation Committee Membership and Organization

The Compensation Committee of the Board of Directors, or the Compensation Committee, has responsibility for establishing, implementing and continually monitoring adherence with our company’s compensation philosophy. Its duties include:

setting the total compensation of our Chief Executive Officer and evaluating his performance based on corporate goals and objectives;

reviewing and approving the Chief Executive Officer’s decisions relevant to the total compensation of our company’s other executive officers;

making recommendations to the Board of Directors with respect to equity-based plans in order to allow us to attract and retain qualified personnel; and

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reviewing director compensation levels and practices and recommending, from time to time, changes in such compensation levels and practices to the Board of Directors.

The members of our Compensation Committee are Messrs. Fanzilli, Geeslin and Geday. Mr. Geeslin currently serves as Chairman of the Compensation Committee. Each member of the Compensation Committee is an “independent director” as such term is defined by Nasdaq’s Listing Rules and as determined by the Board of Directors. The Compensation Committee meets as necessary during the fiscal year as well as considers and takes action by written consent.

Executive Summary
We believe that the skill, talent, judgment and dedication of our executive officers are critical factors affecting the long-term value of Commvault. Therefore, the philosophy and objectives in setting compensation policies for executive officers are to align pay with performance, while at the same time providing fair, reasonable and competitive compensation that will allow us to retain and attract superior executive talent. The Compensation Committee strongly believes that executive compensation should align executives’ interests with those of stockholders by rewarding achievement of specific annual, long-term and strategic goals by our company, with the ultimate objective of improving long-term stockholder value.
Consideration of Prior Advisory Vote on Executive Compensation
Although the annual advisory stockholder vote on executive compensation is non-binding, the Compensation Committee has considered, and will continue to consider, the outcome of this vote each year when making compensation decisions for our named executive officers. Our Compensation Committee periodically undertakes a top-to-bottom review of our executive compensation programs to better align our compensation plan with our pay-for-performance philosophy, to account for changing industry compensation practices and to meet the expectations of our stockholders.  At our Annual Meeting of Stockholders held on August 18, 2016, 91% of our stockholders voted for the “say on pay” executive compensation proposal.
We believe the approval by our shareholders in the prior year was partly the result of the steps we took in transforming our executive compensation program over the last several years. We believe that these steps further align executives with our stockholders and creates a significant performance-focus to our reward system. During our stockholder outreach in fiscal 2016, we heard feedback from our stockholders that desired further alignment between equity awards and the achievement of specific financial goals. We also heard that such alignment should apply to more than just our CEO.

Based in part on this feedback, we have made the following key changes to our equity program for fiscal 2017:

We extended the changes to our CEO compensation plan made in fiscal 2015 and 2016 to additional members of executive and senior management (nearly 20 persons in total).
Established aggressive performance targets and paid performance-based cash bonuses earned under our non-equity incentive plans for our executive and senior management that reflected the achievement of high levels of financial and operational performance.
Equity awards for the fiscal year are made in May of the fiscal year, rather than in October. This allows us to align our grant timing with the beginning of the fiscal year and our fiscal year goals.
Equity awards consisted of the following three components, with the weighting of each component varying by named executive officer:
Vehicle
CEO/COO Weighting
Weighting for other NEOs (and Senior Leaders)
Financial performance stock units, linked to revenue and non-GAAP operating income
33%
25%
Total shareholder return performance stock units
33%
25%
Time-vested restricted stock units
34%
50%

Pay for Performance
We believe our executive compensation program has been designed to pay for performance and is aligned with the long-term value of Commvault. For example, we believe the charts below demonstrate the correlation between our performance and the compensation we paid to our Chairman, President and CEO, Mr. Hammer, over the last five fiscal years.

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a20140707de_chart-19926a05.jpg



15



a20140707de_chart-22004a04.jpg
1)
Non-GAAP EBIT (or non-GAAP income from operations) is defined as income from operations excluding noncash stock-based compensation charges and additional FICA and related payroll tax expense incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards, and in fiscal 2015 certain expenses related to the move into a new corporate campus headquarters. Commvault believes that non-GAAP EBIT is a useful metric for management and investors because it compares Commvault’s core operating results over multiple periods. When evaluating the performance of Commvault’s operating results and developing short and long term plans, Commvault does not consider such expenses that are excluded in the computation of non-GAAP EBIT. See heading below labeled “Reconciliation of GAAP to Non-GAAP Financial Measures” for the detailed calculation of non-GAAP EBIT.
2)
Reflects non-equity cash incentive plan compensation. See heading below labeled “Non-Equity Incentive Plan Compensation” for more details.
3)
Reflects the aggregate grant price fair value of stock option and restricted stock unit awards computed in accordance with FAS ASC Topic 718.
4)
Reflects the stock price on the last business day of the fiscal year.

Mix of Compensation Elements. Our fiscal 2017 executive compensation program consists of three principal elements: base salary, non-equity cash incentive awards and long-term equity-based incentive awards. The chart below illustrates the overall mix of compensation components for our CEO in total for fiscal 2017. Consistent with our pay for performance philosophy, the majority of CEO's compensation in fiscal 2017 consisted of incentive awards, particularly long-term equity-based incentive awards. By using a significant equity-based element, we believe we create an incentive for our CEO to achieve long-term stockholder value.
 

16



a20140707de_chart-23716a05.jpg

Fiscal 2017 Financial Highlights. Fiscal 2017 revenues were $650.5 million, an increase of 9% from fiscal 2016. In addition, non-GAAP income from operations for fiscal 2017 was $75.9 million. Our fiscal 2017 financial results were the basis of the non-equity cash incentive compensation paid to our executive officers. The following table illustrates our financial results in fiscal 2017 in terms of total revenue, non-GAAP EBIT and non-GAAP diluted earnings per share, which the Compensation Committee takes into account when making compensation decisions. The following results are based on the accounting principles that were used to prepare the fiscal 2017 consolidated financial statements included in this annual report. On April 1, 2017, we adopted Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" on a full retrospective basis and recast our historical results. See Note 2 of the audited financial statements included in our 10-K for the fiscal year ended March 31, 2017 for a discussion of recently issued accounting standards.
 
 
 
Fiscal 2017
 
Fiscal 2016
 
% Change
2016 to 2017
Revenue (in millions)
 
$
650.5

 
$
595.1

 
9
%
Non-GAAP Income from Operations (EBIT) (in millions)
 
$
75.9

 
$
67.3

 
13
%
Non-GAAP Diluted Earnings per Share (EPS) (1)
 
$
1.03

 
$
0.91

 
13
%
Stock Price (on last business day)
 
$
50.80

 
$
43.17

 
18
%

1)
Non-GAAP EPS is derived from non-GAAP net income divided by the weighted average shares outstanding on a fully diluted basis. Non-GAAP net income excludes noncash stock-based compensation, the additional FICA and related payroll tax expenses incurred by Commvault when employees exercise in the money stock options or vest in restricted stock awards, and our share of loss from our equity method investment. In addition, non-GAAP net income and non-GAAP diluted EPS incorporate a non-GAAP effective tax rate of 37% in fiscal 2017 and fiscal 2016. We believe that the use of a non-GAAP tax rate is a useful measure as it allows management and investors to compare its operating results on a more consistent basis over the multiple periods presented in its earnings release without the impact of significant variations in the tax rate. See heading below labeled “Reconciliation of GAAP to Non-GAAP Financial Measures” for the detailed calculation of Non-GAAP EPS.

Please see the "Reconciliation of GAAP to Non-GAAP Financial Measures" section of this Compensation Discussion and Analysis for additional detail about our non-GAAP financial measures.




17




Compensation Philosophy and Objectives

As a growing high-technology company, we operate in an extremely competitive and rapidly changing industry. The Compensation Committee’s philosophy and objectives in setting compensation policies for executive officers are to align pay with performance, while at the same time providing fair, reasonable and competitive compensation that will allow us to retain and attract superior executive talent. The Compensation Committee strongly believes that executive compensation should align executives’ interests with those of stockholders by rewarding achievement of specific annual, long-term and strategic goals of our Company, with the ultimate objective of improving long-term stockholder value.
The specific goals that our current executive compensation program rewards are focused primarily on revenue growth and profitability, as the Compensation Committee believes that revenue growth and profitability are the most direct drivers of long-term stockholder value. To that end, the Compensation Committee believes executive compensation packages provided by our Company to its executive officers should include a mix of both cash and equity-based compensation that reward performance as measured against established goals. As a result, the principal elements of our executive compensation are base salary, non-equity incentive plan compensation, long-term equity incentives generally in the form of restricted stock and performance-based stock units and post-termination severance and acceleration of equity award vesting for certain named executive officers upon termination and/or a change in control.

Our goal is to maintain an executive compensation program that will fairly compensate our executives, attract and retain qualified executives who are able to contribute to our long-term success, induce performance consistent with clearly defined corporate goals and align our executives’ long-term interests with those of our stockholders. The decision on the total compensation for our executive officers is based primarily upon an assessment of each individual’s performance and the potential to enhance long-term stockholder value. Often, judgment is relied upon, rather than rigid guidelines or formulas, in determining total executive compensation and the amount and mix of compensation for each executive officer. Factors affecting such judgment include performance compared to strategic goals established for the individual and our Company at the beginning of the year, the nature and scope of the executive’s responsibilities, effectiveness in leading initiatives to achieve corporate goals and conducting all activities in a manner consistent with our core company values.

Role of Executive Officers in Compensation Decisions

The Compensation Committee is responsible for setting the compensation of our Chief Executive Officer and also reviewing and approving our Chief Executive Officer’s decisions relevant to the compensation of our other executive officers. Our Chief Executive Officer, Chief Financial Officer and Chief Human Resources Officer support the Compensation Committee in its work by providing information relating to our financial plans, performance assessments of our executive officers and other personnel-related data. In addition, the Compensation Committee has authority under its charter to engage outside advisors and experts for advice as appropriate.

Performance Measures

The performance measures selected by our Compensation Committee for determination of the CEO’s cash bonus and applicable components of senior management's equity compensation were revenue and non-GAAP EBIT targets because of its belief that they were the most relevant measures of the Company’s financial performance at the time and are a good measure of stockholder value. In fact, as part of our regular stockholder engagements, it is the case that stockholders typically focus on our revenue and non-GAAP EBIT performance as the best measurement of our performance. Further, in our public communications (including on earnings calls), our disclosures typically reference revenue and non-GAAP EBIT performance measures, in addition to our GAAP measures, as measurements of how we view our own performance. In other words, these metrics are most closely tied to how we manage the business. In making its determination, our Compensation Committee took into consideration that our CEO owns a significant stock position in the Company; thus aligning his interests in stock price performance with those of other stockholders.

Because our Compensation Committee believes that revenue and non-GAAP EBIT targets are the most relevant measures of the Company’s financial performance, it has chosen to use such metrics for both the CEO’s cash bonus and certain components of senior management's equity compensation to further drive stockholder value. In that regard, the Compensation Committee believes that it has established aggressive performance goal targets. The rigor of our metrics and aggressive performance goal targets are evidenced by the CEO’s recent performance against the targets. Over the past three fiscal years the CEO's average attainment was 51% (132%, 0% and 21% in fiscal 2017, 2016 and 2015, respectively). In fiscal 2016, the Compensation Committee expanded the performance measures to include Total Shareholder Return ("TSR"). A significant portion of the restricted stock units awarded to the CEO and other senior executives are contingent on the performance of the Company's stock against the Russell 3000 index over the next three years.

18



The following tables show the Company's recent performance against the measures used to determine the CEO’s cash bonus and applicable components of senior management's equity compensation:

Performance Vesting RSUs -
Total Shareholder Return (TSR)
Grant
October 2015
May 2016
Price at grant date:
$35.22
$43.57
Actual Vest %:
 
 
First Annual Tranche
200%
110%
Second Annual Tranche
TBD
TBD
Third Annual Tranche
TBD
TBD

Performance Vesting RSUs
Fiscal 2017 Financial Performance
Grant
May 2016
 
 
Revenue Achievement
102%
Non-GAAP EBIT Achievement
110%
Achievement % Based on Scale
132%

The Compensation Committee also considered the appropriate time horizon for the performance measures used in the CEO compensation plan and determined that single year performance metrics, and a three year vesting period, were most appropriate in light of the other components of the CEO’s compensation plan. In making its determination, our Compensation Committee took into consideration the Company’s use of multi-year vesting periods for equity awards (generally three years) to emphasize a longer-term perspective and the frequency of such awards, which historically and currently are awarded as part of the CEO’s compensation on a yearly basis. Due to the recurring nature of these grants on a yearly basis and their accompanying performance measures in the following year’s financial results, our Compensation Committee believes that multi-year performance measures tied to a single equity grant are less relevant. Our Compensation Committee also took into consideration our CEO’s significant stock position in the Company in determining whether our CEO’s interests are adequately aligned with the long-term interests of stockholders. We believe that the multiple-year vesting requirements also serve an important retention purpose, as our CEO must remain employed for the full vesting period in order to receive the benefits of these awards.

Peer Analysis of Executive Compensation

In the third quarter of fiscal 2016, the Company and our Compensation Committee jointly engaged Compensia, Inc. to conduct a review and provide peer analysis information for structuring our base salary, non-equity incentive plan compensation programs and long-term equity incentive plan programs. The Compensation Committee and management used this data to ensure that our compensation programs are optimally structured to retain our highly experienced executive management team, to keep management focused during our expected period of growth, to motivate management to maximize stockholder value and to align our compensation practices with comparable technology industry companies. The research provided by Compensia included compensation data a peer group of 19 technology and related industry companies with annual revenue ranging from $277 million to $1.0 billion (median revenue was $492 million), market capitalization ranging at the time from $956 million to $4.8 billion (median market capitalization was $2.1 billion). At the time the peer group was finalized, Commvault’s revenue for the trailing four quarters was $608 million (78th percentile in the peer group) and market capitalization was $1.9 billion (29th percentile).

The peer companies included in research provided by Compensia were ACI Worldwide; Aspen Technology; athenahealth; Barracuda Networks; Blackbaud; comScore; Cornerstone OnDemand; Dealertrack Technologies; Fair Isaac; Infoblox; Interactive Intelligence Group; MicroStrategy; NetScout Systems; Pegasystems; Progress Software; Qlik Technologies; SolarWinds; Synchronoss Technologies; and Ultimate Software Group.

The Committee utilized this peer group for decisions throughout fiscal 2017. The Company and the Committee plan to review this peer group annually and make changes as needed to ensure its appropriateness for future decisions.



19



Components of Executive Compensation

The principal components of compensation for our executive officers are:

Base salary;

Non-equity incentive plan compensation;

Long-term equity incentives; and

Other benefits.

Base salary

We provide our executive officers and other employees with base salary to compensate them for services rendered during the fiscal year. We believe that our base salaries are competitive and we generally compare our executive officer base salaries to the 50th - 75th percentile of the technology industry compensation data obtained. We compare this range, allowing for compensation at the upper reaches where appropriate, because executive compensation in the technology industry is intensely competitive and some of our competitors are larger organizations that compensate executive management at greater levels than organizations of our size. Due to the intense competition to both attract and retain talent, it is appropriate to target compensation for our executives at these levels. In some circumstances, such as the need to retain key individuals, to recognize roles that were larger in scope or accountability than standard market positions and/or to reward individual performance, we may need to provide compensation above these ranges.

Salary levels are typically reviewed annually each October as part of our performance review process as well as upon a promotion or other change in job responsibility. In addition to considering the analysis provided by Compensia discussed above, the Compensation Committee considered the scope of and accountability associated with each executive officer’s position; the performance of each executive officer since the last annual review in October 2015; and the overall experience of each executive officer when approving the base salary levels that became effective in October 2016. The table below shows the fiscal 2016 and 2017 base salary rates for each named executive officers:
 
Name and Principal Position Held
 
Fiscal 2016
Salary (1)
 
Fiscal 2017
Salary (1)
 
Amount of
Increase
 
Percentage
Increase
N. Robert Hammer (2)
Chairman, President and
Chief Executive Officer
 
$
610,000

 
$
628,000

 
$
18,000

 
3.0
%
Alan G. Bunte (3)
Executive Vice President
and Chief Operating Officer
 
525,000

 
541,000

 
16,000

 
3.0
%
Brian Carolan (4)
Vice President and
Chief Financial Officer
 
385,000

 
397,000

 
12,000

 
3.1
%
Ron Miiller (5)
Senior Vice President of Worldwide Sales
 
360,000

 
371,000

 
11,000

 
3.1
%
 
(1)
Fiscal 2016 base salaries were effective in October 2015. Fiscal 2017 base salaries were effective in October 2016.
(2)
In fiscal 2017, Mr. Hammer’s base salary was increased by $18,000 to $628,000 and aligns his base salary to approximately the 65th percentile of the technology industry compensation data obtained.
(3)
In fiscal 2017, Mr. Bunte’s base salary was increased by $16,000 to $541,000 and aligns his base salary to approximately the 65th percentile of the technology industry compensation data obtained.
(4)
In fiscal 2017, Mr. Carolan’s base salary was increased by $12,000 to $397,000 and aligns his base salary to approximately the 45th percentile of the technology industry compensation data obtained.
(5)
In Fiscal 2017, Mr. Miiller’s base salary was increased by $11,000 to $371,000 and aligns his base salary to approximately the 80th percentile of the technology industry compensation data obtained.


20



Non-Equity Incentive Plan Compensation

Non-equity incentive plan compensation for our executive officers is designed to reward performance against key corporate goals. In early fiscal 2017, the non-equity incentive plan compensation targets for that year were approved after considering targets for comparable positions provided by our external compensation consultant discussed above; the scope of and accountability associated with each executive officer’s position; and the performance and experience of each executive officer. The performance metrics against which our executive officers are measured are clearly communicated, consistently applied and are focused on corporate objectives.

Our executive officer incentive targets are designed to motivate management to achieve specific goals related to certain revenue and profitability objectives. We believe that our non-equity incentive compensation levels are competitive, which we define as the sum of base salary and target non-equity incentive plan compensation falls between the 50th - 75th percentile of the technology industry compensation data obtained. These metrics and benchmarking targets were selected because we believe that, at this stage of our development, they are most closely correlated to increasing stockholder value. We believe that our revenue and profitability goals are aggressive and not easy to achieve because they are based on growth objectives that are higher than the industry average. These targets are only achievable as the result of performance that exceeds industry averages.

Mr. Hammer - Fiscal 2017 Non-Equity Incentive Compensation

Our Chief Executive Officer, Mr. Hammer, is eligible for non-equity incentive plan compensation with a target bonus potential equal to 105% of his $628,000 ending base salary for fiscal 2017. Mr. Hammer’s target bonus is based on our company’s total revenue and non-GAAP income from operations (EBIT) achievement against the financial plan approved by our Board of Directors. The Compensation Committee evaluates Mr. Hammer based on these performance metrics because we currently believe that growth in revenue and non-GAAP income from operations (EBIT) drives our ability to increase stockholder value.

For fiscal 2017, the Compensation Committee established three separate objectives to determine Mr. Hammer’s non-equity incentive plan award:

60% of the award was based on total revenue and
40% was based on full-year non-GAAP EBIT.


The terms of Mr. Hammer’s fiscal 2017 non-equity incentive plan contained both minimum threshold amounts that must be achieved to qualify for an award as well as additional payment amounts for surpassing the performance metrics. Specifically, actual results below 94% of revenue, and 90% of full-year non-GAAP EBIT targets result in no payment for the respective target.

Revenue - 60% of total award factor
Financial Performance Achievement
% of Target PSU Earned
< 94%
0%
94%
70%
100%
100%
110%
200%
Scale is linear between shown points
Non-GAAP EBIT - 40% of total award factor
Financial Performance Achievement
% of Target PSU Earned
< 90%
0%
90%
50%
100%
100%
120%
200%
Scale is linear between shown points
    
Actual revenue for fiscal 2017 was $650.5 million, and actual full-year non-GAAP income from operations was $75.9 million. As a result, Mr. Hammer was awarded $872,970, or approximately 132% of his fiscal 2017 target bonus amount, related to achievement against his total revenue and non-GAAP EBIT performance targets.



21



Mr. Bunte and Mr. Carolan - Fiscal 2017 Non-Equity Incentive Compensation

Our Chief Operating Officer, Alan Bunte and our Chief Financial Officer, Brian Carolan, are also eligible for non-equity incentive plan compensation with a target bonus potential equal to a percentage of their base salaries. For fiscal 2017, Mr. Bunte’s target bonus was 100% of his $541,000 ending fiscal 2017 base salary and Mr. Carolan’s target bonus was 60% of his $397,000 ending fiscal 2017 base salary. For Mr. Bunte, the Committee established a maximum payout equal to 0.2% of the GAAP revenue for fiscal 2017, with a lesser amount determined based on negative discretion exercised by the Committee based on Mr. Hammer’s recommendation. Non-equity incentive plan compensation awarded to Messrs. Bunte and Carolan is determined and approved by Mr. Hammer and reviewed by the Compensation Committee. The performance goals for Messrs. Bunte and Carolan are both quantitative and qualitative. With respect to quantitative goals for fiscal 2017, Messrs. Bunte and Carolan were measured against the same performance objectives as Mr. Hammer. However, Mr. Hammer and the Compensation Committee also consider achievement against qualitative objectives which are subjective in nature. Therefore, the ultimate non-equity incentive compensation achievement percentage awarded to Messrs. Bunte and Carolan may be either higher or lower than that of Mr. Hammer’s strictly quantitative calculation, subject the maximum award formula established by the Committee for Mr. Bunte. Mr. Hammer and the Compensation Committee do not use a specific formula or apply specific weights when evaluating performance and the resulting impact that such qualitative objectives have on the overall non-equity incentive compensation payout. Instead, Mr. Hammer and the Compensation Committee use business judgment to determine an appropriate award after considering both the quantitative and qualitative objectives. Among the most important qualitative factors used to evaluate the performance of Messrs. Bunte and Carolan are: innovation; leadership; strategic planning; product development initiatives and achievements; financial and operational excellence; customer satisfaction; and staff development.

Mr. Bunte received a fiscal 2017 non-equity incentive award that was 98% of his target bonus amount resulting in a non-equity incentive plan compensation of $530,000, or 98%, of his base salary. In determining Mr. Bunte’s bonus award, Mr. Hammer and the Compensation Committee considered the following achievements in addition to the financial performance of our company.  During fiscal 2017, Mr. Bunte lead the continued development and marketing of what we believe are best in class products and services. Successful 2017 initiatives included driving massive innovation in critical areas such as journey to the cloud solutions (including new standalone products for dev/test, disaster recovery and Microsoft Office 365), hyper-converged infrastructure, virtualization, orchestration, and automation; enhanced managed services and SaaS capabilities; and a successful first ever Commvault GO customer conference in October 2016. Finally, in addition to his product and related strategic initiatives, Mr. Bunte led our business and finance operation teams throughout fiscal 2017 in making critical resource and related investment decisions as well as continued to strengthen our best in class customer support organization by maintaining customer satisfaction ratings that we believe are significantly higher than the industry average.

Mr. Carolan received a fiscal 2017 non-equity incentive award that was 110% of his target bonus amount resulting in a non-equity incentive plan compensation of $262,000, or 66%, of his ending fiscal 2017 base salary. In determining Mr. Carolan’s bonus award, Mr. Hammer and the Compensation Committee considered the following fiscal 2017 achievements in addition to the financial performance of our company. Mr. Carolan worked closely with Mr. Hammer and Mr. Bunte to lead company-wide efforts focused on strategic initiatives as well as resource and related investment decisions, which are outlined above. Also, Mr. Carolan's leadership of the maintenance and support renewals team was considered in the determination of his bonus award. During fiscal 2017, Mr. Carolan led the Company's significant initiative related to maintenance pricing realignment that should accelerate new customer acquisitions and make it easier to do business with Commvault. Finally, Mr. Carolan supervised the Company's early adoption of the new revenue standard “ASC 606” effective April 1, 2017. The adoption of ASC 606 aligns well with current market demands and the Company’s planned gradual shift to new subscription based software offerings throughout FY’18 and beyond. Mr. Carolan also continued to oversee responsibility over certain administrative functions such as IT operations.

 


22



Mr. Miiller - Fiscal 2017 Non-Equity Incentive Compensation

Our Senior Vice President of Worldwide Sales, Ron Miiller, is eligible for non-equity incentive plan compensation with a target bonus potential equal to approximately 100% of his $371,000 ending base salary for fiscal 2017. His fiscal 2017 non-equity incentive plan compensation is based on quarterly attainment related to worldwide commissionable software revenue; worldwide maintenance support revenue; worldwide professional services revenue and annual attainment related to worldwide non-GAAP income from operations (EBIT). Commissionable software revenue generally consists of the dollar amount of software orders executed during the fiscal period for which software revenue has been recognized or will be recognized generally in the one to two subsequent fiscal quarters. We believe compensating Mr. Miiller based on commissionable software revenue aligns his compensation with the employees within the field organization whose compensation is directly influenced by our field sales employees’ efforts. The total combined amounts for worldwide maintenance support revenue and worldwide professional services revenue are reported in the services revenue line item contained in our consolidated statement of operations.

Mr. Miiller’s non-equity incentive plan is most heavily weighted toward worldwide commissionable software revenue because he is primarily responsible for growing our worldwide software revenue. As a result, Mr. Miiller’s fiscal 2017 non-equity incentive plan was weighted 65% to worldwide commissionable software revenue; 15% to non-GAAP income from operations (EBIT); 10% to worldwide maintenance revenue; and 10% to worldwide professional services revenue. Mr. Miiller’s quarterly target pay-out for commissionable software revenue, maintenance support revenue and professional services revenue totals $78,000 per quarter (or $310,675 for the entire annual period) and his annual target pay-out for non-GAAP income from operations (EBIT) totals $55,000 for the entire fiscal year period.

The following table details the relationship between the percentage of commissionable software revenue, maintenance support revenue and professional services revenue targets achieved to the percentage of his $78,000 quarterly commission award earned.
 
 
 
Target Achieved in Relation to Commission Award Earned
Target revenue achieved
 
50
%
 
70
%
 
75
%
 
80
%
 
85
%
 
90
%
 
95
%
 
100
%
 
105
%
 
107
%
 
110
%
 
115
%
Commission award earned
 
40
%
 
60
%
 
70
%
 
75
%
 
85
%
 
90
%
 
95
%
 
100
%
 
110
%
 
120
%
 
140
%
 
150
%

The maximum quarterly commission payout allowed under Mr. Miiller’s compensation plan is 150% achievement of the applicable revenue target. No quarterly payment is made for less than 50% achievement of the individual target revenue amounts.

On an annual basis for fiscal 2017, the total annual commissionable software revenue achievement needed to obtain the annual minimum 50% threshold payout of $95,000 on the commissionable software revenue component was $159.0 million. The similar total for annual customer support revenue and professional services revenue, which we report as services revenue in our public filings, needed to obtain the combined 50% threshold payout of $29,000 was $173.3 million.
    
The table above also details the relationship between the percentage of the non-GAAP income from operations (EBIT) target achieved to the percentage of his annual commission award earned. The maximum commission payout allowed under Mr. Miiller’s compensation plan is 150% achievement of the applicable non-GAAP operating income (EBIT) target. No payment is made for less than 50% achievement of the non-GAAP income from operations (EBIT) target amount. On an annual basis for fiscal 2017, the total annual non-GAAP income from operations achievement needed to obtain the annual minimum 50% threshold payout of $22,000 on the non-GAAP income from operations component was $37.7 million.

Mr. Miiller’s non-equity incentive plan compensation also contains a quarterly consistency bonus calculation for his commissionable software revenue component. Under the quarterly consistency bonus calculation, for each quarterly performance that was at least 100% attainment and the preceding quarter(s) were also at least 100% attainment, the quarterly consistency achievement bonus will be awarded as follows:
Sequential Quarters At or
Above 100% Attainment
 
Consistency
Award Factor (1)
One
 
10
%
Two
 
15
%
Three
 
20
%
(1)
The consistency award factor is equal to the percentage in the above table multiplied by the quarterly non-equity incentive plan potential for the applicable compensation


23



Mr. Miiller was awarded $343,000 or 94% of his target commission award for fiscal 2017. No amounts were paid to Mr. Miiller under the terms of his quarterly consistency bonus.

We believe that the performance targets set for Mr. Miiller are challenging and require substantial effort in order to be attained which is evidenced by Mr. Miiller’s historical achievements against his performance targets of 69% in fiscal 2014, 56% in fiscal 2015, 92% in fiscal 2016, and 94% in fiscal 2017. Mr. Miiller’s compensation plan includes quarter over quarter sequential growth targets that we believe are important to sustain consistent revenue growth over prior year actual amounts.

Long-Term Equity Incentive Awards

We currently provide long-term equity incentive compensation pursuant to our Omnibus Incentive Plan (the “2016 Incentive Plan”), which is designed to provide employees, directors and other service providers with appropriate incentives to perform in a superior manner and to achieve long-range goals and to align the interests of plan participants with those of stockholders. The 2016 Incentive Plan permits the grant of incentive stock options, non-qualified stock options, stock appreciation rights, full value awards (including restricted stock awards, restricted stock units (including performance-based stock units), and performance stock awards) based on, or related to, shares of our company’s common stock and cash incentive awards which are contingent on performance. As of March 31, 2017, we have only granted restricted stock units and performance-based stock units under the 2016 Incentive Plan to our executive officers (and not other types of awards such as options). We previously granted stock options under a prior stock incentive plan. We anticipate that future grants under the 2016 Incentive Plan will continue to be limited to restricted stock units and performance-based stock units. Our restricted stock units generally vest over three years. We currently do not anticipate granting any stock options.

We account for equity compensation paid to all of our employees under the rules of ASC 718 Compensation - Stock Compensation, which requires us to estimate and record compensation expense over the service period of the award. All equity awards to our employees, including executive officers, and to our directors have been granted and reflected in our consolidated financial statements, based upon the applicable accounting guidance, at fair market value on the grant date. Generally, the granting of a non-qualified stock option to our executive officers is not a taxable event to those employees, provided, however, that the exercise of such stock option would result in taxable income to the optionee equal to the difference between the fair market value of the stock on the exercise date and the exercise price paid for such stock. Similarly, a restricted stock award subject to a vesting requirement is also not taxable to our executive officers unless such individual makes an election under section 83(b) of the Internal Revenue Code of 1986, as amended. In the absence of a section 83(b) election, the value of the restricted stock award becomes taxable to the recipient as the restrictions lapse.

Generally, a significant stock grant is made to a new executive officer when that executive officer commences employment. This grant is made within our guidelines for new-hire grants, consistent with the executive’s position. The guidelines were developed based on our historical practices and survey data. The size of each grant is set at a level that we believe is appropriate to create a meaningful opportunity for stock ownership based upon our company’s grant guidelines, the individual’s position with us and the individual’s potential for future responsibility and promotion. The relative weight given to each of these factors varies from individual to individual and all grants to executive officers are approved by the Compensation Committee.

Each executive officer’s performance during the prior year is measured as well as overall corporate performance when follow-on awards are granted and such performance is taken into account when determining equity awards. We generally grant follow-on equity awards on an annual basis. The terms of the award and the number of shares granted are established to ensure a meaningful incentive to remain an employee of our company. The annual long-term equity incentive award granted to our executives during fiscal 2017 occurred in May 2016 and was considered to be our fiscal 2017 long-term equity incentive award.

In anticipation of this equity award granted in May 2016, we utilized the technology industry compensation data described above in the “Peer Analysis of Executive Compensation” section to obtain comparable market data. In determining the amount of the long-term equity incentive awards granted in May 2016, we reviewed the technology peer group data obtained primarily related to the grant date fair value of shares awarded. The long-term equity incentive awards granted in May 2016 were generally targeted around the 75th percentile of the technology industry compensation data obtained. This general range was used because we believe that we have historically achieved revenue and earnings growth that is in the top tier of companies in our industry.

Our Compensation Committee determined that the aggregate economic value of long-term equity incentive compensation awarded to the executive officers should contain a mix of time-vested restricted stock units and performance-based stock units. In addition, grants of restricted stock units allow us to offer equity compensation with fewer shares and less dilution to our stockholders, while simultaneously maintaining competitive rewards to retain our executive employee talent. As a result, the Compensation Committee allocated the value of Mr. Hammer’s long-term equity incentive award approximately 39% to TSR performance-based stock unit awards, 30% to Financial Performance Awards and 31% to restricted stock units, which resulted in

24



a grant of 39,390 TSR awards and financial-performance awards and 40,583 restricted stock units. The TSR awards vest based on the performance of the Company's stock against the Russell 3000 index over the next three years. A third of the grant vests each year based on cumulative performance since the grant date.
Award Type
Shares Granted
Description
Time Vesting RSUs
40,583
Vesting in three equal annual installments beginning on the one year anniversary of the grant date
Performance Vesting RSUs - TSRs
39,390
Performance awards vest according to meeting certain CVLT stock price thresholds against the Russell 3,000 index, shown below

Earned awards are subject to additional time vesting through May 2019
Performance Vesting RSUs - Financial Performance Awards
39,390
Performance awards vest according to meeting certain revenue and Non-GAAP EBIT targets, shown below.

Earned awards are subject to additional time vesting through May 2019



The sliding scales for the performance-based units are as follows:
Relative TSR Percentile Rank
% of Target PSU Earned
< 25th
0%
25th
50%
50th
100%
75th
150%
85th
200% (max)
Scale is linear between shown points and units earned cannot exceed 100% of target if the Company's stock price declines.

Revenue - 60% of total award factor
Financial Performance Achievement
% of Target PSU Earned
< 94%
0%
94%
70%
100%
100%
110%
200%
Scale is linear between shown points
Non-GAAP EBIT - 40% of total award factor
Financial Performance Achievement
% of Target PSU Earned
< 90%
0%
90%
50%
100%
100%
120%
200%
Scale is linear between shown points

The estimated value of Mr. Bunte’s equity award granted in May 2016 was allocated approximately 39% to TSR performance-based stock units, 30% to financial performance-based stock units and 31% to restricted stock units. The estimated value of Mr. Miiller's equity award granted in October 2016 was allocated 30% to TSR performance-based stock units, 24% to financial performance-based stock units and 46% to restricted stock units. The estimated value of Mr. Carolan's equity award granted in October 2016 was allocated 30% to TSR performance-based stock units, 24% to financial performance-based stock units and 46% to restricted stock units. As a result, Mr. Bunte was granted 18,180 TSR performance-based stock units. 18,180 financial performance-based stock units and 18,731 restricted stock units; Mr. Miiller was granted 8,034 TSR performance-based stock units. 8,034 financial performance-based stock units and 16,068 restricted stock units; and Mr. Carolan was granted 8,608 TSR performance-based stock units. 8,608 financial performance-based stock units and 17,216 restricted stock units. The performance conditions for the TSR performance share units granted to Mr. Bunte, Mr. Miiller, and Mr. Carolan are the same as described for Mr. Hammer above.

We anticipate that we will continue to grant long-term equity incentive awards to each of our other executive officers on an annual basis at the discretion of the Compensation Committee. We have no program, plan or practice to coordinate award grants with the release of material non-public information. We believe that the resulting overlapping vesting schedule from awards made in prior years, together with the number of shares subject to each award, help provide meaningful retention incentives for executives and enhance stockholder value over time.


25



At the fiscal 2014 Annual Meeting of Stockholders of the Company held on August 21, 2014, the Company’s stockholders approved the formation of the Employee Stock Purchase Plan (the “ESPP”) to provide eligible employees the opportunity to become stockholders through the purchase of shares of the Company’s common stock. The ESPP is a stockholder approved plan under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six-month offering periods. An employee’s payroll deductions under the ESPP are limited to 10% of the employee’s salary and employees may not purchase more than $25,000 of stock during any calendar year. Messrs. Bunte, Miiller, and Carolan participated in the ESPP in fiscal 2017 and received nominal benefits related to the 15% discount on the purchase price of the Company's stock.

Other benefits

Our executive officer’s participate in benefit programs that are substantially the same as all other eligible employees of our company. These benefits include a 50% matching contribution on the first 4% of eligible pay contributed to our 401(k) plan starting January 1, 2012.

Stock Ownership Guidelines

We currently require our independent directors and our CEO to acquire an equity ownership interest in our common stock within five years of the date of our adoption of the policy (or five years from the date that they first became a director or CEO, as applicable) that, in the case of the independent directors is equal to five (5) times their base annual retainer, or in the case of our CEO is equal to five (5) times the CEO’s current annual base salary. The Compensation Committee is satisfied that this level of equity ownership among our independent directors and our CEO, and the equity ownership interests of our other directors and executive officers, is sufficient to provide motivation and to align these group’s interests with those of our stockholders.

We also have a policy that prohibits employees and directors from engaging in any hedging transactions, which are transactions that allow the holder to continue to own stock but without the full risks and rewards of ownership. When the holder no longer has the full risks and/or rewards of ownership, they may no longer have the same objectives as the Company and our other stockholders, and therefore such transactions are prohibited.

Financial Restatements

The Compensation Committee has not adopted a policy with respect to whether we will make retroactive adjustments to any cash- or equity-based incentive compensation paid to executive officers (or others) where the payment was predicated upon the achievement of financial results that were subsequently the subject of a restatement. Our Compensation Committee believes that this issue is best addressed when the need actually arises and all of the facts regarding the restatement are known.

Deductibility of Executive Compensation

As part of its role, the Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Code which precludes our company from taking a tax deduction for individual compensation in excess of $1 million for our CEO and our three other highest-paid officers, other than the CFO, employed on the last day of any fiscal year. This section also provides for certain exemptions to this limitation, specifically compensation that is performance-based within the meaning of Section 162(m) of the Code.

26




Reconciliation of GAAP to Non-GAAP Financial Measures

The following table provides a reconciliation of our reported GAAP results to the non-GAAP financial measures discussed above and used in certain of our named executive officers fiscal 2017 compensation plans. The following results are based on the accounting principles that were used to prepare the fiscal 2017 consolidated financial statements included in this annual report. On April 1, 2017, we adopted Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers" on a full retrospective basis and recast our historical results. See Note 2 of the audited financial statements included in our Form 10-K for the fiscal year ended March 31, 2017 for a discussion of recently issued accounting standards.
 
 
 
Fiscal Year Ended
March 31,
 
 
2017
 
2016
 
 
(in thousands except per
share data)
Non-GAAP financial measures and reconciliation:
 
 
 
 
GAAP income from operations
 
$
229

 
$
1,999

Noncash stock-based compensation
 
73,928

 
64,196

FICA and related payroll tax expense related to equity compensation
 
1,790

 
1,151

Non-GAAP income from operations
 
$
75,947

 
$
67,346

GAAP net income
 
$
540

 
$
136

Noncash stock-based compensation
 
73,928

 
64,196

FICA and related payroll tax expense related to equity compensation
 
1,790

 
1,151

Equity in loss of affiliate
 
958

 
83

Non-GAAP provision for income taxes adjustment (1)
 
(29,240
)
 
(23,182
)
Non-GAAP net income
 
$
47,976

 
$
42,384

Diluted weighted average shares outstanding
 
46,621

 
46,498

Non-GAAP diluted net income per share
 
$
1.03

 
$
0.91

 
(1)
The provision for income taxes is adjusted to reflect Commvault’s estimated non-GAAP effective tax rate of approximately 37% in both fiscal 2017 and fiscal 2016.


27



Summary Compensation Table

The following table summarizes the compensation earned by our Principal Executive Officer, Principal Financial Officer and the other most highly paid executive officers whose total compensation exceeded $100,000. We refer to these individuals as our “named executive officers”: 
Name and Principal Position
 
Year
 
Salary
 
Stock
Awards(1)(2)
 
Stock
Options(1)
 
Non-Equity
Incentive Plan
Compensation (3)
 
All Other
Compensation
 
Total
N. Robert Hammer
 
2017
 
$
619,000

 
$
5,736,338

 
$

 
$
872,970

 
$
105,384

(4)
$
7,333,692

Chairman, President and
 
2016
 
610,000

 
2,524,189

 

 

 
105,719

 
3,239,908

Chief Executive Officer
 
2015
 
604,615

 
1,031,014

 
3,230,523

 
132,995

 
104,113

 
5,103,260

Alan G. Bunte
 
2017
 
533,000

 
2,647,557

 

 
530,000

 
20,222

(5)
3,730,779

Executive Vice President
 
2016
 
525,000

 
1,376,841

 

 
394,000

 
18,985

 
2,314,826

and Chief Operating Officer
 
2015
 
514,769

 
938,063

 
2,923,276

 
367,500

 
16,138

 
4,759,746

Brian Carolan
 
2017
 
391,000

 
1,617,185

 

 
262,000

 
17,506

(5)
2,287,691

Vice President and
 
2016
 
360,769

 
1,297,612

 

 
196,000

 
13,447

 
1,867,828

Chief Financial Officer
 
2015
 
337,615

 
686,144

 
1,069,079

 
127,500

 
12,705

  
2,233,043

Ron Miiller
 
2017
 
365,450

 
1,509,348

 

 
342,390

 

 
2,217,188

Senior Vice President of
 
2016
 
360,000

 
1,203,460

 

 
331,175

 

 
1,894,635

Worldwide Sales
 
2015
 
353,000

 
771,889

 
1,202,729

 
202,500

 

  
2,530,118

 
(1)
The amounts in these columns represent the grant date fair value of restricted stock units and non-qualified stock options granted during the fiscal year indicated as computed in accordance with FASB ASC Topic 718. The amounts shown disregard estimated forfeitures related to service-based vesting conditions. See Note 8 to the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended March 31, 2017 for a discussion of all assumptions made by us in determining the grant date fair value of such awards.
(2)
Fiscal 2017 grants include both time-based and performance-based awards. See the "Long-Term Equity Incentive Awards" section in the Compensation Discussion and Analysis for details.
(3)
The amounts reported in this column consist of awards earned in fiscal 2017 under each executive officer non-equity incentive plan compensation. The full amount of the bonus paid was performance based. Such amounts are more fully described above under the heading “Non-Equity Incentive Plan Compensation” in the Compensation Discussion and Analysis.
(4)
Mr. Hammer’s other annual compensation in fiscal 2017 included our payment of $47,630 for airfare for Mr. Hammer mainly between his residence in Florida and our headquarters in New Jersey, $30,479 related to housing costs for the rental of an apartment for Mr. Hammer in New Jersey and $27,275 for transportation related costs.
(5)
The amounts reported in this caption primarily relate to transportation related costs, and 401(k) plan company matching contributions.

Fiscal 2017 salary and non-equity incentive compensation in proportion to total compensation

The amount of salary and non-equity incentive compensation earned in fiscal 2017 in proportion to the total compensation reported for each of our named executive officers was:

N. Robert Hammer: 20%
Alan G. Bunte: 28%
Brian Carolan: 29%
Ron Miiller: 32%


28



Grants of Plan Based Awards

The following table sets forth information as to grants of awards to the named executive officers in fiscal 2017:
 
 
 
 
 
 
 
Estimated Future Payouts under
Non-Equity Incentive Plan Awards
 
All Other
Stock Awards:
Number of
Shares of
 
All Other
Options Awards:
Number of
Securities
 
Exercise or Base
Price of
Option
 
Grant Date
Fair Value
of Stock and
Name
 
Grant
Date
 
Approval
Date
 
Threshold
(1)
 
Target
(2)
 
Maximum
(3)
 
Stock or
Units(4)
 
Underlying
Options
 
Awards
($/Sh)
 
Option
Awards(5)
N. Robert Hammer
 

 

 
$
290,000

 
$
659,400

 
$

 

 

 
$

 
$

 
 
5/13/2016

 
5/13/2016

 

 

 

 
119,363

 

 

 
5,736,338

Alan G. Bunte
 

 

 

 
541,000

 

 

 

 

 

 
 
5/13/2016

 
5/13/2016

 

 

 

 
55,091

 

 

 
2,647,557

Brian Carolan
 

 

 

 
238,200

 

 

 

 

 

 
 
5/13/2016

 
5/13/2016

 

 

 

 
34,432

 

 

 
1,617,185

Ron Miiller
 

 

 
148,400

 
371,000

 
556,500

 

 

 

 

 
 
5/13/2016

 
5/13/2016

 

 

 

 
32,136

 

 

 
1,509,348

(1)
Represents the total threshold amount with respect to each applicable metric under the fiscal 2017 non-equity incentive plans for each named executive officer. Actual total pay-outs may be less than the threshold amounts above if individual thresholds are not met. Mr. Hammer’s non-equity incentive compensation plan includes individual annual threshold amounts for total revenue and non-GAAP income from operations (EBIT). Mr. Miiller’s non-equity incentive compensation plan includes individual quarterly threshold amounts for worldwide commissionable software revenue; worldwide maintenance support revenue; worldwide professional services revenue and annual attainment related to worldwide non-GAAP income from operations (EBIT). Annual non-equity incentive plans for Messrs. Bunte and Carolan do not contain threshold amounts. See “Non-Equity Incentive Plan Compensation” above for more information on the plans and performance objectives for each of our named executive officers.

(2)
We believe that our non-equity incentive plan targets are aggressive and not easy to achieve. See “Non-Equity Incentive Plan Compensation” above for more information.

(3)
Annual non-equity incentive plan awards to Messrs. Hammer, Bunte and Carolan do not contain maximum pay-outs. Messrs. Miiller is entitled to non-equity incentive plan compensation based on tiered plans that contain maximum pay-outs. See “Non-Equity Incentive Plan Compensation” above for more information on the plan for each of our named executive officers.

(4)
Amounts in this column reflect restricted stock units granted during fiscal 2017 to a named executive officer under our 2016 Incentive Plan.

(5)
The amounts in theses column represent the grant date fair value of restricted stock units and non-qualified stock options granted during the fiscal year indicated as computed in accordance with FASB ASC Topic 718. The amounts shown disregard estimated forfeitures related to service-based vesting conditions. See Note 8 to the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for a discussion of all assumptions made by us in determining the grant date fair value of such awards.


29




Outstanding Equity Awards at Fiscal Year End

The following table reflects all outstanding equity awards held by the named executive officers as of March 31, 2017:

 
 
 
Option Awards
 
Stock Awards
Name
Grant Date (1)
 
Number of
Securities
Underlying
Unexercised
Options
(Exercisable)
 
Number of
Securities
Underlying
Unexercised
Options
(Unexercisable)
 
Option
Exercise
Price
 
Option
Expiration
Date
 
Number of
Shares or
Units of Stock
That Have
Not Vested
 
Market
Value of
Shares or
Units of
Stock That
Have
Not
Vested (2)
N. Robert Hammer
3/14/2008
 
187,502

 

 
13.81

 
3/14/2018

 

 

 
12/12/2008
 
180,000

 

 
11.12

 
12/12/2018

 

 

 
12/14/2009
 
84,154

 

 
22.59

 
12/14/2019

 

 

 
10/14/2010
 
158,730

 

 
26.83

 
10/14/2020

 

 

 
10/14/2011
 
218,750

 

 
41.55

 
10/14/2021

 

 

 
10/12/2012
 
190,857

 

 
56.57

 
10/12/2022

 
 
 

 
10/14/2013
 
157,567

 
36,362

 
87.20

 
10/14/2023

 
6,060

 
307,848

 
10/14/2014
 
52,875

 
41,125

 
45.44

 
10/14/2024

 

 

 
3/31/2015
 
13,378

 
10,402

 
44.13

 
3/31/2025

 
2,219

 
112,725

 
10/15/2015
 

 

 

 

 
39,933

 
2,028,596

 
5/13/2016
 

 

 

 

 
119,363

 
6,063,640

Alan G. Bunte
5/22/2007
 
34,607

 

 
16.99

 
5/22/2017

 

 

 
3/14/2008
 
100,001

 

 
13.81

 
3/14/2018

 

 

 
12/12/2008
 
135,000

 

 
11.12

 
12/12/2018

 

 

 
12/14/2009
 
64,167

 

 
22.59

 
12/14/2019

 

 

 
10/14/2010
 
139,683

 

 
26.83

 
10/14/2020

 

 

 
10/14/2011
 
145,714

 

 
41.55

 
10/14/2021

 

 

 
10/12/2012
 
152,550

 

 
56.57

 
10/12/2022

 

 

 
 3/14/2013
 
65,000

 

 
77.57

 
3/14/2023

 

 

 
10/14/2013
 
128,918

 
29,751

 
87.20

 
10/14/2023

 
4,959

 
251,917

 
10/14/2014
 
69,674

 
54,191

 
45.44

 
10/14/2024

 
9,032

 
458,826

 
10/15/2015
 

 

 

 

 
21,783

 
1,106,576

 
5/13/2016
 

 

 

 

 
55,091

 
2,798,623

Brian Carolan
3/14/2008
 
10,500

 

 
13.81

 
3/14/2018

 

 

 
12/12/2008
 
19,636

 

 
11.12

 
12/12/2018

 

 

 
12/14/2009
 
10,940

 

 
22.59

 
12/14/2019

 

 

 
10/14/2010
 
23,937

 

 
26.83

 
10/14/2020

 

 

 
1/14/2011
 
6,897

 

 
30.26

 
1/14/2021

 

 

 
10/14/2011
 
22,500

 

 
41.55

 
10/14/2021

 

 

 
10/12/2012
 
35,256

 

 
56.57

 
10/12/2022

 

 

 
3/14/2013
 
12,000

 

 
77.57

 
3/14/2023

 

 

 
10/14/2013
 
36,669

 
8,463

 
87.20

 
10/14/2023

 
2,821

 
143,307

 
10/14/2014
 
25,481

 
19,818

 
45.44

 
10/14/2024

 
6,607

 
335,636

 
10/15/2015
 

 

 

 

 
19,624

 
996,899

 
5/13/2016
 

 

 

 

 
34,432

 
1,749,146


30



 
 
 
Option Awards
 
Stock Awards
Name
Grant Date (1)
 
Number of
Securities
Underlying
Unexercised
Options
(Exercisable)
 
Number of
Securities
Underlying
Unexercised
Options
(Unexercisable)
 
Option
Exercise
Price
 
Option
Expiration
Date
 
Number of
Shares or
Units of Stock
That Have
Not Vested
 
Market
Value of
Shares or
Units of
Stock That
Have
Not
Vested (2)
Ron Miiller
12/12/2008
 
22,500

 

 
11.12

 
12/12/2018

 

 

 
12/14/2009
 
23,731

 

 
22.59

 
12/14/2019

 

 

 
10/14/2010
 
44,762

 

 
26.83

 
10/14/2020

 

 

 
4/14/2011
 
12,000

 

 
38.74

 
4/14/2021

 

 

 
10/14/2011
 
47,250

 

 
41.55

 
10/14/2021

 

 

 
10/12/2012
 
48,816

 

 
56.57

 
10/12/2022

 

 

 
3/14/2013
 
25,000

 

 
77.57

 
3/14/2023

 

 

 
10/14/2013
 
45,838

 
10,578

 
87.20

 
10/14/2023

 
3,526

 
179,121

 
10/14/2014
 
28,667

 
22,295

 
45.44

 
10/14/2024

 
7,432

 
377,546

 
10/15/2015
 

 

 

 

 
18,124

 
920,699

 
5/13/2016
 

 

 

 

 
32,136

 
1,632,509

(1)
Unless otherwise indicated, all stock option and restricted stock unit awards granted to named executive officers vest quarterly in equal installments over a three or four-year period, except that the shares that would otherwise vest quarterly over the first twelve months do not vest until the first anniversary of the grant. The vesting commencement date for all stock options and restricted stock units is the grant date.
(2)
Computed based on the number of unvested shares multiplied by the closing market price of our common stock at the end of fiscal year 2017. The actual value (if any) to be realized by the named executive officer depends on whether the shares vest and the future performance of our common stock. On March 31, 2017, the closing price of our common stock was $50.80 per share.

Option Exercises and Stock Vested

The following table sets forth information on the number and value of stock options exercised and restricted stock units vested during fiscal 2017 for the named executive officers.
 
 
 
Option Awards
 
Stock Awards
Name
 
Number of Shares
Acquired on
Exercise
 
Value Realized
on
Exercise (1)
 
Number of
Shares  Acquired
on Vesting
 
Value Realized
on
Vesting (2)
N. Robert Hammer
 

 
$

 
53,364

 
$
2,755,633

Alan G. Bunte
 
50,000

 
1,650,500

 
36,423

 
1,861,451

Brian Carolan
 
37,508

 
1,290,727

 
27,750

 
1,433,546

Ron Miiller
 
52,879

 
1,821,253

 
28,709

 
1,472,525

(1)
The value realized on the exercise of stock options is based on the difference between the exercise price and the sale price of common stock at the time of exercise.
(2)
The value realized on the vesting of restricted stock units is based on the market price of our common stock on the day that the restricted stock vested.

Pension Benefits

None of our named executive officers participate in or have account balances in qualified or non-qualified defined benefit plans sponsored by us.

Nonqualified Deferred Compensation

None of our named executive officers participate in or have account balances in non-qualified defined contribution plans maintained by us.

31




Employment Agreements

In February 2004, we entered into an employment agreement with N. Robert Hammer. The agreement had an initial term ending on March 31, 2005 and automatically extends for additional one-year terms unless either party elects, at least 30 days prior to the expiration of a term, to terminate the agreement. The agreement provides that Mr. Hammer’s annual salary shall be subject to annual review by our Board of Directors. The agreement also provides that Mr. Hammer shall be eligible for annual non-equity incentive plan compensation with a target bonus potential equal to a percentage of his base salary and that he shall be entitled to participate in the employee benefits plans in which our other executives may participate. If we terminate Mr. Hammer’s employment for any reason other than cause, death or upon a change in control of our company, the agreement provides that, for a one-year period, Mr. Hammer will be entitled to receive his then-current base salary (either in equal bi-weekly payments or a lump sum payment, at our discretion) and we will be required to continue paying the premiums for Mr. Hammer’s and his dependents’ health insurance coverage. In addition, Mr. Hammer will be entitled to any other amounts or benefits previously accrued under our then applicable employee benefit plans, incentive plans or programs. If we terminate Mr. Hammer’s employment by reason of death or disability, Mr. Hammer will be entitled to any compensation earned but not yet paid. The agreement provides that, during his term of employment with us and for a period of one year following any termination of employment with us, Mr. Hammer may not participate, directly or indirectly, in any capacity whatsoever, within the United States, in a business in competition with us, other than beneficial ownership of up to one percent of the outstanding stock of a publicly held company. In addition, Mr. Hammer may not solicit our employees or customers for a period of one year following any termination of his employment with us. Mr. Hammer’s employment agreement also contains a change in control provision which is discussed below in the section titled “Change in Control Agreements.”

Mr. Hammer has maintained his primary residence in the state of Florida since he began serving as our Chairman, President and Chief Executive Officer in 1998. Mr. Hammer’s position with us is his only full time employment. Mr. Hammer generally spends his time working for us in our office in Tinton Falls, New Jersey or traveling on business for us. He is generally in Tinton Falls when not traveling on business. As part of his annual compensation, we pay costs associated with Mr. Hammer’s travel between his residence in Florida and our headquarters in New Jersey and we also lease an apartment for Mr. Hammer’s use in New Jersey. See “Summary Compensation Table” for more information. The members of the Compensation Committee consider these costs in reviewing the annual compensation of Mr. Hammer. We do not believe that Mr. Hammer’s Florida residency has had a negative impact on the quality of his service to us or on his ability to meet his obligations as Chairman, President and Chief Executive Officer in the past and we do not anticipate that his Florida residency will have any negative impact on us in the future.

In February 2004, we entered into employment agreements with Alan G. Bunte. This agreement had an initial term ending on March 31, 2005 and automatically extends for additional one-year terms unless either party to the agreement elects, at least 30 days prior to the expiration of a term, to terminate the agreement. The agreement with Mr. Bunte provides that his annual salary shall be subject to annual review by our chief executive officer or his designee, and also provides that he shall be eligible for annual non-equity incentive plan compensation with a target bonus potential equal to a percentage of Mr. Bunte’s base salary. The agreement with Mr. Bunte provides that he shall be entitled to participate in the employee benefits plans in which our other executives may participate. If we terminate the employment of Mr. Bunte for any reason other than for cause or death, the agreement provides that, for a one-year period, Mr. Bunte will be entitled to receive his then-current base salary (either in equal bi-weekly payments or a lump sum payment, at our discretion) and we will be required to continue paying the premiums for his and his dependents’ health insurance coverage. In addition, Mr. Bunte will be entitled to any other amounts or benefits previously accrued under our then applicable employee benefit plans, incentive plans or programs. If we terminate Mr. Bunte’s employment by reason of death or disability, he will be entitled to any compensation earned but not yet paid. The agreement provides that, during his term of employment with us and for a period of one year following any termination of employment with us, Mr. Bunte may not participate, directly or indirectly, in any capacity whatsoever, within the United States, in a business in competition with us, other than beneficial ownership of up to one percent of the outstanding stock of a publicly held company. In addition, Mr. Bunte may not solicit our employees or customers for a period of one year following any termination of employment with us.

Change in Control Agreements

Mr. Hammer’s employment agreement provides that if a change in control of our company occurs, all equity awards held by Mr. Hammer shall immediately become exercisable or vested. If a change in control of our company occurs and Mr. Hammer’s employment is terminated for reasons other than for cause (other than a termination resulting from a disability) within two years of the change in control, or if Mr. Hammer terminates his employment within 60 days of a material diminution in his salary or duties or the relocation of his employment within two years following a change in control of our company, then he shall be entitled to (1) a lump sum severance payment equal to one and a half times his base salary at the time of the change in control plus an amount equal to Mr. Hammer’s target bonus at the time of the change in control, and (2) health insurance coverage for Mr. Hammer and his dependents for an 18 month period.

32




We have entered into change of control agreements with all of our executive officers, other than Mr. Hammer, whose employment agreement sets forth the protections upon a change of control described above. Each of these agreements provide that if a change in control of our company occurs and the employment of any of the officers is terminated for reasons other than for cause, or if the officer terminates his employment within 60 days of a material diminution in his salary or duties or the relocation of his employment following a change in control of our company, then all equity awards held by the officer shall immediately become exercisable or vested. In addition, the change of control agreement with Mr. Bunte provides that if a change in control of our company occurs and the employment of Mr. Bunte is terminated for reasons other than for cause within two years of the change in control, or if Mr. Bunte terminates his employment within 60 days of a material diminution in his salary or duties or the relocation of his employment within two years following a change in control of our company, then Mr. Bunte shall be entitled to (1) a lump sum severance payment equal to one and a half times the sum of his annual base salary at the time of the change in control and all bonus payments made to him during the one-year period preceding the date of the change in control, and (2) health insurance coverage for him and his dependents for an 18 month period. The change of control agreements with Messrs. Carolan, and Miiller have substantially identical provisions that provide for a lump sum severance payment equal to the officer’s annual base salary at the time of the change in control and health insurance coverage for the officer and his dependents for a 12 month period.

The change of control agreement with Mr. Bunte provides that, for an 18 month period following the termination of employment, Mr. Bunte may not engage in, or have any interest in, or manage or operate any company or other business (whether as a director, officer, employee, partner, equity holder, consultant or otherwise) that engages in any business which then competes with any of our businesses, other than beneficial ownership of up to five percent of the outstanding voting stock of a publicly traded company. The agreement also prohibits Mr. Bunte from inducing any of our employees to terminate their employment with us or to become employed by any of our competitors during the 18 month period. Messrs. Carolan, and Miiller are subject to substantially identical non-competition and non-solicitation provisions for a one-year period following the termination of employment.


33



Estimated Payments and Benefits upon Termination or Change in Control

The amount of compensation and benefits payable to each named executive officer has been estimated in the table below. The amounts below assume that such termination was effective as of March 31, 2017, the last day of our fiscal year. The actual amounts to be paid out can only be determined at the time of such executive’s separation from us.
 
 
 
Compensation
 
 
 
 
 
 
Base Salary
 
Non-Equity
Incentive  Plan
 
Accelerated
Vesting of  Stock
Options(1)
 
Accelerated
Vesting of
Restricted Stock
Units(2)
 
Continuation of
Medical  Benefits
(Present Value)
 
Total
Compensation
and
Benefits
N. Robert Hammer
 
 
 
 
 
 
 
 
 
 
 
 
Death
 
$

 
$

 
$

 
$

 
$

 
$

Disability
 

 

 

 

 

 

Involuntary termination without cause or by non-extension of employment term
 
628,000

 

 

 

 
8,600

 
636,600

Change in Control
 
942,000

 
628,000

 

 
4,906,406

 
12,800

 
6,489,206

Alan G. Bunte
 
 
 
 
 
 
 
 
 
 
 
 
Death
 

 
530,000

 

 

 

 
530,000

Disability
 

 
530,000

 

 

 

 
530,000

Involuntary termination without cause or by non-extension of employment term
 
541,000

 
530,000

 

 

 
8,600

 
1,079,600

Change in Control
 
811,500

 
394,000

 

 
3,229,376

 
12,800

 
4,447,676

Brian Carolan
 
 
 
 
 
 
 
 
 
 
 
 
Death
 

 

 

 

 

 

Disability
 

 

 

 

 

 

Involuntary termination without cause or by non-extension of employment term
 

 

 

 

 

 

Change in Control
 
397,000

 

 

 
3,229,376

 
29,200

 
3,655,576

Ron Miiller
 
 
 
 
 
 
 
 
 
 
 
 
Death
 

 

 

 

 

 

Disability
 

 

 

 

 

 

Involuntary termination without cause or by non-extension of employment term
 

 

 

 

 

 

Change in Control
 
371,000

 

 

 
3,331,212

 
29,300

 
3,731,512

 
(1)
Amounts in this column describe the value of stock options that would vest upon the triggering event described in the leftmost column. The value of stock options is based on the difference between the exercise price of the options and the $50.80 closing price of our common stock on March 31, 2017.
(2)
Amounts in this column describe the value of restricted stock units that would vest upon the triggering event described in the leftmost column, based on a closing price of $50.80 of our common stock on March 31, 2017.

None of the named executive officers are eligible for compensation and benefits payable upon involuntary termination for cause or voluntary resignation or retirement and therefore such descriptions have been excluded from the table above. In addition, the amounts shown in the table above do not include payments and benefits to the extent they are provided on a non-discriminatory basis to salaried employees generally upon termination, such as any unreimbursed business expenses payable and distributions of plan balances under the Commvault Systems, Inc. 401(k) plan.

34




Director Compensation

Our Compensation Committee of the Board of Directors determines the amount of any fees, whether payable in cash, shares of common stock or options to purchase common stock and expense reimbursement that directors receive for attending meetings of the Board of Directors or committees of the Board of Directors.

During fiscal 2017, our Compensation Committee engaged a third party compensation consultant, Compensia, to provide an assessment of our non-employee director compensation practices and also provided peer analysis information for structuring our director compensation practices related to cash compensation, equity compensation and equity vesting. The peer analysis was based on the same 21 technology and related industry companies described above in the Compensation Discussion and Analysis section heading “Peer Analysis of Executive Compensation”. Based on the results of the peer analysis, we believe that Commvault’s director annual compensation is at the 50th percentile of the peer compensation data.

Cash compensation earned by non-employee directors for their services as members of the Board of Directors or any committee of the Board of Directors was as follows:

Annual retainer of $42,000 with an additional $2,000 for each board meeting attended;

The chairperson of our Audit Committee, Compensation Committee and Nominations and Governance Committee receive an additional annual retainer of $30,000, $20,000 and $12,000, respectively;

The lead director receives an additional annual retainer of $20,000; and

Each committee member of the Audit Committee, Compensation Committee and Nominations and Governance Committee receives an additional annual retainer of $15,000, $10,000 and $5,000, respectively.

Non-employee directors are also eligible to receive equity compensation under our 2016 Incentive Plan in which that all equity awards granted to non-employee directors will generally cliff vest, with the entire award vesting one year from the date of grant. In fiscal 2017, we made an equity grant to our non-employee directors in October 2016 related to our fiscal 2017 award. This equity grant consists of 3,888 restricted stock units to each non-employee director in which the entire award will cliff vest in August 2017. See “Long-Term Equity Incentive Awards” in the Compensation Discussion and Analysis above for more information about this plan. We also reimburse all of our directors for their reasonable expenses incurred in attending meetings of our board or committees.

The following table sets forth information concerning the compensation received for services rendered to us by our directors in fiscal 2017:
 
Name
 
Fees Earned or
Paid in Cash
 
Stock Awards
(1)
 
Total
Joseph F. Eazor(2)
 
$
66,250

 
$
208,241

 
$
274,491

Frank J. Fanzilli, Jr.(3)
 
62,000

 
208,241

 
270,241

Armando Geday(4)
 
62,000

 
208,241

 
270,241

Keith Geeslin(5)
 
70,000

 
208,241

 
278,241

F. Robert Kurimsky(6)
 
72,000

 
208,241

 
280,241

Daniel Pulver(7)
 
92,000

 
208,241

 
300,241

Gary B. Smith(8)
 
64,000

 
208,241

 
272,241

David F. Walker(9)
 
87,000

 
208,241

 
295,241

 
(1)
The amounts in theses column represent the grant date fair value of restricted stock units granted during the fiscal year indicated as computed in accordance with FASB ASC Topic 718. The amounts shown disregard estimated forfeitures related to service-based vesting conditions. See Note 7 to the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for a discussion of all assumptions made by us in determining the grant date fair value of such awards.
(2)
Mr. Eazor has 3,888 restricted stock units outstanding as of March 31, 2017.
(3)
Mr. Fanzilli has 35,750 stock options and 3,888 restricted stock units outstanding as of March 31, 2017.

35



(4)
Mr. Geday has 58,250 stock options and 3,888 restricted stock units outstanding as of March 31, 2017.
(5)
Mr. Geeslin has 24,500 stock options and 3,888 restricted stock units outstanding as of March 31, 2017.
(6)
Mr. Kurimsky has a total of 50,750 stock options and 3,888 restricted stock units outstanding as of March 31, 2017.
(7)
Mr. Pulver has a total of 43,250 stock options and 3,888 restricted stock units outstanding as of March 31, 2017.
(8)
Mr. Smith has 50,750 stock options and 3,888 restricted stock units outstanding as of March 31, 2017.
(9)
Mr. Walker has 39,500 stock options and 3,888 restricted stock units outstanding as of March 31, 2017.

Compensation Policies and Practices as They Relate to Risk Management

We have reviewed our compensation policies and practices for all employees and concluded that any risks arising from our policies and practices are not reasonably likely to have a material adverse effect on us.

Employee Benefit Plans

2016 Omnibus Incentive Plan

On August 18, 2016, the Company's stockholders approved the 2016 Incentive Plan. The 2016 Incentive Plan permits the grant of incentive stock options, non-qualified stock options, stock appreciation rights, full value awards (including restricted stock awards, restricted stock units (including performance-based stock units) and, performance stock awards) based on, or related to, shares of the Company’s common stock and cash incentive awards which are contingent on performance.

Our Compensation Committee administers our 2016 Incentive Plan. The 2016 Incentive Plan essentially gives the Compensation Committee sole discretion and authority to select those persons to whom awards will be made, to determine the type of awards that will be made, to designate the number of shares covered by each award, to establish vesting schedules and terms of each award, to specify all other terms of awards and to interpret the 2016 Incentive Plan.

Options awarded under the 2016 Incentive Plan may be either incentive stock options or nonqualified stock options, but incentive stock options may only be awarded to our employees. Incentive stock options are intended to satisfy the requirements of Section 422 of the Internal Revenue Code. Nonqualified stock options are not intended to satisfy Section 422 of the Internal Revenue Code. Stock appreciation rights may be granted in connection with options or as free-standing awards. Exercise of an option will result in the corresponding surrender of the attached stock appreciation right (and vice versa). The exercise price of an option or stock appreciation right must be at least equal to the fair market value of a share of common stock on the date of grant (or, if greater, the part value of a share on the date of grant). Options and stock appreciation rights will be exercisable in accordance with the terms set by the Compensation Committee when granted and will expire on the date determined by the Compensation Committee, but in no event later than the tenth anniversary of the grant date; provided, however, that, with limited exceptions, the minimum vesting period for a stock option under the 2016 Incentive Plan is one year. If a stock appreciation right is issued in connection with an option, the stock appreciation right will expire when the related option expires (and vice versa). Special rules and limitations apply to stock options which are intended to be incentive stock options.

Under the 2016 Incentive Plan, our Compensation Committee may grant full value awards to participants. A full value award entitles the participant to receive a full share of our common stock (or the equivalent value in cash), either upon grant or at the end of a specified period or based on satisfaction of performance conditions. Full value awards that can be granted under the 2016 Incentive Plan include awards such as restricted stock, restricted stock units (including performance stock units), and performance stock awards,. In the discretion of the committee, full value awards issued pursuant to the 2016 Incentive Plan may be subject to vesting or other restrictions. Participants may receive dividends relating to their shares issued pursuant to the 2016 Incentive Plan; provided, however, that, with limited exceptions, the minimum vesting period for a full value award under the 2016 Incentive Plan is one year.

Our Compensation Committee determines the treatment of awards in the event of a change in control of our company or other corporate events affecting our common stock, such as stock dividends, stock splits, recapitalizations, mergers, and similar transactions. The Compensation Committee may make equitable adjustments to the number and kind of shares subject to awards and the exercise price of an award, can provide for replacement of awards or cancellation of awards and any other adjustments determined by the committee. In the event of a change in control of company, unless otherwise determined by the Committee, outstanding awards under the 2016 Incentive Plan will vest and become payable, subject to certain limitations, in the event the participant’s service is involuntarily terminated other than for cause within two years following the change in control.


36



Employee Stock Purchase Plan

The ESPP is a stockholder approved plan under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six-month offering periods. An employee’s payroll deductions under the ESPP are limited to 10% of the employee’s salary and employees may not purchase more than $25,000 of stock during any calendar year. As of March 31, 2017, 2.4 million shares were reserved for future issuance under the Purchase Plan.

COMPENSATION COMMITTEE REPORT
Commvault Systems, Inc.
Compensation Committee
Report On Executive Compensation

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our company’s annual report on Form 10-K for the year ended March 31, 2017 and in this proxy statement.
Compensation Committee
Keith Geeslin— Chairman
Frank J. Fanzilli, Jr.
Armando Geday

37



AUDIT COMMITTEE REPORT
General
The Audit Committee comprises four directors and operates under a written charter for the Audit Committee. All of the members of the Audit Committee meet the definition of independent for purposes of the Nasdaq listing standards. In addition, our Board of Directors has determined that Messrs. Walker and Eazor qualify as an “audit committee financial expert” under the applicable SEC rules and all of the members of Audit Committee satisfy Nasdaq’s financial literacy requirements.
Report
The Audit Committee has furnished the following report:
The Audit Committee has reviewed and discussed the audited financial statements of our company for the fiscal year ended March 31, 2017 with our management. In addition, the Audit Committee has discussed with Ernst & Young LLP, our independent auditors (“Ernst & Young”), the matters required to be discussed under Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 16, Communications with Audit Committees (AS 16).
The Audit Committee has also received from the independent auditors written disclosures regarding the auditors’ independence required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, and has discussed with the independent auditors, the independent auditors’ independence.
The Audit Committee has considered whether the services rendered by our independent public accountants with respect to audit, audit-related, tax and other non-audit fees are compatible with maintaining their independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements for our company for the fiscal year ended March 31, 2017 be included in our Annual Report on Form 10‑K for the fiscal year ended March 31, 2017 for filing with the SEC.
 
Audit Committee
David F. Walker — Chairman
Joseph F. Eazor
F. Robert Kurimsky
Daniel Pulver


38



PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS

Financial statements of our company and our consolidated subsidiaries will be included in our Annual Report furnished to all stockholders. The Audit Committee of the Board of Directors has appointed Ernst & Young LLP (“Ernst & Young”) as independent public accountants for us to examine our consolidated financial statements for the fiscal year ending March 31, 2018, and has determined that it would be desirable to request that the stockholders ratify the appointment. You may vote for, vote against or abstain from voting with respect to this proposal. Assuming the presence of a quorum, the affirmative vote of a majority of the votes cast, in person or by proxy, at the Annual Meeting is required to ratify the appointment. If the stockholders do not ratify the appointment, the Audit Committee will reconsider the appointment for the 2019 fiscal year, rather than the 2018 fiscal year, because of the difficulty and expense involved in changing independent auditors on short notice. Ernst & Young was engaged as our principal independent public accountants for fiscal years 1998 through 2017. Representatives of Ernst & Young are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are also expected to be available to respond to appropriate questions.
Audit, Audit-Related, Tax and All Other Fees
The following table summarizes the aggregate fees and expenses billed to us for the fiscal years ended March 31, 2017 and 2016 by our principal accounting firm, Ernst & Young:
 
 
 
2017
 
2016
 
 
(In thousands)
Audit fees
 
$
1,938

 
$
1,650

Audit-related fees
 
7

 
3

Tax fees
 
655

 
628

All other fees
 

 

 
 
$
2,600

 
$
2,281


Audit Fees - all services necessary to perform an audit of the consolidated financial statements of our company; the reviews of our company’s quarterly reports on Form 10-Q; services in connection with statutory and regulatory filings or engagements; comfort letters; statutory audits; consents and review of documents filed with the SEC. Audit fees also includes services related to our early adoption of the new revenue standard on April 1, 2017.
Audit Related Fees - XBRL filing services and subscription to EY Online Research Tool.
Tax Fees - tax compliance; tax planning; and other tax advice.
All Other Fees - any other work that is not Audit, Audit-Related or a Tax Service.
In considering the nature of the services provided by Ernst & Young, the Audit Committee determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed these services with Ernst & Young and our management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as by the American Institute of Certified Public Accountants.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Auditor
The audit committee is responsible for appointing, setting compensation and overseeing the work of the independent auditor. The Audit Committee has established a policy regarding pre-approval of permissible non-audit services provided by the independent auditor. Generally, pre-approvals may be made by the chairperson of the Audit Committee in accordance with the rules of the Securities and Exchange Commission. All of the services performed by Ernst & Young in the year ended March 31, 2017 were pre-approved in accordance with the pre-approval policy adopted by the Audit Committee.
The Board of Directors recommends that you vote FOR this proposal.


39



PROPOSAL NO. 3
APPROVAL OF THE OMNIBUS INCENTIVE PLAN, AS AMENDED BY THE FIRST AMENDMENT
The Board recommends approval of the Company’s Omnibus Incentive Plan (the “2016 Incentive Plan”) as amended by the First Amendment (the “First Amendment”).
Our Board of Directors believes it is important for employees to have an equity interest in the Company, and is recommending the 2016 Incentive Plan as amended by the First Amendment to stockholders for approval so that the 2016 Incentive Plan can continue to operate. Increasing the number of Common Stock available for issuance is necessary to ensure that we have a sufficient number of Common Stock available for issuance under the 2016 Incentive Plan and to accommodate the increased number of eligible participants.
The First Amendment increases the number of Common Stock reserved for delivery under the 2016 Incentive Plan by 750,000 shares of Common Stock. The First Amendment does not amend or replace any other provisions of the 2016 Incentive Plan. The First Amendment will become effective upon stockholder approval.
The following summary of the 2016 Incentive Plan is qualified in its entirety by the complete text of the amended and restated 2016 Incentive Plan contained in Exhibit 1 to the proxy.
Background

We previously maintained the Commvault Systems, Inc. 1996 Stock Option Plan and 2006 Long-Term Stock Incentive Plan (the “LTIP”, and together with the 1996 Stock Option Plan, the “Prior Plans”). Following approval of the 2016 Incentive Plan, no additional awards were made under the Prior Plans. The Board has directed that the 2016 Incentive Plan, as amended by the First Amendment, be included in the proxy for stockholder approval in order to have in place sufficient shares to award under a plan that includes provisions that are currently common in the market and to enable us to grant a broader spectrum of awards that are performance-based for purposes of section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Except as otherwise expressly indicated, the description of the 2016 Incentive Plan below refers to the 2016 Incentive Plan as amended by the First Amendment.
Section 162(m) of the Code provides that certain compensation in excess of $1 million that is paid to the chief executive officer and the next three most highly paid officers of a public company (other than the chief financial officer) is not deductible. Compensation which constitutes “performance-based compensation” within the meaning of Section 162(m) generally is not subject to the foregoing limitations. In order to constitute “performance-based compensation,” our stockholders must approve the material terms of the plan pursuant to which the compensation is granted and certain other requirements must be met. The 2016 Incentive Plan includes terms that enable us to grant performance-based compensation within the meaning of Section 162(m). We are not requesting that our stockholders approve the Plan for purposes of Section 162(m) at this time.
As of the date of this proxy statement 1,526,000 shares have been awarded under the 2016 Incentive Plan. The 2016 Incentive Plan originally reserved a total of 2,800,000 shares of Common Stock. The First Amendment will increase the number of shares available for issuance under the 2016 Incentive Plan by 750,000 for a total of 3,550,000 shares of Common Stock. The 2016 Incentive Plan authorizes a broad range of awards including stock options (“Options”), stock appreciation rights (“SARs”), Full Value Awards (as more fully described below, including restricted stock, restricted stock units (“RSUs”) (including performance stock units), performance shares, and other stock-based awards) and cash-based awards. A person who has been granted an award under the 2016 Incentive Plan is referred to herein as a “Participant” in the 2016 Incentive Plan.
The 2016 Incentive Plan is not qualified under Section 401(a) of the Code, or, except for the deferred delivery of shares of Common Stock, subject to any provision of the Employee Retirement Income Security Act of 1974, as amended.
On June 30, 2017, the last reported sale price of our Common Stock on the NASDAQ stock market was $56.45 per share.

40



Key Data

The following table includes information regarding outstanding equity awards and shares available for future awards under our Prior Plans as of May 31, 2017:
Options Outstanding
5,098,000

Non-Vested Time Vesting Restricted Stock Units
2,011,000

Performance-based Stock Units Outstanding
421,000

Shares Available for Grant
1,287,000

Weighted Average Exercise Price of Outstanding Options
$45.51
Weighted Average Remaining Term of Options Outstanding
4.70



The following table summarizes our equity usage during the three most recent fiscal years:
Time Period
Time Vesting RSUs Granted
Stock Options Granted
Performance-based Stock Units Granted
Performance-based Stock Units Earned
Weighted Average Common Shares Outstanding (Diluted)
Fiscal 2017
1,052,000
238,000
43,000
46,621,000
Fiscal 2016
1,410,000
148,000
133,000
46,489,000