DEF 14A 1 d532571ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

 

 

Filed by the Registrant                               Filed by a Party other than the Registrant  

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to § 240.14a-12

SYMANTEC CORPORATION

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO

350 Ellis Street

Mountain View, California 94043

 

 

NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS

to be held on:

December 3, 2018

9:00 a.m. Pacific Time

 

 

Dear Stockholder:

You are cordially invited to attend our 2018 Annual Meeting of Stockholders (the “Annual Meeting”), which will be held at 9:00 a.m. (Pacific Time) on Monday, December 3, 2018. This year’s meeting will again be completely virtual and conducted via live webcast. You will be able to attend the Annual Meeting online and submit your questions prior to or during the meeting by visiting www.virtualshareholdermeeting.com/SYMC2018. You will also be able to vote your shares electronically at the Annual Meeting.

We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our stockholders. Hosting a virtual meeting enables increased stockholder attendance and participation since stockholders can participate from any location around the world. In addition, the online format will allow us to communicate more effectively with you via a pre-meeting forum that you can enter by visiting www.virtualshareholdermeeting.com/SYMC2018 and submit questions in advance of the Annual Meeting.

For your convenience, we are also pleased to offer a re-playable webcast of the Annual Meeting at investor.symantec.com.

We are holding the Annual Meeting for the following purposes, which are more fully described in the proxy statement:

 

  1.

To elect the eleven nominees named in the proxy statement to Symantec’s Board of Directors;

 

  2.

To ratify the appointment of KPMG LLP as Symantec’s independent registered public accounting firm for the 2019 fiscal year;

 

  3.

To approve amendments to our 2013 Equity Incentive Plan, as amended, to increase the number of shares authorized for issuance thereunder by 12,000,000 shares and to approve additional amendments thereto;

 

  4.

To approve amendments to our 2008 Employee Stock Purchase Plan, as amended, to extend the term by an additional ten years;

 

  5.

To hold an advisory vote to approve executive compensation; and

 

  6.

To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

On or about October 29, 2018, we expect to send to our stockholders our proxy materials, including our proxy statement and our annual report, and instructions on how to vote through the Internet or by telephone.

Only stockholders of record as of the close of business on October 5, 2018 are entitled to notice of, and vote at, the Annual Meeting or any postponement or adjournment thereof. A list of stockholders entitled to vote will be available for inspection at our offices for ten days prior to the Annual Meeting. If you would like to view this stockholder list, please contact Investor Relations at (650) 527-8020.

Your vote is very important. Whether or not you plan to virtually attend the Annual Meeting, please vote at your earliest convenience by following the instructions in the proxy card you received in the mail. You may revoke your proxy at any time before it is voted. Please refer to the “2018 Annual Meeting of Stockholders Meeting Information” section of the proxy statement for additional information.

BY ORDER OF THE BOARD OF DIRECTORS

 

 

LOGO

SCOTT C. TAYLOR

Executive Vice President, General

Counsel and Secretary

Mountain View, California

October 29, 2018

 

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON DECEMBER 3, 2018. The proxy statement and Symantec’s Form 10-K for the 2018 fiscal year are available at http://investor.symantec.com/About/Investors/financial-information/Annual-Reports/default.aspx.


Table of Contents

TABLE OF CONTENTS

 

     Page  

PROXY SUMMARY

     1  

CORPORATE GOVERNANCE

     8  

Corporate Governance Guidelines

     8  

Code of Conduct and Code of Ethics

     8  

Policy Against Short-Selling, Hedging and Pledging Symantec Securities

     8  

Stock Ownership Guidelines

     8  

Stockholder Engagement

     9  

Majority Vote Standard and Director Resignation Policy

     9  

Proxy Access

     9  

Board Leadership Structure

     10  

Board Independence

     10  

Change in Director Occupation

     10  

Board and Committee Effectiveness

     10  

Board’s Role in Risk Oversight

     11  

Board’s Role in Oversight of Company Strategy

     11  

Board’s Role in Oversight of Human Capital Management

     12  

Outside Advisors

     12  

Board Structure and Meetings

     12  

Executive Sessions

     13  

Succession Planning

     13  

Attendance of Board Members at Annual Meetings

     13  

THE BOARD AND ITS COMMITTEES

     14  

Audit Committee

     14  

Compensation and Leadership Development Committee

     15  

Nominating and Governance Committee

     16  

DIRECTOR NOMINATIONS AND COMMUNICATION WITH DIRECTORS

     17  

Criteria for Nomination to the Board

     17  

Process for Identifying and Evaluating Nominees

     18  

Stockholder Proposals for Nominees

     18  

Contacting the Board of Directors

     19  

PROPOSAL NO. 1 ELECTION OF DIRECTORS

     20  

Nominees for Director

     20  

Agreement with Starboard Value LP

     32  

Summary of Director Qualifications and Experience

     32  

Fiscal 2018 Director Compensation

     34  

PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     35  

Principal Accountant Fees and Services

     35  

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

     35  

PROPOSAL NO. 3 AMENDMENTS TO 2013 EQUITY INCENTIVE PLAN, AS AMENDED

     37  

Promotion of Good Compensation Practices

     37  

Planned Frequency of Share Requests

     37  

Share Request Background

     38  

Non-Employee Director Compensation Limit

     38  

 

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     Page  

Equity Plan Philosophy

     39  

Plan History

     39  

Plan History — Burn Rate

     40  

Summary of our 2013 Equity Incentive Plan, as Amended

     42  

Summary of Federal Income Tax Consequences of Awards Granted under the 2013 Equity Incentive Plan, as Amended

     44  

ERISA Information

     45  

Accounting Treatment

     45  

New Plan Benefits

     46  

Equity Compensation Plan Information

     47  

PROPOSAL NO. 4 AMENDMENTS TO 2008 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED

     48  

Plan History

     48  

Summary of our 2008 Employee Stock Purchase Plan, as Amended

     48  

U.S. Federal Income Tax Consequences

     50  

Accounting Treatment

     51  

New Plan Benefits

     51  

PROPOSAL NO. 5 ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

     53  

OUR EXECUTIVE OFFICERS

     55  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     57  

Section 16(a) Beneficial Ownership Reporting Compliance

     58  

EXECUTIVE COMPENSATION AND RELATED INFORMATION

     60  

Compensation Discussion & Analysis (CD&A)

     60  

Summary Compensation Table for Fiscal 2018

     91  

Grants of Plan-Based Awards in Fiscal 2018

     95  

Outstanding Equity Awards at Fiscal Year-End 2018

     96  

Option Exercises and Stock Vested in Fiscal 2018

     97  

Non-Qualified Deferred Compensation in Fiscal 2018

     98  

Potential Payments Upon Termination or Change-In-Control

     98  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     103  

Related-Person Transactions Policy and Procedures

     103  

Certain Related Person Transactions

     104  

REPORT OF THE AUDIT COMMITTEE

     106  

2018 ANNUAL MEETING OF STOCKHOLDERS MEETING INFORMATION

     107  

Information About Solicitation and Voting

     107  

About the Annual Meeting

     107  

ADDITIONAL INFORMATION

     111  

Stockholder Proposals for the 2019 Annual Meeting

     111  

Available Information

     111  

“Householding” — Stockholders Sharing the Same Last Name and Address

     111  

OTHER MATTERS

     112  

ANNEX A – 2013 EQUITY INCENTIVE PLAN, AS AMENDED

  

ANNEX B – 2008 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED

  

ANNEX C – RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

  

 

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PROXY SUMMARY

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

2018 ANNUAL MEETING OF STOCKHOLDERS INFORMATION

 

Date and Time:

 

  

Monday, December 3, 2018 at 9:00 a.m. Pacific Time

 

Location:

  

Meeting live via the Internet by visiting www.virtualshareholdermeeting.com/SYMC2018

 

Record Date:

  

October 5, 2018

 

Admission:

   To participate in the Annual Meeting, visit www.virtualshareholdermeeting.com/SYMC2018. You will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials.

VOTING MATTERS

 

Proposals

   Board
Recommendation
   Page Number for
Additional
Information

1.    Election of Directors

   FOR    20

2.     Ratification of Independent Registered Public Accounting Firm

   FOR    35

3.    Approval of amendments to the 2013 Equity Incentive Plan

   FOR    37

4.     Approval of amendments to the 2008 Employee Stock Purchase Plan

   FOR    48

5.    Advisory Vote to Approve Executive Compensation

   FOR    53


 

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OUR DIRECTOR NOMINEES

Immediately following the Annual Meeting, the proposed Board of Directors and committees thereof will be as follows:

 

Name

  Age   Director
Since
 

Principal Occupation

  Independent  

 

Committee Memberships

  Other
Current
Public
Boards
 

AC

        CC        

NGC

Gregory S. Clark

  53   2016   Chief Executive Officer   No        

Frank E. Dangeard

  60   2007   Managing Partner, Harcourt   Yes   LOGO     LOGO   1

Peter A. Feld

  39   2018   Managing Member and Head of Research at Starboard Value LP   Yes     LOGO   LOGO   0

Dale L. Fuller

  60   2018   Operating Partner, The Riverside Company   Yes       LOGO   1

Kenneth Y. Hao

  50   2016   Managing Partner and Managing Director, Silver Lake Partners   Yes         1

David W. Humphrey

  41   2016   Managing Director, Bain Capital   Yes         2

David L. Mahoney

  64   2003   Director   Yes     LOGO   LOGO   2

Anita M. Sands

  42   2013   Director   Yes   LOGO       2

Daniel H. Schulman

  60   2000   President and CEO, PayPal Holdings, Inc.   Yes     LOGO   LOGO   2

V. Paul Unruh

  70   2005   Director   Yes   LOGO       0

Suzanne M. Vautrinot

  58   2013   President, Kilovolt Consulting Inc.   Yes   LOGO       2

 

AC = Audit Committee     CC = Compensation and Leadership Development Committee     NGC = Nominating & Governance Committee

LOGO = Member         LOGO = Chair

OVERVIEW OF DIRECTOR NOMINEE QUALIFICATIONS AND EXPERIENCE

 

 

LOGO



 

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11

 

Director

Nominees

 

   

 

90%

 

Independent

(all but CEO)

 

   

 

27%

 

Diverse

 

   

 

5

 

Directors Added

Since 2016

 

   

 

7 Years

 

Average Tenure

 

SOUND CORPORATE GOVERNANCE PRACTICES

 

 

Separate Independent Chairman and CEO

 

Board Committees Consist Entirely of Independent Directors

 

All Directors Attended at least 75% of Meetings Held

 

Independent Directors Meet Regularly in Executive Session

 

Annual Board and Committee Self-Evaluations

 

Risk Oversight by Full Board and Committees

 

Annual Election of All Directors

 

Majority Voting for Directors

 

Stockholder Ability to Call Special Meetings (15% threshold)

 

Stockholder Ability to Act by Written Consent

 

Proxy Access Subject to Standard Eligibility Requirements

 

Insider Trading Policy Prohibits Short-selling, Hedging and Pledging Symantec Securities

 

Stock Ownership Requirements for Directors and Executive Officers

EXECUTIVE COMPENSATION PHILOSOPHY AND PRACTICES

The overriding principle driving our compensation programs continues to be our belief that it benefits our employees, customers, partners and stockholders to have management’s compensation tied to our near- and long-term performance. Our pay programs reward achievement of challenging performance goals that align with our business strategy. We measure shorter-term results, though the majority of emphasis is placed on long-term equity compensation that provides direct alignment with stockholders. We use responsible pay policies to reinforce strong governance and enhance stockholder alignment.

 

 

LOGO

Base Salary Annual Incentives Long-Term Incentives Aligned with role, contributions, and com-petitive market practice Supports attraction and retention of talent 50% Revenue (non-GAAP) Encour-ages overall company growth, a key stockholder value driver 70% Performance Units (PRUs) Independently-measured corporate metrics (non-GAAP EPS and relative TSR) provides short-term and long- term motivation Pay Policies Ownership guidelines No hedging/pledging Clawback policy Double-trigger equity 50% Operating Income (non-GAAP) Provides a strong focus on cost control, aligns with stockholder value growth 30% Time-Vested Restricted Stock Units (RSUs) Promotes retention and stockholder alignment



 

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Consistent with our pay-for-performance philosophy, our executive officers’ compensation is structured so that a large portion of their total direct compensation is paid based on Company performance (modified by individual achievement). As illustrated by the following charts, for fiscal 2018, approximately 95% of our CEO’s target total direct compensation was at-risk, and on average approximately 94% of our other named executive officers’ target total direct compensation was at-risk. As a result of no annual incentives being paid to our executive officers for fiscal 2018, actual pay was delivered 94% in the form of equity for our CEO and an average of 93% for our NEOs other than the CEO. (please see “Executive Compensation and Related Information — Compensation Discussion & Analysis (CD&A)” beginning on page 60 for more discussion of executive officer pay mix).

 

 

LOGO

Fiscal 2018 Total Direct Compensation Mix(1) Fiscal 2018 Total Direct Compensation Mix(1) CEO NEOs except CEO Base Salary 5% Base Salary 6% Annual Annual Incentive 8% Incentive 7% RSU 23% RSU 23% PRU 63% PRU 63% At-Risk At-Risk Compensation Compensation 95% 94%

 

(1) 

Does not equal 100% due to rounding.



 

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The following factors demonstrate our continued and heightened commitment to pay-for-performance and to corporate governance best practices:

SOUND COMPENSATION GOVERNANCE PRACTICES

 

    

What We Do:

       

What We Do Not Do:

LOGO

   We reward performance that meets our predetermined goals.    LOGO    We do not pay performance-based cash or equity awards for unmet performance goals.

LOGO

   We cap payouts under our plans to discourage excessive or inappropriate risk taking by our named executive officers (“NEOs”).    LOGO    Our compensation plans do not have minimum guaranteed payout levels.

LOGO

   We have a relevant peer group and reevaluate the peer group annually, at a minimum.    LOGO    We do not permit short-sales, hedging or pledging of our stock*

LOGO

   We have long-standing significant stock ownership guidelines for our executives and directors, which include stock holding requirements until the following value thresholds have been met: 10x directors’ total annual cash retainer, 6x our CEO’s total base salary, 3x our CFO’s total base salary and 2x our other NEOs’ total base salary.   

 

LOGO

 

 

LOGO

 

LOGO

  

 

We do not provide “golden parachute” excise tax gross-ups under §4999 of IRC for our NEOs.

 

We do not provide material perquisites.

 

 

We do not permit repricing of stock options without stockholder approval.

 

LOGO

   We have adopted a comprehensive “clawback” policy, applicable to all performance-based compensation granted to the company’s officers (even after they leave Symantec).   

 

LOGO

  

 

We do not permit the payment of dividend or dividend equivalents on unvested equity awards.

LOGO

   Only double-trigger change in control provisions apply to our regular compensation programs.      

LOGO

   We limit any potential severance payments to not more than 1x our executive officers’ total target cash compensation and 2x our CEO’s total base salary.      

LOGO

   Our Compensation and Leadership Development Committee retains an independent compensation consultant.      

LOGO

   We hold an annual advisory vote on executive compensation.      

LOGO

   We seek feedback on executive compensation through stockholder engagement.      

LOGO

   We require one-year minimum vesting on stock options and stock appreciation rights (SAR) awards.      

 

*

The Board granted a limited exception to this policy to Starboard Value LP. See “Corporate Governance — Policy Against Short-Selling, Hedging and Pledging Symantec Securities” below.

EFFECTIVELY ALIGNING PAY FOR PERFORMANCE

Executive Annual Incentive Plan

The performance relative to the core financial operating metrics under the FY18 Executive Annual Incentive Plan was as follows(1):

 

   

Non-GAAP operating income: 95.2% of the targeted level, below the threshold of 97%

 

   

Non-GAAP revenue: 96.4% of the targeted performance level, below the threshold of 98%

As a result, no awards were funded because the thresholds for both metrics were not met and named executive officers did not receive any annual incentive plan compensation for 2018.

 

 

(1) 

See “Executive Compensation and Related Information — Compensation Discussion & Analysis (CD&A) — Compensation Components — II. Executive Annual Incentive Plan” below for a description of the non-GAAP operating income and non-GAAP revenue targets.



 

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2018 PRU Awards

In June 2017, our Compensation and Leadership Development Committee (the “Compensation Committee”) approved fiscal 2018 PRU awards (the “FY18 PRUs”) for our executive officers, which may be earned over three years based on the Company’s achievement of non-GAAP earnings per share (“EPS”) for fiscal 2018 along with relative total stockholder return (“TSR”) against the Nasdaq 100 index for the two- and three-year periods ending at the completion of fiscal 2019 and fiscal 2020, respectively, as described below.

50% of the total FY18 PRUs (“FY18 Year One Shares”) were eligible to be earned based on fiscal 2018 non-GAAP EPS. For fiscal 2018, our non-GAAP EPS target under the FY18 PRUs was $1.64 per share versus a threshold level of $1.56 per share. This resulted in 50.5% of the FY18 Year One Shares (25.25% of the total FY18 PRUs) becoming eligible to be earned at the end of the FY18 PRU Performance Period at the end of fiscal 2020*.

 

 

*

See “Executive Compensation and Related Information — Compensation Discussion & Analysis (CD&A) — Compensation Components — II. Executive Annual Incentive Plan — Compensation Components — II. Equity Incentive Awards — Performance Restricted Stock Units (PRUs)” below for a description of non-GAAP EPS target and relative TSR.

AMENDMENTS TO THE 2013 EQUITY INCENTIVE PLAN

We are asking stockholders to approve the following amendments to our 2013 Equity Incentive Plan, as amended (the “2013 Plan”), which were approved by our Board in August and October 2018:

 

  (i)

an increase to the number of shares reserved for issuance under the 2013 Plan by 12,000,000 shares; and

 

  (ii)

a new limit on total annual non-employee director compensation of $900,000.

Our Board takes seriously its commitment to stockholders to use equity responsibly, and in recent years our gross burn rate has been decreasing:

 

 

LOGO

Gross Burn Rate 2.17% 1.78% 1.49% 2016 2017 2018

If approved, with the 12,000,000 share increase, approximately 25,093,483 shares will be available for future grant and issuance under the 2013 Plan, which represents approximately 3.93% of our outstanding shares as of October 10, 2018. For information about our overhang, please see “Plan History” under Proposal No. 3.

As discussed more fully below in Proposal No. 3, increasing the number of shares reserved for issuance under the 2013 Plan is in the best interests of our Company because of the continuing need



 

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to provide equity-based incentives to attract, motivate and retain the most qualified personnel and to respond to relevant market changes in equity compensation practices. The use of equity compensation has historically been a significant part of our overall compensation philosophy at Symantec and is a practice that we plan to continue.

For a more detailed discussion of Proposal No. 3, please see page 37.

AMENDMENTS TO THE 2008 EMPLOYEE STOCK PURCHASE PLAN

We are asking stockholders to approve an amendment to our 2008 Employee Stock Purchase Plan, as amended (the “ESPP”) to extend the term of the ESPP by an additional ten years through January 30, 2028. The Board approved this amendment on January 30, 2018. Although stockholder approval is not required to extend the term, the Board is submitting this amendment for extension of the ESPP to our stockholders for approval as a matter of good corporate practice.

For a more detailed discussion of Proposal No. 4, please see page 48.

MEETING INFORMATION

We provide information about Symantec’s 2018 Annual Meeting of Stockholders (the “Annual Meeting”), voting and additional information starting on page 107.



 

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CORPORATE GOVERNANCE

Symantec is strongly committed to good corporate governance practices. These practices provide an important framework within which our Board of Directors (the “Board”) and management can pursue our strategic objectives for the benefit of our stockholders.

Corporate Governance Guidelines

Our Corporate Governance Guidelines generally specify the distribution of rights and responsibilities of Symantec’s Board, management and stockholders, and detail the rules and procedures for making decisions on corporate affairs. In general, the stockholders elect the Board and vote on certain extraordinary matters; the Board is responsible for the general governance of our Company, including selection and oversight of key management; and management is responsible for running our day-to-day operations.

Our Corporate Governance Guidelines are available on the Investor Relations section of our website, which is located at investor.symantec.com, by clicking on “Company Charters,” under “Corporate Governance.” The Corporate Governance Guidelines are reviewed at least annually by our Nominating and Governance Committee, and changes are recommended to our Board for approval as appropriate. Our Board represents the interests of the stockholders in perpetuating a successful business and optimizing long term stockholder value. The Board is responsible for ensuring that the Company is managed in a manner that is designed to serve those interests.

Code of Conduct and Code of Ethics

We have adopted a code of conduct that applies to all of our Board members, officers and employees. We have also adopted a code of ethics for our Chief Executive Officer and senior financial officers, including our principal financial officer and principal accounting officer. Our Code of Conduct and Financial Code of Ethics are posted on the Investor Relations section of our website located at investor.symantec.com, by clicking on “Company Charters,” under “Corporate Governance.” Any amendments or waivers of our Code of Conduct and Code of Ethics for Chief Executive Officer and Senior Financial Officers pertaining to a member of our Board or one of our executive officers will be disclosed on our website at the above-referenced address.

Policy Against Short-Selling, Hedging and Pledging Symantec Securities

Our Insider Trading Policy prohibits all directors and employees from short-selling Symantec stock or engaging in transactions involving Symantec-based derivative securities, including hedging transactions. This policy was established in part because there is often a conflict of interest involved when an employee bets against or hedges a bet regarding our Company’s performance. In addition, our Insider Trading Policy prohibits pledging Symantec stock as collateral for a loan, since the stock may be sold in foreclosure if the borrower defaults on the loan at a time when the pledgor is aware of material, nonpublic information.

Notwithstanding this policy, the Board granted a waiver from the prohibition against transactions with respect to derivative securities for Mr. Feld and Starboard Value LP (“Starboard”) solely for the purpose of enabling Starboard to exercise the forward contracts that were in existence before Mr. Feld was appointed to the Board and that were described in Starboard’s Schedule 13D with respect to the Company filed with the Securities and Exchange Commission (the “SEC”) on August 16, 2018. The grant of this waiver was conditioned upon Mr. Feld’s and Starboard’s compliance with all applicable laws and all other provisions of the Company’s Insider Trading Policy in connection with such derivative securities transactions.

Stock Ownership Guidelines

It is the policy of the Board that our directors’ and officers’ interests align with those of our stockholders. In furtherance of this policy, our Board adopted stock ownership guidelines to better align our

 

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directors’ and officers’ interests with those of our stockholders. Details of our directors’ stock ownership guidelines are disclosed under “Summary of Director Qualifications and Experience” on page 32, and details of our executive officers’ stock ownership guidelines are disclosed under “Stock Ownership Requirements” in the “Compensation Discussion & Analysis” section on page 60. The Compensation Committee determines the stock ownership guidelines and the Nominating and Governance Committee monitors compliance under such guidelines.

Stockholder Engagement

We are committed to ongoing engagement with our stockholders to gain valuable insight into the issues that matter most to them and to enable our Company to address them effectively. During fiscal 2018 we engaged in discussions with stockholders representing approximately 65% of our then outstanding shares to discuss our strategy, focus on delivering financial results that create significant stockholder value, as well as corporate governance, executive compensation and other company matters. Our stockholders were generally supportive of the direction of the company and provided valuable insights and feedback, which was shared with the full Board for review and consideration.

Majority Vote Standard and Director Resignation Policy

Our Bylaws and Corporate Governance Guidelines provide for a majority voting standard for the election of directors. Under the majority vote standard, each nominee must be elected by a majority of the votes cast with respect to such nominee at any meeting for the election of directors at which a quorum is present. A “majority of the votes cast” means the votes cast “for” a nominee’s election must exceed the votes cast “against” that nominee’s election. A plurality voting standard will apply instead of the majority voting standard if: (i) a stockholder has provided us with notice of a nominee for director in accordance with our Bylaws; and (ii) that nomination has not been withdrawn as of 10 days before we first deliver proxy materials to stockholders.

To effectuate this policy with regard to incumbent directors, the Board will not nominate an incumbent director for re-election unless prior to such nomination the director has agreed to promptly tender a resignation if such director fails to receive a sufficient number of votes for re-election at the stockholder meeting with respect to which such nomination is made. Such resignation will be effective upon the earlier of (i) the Board’s acceptance of such resignation or (ii) the 90th day after certification of the election results of the meeting; provided, however, that prior to the effectiveness of such resignation, the Board may reject such resignation and permit the director to withdraw such resignation.

If an incumbent director fails to receive the required vote for re-election, the Nominating and Governance Committee shall act on an expedited basis to determine whether to recommend acceptance or rejection of the director’s resignation and will submit such recommendation for prompt consideration by the Board. The Board intends to act promptly on the Committee’s recommendation and will decide to accept or reject such resignation and publicly disclose its decision within 90 days from the date of certification of the election results. The Nominating and Governance Committee and the Board may consider such factors they deem relevant in deciding whether to accept or reject a resignation tendered in accordance with this policy. The Board expects a director whose resignation is under consideration to abstain from participating in any decision regarding the resignation.

Proxy Access

Our Bylaws contain “proxy access” provisions which permit a stockholder, or a group of up to 50 stockholders, owning continuously for at least three years a number of shares of our common stock that constitutes at least 3% of our outstanding shares of common stock, to nominate and include in our proxy materials director nominees constituting up to the greater of two individuals or 20% of the Board, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the Bylaws. Our Bylaws specifically allow funds under common management to be treated as a single stockholder,

 

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and permit share lending with a five-day recall. They do not contain any post-meeting holding requirements, do not have any limits on resubmission of failed nominees, and do not contain restrictions on third-party compensation.

Board Leadership Structure

Our Board does not have a policy on whether the roles of Chief Executive Officer and Chairman should be separate. Instead, it retains the flexibility to determine on a case-by-case basis whether the Chief Executive Officer, or an independent director, should serve as Chairman. During those periods in which the positions of Chairman and Chief Executive Officer are combined, the independent directors appoint an independent director as a Lead Independent Director. Currently, the roles of Chief Executive Officer and Chairman are separate. Daniel Schulman, one of our independent directors, was appointed as non-executive Chairman of the Board in January 2013. The Board believes that having an independent director serve as the non-executive Chairman of the Board is the appropriate leadership structure for our Company at this time because it allows our Chief Executive Officer to focus on executing our Company’s strategic plan and managing our Company’s operations and performance, while allowing the Chairman of the Board to focus on the effectiveness of the Board and independent oversight of our senior management team.

Board Independence

It is the policy of the Board and The Nasdaq Stock Market LLC’s (“Nasdaq”) rules require that listed companies have a board of directors with at least a majority of independent directors, as defined under Nasdaq’s Marketplace Rules. Currently, each member of our Board, other than our Chief Executive Officer, Gregory S. Clark, is an independent director, and all standing committees of the Board are composed entirely of independent directors. The Nasdaq independence definition includes a series of objective tests, such as that the director is not an employee of the company and has not engaged in various types of business dealings with the company. In addition, the Board has made a subjective determination as to each independent director that no relationship exists which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the directors reviewed and discussed information provided by the directors and our Company with regard to each director’s business and other activities as they may relate to Symantec and our management. Based on this review and consistent with our independence criteria, the Board has affirmatively determined that the following current directors and director nominees are independent: Frank E. Dangeard, Peter A. Feld, Dale L. Fuller, Kenneth Y. Hao, David W. Humphrey, Geraldine B. Laybourne, David L. Mahoney, Robert S. Miller, Anita M. Sands, Daniel H. Schulman, V. Paul Unruh and Suzanne M. Vautrinot.

Change in Director Occupation

Our Corporate Governance Guidelines include a policy that our Board should consider whether a change in any director’s professional responsibilities directly or indirectly impacts that person’s ability to fulfill his or her directorship obligations. To facilitate the Board’s consideration, all directors shall submit a resignation as a matter of course upon retirement, a change in employer, or other significant change in their professional roles and responsibilities. Such resignation may be accepted or rejected in the discretion of the Board.

Board and Committee Effectiveness

It is important to Symantec that our Board and its committees are performing effectively and in the best interests of our Company and its stockholders. The Nominating and Governance Committee reviews the size, composition and needs of the Board with established criteria to ensure the Board has the appropriate skills and expertise to effectively carry out its duties and responsibilities. In addition, an evaluation of the Board’s and its committees’ operations and performance is conducted annually by the Nominating and Governance Committee. Changes are recommended by the Nominating and Governance Committee for approval by the full Board as appropriate.

 

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Board’s Role in Risk Oversight

The Board executes its risk management responsibility directly and through its committees.

 

   

 

  Board of Directors

 

   
     
LOGO    

  Audit

  Committee

   

  Primarily responsible for overseeing our Company’s enterprise risk management.

  Receives updates and discusses individual and overall risk areas during its meetings, including our Company’s financial risk assessments, risk management policies and major financial risk exposures and the steps management has taken to monitor and control such exposures, which exposures span a variety of areas, including litigation, reputational and policy matters, financial reporting, data privacy and cybersecurity (see “Additional Matters – Audit Committee Investigation” on page 62 for more information on the Audit Committee’s recent independent investigation).

 

    LOGO
   
   

  Compensation

  Committee

   

  Oversees risks associated with our compensation policies and practices with respect to both executive compensation and compensation generally.

  Receives reports and reviews whether Symantec’s compensation policies and practices to confirm that they are not reasonably likely to have a material adverse effect on our Company or encourage unnecessary risk-taking.

 

 
   
   

  Nominating

  and   Governance

  Committee

 

   

  Oversees the management of risks that may arise in connection with our Company’s governance structures, processes.

 

The Board is kept abreast of its committees’ risk oversight and other activities via reports of the committee chairmen to the full Board during the Board meetings. In addition, the Board participates in regular discussions with our senior management of many core subjects, including strategy, operations and finance, in which risk oversight is an inherent element. The Board believes that its leadership structure, as described above under “Board Leadership Structure,” facilitates the Board’s oversight of risk management because it allows the Board, with leadership from the independent, non-executive Chairman and each independent committee chair, to participate actively in the oversight of management’s actions.

Board’s Role in Oversight of Company Strategy

One of the Board’s most important responsibilities is collaborating with management to establish the Company’s long-term strategy and then overseeing and providing guidance to management in the execution of the articulated strategy. Various elements of our strategy are discussed in depth at every quarterly Board meeting, with management providing the Board with an update on performance with an update on execution against short and longer-term elements of strategy. The Board also meets annually for a multi-day session where long-term strategy is the primary topic. While the full Board, with leadership of the Independent Chairman, has responsibility for overseeing overall Company strategy, each of our key Committees provides input to the full Board on strategic and execution oriented issues related to their respective areas of focus. The Board receives regular updates from the management team (including those below the executive level) regarding the Company’s strategy and performance to inform its perspective on progress and ensure that it is able to effectively perform its oversight responsibilities.

 

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Board’s Role in Oversight of Human Capital Management

The Board has long recognized that our employees are one of our most important assets and is engaged with management on ensuring that our Company is an employer of choice for the most talented employees in our industry. While the full Board discusses human capital management with regards to its role in overseeing our overall long-term strategy, our Compensation Committee has responsibility for overseeing human capital management. The Compensation Committee, together with our Nominating and Governance Committee, are tasked with overseeing specific initiatives on a regular basis.

Our Compensation Committee is responsible for, among other tasks:

 

   

Monitoring employee turnover on a quarterly basis; and

 

   

Overseeing compensation philosophies and incentive plans across our workforce.

Our Nominating and Governance Committee has regular touchpoints with management on the following topics:

 

   

Employee engagement and work-life integration initiatives;

 

   

Monitoring our workforce planning, including required capabilities and skills development;

 

   

Understanding our workforce demographics and diversity, equity and inclusion strategies; and

 

   

Monitoring our corporate culture.

Outside Advisors

The Board and its committees are free to engage independent outside financial, legal and other advisors as they deem necessary to provide advice and counsel on various topics or issues, at Symantec’s expense, and are provided full access to our officers and employees.

Board Structure and Meetings

The Board and its committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time. The Board held a total of 10 meetings during fiscal 2018. During this time, no directors attended fewer than 75% of the aggregate of the total number of meetings held by the Board and the total number of meetings held by all committees of the Board on which such director served (during the period which such director served).

Agendas and topics for board and committee meetings are developed through discussions between management and members of the Board and its committees. Information and data that are important to the issues to be considered are distributed in advance of each meeting. Board meetings and background materials focus on key strategic, operational, financial, governance and compliance matters applicable to us, including the following:

 

   

Reviewing annual and longer-term strategic and business plans;

 

   

Reviewing key product, industry and competitive issues;

 

   

Reviewing and determining the independence of our directors;

 

   

Reviewing and determining the qualifications of directors to serve as members of committees, including the financial expertise of members of the Audit Committee;

 

   

Selecting and approving director nominees;

 

   

Selecting, evaluating and compensating the Chief Executive Officer;

 

   

Reviewing and discussing succession planning for the senior management team, and for lower management levels to the extent appropriate;

 

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Reviewing and approving material investments or divestitures, strategic transactions and other significant transactions that are not in the ordinary course of business;

 

   

Evaluating the performance of the Board;

 

   

Overseeing our compliance with legal requirements and ethical standards; and

 

   

Overseeing our financial results.

Executive Sessions

After each regularly scheduled Board meeting, the independent members of our Board hold a separate closed meeting, referred to as an “executive session.” These executive sessions are used to discuss such topics as the independent directors deem necessary or appropriate. At least annually, the independent directors hold an executive session to evaluate the Chief Executive Officer’s performance and compensation. Executive sessions of the Board are led by the independent, non-executive Chairman.

Succession Planning

Our Board recognizes the importance of effective executive leadership to Symantec’s success, and meets to discuss executive succession planning at least annually. Our Board develops and reviews emergency and long-term succession plans and evaluates succession candidates for the CEO and other senior leadership positions under both. The Board also oversees management’s senior executive talent development plans, including ensuring that our succession candidates have regular interactions with the Board.

Attendance of Board Members at Annual Meetings

We encourage our directors to attend our annual meetings of stockholders. All directors who were elected to the Board at our 2017 Annual Meeting were in attendance at that meeting.

 

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THE BOARD AND ITS COMMITTEES

There are three primary committees of the Board: the Audit Committee, Compensation and Leadership Development Committee and Nominating and Governance Committee. The Board has delegated various responsibilities and authorities to these different committees, as described below and in the committee charters. The Board committees regularly report on their activities and actions to the full Board. Each member of the Audit Committee, Compensation Committee and Nominating and Governance Committee was appointed by the Board. Each of the Board committees has a written charter approved by the Board and available on our website at investor.symantec.com, by clicking on “Company Charters,” under “Corporate Governance.”

The following table shows our current directors, their independence status, their roles on the Board and its committees, and the number of meetings the Board and each of its committees held in fiscal 2018:

 

Director

   Independent    Board    Audit    Compensation      Nominating &
Governance
 

Gregory S. Clark

   No    LOGO         

Frank E. Dangeard

   Yes    LOGO    LOGO         LOGO  

Peter A. Feld*

   Yes    LOGO         LOGO        LOGO  

Dale L. Fuller*

   Yes    LOGO            LOGO  

Kenneth Y. Hao

   Yes    LOGO         

David W. Humphrey

   Yes    LOGO         

Geraldine B. Laybourne**

   Yes    LOGO         LOGO        LOGO  

David L. Mahoney

   Yes    LOGO         LOGO        LOGO  

Robert S. Miller**

   Yes    LOGO    LOGO      LOGO     

Anita M. Sands

   Yes    LOGO    LOGO      

Daniel H. Schulman

   Yes    LOGO         LOGO        LOGO  

V. Paul Unruh

   Yes    LOGO    LOGO      

Suzanne M. Vautrinot

   Yes    LOGO    LOGO      

Number of Meetings in Fiscal 2018

      10    10      10        4  

 

LOGO = Member         LOGO = Chair

 

*

Messrs. Feld and Fuller joined our Board in September 2018.

**

Ms. Laybourne and Mr. Miller will not stand for re-election at the Annual Meeting.

Audit Committee

Our Audit Committee oversees our Company’s accounting and financial reporting processes and the audits of our financial statements, including oversight of our systems of internal control over financial reporting and disclosure controls and procedures, compliance with legal and regulatory requirements, internal audit function and the appointment, retention and compensation of our independent auditors. Its duties and responsibilities include, among other things, to:

 

   

Review and discuss with management our Company’s quarterly and annual financial statements.

 

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Review the adequacy and effectiveness of our Company’s accounting and financial reporting processes.

 

   

Appoint and, if necessary, terminate any registered public accounting firm engaged to render an audit report or to perform other audit, review or attest services for our Company.

 

   

Review and approve processes and procedures to ensure the continuing independence of our Company’s independent auditors.

 

   

Review the internal audit function of our Company, including the independence and authority of its reporting obligations and the coordination of our Company’s internal audit function with the independent auditors.

 

   

Review our Company’s practices with respect to risk assessment and risk management and meet with management and members of internal audit to discuss our Company’s significant risk exposures and the steps management has taken to monitor, control and mitigate such exposures.

 

   

Review our Company’s ethics compliance program, including policies and procedures for monitoring compliance, and the implementation and effectiveness of our Company’s ethics and compliance program.

 

   

Direct and supervise investigations into any matters within the scope of its duties, and authority and funding to retain such outside counsel, experts and other advisors as it determines to be necessary to carry out its responsibilities.

Our Board has unanimously determined that all Audit Committee members are independent as defined by current Nasdaq listing standards for Audit Committee membership and financially literate under current Nasdaq listing standards, and at least one member has financial sophistication as required pursuant to the Nasdaq listing standards. In addition, our Board has unanimously determined that V. Paul Unruh qualifies as an “audit committee financial expert” under the SEC rules and regulations. Designation as an “audit committee financial expert” is an SEC disclosure requirement and does not impose any additional duties, obligations or liability on any person so designated.

Compensation and Leadership Development Committee

Our Compensation Committee oversees our compensation policies and practices so that they align with the interests of our stockholders; encourage a focus on our Company’s long-term success and performance; and incorporate sound corporate governance principles. It also oversees our programs to attract, retain and develop our executive officers. Its duties and responsibilities include, among other things, to:

 

   

Review executive and leadership development practices that support our Company’s ability to retain and develop the executive and leadership talent required to deliver against our Company’s short term and long term business strategies, including succession planning for the executive officers.

 

   

Review our Company’s compensation policies, plans and programs to confirm they: (i) are designed to attract, motivate and retain talented executive officers; (ii) compensate the executive officers effectively in a manner consistent with the strategy of our Company and the interests of stockholders; (iii) are consistent with a competitive framework; and (iv) support the achievement of our Company’s overall financial results and individual contributions.

 

   

Review and recommend to the independent directors of our Board all compensation arrangements for our Chief Executive Officer.

 

   

Determine stock ownership guidelines for our Board and executive officers.

 

   

Review our Company’s overall compensation and benefits programs.

 

   

Administer our equity incentive and stock purchase plans.

 

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Review and recommend to the Board compensation for non-employee members of the Board.

 

   

Review and approve policies and procedures relating to perquisites of our executive officers.

 

   

Review our Company’s compensation policies and practices to confirm that such policies and practices are not likely to have a material adverse effect on our Company and do not encourage excessive or inappropriate risk-taking by our executives.

 

   

Review and make recommendations regarding Company policies on recoupment of incentive-based compensation.

 

   

Review and make recommendations to the Board with respect to stockholder proposals and stockholder advisory votes related to executive compensation matters.

Each member of the Compensation Committee is a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an outside director, as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

Nominating and Governance Committee

Our Nominating and Governance Committee oversees our Company’s corporate governance procedures and policies, and ensures that they represent best practices and are in the best interests of our Company and its stockholders, which includes establishing appropriate criteria for nominating qualified candidates to the Board. Its duties and responsibilities include, among other things, to:

 

   

Establish the criteria and determine the desired qualifications, expertise and characteristics of the Board, with the goal of developing a diversity of perspectives, backgrounds, experiences, knowledge and skills on the Board.

 

   

Consider the size, composition and needs of the Board and evaluate and recommend qualified candidates for election to the Board consistent with the established criteria to ensure the Board has the appropriate skills and expertise.

 

   

Advise the Board on corporate governance matters and recommend to the Board appropriate or necessary actions to be taken by our Company, the Board and the Board’s committees.

 

   

Identify best corporate governance practices and develop and recommend to the Board a set of corporate governance guidelines applicable to our Company.

 

   

Review and assess the adequacy of our Company’s corporate governance policies, including our Company’s Corporate Governance Guidelines and Code of Conduct, and recommend modifications to the Board as appropriate.

 

   

Oversee and review our Company’s policies and programs concerning: (i) corporate social responsibility; (ii) public policy; (iii) philanthropy; (iv) political activities and expenditures; (v) our Company’s participation and visibility as a global corporate citizen; and (vi) our Company’s sustainability performance, including impacts to our business of environmental, social and governance issues.

 

   

Monitor compliance under the stock ownership guidelines as set by the Compensation Committee for the Board and executive officers.

 

   

Implement and oversee the processes for evaluating the Board, its committees and the CEO on an annual basis.

 

   

Oversee the management of risks that may arise in connection with our Company’s governance structures and processes.

 

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DIRECTOR NOMINATIONS AND COMMUNICATION WITH DIRECTORS

Criteria for Nomination to the Board

The Nominating and Governance Committee will consider candidates submitted by Symantec stockholders, as well as candidates recommended by directors and management, for nomination to the Board. The Nominating and Governance Committee has generally identified nominees based upon recommendations by outside directors, management and executive recruiting firms. The goal of the Nominating and Governance Committee is to assemble a Board that offers a diverse portfolio of perspectives, backgrounds, experiences, knowledge and skills derived from high-quality business and professional experience. The Nominating and Governance Committee annually reviews the appropriate skills and characteristics required of directors in the context of the current composition of the Board, our operating requirements and the long-term interests of our stockholders.

Two of our director-nominees have been nominated pursuant to an agreement we entered into with Starboard Value LP on September 16, 2018. For more information about this agreement, see disclosure under “Proposal No. 1 — Election of Directors — Agreement with Starboard Value LP” below.

The key attributes, experience and skills we consider important for our directors in light of our current business and structure are:

 

   

Industry and Technology Expertise.    As a cybersecurity company, understanding new technologies and emerging industry trends or having experience in security and related technologies is useful in understanding our business and the market segments in which we compete, our research and development efforts, competing technologies, the various products and processes that we develop, and evolving customer requirements.

 

   

Global Expertise.    We are a global organization with employees, offices and customers in many countries. Directors with global operating expertise can provide a useful business and cultural perspective regarding many significant aspects of our business.

 

   

Leadership Experience.    Directors who have served in a senior leadership position, as a general manager of a business or as the functional leader of a global sales, marketing or product development organization, are important to us, because they bring experience and perspective in analyzing, shaping, and overseeing the execution of important strategic, operational and policy issues at a senior level.

 

   

Public Company Board Experience.    Directors who have served on other public company boards can offer advice and insights with regard to the dynamics and operation of a board of directors, the relations of a board to the company’s chief executive officer and other senior management personnel and the importance of public-company corporate governance, including oversight matters, strategic decisions and operational and compliance-related matters.

 

   

Business Combinations and Partnerships Experience.    Directors who have a background in mergers and acquisitions and strategic partnership transactions can provide insight into developing and implementing strategies for growing our business through combinations or partnerships with other organizations.

 

   

Financial Expertise.    Knowledge of financial markets, financial operations, and accounting and financial reporting processes is important because it assists our directors in understanding, advising, and overseeing Symantec’s capital structure, financing and investing activities, financial reporting, and internal control of such activities.

 

   

Diversity.    In addition to a diverse portfolio of professional background, experiences, knowledge and skills, the composition of the Board should reflect the benefits of diversity as to gender, race, and ethnic background.

The information provided under “Director Qualifications” below each of the brief biographical descriptions set forth under Proposal No. 1, “Election of Directors — Nominees for Director” below

 

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includes the key individual attributes, experience and skills of each of our directors that led to the conclusion that each director should serve as a member of the Board of Directors at this time.

Process for Identifying and Evaluating Nominees

The Nominating and Governance Committee considers candidates by first evaluating the current members of the Board who intend to continue in service, balancing the value of continuity of service with that of obtaining new perspectives, skills and experience. If the Nominating and Governance Committee determines that an opening exists, it identifies the desired skills and experience of a new nominee, including the need to satisfy rules of the SEC and Nasdaq.

The Nominating and Governance Committee generally will evaluate each candidate based on the extent to which the candidate contributes to the range of talent, skill and expertise appropriate for the Board generally, as well as the candidate’s integrity, business acumen, diversity, availability, independence of thought, and overall ability to represent the interests of Symantec’s stockholders. The Nominating and Governance Committee does not assign specific weights to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees. Although the Nominating and Governance Committee uses these and other criteria as appropriate to evaluate potential nominees, it has no stated minimum criteria for nominees. In addition, we do not have a formal written policy with regard to the consideration of diversity in identifying candidates; however, as discussed above, diversity is one of the numerous criteria the Nominating and Governance Committee reviews before recommending a candidate. We have from time to time engaged, for a fee, a search firm to identify and assist the Nominating and Governance Committee with identifying, evaluating and screening Board candidates for Symantec and may do so in the future.

Stockholder Proposals for Nominees

The Nominating and Governance Committee will consider potential nominees properly submitted by stockholders. Stockholders seeking to do so should provide the information set forth in our corporate Bylaws regarding director nominations. The Nominating and Governance Committee will apply the same criteria for candidates proposed by stockholders as it does for candidates proposed by management or other directors.

To be considered for nomination by the Nominating and Governance Committee at next year’s annual meeting of stockholders, submissions by stockholders must be submitted by mail and must be received by the Corporate Secretary no later than July 1, 2019 to ensure adequate time for meaningful consideration by the Nominating and Governance Committee. Each submission must include the following information:

 

   

the full name and address of the candidate;

 

   

the number of shares of Symantec common stock beneficially owned by the candidate;

 

   

a certification that the candidate consents to being named in the proxy statement and intends to serve on the Board if elected; and

 

   

biographical information, including work experience during the past five years, other board positions, and educational background, such as is provided with respect to nominees in this proxy statement.

Information regarding requirements that must be followed by a stockholder who wishes to make a stockholder nomination for election to the Board for next year’s annual meeting is described in this proxy statement under “Additional Information — Stockholder Proposals for the 2019 Annual Meeting.”

Pursuant to the proxy access provisions of our Bylaws, an eligible stockholder or group of stockholders may nominate one or more director candidates to be included in our proxy materials. The nomination notice and other materials required by these provisions must be delivered or mailed to and received by our Corporate Secretary in writing between June 1, 2019 and July 1, 2019 (or, if the 2019 annual meeting is called for a date that is not within 30 calendar days of the anniversary of the date of

 

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the 2018 Annual Meeting, by the later of the close of business on the date that is 180 days prior to the date of the 2019 annual meeting or within 10 calendar days after our public announcement of the date of the 2019 annual meeting) to the Corporate Secretary at the address listed below. When submitting nominees for inclusion in our proxy materials pursuant to the proxy access provisions of our Bylaws, stockholders must follow the notice procedures and provide the information required therein.

Contacting the Board of Directors

Any stockholder who wishes to contact members of our Board may do so by mailing written communications to:

Symantec Corporation

350 Ellis Street

Mountain View, California 94043

Attn: Corporate Secretary

The Corporate Secretary will review all such correspondence and provide regular summaries to the Board or to individual directors, as relevant, will retain copies of such correspondence for at least six months, and make copies of such correspondence available to the Board or individual directors upon request. Any correspondence relating to accounting, internal controls or auditing matters will be handled in accordance with Symantec’s policy regarding accounting complaints and concerns.

 

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our Board currently consists of thirteen directors, eleven of whom are nominated for election at the Annual Meeting, including ten independent directors and our Chief Executive Officer. Each director is elected on an annual basis. At the recommendation of the Nominating and Governance Committee, the Board has nominated the following eleven persons to serve as directors for the term beginning at the Annual Meeting on December 3, 2018: Gregory S. Clark, Frank E. Dangeard, Peter A. Feld, Dale L. Fuller, Kenneth Y. Hao, David W. Humphrey, David L. Mahoney, Anita M. Sands, Daniel H. Schulman, V. Paul Unruh and Suzanne M. Vautrinot. Robert S. Miller, a member of our Board of Directors since 1994, and Geraldine B. Laybourne, a member of our Board of Directors since 2008 are not standing for re-election at the Annual Meeting. The Board thanks Mr. Miller and Ms. Laybourne for their leadership and years of service to Symantec.

Unless proxy cards are otherwise marked, the persons named as proxies will vote all proxies FOR the election of each nominee named in this section. Proxies submitted to Symantec cannot be voted at the Annual Meeting for nominees other than those nominees named in this proxy statement. However, if any director nominee is unable or unwilling to serve at the time of the Annual Meeting, the persons named as proxies may vote for a substitute nominee designated by the Board. Alternatively, the Board may reduce the size of the Board. Each nominee has consented to serve as a director if elected, and the Board does not believe that any nominee will be unwilling or unable to serve if elected as a director. Each director will hold office until the next annual meeting of stockholders and until his or her successor has been duly elected and qualified or until his or her earlier resignation or removal.

Nominees for Director

The names of each nominee for director, their ages as of October 10, 2018, and other information about each nominee is shown below.

 

Nominee

   Age     

Principal Occupation

   Director
Since
 

Gregory S. Clark

     53      Chief Executive Officer      2016  

Frank E. Dangeard

     60      Managing Partner, Harcourt      2007  

Peter A. Feld

     39      Managing Member and Head of Research, Starboard Value LP      2018  

Dale L. Fuller

     60      Operating Partner, The Riverside Company      2018  

Kenneth Y. Hao

     50      Managing Partner and Managing Director, Silver Lake Partners      2016  

David W. Humphrey

     41      Managing Director, Bain Capital      2016  

David L. Mahoney

     64      Director      2003  

Anita M. Sands

     42      Director      2013  

Daniel H. Schulman

     60      President and Chief Executive Officer, PayPal Holdings, Inc.      2000  

V. Paul Unruh

     70      Director      2005  

Suzanne M. Vautrinot

     58      President, Kilovolt Consulting Inc.      2013  

 

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LOGO   

 

Gregory S. Clark

 

Chief Executive
Officer

 

Age: 53

 

Director Since:
2016

 

Committee
Memberships:

 

None

 

Other Current
Public Boards:

 

None

   

Mr. Clark has served as our Chief Executive Officer and a member of our Board since 2016. Prior to joining Symantec, he served as the Chief Executive Officer of Blue Coat, which we acquired in 2016, and as a member of Blue Coat’s board of directors from 2011 to August 2016. From 2008 to 2011, Mr. Clark was the President and Chief Executive Officer of Mincom, a global software and service provider to asset-intensive industries. Before joining Mincom, he was a Founder and served as President and Chief Executive Officer of E2open, a provider of cloud-based supply chain software, from 2001 until 2008. Earlier in his career, Mr. Clark founded a security software firm, Dascom, which was acquired by IBM in 1999. Mr. Clark previously served on the boards of directors of Imperva, Inc. from May 2014 through August 2015 and Emulex Corporation from 2013 through its acquisition by Avago Technologies Ltd. in 2015. He served as a distinguished engineer and Vice President of IBM’s Tivoli Systems, a division providing security and management products, from 1999 until 2001. Mr. Clark holds a Bachelor’s degree from Griffith University.

 

Director Qualifications:

 

Industry and Technology Experience — Chief Executive Officer of Symantec Corporation; former Chief Executive Officer of Blue Coat and former President and Chief Executive Officer of Mincom.

 

Global Experience — Chief Executive Officer of Symantec Corporation; former Chief Executive Officer of Blue Coat and former President and Chief Executive Officer of Mincom.

 

Leadership Experience — Chief Executive Officer of Symantec Corporation; former Chief Executive Officer of Blue Coat; former President and Chief Executive Officer of Mincom and Founder, President and Chief Executive Officer of E2open.

 

Public Company Board Experience — former member of the board of directors of Imperva, Inc. and Emulex Corporation.

 

Business Combinations and Partnerships Experience — Chief Executive Officer of Symantec Corporation; former Chief Executive Officer of Blue Coat; former President and Chief Executive Officer of Mincom and Founder, President and Chief Executive Officer of E2open.

 

Financial Experience — Chief Executive Officer of Symantec Corporation; former Chief Executive Officer of Blue Coat; former President and Chief Executive Officer of Mincom and Founder, President and Chief Executive Officer of E2open.

 

 

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LOGO

 

Frank E. Dangeard

 

Managing Partner, Harcourt

 

Age: 60

 

Director Since: 2007

 

Committee
Memberships:

 

Audit

 

Nominating & Governance

 

Other Current
Public Boards:

 

RBS Group

   

Mr. Dangeard has served as a member of our Board since 2007. He has been the Managing Partner of Harcourt, an advisory firm, since 2008. Mr. Dangeard was Chairman and Chief Executive Officer of Thomson, a provider of digital video technologies, solutions and services, from 2004 to 2008. From 2002 to 2004, he was Deputy Chief Executive Officer of France Telecom, a global telecommunications operator. From 1997 to 2002, Mr. Dangeard was Senior Executive Vice President of Thomson and served as its Vice Chairman in 2000. Prior to joining Thomson, he was Managing Director of SG Warburg & Co. Ltd. from 1989 to 1997 in London, Paris and Madrid and Chairman of SG Warburg France from 1995 to 1997. Prior to that, Mr. Dangeard was a lawyer with Sullivan & Cromwell, in New York and London. He serves on the boards of Arqiva PLC, Royal Bank of Scotland Group PLC (“RBS Group”), as chairman of the board of directors of Nat West Markets PLC, the investment bank of the RBS Group, and on a number of advisory boards. Mr. Dangeard has previously served as a director of a variety of companies, including Crédit Agricole CIB, Eutelsat, Home Credit, SonaeCom, Thomson, Electricité de France and Telenor. He graduated from the École des Hautes Études Commerciales, the Paris Institut d’Études Politiques and holds an LLM degree from Harvard Law School.

 

Director Qualifications:

 

Industry and Technology Experience — former Chairman and Chief Executive Officer of Thomson; former Deputy Chief Executive Officer of France Telecom; former Deputy Chairman of Telenor; former member of the boards of directors of Eutelsat, SonaeCom and RPX Corporation.

 

Global Experience — member of the board of directors of RBS Group (UK), of Arqiva (UK) and chairman of NatWest Markets (UK); former Chairman and Chief Executive Officer of Thomson (France); former Deputy Chief Executive Officer of France Telecom (France); former Deputy Chairman of Telenor (Norway) and former member of the boards of directors of Crédit Agricole CIB (France), Eutelsat (France), Home Credit (Czech Republic), Electricité de France (France) and SonaeCom (Portugal).

 

Leadership Experience — Managing Partner of Harcourt; former Chairman and Chief Executive Officer of Thomson; former Deputy Chief Executive Officer of France Telecom; former Deputy Chairman of Telenor and former Chairman of SG Warburg France and Managing Director of SG Warburg & Co. Ltd; Chairman of NatWest Markets.

 

Public Company Board Experience — member of the board of directors of RBS Group; former Deputy Chairman of Telenor and former member of the boards of directors of Eutelsat, Electricité de France, Thomson, and SonaeCom.

 

Business Combinations and Partnerships Experience — former Chairman and Chief Executive Officer of Thomson; former Deputy Chief Executive Officer of France Telecom; former Deputy Chairman of Telenor; former Chairman of SG Warburg France and former lawyer at Sullivan & Cromwell LLP.

 

Financial Experience — former Chairman and Chief Executive Officer of Thomson; former Deputy Chief Executive Officer of France Telecom; former Chairman of the Audit Committee of Electricité de France and former Deputy Chairman of Telenor; member of the board of RBS Group; Chairman of NatWest Markets.

 

 

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Table of Contents

 

LOGO

 

Peter A. Feld

 

Managing Member and Head of Research,
Starboard Value LP

 

Age: 39

 

Director Since: 2018

 

Committee
Memberships:

 

Compensation

 

Nominating & Governance

 

Other Current
Public Boards:

 

None

 

   

Mr. Feld has served as a member of our Board since September 2018. Mr. Feld has served as a Managing Member and Head of Research of Starboard Value LP since 2011. Mr. Feld previously served on the boards of directors of several technology companies, including Marvell Technology Group Ltd. from May 2016 to June 2018, The Brink’s Company from January 2016 to November 2017, Insperity, Inc. from March 2015 to June 2017, Darden Restaurants, Inc. from October 2014 to September 2015, Tessera Technologies, Inc. (n/k/a Xperi Corporation) from 2013 to April 2014, Integrated Device Technology, Inc. from 2012 to February 2014 and Unwired Planet, Inc. (n/k/a Great Elm Capital Group, Inc.) from 2011 to March 2014 and as Chairman from 2011 to 2013. Mr. Feld received a Bachelor of Arts degree in Economics from Tufts University.

 

Director Qualifications:

 

Industry and Technology Experience — member of the boards of directors of many public and private technology companies.

 

Global Expertise — Managing Member and the Head of Research of Starboard Value LP; former member of the board of directors of Marvell Technology Group, Insperity, Inc., and Darden Restaurants, Inc.

 

Leadership Experience — Managing Member and the Head of Research of Starboard Value LP.

 

Public Company Board Experience — former member of the boards of directors of Marvell Technology Group, Insperity, Inc., and Darden Restaurants, Inc.

 

Business Combinations and Partnerships Experience — Managing Member and the Head of Research of Starboard Value LP.

 

Financial Experience — over 10 years of capital markets and corporate governance experience.

 

 

23


Table of Contents

 

LOGO

 

Dale L. Fuller

 

Operating Partner, The Riverside Company

 

Age: 60

 

Director Since: 2018

 

Committee
Memberships:

 

Nominating & Governance

 

Other Current
Public Boards:

 

comScore, Inc.

   

Mr. Fuller has served as a member of our Board since September 2018. Mr. Fuller has served as an Operating Partner at the Riverside Company, a private equity firm, since 2013 and on the board of directors of comScore, Inc., a media measurement and analytics company, since March 2018, and as Chairman of the board of directors of MobiSocial, Inc., a technology startup, since 2013. Mr. Fuller previously served on the boards of directors of several technology companies, including Quantum Corporation from September 2014 to March 2017 and AVG Technologies N.V. from 2008 to October 2016 and as Chairman from 2009 to October 2016. Mr. Fuller holds an honorary doctorate degree from St. Petersburg State University and a Bachelor of Science degree from Pacific College. 

 

Director Qualifications:

 

Industry and Technology Experience — member of the boards of directors of many public and private technology companies.

 

Global Experience — former member of the boards of directors of Quantum Corporation, AVG Technologies, N.V., Zoran Corporation and Phoenix Technologies, Ltd.

 

Leadership Experience — Operating Partner at the Riverside Company, prior president and CEO of MokaFive and member of the boards of directors of numerous major technology companies.

 

Public Company Board Experience — member of the boards of directors of comScore; former board member of Quantum Corporation and AVG Technologies.

 

Business Combinations and Partnerships Experience — former member of the boards of directors of Quantum Corporation, AVG Technologies, N.V., Zoran Corporation and Phoenix Technologies, Ltd.

 

Financial Experience — over 10 years of capital markets and corporate governance experience.

 

 

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Table of Contents

 

LOGO

 

Kenneth Y. Hao

 

Managing Partner and Managing
Director, Silver
Lake Partners

 

Age: 50

 

Director Since: 2016

 

Committee
Memberships:

 

None

 

Other Current
Public Boards:

 

Smart Global Holdings, Inc.

 

   

Mr. Hao has served as a member of our Board since 2016. Mr. Hao joined Silver Lake Partners in 2000 and currently serves Silver Lake as a Managing Partner and Managing Director. Mr. Hao also serves on the boards of directors of SMART Global Holdings, Inc., as well as on the boards of directors of a number of private companies in Silver Lake’s portfolio. Prior to joining Silver Lake, he was an investment banker with Hambrecht & Quist, where he served as a Managing Director in the Technology Investment Banking group. He also serves on the Executive Council for UCSF Health. Mr. Hao graduated from Harvard University with a Bachelor’s degree in economics.

 

Director Qualifications:

 

Industry and Technology Experience — over 25 years of technology investment experience; member of the boards of directors of many public and private technology companies.

 

Global Experience — extensive experience investing in large global businesses and established Silver Lake’s Asia business.

 

Leadership Experience — Managing Partner and Managing Director of Silver Lake and member of the boards of directors of numerous major technology companies.

 

Public Company Board Experience — member of the board of directors of SMART Global Holdings, Inc.; former board member of Broadcom Limited and Netscout Systems.

 

Business Combinations and Partnerships Experience — Managing Partner and Managing Director of Silver Lake Partners and former investment banker with Hambrecht & Quist.

 

Financial Experience — over 25 years of investment experience in complex transactions.

 

 

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Table of Contents

 

LOGO

 

David W.
Humphrey

 

Managing Director, Bain Capital

 

Age: 41

 

Director Since: 2016

 

Committee
Memberships:

 

None

 

Other Current
Public Boards:

 

BMC Software

 

Genpact Ltd.

   

Mr. Humphrey has served as a member of our Board since August 2016 when he joined in connection with Bain Capital’s investment in Symantec, prior to which he served on Blue Coat’s board of directors since May 2015. He is a Managing Director of Bain Capital, a private equity firm, where he co-leads the firm’s investing efforts in technology, media and telecom investments and where he has worked since 2001. Prior to joining Bain Capital, Mr. Humphrey was an investment banker in the mergers and acquisitions group at Lehman Brothers from 1999 to 2001. He serves on the boards of directors of BMC Software and Genpact Ltd. and on the board of directors of a number of private companies in Bain Capital’s portfolio. Mr. Humphrey previously served on the boards of directors of Bright Horizons Family Solutions, Inc. Burlington Coat Factory Warehouse Corporation, Skillsoft PLC and Bloomin’ Brands, Inc. He received a Master of Business Administration degree from Harvard Business School and a Bachelor’s degree from Harvard University.

 

Director Qualifications:

 

Industry and Technology Experience — former member of the board of directors of Blue Coat; Managing Director of Bain Capital; and member of the boards of directors of BMC Software, Inc., Viewpoint Construction Software, Navicure, Inc. and Genpact Ltd.

 

Global Experience — extensive experience investing in large global businesses.

 

Leadership Experience — Managing Director of Bain Capital and leader of its technology, media and telecom vertical; and member of the boards of directors of BMC Software, Inc. Viewpoint Construction Software, Navicure, Inc. and Genpact Ltd.

 

Public Company Board Experience — member of the board of directors of BMC Software and Genpact Ltd. and former member of the boards of directors of Bright Horizons Family Solutions, Inc. Burlington Coat Factory Warehouse Corporation, Skillsoft PLC and Bloomin’ Brands, Inc.

 

Business Combinations and Partnerships Experience — Managing Director of Bain Capital and former investment banker with Lehman Brothers.

 

Financial Experience — Managing Director of Bain Capital and former investment banker with Lehman Brothers.

 

 

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LOGO

 

David L. Mahoney

 

Director

 

Age: 64

 

Director Since: 2003

 

Committee
Memberships:

 

Compensation (Chair)

 

Nominating & Governance

 

Other Current
Public Boards:

 

Adamas
Pharmaceuticals,
Inc.

 

Corcept
Therapeutics, Inc.

 

   

Mr. Mahoney has served as a member of our Board since 2003. He previously served as co-Chief Executive Officer of McKesson HBOC, Inc., a healthcare services company, and as Chief Executive Officer of iMcKesson LLC, also a healthcare services company, from 1999 to 2001. Mr. Mahoney is a member of the boards of directors of Adamas Pharmaceuticals, Inc. Corcept Therapeutics Incorporated, and Mercy Corps, a non-profit organization, the board of trustees of Mount Holyoke College, as well as a trustee of the Schwab/Laudus fund family and the San Francisco Museum of Modern Art. He has previously served as a director of a variety of companies, including Tercica Inc. Mr. Mahoney has a Bachelor’s degree from Princeton University and a Master of Business Administration degree from Harvard Business School.

 

Director Qualifications:

 

Industry and Technology Experience — former co-Chief Executive Officer of McKesson HBOC, Inc.; former Chief Executive Officer of iMcKesson LLC; various executive roles at McKesson Corporation and former Principal at McKinsey & Co.

 

Global Experience — former co-Chief Executive Officer of McKesson HBOC, Inc.; former Chief Executive Officer of iMcKesson LLC; various executive roles at McKesson Corporation and former Principal at McKinsey & Co.

 

Leadership Experience — former co-Chief Executive Officer of McKesson HBOC, Inc.; former Chief Executive Officer of iMcKesson LLC; various executive roles at McKesson Corporation and former Principal at McKinsey & Co.

 

Public Company Board Experience — member of the board of directors of Corcept Therapeutics Incorporated; Lead Independent Director at Adamas Pharmaceuticals, Inc. and former member of the board of directors of Tercica, Inc.

 

Business Combinations and Partnerships Experience — former co-Chief Executive Officer of McKesson HBOC, Inc.; former Chief Executive Officer of iMcKesson LLC; various executive roles at McKesson Corporation and former Principal at McKinsey & Co.

 

Financial Experience — former roles at McKesson HBOC; serves on the Audit Committee of Corcept Therapeutics Incorporated (former Chair of the Audit Committee) and the Investment Committee of the Schwab/Laudus fund family; served on the Audit Committees of Tercica Inc., Adamas Pharmaceuticals, Inc., Symantec, and is Chair of the Finance Committee of Mercy Corps and San Francisco Museum of Modern Art.

 

 

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Table of Contents

 

LOGO

 

Anita M. Sands

 

Director

 

Age: 42

 

Director Since: 2013

 

Committee
Memberships:

 

Audit

 

Other Current
Public Boards:

 

Pure Storage, Inc.

 

ServiceNow, Inc.

 

   

Ms. Sands has served as a member of our Board since October 2013. She served as Group Managing Director, Head of Change Leadership and a member of the Wealth Management Americas Executive Committee of UBS Financial Services, a global financial services firm, from April 2012 to September 2013. Ms. Sands was Group Managing Director and Chief Operating Officer of Wealth Management Americas at UBS Financial Services from April 2010 to April 2012. Prior to that, she was a Transformation Consultant at UBS Financial Services from October 2009 to April 2010. Prior to joining UBS Financial Services, Ms. Sands was Managing Director, Head of Transformation Management at Citigroup’s Global Operations and Technology organization. She also held several leadership positions with RBC Financial Group and CIBC. Ms. Sands is on the boards of directors of ServiceNow, Inc., Pure Storage, Inc. and two private companies. She received a Bachelor’s degree in physics and applied mathematics from The Queen’s University of Belfast, Northern Ireland, a Doctorate in atomic and molecular physics from The Queen’s University of Belfast, Northern Ireland and a Master of Science degree in public policy and management from Carnegie Mellon University.

 

Director Qualifications:

 

Industry and Technology Experience — former Managing Director and Chief Operating Officer at UBS Financial Services and various executive positions of global financial services firms.

 

Global Experience — former Managing Director and Chief Operating Officer at UBS Financial Services and various executive positions of global financial services firms.

 

Leadership Experience — former Managing Director and Chief Operating Officer at UBS Financial Services and various executive positions of global financial services firms.

 

Public Company Board Experience — member of the boards of directors of ServiceNow, Inc. and Pure Storage, Inc.

 

Financial Experience — former Managing Director and Chief Operating Officer at UBS Financial Services and various executive positions of global financial services firms.

 

 

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Table of Contents

 

LOGO

 

Daniel H. Schulman

 

President and Chief Executive Officer, PayPal Holdings, Inc.

 

Age: 60

 

Director Since: 2000

 

Committee
Memberships:

 

Compensation

 

Nominating & Governance (Chair)

 

Other Current
Public Boards:

 

PayPal
Holdings, Inc.

 

Verizon
Communications Inc.

   

Mr. Schulman has served as a member of our Board since 2000. He has served as President and then Chief Executive Officer of PayPal Holdings, Inc., an online payment system company, since September 2014. Previously, Mr. Schulman served as Group President, Enterprise Group of American Express, a financial services company, from 2010 to September 2014. He was President, Prepaid Group of Sprint Nextel Corporation, a cellular phone service provider, from 2009 until 2010. Mr. Schulman served as Chief Executive Officer of Virgin Mobile USA, a cellular phone service provider, from 2001 to 2009, when Sprint Nextel acquired that company. He also served as a member of the board of directors of Virgin Mobile USA from 2001 to 2009. Mr. Schulman is a member of the boards of directors of PayPal Holdings, Inc., Verizon Communications Inc. and a non-profit organization. He received a Bachelor’s degree in economics from Middlebury College and a Master of Business Administration degree, majoring in Finance, from New York University.

 

Director Qualifications:

 

Industry and Technology Experience — President and Chief Executive Officer of PayPal; former Group President, Enterprise Group of American Express and former Chief Executive Officer and Chief Operating Officer of priceline.com.

 

Global Experience — President and Chief Executive Officer of PayPal and former Group President of American Express.

 

Leadership Experience — President and Chief Executive Officer of PayPal; former Group President, Enterprise Group of American Express; former President, Prepaid Group of Sprint Nextel Corporation; former Chief Executive Officer of Virgin Mobile USA and former Chief Executive Officer and Chief Operating Officer of priceline.com.

 

Public Company Board Experience — member of the boards of directors of PayPal Holdings, Inc. and Verizon Communications Inc. and former member of the boards of directors of Virgin Mobile USA and Flextronics International Ltd.

 

Business Combinations and Partnerships Experience — President and Chief Executive Officer of PayPal and former Chief Executive Officer of Virgin Mobile USA.

 

Financial Experience — President and Chief Executive Officer of PayPal; former Group President, Enterprise Group of American Express; former President, Prepaid Group of Sprint Nextel Corporation; former Chief Executive Officer of Virgin Mobile USA and former Chief Executive Officer and Chief Operating Officer of priceline.com.

 

 

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Table of Contents

 

LOGO

 

V. Paul Unruh

 

Director

 

Age: 70

 

Director Since: 2005

 

Committee
Memberships:

 

Audit (chair)

 

Other Current
Public Boards:

 

None

   

Mr. Unruh has served as a member of our Board since 2005 following the acquisition of Veritas, where he had served on the board of directors since 2003. Mr. Unruh retired as Vice Chairman of Bechtel Group, Inc., a global engineering and construction services company, in 2003. During his 25-year tenure at Bechtel Group, he held a number of management positions including Treasurer, Controller and Chief Financial Officer. Mr. Unruh also served as President of Bechtel Enterprises, the finance, development and ownership arm from 1997 to 2001. He is a member of the board of directors of Aconex Ltd., which is traded on the Australian Stock Exchange, and a private company. Mr. Unruh is a Certified Public Accountant.

 

Director Qualifications:

 

Global Experience — former Vice Chairman of and held various executive positions at Bechtel Group, Inc.; former President of Bechtel Enterprises and member of the board of directors of Aconex Ltd. (Australia).

 

Leadership Experience — former Vice Chairman of and held various executive positions at Bechtel Group, Inc. and former President of Bechtel Enterprises.

 

Public Company Board Experience — former member of the boards of directors of Heidrick & Struggles International Inc., Move, Inc., URS Corporation and Aconex Ltd. (Australia).

 

Business Combinations and Partnerships Experience — former board member of Veritas Corporation, Move, Inc., and URS Corporation.

 

Financial Experience — certified public accountant; former Chief Financial Officer, Treasurer and Controller of Bechtel Group, Inc.; former President of Bechtel Enterprises; served on the Audit Committees of Heidrick & Struggles International, Inc. and Move, Inc

 

 

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Table of Contents

 

LOGO

 

Suzanne M. Vautrinot

 

President, Kilovolt Consulting Inc.

 

Age: 58

 

Director Since: 2013

 

Committee
Memberships:

 

Audit

 

Other Current
Public Boards:

 

Ecolab, Inc.

 

Wells Fargo & Company

   

Ms. Vautrinot has served as a member of our Board since 2013. She has been President of Kilovolt Consulting Inc., an advisory firm, since October 2013. Ms. Vautrinot retired from the United States Air Force in October 2013 after over 30 years of service. During her career with the United States Air Force, she served in a number of leadership positions including Major General and Commander, 24th Air Force/Network Operations from 2011 to October 2013; Special Assistant to the Vice Chief of Staff from December 2010 to 2011; Director of Plans and Policy, U.S. Cyber Command from 2010 to 2010 and Deputy Commander, Network Warfare, U.S. Strategic Command, from 2008 and 2010. Ms. Vautrinot is a member of the board of directors of Ecolab, Inc., Wells Fargo & Company, a private company and a non-profit organization. She received a Bachelor of Science degree from the U.S. Air Force Academy, a Master of Systems Management degree from University of Southern California, and completed Air Command and Staff College as well as Air War College. Ms. Vautrinot was a National Security Fellow at the John F. Kennedy School of Government at Harvard University. In 2017 she was inducted into the National Academy of Engineering.

 

Director Qualifications:

 

Industry and Technology Experience — Major General and Commander (retired) and various leadership positions of United States Air Force.

 

Global Experience — Major General and Commander (retired) of United States Air Force; member of the boards of directors of Ecolab, Inc. and Wells Fargo & Company.

 

Leadership Experience — Major General and Commander (retired) and various leadership positions of United States Air Force.

 

Public Company Board Experience — member of the boards of directors of Ecolab, Inc. and Wells Fargo & Company.

 

Financial Experience — serves on the Audit Committees of Ecolab, Inc. and Wells Fargo & Company.

 

 

31


Table of Contents

Agreement with Starboard Value LP

In September 2018, the Company entered into an agreement with Starboard Value LP and certain of its affiliates (collectively, “Starboard”) regarding, among other things, the membership and composition of the Board and committees thereof (the “Starboard Agreement”). Under the terms of the Starboard Agreement, the Company appointed Peter A. Feld and Dale L. Fuller to serve on the Board and agreed to nominate them for election to the Board at the Annual Meeting. The Starboard Agreement also provides that Robert S. Miller and Geraldine B. Laybourne will not stand for re-election as directors at the Annual Meeting and that, within 30 days after the Annual Meeting, the Company will appoint Richard S. “Rick” Hill to the Board and an additional director to the Board who will be selected by the then-appointed Board from a list of candidates mutually agreed by the Company and Starboard pursuant to the procedures described in the Starboard Agreement. With respect to the Annual Meeting, Starboard has agreed to, among other things, vote all shares of the Company’s common stock beneficially owned by Starboard in favor of the Company’s director nominees and, subject to certain conditions, vote in accordance with the Board’s recommendations on all other proposals.

Pursuant to the Starboard Agreement, if at any time Starboard beneficially owns less than 3.0% of the Company’s then-outstanding common stock (the “Minimum Ownership Threshold”), Mr. Feld (or, if Mr. Feld is no longer serving on the Board, the substitute Starboard employee director who replaced Mr. Feld) will immediately resign from the Board. Furthermore, until the earlier of (x) 15 business days prior to the deadline for the submission of stockholder nominations for the 2019 Annual Meeting and (y) 90 days prior to the first anniversary of the Annual Meeting, for so long as Starboard satisfies the Minimum Ownership Threshold, Starboard also has certain additional rights to recommend or select substitute directors as provided in the Starboard Agreement.

Summary of Director Qualifications and Experience

Our Board is comprised of directors with complementary skills and qualifications needed to effectively oversee our business strategy. The Nominating and Governance Committee annually reviews the skills and characteristics required of members of the Board in the context of the composition of the Board and the stage of the business of the Company.

 

 

Clark

Dangeard

Feld

Fuller

Hao

Humphrey

Mahoney

Sands

Schulman

Unruh

Vautrinot

Industry and Technology Expertise

Ö Ö Ö Ö Ö Ö Ö Ö Ö Ö Ö

Global Expertise

Ö Ö Ö Ö Ö Ö Ö Ö Ö Ö Ö

Leadership Experience

Ö Ö Ö Ö Ö Ö Ö Ö Ö Ö Ö

Public Company Board Experience

Ö Ö Ö Ö Ö Ö Ö Ö Ö Ö Ö

Business Combinations and Partnerships Experience

Ö Ö Ö Ö Ö Ö Ö Ö Ö

Financial Expertise

Ö Ö Ö Ö Ö Ö Ö Ö Ö Ö

Diversity

Ö Ö Ö

The policy of the Board is that compensation for independent directors should be a mix of cash and equity-based compensation. Symantec does not pay employee directors for Board service in addition to their regular employee compensation. Independent directors may not receive consulting, advisory or other compensatory fees from the Company. The Compensation Committee, which consists solely of independent directors, has the primary responsibility to review and consider any revisions to director compensation.

 

32


Table of Contents

Director Stock Ownership Guidelines: Effective fiscal 2017, the Compensation Committee instituted the following stock ownership guidelines for our non-employee directors to better align our directors’ interests with those of our stockholders:

 

   

Directors must maintain a minimum holding of Company stock with a fair market value equal to ten times (10x) such director’s total annual cash retainer;

 

   

In the event the annual retainer (or any portion thereof) is paid to a non-employee director in equity instead of cash, the value of such annual retainer for purposes of calculating the minimum holding requirement means the grant date fair value of the annual equity award (or applicable portion thereof);

 

   

New directors will have three years to reach the minimum holding level; and

 

   

Notwithstanding the foregoing, directors may sell enough shares to cover their income tax liability on vested grants.

Symantec stock ownership information for each of our directors is shown under the heading “Security Ownership of Certain Beneficial Owners and Management” on page 57 of this proxy statement.

Annual Fees: In accordance with the recommendation of the Compensation Committee, the Board determined the non-employee directors’ compensation for fiscal 2018 as follows:

 

   

$50,000 annual cash retainer;

 

   

$15,000 annual fee for committee membership ($20,000 for Audit Committee membership);

 

   

$25,000 annual fee for chairing a committee of the Board ($15,000 for chairing the Nominating and Governance Committee); and

 

   

$100,000 annual fee for the Lead Independent Director/Independent Chairman.

The payment of the annual cash retainer is subject to the terms of the 2000 Director Equity Incentive Plan, as amended, which allows directors to choose to receive common stock in lieu of cash for all or a portion of the retainer payable to each director for serving as a member. We pay the annual retainer fee and any additional annual fees to each director at the beginning of the fiscal year. Directors who join the Company after the beginning of the fiscal year receive a prorated cash payment in respect of their annual retainer fee and fees. These payments are considered earned when paid. Accordingly, we do not require them to be repaid in the event a director ceases serving in the capacity for which he or she was compensated.

Annual Equity Awards. Pursuant to a Non-Employee Director Grant Policy adopted by our Board, each non-employee member of the Board receives an annual award of fully-vested restricted stock under the 2013 Plan, having a fair market value on the grant date equal to a pre-determined dollar value, which was $275,000 for fiscal 2018.

Symantec stock ownership information for each of our directors is shown under the heading “Security Ownership of Certain Beneficial Owners and Management” on page 57 of this proxy statement.

 

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Table of Contents

The following table provides information for fiscal year 2018 compensation for all of our non-employee directors:

Fiscal 2018 Director Compensation

 

Name

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

Frank E. Dangeard

     85,024        274,976        360,000  

Peter A. Feld(5)

     0        0        0  

Dale L. Fuller(5)

     0        0        0  

Kenneth Y. Hao

     40        324,960 (6)        325,000  

David W. Humphrey

     40        324,960 (6)        325,000  

Geraldine B. Laybourne

     80,024        274,976        355,000  

David L. Mahoney

     105,024        274,976        380,000  

Robert S. Miller

     35,040        324,960 (6)        360,000  

Anita M. Sands

     20,040        324,960 (6)        345,000  

Daniel H. Schulman

     195,024        274,976        470,000  

V. Paul Unruh

     95,024        274,976        370,000  

Suzanne M. Vautrinot

     70,024        274,976        345,000  

 

 

(1) 

Non-employee directors receive an annual retainer fee of $50,000 plus an additional annual fee of $15,000 (Compensation Committee and Nominating and Governance Committee) or $20,000 (Audit Committee) for membership on each committee. The chair of each committee receives an additional annual fee of $15,000 (Nominating and Governance Committee) or $25,000 (Audit Committee and Compensation Committee). The Lead Independent Director/Independent Chairman receives an annual fee of $100,000.

 

(2) 

Includes payments for fractional share(s) from stock awards granted to each non-employee director.

 

(3) 

Amounts shown in this column reflect the aggregate full grant date fair value calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 for awards granted during fiscal 2018.

 

(4) 

Each non-employee director, other than Messrs. Feld and Fuller, was granted 8,593 RSUs on May 15, 2017, with a per-share fair value of $32.00 and an aggregate grant date fair value of $274,976. The balance of each such director’s fee was paid in cash as reported in the “Fees Earned or Paid in Cash” column in the table above.

 

(5) 

Messrs. Feld and Fuller joined our Board of Directors on September 16, 2018 and did not receive any compensation in fiscal 2018.

 

(6) 

In lieu of cash, Messrs. Hao, Humphrey and Miller and Ms. Sands each received 100% of his or her respective annual retainer fee of $50,000 in the form of our common stock. Accordingly, pursuant to the terms of the 2000 Director Equity Incentive Plan, each was granted 1,562 shares at a per share fair value of $32.00 and an aggregate grant date fair value of $49,984. The balance of each such director’s fee was paid in cash as reported in the “Fees Earned or Paid in Cash” column in the table above.

THE BOARD RECOMMENDS A VOTE “FOR” ELECTION OF

EACH OF THE ELEVEN NOMINATED DIRECTORS.

 

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Table of Contents

PROPOSAL NO. 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed KPMG LLP (“KPMG”) as our principal independent registered public accounting firm to perform the audit of our consolidated financial statements for fiscal 2019. As a matter of good corporate governance, the Audit Committee has decided to submit its selection of independent audit firm to stockholders for ratification. In the event that this appointment of KPMG is not ratified by a majority of the shares of common stock present or represented at the Annual Meeting and entitled to vote on the matter, the Audit Committee will review its future selection of KPMG as our independent registered public accounting firm.

The Audit Committee first approved KPMG as our independent auditors in September 2002, and KPMG audited our financial statements for fiscal 2018. Representatives of KPMG are expected to attend the meeting with the opportunity to make a statement and respond to appropriate questions from stockholders present at the meeting with respect to this proposal.

Principal Accountant Fees and Services

We regularly review the services and fees from our independent registered public accounting firm, KPMG. These services and fees are also reviewed with the Audit Committee annually. In accordance with standard policy, KPMG periodically rotates the individuals who are responsible for our audit. Our Audit Committee has determined that the providing of certain non-audit services, as described below, is compatible with maintaining the independence of KPMG.

In addition to performing the audit of our consolidated financial statements, KPMG provided various other services during fiscal years 2018 and 2017. Our Audit Committee has determined that KPMG’s provisioning of these services, which are described below, does not impair KPMG’s independence from Symantec. The aggregate fees billed for fiscal years 2018 and 2017 for each of the following categories of services are as follows:

 

Fees Billed to Symantec

   2018      2017  

Audit fees(1)

   $ 11,370,525      $ 9,985,434  

Audit related fees(2)

     753,689        2,215,628  

Tax fees(3)

     469,449        248,467  

All other fees(4)

     311,000         
  

 

 

    

 

 

 

Total fees

   $ 12,904,663      $ 12,449,529  
  

 

 

    

 

 

 

 

The categories in the above table have the definitions assigned under Item 9 of Schedule 14A promulgated under the Exchange Act, and these categories include in particular the following components:

 

(1) 

“Audit fees” include fees for audit services principally related to the year-end examination and the quarterly reviews of our consolidated financial statements, consultation on matters that arise during a review or audit, review of SEC filings, audit services performed in connection with our acquisitions and divestitures and statutory audit fees.

 

(2) 

“Audit related fees” include fees which are for assurance and related services other than those included in Audit fees.

 

(3) 

“Tax fees” include fees for tax compliance and advice.

 

(4) 

“All other fees” include fees for all other non-audit services, principally for services in relation to certain information technology audits.

An accounting firm other than KPMG performs supplemental internal audit services for Symantec. Another accounting firm provides the majority of Symantec’s outside tax services.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services,

 

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audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.

All of the services relating to the fees described in the table above were approved by the Audit Committee.

THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL NO. 2

 

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PROPOSAL NO. 3

AMENDMENTS TO OUR 2013 EQUITY INCENTIVE PLAN, AS AMENDED

We are asking stockholders to approve the following amendments to our 2013 Equity Incentive Plan, as amended (the “2013 Plan”), which were approved by our Board in August and October 2018:

 

  (i)

an increase to the number of shares reserved for issuance under the 2013 Plan by 12,000,000 shares; and

 

  (ii)

a new limit on total annual non-employee director compensation of $900,000.

With the proposed 12,000,000 share increase, approximately 25,093,483 shares will be available for future grant and issuance under the 2013 Plan, which represents approximately 3.93% of our 638,538,278 shares outstanding as of October 10, 2018. Our common stock is listed on Nasdaq under the symbol “SYMC.” On October 10, 2018, the reported closing sale price of our common stock on Nasdaq was $19.90 per share.

Promotion of Good Compensation Practices

The 2013 Plan, as amended, is designed to promote good compensation practices and play an important part of our pay-for-performance philosophy. Including the above proposed amendments, the 2013 Plan, as amended, contains the following important features which we believe promote good compensation practices:

 

   

No “evergreen” provision. The 2013 Plan has a fixed number of shares available for issuance. It is not an “evergreen” plan.

 

   

No “fungible share reserve.” The 2013 Plan does not contain a “fungible share reserve.” Instead, each one share granted as a restricted stock award, RSU (including PRUs), stock option or SAR under the 2013 Plan will count as the issuance of one share reserved for issuance under the 2013 Plan for the purpose of computing shares remaining available for issuance.

 

   

No discounted options of SARs. Stock options and SARs must be granted with an exercise price that is not less than 100% of the fair market value on the date of grant.

 

   

One year minimum vesting on options and SARs. Subject to certain exceptions, each stock option and SAR granted under the 2013 Plan, other than a stock option or SAR granted in substitution for a stock option or SAR granted under a stock plan of a company acquired by the Company, is subject to a minimum service vesting requirement of one year from the date of grant of such stock option or SAR.

 

   

Repricing prohibited. Repricing or certain other exchanges of stock options and SARs for new 2013 Plan awards or cash is prohibited unless stockholder approval is first obtained.

 

   

Non-Employee Director Compensation Limit. The aggregate value of all compensation paid or granted, as applicable, to any individual for service as a non-employee director of our Board of Directors with respect to any fiscal year, including awards granted under the 2013 Plan and cash fees paid by us to such non-employee director, will not exceed $900,000 in total value.

 

   

No recycling or liberal share counting. No recycling of shares or “liberal share counting” practices are permitted under the 2013 Plan. Shares tendered to us or retained by us in the exercise or settlement of an award or for tax withholding, or shares that are repurchased on the open market with the proceeds of an option exercise price will not become available again for issuance under the 2013 Plan. In addition, the gross shares subject to a stock appreciation right (SAR) award and not the net number of shares actually issued upon exercise of such SAR counts against the 2013 Plan reserve.

Planned Frequency of Share Requests

Our request for 12,000,000 shares this year follows last year’s request for 8,000,000 shares under the 2013 Plan. In an effort to increase accountability and transparency, the Board has determined to

 

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seek stockholder approval for more modest increases more frequently. This approach gives stockholders a more frequent opportunity to evaluate and vote on our usage of equity compensation across our Company. Our current reserve of shares plus this year’s request, if approved, is expected to be sufficient for equity awards to employees across our Company for at least one year, at which point we anticipate we will request stockholders approve additional shares.

Share Request Background

We believe that the increase in the number of shares reserved for issuance under the 2013 Plan is in the best interests of our Company because of the continuing need to provide equity-based incentives to attract, motivate and retain the most qualified personnel and to respond to relevant market changes in equity compensation practices. The use of equity compensation has historically been a significant part of our overall compensation philosophy at Symantec and is a practice that we plan to continue. The 2013 Plan serves as an important part of this practice and is a critical component of the overall compensation package that we offer to retain and motivate our employees. In addition, awards under the 2013 Plan provide our employees an opportunity to acquire or increase their ownership stake in us, and we believe this aligns their interests with those of our stockholders, creating strong incentives for our employees to work hard for our future growth and success. If Proposal No. 3 is not approved by our stockholders, we believe our ability to attract, motivate and retain the talent we need to compete in our industry would be seriously and negatively impacted and this could affect our long-term success.

Based on a review of Symantec’s historical practice, the recent trading price of our common stock, advice from its independent compensation consultant, and stockholder feedback, the Compensation Committee and the Board currently believe the additional share request will be sufficient to cover awards for at least one year. Our future burn rate will depend on a number of factors, including the number of participants in the 2013 Plan, the price per share of our common stock, any changes to our compensation strategy, changes in business practices or industry standards, future acquisitions, changes in the compensation practices of our competitors, or changes in compensation practices in the market generally, and the methodology used to establish the equity award mix. Our burn rate is more fully discussed below under “Burn Rate.”

In connection with its approval of the amendment of the 2013 Plan, the Board considered Symantec’s current stock repurchase program, under which approximately $800 million remained authorized for future repurchases as of October 10, 2018, with no expiration date. We believe that stock repurchases reduce the potential dilutive effect of the issuance of additional equity incentives to employees. For example, the weighted average common shares outstanding decreased from 670,002,129 shares in fiscal 2016 to 615,784,822 shares in fiscal 2018, due in part to Symantec’s stock repurchase programs.

Non-Employee Director Compensation Limit

As described above in “Proposal Number 1 — Election of Directors — Fiscal 2018 Director Compensation,” above, we provide our non-employee directors a combination of cash and equity compensation pursuant to a policy developed and recommended by our Compensation Committee, based in part on advice and compensation data provided by Mercer, the Compensation Committee’s independent compensation advisor. For fiscal 2018, the average fees earned or paid in cash to our non-employee directors was approximately $68,530, and the RSU awards granted to our non-employee directors had an aggregate value of $275,000 based on the fair market value of our common stock on the date of grant, resulting in average total annual compensation of approximately $363,506. In May 2018, the Compensation Committee reviewed market data in consultation with Mercer and recommended to our Board of Directors that no changes be made to the non-employee director compensation for fiscal 2019.

We are asking our stockholders to approve an amendment to the 2013 Plan to provide that the total combined value of cash paid and Awards granted to a non-employee director in any calendar year

 

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cannot exceed $900,000 in the aggregate. There is currently no such limit in the 2013 Plan, although the 2013 Plan does currently provide that no award under the 2013 Plan to a non-employee director shall exceed 2,000,000 shares in any one fiscal year (which would be replaced by this amendment if approved). We believe that this proposal will benefit stockholders by establishing an upper limit on director compensation, while continuing to provide flexibility to increase non-employee director compensation in future years, should the Compensation Committee determine, in consultation with an independent compensation advisor, that a higher level of compensation is appropriate to attract and retain qualified directors in light of prevailing compensation practices in our peer group.

If stockholder approval of this proposal is not obtained, there will continue to be no limit on either Awards or cash compensation paid to non-employee directors other than the 2,000,000 share limit currently in place under the 2013 Plan.

Equity Plan Philosophy

We have always placed an emphasis on the importance of using equity-based incentives to attract, motivate and retain the most qualified personnel in our industry. We award equity to a broad-based section of our employee base, which positions us for success in attracting, engaging and retaining key employee talent globally including many highly-competitive markets. Over the last two fiscal years, we have granted equity to more than 25% of new hires. We typically grant equity awards to over 40% of employees at all levels globally during our annual review, with a focus on retention of higher performers with critical skills. As of October 10, 2018, over 60% of our employees, across 40 countries, owned unvested equity in our Company. We believe this points to a culture of ownership at the Company, at all levels of the organization and across the vast majority of countries in which we operate. Equity is also a significant portion of our CEO and NEO’s overall compensation package (95% of total target compensation for our CEO and on average 94% of total target compensation for our NEOs).

Our broad-based use of equity for compensation purposes can have a material impact on our burn rate versus that of our peers, however, we believe that granting equity is an important part of our value proposition to our employees and, ultimately, our stockholders.

Plan History

The 2013 Plan was originally adopted by the Board in July 2013, and it was approved by our stockholders in October 2013. In 2016, the 2013 Plan was amended by the Board to provide the Committee the authority to make certain adjustments under the 2013 Plan in the event of an extraordinary cash dividend by Symantec. The 2013 Plan was further amended in 2016 to require that, subject to certain exceptions, each stock option and SAR granted under the 2013 Plan, other than a stock option or SAR granted in substitution for a stock option or SAR granted under a stock plan of a company acquired by the Company, shall be subject to a minimum service vesting requirement of one year from the date of grant of such stock option or SAR. Last year, the 2013 Plan was amended to (i) prohibit dividend payments on unvested equity awards and (ii) require that all awards under the 2013 Plan be subject to our insider trading policy and recoupment policies in accordance with the Company’s clawback policy.

Upon adoption, our stockholders approved the reservation of an aggregate of 45 million shares for issuance under the 2013 Plan. In 2016, our stockholders approved an increase to the number of shares reserved for issuance under the 2013 Plan by 17,000,000 shares. Last year, our stockholders approved an increase to the number of shares reserved for issuance under the 2013 Plan by 8,000,000 shares. With the proposed 12,000,000 share increase, 82,000,000 shares of our common stock will have been reserved for issuance under the 2013 Plan since its inception, which represents approximately 12.84% of our outstanding shares as of October 10, 2018. No shares carried over to the 2013 Plan from our 2004 Equity Incentive Plan (the “Prior Plan”), which was our primary equity compensation plan prior to the adoption of the 2013 Plan. We no longer grant awards under the Prior Plan.

The following table summarizes certain information regarding our equity incentive program, which includes our 2013 Plan and awards granted under our prior plans, including our assumed plans. Our

 

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only active equity plans with available shares for future issuance are our 2013 Plan, our 2008 Employee Stock Purchase Plan, and our 2000 Director Equity Plan, as referenced below.

 

     As of October 10, 2018  

Total number of shares of common stock subject to outstanding full value awards (including RSUs and PRUs) under all plans(1)

     26,017,340  

Total number of shares of common stock subject to outstanding stock options under all plans

     12,649,479  

Weighted-average exercise price of outstanding stock options

     $8.49  

Weighted-average remaining term of outstanding stock options

     6.88 years  

Total number of shares of common stock available for future grant under the 2013 Plan(2)

     13,093,483  

Total number of shares of common stock available for future grant under the 2000 Director Equity Plan

     43,203  

 

(1) 

Includes PRU at the target grant level.

 

(2) 

Excludes the proposed increase of 12,000,000 shares under this Proposal No. 3.

Burn Rate

A key factor that we consider in administering our equity compensation programs and in determining our share increase request is our “burn rate,” which is generally the number of shares that we utilize under the 2013 Plan each year relative to our total shares outstanding. We analyze our burn rate in terms of gross burn rate and net burn rate. We define “gross burn rate” as the total number of shares granted under all of our equity incentive plans during a period divided by the weighted average number of shares of common stock outstanding during that period and expressed as a percentage. We define “net burn rate” as the total number of shares granted under all of our equity incentive plans during a period, minus the total number of shares returned to such plans through awards cancelled during that period, divided by the weighted average number of shares of common stock outstanding during that period, and expressed as a percentage.

Our Board of Directors takes seriously its commitment to stockholders to use equity responsibly, and in recent years our gross burn rate has been decreasing:

 

 

LOGO

Gross Burn Rate 2.17% 1.78% 1.49% 2016 2017 2018

 

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The following table sets forth our gross burn rate for fiscal 2018, 2017 and 2016. Our net burn rate for the same period was 0.96%, 1.19% and 0.24%, respectively.

Gross Burn Rate Summary

 

Grant Year

   Restricted Stock
Granted
(#)(1)(2)
     Performance-based
Restricted
Stock
Released
(#)(2)(3)
     Options &
SARs
Granted
(#)(4)
     Weighted Average
Common
Shares
Outstanding
(#)
     Gross Burn
Rate
(%)
 

Fiscal 2018

     8,354,368        817,468               615,784,822        1.49  

Fiscal 2017

     10,421,909        583,640               617,726,034        1.78  

Fiscal 2016

     14,116,762        400,449               670,002,129        2.17  

 

(1) 

Includes time-based RSUs granted by Symantec. Does not include PRUs granted by Symantec; PRU stock released is included in a separate column above.

 

(2) 

This table only includes awards granted by Symantec and does not include options, RSUs or PRUs assumed in acquisitions.

 

(3) 

Includes PRU stock released in the fiscal year but earned and vested in the previous fiscal year.

 

(4) 

While we assumed stock options with acquisitions in fiscal 2018 and 2017, no stock options or SARs were granted by Symantec in fiscal 2018, 2017 and 2016.

Our burn rates for fiscal 2016 through fiscal 2018 were higher than we initially estimated for reasons including the following:

 

   

Our weighted average number of shares of common stock outstanding during each of those periods has decreased as we maintain ongoing share buyback plans to return capital to our stockholders; and

 

   

We granted additional equity awards for retention purposes in fiscal 2017 as we integrated Blue Coat and Symantec into one organization while undertaking our business transformation initiatives.

The table below summarizes the number of PRUs granted at target under the 2013 Plan in each of the past three fiscal years but not included in our burn rate calculations. Our burn rate calculations consider Performance-based Restricted Stock upon release rather than grant. PRUs released is a more accurate measure of the compensation expense and dilutive impact than awards granted, and that calculation is also more frequently used by third parties evaluating our equity compensation plans.

 

Grant Year

   Performance-based
Restricted Stock
Granted
(#)
 

Fiscal 2018

     2,836,989  

Fiscal 2017

     1,978,638  

Fiscal 2016

     917,460  

The following table presents a summary of the number of awards assumed in fiscal 2018 in connection acquisitions made by the Company in fiscal 2018, and excluded from our fiscal 2018 burn rate calculations, as noted above.

 

     RSUs (#)      PRUs (#)      Options & SARs (#)  

Fiscal 2018 awards assumed(1)

     2,019,722        1,110,127        722,386  

 

 

(1) 

These amounts include the total awards assumed at the closing of the fiscal 2018 acquisitions; the number of awards currently outstanding is less due to terminations, cancellations and exercises after the assumption.

Please see “Executive Compensation and Related Information — Compensation Discussion & Analysis (CD&A)” beginning on page 60 for more discussion of equity awards made to our senior executives.

 

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Summary of our 2013 Equity Incentive Plan, as Amended

The following is a summary of the principal provisions of the 2013 Plan, as proposed to be amended. This summary does not purport to be a complete description of all of the provisions of the 2013 Plan. It is qualified in its entirety by reference to the full text of the 2013 Plan. A copy of the 2013 Plan has been filed with the SEC with this proxy statement, and any stockholder who wishes to obtain a copy of the 2013 Plan may do so by written request to the Secretary at Symantec’s headquarters in Mountain View, California.

Eligibility. Employees (including officers), consultants, independent contractors, advisors and members of the Board (including non-employee directors) are eligible to participate in the 2013 Plan. As of October 10, 2018, there were approximately 11,650 employees and consultants, including six executive officers, and twelve non-employee directors that were eligible to receive awards under the 2013 Plan.

Since our executive officers and non-employee directors may participate in the 2013 Plan, each of our executive officers, non-employee directors and director nominees has an interest in Proposal No. 3.

Types of Awards. Awards that may be granted are stock options (both nonstatutory stock options and incentive stock options (which may only be granted to employees)), restricted stock awards, RSUs (including PRUs and performance-contingent stock units (“PCSUs”)) and stock appreciation rights (each individually, an “award”).

Shares Reserved for Issuance. If Proposal No. 3 is approved, the total number of shares reserved under the 2013 Plan since the 2013 Plan’s adoption will be 82,000,000 shares, with 25,093,483 available for future issuance (including the available reserve as of October 10, 2018).

Shares Returned to the Plan. Shares that are subject to issuance upon exercise of an option but cease to be subject to such option for any reason (other than exercise of such option), shares that are subject to an award that is granted but is subsequently forfeited or repurchased by Symantec at the original issue price and shares that are subject to an award that terminates without shares being issued will again be available for grant and issuance under the 2013 Plan.

Shares Not Returned to the Plan. Shares that are withheld to pay the exercise or purchase price of an award or to satisfy any tax withholding obligations in connection with an award, shares that are not issued or delivered as a result of the net settlement of an outstanding option or SAR and shares that are repurchased on the open market with the proceeds of an option exercise price will not be available again for grant and issuance under the 2013 Plan.

Reduction of Shares. For purposes of determining the number of shares available for grant under the 2013 Plan, any equity award (i.e., an option, SAR, award of restricted stock or RSUs) will reduce the number of shares available for issuance by one share.

Per-Share Exercise Price. The per-share exercise price of stock options and SARs granted under the 2013 Plan must equal at least the fair market value of a share of our common stock on the grant date of the option.

No Repricing. The exercise price of an option or SAR may not be reduced (repriced) and no option or SAR may be cancelled in exchange for an award with a lower exercise price or cash without first obtaining stockholder approval (other than in connection with certain corporate transactions, including stock splits, stock dividends, mergers, spin-offs and certain other similar transactions).

Recoupment (“Clawback”) Policy; Insider Trading Policy. Under the 2013 Plan, awards granted under the 2013 Plan are subject to a clawback policy adopted by the Board or required by law. In August 2017, our Board adopted a formal clawback policy for recoupment of performance-based equity compensation, PRUs and other performance-based compensation granted under the 2013 Plan from the Company’s executive officers, including all Named Executive Officers. Pursuant to this policy, the

 

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Board of Directors may seek to recoup certain incentive compensation from executives in the event that the Company is required to restate its financial statements due to fraud or intentional misconduct for three fiscal years preceding the date on which the Company is required to prepare an accounting restatement. In August 2018, our Board further expanded this clawback policy to allow for recoupment for certain violations of the Company’s policies. This policy operates in addition to any compensation recoupment provided for under the Company’s Executive Annual Incentive Plans or other equity arrangements. Awards under the 2013 Plan are also subject to compliance with the Company’s insider trading policy.

Number of Shares Per Calendar Year. No person will be eligible to receive more than 2,000,000 shares in any calendar year pursuant to the grant of awards under the 2013 Plan, except that new employees are eligible to receive up to a maximum of 3,000,000 shares in the calendar year in which they commence employment with us.

Non-Employee Director Compensation Limit. Under the 2013 Plan, non-employee directors may be granted stock options and other equity awards either on a discretionary basis or pursuant to policy adopted by the Board. Additionally, the aggregate value of all compensation paid or granted, as applicable, to any individual for service as a non-employee director of our Board of Directors with respect to any fiscal year, including awards granted under the 2013 Plan and cash fees paid by us to such non-employee director, will not exceed $900,000 in total value. Pursuant to a policy adopted by the Board effective April 2, 2016, each non-employee member of the Board receives an annual award of fully-vested restricted stock units having a fair market value on the grant date equal to $275,000, with this value prorated for new non-employee directors from the date of such director’s appointment to the Board to the end of the fiscal year.

Vesting and Exercisability. Awards become vested and exercisable, as applicable, within such periods, or upon such events, as determined by the administrator and as set forth in the related award agreement. Vesting may be based on the passage of time in connection with services performed for us or upon achievement of performance goals or other criteria. The maximum term of each option and SAR is ten years from the date of grant. As a matter of practice, options have generally been subject to a four-year vesting period with a one-year period before any vesting occurs and are currently granted with a maximum term of seven years from the date of grant. Options cease vesting on the date of termination of service or the death or disability of the employee, and generally expire three months after the termination of the employee’s service to Symantec or up to 12 months following the date of death or disability. However, if an employee is terminated for cause, the option expires upon termination. SARs become exercisable as they vest and are settled in cash or shares, as determined by the administrator, having a value at the time of exercise equal to (1) the number of shares deemed exercised, times (2) the amount by which Symantec’s stock price on the date of exercise exceeds the exercise price of SARs. RSUs are settled in cash or shares, depending on the terms upon which they are granted, and only to the extent that they are vested. Shares subject to a restricted stock award that are unvested remain subject to our right of repurchase.

Minimum Vesting. No stock option or SAR award granted on or after November 1, 2016 will vest until at least 12 months following the date of grant of the award; provided, however, that up to 5% of the shares authorized for issuance under the 2013 Plan as of November 1, 2016 may be subject to stock options and SAR awards granted on or after November 1, 2016 which do not meet such vesting (and, if applicable, exercisability) requirements.

No Dividends Paid on Unvested Awards. Under the 2013 Plan as proposed to be amended, dividend or dividend equivalent payments may be accrued but not paid on unvested equity awards. Any dividends or dividend equivalents on unvested awards are subject to the same vesting conditions as the awards on which they relate and may be paid at the time of vesting.

Method of Exercise. The exercise price of options and the purchase price, if any, of other stock awards may be paid by cash, check, broker assisted same-day sales or other methods permitted by the 2013 Plan, the administrator and applicable law.

 

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Adjustment of Shares. In the event of a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of Symantec without consideration or if there is a change in the corporate structure of Symantec, then (a) the number of shares reserved for issuance and future grant under the 2013 Plan, (b) the limits on the number of shares that may be issued to participants in a calendar year, (c) the exercise price and number of shares subject to outstanding options and SARs, (d) the maximum number of shares that may be issued as incentive stock options, (e) the maximum number of shares that may be issued to non-employee directors in a fiscal year and (f) the purchase price and number of shares subject to other outstanding awards, including restricted stock awards, will be proportionately adjusted, subject to any required action by the Board or our stockholders and subject to compliance with applicable securities laws. In the event of an extraordinary cash dividend, the Company may make certain adjustments in lieu of the above, including cash payments.

Administration. The Compensation Committee administers the 2013 Plan (except when the Board decides to directly administer the 2013 Plan).

Corporate Transaction. In the event of a change of control of Symantec (as set forth in the 2013 Plan), the buyer may, among other alternatives, either assume outstanding awards or substitute equivalent awards. If the buyer fails to assume or substitute awards issued under the 2013 Plan, all awards will accelerate upon the closing of the transaction, unless otherwise determined by the Board.

Amendment or Termination of 2013 Plan. The Board may at any time amend or terminate the 2013 Plan in any respect; provided, that the Board may not, without the approval of the stockholders of Symantec, amend the 2013 Plan to increase the number of shares that may be issued under the 2013 Plan, change the designation of employees or class of employees eligible for participation in the 2013 Plan or materially modify a provision of the 2013 Plan if the modification requires stockholder approval under Nasdaq rules.

Termination Date. The 2013 Plan will terminate on October 22, 2023 unless terminated earlier.

Summary of Federal Income Tax Consequences of Awards Granted under the 2013 Equity Incentive Plan, as Amended

The following is a general summary as of the date of this proxy statement of the U.S. federal income tax consequences to Symantec and participants in the 2013 Plan with respect to awards granted under the 2013 Plan. U.S. federal tax laws may change and U.S. federal, state and local tax consequences for any participant will depend upon his or her individual circumstances.

Tax Treatment of the Participant

Incentive Stock Options. An optionee will recognize no income upon the grant of an incentive stock option (“ISO”) and will incur no tax upon exercise of an ISO unless for the year of exercise the optionee is subject to the alternative minimum tax (“AMT”). If the optionee holds the shares purchased upon exercise of the ISO (the “ISO Shares”) for more than one year after the date the ISO was exercised and for more than two years after the ISO’s grant date (the “required holding period”), then the optionee generally will realize long-term capital gain or loss (rather than ordinary income or loss) upon disposition of the ISO Shares. This gain or loss will equal the difference between the amount realized upon such disposition and the amount paid for the ISO Shares upon the exercise of the ISO.

If the optionee disposes of ISO Shares prior to the expiration of the required holding period (a “disqualifying disposition”), then gain realized upon such disposition, up to the difference between the option exercise price and the fair market value of the ISO Shares on the date of exercise (or, if less, the amount realized on a sale of such ISO Shares), will be treated as ordinary income. Any additional gain will be capital gain, and treated as long-term capital gain or short-term capital gain depending upon the amount of time the ISO Shares were held by the optionee.

Alternative Minimum Tax. The difference between the exercise price and fair market value of the ISO Shares on the date of exercise is an adjustment to income for purposes of the AMT. Alternative

 

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minimum taxable income is determined by adjusting regular taxable income for certain items, increasing that income by certain tax preference items and reducing this amount by the applicable exemption amount. If a disqualifying disposition of the ISO Shares occurs in the same calendar year as exercise of the ISO, there is no AMT adjustment with respect to those ISO Shares. Also, upon a sale of ISO Shares that is not a disqualifying disposition, alternative minimum taxable income is reduced in the year of sale by the excess of the fair market value of the ISO Shares at exercise over the amount paid for the ISO Shares.

Nonstatutory Stock Options. An optionee will not recognize any taxable income at the time a NSO is granted. However, upon exercise of a NSO, the optionee must include in income as compensation an amount equal to the difference between the fair market value of the shares on the date of exercise and the optionee’s exercise price. The included amount must be treated as ordinary income by the optionee and will be subject to income tax withholding by Symantec if the optionee is an employee. Upon resale of the shares by the optionee, any subsequent appreciation or depreciation in the value of the shares will be treated as long-term or short-term capital gain or loss depending upon the amount of time the NSO shares were held by the optionee.

Restricted Stock Units. In general, no taxable income is realized upon the grant of a RSU award (including awards of PRUs and PCSUs). The participant will generally include in ordinary income, which will be subject to income tax withholding by Symantec if the participant is an employee, the fair market value of the shares of stock that are delivered to the participant upon settlement, which generally occurs at the time the RSUs vest.

Restricted Stock. A participant receiving restricted shares for services recognizes taxable income when the shares become vested. Upon vesting, the participant will include in ordinary income an amount, which will be subject to income tax withholding by Symantec if the participant is an employee, equal to the difference between the fair market value of the shares at the time they become substantially vested and any amount paid for the shares. Upon resale of the shares by the participant, subsequent appreciation or depreciation in the value of the shares is treated as long-term or short-term capital gain or loss depending on the amount of time the shares were held by the participant.

If the participant makes an election under Section 83(b) of the Code (“83(b) Election”), the participant will include in income as ordinary income the fair market value of the shares of stock on the date of receipt of the award, less any purchase price paid for such shares. The income will be subject to withholding by Symantec (either by payment in cash or withholding out of the participant’s award). If the award is subsequently forfeited, the participant will not receive any deduction for the amount treated as ordinary income.

Stock Appreciation Rights. A grant of a SAR has no federal income tax consequences at the time of grant. Upon the exercise of SARs, the value of the shares or other consideration received is generally taxable to the recipient as ordinary income, which will be subject to income tax withholding by Symantec if the recipient is an employee.

Tax Treatment of Symantec

Subject to any withholding requirement, the standard of reasonableness, and (if applicable) Section 162(m) of the Code, Symantec generally will be entitled to a deduction to the extent any participant recognizes ordinary income from an award granted under the 2013 Plan.

ERISA Information

The 2013 Plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended.

Accounting Treatment

Symantec will recognize compensation expense in connection with awards granted under the 2013 Plan as required under applicable accounting standards. Symantec currently recognizes

 

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compensation expense associated with equity awards over an award’s requisite service period and establishes fair value of equity awards in accordance with applicable accounting standards.

New Plan Benefits

Except as described in “— Summary of our 2013 Equity Incentive Plan, as Amended — Non-Employee Director Equity Awards” above, future awards to directors, executive officers, employees and other eligible participants under the 2013 Plan are discretionary and cannot be determined at this time. Further, since the number of shares subject to the RSUs to be granted to non-employee directors under the 2013 Plan depends on the fair market value of our common stock at future dates, it is not possible to determine the exact number of shares that will be subject to such future RSU awards. The following table sets forth the aggregate number of shares subject to RSU awards (including PRUs at 100% of target as disclosed under “Compensation Components — II. Equity Incentive Awards — Performance Restricted Stock Units (PRUs)”) granted in fiscal 2018 under the 2013 Plan for the individuals identified and the various indicated groups. No stock options were granted under the 2013 Plan in fiscal 2018.

 

Name

   Restricted Stock
Units Granted
 

Named Executive Officers:

  

Clark, Gregory S

     485,249  

Noviello, Nicholas R.

     226,449  

Fey, Michael D.

     452,899  

Taylor, Scott C.

     145,574  

Rosch, Francis C.(1)

     388,199  

All current executive officers as a group (6 persons)

     1,458,979  

All current non-employee directors as a group (12 persons)

     85,930  

All employees, excluding current executive officers

     9,646,448  

 

 

(1) 

Former executive officer

As of October 10, 2018, since the inception of the 2013 Plan, the aggregate number of awards granted to each named executive officer and the various indicated groups under the 2013 Plan are:

 

Name

   Number of Awards
Granted under 2013 Plan
 

Named Executive Officers:

  

Clark, Gregory S.

     485,249  

Noviello, Nicholas R.

     226,449  

Fey, Michael D.

     452,899  

Taylor, Scott C.

     644,754  

Rosch, Francis C.(1)

     1,020,083  

All current executive officers as a group (6 persons)

     2,984,490  

All current non-employee directors as a group (12 persons)

     529,582  

All employees, excluding current executive officers

     73,302,468  

 

 

(1) 

Former executive officer

 

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Equity Compensation Plan Information

The following table gives information about Symantec’s common stock that may be issued upon the exercise of options, warrants and rights under all of Symantec’s existing equity compensation plans as of March 30, 2018:

 

     Equity Compensation Plan Information  

Plan Category

   Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
    Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
     Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
 
     (a)     (b)      (c)  

Equity compensation plans approved by security holders

                  82,997,034 (1)  

Equity compensation plans not approved by security holders

     (2)               

Total

                  82,997,034  

 

(1) 

Represents 47,683 shares remaining available for future issuance under Symantec’s 2000 Director Equity Incentive Plan, 35,773,529 shares remaining available for future issuance under Symantec’s 2008 Employee Stock Purchase Plan, 22,019,375 shares issuable upon settlement of RSUs and PRUs (at 100% of target), and 25,156,447 shares issuable for future grant under our 2013 Plan as of March 30, 2018. Excludes 14,125,684 shares issuable upon settlement of RSUs and PRUs (at target) that were assumed in connection with various acquisitions. Note, this does not include shares granted after March 30, 2018 and excludes the proposed increase of 12,000,000 shares under this Proposal No. 3.

 

(2) 

Excludes outstanding options to acquire 13,605,035 shares as of March 30, 2018 that were assumed as part of various acquisitions. The weighted average exercise price of these outstanding options was $8.53 as of March 30, 2018. In connection with these acquisitions, Symantec has only assumed outstanding options and rights, but not the plan themselves, and therefore, no further options may be granted under these acquired-company plans.

THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL NO. 3

 

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PROPOSAL NO. 4

APPROVAL OF AMENDMENT TO OUR 2008 EMPLOYEE STOCK PURCHASE PLAN

We are asking stockholders to approve an amendment to our 2008 Employee Stock Purchase Plan (the “ESPP”) to extend the term of the ESPP by an additional ten years through January 30, 2028 and make certain other minor administrative changes. The Board approved this amendment on January 30, 2018. Although stockholder approval is not required to extend the term, the Board is submitting this amendment for extension of the ESPP to our stockholders for approval as a matter of good corporate practice.

The ESPP provides our employees the means to acquire shares of our common stock at a discount to the purchase date fair market value through accumulated payroll deductions. This is a long-standing benefit program, and we believe it is important in helping us retain employees and helping align their interests with those of our stockholders.

Plan History

The ESPP was originally adopted by the Board in April 2008, and it was approved by our stockholders in September 2008. The ESPP was amended by the Board and our stockholders in 2010 and 2013 to increase the number of shares reserved for issuance. As of October 10, 2018, 35,773,529 shares are available for future issuance under the ESPP.

The following named executive officers purchased under the ESPP the number of the shares listed after his or her name during the fiscal year ending March 30, 2018: Gregory S. Clark — none, Nicholas R. Noviello — 276 shares, Michael D. Fey — 884 shares, Francis C. Rosch — 743 shares, and Scott C. Taylor — 884 shares. During fiscal year 2018, all executive officers as a group purchased an aggregate of 2,973 shares. No associate of any of our executive officers or directors has purchased shares under the ESPP, and no person has purchased 5% or more of the total shares issued under the ESPP from the inception of the ESPP through October 10, 2018.

Summary of our 2008 Employee Stock Purchase Plan

The following is a summary of the principal provisions of the ESPP, as proposed for approval. This summary does not purport to be a complete description of all of the provisions of the ESPP. It is qualified in its entirety by reference to the full text of the ESPP. A copy of the ESPP has been filed with the SEC with this proxy statement, and any stockholder who wishes to obtain a copy of the ESPP may do so by written request to the Corporate Secretary at Symantec’s headquarters in Mountain View, California.

Statutory Plan and Non-Statutory Plan. The ESPP allows us the ability to establish separate sub-plans to permit the purchase of our common stock either through the “Statutory Plan,” which is intended to satisfy the requirements of Section 423 of the Code or through one or more “Non-Statutory Plans” that will not comply with Section 423. The Statutory Plan and the Non-Statutory Plans shall be operated as separate and independent plans, although the total number of shares authorized to be issued under the ESPP applies in the aggregate to both the Statutory Plan and to all Non-Statutory Plans. Other than the share reserve, the Board may adopt special provisions, rules and procedures for a particular Non-Statutory Plan that are different from, and may in certain cases supersede the provisions of the ESPP, without seeking stockholder approval.

Shares Reserved for Issuance. As of October 10, 2018, there were 70,000,000 shares reserved for issuance under the ESPP since its initial adoption and there was 638,538,278 shares of our common stock issued and outstanding.

Offering Periods. The ESPP operates by offering eligible employees the right to purchase stock through a series of successive or overlapping offering periods (each an “Offering Period”). The ESPP operates through a series of successive twelve-month Offering Periods that generally begin each

 

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February 16 and August 16 (or the first business day after that date), and end, respectively, on the following February 15 and August 15 (or the last business day preceding that date). The ESPP permits us to provide for multiple purchase dates within a single Offering Period. Each Offering Period is divided into two consecutive six-month “Purchase Periods,” one ending with a “Purchase Date” on the last trading date immediately preceding the six (6) month anniversary of the commencement of the Offering Period and the second one ending with a Purchase Date on the last trading date immediately preceding the twelve (12) month anniversary of the commencement of the Offering Period. On each Purchase Date, all accrued payroll deductions of each participant are used to purchase shares.

Eligibility and Participation. Employees (including officers and employee directors) who are employed for at least 20 hours per week and more than five months in any calendar year and who are employed by us as of the third business day before the beginning of an Offering Period are eligible to participate in that Offering Period, subject to certain limitations imposed by Section 423(b) of the Code, applicable local law for locations outside of the United States and the plan itself. For example, no employee may be granted an option under the ESPP if immediately after the grant such employee would own stock and/or hold outstanding options to purchase stock possessing 5% or more of the total voting power or value of all classes of stock of Symantec or our subsidiaries. As of October 10, 2018, approximately 11,954 employees (including officers and employee directors) are eligible to participate in the ESPP. Each of our executive officers has an interest in Proposal No. 4. In connection with the Audit Committee Investigation, the Purchase Period scheduled to end on August 15, 2018, and the Offering Period scheduled to begin on August 16, 2018 were cancelled. With the conclusion of the Audit Committee Investigation announced on September 24, 2018, we anticipate opening the ESPP to eligible employees with the Offering Period beginning on February 16, 2019.

Eligible employees become participants in the ESPP by submitting an enrollment form authorizing payroll deductions no later than the third business day prior to the beginning of an Offering Period (unless payroll deductions are not permitted under local law, in which case such other payment methods as we may approve). Once a participant enrolls in an Offering Period, he or she is automatically enrolled in subsequent Offering Periods unless he or she withdraws from or becomes ineligible to participate in the ESPP. Once an employee has enrolled in the ESPP, amounts are withheld from his or her compensation during each payroll period. An employee may elect to have not less than 2% or more than 10% of his or her compensation during an Offering Period withheld to be used to purchase shares under the ESPP. Eligible compensation is defined in the ESPP as all compensation including base salary, wages, commissions, overtime, shift premiums and bonuses, plus draws against commissions but excluding amounts related to company equity compensation; provided however, that for purposes of determining a participant’s compensation any election by such participant to reduce his or her regular cash remuneration under Sections 125 or 401(k) of the Code shall be treated as if the participant did not make the election. For purposes of any Non-Statutory Plan, compensation is defined as base salary. A participant may decrease, but not increase, the rate of his or her payroll deductions once during an ongoing Offering Period by completing and filing a new authorization for payroll deductions form.

Grant and Exercise of Option; Purchase Price. On the first trading date of an Offering Period (which is referred to as the grant date or the “Offering Date”), each participant is granted an option to purchase up to that number of shares determined by dividing his or her payroll deductions accumulated during each Purchase Period as of the last trading day of such Purchase Period by the purchase price applicable for that Purchase Period. We administer the ESPP to provide that the purchase price per share for each Purchase Period is the lower of 85% of the fair market value of a share of our common stock on (i) the first day of the Offering Period or (ii) the last trading day of the applicable Purchase Period (the “Purchase Date”). Fair market value means the closing price of our common stock on the Purchase Date. As of October 10, 2018, the fair market value of a share of our common stock was $19.90.

Certain limitations on the number of shares that a participant may purchase apply. For example, the option granted to an employee may not permit him or her to purchase stock under the ESPP at a

 

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rate which exceeds $25,000 in fair market value of such stock (determined as of the Offering Date) for each calendar year in which the option is outstanding. In addition, we have set 10,000 shares as the maximum number of shares an employee may purchase on each Purchase Date. The ESPP allows us to increase or decrease this share limit without stockholder approval. We will make a pro rata reduction in the number of shares subject to options outstanding under the ESPP if the total number of shares that would otherwise be purchased on a Purchase Date by all participants exceeds the number of shares remaining available under the plan.

Provided the employee continues participating in the plan through the end of a Purchase Period, his or her option to purchase shares is exercised automatically at the end of the Purchase Period, and the maximum number of shares that may be purchased with accumulated payroll amounts at the applicable purchase price are issued to the employee.

Rights to purchase stock under the ESPP are generally not transferable by the employee.

Termination of Employment; Withdrawal from the ESPP. Termination of a participant’s employment for any reason, including retirement or death or the failure of the participant to remain in the continuous employ of Symantec for at least 20 hours per week and more than five months in any calendar year during the applicable Offering Period cancels his or her option to purchase shares under the ESPP and terminates his or her participation. In such event, accumulated payroll deductions are returned (without interest unless required by applicable law) to the participant.

A participant may withdraw from the ESPP at any time during an Offering Period prior to a date specified for administrative reasons prior to the Purchase Date. Upon withdrawal, the participant’s accumulated payroll amounts are returned to him or her, without interest unless required by applicable law.

Adjustment of Shares. Subject to any required action by our stockholders, in the event of a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of Symantec without consideration, proportionate adjustment shall be made to the number of shares remaining available for issuance under the ESPP, the purchase price and number of shares subject to then-outstanding options under the ESPP, and the maximum number of shares that may be purchased on any Purchase Date.

Corporate Transactions. In the event of a proposed change of control of Symantec (as set forth in the ESPP), each then-outstanding option under the ESPP will be assumed or an equivalent substitute option substituted by the buyer, unless the Board elects in lieu of that treatment to simply shorten the Offering Period then in progress and allow each outstanding option to be automatically exercised on a specified date preceding the closing of the transaction. If the Board sets an earlier Purchase Date in connection with a change of control transaction, the Offering Period then in progress will terminate on that Purchase Date.

Amendment and Termination of the ESPP. The Board may at any time amend or terminate the ESPP without the approval of the stockholders or employees, except that an amendment or termination generally cannot adversely affect options then outstanding (although the ESPP provides for certain exceptions to this rule).

Term. The ESPP shall expire on January 30, 2028, unless sooner terminated by the Board.

U.S. Federal Income Tax Consequences

The following is a brief summary of the general U.S. federal income tax consequences to U.S. taxpayers and Symantec of shares purchased under the Statutory Plan, which is a sub-plan of the ESPP. This summary is not complete and does not discuss the tax consequences of a participant’s death or the income tax laws of any state or foreign country in which the participant may reside. Tax consequences for any particular individual may be different.

 

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The Statutory Plan and the options granted under the Statutory Plan are intended to qualify for favorable federal income tax treatment associated with rights granted under an “employee stock purchase plan” that qualifies under provisions of Section 423 of the Code.

Amounts of a participant’s compensation withheld for the purchase of shares of our common stock under the Statutory Plan will be subject to regular income and employment tax withholding as if such amounts were actually received by the employee. Other than this, no income will be taxable to a participant until sale or other disposition of the acquired shares.

Tax treatment upon transfer of the purchased shares depends on how long the participant holds the shares from the Purchase Date to the transfer date. If the stock is disposed of more than two years after the Offering Date, and more than one year after the Purchase Date for the stock being transferred, then the lesser of (i) the excess of the fair market value of the stock at the time of such disposition over the purchase price or (ii) the excess of the fair market value of the stock as of the Offering Date over the purchase price (determined as of the Offering Date) will be treated as ordinary income. Any further gain will be taxed as a long-term capital gain.

Under current law, long-term capital gains are generally subject to lower tax rates than ordinary income. If the fair market value of the stock on the date of the disposition is less than the purchase price paid for the shares, there will be no ordinary income, and any loss recognized will be a capital loss.

If the stock is sold or disposed of before the expiration of either of the holding periods described above, then the excess of the fair market value of the stock on the Purchase Date for the shares over the purchase price will be treated as ordinary income at the time of the sale or disposition. The balance of any gain will be treated as capital gain. Even if the stock is disposed of for less than its Purchase Date fair market value, the same amount of ordinary income is attributed to the participant, and a capital loss is recognized equal to the difference between the sales price and the fair market value of the stock on such Purchase Date. Any capital gain or loss will be short-term or long-term, depending on how long the stock has been held.

There are no U.S. federal income tax consequences to Symantec by reason of the grant or exercise of options under the ESPP. Symantec is entitled to a deduction to the extent amounts are taxed as ordinary income to a participant.

Symantec may also grant options under Non-Statutory Plans to employees of our designated subsidiaries and affiliates that do not participate in the Statutory Plan. The specific terms of such Non-Statutory Plans are not yet known; accordingly, it is not possible to discuss with certainty the relevant tax consequences of these Non-Statutory Plans. The Non-Statutory Plans will be sub-plans of the ESPP that are generally not intended to qualify under the provisions of Sections 421 and 423 of the Code. Therefore, it is likely that at the time of the exercise of an option under a Non-Statutory Plan, an employee subject to tax under the Code would recognize ordinary income equal to the excess of the fair market value of the stock on the date of exercise and the purchase price, Symantec would be able to claim a tax deduction equal to this difference, and Symantec would be required to withhold employment taxes and income tax at the time of the purchase.

Accounting Treatment

Symantec recognizes compensation expense in connection with options outstanding under the ESPP in accordance with authoritative guidance on stock compensation. So long as Symantec continues issuing shares under the ESPP with a purchase price at a discount to the fair market value of its stock, Symantec will recognize compensation expense which will be determined by the level of participation in the ESPP.

New Plan Benefits

Because benefits under the ESPP depend on the fair market value of our common stock at various future dates, it is not possible to determine the benefits that will be received by employees if they

 

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participate in the ESPP. During fiscal year 2018, four Named Executive Officers participated in the ESPP.

As of October 10, 2018, since the inception of the ESPP, the aggregate number of shares issued to each named executive officer and the various indicated groups under the ESPP are:

 

Name

   Number of Shares
Issued Under ESPP
 

Named Executive Officers:

  

Clark, Gregory S.

      

Noviello, Nicholas R.

     1,599  

Fey, Michael D.

     3,059  

Taylor, Scott C.

     3,059  

Rosch, Francis C.(1)

     10,141  

All current executive officers as a group (6 persons)

     21,609  

All current non-employee directors as a group (12 persons)

      

All employees, excluding current executive officers

     34,204,862  

 

(1)

Former executive officer

THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL NO. 4.

 

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PROPOSAL NO. 5

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

In accordance with Section 14A of the Exchange Act, stockholders are entitled to cast an advisory vote to approve the compensation of our named executive officers, as disclosed in this proxy statement. Accordingly, you are being asked to vote on the following resolution at the Annual Meeting:

RESOLVED, that the compensation paid to Symantec Corporation’s named executive officers, as disclosed in this proxy statement pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion & Analysis, compensation tables and narrative discussion, is hereby approved.”

As described more fully in the Compensation Discussion & Analysis section of this proxy statement, our named executive officers are compensated in a manner consistent with our pay-for-performance philosophy and corporate governance best practices. Our executive compensation programs for fiscal 2018 reflect these significant changes to our management team and to our business while promoting our pay-for-performance philosophy and corporate governance best practices. A few highlights, which are discussed further in the Compensation Discussion & Analysis, are:

 

   

We reward performance that meets our predetermined goals. Our compensation plans do not have guaranteed payout levels, and our named executive officers do not receive any payouts under performance-based cash or equity awards if the goals are not met. Our compensation plans are also capped to discourage excessive or inappropriate risk-taking by our executive officers.

 

   

The majority of the annual, at-target equity compensation of our named executive officers is in the form of performance-based restricted stock units (“PRUs”), which do not have any value unless the performance-based metrics are achieved. We do not award any stock options to our executives.

 

   

Our various incentive plans use multiple, non-duplicative measures that correlate to stockholder value, such that no single metric is overly emphasized in determining payouts in a year.

 

   

Our peer group consists primarily of businesses with a focus on software development, or software and engineering-driven companies that compete with us for talent. Our peer group companies are comparable to us in terms of complexity, global reach, revenue and market capitalization. We reevaluate our peer group on an annual basis and, when necessary, make adjustments.

 

   

We have long-standing stock ownership guidelines for our named executive officers, requiring them to hold a significant minimum value in shares so that they have a material financial stake in our Company, thereby further aligning the interests of our executive officers with those of our stockholders. We also prohibit the sale of any shares (except to meet tax withholding obligations) if doing so would cause them to fall below the required ownership levels.

 

   

We do not provide for gross-ups of excise tax values under Section 4999 of the Internal Revenue Code.

 

   

We limit any potential cash severance payments to not more than 1x our executive officers’ total target cash compensation and 2x our CEO’s total base salary.

 

   

We have traditionally included clawback provisions in all of our executive compensation plans (providing for the return of any excess compensation received by an executive officer if our financial statements are the subject of a restatement due to error or misconduct). In August 2017, our Board went a step further and adopted a “clawback” policy, applicable to all performance-based compensation granted to the company’s officers (even after they leave Symantec). In August 2018, our Board further expanded this clawback policy to allow for recoupment for certain violations of the Company’s policies. This policy supplements the contractual “clawback” rights described above we have had in place for many years, noted herein.

 

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Our executive officers are prohibited from short-selling Symantec stock or engaging in transactions involving Symantec-based derivative securities, and are also prohibited from pledging their Symantec stock.

 

   

Our equity incentive plan prohibits the repricing or exchange of equity awards without stockholder approval.

 

   

We seek stockholder feedback on our executive compensation through an annual advisory vote and ongoing stockholder engagement.

We believe that our compensation program balances the interests of all of our constituencies — our stockholders, our executive officers, the remainder of our employee base, our business partners and our community — by, among other things, focusing on achievement of corporate objectives, attracting and retaining highly-qualified executive management and maximizing long-term stockholder value. We encourage you to read the Compensation Discussion & Analysis, compensation tables and narrative discussion related to executive compensation in this proxy statement.

The vote to approve the compensation of our named executive officers is advisory and, therefore, not binding. Although the vote is non-binding, the Compensation Committee and the Board value your opinion and will consider the outcome of the vote in establishing its compensation philosophy and making future compensation decisions.

THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL NO. 5

 

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OUR EXECUTIVE OFFICERS

The names of our current executive officers, their ages as October 10, 2018, and their positions are shown below.

 

Name

   Age     

Position

Gregory S. Clark

     53      Chief Executive Officer

Amy L. Cappellanti-Wolf

     53      Senior Vice President and Chief Human Resources Officer

Michael D. Fey

     43      President and Chief Operating Officer

Samir Kapuria

     45      Executive Vice President, Cyber Security Services

Nicholas R. Noviello

     49      Executive Vice President and Chief Financial Officer

Scott C. Taylor

     54      Executive Vice President, General Counsel and Secretary

The Board chooses executive officers, who then serve at the Board’s discretion. There is no family relationship between any of the directors or executive officers and any other director or executive officer of Symantec.

For information regarding Mr. Clark, please refer to Proposal No. 1, “Election of Directors” above.

Ms. Cappellanti-Wolf has served as our Senior Vice President and Chief Human Resources Officer since July 2014. Prior to joining us, she was Chief Human Resources Officer at Silver Spring Networks, Inc., a smart grid products provider, from June 2009 to July 2014. From September 2001 to June 2009, Ms. Cappellanti-Wolf served as Vice President, Human Resources of Cisco Systems, Inc., a networking company. From 2000 to 2001, she served as a Human Resources Director at Sun Microsystems, Inc. Ms. Cappellanti-Wolf served as Human Resources Director for The Walt Disney Company from 1995 to 2000 and held various roles in human resources with Frito-Lay, Inc., a division of PepsiCo, Inc., from 1988 to 1995. She has a Bachelor’s degree in journalism from West Virginia University and a Master’s degree in industrial and labor relations from West Virginia University.

Mr. Fey has served as our President and Chief Operating Officer since August 2016. Prior to that, he served as the President and Chief Operating Officer of Blue Coat from December 2014 to August 2016, when we acquired that company. Prior to joining Blue Coat, Mr. Fey served in a variety of capacities at the Intel Security Group from 2012 until 2014, including as Executive Vice President, Chief Technology Officer and as General Manager of Corporate Products. Previously, he served as Senior Vice President, Advanced Technologies and Field Engineering with McAfee, a software security company, from 2007 until 2012. Mr. Fey holds a Bachelor’s degree from Embry-Riddle Aeronautical University.

Mr. Kapuria has served as our Executive Vice President, Cyber Security Services since May 2018. Prior to that, he served as our Senior Vice President, Cyber Security Services from November 2014 to May 2018, as our Vice President, Products and Services from July 2012 to November 2014, and as our Vice President, Business Strategy and Security Intelligence from April 2011 to July 2012. Prior to April 2011, Mr. Kapuria held numerous other management positions with Symantec. Mr. Kapuria holds a bachelor’s degree in finance from the University of Massachusetts.

Mr. Noviello has served as our Executive Vice President and Chief Financial Officer since December 2016. Prior to that, he served as our Executive Vice President and Chief Integration Officer from August 2016 to November 2016. Prior to joining Symantec, Mr. Noviello served as Blue Coat’s Chief Financial Officer from January 2016 to August 2016, when we acquired that company. Prior to joining Blue Coat, he served as Executive Vice President, Finance and Operations, and Chief Financial Officer for NetApp, a publicly traded global data management and storage company, from January 2012 through January 2016. From January 2008 until January 2012, Mr. Noviello held a variety of posi-

 

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tions of increasing seniority within the finance organization at NetApp, including Controller and Global Controller. Prior to joining NetApp, he spent eight years at Honeywell International, where he was Chief Financial Officer of two global business units, ran investor relations, and was a leader on the corporate mergers and acquisitions team. Mr. Noviello started his career at PricewaterhouseCoopers. He is a Certified Public Accountant and holds a Bachelor’s degree in business administration from Boston University and a Master’s degree in taxation from Fairleigh Dickinson University.

Mr. Taylor has served as our Executive Vice President, General Counsel and Secretary since August 2008. From February 2007 to August 2008, he served as our Vice President, Legal. Prior to joining Symantec, Mr. Taylor held various legal and administrative positions at Phoenix Technologies Ltd., a provider of core systems software, from January 2002 to February 2007, including most recently as Chief Administrative Officer, Senior Vice President and General Counsel. From May 2000 to September 2001, he was Vice President and General Counsel at Narus, Inc., a venture-backed private company that designs IP network management software. Mr. Taylor is a director of Piper Jaffray Companies, a national advisory board member of the Stanford University Center for Comparative Studies on Race and Ethnicity and serves on the board of trustees of Menlo School. He holds a Juris Doctorate from George Washington University and a Bachelor’s degree from Stanford University.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of October 10, 2018 with respect to the beneficial ownership of Symantec common stock by (i) each stockholder known by Symantec to be the beneficial owner of more than 5% of Symantec common stock, (ii) each member of the Board and nominee, (iii) the named executive officers of Symantec included in the Summary Compensation Table appearing on page 91 of this proxy statement and (iv) all current executive officers and directors of Symantec as a group.

Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise indicated below, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Percentage ownership is based on 638,538,278 shares of Symantec common stock outstanding as of October 10, 2018 (excluding shares held in treasury). Shares of common stock subject to stock options and restricted stock units vesting on or before December 9, 2018 (within 60 days of October 10, 2018) are deemed to be outstanding and beneficially owned for purposes of computing the percentage ownership of such person but are not treated as outstanding for purposes of computing the percentage ownership of others.

Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Symantec Corporation, 350 Ellis Street, Mountain View, California 94043.

 

Name and Address of Beneficial Owner

   Amount and
Nature of
Beneficial
Ownership
     Percent
of Class
 

T. Rowe Price Associates, Inc.(1)

     78,822,026        12.3

Vanguard Group Inc.(2)

     63,359,516        9.9

Capital World Investors(3)

     43,353,589        6.8

BlackRock, Inc.(4)

     40,184,068        6.3

Starboard Value LP(5)

     36,000,796        5.6

Directors and Executive Officers

     

Gregory S. Clark(6)

     6,566,782        1.0

Michael D. Fey(7)

     2,308,211        *  

Nicholas R. Noviello(8)

     1,471,135        *  

Scott C. Taylor

     350,364        *  

David L. Mahoney(9)

     187,299        *  

Amy L. Cappellanti-Wolf

     178,361        *  

Daniel H. Schulman(10)

     156,865        *  

Robert S. Miller

     141,097        *  

Geraldine B. Laybourne

     131,614        *  

Samir Kapuria(11)

     105,116        *  

Frank E. Dangeard

     104,050        *  

V. Paul Unruh

     87,587        *  

Francis C. Rosch**(12)

     83,268        *  

Anita M. Sands

     49,706        *  

Kenneth Y. Hao(13)

     43,899        *  

Suzanne M. Vautrinot

     36,145        *  

David W. Humphrey

     33,190        *  

Dale E. Fuller

     14,200        *  

Peter A. Feld(14)

             

All current Symantec executive officers and directors as a group (18 persons)(15)

     11,965,621        1.9

 

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*

Less than 1%.

 

**

Former officer.

 

(1) 

Based solely on a Schedule 13G/A filing made by T. Rowe Price Associates on February 14, 2018, reporting sole voting and dispositive power over the shares. This stockholder’s address is 100 E. Pratt Street, Baltimore, MD 21202.

 

(2) 

Based solely on a Schedule 13G/A filing made by The Vanguard Group on February 9, 2018, reporting sole voting and dispositive power over the shares. This stockholder’s address is 100 Vanguard Blvd., Malvern, PA 19355.

 

(3) 

Based solely on a Schedule 13G/A filing made by Capital World Investors on September 10, 2018, reporting sole voting and dispositive power over the shares. This stockholder’s address is 333 South Hope Street, Los Angeles, CA 90071.

 

(4) 

Based solely on a Schedule 13G/A filing made by the BlackRock, Inc. on February 8, 2018, reporting sole voting and dispositive power over the shares. This stockholder’s address is 55 East 52nd Street, New York, NY 10055.

 

(5) 

Based solely on a Schedule 13D filing made by Starboard Value LP on September 18, 2018, reporting sole voting and dispositive power over the shares. This stockholder’s address is 777 Third Avenue, 18th Floor, New York, New York 10017. Mr. Feld is a Managing Member of Starboard Value LP and may be deemed to share voting and dispositive power over these shares.

 

(6) 

Includes 1,122,938 shares held by the TR UA 01/29/2016 Gregory S. Clark Living Trust for which Mr. Clark exercises voting and dispositive power and 3,665,271 shares subject to options that will be exercisable as of December 9, 2018.

 

(7) 

Includes 1,300,813 shares subject to options that will be exercisable as of December 9, 2018.

 

(8) 

Includes 1,107,183 shares subject to options that will be exercisable as of December 9, 2018.

 

(9) 

Includes 2,835 shares held by the Winnifred C. Ellis & David L Mahoney TR UA 06/25/1998 Trust for which Mr. Mahoney exercises voting and dispositive power.

 

(10) 

Includes 135,952 shares held by the DHS 2017 Annuity Trust Agreement II for which Mr. Schulman exercises voting and dispositive power.

 

(11) 

Includes 3,633 shares issuable upon the settlement of RSUs as of December 9, 2018.

 

(12) 

Beneficial ownership data is current through Mr. Rosch’s departure date of June 28, 2018 and excludes 325,401 shares issued on the settlement of PRUs as of December 9, 2018.

 

(13)

These securities are held by Mr. Hao for the benefit of Silver Lake Technology Management LLC, certain of its affiliates and certain of the funds they manage (“Silver Lake”) and pursuant to Mr. Hao’s arrangement with Silver Lake, upon the sale of these securities, the proceeds are expected to be remitted to Silver Lake.

 

(14) 

Excludes 36,000,796 shares of common stock beneficially owned by Starboard Value LP and its affiliates, which includes 11,499,000 shares underlying certain forward purchase contracts.

 

(15) 

Includes 6,073,267 shares subject to options that will be exercisable as of December 9, 2018 and 3,633 shares issuable upon the settlement of RSUs as of December 9, 2018.

Symantec has adopted a policy that executive officers and members of the Board hold an equity stake in the Company. The policy requires each executive officer to hold a minimum number of shares of Symantec common stock. Newly appointed executive officers are not required to immediately establish their position but are expected to make regular progress to achieve it. The Nominating and Governance Committee reviews the minimum number of shares held by the executive officers and directors from time to time. The purpose of the policy is to more directly align the interests of our executive officers and directors with our stockholders. See “Stock Ownership Requirements” under the Compensation Discussion & Analysis section for a description of the stock ownership requirements applicable to our executive officers.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16 of the Exchange Act requires Symantec’s directors, executive officers and any persons who own more than 10% of Symantec’s common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulation to furnish Symantec with copies of all Section 16(a) forms that they file.

 

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Based solely on its review of the copies of such forms furnished to Symantec and written representations from the directors and executive officers, Symantec believes that all Section 16(a) filing requirements were met in fiscal 2018, except as follows: a Form 5 covering the distribution and sale of shares held in family trusts by Gregory S. Clark, due on May 14, 2018, was filed late on a Form 4 on June 5, 2018.

 

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EXECUTIVE COMPENSATION AND RELATED INFORMATION

COMPENSATION DISCUSSION & ANALYSIS (CD&A)

This compensation discussion and analysis (“CD&A”) describes the material elements of Symantec’s fiscal 2018 executive compensation program. For fiscal 2018, our named executive officers (“NEOs”) included the following current executive officers:

 

   

Gregory S. Clark, Chief Executive Officer (“CEO”);

 

   

Michael D. Fey, President and Chief Operating Officer (“COO”);

 

   

Nicholas R. Noviello, Executive Vice President and Chief Financial Officer (“CFO”); and

 

   

Scott C. Taylor, Executive Vice President, General Counsel and Secretary.

Our fiscal 2018 NEOs also included one executive officer who resigned following the end of fiscal 2018:

 

   

Francis C. Rosch, Former Executive Vice President, Consumer Digital Safety

Three Years of Transformation, Success and Challenges

This CD&A largely focuses on executive compensation granted in fiscal 2018. It also includes a discussion of long-term incentive compensation granted in fiscal 2017 and fiscal 2016, but earned based all or partly on fiscal 2018 financial or stock price performance.

Symantec has undertaken a significant transformation of its business between fiscal 2016 and fiscal 2018. In fiscal 2016, Symantec completed its strategic decision to focus solely on cybersecurity with the divestiture of its information management business, Veritas, which was completed in the fourth quarter of fiscal 2016. Our fiscal 2016 executive compensation program rewarded performance against an EPS target for the first three quarters of fiscal 2016, as well as performance in our TSR ranking over a two- and three-year period, respectively.

In fiscal 2017, Symantec continued its transformation by undertaking a major operational initiative to reduce costs and complexity, continuing to refocus its core business to deliver comprehensive cybersecurity products for both enterprises and consumers with the acquisitions of Blue Coat and LifeLock, and reconstituting its management team, which included a new CEO, COO and CFO from our Blue Coat acquisition. In fiscal 2017, we revised our executive compensation program to ensure that the appropriate incentives were in place to drive and complete our business transformation and cost reduction initiatives, a process we expected to take more than a single fiscal year. The fiscal 2017 executive compensation program leveraged non-GAAP operating income for fiscal 2018 as a key metric to focus the Company’s efforts on the announced cost savings plan and business transformation initiatives.

In fiscal 2018, Symantec focused on continued operational execution of the business transformation embarked upon in fiscal 2017 with a focus on revenue, operating income, EPS and cash flow growth. Key objectives for fiscal 2018 included:

 

   

Delivering strong revenue growth with the integrated business portfolio across both our Enterprise and Consumer segments;

 

   

Growing non-GAAP operating income dollars;

 

   

Improving non-GAAP operating income margin;

 

   

Increasing non-GAAP EPS;

 

   

Reducing debt levels;

 

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Increasing deferred revenue balances; and

 

   

Delivering strong operating cash flow.

The improvement in our results over these three years of transformation demonstrates that we have met our key objectives.

 

 

LOGO

Non-GAAP Operating Non-GAAP Revenue Non-GAAP EPS Operating Cash Flow (1) Income / ($mm) Margin Expansion ($)(1) ($mm) ($mm)(1) 29% CAGR 27% 9% 18 18 CAGR 8 CAGR 16 - 6 - - 1 17% 1 16 18 CAGR $1,710 6 - 1 $1.67 $4,960 $950 $1,194 $802 $4,163 $1,026 $1.03 $1.18 $3,600 34% 29% 29% ($209) FY16A FY17A FY18A FY16A FY17A FY18A FY16A FY17A FY18A FY16A FY17A FY18A

 

 

(1) 

Please see “Annex C — Reconciliation of Selected GAAP Measures to Non-GAAP Measures” for a reconciliation of the relevant adjusted measures to the most directly comparable generally accepted accounting principles (“GAAP”) measures.

The design of our fiscal 2018 executive compensation program was aligned with the objectives noted above, with the intent to ultimately reinforce metrics and goals that would support stockholder value creation. In addition, the compensation programs were established in consideration of competitive market practices, the fact that several of the senior leaders were relatively new to Symantec and that we operate in the highly competitive cybersecurity talent market.

In developing our fiscal 2018 executive compensation programs, the Compensation Committee also relied on our regular stockholder outreach and engagement activities as well as more formal channels to communicate with stockholders, including the opportunity for stockholders to cast a non-binding advisory vote regarding executive compensation at our annual meeting. At our 2017 annual meeting of stockholders, the advisory vote on executive compensation for fiscal 2017 was approved by approximately 87% of stockholder votes.

Fiscal Year 2018 Business Results

During fiscal 2018, we focused on executing our plan and strategy following the substantial transformational changes we experienced in fiscal 2017. Symantec’s financial and operational results for fiscal 2018 demonstrate this increased focus on execution:

 

   

The Company’s fiscal 2018 total revenue, determined in accordance with GAAP, was $4.834 billion, an increase of 20% over fiscal 2017, with fiscal 2018 Enterprise Security segment GAAP revenue up 8%, and fiscal 2018 Consumer Digital Safety segment GAAP revenue up 37%.

 

   

Non-GAAP operating margin for fiscal 2018 was 34.5% compared to 28.7% in fiscal 2017. This year-over-year improvement reflects our top-line revenue growth, as well as enhanced operating efficiencies.

 

   

The Company significantly reduced the principal amount of debt during fiscal 2018 from approximately $8.3 billion to $5.1 billion, with $1.75 billion of the fiscal 2018 year-end balance comprised of convertible notes.

 

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The Company grew deferred revenue balances by $316 million in fiscal 2018.

 

   

The Company generated cash flow from operating activities in fiscal 2018 of $950 million, compared to $209 million used for operating activities in fiscal 2017. Cash flow from operating activities in fiscal 2017 was impacted by a one-time payment for income taxes related to the gain on sale from the divestiture of Veritas during fiscal 2016. The divestiture of Veritas focused our portfolio and was a key component of our strategic refocus of the business to deliver comprehensive cybersecurity products.

 

   

The Company developed compelling product portfolios across both our Enterprise and Consumer solutions.

 

   

The Company completed the sale of its website security business and related PKI assets to DigiCert Inc. to refine the Company’s focus on higher growth cybersecurity offerings.

Additional Matters — Audit Committee Investigation

As disclosed on May 10, 2018, the Audit Committee of the Board, with the assistance of independent outside counsel and a forensic accounting firm, undertook a thorough independent investigation relating to allegations raised by a former employee (the “Audit Committee Investigation”). On September 24, 2018, the Company issued a press release announcing the completion of the Audit Committee Investigation, providing the following details regarding the Audit Committee’s findings and recommendations:

The Company does not anticipate a restatement or adjustment of any audited or unaudited, filed or previously announced, GAAP or non-GAAP financial statements, except as described below, with respect to a specific transaction with a customer entered into in the fourth quarter of fiscal 2018 (ended March 30, 2018).

No employment actions with respect to any Section 16 officer have been recommended as a result of this investigation.

The Audit Committee noted relatively weak and informal processes with respect to some aspects of the review, approval and tracking of transition and transformation expenses. The Audit Committee also observed that beginning in the second quarter of fiscal 2018 (ended September 29, 2017), the Company initiated a review by an outside accounting firm of, and took other steps to enhance, the Company’s policies and procedures regarding non-GAAP measures.

In addition to the matters announced in May 2018, the Audit Committee reviewed a transaction with a customer for which $13 million was recognized as revenue in the fourth quarter of fiscal 2018. After subsequent review of the transaction, the Company has concluded that $12 million of the $13 million should be deferred. Accordingly, the previously announced financial results for the fourth quarter of fiscal 2018 and the first quarter of fiscal 2019 (ended June 29, 2018) will be revised to take into account this deferral and any other financial adjustments required as a result of this revision.

The Audit Committee also reviewed certain allegations concerning, and identified certain behavior inconsistent with, the Company’s Code of Conduct and related policies. The Audit Committee referred these matters to the Company for appropriate action, which the Company intends to take.

The Audit Committee proposed certain recommendations which the Board of Directors has adopted, including: appointing a separate Chief Accounting Officer; appointing a separate Chief Compliance Officer reporting to the Audit Committee; clarifying and enhancing the Code of Conduct and related policies; and adopting certain enhanced controls and policies related to the matters investigated.

 

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Following the completion of the Audit Committee Investigation, the Company has either implemented, or is in the process of implementing, the Audit Committee’s recommendations. Additionally, following the completion of the Audit Committee Investigation, our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 30, 2018. As further described in Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the year ended March 30, 2018, our management has concluded that, as of March 30, 2018, our internal control over financial reporting was effective at the reasonable assurance level.

Also as previously announced, the Company voluntarily contacted the SEC regarding the Audit Committee’s investigation. The SEC commenced a formal investigation and the Company will continue to cooperate with that investigation.

Fiscal Year 2019 Compensation Preview

As announced in connection with the Audit Committee Investigation, certain of the Company’s filings with the Securities and Exchange Commission were delayed, including this Proxy and the fiscal 2018 CD&A contained herein. Subsequent to the announcement of fiscal 2018 performance results, fiscal 2019 guidance, and the Audit Committee Investigation, Symantec’s stockholders experienced a substantial decline in the Company’s stock price. In this context, Mr. Clark, in consultation with the Compensation Committee, elected to forego a fiscal 2019 equity award. Mr. Clark also determined, in consultation with the Compensation Committee, that none of the Company’s NEOs would receive a base salary increase for fiscal 2019.

Fiscal Year 2018 Compensation Results — Overview of Compensation through Our Transformation

Fiscal Year 2018 Compensation Components

Our fiscal year 2017 compensation program design reflected the transformation we planned to undertake. Our fiscal year 2018 compensation programs built upon the substantial transformation achieved by the Company in fiscal 2017. In fiscal 2018, we maintained our historical compensation program design for base salary and short-term cash incentive awards, and reverted back to our historical compensation program design for PRUs, as shown below:

 

 

Component

 

  

 

Metrics / Purpose

 

Base Salary   

 Supports attraction and retention of talent

 

 Aligned with role, contributions, and competitive market practice

   
  Annual Incentive(1)     

 50% Revenue (non-GAAP)

 Encourages overall company growth, a key stockholder value driver

 

 50% Operating Income (non-GAAP)

 Provides a strong focus on cost control, aligns with stockholder value growth

   
Equity Incentive   

  70% Performance Based Restricted Stock Units (PRUs)

 Independently-measured corporate metrics (non-GAAP EPS and relative TSR) provide  short-term and long-term motivation

 

 30% time-vested restricted stock units (RSUs)

 Promotes retention and stockholder alignment

 

(1) 

In fiscal 2018, these awards would have been payable in fully-vested RSU awards.

 

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Compensation Outcomes Driven by our 2018 Results

Our fiscal 2018 financial results and total stockholder return drove the outcomes of the 2018 Executive Annual Incentive Plan (“FY18 EAIP”) and the FY18 PRUs, FY17 PRUs and FY16 PRUs, as follows:

 

 

Component

 

  Metric(1)(2)       Achievement       Funding
FY18 EAIP  

 

FY18 Adjusted Non-
GAAP Operating
Income(3)

 

 

 

    95.20%    

 

 

0%

 

 

FY18 Adjusted Non-
GAAP Revenue(3)

 

 

 

    96.40%    

 

 

0%

FY18 PRUs  

 

FY18 Adjusted Non-
GAAP EPS

 

 

 

    95.20%    

 

 

50.5% of the FY18 Year One

Shares became eligible to be

earned at the end of fiscal 2020.

 

FY17 PRUs  

 

FY18 Adjusted Non-
GAAP Operating
Income(4)

 

 

 

    109.29%    

 

 

268.20% (of which 250.00%

vested and was funded as of

FY18 end)(5)

 

FY16 PRUs  

 

2-year relative TSR

 

 

    112.20%    

 

 

106.45% (based on FY16 Q1-Q3

EPS, 1-year TSR ended FY17

and 2-year TSR ended FY18)

 

 

(1) 

Please refer to the respective sections for each component below for a full overview of how the targets for each award were calculated.

 

(2) 

In calculating the actual FY18 performance of each metric, the Company utilizes the relevant metric that we report in our quarterly earnings releases, and makes certain adjustments where required, in accordance with the terms of the underlying plans. Please refer to the respective sections below for details on the adjustments to the actual results under each plan, where appropriate.

 

(3) 

Please see “-II. Executive Annual Incentive Plan — Executive Annual Incentive Plan Performance Measures and Target Setting” for a description of how FY18 adjusted non-GAAP operating income and FY18 adjusted non-GAAP revenue is calculated under the FY18 EAIP.

 

(4) 

Please see “-III. Equity Incentive Awards — Performance-based Restricted Stock Units (PRUs) – Fiscal Year 2017 PRU Achievement” for a description of how FY18 adjusted non-GAAP operating income is calculated under the FY17 PRUs.

 

(5) 

An additional 18.20% is eligible to be earned at the end of fiscal 2019, subject to continued employment through that date.

The plan payouts reflect mixed results relative to the performance goals established for the respective plans:

FY18 EAIP. In fiscal 2018, the Company set challenging performance targets for the FY18 EAIP based on the strong progress made against its business strategy during fiscal 2017. Our Compensation Committee established the adjusted non-GAAP operating income and revenue metrics because it believed, among other factors, that these measures strongly correlate with stockholder value creation. Despite significant year-over-year improvements in results, the Company did not achieve the incremental threshold levels set for the non-GAAP operating income and non-GAAP revenue under the FY18 Executive Annual Incentive Plan. Accordingly, no payouts were made to our named executive officers under the payout formula for the FY18 Executive Annual Incentive Plan.

 

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FY18 PRUs. These awards may be earned over three years based on the Company’s achievement of non-GAAP EPS for fiscal 2018, as adjusted under the plan, along with relative TSR against the Nasdaq 100 index for the two-year and three-year periods ending at the completion of fiscal 2019 and fiscal 2020, respectively. 50% of the total FY18 PRUs (“FY18 Year One Shares”) were eligible to be earned based on fiscal 2018 non-GAAP EPS. Our Compensation Committee established the non-GAAP EPS portion for the FY18 Year One Shares because it believed it would allow evaluation of Company performance on its short-term strategy execution, while requiring longer-term three-year vesting to provide alignment with stockholders over a more extended time period. For fiscal 2018, our non-GAAP EPS target under the FY18 PRUs was $1.64 per share with a threshold performance level of $1.56 per share. The Compensation Committee determined that we achieved a fiscal 2018 non-GAAP EPS of $1.56 per share, or 95.2% of this metric, resulting in the threshold level having been achieved and 50.5% of the FY18 Year One Shares (25.25% of the total FY18 PRUs) becoming eligible to be earned at the end of the FY18 PRU Performance Period at the end of fiscal 2020.

FY17 PRUs. These awards were earned based on fiscal 2018 adjusted non-GAAP operating income, which was selected as the metric for the FY17 PRUs because it provided a powerful incentive to both complete the Company’s business transformation goal while also requiring the executive team to deliver increased profitability. The fiscal 2018 non-GAAP operating income target under the FY17 PRUs was $1,560 million (which took into account the Blue Coat and LifeLock acquisition and DigiCert, Inc. divestiture). The Company achieved $1,705 million in adjusted non-GAAP operating income in fiscal 2018, resulting in the achievement of 109.29% of target, with a payout of 268.20%, 250% of which being earned and vested at the end of fiscal 2018. The Compensation Committee believes the targets set in June 2016, and subsequently revised in March 2017 and October 2017, had the desired effect to drive the demonstrated growth in non-GAAP operating income from fiscal 2016 to fiscal 2018.

FY16 PRUs. These awards were earned based on a combination of fiscal 2016 EPS results and subsequent relative TSR versus the S&P 500 over fiscal 2017 and fiscal 2018. The FY16 PRUs paid out at 112.2% of target.

See “II. Executive Annual Incentive Plan” below for details on the EAIP design and pay outcome, and “Previously Granted Long Term Incentive Pay Outcomes” below for a full description of the design and pay outcomes of the FY18, FY17, and FY16 PRUs.

Our Compensation Philosophy and Practices

Our executive compensation programs are designed to drive our success as a market leader in cybersecurity. As we structure and oversee these programs, we focus on the achievement of corporate and individual performance objectives, and aim to attract and retain highly-qualified executive management while maximizing long-term stockholder value.

A number of principles and circumstances inform our executive compensation decisions. One important principle is our belief that it benefits all of our constituencies for management’s compensation to be tied to the Company’s current and long-term performance. As a result, at-risk pay comprises a significant portion of our executive compensation, particularly for individuals in more senior and influential positions.

We believe it is important to attract, motivate and retain highly-qualified executives who demonstrate strong commitment to Symantec’s success. We review relevant market and industry practices to structure compensation packages that are competitive in the markets in which we compete for executive talent. While we strive for a basic level of internal pay equity among our management team members, we believe that it is also important to reward outstanding individual performance, team success, and Company-wide results.

 

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We are also sensitive to our need to balance the interests of our executive officers with those of our stockholders, especially when compensation decisions might increase our cost structure or stockholder dilution. We strive to appropriately balance the interests of all of our constituencies — our stockholders, our executive officers, our employee base, our business partners and our community.

Compensation Policies and Practices

As described below, the overriding principle driving the design of our executive compensation programs continues to be our belief that our employees, customers, partners and stockholders all benefit when management’s compensation is tied to our current and long-term performance. The following factors demonstrate our commitment to pay-for-performance and to corporate governance best practices:

 

   

Payouts Based on Performance. We reward performance that meets targets set by the Compensation Committee. Our compensation plans do not have guaranteed payout levels, and our executive officers do not receive any payouts under performance-based cash or equity awards if the goals are not met. Our compensation plans are also capped to discourage excessive or inappropriate risk-taking by our executive officers.

 

   

Performance-based Restricted Stock Units (“PRUs”); no Options. The majority of the annual, at-target equity compensation of our executive officers is in the form of PRUs, which have no value unless our Company achieves the targeted metrics for each PRU award. We do not award stock options to our executive officers (although some executives that joined our Company in connection with an acquisition may hold options granted to them by the acquired company and assumed by our Company).

 

   

Metrics Correspond to Stockholder Value. Our incentive plans use multiple, non-duplicative measures that correlate to stockholder value, with no single metric overly emphasized in determining payouts in any year.

 

   

Relevant Compensation Peer Group. Our compensation peer group consists primarily of businesses with a focus on software development, or software and engineering-driven companies that compete with us for talent. Our peer group companies are comparable to us in terms of complexity, global reach, revenue and market capitalization. We reevaluate our peer group on an annual basis and, as necessary, make adjustments to our peer group.

 

   

Meaningful Stock Ownership Guidelines for Executives. We have long-standing stock ownership guidelines for our named executive officers, requiring them to hold a significant minimum value in shares so that they have a material financial stake in our Company and our success, aligning the interests of our executives with those of our stockholders. We also prohibit the sale of shares by executives (except to meet tax withholding obligations) if doing so would cause them to fall below required ownership levels.

 

   

Annual Say-on-Pay Vote and Stockholder Engagement. We seek stockholder feedback on our executive compensation through an annual advisory vote and ongoing stockholder engagement.

 

   

No Tax Gross-ups Permitted. We do not provide for gross-ups of excise tax amounts under Section 4999 of the Code.

 

   

Limited Cash Severance. We limit any potential cash severance payments to not more than 1x of each of our non-CEO’s executive officers’ total target cash compensation and to 2x our CEO’s annual base salary.

 

   

Clawback Provisions. We have a recoupment, or “clawback”, policy applicable to all incentive-based compensation for certain violations of Symantec policies and to all performance-based compensation granted to the Company’s executives (even after they leave Symantec). This

 

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policy supplements contractual clawback rights which we have had in place for all of our executive compensation plans for many years, providing that any excess compensation paid to an executive officer is to be returned if our financial statements are the subject of a restatement due to error or misconduct.

 

   

Short-selling, Hedging and Pledging Prohibited. Our executives are prohibited from short-selling Symantec stock, hedging or engaging in transactions involving Symantec-based derivative securities, and they are prohibited from pledging their Symantec stock. For more on these prohibitions and waivers therefrom, see “Corporate Governance–Policy Against Short-Selling, Hedging and Pledging Symantec Securities.”

 

   

Stockholder Approval Required for Repricing or Exchanges. Our equity incentive plan prohibits the repricing or exchange of equity awards without stockholder approval.

Named Executive Officer Compensation

General

Our named executive officers were compensated in a manner consistent with our core pay-for-performance compensation philosophy. The following are some important elements of our named executive officers’ compensation for fiscal 2018:

 

   

Majority of pay at risk. For fiscal 2018, based on full target award value, approximately 95% of our CEO’s target total direct compensation was at risk and approximately 94% of the target total direct compensation for our other named executive officers was at risk.

 

   

Short-term incentive compensation linked directly to Symantec financial results. Our annual incentive compensation for executives is structured to emphasize performance. Under the FY18 Executive Annual Incentive Plan, the named executive officers were eligible to receive performance-based incentive cash awards based on Company achievement of targeted non-GAAP operating income and non-GAAP revenue during fiscal 2018. In fiscal 2018, these short-term awards would have been payable in fully-vested RSU awards.

 

   

100% equity-based long-term incentive compensation, the majority of which is performance-based. For fiscal 2018, the long-term compensation component of our named executive officers’ compensation packages consisted entirely of equity incentive awards.

 

   

Seventy percent of the value of the target equity incentive awards granted to our named executive officers were made in PRUs (with the remaining 30% in RSUs).

 

   

Under the FY18 PRUs, the NEOs were eligible to earn:

 

   

50% of the shares based on Company achievement of adjusted non-GAAP EPS for fiscal 2018. The Compensation Committee believed this metric would create a near-term measure for goal achievement and short-term stockholder value creation that could be impacted by the performance of the executive team while creating long-term alignment with stockholder value creation.

 

   

25% of the shares may be earned at the end of fiscal 2019 and the final 25% of the shares may be earned at the end of fiscal 2020 based on Company achievement over the two-year and three-year periods of relative TSR for the Company compared to TSR for the Nasdaq 100 index. The Compensation Committee believed these were proper metrics to allow for continued evaluation of the Company’s performance on short-term financial execution against its peers while also maintaining multi-year sustainability of stockholder value creation.

 

   

The FY18 PRUs further encourage executive retention with the Company since the executive must, subject to limited circumstance, be employed with the Company through the end of fiscal 2020 in order to vest in any earned FY18 PRUs.

 

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The fiscal 2018 incentive compensation performance measures were selected because they focus on measuring the executive team’s execution following Symantec’s business transformation during the preceding fiscal year. The TSR benchmark group was updated to the Nasdaq 100 index under the FY18 PRU plan from the S&P 500 which was used in our prior PRU plans (except for the FY17 PRU plan, under which TSR was not a metric) because the Compensation Committee believes the Nasdaq 100 index is more closely aligned to Symantec in terms of industries represented in the index.

“Say on Pay” Advisory Vote on Executive Compensation and Stockholder Engagement

We hold an advisory vote on named executive officer compensation, commonly known as a “Say-on-Pay” vote, on an annual basis. While these votes are not binding, we believe that it is important for our stockholders to have an opportunity to express their views regarding our executive compensation programs and philosophy as disclosed in our proxy statement on an annual basis. The Compensation Committee values our stockholders’ opinions and the Board and the Compensation Committee consider the outcome of each vote when making future compensation decisions for our named executive officers. We received approximately 97% and 87% of the votes cast on the advisory vote in favor of our executive compensation programs in fiscal 2016 and fiscal 2017, respectively.

In addition to the annual advisory vote on executive compensation, we are committed to ongoing engagement with our stockholders on executive compensation matters generally. These engagement efforts take place through telephone calls, in-person meetings and correspondence with our stockholders. For example, during fiscal 2018 we engaged in discussions with stockholders representing approximately 65% of our then outstanding shares to discuss, among other topics, executive compensation matters.

COMPENSATION COMPONENTS

The major components of target compensation for our named executive officers during fiscal 2018 were: (i) base salary, (ii) short-term cash incentive awards and (iii) long-term equity incentive awards.

Analysis of Compensation Components

Note that the financial measures used as performance targets for our NEOs are non-GAAP measures and differ from the comparable GAAP measures reported in our financial statements and may differ from the non-GAAP results we report in our quarterly earnings releases. We explain how we use these non-GAAP measures in our discussions on the calculations of each metric below.

I. Base Salary

The Compensation Committee reviews the named executive officers’ base salaries annually as part of its overall competitive market assessment and may make adjustments based on talent, experience, performance, contribution levels, individual role, positioning relative to market and our overall salary budget. Except as described under “Named Executive Officer Compensation” above, the independent members of the Board review the CEO’s salary in executive session (i.e., without any executives present), and changes are considered in light of market pay assessments and the Board’s annual CEO performance evaluation, in each case without the participation of our CEO. In setting the base salaries for the other named executive officers, the Compensation Committee also generally considers the recommendations of the CEO based upon his annual review of their performance. See “Factors We Consider in Determining Our Compensation Programs” for a discussion of how the Compensation Committee performs its competitive market assessment.

The following table presents each named executive officer’s base salary for fiscal 2018. None of our named executive officers received a base salary increase in fiscal 2018 as compared to fiscal

 

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2017, because our Compensation Committee deemed the base salary for each named executive officer was effective in continuing to achieve the Compensation Committee’s goals for this component of each officer’s executive compensation.

 

Name of NEO

   Fiscal 2017
Annual Salary ($)
     Change in
Salary (%)
     Fiscal 2018
Annual Salary ($)
 

Gregory S. Clark(1)

     1,000,000               1,000,000  

Michael D. Fey(1)

     865,000               865,000  

Nicholas R. Noviello(1)

     650,000               650,000  

Scott C. Taylor

     600,000               600,000  

Francis C. Rosch(2)

     700,000               700,000  

 

(1) 

Messrs. Clark, Fey and Noviello joined the Company following the Company’s acquisition of Blue Coat in August 2016 and received an annualized portion of the amounts listed here for fiscal 2017.

 

(2) 

Mr. Rosch served as our Executive Vice President, Consumer Digital Safety through June 28, 2018.

II. Executive Annual Incentive Plan

Executive Annual Incentive Plans for our executive officers were adopted pursuant to the Senior Executive Incentive Plan, which was most recently approved by our stockholders in 2013. The Executive Annual Incentive Plans are annual cash incentives designed to reward named executive officers (and other participants) for generating strong financial results for our Company in the short term. In fiscal 2018, these awards would have been payable in fully-vested RSU awards. To align our executives’ incentive awards with key drivers of the Company’s financial performance, all named executive officers earn incentive compensation based on performance against pre-set corporate targets. The Compensation Committee typically sets, and evaluates achievement of, individual performance targets for named executive officers as well.

Executive Annual Incentive Plan Target Opportunities: Under the Executive Annual Incentive Plans, each named executive officer has a target award opportunity for a given fiscal year, expressed as a percentage of base salary, with the ability to earn above or below that target based on actual performance. Target award opportunities for our Executive Annual Incentive Plans are established by the Compensation Committee using the various inputs described below. The following table presents each named executive officer’s target bonus opportunity (on an actual and percentage of base salary basis) for fiscal 2018 under the FY18 Executive Annual Incentive Plan:

 

Name of NEO

   Fiscal 2018 Target
Percent of Base (%)
     Fiscal 2018
Target ($)
 

Gregory S. Clark

     150        1,500,000  

Michael D. Fey

     150        1,297,500  

Nicholas R. Noviello

     100        650,000  

Scott C. Taylor

     100        600,000  

Francis C. Rosch

     100        700,000  

In general, these target award opportunities for fiscal 2018 were determined based on relevant market data, desired market positions, the desired mix between cash and equity-based incentive pay, internal pay equity goals, and the role of the named executive officer. Mr. Clark’s target bonus opportunity was increased to 150% of base salary for fiscal 2018 to more closely align with competitive market practices for CEOs with similar scope and responsibilities. When target bonus opportunities are established for executive officers, there is no assurance that the performance objectives associated with the awards will be realized and all payouts are capped based on achievement of relevant performance metrics. Payment is contingent upon achievement of the threshold performance level for both metrics.

 

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The threshold performance levels were not achieved in fiscal 2018, so no payouts were made to our named executive officers under the FY18 Executive Annual Incentive Plan.

Executive Annual Incentive Plan Performance Measures and Target Setting: Executive Annual Incentive Plan performance targets are typically established within the first 90 days of each plan year. Our management develops goals to propose to the Compensation Committee after taking into account a variety of factors, including our historical performance, internal budgets, market and peer performance and external expectations for our performance. The Compensation Committee reviews, adjusts as necessary and approves the goals, the range of performance to be rewarded and the weighting of the goals. After the end of each fiscal year, the Compensation Committee reviews our actual performance against the performance measures established in the fiscal year’s Executive Annual Incentive Plans (after making any appropriate adjustments to such measures for the effects of corporate events that were not anticipated in establishing the performance measures), determines the extent of achievement and approves the payment of annual cash incentives, if warranted.

The FY18 Executive Annual Incentive Plan was comprised of two metrics: non-GAAP operating income and non-GAAP revenue. We used these performance metrics because:

 

   

over time, we believe that non-GAAP operating income and non-GAAP revenue measures strongly correlate with stockholder value creation for Symantec;

 

   

non-GAAP operating income and non-GAAP revenue measures are transparent to investors and are calculated on the same basis as described in our quarterly earnings releases and supplemental materials, with certain adjustments as described below;

 

   

non-GAAP operating income and non-GAAP revenue measures are designed to balance growth and profitability; and

 

   

the executive team can have a direct impact on these metrics through skillful management and oversight.

Consistent with the presentation in our quarterly earnings releases and supplemental materials, in our executive compensation programs, we define (i) non-GAAP operating income as GAAP operating income, adjusted, as applicable, to exclude website security and PKI results included in our third quarter of fiscal year 2018 results, stock-based compensation expense, charges related to the amortization of intangible assets, restructuring, separation, transition and other related expenses, acquisition and integration expenses, certain gains or losses on litigation contingencies and settlements, the impact from deferred revenue and inventory fair value adjustments as part of business combination accounting entries and certain other income and expense items that management considers unrelated to Symantec’s core operations; and (ii) non-GAAP revenue as GAAP revenue adjusted, as applicable, to exclude website security and PKI revenue included in our third quarter of fiscal year 2018 revenue, certain litigation contingencies and settlements, and the impact from deferred revenue fair value adjustments as part of business combination accounting entries. For purposes of calculating achievement of both metrics under the FY18 Executive Annual Incentive Plan, foreign exchange movements were held constant at plan rates, pursuant to the terms of the plans.

 

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The FY18 Executive Annual Incentive Plan provides that the determination of achievement of the non-GAAP operating income and non-GAAP revenue metrics is formulaic, while the individual performance metric is determined based on a qualitative evaluation of the individual’s performance against pre-established objectives with input from our CEO. In rating the individual’s performance, the Compensation Committee gives weight to the input of our CEO, but final decisions about the compensation of our named executive officers is made solely by the Compensation Committee. The Compensation Committee has discretion to adjust individual awards as appropriate.

 

 

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Weighted Average Annual Individual Individual Base of Revenue and Incentive Performance Payout Salary $ Operating Income Target % Factor % Amount $ Funding %

The payout curves for each of non-GAAP revenue and non-GAAP operating income are as follows:

 

Fiscal 2018 Non-GAAP Operating Income

Performance and Payout Ranges

 

  

Fiscal 2018 Non-GAAP Revenue

Performance and Payout Ranges

 

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Payout as % of Target 200% 150% 100% 50% 0% Target level payout between $1.707 and $1.747 billion 130% payout at $1.792 billion Max at $2.000 billion 40% payout at $1.655 billion $1,600 $1,700 $1,800 $1,900 $2,000 Non-GAAP Operating Income (millions) Payout as % of Target 200% 150% 100% 50% 0% Max at $5.207 billion Target at $5.007 billion 40% payout at $4.901 billion $4,800 $4,900 $5,000 $5,100, $5,200 Non-GAAP Revenue (millions)

The non-GAAP operating income and non-GAAP revenue metrics are tested and funded independently of each other and are weighted equally. With the exception of our CEO, the actual individual payouts are generally further modified based on the individual performance factor generally in the range of 0% to 140% based on the performance achievement against pre-established individual goals for the fiscal year.

 

     Non-GAAP
Operating Income
(%)
   Non-
GAAP
Revenue
(%)
   Individual
Performance
Modifier (%)
   Total Payout
as a Percentage of
Target (%)

Threshold

       40        40        35        14

Target

       100        100        100        100

Maximum

       200        200        140        280

Non-GAAP operating income and non-GAAP revenue performance targets were established based on a range of inputs, including external market economic conditions, growth outlooks for our product portfolio, the competitive environment, our internal budgets and market expectations. The targets for achievement of non-GAAP operating income and non-GAAP revenue and payout curves for the FY18 Executive Annual Incentive Plan reflected the substantial improvement in non-GAAP operat-

 

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ing income and non-GAAP revenue that the Company experienced in fiscal 2017 and were adjusted to reflect the financial impact of the divestiture of the Company’s website security business and related PKI assets to DigiCert, Inc. that was completed in October 2017 (the adjustment also took into consideration the effect of two small acquisitions that were completed in July 2017).

As presented in the table below, for fiscal 2018, our non-GAAP operating income target under the FY18 EAIP was $1,707 million and our non-GAAP revenue target under the FY18 EAIP was $5,007 million. The non-GAAP operating income and non-GAAP revenue targets prior to the October 2017 adjustment were $1,857 million and $5,210 million, respectively. The Compensation Committee sets rigorous targets for incentive plan metrics, the achievement of which would reflect outstanding performance. As described more fully below under Achievement of Fiscal 2018 Performance Metrics, the Company did not achieve either of the threshold performance levels and no payouts were made to our named executive officers.

Individual Performance Assessment: In general, individual awards are determined based in part on assessment of individual performance results and impact against both quantitative and qualitative expectations for the executive’s role. The CEO’s payout opportunity does not include any individual performance modifier.

Individual performance is evaluated based on both quantitative and qualitative results in the following key areas:

 

   

financial and operational goals for the executive’s area of responsibility and the entire Company;

 

   

leadership qualities as well as functional competencies and knowledge for the executive’s area of responsibility; and

 

   

development and management of the executive’s team of employees.

Leadership skills are a common component of each of these objectives and are a significant factor in the assessment of individual performance. The executive’s willingness to contribute to cross-functional initiatives outside his or her primary area of responsibility, and the executive’s contribution to our performance-focused culture, are also extremely important aspects of the individual performance assessment.

Under the FY18 Executive Annual Incentive Plan, if the threshold performance level for each Company performance metric is achieved, the CEO evaluates the level of each named executive officer’s individual performance against the pre-determined goals following the end of fiscal year and then make a recommendation to the Compensation Committee. The Compensation Committee would then review the CEO’s compensation recommendations for the other named executive officers, make any appropriate adjustments, and approve their compensation, if warranted.

Achievement of Fiscal 2018 Performance Metrics:

FY18 Executive Annual Incentive Plan Results

 

     Target
($) (millions)
   Actual
($) (millions)(1)
   Achievement (%)   Threshold (%)   Funding (%)

Non-GAAP Operating Income

       1,707        1,625        95.2 %       97 %       0 %

Non-GAAP Revenue

       5,007        4,827        96.4 %       98 %       0 %

Fiscal 2018 Funding

                         0 %

 

(1) 

For purposes of calculating achievement of both metrics, foreign exchange movements were held constant at plan rates, pursuant to the terms of the plans.

 

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With the strong progress made against the business transition plan in fiscal 2017, including year-over-year improvements in financial results between fiscal 2016 and fiscal 2017, in fiscal 2018 the Compensation Committee set challenging targets for non-GAAP operating income and non-GAAP revenue under the FY18 Executive Annual Incentive Plan that required outstanding performance be achieved in fiscal 2018. Notwithstanding the year-over-year improvements in results between fiscal 2017 and fiscal 2018, the Company did not achieve either of the threshold performance levels set for non-GAAP operating income and non-GAAP revenue under the FY18 Executive Annual Incentive Plan. Because neither threshold was achieved, no payouts were made to our named executive officers under the payout formula for the FY18 Executive Annual Incentive Plan. Individual performance metrics were set for our executive officers and were designed to be a factor in determining payout amounts, but ultimately were not taken into consideration because the threshold financial operating metrics were not achieved.

III. Equity Incentive Awards

The primary purpose of our equity incentive awards is to align the interests of our named executive officers with those of our stockholders by rewarding the named executive officers for creating stockholder value over the long term. By compensating our executives with equity incentive awards, our executives hold a stake in Symantec’s financial future. The gains realized in the long term depend on our executives’ ability to drive the financial performance of Symantec as reflected in its share price. Equity incentive awards are also a useful vehicle for attracting and retaining executive talent in the highly-competitive market for talent in which we compete.

Our 2013 Plan, provides for the award of stock options, stock appreciation rights, restricted stock, and restricted stock units (including PRUs). For fiscal 2018, the equity incentive component of our executive compensation program consisted of PRUs and RSUs for all of our named executive officers. We also offer all employees in eligible countries the opportunity to participate in the 2008 Employee Stock Purchase Plan, which allows for the purchase of our stock at a discount to the fair market value through payroll deductions. This plan is designed to comply with Section 423 of the Code. During fiscal 2018, four of the named executive officers participated in the 2008 Employee Stock Purchase Plan.

We seek to provide equity incentive awards that are competitive with companies in our peer group and the other information technology companies that the Compensation Committee includes in its competitive market assessment. As such, we establish target equity incentive award grant guideline levels for the named executive officers based on competitive market assessments. When making annual equity awards to named executive officers, we consider our Company performance during the past year, the role, responsibility and performance of the individual named executive officer, the competitive market assessment described above, prior equity awards, and the level of vested and unvested equity awards then held by each named executive officer. In making equity awards, we also generally take into consideration gains recognizable by the executive from equity awards made in prior years. Mercer, an outside consulting firm, provides the Compensation Committee with market data on these matters, as well as providing to the Compensation Committee summaries of the prior grants made to the individual named executive officers.

As discussed below, the Compensation Committee believes that for fiscal 2018, a mix of PRUs and time-vested RSUs was the appropriate long-term equity incentive for named executive officers. For fiscal 2018, our CEO received approximately 70% of the value of his target annual equity incentive award in the form of PRUs and 30% in the form of RSUs. This is consistent with our philosophy to allocate a significant portion of the value of the CEO’s target total long-term equity incentive award in the form of PRUs rather than time-vested RSUs. For the fiscal 2018 awards, in order to provide a strong incentive to deliver on our longer- term performance objectives, we applied the same philosophy to grant a majority of the value of the target total long-term equity incentive award in the form of PRUs with our other named executive officers as well. 70% of the other named executive officers’ equity incentive award target value was also granted in the form of PRUs and approximately 30% in the form of RSUs.

 

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For Messrs. Clark, Noviello and Fey, fiscal 2018 marked each executive’s first full fiscal year with Symantec following the acquisition of Blue Coat in August 2016 and included each executive’s first full-year equity incentive grant by Symantec. Accordingly, comparisons with certain equity grant amounts listed for fiscal 2017 herein (for example, in the Summary Compensation Table, below) may not take into account the grants each of these executives received in fiscal 2017 by Blue Coat prior to the close of the acquisition. See Note 2 to the Summary Compensation Table, below.

Restricted Stock Units (RSUs): RSUs represent the right to receive one share of Symantec common stock for each RSU vested upon the settlement date, which is the date on which certain conditions, such as continued employment with us for a pre-determined length of time, are satisfied. The Compensation Committee believes that RSUs align the interests of the named executive officers with the interests of our stockholders because the value of these awards appreciates if the trading price of our common stock appreciates, and these awards also have retention value even during periods in which our trading price does not appreciate, which supports continuity in the senior management team.

Shares of our common stock are issued to RSU holders as the awards vest. The vesting schedule for RSUs granted to our named executive officers in fiscal 2018 as part of the annual review process provide that each award vests in three installments: 30% in June 2018, 30% in June 2019 and 40% in June 2020.

Details of RSUs granted to our named executive officers in fiscal 2018 are disclosed in the Grants of Plan-Based Awards table on page 95 and summarized in the last table within the next subsection below.

Performance-based Restricted Stock Units (PRUs): The Compensation Committee grants PRUs in furtherance of our pay for performance philosophy. Our Compensation Committee established this program to enhance our pay for performance culture with components directly linked to Company performance against established metrics over two- and three-year periods. Unlike our RSU awards, the shares underlying the PRUs awarded for fiscal 2018 are eligible to be earned only if we achieve a threshold of non-GAAP EPS for fiscal 2018 and a threshold of relative TSR against the Nasdaq 100 index for the two- and three-year periods ending fiscal 2019 and fiscal 2020, respectively, as shown below.

 

 

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FY2018 PRU Design FY 2018 FY 2019 FY 2020 50% - FY2018 EPS Performance (A) Payout Range 0% - 200% for each metric 25% - 2-year TSR Performance (B) 25% - 3-year TSR Performance (C) A + B + C = Total Number of PRUs Earned (Subject to continued employment, all of the earned shares are released at the end of FY2020)

For fiscal 2018, our PRU design reflected a renewed focus on linking executive compensation to operational execution and stockholder value creation. The Compensation Committee believed that using independently-measured corporate metrics (non-GAAP EPS and relative TSR) for the FY18 PRUs would motivate our executive team by providing distinct separate opportunities to earn awards. Non-GAAP EPS was chosen to help create a near-term measure for goal achievement and short-term stockholder value creation that could be impacted by the performance of the executive team, while also

 

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supplementing the non-GAAP operating income performance metrics under the FY17 PRUs and the non-GAAP operating income and revenue performance metrics under the FY18 Executive Annual Incentive Plan.

For the FY18 PRUs, adjusted non-GAAP EPS is calculated as GAAP profit before tax, adjusted, as applicable, to exclude website security and PKI results included in our third quarter of fiscal year 2018 results, stock-based compensation expense, charges related to the amortization of intangible assets, restructuring, separation, transition and other related expenses, acquisition and integration expenses, certain gains or losses on litigation contingencies and settlements, the impact from deferred revenue and inventory fair value adjustments as part of business combination accounting entries, non-cash interest expense, gains on divestitures and sale of assets, loss from equity interest, income from discontinued operations and certain other income and expense items that management considers unrelated to Symantec’s core operations, less GAAP tax expense excluding (i) the discrete impacts of changes in tax legislation, (ii) most other significant discrete items, (iii) certain unique GAAP reporting requirements under discontinued operations and (iv) the income tax effects of the non-GAAP adjustment to our operating results described above. This amount is divided by a fixed share count, which eliminates dilution or stock buybacks from impacting the financial performance in the calculation of non-GAAP EPS. For purposes of calculating achievement of this metric, foreign exchange movements were held constant at plan rates, pursuant to the terms of the plan.

The two and three-year relative TSR metric was chosen to enable evaluation of Company performance against its peers while maintaining multi-year sustainability of stockholder value creation. We changed our TSR benchmark group to the Nasdaq 100 index from the S&P 500 which was used in prior year PRU plans, because the Compensation Committee believed the Nasdaq 100 index is more closely aligned to Symantec in terms of industries and companies represented.

With respect to the non-GAAP EPS metric of the FY18 PRUs, 50% of the shares underlying the FY18 PRUs (“FY18 Year One Shares”) are eligible to be earned based on the achievement of the non-GAAP EPS threshold amount. Depending on actual results, 0% to 200% of the FY18 Year One Shares will be eligible to be earned at the end of the 3-year performance period. With some exceptions (including acceleration of vesting upon a change in control of our Company under the terms of the Symantec Executive Retention Plan, as amended), the FY18 Year One Shares earned at the end of fiscal 2018 will vest, if at all, only at the end of fiscal 2020 (the “FY18 PRU Performance Period”), and the named executive officer must be employed by us at the end of such period in order to vest in the award. The following table presents threshold, target and maximum performance levels and payouts at the non-GAAP EPS metric:

 

     EPS Performance as
a Percentage of
Target (%)
   EPS Payout as
a Percentage
of Target (%)

Threshold Level Payout %

       95        50

Target Level Payout %

       100        100

Maximum Payout %

       108        200

For fiscal 2018, our non-GAAP EPS target under the FY18 PRUs was $1.64 per share with a threshold level of $1.56 per share. The Compensation Committee determined that we achieved 95.2% of the target level of this metric, resulting in the threshold level having been achieved and 50.5% of the FY18 Year One Shares becoming eligible to be earned at the end of the FY18 PRU Performance Period at the end of fiscal 2020.

With respect to the relative TSR metric of the FY18 PRUs, 25% of the shares underlying the FY18 PRUs (“FY18 Year Two Shares”) are eligible to be earned based on the achievement of the Company’s relative TSR threshold amount over the two-year TSR performance ending on the last day of fiscal

 

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2019, measured against the two-year TSR performance of companies comprising the Nasdaq 100 index over the same period. The companies deemed to be in the Nasdaq 100 index for this purpose consist of those companies that make up the Nasdaq 100 index at the end of fiscal 2019. Depending on achievement of this metric, 0% to 200% of the FY18 Year Two Shares will be eligible to be earned at the end of the FY18 PRU Performance Period. With some exceptions (including acceleration of vesting upon a change in control under the terms of the Symantec Executive Retention Plan, as amended), the FY18 Year Two Shares vest, if at all, only at the end of the FY18 PRU Performance Period, and the named executive officer must be employed by us at the end of such period in order to vest in the award.

An additional 25% of the shares underlying the FY18 PRUs (“FY18 Year Three Shares”) are eligible to be earned only based on the achievement of the Company’s relative TSR threshold amount over the three-year TSR performance ending on the last day of fiscal 2020, as measured against the three-year TSR performance of companies comprising the Nasdaq 100 index over the same period. The companies deemed to be in the Nasdaq 100 index for this purpose consist of those companies that make up the Nasdaq 100 index at the end of fiscal 2020. Depending on the achievement of this metric, 0% to 200% of the FY18 Year Three Shares will be eligible to be earned at the end of the FY18 PRU Performance Period. With some exceptions (including acceleration of vesting upon a change in control of our Company under the terms of the Symantec Executive Retention Plan, as amended), the FY18 Year Three Shares vest, if at all, only at the end of the FY18 PRU Performance Period, and the named executive officer must be employed by us at the end of such period in order to vest in the award. If our TSR performance applicable to the FY18 Year Two Shares (2-year performance) is below target, any unearned shares below the target level are added to the FY18 Year Three Shares. TSR is calculated using a 60-trading day average stock price at the beginning and end of the applicable period plus the value of dividends provided in the respective period.

The following table presents threshold, target and maximum performance levels and payouts of the relative TSR metric for the FY18 Year Two Shares and the FY18 Year Three Shares:

 

     TSR Percentile
Rank against
Nasdaq 100
     TSR Payout as a
Percentage of Target (%)
 

Threshold Level Payout %

     25th        50  

Target Level Payout %

     50th        100  

Maximum Payout %

     75th        200  

Details of PRUs granted to our named executive officers in fiscal 2018 are disclosed in the Grants of Plan-Based Awards table on page 95 and summarized in the last table within the next subsection below.

Equity Grant Summary: The following table summarizes the number of shares granted subject to equity awards in fiscal 2018, the value of each award and the total value of the equity awards for each named executive officer as of the grant date (with all values of RSU awards based upon the closing price for a share of our common stock of $29.71 on June 9, 2017). The grant values provided below were established in the context of various factors, including competitive award opportunities for direct peer roles and potential alternative roles for which key individuals were potential candidates and the strategic importance of roles relative to the fiscal year 2018 and ongoing execution of the business transformation begun in fiscal 2017.

For Messrs. Clark, Noviello and Fey, fiscal 2018 marked each executive’s first full fiscal year with Symantec following the acquisition of Blue Coat in August 2016 and included each executive’s first full-year equity grant by Symantec. Accordingly, comparisons with certain equity grant amounts listed for fiscal 2017 herein (for example, in the Summary Compensation Table, below) may not take into

 

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account the grants each of these executives received in fiscal 2017 by Blue Coat prior to the close of the acquisition. Please refer to Note 2 to the Summary Compensation Table on page 91 for additional information regarding the calculation of the PRU value at grant date.

 

Name of NEO

   Target
PRUs
(#)
     PRU Value
at Grant
Date ($)
     RSUs (#)      RSU Value
at Grant
Date ($)
     Total Target
Equity Incentive
Awards Value
at Grant Date
($)
 

Gregory S. Clark

     339,674        11,657,612        145,575        4,325,033        15,982,645  

Michael D. Fey

     317,029        10,880,435        135,870        4,036,698        14,917,133  

Nicholas R. Noviello

     158,514        5,440,200        67,935        2,018,349        7,458,549  

Scott C. Taylor

     101,902        3,497,276        43,672        1,297,495        4,794,772  

Francis C. Rosch

     271,739        9,326,082        116,460        3,460,026        12,786,109  

Previously Granted Long Term Incentive Pay Outcomes

Our fiscal 2018 financial results resulted in compensation plan payouts for long term incentive plan awards that had been made in fiscal 2016 and fiscal 2017. The payouts reflect mixed results relative to the performance goals established for the respective plans in the different fiscal years.

The FY16 PRUs paid out at 112.2% of target based on a combination of fiscal 2016 EPS results and subsequent total stockholder return (“TSR”) versus the S&P 500 over fiscal 2017 and fiscal 2018.

The FY17 PRU was funded at 268.20% of target, based on fiscal 2018 adjusted non-GAAP operating income results that were ahead of the original goals and delivered achievement of 109.29% of target. 250% of the shares were earned and vested at the end of fiscal 2018, with the remaining shares vesting at the end of fiscal 2019.

The FY18 PRUs were structured so that 50% of the awards were eligible to be earned based on fiscal 2018 non-GAAP EPS (the FY18 Year One Shares). We achieved non-GAAP EPS of $1.56 per share, or 95.2% of this metric, resulting in the threshold level having been achieved and 50.5% of the FY18 Year One Shares (25.25% of the total FY18 PRUs) becoming eligible to be earned at the end of the FY18 PRU Performance Period at the end of fiscal 2020. The remaining 50% of FY18 PRUs will be eligible to vest based on two and three year relative TSR; any shares earned based on relative TSR performance will vest at the end of fiscal year 2020.

 

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Fiscal Year 2016 PRU Achievement

 

 

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FY2016 PRU Design FY 2018 FY 2019 FY 2020 50% of shares earned based on FY2016 EPS TSR used as a Modifier (A) modified based on TSR Payout Range 100% - FY2016 1-year TSR Q1-Q3 EPS 0% - 150% Performance (B) Performance (A) 50% of shares earned based on FY2016 EPS(A) modified based on 2-year TSR Performance (C) EPS Payout Range 0% - 133% (A x 50% x B)+ (A x 50% x C) = Total Number of PRUs Earned (all of the earned shares are released after FY2020 end)

The PRUs granted to our named executive officers in fiscal 2016 (the “FY16 PRUs”) were eligible to be earned only if we achieved a threshold of non-GAAP EPS for the first three quarters of fiscal 2016. For purposes of calculating achievement for fiscal 2016, we define non-GAAP EPS as GAAP profit before tax, including discontinued operations, adjusted to exclude stock-based compensation expense, charges related to the amortization of intangible assets, restructuring, separation, transition and other related expenses, certain expenses related to transition service agreements with our former information management business, and certain other income and expense items that management considered unrelated to Symantec’s core operations, less GAAP tax expense excluding the income tax effects of the non-GAAP adjustment to our operating results described above. This amount is divided by diluted weighted-average shares outstanding for the period. For purposes of calculating achievement of this metric, foreign exchange movements were held constant at plan rates.

Our fiscal 2016 awards were granted and specifically designed by our Compensation Committee to enhance our pay for performance culture with a component directly linked to our TSR over two and three-year periods. Depending on our achievement of this metric, 0% to 133% of the target shares would be eligible to be earned at the end of the second and third fiscal year after the fiscal year of grant, based on, and subject to further adjustment as a result of, the achievement of the TSR ranking for our Company as compared to the S&P 500. If any target shares became eligible (the “eligible shares”) to be earned in the second and third fiscal year after the fiscal year of grant as a result of achievement of the non-GAAP EPS metric for the fiscal year of grant, then 50% to 150% of one-half of the eligible shares would be earned based on the achievement of the TSR goal for the two years ended at the end of the second fiscal year after the fiscal year of grant and 50% to 150% of one-half of the eligible shares (plus any eligible shares not earned at the end of the second fiscal year after the fiscal year of grant if less than 100% of the TSR goal is achieved for the two-year period then ended) would be earned based on the achievement of the TSR goal for the three years ended at the end of the third fiscal year after the fiscal year of grant. For the FY16 PRUs, we measure the performance period of the TSR to one year (fiscal 2017) and two years (fiscal 2017-2018 period) to exclude in each case the impact of the Veritas separation which took place during fiscal 2016. Subject to certain exceptions (including acceleration of vesting upon a change in control of our Company under the terms of the Symantec Executive Retention Plan, as amended), the award shall vest, if at all, only at the end of the third year of the performance period (i.e., fiscal 2018), and the named executive officer must be employed by us at the end of such period in order to vest in the award.

 

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Below is the summary of our FY16 PRU performance metric achievements. The three-year performance period for the fiscal 2016 awards granted in fiscal 2016 completed at the end of fiscal 2018. The Compensation Committee certified an overall payout of 106.45% of the target award level.

 

Non-GAAP EPS    2-Year TSR    3-Year TSR
Performance
as % of

Target

   Eligible
Shares as %
of Target
Shares
   S&P 500
Percentile
Ranking
   Payout as %
of Target
   S&P 500
Percentile
Ranking
   Payout as %
of Target
   Overall
Payout
88.71%    81.19%    94th    150.00%    56th    112.24%    106.45%

Fiscal Year 2017 PRU Achievement

 

 

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FY2017 PRU Design FY 2017 FY 2018 FY 2019 Addl Vesting Period 100% - FY2018 Operating Income for the portion Payout Range Up to 250% of target award vested after exceeding 250% of 0% - 300% FY2018 (A) target award (B) A + B = Total Number of PRUs Earned (Subject to continued employment, earned shares up to 250% of target award are released after FY2018 end; earned shares exceeding 250% of target award are released after FY 2019)

As noted above, the achievement associated with the FY17 PRUs marks a significant element of executive compensation that was determined on fiscal 2018 results and awarded in fiscal 2019. As a key component of our fiscal 2017 long-term equity incentive compensation program, in June 2016, our Compensation Committee granted PRUs to our then-current executive team, including Messrs. Taylor and Rosch under our 2013 Equity Incentive Plan. Similarly, in anticipation of their joining our executive team, Blue Coat granted Messrs. Clark, Fey and Noviello PRUs under an identical Blue Coat equity plan prior to the Blue Coat acquisition closing. At the time of grant in June 2016, the Company had announced a cost savings plan and business transformation initiatives which the Compensation Committee recognized would involve a multi-year effort on the part of the Company’s executives. Accordingly, the FY17 PRUs were designed with a performance metric that would focus the Company’s efforts on producing significantly increased profitability by the end of fiscal 2018. The Compensation Committee revised the performance metric and the targets upward in March 2017 to take into account the Blue Coat and LifeLock acquisitions, and subsequently adjusted the targets down in October 2017 in connection with the divestiture of the Company’s website security business and related PKI assets to DigiCert, Inc., which divestiture was completed in October 2017 (the October 2017 adjustment also took into consideration the effect of two small acquisitions that were completed in July 2017).

The Compensation Committee chose fiscal 2018 non-GAAP operating income as the appropriate metric for the FY17 PRUs because it provided a powerful incentive to both complete the Company’s business transformation goal while also requiring the executive team to deliver increased profitability. Taking into account the revisions to the performance metric in March 2017 and October 2017, the fiscal 2018 non-GAAP operating income target under the FY17 PRUs was $1,560 million, and the Company achieved $1,705 million in adjusted non-GAAP operating income in fiscal 2018, resulting in the achievement of 109.29% of target, with funding at 268.20% of target, 250% of which was earned and vested at the end of fiscal 2018, as discussed below. The Compensation Committee believes the targets set in June 2016, and subsequently revised in March 2017 and October 2017, had the desired effect to drive the demonstrated growth in non-GAAP operating income from fiscal 2016 to fiscal 2018.

 

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For purposes of calculating performance under the FY17 PRUs, we define non-GAAP operating income as our fiscal 2018 GAAP operating income, adjusted, as applicable, to exclude website security and PKI results included in our third quarter of fiscal year 2018 results, stock-based compensation expense, charges related to the amortization of intangible assets, restructuring, separation, transition and other related expenses, acquisition and integration expenses, certain gains or losses on litigation contingencies and settlements, the impact from deferred revenue and inventory fair value adjustments as part of business combination accounting entries and certain other income and expense items that management and/or the Compensation Committee considers unrelated to Symantec’s core operations. Non-GAAP operating income was adjusted under FY17 PRUs to (i) allow for the negative impact of up to $91 million of foreign exchange rates on revenue, with no limit on the positive foreign exchange impact, and (ii) adjusted beneficially for changes to Symantec’s capital structure that positively impacted Symantec’s EPS on a non-GAAP Basis, such as cash interest expense savings due to prepayment of indebtedness.

Depending on our achievement of this metric, 0% to 300% of the target shares were eligible to be earned at the end of fiscal 2018, subject to additional vesting conditions in certain cases as discussed below. To further encourage continued service to our Company and our stockholders, for any achievement above 250% of target to be earned, the participant must generally be employed by our Company through the end of fiscal 2019 when the additional payout in excess of 250% will be made.

Below is the summary of our FY17 PRU performance metric achievement:

 

             
 

FY18

non-GAAP
Operating
Income

Target ($)
(millions)

FY18

non-GAAP
Operating
Income

Actual ($)
(millions)

FY18

Non-GAAP
Operating
Income
Performance

as a % of
Target

Vesting

Level
as a % of

Target Award

Eligible

Shares

as a % of
Target

Shares
at end of
FY18

Eligible

Shares
as a % of
Target
Shares
at end of
FY19

 

Fiscal 2017 PRU

 

1,560

 

1,705

 

109.29

 

268.20

 

250.00

 

18.20

 

For purposes of calculating performance under the FY17 PRUs, our FY18 non-GAAP operating income target was $1,560 million and our actual FY18 non-GAAP operating income was $1,705 million. The Compensation Committee determined that we achieved 109.29% of target, resulting in a payout of 268.20% of target under the FY17 PRUs. According to the terms of the FY17 PRUs, 250% of the plan payout was earned at the end of fiscal 2018, and the additional 18.2% (the excess amount above 250% as described above) is eligible to be earned at the end of fiscal 2019, provided the participant is employed by our Company through the end of fiscal 2019.

Details of PRUs granted to our named executive officers in fiscal 2017 are disclosed in the Grants of Plan-Based Awards table on page 95 and summarized in the last table within the next subsection below.

Fiscal Year 2018 PRU Achievement

In designing the fiscal 2018 long-term incentive program, the Compensation Committee chose non-GAAP earnings per share (“EPS”) and relative total stockholder return (“TSR”) against the Nasdaq 100 index as the applicable performance metrics for the fiscal 2018 PRU awards (the “FY18 PRUs”). These awards may be earned over three years based on the Company’s achievement of non-GAAP EPS for fiscal 2018, as adjusted under the plan, along with relative TSR against the Nasdaq 100 index for the two-year and three-year periods ending at the completion of fiscal 2019 and fiscal 2020, respectively, as described below. Our Compensation Committee established the non-GAAP EPS portion of the FY18 PRUs because it believed it would allow evaluation of Company performance on its short-term strategy execution, while requiring longer-term three-year vesting to provide alignment with stockholders over a more extended time period. This EPS metric is balanced by longer-term relative

 

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TSR measurement of stockholder value creation which requires Symantec to match or exceed median market results to achieve a payout of target or a greater number of shares.

 

    

FY18
non-GAAP EPS

Target

 

 

18 non-GAAP EPS

Actual

 

 

 

Achievement
as a
Percentage
of Target

 

 

Eligible Shares as a % of

Target Shares at end of FY18

 

  Fiscal 2017 PRU     $1.64 per share   $1.56 per share   95.20%  

50.5% of the FY18 Year One Shares (20.25% of the total FY18 PRUs) became eligible to be earned at the end of fiscal 2020.

 

For fiscal 2018, our non-GAAP EPS target under the FY18 PRUs was $1.64 per share with a threshold performance level of $1.56 per share. The Compensation Committee determined that we achieved a fiscal 2018 non-GAAP EPS of $1.56 per share, or 95.20% of this metric, resulting in the threshold level having been achieved and 50.5% of the FY18 Year One Shares becoming eligible to be earned at the end of the FY18 PRU Performance Period at the end of fiscal 2020.*

 

*

See “Compensation Components — III. Equity Incentive Awards — Performance Restricted Stock Units (PRUs)” below for a description of adjusted non-GAAP EPS target and relative TSR.

Health and Welfare Benefits; Perquisites

All named executive officers are eligible to participate in our Section 401(k) plan (which includes our matching contributions), health and dental coverage, life insurance, disability insurance, paid time off, and paid holidays on the same terms as are available to all employees generally. These rewards are designed to be competitive with overall market practices, and are in place to attract and retain the talent needed in the business. In addition, named executive officers are eligible to participate in the deferred compensation plan, and to receive other benefits described below.

Deferred Compensation: Symantec’s named executive officers are eligible to participate in a nonqualified deferred compensation plan that provides management employees on our U.S. payroll with a base salary of $180,000 or greater (including our named executive officers) the opportunity to defer up to 75% of base salary, 100% of sales commissions, and 100% of annual incentive payments for payment at a future date. This plan is provided to be competitive in the executive talent market, and to provide executives with a tax-efficient alternative for receiving earnings. Three of our named executive officers participated in this plan during fiscal 2018. The plan is described further under “Non-Qualified Deferred Compensation in Fiscal 2018,” on page 98.

Perquisites: Symantec’s executive officers typically do not receive perquisites, except in limited circumstances when deemed appropriate and approved by the Compensation Committee. For example, an additional benefit available to executive officers is reimbursement for up to $10,000 for financial planning services. We also provide a car service for our CEO and incurred $155,196 in costs through the end of fiscal 2018 under this ongoing arrangement. In fiscal 2018, we entered into an aircraft lease agreement with our CEO for Company use of an aircraft owned by Mr. Clark, under which Mr. Clark recognized $3,075 in imputed income in fiscal 2018. The Compensation Committee provides these perquisites for business-related purposes and believes they are prevalent in the marketplace for executive talent. The value of the perquisites we provide is taxable to the named executive officers and the incremental cost to us for providing these perquisites is reflected in the Summary Compensation Table. These benefits are disclosed in the All Other Compensation column of the Summary Compensation Table on page 91.

Change of Control and Severance Arrangements: Our Executive Retention Plan provides (and the terms of our PRUs provide) participants with “double trigger” acceleration of vesting of equity

 

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awards and, if applicable, such awards become immediately exercisable, where the individual’s employment is terminated without cause, or is constructively terminated, within 12 months after a change in control of our Company (as defined in the plan). In the case of PRUs granted prior to fiscal 2017, PRUs will vest at target if the change in control occurs prior to the first performance period and will vest as to eligible shares based on the results for the initial performance period if the change in control occurs following the first performance period but before the end of the third performance period. In the case of PRUs granted in fiscal 2017, PRUs will vest at target regardless of whether the change in control event occurs prior to or during the performance period. The PRUs granted in fiscal 2018 will also vest at target if the change in control event takes place during the three-year performance period.

We believe that this double trigger acceleration appropriately furthers the intent of the applicable plan without providing an undue benefit to those executives who continue to be employed following a change in control transaction. The intent of the plan is to enable named executive officers to have a balanced perspective in making overall business decisions in the context of a potential acquisition of our Company, as well as to be competitive with market practices. The Compensation Committee believes that change in control benefits, if structured appropriately, serve to minimize the distraction caused by a potential transaction and reduce the risk that key talent would leave our Company before a transaction closes.

The change in control and severance payments and benefits described above do not influence and are not influenced by the other elements of compensation as these benefits serve different objectives than the other elements. We do not provide for gross-ups of excise tax values under Section 4999 of the Code. Rather, we allow the named executive officer to reduce the benefit received or waive the accelerated vesting of options to avoid excess payment penalties.

Details of each individual named executive officer’s severance payments and benefits, including estimates of amounts payable in specified circumstances in effect as of the end of fiscal 2018, are disclosed under “Potential Payments Upon Termination or Change- in-Control” below.

FACTORS WE CONSIDER IN DETERMINING OUR COMPENSATION PROGRAMS

The Compensation Committee applies a number of compensation policies and analytic tools in implementing our compensation principles. These policies and tools guide the Compensation Committee in determining the mix and value of the compensation components for our named executive officers, consistent with our compensation philosophy. They include:

Focus on Pay-for-Performance: Our executive compensation program is designed to reward executives for results. As described below, the pay mix for our named executive officers emphasizes variable pay in the form of short-term cash and long-term equity awards. For cash awards, short-term results are measured by annual non-GAAP operating income, annual non-GAAP revenue and, for all our named executive officers except the CEO, individual performance. A significant portion of equity grants for our named executive officers are directly based on our financial performance. The value of the remainder of the equity grants to our named executive officers depends on the Company share price performance.

A Total Rewards Approach: Elements of the total rewards offered to our executive officers include base salary, short- and long-term incentives including equity awards, health benefits and a deferred compensation program.

Appropriate Market Positioning: Our general pay positioning strategy is to target the levels of base salary, annual short-term cash incentive structure and long-term equity incentive opportunities and benefits for our named executive officers with reference to the relevant market data for each position. Nonetheless, the Compensation Committee bases its decisions on its subjective judgment and

 

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may set the actual components for an individual named executive officer above or below the positioning benchmark based on factors such as experience, performance achieved, specific skills or competencies, the desired pay mix (e.g., emphasizing short- or long-term results) and our budget.

Competitive Market Assessments: Market competitiveness is one factor that the Compensation Committee considers each year in determining a named executive officer’s overall compensation package, including pay mix. The Compensation Committee relies on various data sources to evaluate the market competitiveness of each pay element, including publicly-disclosed data from a peer group of companies and published survey data from a broader set of information technology companies that the Compensation Committee believes represent Symantec’s competition in the broader talent market, based on the advice of Mercer, an outside consulting firm engaged by the Compensation Committee for fiscal 2018. The proxy statements of peer group companies provide detailed pay data for the highest-paid executives. Survey data, which we obtain from the Radford Global Technology Survey, provides compensation information on a broader group of executives and from a broader group of information technology companies, with positions matched based on specific job scope and responsibilities. The Compensation Committee considers data from these sources as a framework for making compensation decisions for each named executive officer’s position.

The information technology industry in which we compete is characterized by rapid rates of change and intense competition from small and large companies, and the companies within this industry have significant cross-over in leadership talent needs. As such, we compete for executive talent with leading software and services companies as well as in the broad information technology industry. We face particularly intense competition with companies located in the geographic areas where Symantec operates, regardless of specific industry focus or company size. Further, consistent with prior years, in part because we believe that stockholders measure our performance against a wide array of technology peers, for fiscal 2018 the Compensation Committee used a peer group that consists of a broad group of high technology companies in different market segments that were of a comparable size to us. The Compensation Committee used this peer group, as well as other relevant market data, to evaluate named executive officer pay levels.

The Compensation Committee reviews our peer group on an annual basis, with input from Mercer, and the group may be adjusted from time to time based on, among other factors, a comparison of revenues, market capitalization, industry, peer group performance, merger and acquisition activity and stockholder input. The Compensation Committee reviewed and revised our peer group for fiscal 2018. The following criteria were used to select our updated peer group to be used to evaluate named executive officer pay levels in connection with setting compensation for fiscal 2018:

 

   

Business with software development focus including security related businesses where possible;

 

   

Similar breadth, complexity and global reach as Symantec; and

 

   

Annual revenue 0.5x to 2.0x as a starting point but including companies based on an assessment of overlapping geography, engineering focus and executive talent competition.

The Compensation Committee selected the following companies as our fiscal 2018 peer group:

Fiscal 2018 Symantec Peer Group

 

Activision Blizzard, Inc.    eBay Inc.    Red Hat Inc.
Adobe Systems Incorporated    Electronic Arts Inc.    Salesforce.com, Inc.
Autodesk, Inc.    FireEye, Inc.    Synopsys, Inc.
Akamai Technologies Inc.    Intuit Inc.    VMware, Inc.
CA, Inc.    Palo Alto Networks Inc.   
Citrix Systems, Inc.    PayPal Holdings, Inc.   

 

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LinkedIn and Yahoo! were removed from our fiscal 2018 peer group as a result of their acquisitions. The Compensation Committee evaluated our peer group for fiscal 2019 and determined to keep the companies otherwise the same for fiscal 2019.

Appropriate Pay Mix: Consistent with our pay-for-performance philosophy, our executive officers’ compensation is structured so that a large portion of their total direct compensation is paid based on the performance of our Company (modified by individual achievement). In determining the mix of the various reward elements and the value of each component, the Compensation Committee takes into account the executive’s role, the competitiveness of the market for executive talent, company performance, individual performance, internal pay equity and historical compensation. In making its determinations with regard to compensation, the Compensation Committee reviews the various compensation elements for the CEO and our other named executive officers (including base salary, target annual bonus and the value of vested and unvested equity awards actually or potentially issued).

The percentage of an executive officer’s compensation opportunity that is “at-risk,” or variable instead of fixed, is based primarily on the officer’s level of influence at Symantec. Executive officers generally have a greater portion of their pay at risk through short- and long-term incentive programs than the rest of our employee population because of their relatively greater responsibility and ability to influence our Company’s performance.

As illustrated by the following charts, for fiscal 2018, approximately 95% of our CEO’s target total direct compensation (sum of annual base salary, target annual incentive, and grant date fair value of equity awards) was at-risk, and on average approximately 94% of our other named executive officers’ compensation opportunity was at-risk compensation. As a result of no annual incentives being paid to our executive officers for fiscal 2018, actual pay was delivered 94% in the form of equity for our CEO and an average of 93% for our NEOs other than the CEO.

 

 

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Fiscal 2018 Total Direct Compensation Mix(1) Fiscal 2018 Total Direct Compensation Mix(1) CEO NEOs except CEO Base Salary 5% Base Salary 6% Annual Annual Incentive 8% Incentive 7% RSU 23% RSU 23% PRU 63% PRU 63% At-Risk At-Risk Compensation Compensation 95% 94%

 

(1) 

Does not equal 100% due to rounding.

Form and Mix of Long-Term Equity Incentive Compensation: The long-term equity incentive compensation component of our regular annual executive compensation program consists of PRUs and RSUs for all of our named executive officers. The Compensation Committee’s allocation between these two forms of equity is designed to strike the appropriate balance between performance and retention for long-term equity incentive awards.

For fiscal 2018, our CEO received approximately 70% of the value of his target annual equity incentive award in the form of PRUs and 30% in the form of RSUs. Other named executive officers,

 

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also received, on average, approximately 70% of the target annual equity incentive award in the form of PRUs and 30% in the form of RSUs. We consider slightly lower proportional weighting of base salary in the CEO’s total direct compensation, compared to the other named executive officers, to be appropriate given both the level of total direct compensation and the broader level of influence over Company performance associated with the CEO role.

The percentages described above (and other percentage-based equity award values discussed below) are generally based on the grant date fair value of the shares of common stock underlying the RSUs, and the grant date fair value of the PRUs at the target level award size.

In making its compensation decisions and recommendations, the Compensation Committee may consider factors such as the individual executive’s responsibilities, performance, industry experience, current pay mix, total compensation competitiveness, previous equity awards, retention considerations, and other factors.

Compensation Risk Assessment: The Compensation Committee, in consultation with Mercer, conducted its annual risk analysis of Symantec’s compensation policies and practices and does not believe that our compensation programs encourage excessive or inappropriate risk taking by our executives, or that they are reasonably likely to have a material adverse effect on Symantec.

Burn Rate and Dilution: We closely manage how we use our equity to compensate employees. We compute our “gross burn rate” as the total number of shares granted under all of our equity incentive plans during a period divided by the weighted average number of shares of common stock outstanding during that period and expressed as a percentage. We compute our “net burn rate” as the total number of shares granted under all of our equity incentive plans during a period, minus the total number of shares returned to such plans through awards cancelled during that period, divided by the weighted average number of shares of common stock outstanding during that period, and expressed as a percentage. We compute “overhang” as the total number of shares underlying options and awards outstanding plus shares available for issuance under all of our equity incentive plans (other than our Employee Stock Purchase Plan) at the end of a period divided by the weighted average number of shares of common stock outstanding during that period and expressed as a percentage. The Compensation Committee reviews and approves our equity usage for our equity compensation programs throughout the year based on our business and talent strategy and competitive market practices to attract, motivate and retain talent. In addition, the Compensation Committee considers the accounting charges that will be reflected in our financial statements under GAAP when establishing the forms of equity to be granted and the size of the overall pool available. For fiscal 2018, our gross burn rate was 1.49%, our net burn rate was 0.96% and our overhang was 12.23%.

Roles of Our Compensation Committee, Independent Directors, Executive Officers and Consultants in our Compensation Process

The Compensation Committee, which is comprised entirely of independent directors, is responsible for overseeing all of Symantec’s compensation programs, including the review and recommendation to the independent directors of our Board of all compensation arrangements for our CEO and the review and approval of the compensation arrangement for our other named executive officers.

The independent members of the Board evaluate our CEO’s performance and the Compensation Committee then reviews and recommends to the independent members of the Board all compensation arrangements for our CEO. After discussion, the independent members of the Board determine our CEO’s compensation. The Compensation Committee also discusses the performance of the other named executive officers with our CEO, reviews the compensation recommendations that our CEO submits for the other named executive officers, makes any appropriate adjustments and approves their compensation. While our CEO provides input and makes compensation recommendations with respect

 

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to executive officers other than himself, our CEO does not make recommendations with respect to his own compensation or participate in the deliberations regarding the setting of his own compensation by the Board or the Compensation Committee.

Since fiscal 2004, the Compensation Committee has engaged Mercer, an outside consulting firm, to provide advice and ongoing recommendations on executive compensation matters. The Compensation Committee oversees Mercer’s engagement. Mercer representatives meet informally with the Compensation Committee Chair and the Chief Human Resources Officer and also with the Compensation Committee during its regular meetings, including in executive sessions from time to time without any members of management present.

As part of its engagement for fiscal 2018, Mercer provided, among other services, advice and recommendations on the amount and form of executive and director compensation. For example, Mercer evaluated and advised the Compensation Committee on the peer group that the Compensation Committee uses to develop a market composite for purposes of establishing named executive officer pay levels (as described below), the competitiveness of our executive and director compensation programs, the design of awards and proposed performance metrics and opportunity ranges for incentive plans, compensation-related trends and developments in our industry and the broader talent market and regulatory developments relating to compensation practices.

We paid Mercer approximately $478,000 for executive compensation services in fiscal 2018. In addition, management engaged and Symantec paid Mercer and its affiliates for other services, including approximately $3,719,621 of unrelated consulting and business services in fiscal 2018. We also reimbursed Mercer and its affiliates for reasonable travel and business expenses. The Compensation Committee did not review or approve the other services provided by Mercer and its affiliates to Symantec, as those services were approved by management in the normal course of business within the scope of the Compensation Committee’s pre-authorization for such services. Based in part on policies and procedures implemented by Mercer to ensure the objectivity of its executive compensation consultants and the Compensation Committee’s assessment of Mercer’s independence pursuant to the SEC rules, the Compensation Committee concluded that the consulting advice it receives from Mercer is objective and not influenced by Mercer and its affiliates’ other relationships with Symantec and that no conflict of interest exists that will prevent Mercer from being independent consultants to the Compensation Committee.

The Compensation Committee establishes our compensation philosophy, approves our compensation programs and solicits input and advice from several of our executive officers and Mercer. As mentioned above, our CEO provides the Board and the Compensation Committee with feedback on the performance of our executive officers and makes compensation recommendations (other than with respect to his own compensation) that are presented to the Compensation Committee for their approval. Our CEO, Chief Human Resources Officer and General Counsel regularly attend the Compensation Committee’s meetings to provide their perspectives on competition in the industry, the needs of the business, information regarding Symantec’s performance and other advice specific to their areas of expertise. In addition, at the Compensation Committee’s direction, Mercer works with our Chief Human Resources Officer and other members of management to obtain information necessary for Mercer to make their own recommendations as to various matters, as well as to evaluate management’s recommendations.

Equity Grant Practices: The Compensation Committee generally approves grants of equity awards to the named executive officers at its first meeting of each fiscal year, or shortly thereafter through subsequent action. The grant date for all equity grants made to employees, including the named executive officers, is generally the 10th day of the month following the applicable meeting. If the 10th day is not a business day, the grant is generally made on the previous business day. The Compensation Committee does not coordinate the timing of equity awards with the release of material,

 

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nonpublic information. RSUs may be granted from time to time throughout the year, but all RSUs (with the exception of grants assumed with acquisitions) generally vest on either March 1, June 1, September 1 or December 1 for administrative reasons.

Change of Control and Severance Arrangements: The vesting of certain stock options, RSUs and PRUs held by our named executive officers will accelerate if they are subject to an involuntary (including constructive) termination of employment under certain circumstances. For additional information about these arrangements, see “—Health and Welfare Benefits; Perquisites — Change of Control and Severance Arrangements” above and “Potential Payments Upon Termination or Change-in-Control,” below.

RELATED POLICIES AND CONSIDERATIONS

To ensure that the overall executive compensation structure is aligned with stockholder interests and competitive with the market, we maintain the following policies:

Stock Ownership Requirements

We believe that in order to align the interests of our executive officers with those of our stockholders, our executive officers should have a financial stake in our Company. We have maintained stock ownership requirements for our executive officers since October 2005. For fiscal 2018, our executive officers were required to hold shares of our common stock (excluding stock options and unvested RSUs and PRUs) with value equal to:

 

   

CEO: 6x base salary (increased from 5x base salary effective August 1, 2017 to further align with interests of stockholders);

 

   

CFO and President and COO: 3x base salary; and

 

   

Executive Vice Presidents: 2x base salary.

The executive officer is required to acquire and thereafter maintain the stock ownership required within four years of becoming an executive officer of Symantec. During the four-year transition period, each executive officer must retain at least 50% of all net (after-tax) equity grants until the required stock ownership level is met.

As of October 10, 2018, all of our named executive officers have reached the stated ownership requirements for fiscal 2018. See the table below for individual ownership levels relative to the executive’s ownership requirement.

 

Named Executive Officer

   Ownership
Requirement(1)
(# of shares)
     Holdings as of
October 10, 2018
(# of shares)
 

Gregory S. Clark

     301,508        2,901,511  

Michael D. Fey

     130,402        1,007,398  

Nicholas R. Noviello

     97,990        363,952  

Scott C. Taylor

     60,302        350,364  

Francis C. Rosch(2)

     n/a        n/a  

 

(1) 

Based on the closing price for a share of our common stock of $19.90 on October 10, 2018.

 

(2) 

Mr. Rosch served as our Executive Vice President, Consumer Digital Safety through June 28, 2018.

Recoupment “Clawback” Policies

In 2017, we adopted a recoupment, or “clawback”, policy applicable to all performance-based compensation granted to the Company’s officers (even after they leave Symantec). In August 2018,

 

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our Board further expanded this clawback policy to allow for recoupment for certain violations of the Company’s policies. This updated policy supplements the contractual clawback rights we have had in all of our executive compensation plans since fiscal 2009 (providing for the return of any excess compensation received by an executive officer if our financial statements are the subject of a restatement due to error or misconduct).

Insider Trading, Hedging and Pledging Policies

Our Insider Trading Policy prohibits all directors and employees from short-selling Symantec stock or engaging in transactions involving Symantec-based derivative securities, including, but not limited to, trading in Symantec-based option contracts (for example, buying and/or writing puts and calls). It also prohibits pledging Symantec stock as collateral for a loan. Notwithstanding this policy, the Board granted a waiver from the prohibition against transactions with respect to derivative securities for Mr. Feld and Starboard solely for the purpose of enabling Starboard to exercise the forward contracts that were in existence before Mr. Feld was appointed to the Board and that were described in Starboard’s Schedule 13D with respect to the Company filed with the SEC on August 16, 2018. The grant of this waiver was conditioned upon Mr. Feld’s and Starboard’s compliance with all applicable laws and all other provisions of our Insider Trading Policy in connection with such derivative securities transactions.

In addition, our Insider Trading Policy prohibits our directors, officers, employees and contractors from purchasing or selling Symantec securities while in possession of material, non-public information. It also requires that each of our directors, our Chief Executive Officer, our President, and our Chief Financial Officer conduct any open market sales of our securities only through use of stock trading plans adopted pursuant to Rule 10b5-1 of the Exchange Act. Rule 10b5-1 allows insiders to sell and diversify their holdings in our stock over a designated period by adopting pre-arranged stock trading plans at a time when they are not aware of material nonpublic information about us, and thereafter sell shares of our common stock in accordance with the terms of their stock trading plans without regard to whether or not they are in possession of material nonpublic information about the Company at the time of the sale. All other executives are strongly encouraged to trade using Exchange Act Rule 10b5-1 plans.

Tax and Accounting Considerations on Compensation

The financial reporting and income tax consequences to the Company of individual compensation elements are important considerations for the Compensation Committee when it reviews compensation practices and makes compensation decisions. While structuring compensation programs that result in more favorable tax and financial reporting treatment is a general principle, the Compensation Committee balances these goals with other business needs that may be inconsistent with obtaining the most favorable tax and accounting treatment for each component of its compensation.

Deductibility by Symantec. Section 162(m) of the Code generally disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to certain executive officers. While the Compensation Committee may consider the deductibility of awards as one factor in determining our executive compensation, it also looks at other factors in making its executive compensation decisions and retains the flexibility to grant awards or pay compensation the Compensation Committee determines to be consistent with its goals for Symantec’s executive compensation program, even if the awards may not be deductible by Symantec for tax purposes.

Recent changes to Section 162(m) in connection with the passage of the Tax Cuts and Jobs Act repealed the exception to the deductibility limit that were previously available for “qualified performance-based compensation” (including stock option grants, performance-based cash bonuses and performance-based equity awards, such as performance-based restricted stock units) effective for

 

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taxable years beginning after December 31, 2017. Compensation paid to certain of our executive officers for taxable years beginning prior to December 31, 2017 remains deductible if such compensation would otherwise be deductible for such taxable year. The Tax Cuts and Jobs Act also increased the number of executive officers who are affected by the loss of deductibility effective for taxable years beginning after December 31, 2017. As a result, any compensation paid to certain of our executive officers for taxable years beginning after December 31, 2017 in excess of $1 million will be non-deductible unless it qualifies for transition relief afforded by the Tax Cuts and Jobs Act to compensation payable pursuant to certain binding arrangements in effect on November 2, 2017 (including performance-based restricted stock units granted to our executive officers who were “covered employees” within the meaning of Section 162(m) that were intended to qualify as performance-based compensation for purposes of Section 162(m) and that were granted prior to such time but not yet vested or settled).

We believe that compensation expense incurred in respect of the exercise of our stock options granted to our executive officers prior to November 2, 2017 will continue to be deductible pursuant to this transition rule. However, because of uncertainties in the interpretation and implementation of the changes to Section 162(m) in the Tax Cuts and Jobs Act, including the scope of the transition relief, we can offer no assurance of such deductibility with respect to payment of cash bonuses paid or RSUs or PRUs settled after December 31, 2017.

Tax Implications for Officers. Section 409A of the Code imposes additional income taxes on executive officers for certain types of deferred compensation that do not comply with Section 409A. The Company attempts in good faith to structure compensation so that it either conforms with the requirements of or qualifies for an exception under Code Section 409A. Sections 280G and 4999 of the Code imposes an excise tax on payments to executives of severance or change of control compensation that exceed the levels specified in the Section 280G rules. Our named executive officers could receive the amounts shown in the section entitled “Potential Payments Upon Termination or Change-in-Control” (beginning on page 91 below) as severance or change of control payments that could implicate this excise tax. As mentioned above, we do not offer our officers as part of their change of control benefits any gross ups related to this excise tax under Code Section 4999.

Accounting Considerations. The Compensation Committee also considers the accounting and cash flow implications of various forms of executive compensation. In its financial statements, the Company records salaries and cash-based performance-based compensation incentives as expenses in the amount paid, or estimated to be paid, to the named executive officers. Accounting rules also require the Company to record an expense in its financial statements for equity awards, even though equity awards are not paid in cash to employees. The accounting expense of equity awards to employees is calculated in accordance with the requirements of FASB Accounting Standards Codification Topic 718. The Compensation Committee believes, however, that the many advantages of equity compensation, as discussed above, more than compensate for the non-cash accounting expense associated with them.

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee during fiscal 2018 were Geraldine B. Laybourne, David L. Mahoney, Robert S. Miller and Daniel H. Schulman. None of the members of the Compensation Committee in fiscal 2018 were at any time during fiscal 2018 or at any other time an officer or employee of Symantec or any of its subsidiaries, and none had or have any relationships with Symantec that are required to be disclosed under Item 404 of Regulation S-K. None of Symantec’s executive officers has served as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our Board or Compensation Committee during fiscal 2018.

 

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Compensation Committee Report

The information contained in the following report of Symantecs Compensation Committee is not considered to be soliciting material, filed or incorporated by reference in any past or future filing by Symantec under the Exchange Act or the Securities Act of 1933 unless and only to the extent that Symantec specifically incorporates it by reference. The Compensation Committee has reviewed and discussed with management the CD&A contained in this proxy statement. Based on this review and discussion, the Compensation Committee has recommended to the Board that the CD&A be included in this proxy statement and our Annual Report on Form 10-K for the fiscal year ended March 30, 2018.

By: The Compensation and Leadership Development Committee of the Board:

David L. Mahoney (Chair)

Peter A. Feld*

Geraldine B. Laybourne

Robert S. Miller

Daniel H. Schulman

 

*

Joined the Compensation Committee on September 16, 2018.

 

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Summary of Compensation

The following table shows for the fiscal year ended March 30, 2018, compensation awarded to or paid to, or earned by each individual who served as our Chief Executive Officer, our Chief Financial Officer during fiscal 2018 and the three most highly compensated executive officers who were serving as executive officers (other than as our Chief Executive Officer or Chief Financial Officer) at the end of fiscal 2018 (the “named executive officers”).

Summary Compensation Table for Fiscal 2018

 

Name and Principal
Position

  Fiscal
Year
  Salary
($)
  Bonus
($)
  Stock
Awards(1)(2)

($)
  Option
Awards
($)
  Non-Equity
Incentive Plan
Compensation
($)
  All Other
Compensation
($)
  Total ($)

Gregory S. Clark

      2018       1,000,000             15,982,645             (3)        364,936 (4)        17,347,581

Chief Executive Officer

      2017       666,667 (5)              4,269,815 (6)              743,333 (7)        379,937 (8)        6,059,752 (6) 

Nicholas R. Noviello

      2018       650,000             7,458,549             (3)        47,606 (9)        8,156,155

Executive Vice President and CFO

     
2017

     
433,333
(5)
 
     


     
1,077,917
(6)
 
     


     
479,673
(7)
 
     
172,740
(10)
 
     
2,163,663
(6)
 

Michael D. Fey

      2018       865,000             14,917,133             (3)        41,832 (11)        15,823,965

President and COO

      2017       544,167 (5)              2,856,660 (6)              909,370 (7)        131,000 (12)        4,441,197 (6) 

Scott C. Taylor

      2018       600,000             4,794,772             (3)        621,788 (13)        6,016,560

Executive Vice President, General Counsel and Secretary

      2017       600,000       150,000 (14)        4,831,307             568,374 (7)        363,462 (15)        6,513,143
     
2016

     
593,939

     


     
3,082,307

     


     
283,380
(16)
 
     
86,028
(17)
 
     
4,045,654

Francis C. Rosch

      2018       700,000             12,786,109             (3)        755,059 (18)        14,241,168

Former Executive Vice President, Consumer Digital Safety*

      2017       612,500 (19)              6,039,114             623,970 (7)        461,965 (20)        7,737,549
     
2016

     
504,394

     


     
5,137,221

     


     
320,750
(16)
 
     
97,334
(21)
 
     
6,059,699

 

 

*

Mr. Rosch served as our Executive Vice President, Consumer Digital Safety through June 28, 2018.

 

(1) 

The amounts shown in this column reflect the aggregate grant date fair value of awards, calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 for RSUs and PRUs) and was determined based on the fair value of our common stock on the date of grant/modification, except for the amounts listed for Messrs. Clark, Noviello and Fey for fiscal 2017 and described further in footnote 6 below. For a discussion of the valuation methodology used to value the PRUs awarded during fiscal years 2016, 2017 and 2018, see footnote 2 below. For details of the awards granted in fiscal 2018, see the table “Grants of Plan-Based Awards”, below.

 

(2) 

The FY18 PRUs are based on a three-year performance period. The FY18 PRUs are eligible to be earned if we achieve at least the threshold level of the performance goal for adjusted non-GAAP EPS for fiscal 2018 and at least the threshold level of the performance goals for relative TSR against the Nasdaq 100 index for the two- and three- year periods ending fiscal 2019 and fiscal 2020, respectively. Depending on our achievement of these metrics, 0% to 200% of the target shares are eligible to be earned at the end of fiscal 2020, provided the participant is employed with the Company through the end of fiscal 2020, with certain exceptions. One-half of the eligible shares will be based on the achievement of the adjusted non-GAAP EPS performance goal, one-quarter of the eligible shares will be based on the achievement of the two-year relative TSR performance goal, and the remaining one-quarter of shares will be based on the achievement of the three-year relative TSR performance goal.

 

    

The FY17 PRUs were a one-time design award based on a one-year performance period ended fiscal 2018. The FY17 PRUs are eligible to be earned if we achieve at least 50% of the target level non-GAAP operating income performance for fiscal 2018. Depending on our achievement of this metric, 0% to 300% of the target shares were eligible to be earned with the first 250% of the target shares eligible to be earned at the end of fiscal 2018 and any remaining eligible shares (up to 50% for an aggregate of 300%) eligible to be earned at the end of fiscal 2019, provided the participant is employed with the Company through the end of fiscal 2019 with certain exceptions.

 

    

The FY16 PRUs are based on a three-year performance period. The FY16 PRUs are eligible to be earned if we achieve at least 70% of the target level non-GAAP EPS performance. Depending on our achievement of this metric, 0% to 133% of the target shares was eligible to be earned at the end of the fiscal 2016, based on, and subject to further adjustment as a result of, the achievement of the TSR goal for our Company as compared to the S&P 500 (the market-related component) in fiscal 2017 and 2018. If any target shares become eligible (the “eligible shares”) to be earned as a result of achievement of the performance-related component, then 50% to 150% of one-half of the eligible shares may be earned based on the achievement of the TSR goal for the first and second fiscal years and 50% to 150% of the remaining one-half of the eligible shares (plus any eligible shares not earned at the end of the second fiscal year) may be earned based on the achievement of the TSR goal for the first, second and

 

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  third fiscal years. Consistent with ASC Topic 718, the full grant date fair value for the market-related component, or the TSR adjustment, for the entire three-year performance cycle is included in the amounts shown for the year of grant and was determined using a Monte Carlo simulation option pricing model (“Monte Carlo model”) as of the date the PRUs were awarded.

 

    

The table below sets forth the grant date fair value (prior to any applicable modifications) determined in accordance with ASC Topic 718 principles for the performance-related components of these awards (i) based upon the probable outcome of the fiscal years 2016, 2017 and 2018 performance-related component as of the grant date, and (ii) based upon achieving the maximum level of performance under the fiscal years 2016, 2017 and 2018 performance-related component as of the grant date. Also set forth below are the grant date fair values pertaining to the market-related component or the TSR adjustment and significant inputs and assumptions used in the Monte Carlo model, determined upon grant in fiscal years 2016, 2017 and 2018, and which are not subject to probable or maximum outcome assumptions.

 

Name

   Fiscal
Year
   Probable Outcome of
Performance
Conditions Grant
Date Fair Value
($)
   Maximum
Outcome of
Performance
Conditions Grant
Date Fair Value
($)
   Market-Related
Component Grant
Date Fair Value
($)

Gregory S. Clark

       2018        11,657,612        23,315,223        N/A

Nicholas R. Noviello

       2018        5,440,200        10,880,401        N/A

Michael D. Fey

       2018        10,880,435        21,760,871        N/A

Scott C. Taylor

       2018        3,497,277        6,994,553        N/A
       2017        2,866,870        8,600,609        N/A
       2016        1,814,793        2,584,234        1,943,033

Francis C. Rosch

       2018        9,326,082        18,652,165        N/A
       2017        3,583,574        10,750,722        N/A
       2016        3,024,672        4,307,081        3,238,407

 

Grant Date

   Fiscal Year    Grant Date
Fair Value
per Unit ($)
   Volatility (%)    Risk-Free
Interest Rate (%)

6/9/2017

       2018        34.32        23.23        1.47

6/10/2015

       2016        27.03        22.55        1.07

 

    

We adjusted the performance metrics under our FY17 PRU grants on March 8, 2017. The incremental modification charges were based on the Company’s stock price on the date of the modification ($29.60) multiplied by the incremental expected achievement percentage multiplied by the number of granted units. Volatility and interest rate were not factors.

 

    

For Messrs. Clark, Noviello and Fey, fiscal 2018 marked each executive’s first full fiscal year with Symantec following the acquisition of Blue Coat by Symantec in August 2016. The amounts listed for fiscal 2018 for such executives include each executive’s first full-year equity incentive grant by Symantec. The grants listed for such executives in fiscal 2017 do not take into account any grants such executives received in fiscal 2017 by Blue Coat prior to the close of the acquisition.

 

(3)

No annual bonus under the FY18 Executive Annual Incentive Plan was earned in fiscal 2018 because the minimal threshold performance metrics were not met.

 

(4) 

Represents (a) $199,665 for dividend equivalent payments on stock awards, (b) $7,000 of matching contributions to Mr. Clark’s account under our 401(k) plan, (c) $155,196 related to our provision of car and driver services for Mr. Clark, and (d) $3,075 imputed income charges to Mr. Clark for personal passengers flights on the corporate aircraft.

 

(5) 

Represents the base salary earned by such executive from the closing of the Blue Coat acquisition in August 2016 through the end of fiscal 2017. The fiscal 2017 annual base salary for Messrs. Clark, Noviello, and Fey was $1,000,000, $650,000 and $865,000, respectively. Mr. Fey’s annual base salary, initially set at $800,000 in August 2016, was increased to $865,000 effective February 1, 2017.

 

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(6) 

These amounts represent the incremental fair values of modified PRUs that were granted prior to and assumed by us at the closing of the Blue Coat acquisition. Under SEC rules, we are required to disclose in the Stock Awards column the grant date fair value of each equity award computed in accordance with ASC 718. However, no grant date fair value was recorded by Symantec for these awards in accordance with ASC 718 because they were awarded by Blue Coat’s board of directors prior to the closing of the Blue Coat acquisition. As a result, the amounts reported in the Stock Awards column above may understate the compensation awarded to these executive officers for fiscal 2017 because they do not include any grant date fair value for such awards. In March 2017 we adjusted the performance metrics under our FY17 PRU grants to reflect both the impact of the acquisitions of Blue Coat and LifeLock on the fiscal 2017 financial plan and to account for the transformational impact on our business of our cost and complexity reduction initiatives. As a result of these adjustments, incremental fair values of the modified awards are included in the Stock Awards column above and further described in the table below.

 

     2017 Stock Awards  

Name

   FY17 PRU
Modification
Charge
($)
     2017 Total (Without
PRU Modification
Charges)
($)
 

Gregory S. Clark

     4,269,815         

Michael D. Fey

     2,856,660         

Nicholas R. Noviello

     1,077,917         

 

(7)

Represents the executive officer’s annual bonus under the FY17 Executive Annual Incentive Plan, which was earned in fiscal 2017 and paid in fiscal 2018.

 

(8) 

Represents (a) $250,000 in bonus payment earned by Mr. Clark prior to the closing of the Blue Coat acquisition under Blue Coat’s Fiscal 2017 Bonus Plan, but paid by Symantec in October 2016, (b) $75,000 for reimbursement of Mr. Clark’s attorney’s fees in connection with the negotiation of his employment agreement with us, (c) $32,515 for dividend equivalent payments on stock awards, (d) $17,422 related to our provision of car and driver services for Mr. Clark and (e) $5,000 of matching contributions to Mr. Clark’s account under our 401(k) plan.

 

(9) 

Represents (a) $34,685 for dividend equivalent payments on stock awards, (b) $6,271 of matching contributions to Mr. Noviello’s account under our 401(k) plan, (c) $5,000 for reimbursement for tax services, (d) $930 in contributions to Mr. Noviello’s Company-sponsored long-term disability insurance and (e) $720 in Company wellness credit.

 

(10) 

Represents (a) $162,500 in bonus payment earned by Mr. Noviello prior to the closing of the Blue Coat acquisition under Blue Coat’s Fiscal 2017 Bonus Plan, but paid by Symantec in October 2016, (b) $5,417 of matching contributions to Mr. Noviello’s account under our 401(k) plan and (c) $4,823 for dividend equivalent payments on stock awards.

 

(11) 

Represents (a) $24,817 for dividend equivalent payments on stock awards, (b) $6,000 of matching contributions to Mr. Fey’s account under our 401(k) plan, (c) $6,000 for reimbursement for tax services, (d) $4,085 for coverage of expenses related to attendance at the fiscal 2018 sales achiever’s trip, and (d) $930 in contributions to Mr. Fey’s Company-sponsored long-term disability insurance.

 

(12) 

Represents (a) $125,000 in bonus payment earned by Mr. Fey prior to the closing of the Blue Coat acquisition under Blue Coat’s Fiscal 2017 Bonus Plan, but paid by Symantec in October 2016 and (b) $6,000 of matching contributions to Mr. Fey’s account under our 401(k) plan.

 

(13) 

Represents (a) $614,283 for dividend equivalent payments on stock awards, (b) $4,625 of matching contributions to Mr. Taylor’s account under our 401(k) plan, (c) $1,950 for reimbursement for tax services, and (d) $930 in contributions to Mr. Taylor’s Company-sponsored long-term disability insurance.

 

(14) 

Represents an additional bonus paid to Mr. Taylor in connection with his service as a member of the Office of the President during the CEO transition process announced in April 2016.

 

(15) 

Represents (a) $354,812 for dividend equivalent payments on stock awards, (b) $5,125 of matching contributions to Mr. Taylor’s account under our 401(k) plan, and (c) $3,525 for reimbursement for tax services.

 

(16) 

Represents the executive officer’s annual bonus under the Executive Annual Incentive Plans for fiscal 2016, which was earned in fiscal 2016 and paid in fiscal 2017.

 

(17) 

Represents (a) $60,816 for dividend equivalent payments on stock awards, (b) $15,834 for reimbursement for tax services, (c) $6,188 of matching contributions to Mr. Taylor’s account under our 401(k) plan, (d) $2,335 in contributions to Mr. Taylor’s Company-sponsored life insurance policy and (e) $855 in contributions to Mr. Taylor’s Company-sponsored long-term disability insurance.

 

(18) 

Represents (a) $722,048 for dividend equivalent payments on stock awards, (b) $6,000 of matching contributions to Mr. Rosch’s account under our 401(k) plan, (c) $4,415 for reimbursement for tax services, (d) $22,386 for coverage of expenses related to attendance at the fiscal 2018 sales achiever’s trip, and (e) $210 in contributions to Mr. Rosch’s Company-sponsored long-term disability insurance.

 

(19) 

Mr. Rosch’s base annual salary increased from $525,000 to $700,000 during fiscal 2017 to compensate him for his expanded role and responsibilities following the LifeLock acquisition.

 

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(20) 

Represents (a) $440,020 for dividend equivalent payments on stock awards, (b) $8,063 of matching contributions to Mr. Rosch’s account under our 401(k) plan, (c) $7,907 for coverage of expenses related to attendance at the fiscal 2016 sales achiever’s trip, and (d) $5,975 for reimbursement for tax and services.

 

(21) 

Represents (a) $55,763 for dividend equivalent payments on stock awards, (b) $23,853 for coverage of expenses related to attendance at the fiscal 2015 sales achiever’s trip and paid in fiscal 2016, (c) $6,638 of matching contributions to Mr. Rosch’s account under our 401(k) plan, (d) $6,211 for spousal medical benefits, (e) $2,955 for reimbursement for tax services and (f) $1,914 in contributions to Mr. Rosch’s Company-sponsored life insurance policy.

 

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The following table shows for the fiscal year ended March 30, 2018 certain information regarding grants of plan-based awards to our named executive officers from our incentive plans:

Grants of Plan-Based Awards in Fiscal 2018

 

         

 

Estimated Future Payouts

Under Non-Equity Incentive Plan
Awards(1)

   

 

Estimated Future Payouts
Under Equity Incentive Plan
Awards(2)

    All Other
Stock
Awards:
Number
of Shares
of Stock
or Units(3)

(#)
    All Other
Option
Awards:
Number
of Securities
Underlying
Options

(#)
    Exercise or
Base Price
of Option
Awards
($/Sh)
    Grant
Date
Fair
Value
of Stock
and
Option
Awards(4)

($)
 

Name

  Grant
Date
    Threshold
($)
    Target
($)
    Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
 

Clark, Gregory S.

    6/9/17       750,000       1,500,000       3,000,000       169,837       339,674       679,348       145,575                   15,982,645  

Noviello, Nicholas R.

    6/9/17       113,750       650,000       1,820,000       79,257       158,514       317,028       67,935                   7,458,549  

Fey, Michael D.

    6/9/17       227,063       1,297,500       3,633,000       158,515       317,029       634,058       135,870                   14,917,133  

Taylor, Scott C

    6/9/17       105,000       600,000       1,680,000       50,951       101,902       203,804       43,672                   4,794,772  

Rosch, Francis C.

    6/9/17       122,500       700,000       1,960,000       135,870       271,739       543,478       116,460                   12,786,109  

 

 

(1) 

Represents threshold, target and maximum payouts with respect to each applicable metric under the FY18 Executive Annual Incentive Plan. For a summary of the terms of the FY18 Executive Annual Incentive Plan, see “Compensation Discussion & Analysis (CD&A) — Compensation Components — Executive Annual Incentive Plan” beginning on page 69.

 

(2) 

The amounts shown in these rows reflect the threshold, target, and maximum potential eligible shares to be earned for the PRUs awarded during fiscal 2018 and as further described in the CD&A section beginning on page 60. These FY18 PRUs are eligible to be earned at the end of fiscal 2020 and are based on the achievement of performance goals for adjusted non-GAAP EPS for the one-year performance period ended March 30, 2018 and the relative TSR ranking for our Company as compared to the Nasdaq 100 index for the two- and three- year performance periods ending March 29, 2019 and April 3, 2020, respectively.

 

(3) 

These RSUs vest as to 30% on June 1, 2018, 30% on June 1, 2019, and 40% on June 1, 2020.

 

(4) 

The aggregate grant date fair value of the equity incentive plan awards is calculated by multiplying the target number of shares by the PRU grant date fair value on June 9, 2017, which was $34.32. For additional details on the grant date fair value of the PRUs, see footnotes 1 and 2 to the Summary Compensation Table above. The aggregate grant date fair value of Other Stock Awards is the number of shares multiplied by the RSU grant date fair value on June 9, 2017, which was $29.71.

For a summary of the terms of the FY18 Executive Annual Incentive Plan, see “Compensation Discussion & Analysis (CD&A) — Compensation Components — Executive Annual Incentive Plans” above. Details of acceleration of the equity awards described are disclosed under “Compensation Discussion & Analysis (CD&A) — Health and Welfare Benefits; Perquisites — Change in Control and Severance Arrangements” above and “Potential Payments Upon Termination or Change-in-Control” below.

 

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The following table shows for the fiscal year ended March 30, 2018, certain information regarding outstanding equity awards at fiscal year-end for our named executive officers.

Outstanding Equity Awards at Fiscal Year-End 2018

 

          Option Awards     Stock Awards  

Name

  Grant
Date
    Number of
Securities
Underlying
Unexercised
Options
Exercisable

(#)
    Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
    Option
Exercise
Price ($)
    Option
Expiration
Date
    Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
    Market Value
of Shares or
Units of
Stock That
Have Not
Vested(1)
($)
    Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
that Have
Not Yet
Vested
(#)
    Equity
Incentive
Plan
Awards:
Value of
Unearned
Shares,
Units or
Other
Rights
that Have
Not Yet
Vested(1)
($)
 

Gregory S. Clark

    6/9/2017               145,575 (2)       3,763,114       425,441 (3)       10,997,650  
        (4)                288,499 (5)       7,457,699       2,579,198 (6)       66,672,268  
        (4) (7)        2,860,006       805,265       6.73       9/9/2025          

Nicholas R. Noviello

    6/9/2017               67,935 (8)       1,756,120       198,538 (3)       5,132,207  
        (4)                88,908 (9)       2,298,272       651,119 (6)       16,831,426  
        (4) (10)        875,570       231,613       8.35       1/27/2026          

Michael D. Fey

    6/9/2017               135,870 (11)       3,512,240       397,078 (3)       10,264,466  
        (4)                193,017 (12)       4,989,489       1,725,576 (6)       44,606,140  
        (4) (13)        758,807       542,006       6.73       9/9/2025          

Scott C. Taylor

    6/9/2017               43,672 (14)       1,128,921       127,632 (3)       3,299,287  
    6/10/2016               49,714 (15)       1,285,107       444,447 (6)       11,488,955  
    6/10/2015               19,167 (16)       495,467       76,515 (17)       1,977,913  
    6/10/2014               9,297 (18)       240,327      

Francis C. Rosch

    6/9/2017               116,460 (19)       3,010,491       340,353 (3)       8,798,125  
    6/10/2016               15,091 (20)       390,102       517,857 (6)       13,386,603  
    6/10/2015               31,946 (21)       825,804       127,526 (17)       3,296,547  
    6/10/2014               9,297 (22)       240,327      

 

(1) 

The market value of the equity awards that have not vested is calculated by multiplying the number of units of stock that have not vested by the closing price of our common stock on March 29, 2018, which was $25.85.

 

(2) 

Of the 145,575 shares underlying this award, 43,673 shares vested on June 1, 2018, 43,672 shares vest on June 1, 2019 and 58,230 shares vest on June 1, 2020.

 

(3) 

These FY18 PRUs are eligible to be earned at the end of fiscal 2020 and are based on the achievement of performance goals for adjusted non-GAAP EPS for the one-year performance period ended March 30, 2018 and the relative TSR ranking for our Company as compared to the Nasdaq 100 index for the two- and three- year performance periods ending March 29, 2019 and April 3, 2020, respectively. The number of shares and the payout value set forth above reflect the target potential payout which represents 125.25% of the target number of PRUs. Each PRU is subject to the Compensation Committee’s certification when approving the settlement thereof.

 

(4) 

Represents an equity award previously granted by Blue Coat and assumed by Symantec upon the closing of the Blue Coat acquisition. Upon assumption, by their terms, these awards converted into the right to receive shares of our common stock, subject to applicable service or performance-based vesting conditions.

 

(5) 

Of the remaining 288,499 shares underlying this award, 123,642 shares vested on August 1, 2018 and 164,857 shares vest on August 1, 2019.

 

(6) 

These FY17 PRUs were eligible to vest at the end of fiscal 2018 based on, and subject to further adjustment as a result of, the achievement of non-GAAP operating income for fiscal 2018. The number of shares and the payout value set forth above reflect the target potential payout which represents 268.20% of the target number of PRUs. Any achievement above 250% of target will be paid at the end of fiscal 2019, subject to certain restrictions. Each PRU is subject to the Compensation Committee’s certification when approving the settlement thereof.

 

(7) 

Of the remaining 805,265 unvested shares underlying this option, 161,053 shares vested monthly on the first of each month through August 1, 2018.

 

(8) 

Of the 67,935 shares underlying this award, 20,381 shares vested on June 1, 2018, 20,380 shares vest on June 1, 2019 and 27,174 shares vest on June 1, 2020.

 

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(9) 

Of the remaining 88,908 shares underlying these awards, 16,076 shares vested on June 1, 2018, 31,214 shares vest on August 1, 2018 and 41,618 shares vest on August 1, 2019.

 

(10) 

Of the remaining 231,613 unvested shares underlying this option, approximately 46,323 shares vested monthly on the first of each month through August 1, 2018.

 

(11) 

Of the 135,870 shares underlying this award, 40,761 shares vested on June 1, 2018, 40,761 shares vest on June 1, 2019 and 54,348 shares vest on June 1, 2020.

 

(12) 

Of the remaining 193,017 shares underlying this award, 82,722 shares vested on August 1, 2018 and 110,295 shares vest on August 1, 2019.

 

(13) 

Of the remaining 542,006 unvested shares underlying this option, 108,401 shares vested monthly on the first of each month through August 1, 2018.

 

(14) 

Of the 43,672 shares underlying this award, 13,102 shares vested on June 1, 2018, 13,102 shares vest on June 1, 2019 and 17,468 shares vest on June 1, 2020.

 

(15) 

Of the remaining 49,714 shares underlying this award, 21,306 shares vested on June 1, 2018 and 28,408 shares vest on June 1, 2019.

 

(16) 

The remaining 19,167 shares underlying this award vested on June 1, 2018.

 

(17) 

These FY16 PRUs were eligible to vest at the end of fiscal 2018 based on, and subject to further adjustment as a result of, the achievement of the TSR ranking for our Company as compared to the S&P 500 for the 3-year performance period ended March 30, 2018. The number of shares and the payout value set forth above reflect the maximum potential payout and represents 106.45% of the target number of PRUs. Each PRU is subject to the Compensation Committee’s certification when approving the settlement thereof.

 

(18) 

The remaining 9,297 shares underlying this award vested on June 1, 2018.

 

(19) 

Of the 116,460 shares underlying this award, 34,938 shares vested on June 1, 2018, 34,938 shares vest on June 1, 2019 and 46,584 shares vest on June 1, 2020.

 

(20) 

The remaining 15,091 shares underlying this award vested on June 1, 2019.

 

(21) 

The remaining 31,946 shares underlying this award vested on June 1, 2018.

 

(22) 

The remaining 9,297 shares underlying this award vested on June 1, 2018.

The following table shows for the fiscal year ended March 30, 2018, certain information regarding option exercises and stock vested during the last fiscal year with respect to our named executive officers:

Option Exercises and Stock Vested in Fiscal 2018

 

     Option Awards      Stock Awards  

Name

   Number of
Shares
Acquired
on Exercise
(#)
     Value Realized
on Exercise
($)
     Number of
Shares
Acquired
on Vesting(1)
(#)
     Value Realized
on Vesting
($)
 

Gregory S. Clark

     200,000        4,654,261        2,961,345        78,299,177  

Michael D. Fey

     1,300,812        28,761,644        1,691,202        44,159,307  

Nicholas R. Noviello

     375,000        7,887,155        702,455        18,524,813  

Scott C. Taylor

                   622,938        14,525,191  

Francis C. Rosch

     68,000        1,058,907        706,604        18,494,345  

 

(1) 

The number of shares and value realized for stock awards set forth above reflect RSU awards vested and released in fiscal 2018 and PRUs vested in fiscal 2018 and released in fiscal 2019.

 

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Non-Qualified Deferred Compensation in Fiscal 2018

The table below provides information on the non-qualified deferred compensation of the named executive officers for the fiscal year ended March 30, 2018.

 

     Non-Qualified Deferred Compensation  

Name

   Executive
Contributions in
Last Fiscal

Year
($)
     Registrant
Contributions in
Last Fiscal

Year
($)
     Aggregate
Earnings in
Last Fiscal
Year

($)
     Aggregate
Withdrawals/
Distributions

($)
     Aggregate
Balance at
Last Fiscal
Year-End

($)
 

Gregory S. Clark

                                  

Michael D. Fey

                                  

Nicholas R. Noviello

     65,000               3,867               85,322  

Scott C. Taylor

     210,000               5,101               260,481  

Francis C. Rosch

     70,000               7,377               134,121  

In fiscal 2018, certain management employees on our U.S. payroll with a base salary of $180,000 or greater, including each of the named executive officers, were eligible to participate in the Symantec Corporation Deferred Compensation Plan. Prior to January 1, 2017, the plan provided the opportunity for participants to defer up to 75% of base salary and 100% of variable pay each year. Variable pay included annual incentive plan and commission payments. Deferral elections must be made prior to the beginning of a calendar year and cannot be revoked as of the day immediately prior to commencement of that year. The plan is “unfunded” and all deferrals are general assets of Symantec. Amounts deferred by each participant under the plan are credited to a bookkeeping account maintained on behalf of each participant. The bookkeeping account under the plan will then be adjusted based on the performance of the measurement funds that have been selected by the participant. Prior to January 1, 2017, the measurement funds available under the plan were substantially identical to the investment funds available under our 401(k) plan. Each participant may change their measurement fund selections on a daily basis. The plan requires that benefits accumulated in the bookkeeping accounts for each participant not meeting a 5-year service requirement be distributed to the participant following his or her termination of employment with us for any reason. If a 5-year service requirement is met, accumulated benefits in the accounts established prior to 2017 will be distributed according to the participant’s designated payment election.

Beginning January 1, 2017, the investment options within the Deferred Compensation Plan were expanded to include additional asset classes. Participants are still able to defer up to 75% of salary and 100% of annual incentive payments, but are now able to defer up to 100% of sales commissions as a separate election. Additionally, participants have the opportunity to elect each year whether to receive that year’s deferrals upon a specified date or upon termination of employment, and the form of payment elected will be honored regardless of a participant’s length of service.

Beginning January 1, 2018, upon first entering the Deferred Compensation Plan, a participant has the option to make a one-time election, which will apply to all future account balances to determine how they will be paid in the event of a change in control. By making the one-time election a participant will receive all remaining account balances in a lump sum in the month following the month of termination, if termination occurs within two (2) years following a change in control. If a participant’s employment ended before the change in control, any remaining balances will be distributed in a lump sum within 90 days of the change in control.

Potential Payments Upon Termination or Change-In-Control

Set forth below is a description of the plans and agreements (other than the Deferred Compensation Plan) that could result in potential payouts to our named executive officers in the case of their termination of employment and/or a change in control of Symantec. For information regarding potential

 

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payouts upon termination under the Deferred Compensation Plan, in which certain of our executive officers participate, see “Non-Qualified Deferred Compensation in Fiscal 2018” above.

Symantec Executive Retention Plan

In January 2001, the Board approved the Symantec Executive Retention Plan, to deal with employment termination resulting from a change in control of the Company. The plan was modified by the Board in July 2002, April 2006, June 2007, April 2012, February 2016 and January 2018. Under the terms of the plan, all equity compensation awards (including, among others, stock options, RSUs and PRUs) granted by the Company to the Company’s Section 16(b) officers (including our named executive officers) would become fully vested (at target or to the extent of achievement for PRUs) and, if applicable, exercisable following a change in control of the Company (as defined in the plan) after which the officer’s employment is terminated without cause or constructively terminated by the acquirer within 12 months after the change in control. In the case of PRUs granted prior to fiscal 2017, PRUs will vest at target if the change in control occurs prior to the first performance period, will vest as to eligible shares if the change in control occurs following the first performance period but before achievement is determined with respect to the second performance period, and will vest as to the sum of the eligible shares determined to be earned for the second performance period plus 50% of the eligible shares if the change in control occurs following the second performance period but before achievement is determined with respect to the third performance period. In the case of the PRUs granted in fiscal 2017, PRUs vest at target if the change in control occurs prior to the end of the performance period and will vest as to actual earned shares if the change in control occurs following the performance period but before the end of the additional vesting period. Additionally, in accordance with the terms of the PRU award agreement, in the case that an executive’s employment with the Company terminates by reason of the executive’s death, total and permanent disability or an involuntary termination by the Company other than for cause (as defined in the award agreement) after the end of the first year of the performance period but prior to the end of the performance period, then the executive will be entitled to payment of a prorated number of PRUs based on the number of months in the performance period during with the executive was employed by the Company, provided that the Company’s performance met at least the threshold level of the applicable performance metric during the first year of the performance period.

The plan also provides for the payment of a cash severance benefit for our named executive officers equal to one times such officer’s base salary and target payout under the Executive Annual Incentive Plan applicable to such named executive officer in the circumstances described above (i.e., following a change in control of the Company after which the officer’s employment is terminated without cause or constructively terminated by the acquirer within 12 months after the change in control.)

Symantec Executive Severance Plan

In April 2012, the Compensation Committee adopted the Symantec Executive Severance Plan to provide severance benefits to specified officers of Symantec, including our named executive officers. The executive officers must meet certain criteria in order to participate in the plan, including, among other criteria, (i) the executive officer was involuntarily terminated from active employment other than for cause (as defined in the plan); (ii) the executive officer was not terminated due to the sale of a business, part of a business, divestiture or spin-off and offered employment upon terms and conditions substantially identical to those in effect immediately prior to such sale, divestiture or spin-off; and (iii) the executive officer is not entitled to severance under any other plan, fund, program, policy, arrangement or individualized written agreement providing for severance benefits that is sponsored or funded by Symantec.

Under the terms of the plan, the executive officer will receive severance payments equal to one times the sum of his or her base salary in effect at the time of his or her involuntary termination. The executive officer will also receive a one-time bonus of $15,000, minus taxes and other legally required

 

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deductions. The executive officer is also entitled to receive six months of outplacement services, including counseling and guidance. The executive officer is solely responsible for all COBRA premiums for his or her continuation coverage.

In fiscal 2016, the Compensation Committee revised the plan to provide an additional payment equivalent to 75% of the executive officer’s prorated target incentive bonus under the Executive Annual Incentive Plan in effect for such fiscal year to the executive officer who was terminated in the second half of such fiscal year and was employed in good standing for a minimum of six (6) months prior to his or her termination date. This payment was added to standardize benefits to all of our executive officers and to be competitive with overall market practices.

Payment of severance payments, one-time bonus payment, outplacement services and 75% of the prorated target bonus under the Executive Annual Incentive Plan pursuant to the Symantec Executive Severance Plan is subject to the applicable executive officer returning a release of claims against Symantec.

Gregory S. Clark

The following table summarizes the value of the payouts to Mr. Clark pursuant to the Symantec Executive Retention Plan, the Symantec Executive Severance Plan and Mr. Clark’s employment agreement, assuming a qualifying termination as of March 30, 2018 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $25.85 on March 29, 2018 minus the exercise price):

 

     Severance
Pay ($)
     Option
Vesting ($)
     RSU Vesting ($)      PRU
Vesting ($)
 

Involuntary Termination Because of Market Conditions or Division Performance

     2,020,031        15,396,667               69,655,393  

Termination Without Cause or Constructive Termination Within 12 Months of a Change of Control

     2,000,000        15,396,667        7,457,699        33,639,742  

Termination Without Cause

     2,020,031        15,396,667               69,655,393  

Termination Due to Death or Disability

            15,396,667               69,655,393  

Nicholas R. Noviello

The following table summarizes the value of the payouts to Mr. Noviello pursuant to the Symantec Executive Retention Plan and the Symantec Executive Severance Plan, assuming a qualifying termination as of March 30, 2018 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $25.85 on March 29, 2018 minus the exercise price):

 

     Severance
Pay ($)
     Option
Vesting ($)
     RSU Vesting ($)      PRU
Vesting ($)
 

Involuntary Termination Because of Market Conditions or Division Performance

     1,156,538        4,053,228        415,565        17,584,534  

Termination Without Cause or Constructive Termination Within 12 Months of a Change of Control

     1,300,000        4,053,228        4,054,392        10,373,295  

Termination Without Cause

     1,156,538        4,053,228        4,054,392        17,584,534  

Termination Due to Death or Disability

            4,053,228        415,565        17,584,534  

 

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Michael D. Fey

The following table summarizes the value of the payouts to Mr. Fey pursuant to the Symantec Executive Retention Plan and the Symantec Executive Severance Plan, assuming a qualifying termination as of March 30, 2018 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $25.85 on March 29, 2018 minus the exercise price):

 

     Severance
Pay ($)
     Option
Vesting ($)
     RSU Vesting ($)      PRU
Vesting ($)
 

Involuntary Termination Because of Market Conditions or Division Performance

     1,857,163        10,363,155               46,601,976  

Termination Without Cause or Constructive Termination Within 12 Months of a Change of Control

     2,162,500        10,363,155        8,501,729        24,826,883  

Termination Without Cause

     1,857,163        10,363,155        8,501,729        46,601,976  

Termination Due to Death or Disability

            10,363,155               46,601,976  

Scott C. Taylor

The following table summarizes the value of the payouts to Mr. Taylor pursuant to the Symantec Executive Retention Plan and the Symantec Executive Severance Plan, assuming a qualifying termination as of March 30, 2018 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $25.85 on March 29, 2018):

 

     Severance
Pay ($)
     Option
Vesting ($)
     RSU Vesting ($)      PRU
Vesting ($)
 

Involuntary Termination Because of Market Conditions or Division Performance

     1,069,038                      14,266,151  

Termination Without Cause or Constructive Termination Within 12 Months of a Change of Control

     1,200,000               3,149,823        8,426,468  

Termination Without Cause

     1,069,038               3,149,823        14,266,151  

Termination Due to Death or Disability

                          14,266,151  

Former Officer:

Francis C. Rosch

Mr. Rosch served as our Executive Vice President, Consumer Digital Safety through June 28, 2018. Mr. Rosch left the Company voluntarily and accordingly was not entitled to and did not receive any payouts under the Symantec Executive Retention Plan or the Symantec Executive Severance Plan.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the ratio of the annual total compensation of Mr. Clark, our CEO, to the median of the annual total compensation of our employees. We believe that the pay ratio disclosed below is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and apply various assumptions and, as result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies.

Symantec is a global cybersecurity company and operates in 46 countries. As of the end of fiscal 2018, March 30, 2018, we employed 11,830 employees globally. Of our total workforce, approximately

 

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48% was based in the United States and 52% was based outside of the United States as of the end of fiscal 2018. Our compensation programs and reward offerings are designed to reflect local market practices across our global operations.

Pay Ratio:

 

   

Mr. Clark’s fiscal 2018 annual total compensation was $17,347,581, as reported in the “Total” column of the “2018 Summary Compensation Table” in this proxy statement.

 

   

The fiscal 2018 annual total compensation of our median employee (other than our CEO) was $102,869.

 

   

Based on this information, the pay ratio of the annual total compensation our CEO to the median of the annual total compensation of our employees is 168.6 to 1.

Identification of the Median Employee:

For purposes of identifying our median employee, we used our global employee population as of March 30, 2018, identified based on our global human resources system of record, inclusive of all regular employees employed by the company as of that date. We used total direct compensation as our consistently applied compensation measure. In this context, total direct compensation is the sum of the annualized value of base salary, the annual incentive target amount or annual commission target amount in effect as of March 30, 2018, and the grant date fair value of all equity awards granted during fiscal 2018. Part-time employees’ compensation reflects their part-time pay rate. Cash compensation figures were converted from local currency to U.S. dollars using the exchange rate the Company used for 2018 internal budgeting purposes. Symantec did not utilize the de minimis exemption to eliminate countries representing no more than 5% of our global population in the aggregate as allowed by SEC rules.

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related-Person Transactions Policy and Procedure

Symantec has adopted a written related person transactions policy which provides for the Company’s policies and procedures regarding the identification, review, consideration and approval or ratification of “related person transactions.” The Nominating and Governance Committee reviews transactions that may be “related person transactions,” which are transactions between Symantec and any related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000, and in which the related person has or will have a direct or indirect material interest. For purposes of the policy, a related person is any Symantec executive officer, director, nominee for director, or stockholder holding more than 5% of any class of Symantec’s voting securities, in each case, since the beginning of the previous fiscal year, and their immediate family members.

Under the policy, absent any facts or circumstances indicating special or unusual benefits to the related person, the following transactions are deemed not to be “related person transactions” (meaning the related person is deemed to not have a direct or indirect material interest in the transaction):

 

   

compensation to executive officers determined by Symantec’s Compensation Committee;

 

   

any transaction with another company at which a related person is a director or an employee (other than an executive officer) if the aggregate amount involved does not exceed the greater of $2,000,000, or three percent of that company’s total annual gross revenues, provided that the transaction involves the purchase of either company’s goods and services and the transaction is subject to usual trade terms and is in the ordinary course of business and the related person is not involved in the negotiation of the transaction;

 

   

any compensation paid to a director if the compensation is required to be reported in Symantec’s proxy statement;

 

   

any transaction where the related person’s interest arises solely from the ownership of the Company’s common stock and all holders of the Company’s common stock received the same benefit on a pro rata basis;

 

   

any charitable contribution, grant or endowment by Symantec or the Symantec Foundation to a charitable organization, foundation or university at which a related person’s only relationship is as a director or an employee (other than an executive officer), if the aggregate amount involved does not exceed $120,000, or any non-discretionary matching contribution, grant or endowment made pursuant to a matching gift program;

 

   

any transaction where the rates or charges involved are determined by competitive bids;

 

   

any transaction involving the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority; or

 

   

any transaction involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services.

Under the policy, members of Symantec’s legal department review transactions involving related persons that do not fall into one of the above categories. If they determine that a related person could have a significant interest in a transaction, the transaction is referred to the Nominating and Governance Committee. In addition, transactions may be identified through Symantec’s Code of Conduct or other Symantec policies and procedures, and reported to the Nominating and Governance Committee. The Nominating and Governance Committee determines whether the related person has a material interest in a transaction and may approve, ratify, rescind or take other action with respect to the transaction.

 

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Certain Related Person Transactions

Investments by Firms Affiliated with our Directors

On February 3, 2016, Symantec entered into an investment agreement with investment entities affiliated with Silver Lake, relating to the issuance to Silver Lake of $500 million principal amount of 2.5% convertible unsecured notes, due 2021. In connection with the investment, Kenneth Y. Hao, a managing partner and managing director of Silver Lake, was appointed to our Board.

On June 12, 2016, Symantec entered into an investment agreement with investment entities affiliated with Silver Lake and Bain Capital relating to the issuance of $1.25 billion aggregate principal amount of 2.0% convertible unsecured notes due 2021. Pursuant to the investment agreement, Silver Lake, a private equity firm of which Mr. Hao is a managing partner and managing director,