UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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AVAYA HOLDINGS CORP.
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2605 Meridian Parkway, Suite 200
Durham, North Carolina 27713
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 3, 2021
To the Stockholders of Avaya Holdings Corp.:
The Annual Meeting of Stockholders (the Annual Meeting) of Avaya Holdings Corp. (the Company or Avaya) will be held virtually via live webcast at www.virtualshareholdermeeting.com/AVYA2021 on Wednesday, March 3, 2021, at 10:30 a.m. Eastern time. You will be able to attend the meeting online and submit questions during the meeting by visiting the website listed above. You will also be able to vote your shares electronically at the Annual Meeting. The meeting will be held online only, and will be held for the following purpose:
1. | To elect eight directors, each to serve until the next Annual Meeting or until his or her successor is duly elected and qualified; |
2. | To ratify the appointment of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for the fiscal year ending September 30, 2021; |
3. | To approve, on an advisory basis, the Companys named executive officers compensation; and |
4. | To transact any other business as may properly come before the 2021 Annual Meeting and any adjournment or postponement thereof. |
The foregoing items of business are more fully described in the Proxy Statement accompanying this notice. The Companys board of directors (the Board) has fixed the close of business on January 4, 2021 as the record date for determining stockholders of the Company entitled to receive notice of and vote at the Annual Meeting and any adjournment or postponement thereof.
The Proxy Statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully.
By Order of the Board of Directors,
Shefali Shah
Executive Vice President,
Chief Administrative
Officer and General Counsel
January 19, 2021
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to be Held on March 3, 2021
The Notice of Annual Meeting, Proxy Statement and Form of Proxy are first being distributed and made available on or about January 19, 2021 to all stockholders entitled to vote at the Annual Meeting. This Proxy Statement and the enclosed Form of Proxy, the Notice of Annual Meeting of Stockholders, and the Companys 2020 Annual Report are available on the Internet at http://materials.proxyvote.com/05351X, as well as at the Annual Meeting website referenced below.
Virtual Meeting Admission
Stockholders of record as of January 4, 2021 will be able to participate in the Annual Meeting by visiting our Annual Meeting website at www.virtualshareholdermeeting.com/AVYA2021. To participate in the Annual Meeting, you will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials.
The Annual Meeting will begin promptly at 10:30 a.m. Eastern time on Wednesday, March 3, 2021. Online check-in will begin at 10:15 a.m. Eastern time, and you should allow approximately 15 minutes for the online check-in procedures.
Voting. Whether or not you plan to virtually attend the Annual Meeting and regardless of the number of shares of the Companys Common Stock that you own, please cast your vote, at your earliest convenience, as instructed in the proxy card. Your vote is very important. Your vote before the Annual Meeting will ensure representation of your shares at the Annual Meeting even if you are unable to virtually attend. You may submit your vote by the Internet, telephone, mail or in person by participating virtually in the meeting. Voting over the Internet or by telephone is fast and convenient, and your vote is immediately confirmed and tabulated. By using the Internet or telephone, you help us reduce postage, printing and proxy tabulation costs. We encourage all holders of record to vote in accordance with the instructions on the proxy card and/or voting instruction form prior to the Annual Meeting even if they plan on virtually attending the meeting. Submitting a vote before the Annual Meeting will not preclude you from voting your shares at the meeting should you decide to virtually attend. You may vote using the following methods:
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Prior to the Annual Meeting, visit the website listed on your proxy card/voting instruction form to vote via the Internet. | |
During the Annual Meeting, visit our Annual Meeting website at www.virtualshareholdermeeting.com/AVYA2021. | ||
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Sign, date and return your proxy card/voting instruction form to vote by mail. | |
Call the telephone number on your proxy card/voting instruction form to vote by telephone. |
PROXY SUMMARY |
This summary highlights certain information contained in the Proxy Statement. This summary does not contain all the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information regarding the Companys performance in the fiscal year which ended on September 30, 2020 (Fiscal 2020), please review the Companys Annual Report on Form 10-K for the year ended September 30, 2020 (the Form 10-K) that accompanied this Proxy Statement.
2021 Annual Meeting Overview
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Date and Time
March 3, 2021 at 10:30 a.m., Eastern time |
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Place Virtually via webcast
Participate in the Annual Meeting by visiting our Annual Meeting website at www.virtualshareholdermeeting.com/AVYA2021 |
There will not be a physical meeting in North Carolina, New York or anywhere else.
Record Date January 4, 2021 |
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Voting
Stockholders of record as of the close of business on the record date are entitled to vote for each director nominee and for each of the other proposals to be voted on at the 2021 Annual Meeting. Each share of Common Stock of the Company (Common Stock) is entitled to one vote. Each share of Series A Convertible Preferred Stock of the Company (Series A Stock) is entitled to one vote for each share of Common Stock that would be issuable upon conversion of such Series A Stock immediately prior to the record date. |
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Virtual Stockholder Meeting
Our 2021 Annual Meeting will be conducted exclusively online via live webcast, allowing all of our stockholders the option to participate in the live, online meeting from any location convenient to them, providing stockholder access to our Board and management, and enhancing participation. Stockholders at the close of business on January 4, 2021 will be allowed to communicate with us and ask questions in our virtual stockholder meeting forum before and during the meeting. All directors and key executive officers are expected to be available to answer questions. For further information on the virtual meeting, please see the Proxy and Voting Information section in this Proxy Statement. |
Roadmap of Voting Matters
Stockholders are being asked to vote on the following matters at the 2021 Annual Meeting:
Proposal |
Board |
Further
Information | ||
1 Election of Directors |
✓ FOR each Nominee
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Page 16 | ||
2 Ratification of the appointment of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for the fiscal year ending September 30, 2021 (Fiscal 2021) |
✓FOR |
Page 21 | ||
3 Advisory approval of the Companys named executive officers compensation |
✓FOR |
Page 24 |
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2021 Proxy Statement | 1 |
PROXY SUMMARY | | Governance Highlights |
Governance Highlights
We are committed to the highest standards of corporate governance, which we believe promotes the long-term interests of stockholders. The Corporate Governance section beginning on page 7 describes our governance framework, which includes the following highlights:
2 |
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2021 Proxy Statement |
Director Nominees | | PROXY SUMMARY |
Director Nominees
Other
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Committees | |||||||||||||||
Name |
Age | Director Since |
Position | Board | Audit | Compensation | Nominating and Corporate Governance | |||||||||
James M. Chirico, Jr. |
63 |
2017 |
none |
President and Chief Executive Officer of the Company |
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Stephan Scholl |
50 |
2017 |
none |
Chief Executive Officer of Alight Solutions |
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Susan L. Spradley |
59 |
2017 |
2 |
Chief Executive Officer of Motion Intelligence, Inc. |
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Stanley J. Sutula, III |
55 |
2017 |
none |
Chief Financial Officer of Colgate-Palmolive Company |
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Robert Theis |
59 |
2020 |
1 |
General Partner of World Innovation Lab |
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Scott D. Vogel |
45 |
2017 |
3 |
Managing Member of Vogel Partners LLC |
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William D. Watkins |
68 |
2017 |
2 |
Former Chairman and Chief Executive Officer of Imergy Power Systems |
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Jacqueline E. Yeaney |
52 |
2019 |
none |
Executive Vice President, Marketing of Tableau Software
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Experience/Skills
Senior Leadership |
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8 | ||||||||||||||||||
Finance, Accounting or Financial Reporting | ||||||||||||||||||
6 |
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Corporate Governance | ||||||||||||||||||
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Executive Compensation | ||||||||||||||||||
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International Experience | ||||||||||||||||||
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Other Public Company Board Experience | ||||||||||||||||||
5 |
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Risk Management | ||||||||||||||||||
7 |
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Strategic Planning, Business Development, Business Operations | ||||||||||||||||||
8 | ||||||||||||||||||
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2021 Proxy Statement | 3 |
PROXY SUMMARY | | Business Overview and Fiscal 2020 Performance at a Glance |
Business Overview and Fiscal 2020 Performance at a Glance
Strong operational performance drove Avayas solid financial performance in Fiscal 2020. Highlights include:
Annual Revenue |
Annual Adjusted EBITDA* |
Annual CAPS Revenue | ||||||||||
$2,873m |
$710m |
26% |
4 |
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2021 Proxy Statement |
Business Overview and Fiscal 2020 Performance at a Glance | | PROXY SUMMARY |
* |
Non-GAAP revenue, non-GAAP gross margin, Adjusted EBITDA and Adjusted EBITDA margin are financial performance metrics that are not calculated and presented in accordance with generally accepted accounting principles in the United States of America (GAAP). See the Reconciliation of GAAP to non-GAAP (Adjusted) Financial Measures in Annex A at the end of this Proxy Statement for additional discussion of non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measure. |
** | We define TCV as the value of all active ratable contracts that have not been recognized as revenue, including both billed and unbilled backlog. |
Executive Compensation Highlights
Our executive compensation program is designed with the objective of strongly linking pay with performance as evidenced by the graphs below:
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* | Please see page 32 for information on our Compensation Peer Group. |
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2021 Proxy Statement | 5 |
PROXY SUMMARY | | Executive Compensation Highlights |
Say-on-Pay
Avayas executive compensation program for 2019 received substantial stockholder support and was approved, on an advisory basis, by approximately | ||||||
93% |
of stockholders voting on the proposal at the 2020 Annual |
The table below highlights the key characteristics of our compensation program for Fiscal 2020, many of which we believe drive performance and are aligned with compensation and governance best practices. The table also highlights certain practices we have not implemented because we do not believe they would serve our stockholders interests.
Executive Compensation Practices | ||||||
What We Do
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What We Dont Do
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+ |
We Do have a pay-for-performance philosophy, which ties compensation to pre-established performance goals
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- |
We Dont allow discounting, reloading or repricing of stock options without stockholder approval
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+ |
We Do use multiple performance metrics for annual incentive programs |
- |
We Dont have single trigger vesting of outstanding equity-based awards based solely on a CIC
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+ |
We Do use an independent compensation consultant |
- |
We Dont maintain compensation policies or practices that encourage unreasonable risk taking
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+ |
We Do have reasonable severance and change in control (CIC) protections that require involuntary termination (i.e., are double trigger protections)
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- |
We Dont have employment agreements with our NEOs other than our CEO | |||
+ |
We Do have a clawback policy |
- |
We Dont generally guarantee portions of annual incentive bonuses unless needed to attract talent
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+ |
We Do have policies prohibiting hedging/pledging of the Companys stock
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- |
We Dont offer excessive perquisites | |||
+ |
We Do have robust stock ownership guidelines for our NEOs |
- |
We Dont provide tax gross-ups for any excise taxes triggered in connection with a change in control
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6 |
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2021 Proxy Statement |
CORPORATE GOVERNANCE | | Overview |
In addition to upholding high ethical standards in the ways we conduct business, we recognize that our Company has opportunities to bring about positive social, environmental and economic change. We call this our corporate responsibility and work with our customers, partners, employees, and community to make a positive impact in the world. Our Corporate Responsibility Policy and overall Company program, which details our commitments, goals, and initiatives, are available on our website at https://www.avaya.com/en/about-avaya/corporate-responsibility.
Environment |
Avaya is committed to continually reducing the environmental impacts of our products.
Avaya is a member of We Are Still In, the largest climate action group in the US.
Avaya tracks and reports its carbon emissions annually to the CDP (formerly known as the Carbon Disclosure Project). In 2015, we set a goal to reduce our Scope 1 and Scope 2 emissions by 15% cumulatively by 2020. We exceeded this goal and achieved a cumulative 40% reduction from 2014 to 2020.
Avayas ISO 14001 certified Design for Environment (DfE) program focuses on continually reducing the environmental impact of our solutions and services; current initiatives include developing energy efficient products and eliminating single-use plastic packaging in our supply chain. Our commitment to demonstrating care for the environment through the DfE program is stated in our R&D Environmental Policy.
Our technology helps our customers achieve their environmental goals. For example, the Avaya Spaces videoconferencing platform reduces or eliminates the need for business travel by enabling customers to host engaging and effective meetings remotely. This results in significant Scope 3 carbon emission reductions for our customers, which helps mitigate climate change.
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Human Rights |
Avaya is dedicated to providing a safe and healthy work environment for our employees.
Avaya is a member of the Responsible Business Alliance (RBA), the worlds largest industry coalition dedicated to upholding social, environmental, and ethical standards in global supply chains, and has adopted the Supplier Code of Conduct.
Avaya has policies and programs in place to identify risks and prevent the use of child labor, slavery, and human trafficking in our business operations and supply chain, including our Code of Conduct, Supplier Code of Conduct, Human Rights Statement and UK Modern Slavery Transparency Act Statement.
Avaya has a Conflict Minerals Policy and submits an annual Conflict Minerals Report to the SEC with the aim of eliminating the social and environmental harm brought from sourcing conflict minerals from the Democratic Republic of Congo.
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Diversity and |
We cultivate diverse perspectives and foster healthy dialogue around race, gender, and sexuality.
Avaya is a member of CEO Action for Diversity and Inclusion, the largest CEO-driven business commitment to advance diversity and inclusion in the workplace.
Avayas Diversity and Inclusion Policy states our commitment to promote diversity and foster a culture of inclusion within our company, industry, and communities.
Avaya conducts unconscious bias training for Avaya employees to identify, address and reduce underlying biases that are carried to foster a more inclusive work environment.
Avayas Talent Exchange Program gives employees the opportunity to perform their job in other parts of the world in order to build cultural intelligence and foster a diverse workforce.
Avaya has a Supplier Diversity Program to promote a network of diverse strategic supplier alliances to deliver exceptional products and services to our customers.
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8 |
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2021 Proxy Statement |
Overview | | CORPORATE GOVERNANCE |
Community |
Year round, Avaya organizes and participates in charitable activities that give back to the communities where we live and work.
We sponsor a Month of Giving each year in an effort to support fundraising and volunteering efforts by our worldwide employees, partners and customers. Over the past five years, we have raised over $950,000, donated 7,000 pounds of materials such as food, clothing and supplies and spent thousands of hours volunteering worldwide.
We partnered with Save the Children to fund various projects around the world, with a focus on places where childrens education so desperately needs support, such as Mozambique, Afghanistan and Uganda. Between 2015 and 2020, we donated nearly $250,000 to projects in these countries.
In India, we partnered with a variety of non-profit organizations to support both education and health. Over the past five years, we have donated 165,122,065 IRN to these projects, which is equivalent to approximately $2.2 million USD at todays exchange rate.
We have a Corporate Social Responsibility (CSR) program in India that is focused on enhancing the quality of education and utilizing Avaya technology to improve access to health and education. We have established multi-year partnerships with non-governmental agencies that support remedial education, STEM Education, and Information, Communication, and Technology (ICT) enabled education in government schools.
In response to the ongoing COVID-19 pandemic, we have undertaken multiple initiatives in India to assist those who are underprivileged and unable to obtain basic supplies. These initiatives include providing COVID Care Kits, School Kits which include essential supplies for completing homework and studies during online learning and Kishori Care Kits which include basic necessities for adolescent girls.
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We believe it is our responsibility to
make the world a better place and
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2021 Proxy Statement | 9 |
Board Committees | | CORPORATE GOVERNANCE |
Committees and Membership |
Key Committee Responsibilities | |
Audit
Stanley J. Sutula, III, Chair* Susan L. Spradley Scott D. Vogel*
* Qualifies as an audit committee financial expert
Meetings in Fiscal 2020: 9 |
Select, and evaluate the performance of, the Companys independent registered public accounting firm (including its qualifications, performance and independence);
Review and discuss with management and our independent registered public accounting firm the content of our financial statements prior to filing our quarterly reports on Form 10-Q, and the annual audited financial statements, including disclosures made in managements discussion and analysis of financial condition and results of operations, and recommend to our Board whether the audited financial statements should be included in our annual report on Form 10-K;
Oversee the Companys systems of internal accounting and financial controls and review the activities and qualifications of the Companys internal audit function;
Review and discuss risk management and controls, including policies and guidelines with respect to risk assessment and risk management;
Review and approve related party transactions for potential conflicts of interest; and
Oversee the processes for handling complaints relating to accounting, internal accounting controls and auditing matters. | |
Audit Committee Report, Page 23 |
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Compensation
Scott D. Vogel, Chair Stephan Scholl Jacqueline E. Yeaney
Meetings in FIscal 2020: 7 |
Approve the compensation of each of the Companys senior officers who are, as determined from time to time by our Board, subject to the provisions of Section 16 of the Exchange Act (the Senior Executives or Section 16 Officers), and approve (as appropriate) employment agreements and severance plans;
Review the CEOs individual goals and objectives and set the CEOs compensation after evaluating his performance;
Review, approve and make recommendations to the Board regarding equity-based plans and incentive compensation plans in which the CEO and the other Senior Executives may participate;
Approve grants of stock options, restricted stock awards and/or other awards under equity-based plans;
Recommend to the Board compensation of the non-employee Board members;
Monitor compliance with the Companys share ownership guidelines;
Develop and periodically review with the Board succession plans with respect to the CEO and other senior executives;
Monitor progress of the Companys human capital management, including, among other things, management depth and strength assessment, leadership development, talent assessment, diversity and inclusion and the results of the Companys employee surveys; and
Administer the Companys clawback policy.
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Compensation Committee Report, Page 36 |
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2021 Proxy Statement | 11 |
CORPORATE GOVERNANCE | | Board Committees |
Committees and Membership |
Key Committee Responsibilities | |
Nominating and Corporate Governance
Susan L. Spradley, Chair Stephan Scholl William D. Watkins
Meetings in Fiscal 2020: 2 |
Evaluate the performance, size and composition of the Board to determine the qualifications and areas of expertise, including a diversity of experience and backgrounds, needed to further enhance the composition of the Board and working with management in attracting candidates with those qualifications;
Identify individuals qualified to become directors and review the qualifications of prospective nominees, including nominees recommended by stockholders, and recommend to the Board candidates for election at the Companys Annual Meeting of Stockholders and to fill Board vacancies;
Recommend to the Board committee chairs and members, as well as changes in number or function of committees;
Establish procedures, subject to the Boards approval, for the annual performance self-evaluation of the Board and its committees;
Periodically review the Companys corporate governance practices and leadership structure; and
Develop and oversee a Company orientation program for new directors and an education program for all directors. |
Compensation Committee Interlocks and Insider Participation
12 |
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2021 Proxy Statement |
Board Committees | | CORPORATE GOVERNANCE |
Board Oversight of Risk Management
Stockholders or interested parties may contact the Board, the Non-Executive Chairman and/or independent directors about corporate governance or other matters related to the Board by writing to the following address (indicating by name or title to whom the correspondence should be directed):
Avaya Holdings Corp. Board of Directors
Attention: Corporate Secretary
2605 Meridian Parkway, Suite 200
Durham, North Carolina 27713
Communications may also be sent by email to bdofdirectors@avaya.com. The Corporate Secretary manages all communications received as set forth above to determine whether the contents represent a message to the Board, its committees or any member, group or committee of the Board.
Certain Relationships and Related Transactions
Strategic Partnership with RingCentral, Inc.
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2021 Proxy Statement | 13 |
PROPOSAL 1 Election of Directors |
PROPOSAL 1 ELECTION OF DIRECTORS
Experience/Skills
Senior Leadership |
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8 | ||||||||||||||||||
Finance, Accounting or Financial Reporting | ||||||||||||||||||
6
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Corporate Governance | ||||||||||||||||||
5
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Executive Compensation | ||||||||||||||||||
4
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International Experience | ||||||||||||||||||
7
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Other Public Company Board Experience | ||||||||||||||||||
5
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Risk Management | ||||||||||||||||||
7
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Strategic Planning, Business Development, Business Operations | ||||||||||||||||||
8
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16 |
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2021 Proxy Statement |
PROPOSAL 1 Election of Directors |
Each director to be elected by stockholders is elected by a plurality of votes, which means that the eight nominees receiving the most for votes will be elected. Votes withheld from any nominee will have no effect on the outcome of the election of directors. Votes may not be cast against the election of a nominee. Abstentions and broker non-votes will not be counted for any purpose in determining whether a nominee is elected. Directors may be removed, with or without cause, upon the affirmative vote of the holders of at least a majority of our voting stock. Directors need not be stockholders but are subject to certain share ownership requirements as described in the Compensation Discussion & Analysis below.
Director Nominees
James M. Chirico, Jr.
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Director since: 2017
Age: 63
President and Chief Executive Officer of Avaya Holdings Corp. |
Personal Highlights Mr. Chirico has been our President and Chief Executive Officer since October 1, 2017 and a member of our Board since December 15, 2017. Prior to that, from September 1, 2016 through September 30, 2017, he served as our Executive Vice President and Chief Operating Officer and was also named Head of Global Sales in November 2016. Previously he served as our Executive Vice President, Business Operations and Chief Restructuring Officer from June 14, 2010 through August 31, 2016. He served as President, Operations from January 2008 until June 14, 2010 and was appointed Chief Restructuring Officer on February 3, 2009. Prior to joining Avaya, from February 1998 to November 2007, Mr. Chirico held various senior management positions at Seagate Technology, a designer, manufacturer and marketer of hard disc drives, including Executive Vice President, Global Disc Storage Operations, from February 2006 until November 2007, and Senior Vice President and General Manager, Asia Operations, from September 2000 to February 2006. | |||
Experience, Qualifications, Attributes and Skills Mr. Chiricos role as CEO, the management perspective he brings to Board deliberations and his extensive management experience at Avaya, as well as at other companies, led to the conclusion that he should serve as a director of our Company. | ||||
Committees: None |
Other Public Company Boards: None |
Stephan Scholl
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Director since: 2017
Age: 50
Chief Executive Officer of Alight Solutions |
Personal Highlights Mr. Scholl joined our Board on December 15, 2017. Mr. Scholl is currently Chief Executive Officer of Alight Solutions, a leading provider of integrated benefits, payroll and cloud solutions, a position he has held since April 13, 2020. Prior to that, from April 2012 to July 11, 2018, he served as President of Infor, Inc. (Infor), a privately held provider of enterprise software products and services. Previously, from 2011 until 2012, he served as President and Chief Executive Officer of Lawson Software, Inc. (Lawson). He helped merge Lawson into Infor in 2012. He joined Infor in 2010 as Executive Vice President of Global Sales and Consulting. Earlier, Mr. Scholl held various leadership roles at Oracle Corporation (Oracle), including Senior Vice President and General Manager of the Tax and Utilities Business and before that, as Senior Vice President of the North America Consulting business. He joined Oracle in 2005 with the companys acquisition of PeopleSoft. Mr. Scholl currently sits on the boards of EG Software and 1010 Data and in the past, he has served as an advisor to several private equity firms. | |||
Experience, Qualifications, Attributes and Skills Mr. Scholls experience in software and services, including with a cloud business, his service as an executive officer of companies including as President and Chief Executive Officer, as well as his independence from the Company, led to the conclusion that he should serve as a director of our Company. | ||||
Committees: Compensation Nominating & Corporate Governance |
Other Public Company Boards: None |
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2021 Proxy Statement | 17 |
PROPOSAL 1 Election of Directors |
Susan L. Spradley
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Director since: 2017
Age: 59
Chief Executive Officer of Motion Intelligence, Inc. |
Personal Highlights Ms. Spradley joined our Board on December 15, 2017. Ms. Spradley is Chief Executive Officer of Motion Intelligence, Inc., a SaaS company specializing in preventing mobile device distraction while driving in addition to location and identification services, a position she has held since December 2017. Previously, she was a partner in the Tap Growth Group, a senior executive consulting firm focused on helping new ventures and Fortune 500 companies drive growth, from August 2017 until June 2019. In addition, she served in senior executive roles at Viavi Solutions (formerly JDSU), a publicly traded provider of strategic network solutions. She was Executive Vice President and General Manager of Product Line Management and Design from 2015 to January 2017, and before that she was Senior Vice President and General Manager of the Communications Test & Measurement Business Unit from 2013 to 2015. From April 2011 to December 2012, Ms. Spradley was the CEO/Executive Director of US Ignite, a White House and National Science Foundation initiative focused on applications for smart city implementation. Prior to serving at US Ignite, Ms. Spradley was President of the North America region at Nokia Siemens Networks and an Executive Board Member. She served in a variety of roles at Nortel before her work at Nokia Siemens Networks, most recently as President of Global Services. Additionally, from 2012 through January 2020, Ms. Spradley served as Chairman of the board of directors of US Ignite, a non-profit organization. From October 2011 until November 2012, she served on the board of directors of EXFO Inc. | |||
Experience, Qualifications, Attributes and Skills Ms. Spradleys experience in the wireless telecommunications industry, including broad operating experience in sales, product portfolio management, and research and development for multiple global communications-related companies and her extensive public company executive leadership experience, as well as her independence from the Company, led to the conclusion that she should serve as a director of our Company. | ||||
Committees: Audit Nominating & Corporate Governance (Chair) |
Other Public Company Boards: NetScout Systems Inc. (April 2018 Present) Qorvo (January 2017 Present) |
Stanley J. Sutula, III
| ||||
Director since: 2017
Age: 55
Chief Financial Officer of Colgate- Palmolive Company |
Personal Highlights Mr. Sutula joined our Board on December 15, 2017. Mr. Sutula has served as the Chief Financial Officer of Colgate-Palmolive Company since November 2020. He previously served as the Executive Vice President and the Chief Financial Officer of Pitney Bowes Inc., a global technology company that provides commerce solutions in the areas of ecommerce, shipping, mailing and data, and served in this capacity from February 2017 to November 2020. From January 2015 to January 2017, he was Vice President and Controller of International Business Machines Corporation (IBM), a global company that creates value for clients through integrated solutions and products that leverage data, information technology, deep expertise in industries and business processes, and a broad ecosystem of partners and alliances. From January 2014 to January 2015, he served as Vice President and Treasurer of IBM and from May 2008 to January 2014 he served as Vice President Finance and Planning (Chief Financial Officer) of IBMs Global Technology Services business. From 1988 to 2008, he held a number of positions at IBM including several leadership positions in the US and Europe. | |||
Experience, Qualifications, Attributes and Skills Mr. Sutulas experience in senior finance positions, including as Chief Financial Officer and Controller, and his experience with software and global management, as well as his independence from the Company, led to the conclusion that he should serve as a director of our Company. | ||||
Committees: Audit (Chair) |
Other Public Company Boards: None |
18 |
|
2021 Proxy Statement |
PROPOSAL 1 Election of Directors |
Robert Theis
| ||||
Director since: 2020
Age: 59
General Partner of World Innovation Lab |
Personal Highlights Mr. Theis joined our Board on November 6, 2020. Mr. Theis has served as a General Partner of World Innovation Lab, a venture capital firm, since September 2016. He was a co-founder and served as Managing Partner of Garnett Theis Capital, a venture capital firm, from October 2014 to September 2016. He served as a managing director at Scale Venture Partners (Scale Ventures), a venture capital firm, from May 2008 to October 2014. Prior to joining Scale Ventures, from July 2000 to April 2008, Mr. Theis served as a general partner with Doll Capital Management, a venture capital firm. From July 1996 to June 2000, Mr. Theis served as Executive Vice President and served on the board of directors of New Era of Networks, Inc., a supplier of Internet infrastructure software and services. From April 1986 to June 1996, Mr. Theis served as a Managing Director at Sun Microsystems, Inc., a provider of computers and computer components acquired by Oracle Corporation, and from January 1984 to March 1986, as Marketing Manager at Silicon Graphics, Inc., a provider of high-performance computing solutions. Mr. Theis serves on the board of directors at the Computer History Museum, a museum that provides stories and artifacts of the information age and computing revolution. Mr. Theis is RingCentrals nominee to our Board. | |||
Experience, Qualifications, Attributes and Skills Mr. Theiss substantial experience as a venture capitalist investment professional and as a director of technology infrastructure and applications companies, as well as his independence from the Company, led to the conclusion that he should serve as a director of our Company. | ||||
Committees: None |
Other Public Company Boards: RingCentral, Inc. (August 2011 Present) |
Scott D. Vogel
| ||||
Director since: 2017
Age: 45
Managing Member of Vogel Partners LLC |
Personal Highlights Mr. Vogel joined our Board on December 15, 2017. Mr. Vogel is currently a Managing Member of Vogel Partners LLC, a private investment firm, and has served in that capacity since July 2016. From 2002 through July 2016, he was a Managing Director at Davidson Kempner Capital Management, L.L.C., investing in distressed debt securities. From 1999 to 2001, he worked at MFP Investors, L.L.C. investing in special situations and turnaround opportunities. Prior to MFP Investors, he was an investment banker at Chase Securities. Mr. Vogel has served on numerous boards during his career, including the board of Seadrill Ltd. from July 2018 until February 2020, Arch Coal, Inc. from October 2016 until May 2019 and Key Energy Services, Inc. from December 2016 until April 2019. Mr. Vogel is a member of the Olin Alumni Board of Washington University and a member of the Advisory Board of Grameen America. | |||
Experience, Qualifications, Attributes and Skills Mr. Vogels mix of experience with executive management oversight, finance and capital markets, human resources and compensation and strategic planning, as well as his independence from the Company, led to the conclusion that he should serve as a director of our Company. | ||||
Committees: Audit Compensation (Chair) |
Other Public Company Boards: Bonanza Creek Energy, Inc. (April 2017 Present) CBL & Associates Properties, Inc. (October 2020 Present) Contura Energy, Inc. (December 2019 Present) |
|
2021 Proxy Statement | 19 |
PROPOSAL 1 Election of Directors |
William D. Watkins
| ||||
Director since: 2017
Age: 68
Independent Chair of Former Chairman |
Personal Highlights Mr. Watkins joined our Board and became Chair of the Board on December 15, 2017. Mr. Watkins was most recently Chairman and Chief Executive Officer of Imergy Power Systems, a privately held energy storage solutions company, from January 2015 and September 2013, respectively, until August 2016. Previously, he served as Chairman of the Board at Bridgelux, Inc., from February 2013 to December 2013 and as its Chief Executive Officer from 2010 to February 2013. Prior to that, he served as Chief Executive Officer and board member at Seagate Technology, a publicly traded provider of electronic data storage technologies and systems, from 2004 until 2009, and before that, he was Seagates President and Chief Operating Officer. He joined Seagate in 1996 with the companys acquisition of Conner Peripherals. Previously, Mr. Watkins served on the board of directors as Chairman at Bright Machines, Inc., a privately held software design manufacturing company from 2019 to 2020. | |||
Experience, Qualifications, Attributes and Skills Mr. Watkins experience in the technology industry, his operational and management experience, his experience as an executive officer of companies including as Chief Executive Officer, President and Chief Operating Officer, his expertise and familiarity with financial statements, as well as his independence from the Company, led to the conclusion that he should serve as a director of our Company. | ||||
Committees: Nominating & Corporate Governance |
Other Public Company Boards: Flex Ltd. (April 2009 Present) Maxim Integrated Products, Inc. (August 2008 Present) |
Jacqueline Jackie E. Yeaney
| ||||
Director since: 2019
Age: 52
Executive Vice |
Personal Highlights Ms. Yeaney joined our Board on March 18, 2019. Ms. Yeaney is Executive Vice President, Marketing of Tableau Software, a self-service analytics platform owned by Salesforce.com, Inc., a position she has held since August 22, 2019. Prior to that Ms. Yeaney was the Senior Vice President and Chief Marketing Officer of Ellucian, a privately held provider of software and services for higher education management, from January 2017 until April 1, 2019. She served as the Executive Vice President, Strategy and Marketing of Red Hat, Inc. (Red Hat), a provider of open source software solutions now owned by IBM, from 2011 to 2016 after serving as a consultant to Red Hat from 2010 to 2011. Prior to that, she served as the Chief Marketing Officer at Premiere Global Services, Inc., EarthLink, Inc. and HomeBanc Mortgage Corporation. Ms. Yeaney was also a Captain in the U.S. Air Force where she held the highest-level security clearance. Previously, Ms. Yeaney served as a Non-Executive Director at Promethean World Limited from 2014 to 2015. | |||
Experience, Qualifications, Attributes and Skills Ms. Yeaneys experience with global public company technology companies, including experience with strategy, marketing and transformation in the cloud and software industries, and her executive leadership experience, as well as her independence from the Company, led to the conclusion that she should serve as a director of our Company. | ||||
Committees: Compensation |
Other Public Company Boards: None |
The Board unanimously recommends that you vote FOR each of the director nominees named in this proposal. |
20 |
|
2021 Proxy Statement |
PROPOSAL 2 Ratification of Appointment of Independent Registered Public Accounting Firm |
PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Pre-Approval Policies and Procedures
Principal Accountant Fees and Services
The following table provides information regarding the fees for the audit and other services provided by PricewaterhouseCoopers LLP for the fiscal years ended September 30, 2020 and 2019:
Fiscal Years Ended September 30, | ||||||||||||
(In thousands) |
2020 |
|
2019 |
|||||||||
Audit Fees |
$ |
11,171 |
|
$ |
14,119 |
| ||||||
Audit-Related Fees |
|
434 |
|
|
1,004 |
| ||||||
Tax Fees |
|
1,475 |
|
|
1,109 |
| ||||||
All Other Fees |
|
787 |
|
|
502 |
| ||||||
Total Fees |
$ |
13,867 |
|
$ |
16,734 |
| ||||||
|
2021 Proxy Statement | 21 |
PROPOSAL 2 Ratification of Appointment of Independent Registered Public Accounting Firm |
|
The Board unanimously recommends a vote FOR the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2021.
|
22 |
|
2021 Proxy Statement |
AUDIT COMMITTEE REPORT |
In connection with the Companys consolidated financial statements for the year ended September 30, 2020, the Audit Committee has:
| reviewed and discussed the audited financial statements with management; |
| discussed with the Companys independent registered public accounting firm, PwC, the matters required to be discussed by Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 1301, Communications with Audit Committees; and |
| received the written disclosures and the letter from PwC as required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, and the Audit Committee discussed with PwC that firms independence. |
Based on the review and discussions with the Companys management and the independent registered public accounting firm, as set forth above, the Audit Committee recommended to the Board that the audited financial statements be included in the Companys 2020 Annual Report, for filing with the SEC.
MEMBERS OF THE AUDIT COMMITTEE:
Stanley J. Sutula, III, Chair
Susan L. Spradley
Scott Vogel
The foregoing report shall not be deemed incorporated by reference by any general statement or reference to this Proxy Statement into any filing under the Securities Act of 1933, as amended, or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under those Acts.
|
2021 Proxy Statement | 23 |
PROPOSAL 3 Advisory Approval of the Companys Named Executive Officers Compensation (say-on-pay) |
PROPOSAL 3 ADVISORY APPROVAL OF THE COMPANYS NAMED EXECUTIVE OFFICERS COMPENSATION (SAY-ON-PAY)
|
The Board unanimously recommends a vote FOR the approval of the compensation paid to the Companys NEOs, as disclosed in this proxy statement pursuant to item 402 of regulation S-K.
|
24 |
|
2021 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
Compensation Discussion and Analysis
Quick Reference Guide
* | Non-GAAP revenue and Adjusted EBITDA are financial performance metrics that are not calculated and presented in accordance with GAAP. See the Reconciliation of GAAP to non-GAAP (Adjusted) Financial Measures in Annex A at the end of this Proxy Statement for additional discussion of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measure, as well as information on the calculation of constant currency. |
|
2021 Proxy Statement | 25 |
COMPENSATION DISCUSSION AND ANALYSIS | | Fiscal 2020 Named Executive Officers |
Fiscal 2020 Named Executive Officers
This Compensation Discussion and Analysis (the CD&A) explains the key elements of the compensation of our NEOs and describes the objectives and principles underlying our Companys executive compensation program for Fiscal 2020. For Fiscal 2020, our NEOs were:
Name |
Title as of September 30, 2020 | |
James M. Chirico, Jr. |
President and CEO | |
Kieran McGrath |
Executive Vice President and Chief Financial Officer | |
Anthony Bartolo(1) |
Executive Vice President and Chief Product Officer | |
Shefali Shah |
Executive Vice President, General Counsel and Chief Administrative Officer | |
Stephen Spears(2) |
Executive Vice President and Chief Revenue Officer |
(1) | Mr. Bartolo commenced employment on December 9, 2019. |
(2) | Mr. Spears commenced employment on September 15, 2020. |
Primary Elements of Compensation
Element |
Form | Objective | ||
Base Salary |
Fixed Pay: Cash |
Provide a fixed portion of annual income to attract and retain qualified executives
| ||
Annual Incentives |
Variable Pay: Cash |
Focus executives attention on annual financial, operational, and strategic objectives that support long-term strategy and value creation
| ||
Long-Term Incentives |
Variable Pay: Equity -50% RSUs -50% performance-based restricted stock units (PRSUs) |
Directly align executive pay with long-term stockholder value Focus executives on long-term performance goals Retain executives
|
Stockholder Engagement & Results of Say-on-Pay Vote
26 |
|
2021 Proxy Statement |
Stockholder Engagement & Results of Say-on-Pay Vote | | COMPENSATION DISCUSSION AND ANALYSIS |
Key Elements of Our Executive Compensation Program
There were no changes to the base salaries from Fiscal 2019 for the continuing NEOs. Base salaries for executives hired in Fiscal 2020 were set as a part of the arms length negotiation of the applicable employment arrangements, taking into consideration our executive compensation principles and competitive market practices. The Fiscal 2020 base salaries for the NEOs are set forth below:
Named Executive Officer |
Fiscal 2020 Base Salary ($) | ||||
James M. Chirico, Jr. |
1,250,000 | ||||
Kieran McGrath |
650,000 | ||||
Anthony Bartolo |
650,000 | ||||
Shefali Shah |
600,000 | ||||
Stephen Spears |
600,000 |
Non-GAAP Revenue * (measured in constant currency using the exchange rate in effect on September 30, 2019) |
||||
Threshold |
$2,750 million | |||
Target |
$2,895 million | |||
Max |
$3,040 million | |||
Actual: |
$2,872 million |
Adjusted EBITDA * |
||||
Threshold |
$637 million | |||
Target |
$680 million | |||
Max |
$714 million | |||
Actual: |
$710 million |
* | Non-GAAP revenue and Adjusted EBITDA are financial performance metrics that are not calculated and presented in accordance with GAAP. See the Reconciliation of GAAP to non-GAAP (Adjusted) Financial Measures in Annex A at the end of this Proxy Statement for additional discussion of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measure, as well as information on the calculation of constant currency. |
|
2021 Proxy Statement | 27 |
COMPENSATION DISCUSSION AND ANALYSIS | | Key Elements of our Executive Compensation Program |
CAPS Revenue |
||||
Threshold |
$450.9 million | |||
Target |
$501.0 million | |||
Max |
$551.1 million | |||
Actual: |
$762.0 million |
The table below presents the achievements under the AIP and the CAPS metric and the resulting payouts to our NEOs in respect of Fiscal 2020 (as further detailed in the Summary Compensation Table):
Corporate Financial Metrics
|
CAPS
|
|||||||||||||||||||||||||||||||||||||||
Named Executive Officer |
Non-GAAP Revenue Growth Attainment |
% Earned |
Adjusted EBITDA Attainment |
% Earned |
CAPS Revenue Attainment |
% Earned |
Total % of Target Bonus Earned |
Actual AIP Earned | ||||||||||||||||||||||||||||||||
James M. Chirico, Jr. |
$ | 2,872 million | 1 | 88.5 | % | $ | 710 million | 187.2 | % | $ | 762 million | 200 | % | 159 | % | $ | 2,982,281 |
1 | Measured in constant currency using the exchange rate in effect on September 30, 2020. |
Corporate Financial Metrics
|
||||||||||||||||||||||||||||||
Named Executive Officer |
Non-GAAP Revenue Growth Attainment |
% Earned |
Adjusted EBITDA Attainment |
% Earned |
Total % of Target Bonus Earned |
Actual AIP Earned | ||||||||||||||||||||||||
Kieran McGrath |
$ | 2,872 million | 1 | 88.5 | % | $ | 710 million | 187.2 | % | 118 | % | $ | 767,715 | |||||||||||||||||
Anthony Bartolo |
$ | 2,872 million | 1 | 88.5 | % | $ | 710 million | 187.2 | % | 118 | % | $ | 767,715 | |||||||||||||||||
Shefali Shah |
$ | 2,872 million | 1 | 88.5 | % | $ | 710 million | 187.2 | % | 118 | % | $ | 708,660 |
1 | Measured in constant currency using the exchange rate in effect on September 30, 2019. |
28 |
|
2021 Proxy Statement |
Key Elements of our Executive Compensation Program | | COMPENSATION DISCUSSION AND ANALYSIS |
|
2021 Proxy Statement | 29 |
COMPENSATION DISCUSSION AND ANALYSIS | | Key Elements of our Executive Compensation Program |
Named Executive Officer |
RSU Award as of Grant Date ($) |
Common Stock Underlying RSU Award (#) |
Option Award as of Grant Date ($) |
Common Stock Underlying Option Award (#) |
PRSU Award Opportunity as of Grant Date ($) |
Common Stock Underlying PRSU Award (#) |
Total Equity Award Opportunity as of Grant Date ($) |
Common Stock Underlying Total Equity Award (#) | ||||||||||||||||||||
James M. Chirico, Jr.(1) |
$ | 3,228,239 | 253,593 | $ | 3,228,239 | 253,593 | $6,456,478 | 507,186 | ||||||||||||||||||||
Kieran McGrath(1) |
$ | 875,000 | 73,964 | $ | 875,000 | 73,964 | $1,750,000 | 147,928 | ||||||||||||||||||||
Anthony Bartolo(2) |
$ | 2,000,000 | 175,746 | $ | 1,000,000 | 163,666 | $ | 1,000,000 | 87,873 | $4,000,000 | 427,285 | |||||||||||||||||
Shefali Shah(1) |
$ | 625,000 | 52,832 | $ | 625,000 | 52,831 | $1,250,000 | 105,663 | ||||||||||||||||||||
Stephen Spears(3) |
$ | 2,800,000 | 188,552 | $2,800,000 | 188,552 |
(1) | These awards were granted under the 2017 Equity Incentive Plan. |
(2) | 87,873 RSUs and the options listed above were granted under the Inducement Plan; 87,873 RSUs and the PRSUs listed above were granted under the 2017 Equity Incentive Plan. |
(3) | These awards were granted under the 2019 Equity Incentive Plan. |
Fiscal 2019 PRSUs
Fiscal 2020 Performance Fiscal 2019 PRSUs and Fiscal 2020 PRSUs
Fiscal 2020 Adjusted EBITDA (in millions) |
Fiscal Adjusted (in
|
PRSUs Eligible
| |||||||||||||||||||||||
PRSU Awards |
Threshold | Target | Maximum | ||||||||||||||||||||||
FY2019 PRSUs (Year 2) |
$740 | $781 | $822 | $710 | 0% | ||||||||||||||||||||
FY2020 PRSUs (Year 1) |
$632 | $680 | $707 | $710 | 150% |
30 |
|
2021 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | | Determination of NEO Compensation |
The Compensation Peer Group for Fiscal 2020 and Fiscal 2021 were approved by the Compensation Committee in May 2019 and May 2020, respectively, following an assessment of our Compensation Peer Group with guidance from FW Cook. For Fiscal 2021, one company was removed and one was added. The peer group changes were made to address peer group activity (removal of LogMein in anticipation of its buyout by private equity firms, which occurred in September 2020) and to maintain a balanced sample (addition of CDK Global). The revised Compensation Peer Group of fifteen companies has been used for Fiscal 2021 compensation planning and actions.
32 |
|
2021 Proxy Statement |
Determination of NEO Compensation | | COMPENSATION DISCUSSION AND ANALYSIS |
In fiscal 2018, the Compensation Committee approved share ownership guidelines for our NEOs, which are designed to align their long-term financial interests with those of our stockholders by increasing stock ownership levels. The NEO share ownership guidelines are as follows:
Role |
Value of Common Stock to be Owned | |
CEO |
6 times base salary | |
Other NEOs |
2 times base salary |
|
2021 Proxy Statement | 33 |
COMPENSATION DISCUSSION AND ANALYSIS | | Determination of NEO Compensation |
The following table highlights the key plan provisions (certain terms used in the following table are defined in the respective plan):
Element |
CEO Employment (CIC Related) |
CEO Employment Agreement (Non-CIC Related) |
CIC Plan Provisions | Separation Plan Provisions | ||||
Cash Severance (multiple of sum of base salary and target bonus opportunity)
|
3.0x |
2.0x |
1.5x |
1.0x | ||||
In-cycle bonus
|
Pro-rata target bonus
|
None
|
Pro-rata target bonus
|
None
| ||||
Benefits Continuation
|
18 months
|
18 months
|
18 months
|
12 months
| ||||
Equity acceleration |
All equity awards will fully vest upon a qualifying termination within 6 months before or 24 months after a CIC (double trigger). |
Acceleration pursuant to the applicable award agreement(s), as summarized in the table below. |
Treatment of performance-based awards granted on or after February 11, 2019 will be governed by the terms of the applicable award agreement, summarized in the table below.
|
Acceleration pursuant to the applicable award agreement(s) as summarized in the table below. |
Treatment of Equity Awards upon Certain Terminations of Employment
The table below summarizes the treatment for outstanding equity awards held by NEOs upon certain terminations of employment, including upon the occurrence of a change in control (a CIC), which terms are more fully described in the 2017 Equity Incentive Plan, the Inducement Plan or the 2019 Equity Incentive Plan, as applicable, and the applicable award agreements. The RSUs and stock options granted to Mr. Chirico and Ms. Shah when the Company emerged from Chapter 11 restructuring (Emergence Awards), which were negotiated among certain Company creditors and the Company and approved by the Chapter 11 bankruptcy court, fully vested on December 31, 2020.
34 |
|
2021 Proxy Statement |
Determination of NEO Compensation | | COMPENSATION DISCUSSION AND ANALYSIS |
Equity Awards |
Non-CIC Termination of Employment | CIC Termination of Employment | ||
CEO FY2019 PRSUs |
Upon a termination prior to the end of the performance period by the Company without cause or resignation for good reason without a CIC, then, to the extent the applicable stock price goal has been achieved prior to the termination date, the CEO FY2019 PRSU will vest on a pro-rated basis.
In connection with any other termination of employment or to the extent that the applicable stock price goal has not been achieved prior to the terminate date, the CEO FY2019 PRSUs will be forfeited upon termination. |
If a CIC occurs prior to the end of the performance period and either (i) the stock price goal has been achieved, or (ii) the value of the consideration received by the Companys stockholders (on a per share basis) equals or exceeds the stock price goal, then the CEO FY2019 PRSU will be treated in accordance with the CIC provisions under the 2017 Equity Incentive Plan that permit the awards to be assumed, substituted or accelerated in connection with the CIC, in the discretion of the Compensation Committee.
Otherwise, the CEO FY2019 PRSUs will be cancelled in connection with a CIC. | ||
FY2019 PRSUs & FY2020 PRSUs |
If a termination occurs prior to the vesting date, all awards are forfeited. |
If a CIC occurs prior to the vesting date, then the PRSUs will be treated in accordance with the CIC provisions under the 2017 Equity Incentive Plan that permit the awards may be assumed, substituted or accelerated in connection with the CIC, in the discretion of the Compensation Committee.
If PRSUs are converted into new awards following a CIC, and the recipients employment is terminated without Cause (other than death or Disability) or for Good Reason prior to vesting during a Potential Change in Control Period (as defined in the CIC Plan) or within 12 months of a CIC, then:
Earned units from a performance year ending prior to the termination date, vest immediately.
Units eligible to be earned in the year of the termination or any subsequent performance year, vest immediately at target level. | ||
RSUs and Options |
If a CIC occurs prior to the applicable vesting date, the award will be treated in accordance with the CIC provisions under the 2017 Equity Incentive Plan, Inducement Plan or 2019 Equity Incentive Plan, as applicable that permit the awards to be assumed, substituted or accelerated in connection with the CIC, in the discretion of the Compensation Committee.
If the awards are converted into new awards following a CIC and employment is terminated without Cause, for Good Reason or due to death or Disability within 24 months of a CIC, the award fully vests. |
|
2021 Proxy Statement | 35 |
COMPENSATION DISCUSSION AND ANALYSIS | | Determination of NEO Compensation |
Risk Assessment in Compensation Programs
The Compensation Committee has reviewed and discussed the CD&A above with management. Based on such review and discussion, the Compensation Committee has recommended to the Board that the CD&A be included in this Proxy Statement.
MEMBERS OF THE COMPENSATION COMMITTEE:
Scott D. Vogel, Chair
Stephan Scholl
Jacqueline E. Yeaney
36 |
|
2021 Proxy Statement |
Executive Compensation Tables | | COMPENSATION DISCUSSION AND ANALYSIS |
Fiscal 2020 Summary Compensation Table
Name |
Year | Salary(1) | Bonus(2) | Stock Awards(3) |
Option Awards(3) |
Non-Equity Incent. Plan Comp.(4) |
All Other Comp.(5) |
Total | ||||||||||||||||||||||||||||||||
James M. Chirico, Jr. President and Chief Executive Officer |
|
2020 |
$ |
1,250,000 |
$ |
6,879,978 |
$ |
2,982,281 |
$ |
46,365 |
$ |
11,158,624 |
||||||||||||||||||||||||||||
|
2019 |
$ |
1,250,000 |
$ |
3,065,813 |
$ |
46,240 |
$ |
4,362,053 |
|||||||||||||||||||||||||||||||
|
2018 |
$ |
1,250,000 |
$ |
5,250,000 |
$ |
22,147,896 |
$ |
3,866,629 |
$ |
312,500 |
$ |
44,875 |
$ |
32,871,900 |
|||||||||||||||||||||||||
Kieran McGrath EVP and Chief Financial Officer |
|
2020 |
$ |
650,000 |
$ |
1,857,976 |
$ |
767,715 |
$ |
58,078 |
$ |
3,333,769 |
||||||||||||||||||||||||||||
|
2019 |
$ |
435,689 |
$ |
650,000 |
$ |
3,999,985 |
$ |
41,169 |
$ |
5,126,843 |
|||||||||||||||||||||||||||||
Anthony Bartolo EVP and Chief Product Officer |
|
2020 |
$ |
529,356 |
$ |
650,000 |
$ |
3,114,219 |
$ |
1,000,000 |
$ |
767,715 |
$ |
123,163 |
$ |
6,184,453 |
||||||||||||||||||||||||
Shefali Shah EVP, General Counsel and CAO |
|
2020 |
$ |
600,000 |
$ |
1,327,127 |
$ |
708,660 |
$ |
22,113 |
$ |
2,657,900 |
||||||||||||||||||||||||||||
|
2019 |
$ |
600,000 |
$ |
1,193,200 |
$ |
30,375 |
$ |
1,823,575 |
|||||||||||||||||||||||||||||||
|
2018 |
$ |
473,810 |
$ |
1,100,000 |
$ |
1,845,654 |
$ |
322,221 |
$ |
235,068 |
$ |
25,080 |
$ |
4,001,833 |
|||||||||||||||||||||||||
Stephen Spears EVP and Chief Revenue Officer
|
|
2020 |
$ |
27,273 |
$ |
750,000 |
$ |
2,799,997 |
$ |
3,577,270 |
||||||||||||||||||||||||||||||
(1) | Salary amounts shown for Messrs. Bartolo and Spears reflect pro-rated amounts based on their commencement of employment on December 9, 2019 and September 15, 2020, respectively. |
(2) | For Fiscal 2020, amounts shown include sign-on bonus for Mr. Bartolo ($650,000) and Mr. Spears ($750,000). For Fiscal 2019, amounts shown include sign-on bonus for Mr. McGrath ($650,000). For fiscal 2018, for Mr. Chirico, includes sign-on bonus ($2,500,000), one-time emergence bonus ($250,000) and guaranteed AIP award ($2,500,000); and for Ms. Shah, includes sign-on bonus ($500,000) and guaranteed AIP award ($600,000). |
(3) | For Fiscal 2020, amounts represent equity grants of RSUs, PRSUs and Stock Options. For Messrs. Chirico and McGrath, and Ms. Shah, the grants consist of 50% RSUs and 50% PRSUs. For Mr. Bartolo, the grant consists of RSUs, PRSUs and Stock Options. For Mr. Spears, the grant consists solely of RSUs. For Fiscal 2020, the stock awards were granted on December 6, 2019 for Mr. McGrath and Ms. Shah, on December 9, 2019 for Mr. Bartolo, on December 23, 2019 for Mr. Chirico, and on September 15, 2020 for Mr. Spears. Amounts shown represent the aggregate grant date fair value of each award as calculated in accordance with ASC 718. The aggregate grant date value for awards subject to performance conditions are shown based on the probable outcome of the applicable performance criteria as of the grant date, which was target level achievement. Assuming maximum level of achievement, the grant date fair value of the PRSUs for each of Messrs. Chirico, McGrath and Bartolo, and Ms. Shah would have been $4,404,910, $1,186,013, $1,344,457 and $847,145, respectively. See Note 16 of the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020 for an explanation of the assumptions used in the valuation of stock awards. For Mr. Chirico and Ms. Shah, the stock and option awards in fiscal 2018 were granted on December 15, 2017 as part of the emergence grants. |
(4) | Amounts shown under Fiscal 2020 represent awards under the Fiscal 2020 annual incentive plan for Messrs. Chirico, McGrath and Bartolo and for Ms. Shah. Mr. Spears was not eligible for a Fiscal 2020 annual incentive plan award. For Mr. Chirico and Ms. Shah, amounts shown under fiscal 2018 represent awards under the fiscal 2018 executive annual incentive plan in excess of the guaranteed bonus amounts. |
(5) | The following table separately quantifies all other compensation amounts for Fiscal 2020. |
Name |
Financial Counseling |
Life Insurance Premiums |
Life Insurance Imputed Income |
HSA Earned |
401(k) Company Match |
Relocation | Housing Allowance |
Total | ||||||||||||||||||||||||||||||||
James M. Chirico, Jr |
$ |
20,000 |
$ |
2,400 |
$ |
15,840 |
$ |
1,000 |
$ |
7,125 |
$ |
46,365 |
||||||||||||||||||||||||||||
Kieran McGrath |
$ |
15,000 |
$ |
2,200 |
$ |
15,840 |
$ |
7,038 |
$ |
18,000 |
$ |
58,078 |
||||||||||||||||||||||||||||
Anthony Bartolo |
$ |
15,000 |
$ |
2,000 |
$ |
4,140 |
$ |
500 |
$ |
8,171 |
$ |
93,352 |
$ |
123,163 |
||||||||||||||||||||||||||
Shefali Shah |
$ |
15,000 |
$ |
645 |
$ |
968 |
$ |
500 |
$ |
5,000 |
$ |
22,113 |
||||||||||||||||||||||||||||
Stephen Spears |
|
2021 Proxy Statement | 37 |
COMPENSATION DISCUSSION AND ANALYSIS | | Executive Compensation Tables |
Fiscal 2020 Grants of Plan-Based Awards
Estimated Future Payouts under Non-Equity Incentive Plan Awards |
All Other Stock Awards: Number of Shares of Stock or Units(2)(3) |
All Other Option Awards: Number of Securities Underlying Options (#) |
Estimated Future Payouts under Equity Incentive Plan Awards(4) |
Exercise or Base Price of Option Awards ($) |
Grant Date Fair Value of Stock and Option Awards ($)(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Name |
Grant Date | Threshold |
Target |
Maximum |
Threshold ($) |
Target ($) |
Maximum ($) | ||||||||||||||||||||||||||||||||||||||||||||||||
James M. Chirico, Jr. |
10/1/2019 | (1) | $ | 468,750 | $ | 1,875,000 | $ | 3,750,000 | |||||||||||||||||||||||||||||||||||||||||||||||
12/23/2019 | 253,593 | $ | 3,228,239 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
12/23/2019 | $ | 1,829,673 | $ | 3,651,739 | $ | 4,404,910 | $ | 3,651,739 | |||||||||||||||||||||||||||||||||||||||||||||||
Kieran McGrath |
10/1/2019 | (1) | $ | 162,500 | $ | 650,000 | $ | 1,300,000 | |||||||||||||||||||||||||||||||||||||||||||||||
12/6/2019 | 73,964 | $ | 874,994 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 492,600 | $ | 982,982 | $ | 1,186,013 | $ | 982,982 | ||||||||||||||||||||||||||||||||||||||||||||||||
Anthony Bartolo |
12/9/2019 | (1) | $ | 162,500 | $ | 650,000 | $ | 1,300,000 | |||||||||||||||||||||||||||||||||||||||||||||||
12/9/2019 | 163,666 | $ | 11.38 | $ | 999,999 | ||||||||||||||||||||||||||||||||||||||||||||||||||
12/9/2019 | 87,873 | $ | 999,995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
12/9/2019 | 87,873 | $ | 999,995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
12/9/2019 | $ | 557,994 | $ | 1,114,230 | $ | 1,344,457 | $ | 1,114,230 | |||||||||||||||||||||||||||||||||||||||||||||||
Shefali Shah |
10/1/2019 | (1) | $ | 150,000 | $ | 600,000 | $ | 1,200,000 | |||||||||||||||||||||||||||||||||||||||||||||||
12/6/2019 | 52,832 | $ | 625,003 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
12/6/2019 | $ | 351,854 | $ | 702,124 | $ | 847,145 | $ | 702,124 | |||||||||||||||||||||||||||||||||||||||||||||||
Stephen Spears |
9/15/2020 | (1) | $ | | |||||||||||||||||||||||||||||||||||||||||||||||||||
9/15/2020 | 188,552 | $ | 2,799,997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(1) | Amounts shown represent the Fiscal 2020 threshold, target and maximum amounts payable under the AIP, which is discussed above under Key Elements of our Executive Compensation Program. |
(2) | For Messrs. Chirico, McGrath and Bartolo and Ms. Shah, these RSU awards vest 33.34% on the date closest to quarterly vest date, and following, the first anniversary; and 8.33% quarterly thereafter. |
(3) | For Mr. Spears, the RSU award vests 33.34% on the first anniversary of the grant date and 8.33% quarterly thereafter. |
(4) | Amounts shown represent grant date fair value of each performance-based award based on threshold, target and maximum achievement, respectively, during the applicable three-year performance period. |
(5) | Amounts shown represent the aggregate grant date fair value of each award as calculated in accordance with ASC 718. The aggregate grant date value for awards subject to performance conditions are shown based on the probable outcome of the applicable performance criteria as of the grant date, which was target level achievement. See Note 16 of the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020 for an explanation of the assumptions used in the valuation of these awards. |
38 |
|
2021 Proxy Statement |
Executive Compensation Tables | | COMPENSATION DISCUSSION AND ANALYSIS |
Outstanding Equity Awards at year-end Fiscal 2020
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#)(1) |
Number of Securities Underlying Unexercised Options Unexercisable (#)(2)(3) |
Option Exercise Price |
Option Expiration Date |
Number of Shares or Units of Stock that have not Vested (4) |
Market Value of Shares or Units of Stock that have not vested ($)(5) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that have not vested (#)(6) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights that have not vested ($)(7) | ||||||||||||||||||||||||||||||||
James M. Chirico, Jr. |
|
446,399 |
|
40,582 |
$ |
19.46 |
|
12/15/2027 |
||||||||||||||||||||||||||||||||
|
121,746 |
$ |
1,850,539 |
|||||||||||||||||||||||||||||||||||||
|
253,593 |
$ |
3,854,614 |
|||||||||||||||||||||||||||||||||||||
|
274,223 |
$ |
4,168,190 |
|||||||||||||||||||||||||||||||||||||
|
253,593 |
$ |
3,854,614 |
|||||||||||||||||||||||||||||||||||||
Kieran McGrath |
|
128,866 |
$ |
1,958,763 |
||||||||||||||||||||||||||||||||||||
|
73,964 |
$ |
1,124,253 |
|||||||||||||||||||||||||||||||||||||
|
73,964 |
$ |
1,124,253 |
|||||||||||||||||||||||||||||||||||||
Anthony Bartolo |
|
163,666 |
$ |
11.38 |
|
12/9/2029 |
||||||||||||||||||||||||||||||||||
|
87,873 |
$ |
1,335,670 |
|||||||||||||||||||||||||||||||||||||
|
87,873 |
$ |
1,335,670 |
|||||||||||||||||||||||||||||||||||||
|
87,873 |
$ |
1,335,670 |
|||||||||||||||||||||||||||||||||||||
Shefali Shah |
|
37,200 |
|
3,382 |
$ |
19.46 |
|
12/15/2027 |
||||||||||||||||||||||||||||||||
|
10,146 |
$ |
154,219 |
|||||||||||||||||||||||||||||||||||||
|
20,136 |
$ |
306,067 |
|||||||||||||||||||||||||||||||||||||
|
52,832 |
$ |
803,046 |
|||||||||||||||||||||||||||||||||||||
|
40,270 |
$ |
612,104 |
|||||||||||||||||||||||||||||||||||||
|
52,831 |
$ |
803,031 |
|||||||||||||||||||||||||||||||||||||
Stephen Spears |
||||||||||||||||||||||||||||||||||||||||
|
188,552 |
$ |
2,865,990 |
(1) | Represents the exercisable portion of stock options granted and outstanding. |
(2) | Represents the unvested and unexercisable portion of stock options granted and outstanding. |
(3) | The stock option awards are scheduled to vest as follows: |
Name | Number of Securities Underlying Options |
Grant Date | Vesting Description | |||||||
James M. Chirico, Jr. |
486,981 | 12/15/2017 | 33.33% on 1st anniversary; 8.33% last day of each quarter thereafter | |||||||
Anthony Bartolo |
163,666 | 12/9/2019 | 33.34% on the date closest to Feb 15, May 15, Aug 15, Nov 15, and following the 1st anniversary; 8.33% quarterly thereafter | |||||||
Shefali Shah |
|
40,582 |
|
|
12/15/2017 |
|
33.33% on 1st anniversary; 8.33% last day of each quarter thereafter |
|
2021 Proxy Statement | 39 |
COMPENSATION DISCUSSION AND ANALYSIS | | Executive Compensation Tables |
(4) | The RSU awards are scheduled to vest as follows: |
Name | RSU Award |
Grant Date |
RSUs Vested |
RSUs Cancelled |
RSUs Unvested |
Vesting Description | ||||||||||||||
James M. Chirico, Jr. |
1,460,943 | 12/15/2017 | 1,339,197 | 121,746 | 33.33% on 1st anniversary; 8.33% last day of each quarter thereafter | |||||||||||||||
James M. Chirico, Jr. |
253,593 | 12/23/2019 | 253,593 | 33.34% on the date closest to Feb 15, May 15, Aug 15, Nov 15, and following the 1st anniversary; 8.33% quarterly thereafter | ||||||||||||||||
Kieran McGrath |
257,731 | 2/11/2019 | 128,865 | 128,866 | 33.34% 1st anniversary then 8.33% quarterly; full vesting 3 years after grant | |||||||||||||||
Kieran McGrath |
73,964 | 12/6/2019 | 73,964 | 33.34% on the date closest to Feb 15, May 15, Aug 15, Nov 15, and following the 1st anniversary; 8.33% quarterly thereafter | ||||||||||||||||
Anthony Bartolo |
87,873 | 12/9/2019 | 87,873 | 33.34% on the date closest to Feb 15, May 15, Aug 15, Nov 15, and following the 1st anniversary; 8.33% quarterly thereafter | ||||||||||||||||
Anthony Bartolo |
87,873 | 12/9/2019 | 87,873 | 33.34% on the date closest to Feb 15, May 15, Aug 15, Nov 15, and following the 1st anniversary; 8.33% quarterly thereafter | ||||||||||||||||
Shefali Shah |
121,745 | 12/15/2017 | 111,599 | 10,146 | 33.33% on 1st anniversary; 8.33% last day of each quarter thereafter | |||||||||||||||
Shefali Shah |
40,270 | 2/11/2019 | 20,134 | 20,136 | 33.34% 1st anniversary then 8.33% quarterly; full vesting 3 years after grant | |||||||||||||||
Shefali Shah |
52,832 | 12/6/2019 | 52,832 | 33.34% on the date closest to Feb 15, May 15, Aug 15, Nov 15, and following the 1st anniversary; 8.33% quarterly thereafter | ||||||||||||||||
Stephen Spears |
188,552 | 9/15/2020 | 188,552 | 33.34% on 1st anniversary; 8.33% quarterly thereafter on Feb 15, May 15, Aug 15, Nov 15 |
(5) | Determined using the closing price of a share of the Companys Common Stock on September 30, 2020, the last day of the fiscal year, which was $15.20 per share. |
(6) | The PRSU awards are scheduled to vest as follows: |
Name | PRSU Award |
Grant Date |
PRSUs Vested |
PRSUs Cancelled |
PRSUs Unvested |
Vesting Description | ||||||||||||||||
James M. Chirico, Jr. |
274,223 | 2/11/2019 | 274,223 | Vesting, if any, is eligible to occur February 11, 2022, subject to achievement of the applicable performance conditions | ||||||||||||||||||
James M. Chirico, Jr. |
253,593 | 12/23/2019 | 253,593 | Vesting, if any, is eligible to occur February 15, 2023, subject to achievement of the applicable performance conditions | ||||||||||||||||||
Kieran McGrath |
73,964 | 12/6/2019 | 73,964 | Vesting, if any, is eligible to occur February 15, 2023, subject to achievement of the applicable performance conditions | ||||||||||||||||||
Anthony Bartolo |
87,873 | 12/9/2019 | 87,873 | Vesting, if any, is eligible to occur February 15, 2023, subject to achievement of the applicable performance conditions |
40 |
|
2021 Proxy Statement |
Executive Compensation Tables | | COMPENSATION DISCUSSION AND ANALYSIS |
Name | PRSU Award |
Grant Date |
PRSUs Vested |
PRSUs Cancelled |
PRSUs Unvested |
|
Vesting Description | ||||||||||||||||||||||
Shefali Shah |
40,270 | 2/11/2019 | 40,270 | Vesting, if any, is eligible to occur February 15, 2022, subject to achievement of the applicable performance conditions | |||||||||||||||||||||||||
Shefali Shah |
52,831 | 12/6/2019 | 52,831 | Vesting, if any, is eligible to occur February 15, 2023, subject to achievement of the applicable performance conditions |
(7) | Determined using the closing price of a share of the Companys Common Stock on September 30, 2020, the last day of the fiscal year, which was $15.20 per share. |
Stock Vested
The following table sets forth information regarding stock award vesting for our NEOs during Fiscal 2020:
Stock Awards | ||||||||||
Name | Shares Acquired on Vesting (#) |
Value realized ($)(1) | ||||||||
James M. Chirico, Jr. |
|
486,982 |
$ |
6,058,059 |
||||||
Kieran McGrath |
|
128,865 |
$ |
1,782,181 |
||||||
Anthony Bartolo |
|
|
|
|
|
| ||||
Shefali Shah |
|
60,717 |
$ |
783,300 |
||||||
Stephen Spears |
|
|
|
|
|
|
(1) | The amounts included in the table have been determined using the Companys closing market price on the date immediately preceding the applicable vesting date. |
|
2021 Proxy Statement | 41 |
COMPENSATION DISCUSSION AND ANALYSIS | | Executive Compensation Tables |
Potential Payments upon Termination or CIC
42 |
|
2021 Proxy Statement |
Executive Compensation Tables | | COMPENSATION DISCUSSION AND ANALYSIS |
|
2021 Proxy Statement | 43 |
COMPENSATION DISCUSSION AND ANALYSIS | | Executive Compensation Tables |
Potential Payments upon Involuntary Termination without CIC
The table set forth below reflects the amount of compensation that would have been payable to the NEOs in the event of termination of employment, including certain benefits upon an involuntary termination that does not occur in connection with a CIC. The amounts shown assume a termination effective as of September 30, 2020. The actual amounts that would be payable can be determined only at the time of the NEOs termination.
Name | Annual Base Salary |
Annual Target Bonus |
Total Severance Pay1 |
Benefits2 | Outplacement Services3 |
Accelerated Equity4 |
Total | |||||||||||||||||||
James M. Chirico, Jr. |
$ |
1,250,000 |
|
$ |
1,875,000 |
|
$ |
6,250,000 |
|
$ |
36,180 |
|
$ 7,000 |
$ |
1,850,539 |
|
$ |
8,143,719 |
| |||||||
Kieran McGrath |
$ |
650,000 |
|
$ |
650,000 |
|
$ |
1,300,000 |
|
$ |
24,120 |
|
$ 7,000 |
|
|
|
$ |
1,331,120 |
| |||||||
Anthony Bartolo |
$ |
650,000 |
|
$ |
650,000 |
|
$ |
1,300,000 |
|
$ |
24,120 |
|
$ 7,000 |
|
|
|
$ |
1,331,120 |
| |||||||
Shefali Shah |
$ |
600,000 |
|
$ |
600,000 |
|
$ |
1,200,000 |
|
$ |
24,120 |
|
$ 7,000 |
$ |
154,219 |
|
$ |
1,385,339 |
| |||||||
Stephen Spears |
$ |
600,000 |
|
$ |
600,000 |
|
$ |
1,200,000 |
|
$ |
24,120 |
|
$ 7,000 |
|
|
|
$ |
1,231,120 |
|
(1) | For Mr. Chirico, amount shown under Total Severance Pay represents two times the sum of his base salary and target annual bonus for the year of termination, payable in a lump sum. For all other NEOs, represents the sum of the NEOs base salary plus target annual bonus for the year of termination. |
(2) | For Mr. Chirico, represents the estimated value of providing certain COBRA continuation payments for a period of 18 months following his termination date; for all other NEOs, represents continuation payments for a period of 12 months following the NEOs termination date. |
(3) | For all NEOs, Outplacement Services represents the value of outplacement services that would be made available to the executive for a certain period of time following termination of employment. |
(4) | For all NEOs, represents the value attributable to the vesting of outstanding equity awards that would be accelerated upon an involuntary termination of employment without cause (assuming that any performance-based awards were deemed to have been achieved at target level), based on the fair market value of a share of the Companys Common Stock on September 30, 2020 and their applicable award agreements. |
For Mr. Chirico and Ms. Shah, the values above include the value attributable to the accelerated vesting of Mr. Chiricos and Ms. Shahs Emergence Awards, which fully vested on December 31, 2020.
For Mr. Chirico, such acceleration would have occurred upon an Equity Award Qualifying Termination (as defined in the Emergence Awards) and either: (i) an additional portion of the awards would have accelerated and vested such that 75% of the total number of the Emergence Awards granted under the applicable award agreement would become vested; or (ii) a pro rata portion of the then-current vesting tranche of the Emergence Awards (as provided for under the original vesting schedule), would have accelerated and vested, based on the number of days of his employment from the most recent vesting date prior to the date of his termination until the next vesting date following the date of such termination, plus the Emergence Awards that would have vested pursuant to the original vesting schedule in the first twelve (12) months immediately following the date of such termination, whichever of (i) or (ii) which would result in greater total vesting. For Ms. Shah, upon termination of her employment, the number of Emergence Awards that would have otherwise vested in the 12 months following the termination date had she not been terminated would have accelerated and vested.
44 |
|
2021 Proxy Statement |
Executive Compensation Tables | | COMPENSATION DISCUSSION AND ANALYSIS |
Potential Payments upon Involuntary Termination with CIC
The table set forth below reflects the amount of compensation that would have been payable to the NEOs in the event of termination of employment, including certain benefits upon an involuntary termination related to a CIC. The amounts shown assume a termination effective as of September 30, 2020. The actual amounts that would be payable can be determined only at the time of the NEOs termination.
Name |
Annual Base Salary |
Annual Target Bonus |
Total Pay1 |
Benefits2 |
Accelerated Equity3 |
Total | ||||||||||||||||||||||||
James M. Chirico, Jr. |
$ |
1,250,000 |
$ |
1,875,000 |
$ |
11,250,000 |
|
$ 36,180 |
$ |
9,559,766 |
$ |
20,845,946 |
||||||||||||||||||
Kieran McGrath |
$ |
650,000 |
$ |
650,000 |
$ |
2,600,000 |
|
$ 36,180 |
$ |
4,207,269 |
$ |
6,843,449 |
||||||||||||||||||
Anthony Bartolo |
$ |
650,000 |
$ |
650,000 |
$ |
2,600,000 |
|
$ 36,180 |
$ |
4,632,213 |
$ |
7,268,393 |
||||||||||||||||||
Shefali Shah |
$ |
600,000 |
$ |
600,000 |
$ |
2,400,000 |
|
$ 36,180 |
$ |
2,474,433 |
$ |
4,910,613 |
||||||||||||||||||
Stephen Spears |
$ |
600,000 |
$ |
600,000 |
$ |
1,800,000 |
|
$ 36,180 |
$ |
2,865,990 |
$ |
4,702,170 |
(1) | For Mr. Chirico, amount shown under Total Severance Pay represents the sum of three times the sum of his base salary plus target annual bonus for the year of termination, plus the pro-rated target bonus for the year of termination, payable in a lump sum. For all other NEOs, represents the sum of 1.5 times the sum of the NEOs base salary plus target annual bonus for the year of termination, plus the pro-rated target bonus for the year of termination, payable in a lump sum. |
(2) | For all NEOs, represents the estimated value of providing certain COBRA continuation payments for a period of 18 months following the NEOs termination date. |
(3) | For all NEOs, represents the acceleration value attributable to the accelerated vesting of outstanding equity awards, based on the fair market value of a share of the Companys Common Stock on September 30, 2020 (assuming that (x) any performance-based awards granted to the NEOs other than the CEO were deemed to have been achieved at target level and (y) the value of accelerated stock options was calculated as the difference between the closing price of a share of the Companys Common Stock on September 30, 2020 ($15.20) and the option exercise price per share times the number of stock options accelerated.) |
For Mr. Chirico and Ms. Shah, the values above include the value attributable to the accelerated vesting of Mr. Chiricos and Ms. Shahs Emergence Awards, which fully vested on December 31, 2020.
For Mr. Chirico, such acceleration would have occurred upon an Equity Award Qualifying Termination (as defined in the Emergence Awards) and, as per the terms of the CEO Employment Agreement, if Mr. Chirico is terminated in connection with a CIC, all of his outstanding Emergence Awards would have vested in full. For Ms. Shah, upon termination of her employment, the number of Emergence Awards that would have otherwise vested in the 12 months following the termination date had she not been terminated would have accelerated and vested.
The amounts shown in the chart above do not take into account any reductions in payment that may be applied in order to avoid any excise taxes under Section 280G and Section 4999 of the Code.
|
2021 Proxy Statement | 45 |
STOCK OWNERSHIP |
Security Ownership of Certain Beneficial Owners and Management
Beneficial ownership of shares is determined under the SEC rules and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our Common Stock shown as beneficially owned by them. Unless otherwise noted below, the address of each of the individuals and entities named below is c/o Avaya Holdings Corp., 2605 Meridian Parkway, Suite 200, Durham, North Carolina 27713.
Name and Address of Beneficial Owner | Title of Class | Amount and Nature of Beneficial Ownership |
Percent of Class Owned |
|||||||||
5% Stockholder:
|
||||||||||||
The Vanguard Group |
Common Stock | 10,946,989(1) | 13.05% | |||||||||
100 Vanguard Blvd. Malvern, Pennsylvania 19355
|
||||||||||||
BlackRock, Inc. |
|
Common Stock |
|
|
8,093,155(2) |
|
|
9.65% |
| |||
55 East 52nd Street New York, New York 10055
|
||||||||||||
RingCentral, Inc. |
|
Common Stock |
|
|
8,093,204(3) |
|
|
8.80% |
| |||
20 Davis Drive Belmont, CA 94002 |
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|
|
|
|
|
|
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(1) | The information was based upon a Schedule 13G/A filed with the SEC on February 10, 2020 by The Vanguard Group. The Vanguard Group has sole voting power with respect to 107,773 of these shares, shared voting power with respect to 16,592 of these shares, sole dispositive power with respect to 10,838,595 of these shares and shared dispositive power with respect to 108,394 of these shares. The Vanguard Groups Schedule 13G/A indicates that (i) 91,802 of these shares are beneficially owned by Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, as a result of its serving as investment manager of collective trust accounts; and (ii) 32,563 of these shares are beneficially owned by Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, as a result of its serving as investment manager of Australian investment offerings. |
(2) | The information was based upon a Schedule 13G/A filed with the SEC on February 10, 2020 by BlackRock, Inc. BlackRock, Inc. has sole voting power with respect to 7,834,897 of these shares and sole dispositive power with respect to 8,093,155 of these shares. BlackRock, Inc.s Schedule 13G/A indicates that each of the following subsidiaries owns at 5% or greater of the shares reported on this |
|
2021 Proxy Statement | 47 |
STOCK OWNERSHIP | | Security Ownership of Certain Beneficial Owners and Management |
Schedule 13G/A: BlackRock Advisors, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock Investment Management (Australia) Limited; BlackRock (Netherlands) B.V.; BlackRock Fund Advisors; BlackRock Asset Management Ireland Limited; BlackRock Institutional Trust Company, National Association; BlackRock Financial Management, Inc.; BlackRock Asset Management Schweiz AG; BlackRock Fund Management Company S.A. and BlackRock Investment Management, LLC. |
(3) | The information was based upon a Schedule 13D filed with the SEC on November 12, 2019 by RingCentral, Inc. RingCentral, Inc. has sole voting and dispositive power with respect to 125,000 shares of Series A Stock, currently convertible into 8,093,204 shares of Common Stock. |
Name of Beneficial Owner |
Title of Class | Amount and Nature of Beneficial Ownership |
Percent of Class Owned | |||||||||
Directors |
||||||||||||
James M. Chirico, Jr. |
Common Stock | 1,397,182 | (4) | 1.67% | ||||||||
Stephan Scholl |
Common Stock | 52,417 | (5) | * | ||||||||
Susan L. Spradley |
Common Stock | 52,417 | (5) | * | ||||||||
Stanley J. Sutula, III |
Common Stock | 52,417 | (5) | * | ||||||||
Scott D. Vogel |
Common Stock | 52,417 | (5) | * | ||||||||
William D. Watkins |
Common Stock | 52,417 | (5) | * | ||||||||
Jacqueline E. Yeaney |
Common Stock | 38,415 | (6) | * | ||||||||
Robert Theis |
Common Stock | 4,740 | (7) | * | ||||||||
Named Executive Officers (other than James M. Chirico, Jr.): |
|
|||||||||||
Shefali Shah |
Common Stock | 142,584 | (8) | * | ||||||||
Kieran McGrath |
Common Stock | 139,822 | (9) | * | ||||||||
Anthony Bartolo |
Common Stock | 124,846 | (10) | * | ||||||||
Stephen Spears |
Common Stock | * | ||||||||||
All Current Directors and Executive Officers as a Group (13 persons)(4),(5),(6),(7),(8),(9),(10),(11) |
|
Common Stock |
|
|
2,122,857 |
|
2.53% |
* | Represents beneficial ownership of less than one percent of the outstanding shares of Common Stock. |
(4) | Includes (i) 486,981 shares of Common Stock issuable upon the exercise of outstanding stock options that are exercisable or will become exercisable within 60 days of January 4, 2021 and (ii) 84,547 shares of Common Stock issuable upon the vesting of RSUs that will vest within 60 days of January 4, 2021. |
(5) | Includes (i) 4,040 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) February 12, 2022, (y) the recipients separation of service from the Company and (z) a change in control of the Company, as defined in the Avaya Holdings Corp. 2017 Equity Incentive Plan (the 2017 Equity Incentive Plan); (ii) 16,846 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) May 15, 2022, (y) the recipients separation of service from the Company and (z) a change in control of the Company, as defined in the 2017 Equity Incentive Plan; and (iii) 18,684 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) March 4, 2023, (y) the recipients separation of service from the Company and (z) a change in control of the Company, as defined in the Avaya Holdings Corp. 2019 Equity Incentive Plan (the 2019 Equity Incentive Plan). All of the RSUs can only be settled with Common Stock. |
(6) | Includes (i) 2,885 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) March 18, 2022, (y) the recipients separation of service from the Company and (z) a change in control of the Company, as defined in the 2017 Equity Incentive Plan; and (ii) 16,846 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) May 15, 2022, (y) the recipients separation of service from the Company and (z) a change in control of the Company, as defined in the 2017 Equity Incentive Plan; and (iii) 18,684 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) March 4, 2023, (y) the recipients separation of service from the Company and (z) a change in control of the Company, as defined in the 2019 Equity Incentive Plan. These RSUs can only be settled with Common Stock. |
(7) | Consists of 4,740 shares of Common Stock issuable in respect of RSUs that have vested but have had their settlement deferred until the earliest to occur of: (x) November 6, 2023, (y) the recipients separation of service from the Company and (z) a change in control of the Company, as defined in the 2019 Equity Incentive Plan. These RSUs can only be settled with Common Stock. |
(8) | Includes (i) 40,852 shares of Common Stock issuable upon the exercise of outstanding stock options that are exercisable or will become exercisable within 60 days of January 4, 2021, and (ii) 3,354 shares of Common Stock issuable upon the vesting of RSUs within 60 days of January 4, 2021. |
(9) | Includes 21,469 shares of Common Stock issuable upon the vesting of RSUs within 60 days of January 4, 2021. |
48 |
|
2021 Proxy Statement |
Security Ownership of Certain Beneficial Owners and Management | | STOCK OWNERSHIP |
(10) | Includes (i) 58,592 shares of Common Stock issuable upon the exercise of outstanding stock options that are exercisable or will become exercisable within 60 days of January 4, 2021, and (ii) 58,592 shares of Common Stock issuable upon the vesting of RSUs within 60 days of January 4, 2021. |
(11) | All current directors and executive officers includes: the eight directors listed above, Anthony F. Bartolo, Kieran J. McGrath, Shefali A. Shah, Stephen D. Spears and Kevin Speed. |
|
2021 Proxy Statement | 49 |
DIRECTOR COMPENSATION |
Members of the Board who are Company employees do not receive any additional compensation for their service as directors.
Fiscal 2020 Non-Employee Director Compensation Program
For Fiscal 2020, the program consisted of the following:
Additional Compensation
Additional Cash Retainers for Leadership Positions:
Non-Executive Chair: $75,000
Audit Committee Chair: $25,000
Compensation Committee Chair: $15,000
Nominating & Corporate Governance Committee Chair: $10,000
Meeting Fees: $2,000 per Board or committee meeting in excess of 20 aggregate meetings during the fiscal year
Initial Equity Grant for Any Non-Employee Director Joining the Board of Directors Before the next Annual General Meeting: $250,000 in RSUs, pro-rated to reflect service as a non-employee director for the portion of the fiscal year served until the next Annual Meeting
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50 |
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2021 Proxy Statement |
Fiscal 2020 Non-Employee Director Compensation Program | | DIRECTOR COMPENSATION |
The following table details the total compensation paid to our non-employee directors for Fiscal 2020:
Name |
Fees Earned or Paid in Cash (1) |
Stock Awards(2) | Total | ||||||||||||
Stephan Scholl |
$ |
75,000 |
|
$ |
250,000 |
|
$325,000 |
||||||||
Susan L. Spradley |
$ |
87,000 |
$ |
250,000 |
|
$337,000 |
|||||||||
Stanley J. Sutula, III |
$ |
100,000 |
$ |
250,000 |
|
$350,000 |
|||||||||
Scott D. Vogel |
$ |
98,000 |
$ |
250,000 |
|
$348,000 |
|||||||||
William D. Watkins |
$ |
150,000 |
$ |
250,000 |
|
$400,000 |
|||||||||
Jacqueline E. Yeaney |
$ |
75,000 |
$ |
250,000 |
|
$325,000 |
(1) | Cash compensation consists of the $75,000 annual cash retainer and additional cash retainers for leadership positions, as described above. The table above also includes meeting fees paid for Fiscal 2020 consisting of $2,000 for Ms. Spradley and $8,000 for Mr. Vogel. |
(2) | Amounts shown represent the grant date fair value of the annual grant award of $250,000, awarded on March 4, 2020 following each directors re-election at the 2020 Annual General Meeting, as calculated in accordance with ASC 718. See Note 16 of the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020 for an explanation of the assumptions used in the valuation of these awards. |
Non-Employee Director Share Ownership Guidelines
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2021 Proxy Statement | 51 |
EXECUTIVE OFFICERS |
The officers are elected by and serve at the discretion of the Board. Below is biographical information regarding our current Section 16 Officers. Biographical information about Mr. Chirico is in this Proxy Statement under the heading PROPOSAL 1 ELECTION OF DIRECTORS.
Name |
Age | Position | ||
James M. Chirico, Jr. |
63 |
President, Chief Executive Officer and Director | ||
Anthony Bartolo |
50 |
Executive Vice President and Chief Product Officer | ||
Kieran McGrath |
61 |
Executive Vice President and Chief Financial Officer | ||
Shefali Shah |
49 |
Executive Vice President, Chief Administrative Officer and General Counsel | ||
Stephen Spears |
52 |
Executive Vice President, Chief Revenue Officer | ||
Kevin Speed |
46 |
Vice President, Controller and Chief Accounting Officer |
52 |
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2021 Proxy Statement |
EXECUTIVE OFFICERS |
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2021 Proxy Statement | 53 |
PROXY AND VOTING INFORMATION |
Why am I receiving these materials?
What is the purpose of the Annual Meeting?
Who is entitled to vote at the Annual Meeting?
Why are you holding a virtual meeting instead of a physical meeting?
How can I attend the virtual Annual Meeting?
54 |
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2021 Proxy Statement |
PROXY AND VOTING INFORMATION |
What can I do if I need technical assistance during the Annual Meeting?
If I cannot participate in the live Annual Meeting webcast, can I vote or listen to it later?
What constitutes a quorum?
How are abstentions and broker non-votes counted?
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2021 Proxy Statement | 55 |
PROXY AND VOTING INFORMATION |
What vote is required to approve each item to be voted on at the Annual Meeting and how does the Board recommend I vote?
Only votes cast For a nominee will be counted in the election of directors. Votes that are withheld in respect of one or more nominees will result in those nominees receiving fewer votes but will not count as a vote against the nominees. Abstentions and broker non-votes (described above) are not counted for purposes of the election of directors and will not affect the outcome of such election. You have the right to vote For or Against, or to Abstain from voting in connection with Proposals 2 and 3. The following table summarizes each proposal, the Boards recommendation, the affirmative vote required for approval and whether broker discretionary voting is allowed.
Proposal Number |
Proposal | Board Recommendation |
Affirmative Vote Required for Approval |
Broker Discretionary Voting Allowed | ||||
1 |
Election of Directors |
FOR ALL |
Plurality vote |
No | ||||
2 |
Ratification of the appointment of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for Fiscal 2021 |
FOR |
Majority of votes cast |
Yes | ||||
3 |
Advisory approval of the Companys named executive officers compensation |
FOR |
Majority of votes cast |
No |
Will any other matters be voted on?
How do I vote?
56 |
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2021 Proxy Statement |
PROXY AND VOTING INFORMATION |
Can I change my vote after I return my proxy card?
If I dissent to any matter to be voted on, what are my rights?
What if I return a proxy card but do not make specific choices?
What does it mean if I receive more than one proxy card or voting instruction form?
How will votes be recorded?
What is householding and how does it affect me?
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2021 Proxy Statement | 57 |
PROXY AND VOTING INFORMATION |
Who is paying for this proxy solicitation?
Where can I find the voting results of the Annual Meeting?
Who is Avaya Holdings Corp.s transfer agent?
58 |
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2021 Proxy Statement |
ANNUAL REPORT |
The Board knows of no other matters that will be presented for consideration at the Annual Meeting. Should other matters be properly introduced at the 2021 Annual Meeting, those persons named in the enclosed proxy will have discretionary authority to act on such matters and will vote the proxy in accordance with their best judgment.
By Order of the Board of Directors,
Shefali Shah
Executive Vice President, Chief Administrative Officer
and General Counsel
January 19, 2021
|
2021 Proxy Statement | 61 |
ANNEX A |
The following tables reconcile historical GAAP measures to non-GAAP measures.
Avaya Holdings Corp.
Supplemental Schedules of Non-GAAP Reconciliations
(Unaudited; in millions)
(In millions) | Fiscal year ended September 30, 2020 |
Fiscal year ended September 30, 2019 |
||||||
GAAP Revenue |
$ |
2,873 |
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$ |
2,887 |
| ||
Adj. for fresh start accounting |
|
6 |
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21 |
| ||
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Non-GAAP Revenue |
$ |
2,879 |
|
$ |
2,908 |
| ||
(In millions) | Fiscal year ended September 30, 2020 |
Fiscal year ended September 30, 2019 |
||||||
Reconciliation of Non-GAAP Gross Profit and Non-GAAP Gross Margin |
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Gross Profit |
$ |
1,580 |
|
$ |
1,575 |
| ||
Items excluded: |
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|
|
|
|
| ||
Adj. for fresh start accounting |
|
7 |
|
|
37 |
| ||
Amortization of technology intangible assets |
174 | 174 | ||||||
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|
|||||
Non-GAAP Gross Profit |
$ |
1,761 |
|
$ |
1,786 |
| ||
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|
|||||
GAAP Gross Margin |
|
55.0 |
% |
|
54.6 |
% | ||
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|
|||||
Non-GAAP Gross Margin |
|
61.2 |
% |
|
61.4 |
% |
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2021 Proxy Statement | A - 2 |
ANNEX A |
Avaya Holdings Corp.
Supplemental Schedules of Non-GAAP Reconciliations
(Unaudited; in millions)
(In millions) | Fiscal year ended September 30, 2020 |
Fiscal year ended September 30, 2019 |
||||||
Net loss |
$ |
(680 |
) |
$ |
(671 |
) | ||
Interest expense |
|
226 |
|
|
237 |
| ||
Interest income |
|
(6 |
) |
|
(14 |
) | ||
Provision for income taxes |
|
62 |
|
|
2 |
| ||
Depreciation and amortization |
|
423 |
|
|
443 |
| ||
|
|
|
|
|||||
EBITDA |
$ |
25 |
|
$ |
(3 |
) | ||
Impact of fresh start accounting adjustments |
|
1 |
|
|
5 |
| ||
Restructuring charges, net of sublease income |
|
20 |
|
|
22 |
| ||
Advisory fees |
|
40 |
|
|
11 |
| ||
Acquisition-related costs |
|
|
|
|
9 |
| ||
Share-based compensation |
|
30 |
|
|
25 |
| ||
Impairment charges |
|
624 |
|
|
659 |
| ||
Change in fair value of Emergence Date Warrants |
|
3 |
|
|
(29 |
) | ||
Loss on foreign currency transactions |
|
16 |
|
|
8 |
| ||
Gain on investments in equity and debt securities, net |
|
(49 |
) |
|
(1 |
) | ||
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|
|
|
|||||
Adjusted EBITDA |
$ | 710 | $ | 706 | ||||
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|
|
|
|||||
Adjusted EBITDA Margin |
|
24.7 |
% |
|
24.3 |
% |
A - 3 |
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|
2021 Proxy Statement |
AVAYA HOLDINGS CORP. 2605 MERIDIAN PARKWAY, SUITE 200 DURHAM, NORTH CAROLINA 27713 |
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 PM Eastern Time on March 2, 2021. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/AVYA2021
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 PM Eastern Time on March 2, 2021. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
D28876-P47774 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
AVAYA HOLDINGS CORP. | For All |
Withhold All |
For All Except |
To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below. | ||||||||||||||||||||
The Board of Directors recommends you
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1. | Election of Directors | ☐ | ☐ | ☐ | ||||||||||||||||||||
Nominees: | ||||||||||||||||||||||||
01) James M. Chirico, Jr. 05) Robert Theis | ||||||||||||||||||||||||
02) Stephan Scholl 06) Scott D. Vogel | ||||||||||||||||||||||||
03) Susan L. Spradley 07) William D. Watkins | ||||||||||||||||||||||||
04) Stanley J. Sutula, III 08) Jacqueline E. Yeaney | ||||||||||||||||||||||||
The Board of Directors recommends you vote FOR proposals 2 and 3. | For | Against | Abstain | |||||||||||||||||||||
2. | Ratification of the appointment of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for the fiscal year ending September 30, 2021. | ☐ | ☐ | ☐ | ||||||||||||||||||||
3. | Advisory approval of the Companys named executive officers compensation. | ☐ | ☐ | ☐ | ||||||||||||||||||||
NOTE: With respect to other matters that properly come before the 2021 Annual Meeting and any adjournment or postponement thereof, this proxy will be voted in the discretion of the named proxies.
|
||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com.
D28877-P47774
AVAYA HOLDINGS CORP. Annual Meeting of Stockholders March 3, 2021 10:30 AM ET
This proxy is solicited by the Board of Directors
The stockholder(s) hereby appoint(s) Shefali Shah and Sara Bucholtz, or either of them, as proxies, each with the power to appoint their substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of AVAYA HOLDINGS CORP. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 10:30 AM ET on March 3, 2021, online at www.virtualshareholdermeeting.com/AVYA2021, and any adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors recommendations.
Continued and to be signed on reverse side
|
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