Non-Binding Advisory Vote on Executive Compensation
This proposal provides our stockholders with the opportunity
to cast a vote, on an advisory basis, on the compensation of our named executive officers, or NEOs, pursuant to Section 14A of
the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. For more detail on our NEO’s compensation,
please see the section entitled “
Executive Compensation
”, including the “
Compensation Discussion and
Analysis
” and the compensation tables included in this proxy statement. This proposal, commonly known as a “Say-on-Pay”
proposal, gives you, as a stockholder, the opportunity to express your views on our executive compensation programs and policies
and the compensation paid to our NEOs.
The Company’s current policy is to hold a Say-on-Pay vote
each year, and assuming stockholders recommend an annual vote on Proposal No. 7, we expect to hold another advisory vote with respect
to executive compensation at the 2018 annual meeting.
As described in detail in the “Compensation Discussion
and Analysis” section of this proxy statement, we design our executive compensation programs to implement our core objectives
of (i) providing competitive pay, (ii) paying
for performance, and (iii) aligning management’s interests with the interests
of long-term stockholders. We believe that our Chief Executive Officer’s compensation, and that of our other NEOs, in 2016
is well aligned with the Company’s performance and the interests of our stockholders, and reflects our objective to link
pay with performance for our NEOs.
Recommendation
Our Board believes the Company’s executive compensation
programs use appropriate structures and sound pay practices that are effective in achieving our core objectives. Accordingly, the
Board of Directors recommends that you vote “FOR” the following resolution:
“RESOLVED, that Juniper Networks, Inc. stockholders approve,
on an advisory basis, the compensation of the Company’s named executive officers as disclosed pursuant to the Securities
and Exchange Commission’s compensation disclosure rules, including the Compensation Discussion and Analysis and Executive
Compensation sections of this proxy statement.”
30
Proposals to be Voted on
|
|
If you sign your proxy or voting instruction card or vote by
telephone or over the Internet but do not give instructions with respect to this proposal, your shares will be voted “FOR”
the proposal, as recommended by the Board. If you do not give voting instructions to your broker, your broker will not be able
to vote your shares and your shares will not be voted on this matter.
Vote Required
Provided a quorum is present, the advisory approval of our executive
compensation requires the affirmative vote
of a majority of the shares of Juniper Networks common stock present in person or represented
by proxy and entitled to be voted at the annual meeting.
As this is an advisory vote, the result will not be binding;
however, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation
programs, values the opinions expressed by our stockholders and will take the outcome of the vote under advisement in evaluating
our executive compensation principles, design and practices.
Proposal No. 7
Approval, on an advisory basis, of the frequency of future stockholder advisory votes on the compensation of our named executive
officers
The Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010 and Section 14A of the Exchange Act enables our stockholders to indicate, at least once every six years, how frequently
we should seek a non-binding advisory vote on the compensation of our NEOs. By voting on this Proposal No. 7, stockholders may
indicate whether they would prefer to hold a non-binding advisory vote on executive compensation once every one, two, or three
years.
After careful consideration, our Board has determined that a
non-binding advisory vote on executive compensation that occurs annually is the most appropriate alternative for the Company and
our stockholders, and therefore our Board recommends that you vote for a one-year interval for the non-binding advisory vote on
executive compensation.
We believe that an annual vote will continue to allow our stockholders
the ability to frequently communicate to us their position on the executive compensation through a non-binding advisory vote on
executive compensation, and aligns with our practice of engaging with stockholders to obtain their input on corporate governance
matters and executive compensation philosophy, policies and practices. An annual vote further aligns to our short-term cash programs
and the metrics that guide those programs as well as to our periodic cycle of granting long-term equity compensation to the named
executive officers. Our Compensation Committee is responsible for our executive compensation programs and values our stockholders’
opinions. We understand that our stockholders may have different views as to what is the best approach for the Company, and we
look forward to hearing from our stockholders on this proposal.
The option of 1 year, 2 years or 3 years that receives the highest
number of votes cast by stockholders will be the frequency for the advisory vote on executive
compensation that has been selected
by stockholders. However, because this vote is advisory and not binding on the Company, the Compensation Committee or our Board,
the Board may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote on executive
compensation more or less frequently than the option approved by our stockholders.
Recommendation
Our Board unanimously recommends a vote to hold future advisory
votes every “1 YEAR” on named executive officer compensation.
The option receiving the greatest number of votes (every 1
year, two years or three years) will be considered the frequency selected by stockholders.
If you sign your proxy or voting instruction card or vote by
telephone or over the Internet but do not give instructions with respect to this proposal, your shares will be voted to hold future
advisory votes every “1 YEAR” on named executive officer compensation, as recommended by the Board. If you do not give
voting instructions to your broker, your broker will not be able to vote your shares and your shares will not be voted on this
matter.
Vote Required
Provided a quorum is present, the option of 1 year, 2 years or
3 years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive
compensation that has been selected by stockholders.
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
31
|
Compensation Discussion
and Analysis
Our Compensation Discussion and Analysis provides an overview
of (1) our executive compensation framework and philosophy, (2) the compensation decisions the Compensation Committee and the Performance
Award Subcommittee of the Committee (the “Subcommittee”) have made under those programs, and (3) an analysis
of the
2016 compensation program for the Named Executive Officers (“NEOs”) of the Company, who are listed below. We refer
to the Compensation Committee and Subcommittee collectively in this “
Compensation Discussion and Analysis
” section
of the proxy statement as the “Committee.”
Named Executive Officers
|
Rami Rahim
|
Chief Executive Officer
|
Kenneth Miller
(1)
|
EVP, Chief Financial Officer
|
Robyn Denholm
(1)
|
Former EVP, Chief Financial and Operations Officer
|
Pradeep Sindhu
(2)
|
EVP, Chief Technology Officer and Chief Scientist
|
Vincent Molinaro
|
EVP, Chief Customer Officer
|
Jonathan Davidson
(3)
|
EVP and GM, Juniper Development & Innovation
|
(1)
|
On February 22, 2016, Kenneth Miller was promoted to his role as EVP, Chief Financial
Officer. In February 2016, Ms. Denholm resigned from her role as EVP, Chief Financial and Operations Officer, and remained
an employee of the Company until July 29, 2016. As a result, the Committee did not make any pay decisions for Ms. Denholm
with respect to the 2016 compensation program, and she is not included in the discussion below. See the “Summary Compensation
Table” for details regarding pay received during 2016.
|
(2)
|
In February 2017, Dr. Sindhu transitioned to the role of Chief Scientist in order to devote a majority
of his time to Fungible, Inc., a company that Dr. Sindhu co-founded in 2015. Dr. Sindhu will continue to serve as the Company’s
Chief Technology Officer until a successor is found. In connection with Juniper’s 2017 annual meeting of stockholders,
Dr. Sindhu will transition from Vice Chairman to Technical Advisor to the Board.
|
(3)
|
On March 7, 2017, Mr. Davidson resigned from the Company. No severance benefits were paid to Mr.
Davidson as a result of his resignation.
|
Our Compensation Discussion and Analysis is organized into four
sections.
|
●
|
Section 1 – Executive Summary
|
|
●
|
Section 2 – Setting Executive Compensation
|
|
●
|
Section 3 – Elements of Executive Compensation
|
|
●
|
Section 4 – Other Compensation Policies and Information
|
Section 1 –
Executive Summary
Juniper Networks Overview and 2016 Performance
Juniper Networks designs, develops, and sells products and services
for high-performance networks, to enable customers to build scalable, reliable, secure, and cost-effective networks for their businesses,
while achieving agility, efficiency, and value through automation. In 2016, we continued to execute on our strategy to diversify
our business and capture share in the cloud and cloud-enabled segments of our market. We made significant advancements in performance
and automation across a number of key solution areas and announced a number of new products and enhancements to our hardware and
software products across routing, switching, and security.
Our fiscal 2016 results saw modest net revenue growth that was
primarily driven by Cloud Providers, which increased more than 25% in 2016. While routing revenue was slightly down, switching revenue increased 12%
in 2016. Our security revenues
continued to decline as this component of our business is transitioning from legacy security products to our new SRX security
offerings, which were introduced throughout 2016. Our Services business continued to be strong with another year of solid
year-over-year revenue growth, increasing 13% in 2016.
In addition, in 2016, we completed three acquisitions –
BTI Systems Inc., Aurrion, Inc., and AppFormix, Inc. – that we expect will further strengthen our innovation pipeline, enhance
our product portfolio, and accelerate our transition to cloud-based markets.
Since the first quarter of 2014 through 2016, we returned $4.1
billion to stockholders in the form of share repurchases and dividends.
The following tables highlight certain year-over-year key performance
indicators, and our total shareholder return (“TSR”) over the past three and five years.
32
Executive Compensation
|
|
Certain Key Performance Indicators:
2016 vs. 2015
Result
|
|
Fiscal 2015
|
|
Fiscal 2016
|
|
YoY % Change
|
Revenue (M)
|
|
$4,857.8
|
|
$4,990.1
|
|
+2.7%
|
Cash Flow from Operations (M)
|
|
$892.5
|
|
$1,106.0
|
|
+23.9%
|
Stock Price at Fiscal Year End
|
|
$27.60
|
|
$28.26
|
|
+2.4%
|
Absolute Total Shareholder Return
|
|
1-Year
|
|
3-Year
|
|
5-Year
|
Total Shareholder Return
(1)
|
|
4%
|
|
30%
|
|
44%
|
(1)
|
TSR represents cumulative stock price appreciation with dividends reinvested. The 1-,
3-, and 5-year TSRs are measured based on the fiscal year periods ending December 31, 2016.
|
2016 Pay Outcomes
As further detailed below, the Committee has adopted and consistently
maintained a “pay-for-performance” philosophy that forms the foundation of our executive compensation program. Accordingly,
our financial results and stock price performance for 2016 are directly reflected in the outcomes of our executive compensation
program. In summary, achievement of performance results as described above resulted in the following executive compensation program
outcomes:
●
|
The Executive Annual Incentive Plan (“AIP”) resulted in total payouts representing 75.0% of target for our Chief Executive Officer, or CEO, and 67.5% to 75.0% for our other NEOs. In addition, the performance conditions for the Bonus PSUs (as described in greater detail below) were achieved, resulting in the Bonus PSUs becoming subject to time-based vesting;
|
●
|
The 2016 tranche for our three-year performance share awards (“PSAs”) achieved a “banked” payout of 50.3% of target for our CEO and other NEOs;
|
●
|
Based on performance during the three-year period covering fiscal years 2014 through 2016, our 2014 PSAs were earned and settled at 71.8% of target; and
|
●
|
Based on the Company’s stock price performance in 2016, the first tranche of the price-vested RSUs granted in 2015 vested in 2016.
|
CEO Compensation for 2014-2016
Consistent with our “pay-for-performance” philosophy,
a majority of our CEO’s target pay is at risk. As a result, the value that will ultimately be received aligns with the Company’s
financial results and stock price performance. We believe that realizable compensation provides a more accurate view of the compensation
actually earned by our CEO, and helps us evaluate the alignment between pay and performance for our CEO. As demonstrated in the
chart below, our CEO’s pay is closely aligned with the Company’s performance and stockholder value creation.
Continues on next
page ►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
33
|
This approach compares the value of target pay granted to the
CEO from fiscal years 2014-2016 in the context of realizable pay and performance over the same timeframe. The chart compares CEO
pay to TSR and revenue performance at fiscal year-end, indexed to December 31, 2013.
Target pay reflects (1) the sum of the following components reported
in our “
Summary Compensation Table
” for the applicable year: Salary, Bonus, Stock Awards, and All Other Compensation,
and (2) the target opportunity reflected in our “
Grants of Plan-Based Awards For Fiscal 2016
” table for the
applicable year with respect to Non-Equity Incentive Compensation. Realizable pay is calculated in the same manner as “Target
Pay,” except that Non-Equity Incentive Plan Compensation reflects the actual value disclosed for the applicable year in our
“
Summary Compensation Table
,” and long-term equity incentive vehicles are valued based on the closing price
per share of our common stock at each fiscal year end, and further adjusted as follows:
●
|
Performance share awards are adjusted to reflect actual “banked” amounts in the case where performance tranches for PSAs have been completed, and target amounts in the case where performance tranches for PSAs are pending or will be determined in the future; and
|
●
|
Price-vested RSUs are included only if they have been earned based on achievement of performance goals as of December 31, 2016.
|
Stockholder Engagement and Significant Changes
for 2017
At our 2016 annual meeting of stockholders, approximately 84%
of votes cast were in favor of our named executive officer compensation program, representing a decrease from the 96% rate at our
2015 annual meeting. Following our annual “Say-on-Pay” advisory vote, Juniper Networks continued its practice of specifically
meeting with significant stockholders to obtain feedback on our executive compensation program. These engagement efforts, as well
as ongoing conversations between management and stockholders on a variety of matters, reflect our commitment to strong corporate
governance and our goal of seeking input directly from our stockholders, which we believe allows us to better understand our stockholders’
perspectives.
In this regard, in 2016, we extended an invitation to our largest
shareholders to discuss our executive officer compensation program and equity usage, and to provide a forum to ask questions on other matters of interest.
Representatives from Juniper
Networks, including our Lead Independent Director and Compensation Committee Chairperson, Chief Executive Officer, or members
of management spoke with ten of our largest stockholders who accepted our invitation. Collectively, these stockholders held
approximately 36% of our outstanding common stock, and included stockholders that did not vote in favor of our named
executive officer compensation program in 2016.
The Committee evaluated the results of the “Say-on-Pay”
advisory vote, as well as took into consideration the feedback we received from stockholders. Following consultation with the Committee’s
independent compensation consultant, the Committee continued its practice of evolving the design for our executive officer compensation
program to meet our changing business needs. Certain significant changes to our executive compensation program and equity dilution
target for 2017 are summarized below.
|
●
|
Adjustment to Pay Positioning
.
For 2017 executive officer compensation
decisions, the Committee intends to decrease the reference for NEO pay positioning from the market 60th-65th percentile to the
market median. The Committee will continue to determine compensation on a case-by-case basis, taking into account, among other
things, market data, individual performance, tenure, criticality of role, and ability to impact business results. The Committee
believes this change will better align executive officer compensation levels with stockholder interests while continuing to reward
executives for achieving financial and strategic results that drive stockholder value over the long-term, including rewarding
above-target performance with above-target incentive pay.
|
|
●
|
Continuing Focus on Reducing Equity Burn Rate
.
The Company intends
to continue its focus on reducing its equity burn rate. For 2017, the Company is targeting an equity burn rate commitment reduction
from 2.4% (which was the Company’s commitment in 2016) of common shares outstanding (“CSO”) to 2.3% of CSO (counting
each RSU as one share and counting each performance share as one share based on the target number of shares issuable under the
award). We believe that reducing our equity utilization target will help mitigate stockholder dilution while still allowing us
to stay competitive to attract and retain talent. This reduction in our target burn rate demonstrates the Company’s ongoing
commitment to continue its long-term focus on prudently managing our equity issuance. The following chart shows how we have been
prudently managing our equity burn rate over the past five years.
|
34
Executive Compensation
|
|
(1)
|
Shares granted, as well as burn rate, counts each RSU as one share and counts each
performance share as one share based on the target issuable under the award.
|
Corporate Governance
The Committee takes seriously its duty to maintain a comprehensive
governance framework that is aligned with market leading practice and standards. Therefore, the Committee has adopted a strong
corporate governance framework for executive compensation that includes the components described below.
What We Do
|
|
Pay-for-performance
|
A significant percentage of total target direct compensation is performance-based. Our annual and long-term plans provide a balance of incentives and include different measures of performance.
|
Annual “Say-on-Pay” Advisory Vote
|
We conduct an annual “Say-on-Pay” advisory vote. At our 2016 Annual Meeting of Stockholders, 84% of votes were cast in favor of the fiscal year 2015 executive officer compensation programs.
|
Stock ownership guidelines
|
We have established stock ownership guidelines for members of our Board and NEOs to align the interests of our leadership with those of our stockholders.
|
“Clawback” policy
|
In 2016, we adopted a “clawback” policy under which all of our executive officers are required, in certain instances, to repay overpayments of incentive compensation awards.
|
“Double-trigger” change-in-control arrangements
|
An executive’s unvested equity awards will vest upon a change in control only if the executive also experiences a qualifying termination of employment.
|
Retain an independent compensation consultant
|
The Compensation Committee engaged an independent compensation consultant, Semler Brossy, to provide analysis, advice and guidance on executive compensation matters. Semler Brossy does not provide services to management or the Company.
|
Avoid excessive risk taking
|
Our incentive plans use multiple performance measures, caps on
incentive payments, and overlapping performance periods for PSA shares and price-vested RSUs. The Committee reviews an annual executive
compensation program risk assessment conducted by Semler Brossy.
Based in part on this philosophy and these governance features,
the Committee does not believe that the compensation programs create risks that are reasonably likely to have a material adverse
effect on the Company.
|
What We Don’t Do
|
|
No stock option repricing
|
The Company’s 2015 Equity Incentive Plan does not permit us to reprice or repurchase “underwater” stock options without stockholder approval or to grant stock options with an exercise price below fair market value.
|
No tax gross-ups
|
The Company has no executive officer contracts providing for an excise tax gross-up following a change in control.
|
No hedging or pledging of Company stock and no use of margin accounts
|
The Company has adopted a policy that prohibits members of our Board and all employees, including Section 16 Officers, from pledging their Company stock or engaging in short sales of Company stock and other similar transactions that could be used to hedge the risk of Company stock ownership.
|
No “evergreen” or fixed-term employment agreements
|
We do not provide “evergreen” positions in any employment agreements with executive officers. Employment of our executive officers is “at will” and may be terminated by either the Company or the employee at any time.
|
No dividend equivalents on unvested equity awards
|
We do not pay dividends or dividend equivalents on unearned shares or units. We amended our 2015 Equity Incentive Plan to reflect this practice.
|
No excessive perks
|
We offer only certain limited benefits as required to remain competitive and to attract and retain highly talented executives.
|
No excessive change-in-control benefits
|
We do not provide change-in-control cash payments exceeding 2x base salary and bonus.
|
No Pension or SERPs
|
We do not provide for any pension plans or SERPs.
|
Continues on next
page ►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
35
|
Section 2 –
Setting Executive Compensation
Roles
The Company’s executive compensation program is established
and overseen by the Compensation Committee and Subcommittee, with support provided by their independent compensation consultant,
and the Chief Executive Officer and management. Each of their roles is described below.
Role of the Compensation Committee and Subcommittee
The Compensation Committee is comprised entirely of independent
directors and has the responsibility of establishing compensation for our officers who are designated as reporting officers under
Section 16 of the Exchange Act. The Subcommittee is comprised entirely of members of the Compensation Committee who are “outside
directors” as defined in Section 162(m) of the Code (“Section 162(m)”) and has the responsibility of approving
the incentive compensation programs that apply to our “covered employees” as defined in Section 162(m). The Compensation
Committee and Subcommittee have overall responsibility for establishing and evaluating executive officer compensation plans, policies,
and programs, including the evaluation of the Chief Executive Officer. We refer to the Committee and Subcommittee collectively
in this Compensation Discussion & Analysis as “the Committee.” The Compensation Committee also has responsibility
for reviewing the overall equity award practices of the Company. The Committee has the authority to obtain advice and assistance
from, and receive appropriate funding from Juniper Networks for, outside legal counsel, compensation consultants, or other advisors,
as the Committee deems necessary to carry out its duties. In addition, the Committee is free to replace its compensation advisors
or retain additional advisors at any time.
The Committee independently decides the salary, incentive target
and equity awards for the Chief Executive Officer
with input from its independent compensation consultant. Based on the information
presented from the independent compensation consultant, the Committee discusses the Chief Executive Officer’s contribution
and performance, Company performance, the competitive market, and the other factors discussed below, and independently makes compensation
decisions in an executive session, without members of management present.
Role of the Independent Compensation Consultant
During 2016, the Committee engaged Semler Brossy Consulting Group,
LLC (“Semler Brossy”) to advise the Committee on executive compensation. The Compensation Committee determined that
Semler Brossy is an independent compensation advisor under the rules of the New York Stock Exchange and there are no conflicts
of interest. For details on the engagement and services provided by Semler Brossy, please refer to the “
Compensation Consultant
Fee Disclosure
” section of this proxy statement. During the 2016 fiscal year, Semler Brossy did not provide the Company
any services unrelated to executive compensation, and therefore received no fees for additional services.
Role of the Chief Executive Officer and Management
The Chief Executive Officer makes recommendations to the Committee
regarding the salary, incentive target and equity awards for the executive officers other than himself. These recommendations are
based on analysis and guidance provided by the compensation consultant on behalf of the Committee and the Chief Executive Officer’s
assessment of individual specific factors, such as the individual’s role and contribution to Company performance and the
other factors discussed below. The Chief Executive Officer is also assisted by the Senior Vice President, Chief Human Resources
Officer in making these recommendations.
Executive Compensation Philosophy and Objectives
The Compensation Committee has established guiding principles
with respect to our executive compensation program, and has maintained them for 2016, as detailed below. The Committee believes
that these guiding principles drive desirable behaviors, accountability, and alignment with stockholder interests.
Principle
|
Strategy
|
1.
|
Enhance Accountability
|
Executive compensation linked to a clear set of business objectives
|
2.
|
Manage to Balanced Results
|
Compensation strategy that drives balanced results between the following:
|
|
|
‒ Short- and long-term objectives
|
|
|
‒ Individual and team performance
|
|
|
‒ Financial and non-financial objectives
|
|
|
‒ Customer satisfaction and growth
|
3.
|
Reward High Performance
|
Upside potential in the incentive plans for superior performance with downside risk for underperformance
|
4.
|
Attract & Retain Talent
|
Market-competitive programs with flexibility to be aggressive for mission-critical talent retention and acquisition
|
5.
|
Align with Stockholder Interests
|
Programs that are transparent, easily understood and aligned with long-term stockholder interests
|
6.
|
Encourage Health and Financial
Well-Being
|
Market-competitive benefit programs that encourage wellness and financial savings
|
36
Executive Compensation
|
|
Competitive Compensation Data
The Committee reviews competitive compensation data to establish
market reference points, including data from the Peer Group and published compensation surveys, as described below.
2016 Peer Group
The Compensation Committee, with input from Semler Brossy, established
a peer group of publicly traded networking equipment and other high technology companies set forth in the table below (the “Peer
Group”) for use in 2016. In deciding whether a company should be included in the Peer Group, the Compensation Committee generally
considers the following screening criteria:
●
|
Revenue;
|
●
|
Market value;
|
●
|
Historical revenue growth;
|
●
|
Business model;
|
●
|
Scope of operations;
|
●
|
Industry relevance; and
|
●
|
Whether we compete with the company for talent.
|
The Peer Group is regularly reviewed and updated by the Compensation
Committee with the assistance of its compensation consultant to take into account changes in both the Company’s business
and the businesses of the companies in the Peer Group. The data on the compensation practices of the Peer Group is gathered through
publicly available information.
For competitive benchmarking purposes, the positions of our NEOs
were compared to similar positions in the Peer Group, and the compensation levels for comparable positions in the Peer Group as
presented by Semler Brossy were examined to become informed about competitive pay levels and practices. For compensation decisions
made in early 2016, the Peer Group consisted of the 17 companies set forth below.
Company
Name
|
Adobe Systems Inc.
|
Intuit Inc.
|
ARRIS Intl. Plc.
|
Motorola Solutions Inc.
|
Autodesk, Inc.
|
NetApp Inc.
|
Broadcom Corp.
|
NVIDIA Corp.
|
Brocade Communication Systems, Inc.
|
SanDisk Corp.
|
CA, Inc.
|
Symantec Corp.
|
Ciena Corp.
|
VMware, Inc.
|
Citrix Systems, Inc.
|
Xilinx, Inc.
|
Corning, Inc.
|
|
Changes to the Peer Group used to assess 2016 pay decisions include
the removal of EMC Corporation and the additions of Ciena and ARRIS. The Compensation Committee determined that EMC Corporation,
despite the high relevance of its business model, had grown to a size where revenue and market capitalization increased beyond
the size screens used to determine comparable peers. The Compensation Committee determined that both Ciena and ARRIS were comparable
peers in terms of size, scope of operations, and industry.
Peer Group Changes for 2017
In August 2016, the Compensation Committee reviewed the then
current Peer Group and, with input from Semler Brossy, decided to remove Broadcom, as it was acquired in 2016.
Published Surveys
Semler Brossy, at the request of the Committee additionally reviews
broader technology company data to provide market context for its compensation decisions. For the 2016 annual compensation review,
compensation data was drawn from the Radford 2015 Global Technology Survey for a broader list of technology companies of comparable
size, approximately $4.9 billion in annual revenue.
After reviewing the Peer Group and survey compensation data,
the Committee takes into consideration other factors, such as internal equity, individual performance, tenure, leadership skills,
and ability to impact business performance. In addition, while recruiting key executive talent, the compensation decisions may
be determined based on negotiations with such individuals and can reflect such factors as the amount of compensation that the individual
would forego by joining the Company or relocation costs. The Committee also takes into consideration the aggregate amount of equity
awards, other compensation values, and potential payments upon termination or change of control for each executive officer. The
Committee also takes into consideration the results from the “Say-on-Pay” advisory vote and feedback we receive when
we conduct ongoing stockholder outreach in the evaluation of our executive compensation program and policies.
Continues on next
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Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
37
|
Section 3 –
Elements of Executive Compensation
The following table lists the elements of target direct compensation
for our 2016 executive compensation program.
|
Fixed
|
Variable Short-Term
|
Variable Long-Term
|
Other
|
|
Base Salary
|
AIP Cash
|
Bonus PSU
|
PSA
|
Price-Vested RSU
|
RSU
|
Benefits
|
Primary Purpose
|
Attract and retain
|
Retain
|
Attract and retain
|
Encourage wellness and financial savings
|
|
Provide focus on annual financial and non-financial goals, motivate performance
|
Reward achievement of financial and strategic results that drive long-term stockholder value
|
|
Create ownership and align employee efforts with stockholder interests
|
Performance Measures
|
|
●
Revenue
●
Non-GAAP op. income
●
Non-GAAP op. margin
●
Strategic objectives
|
●
Revenue
●
Non-GAAP op. income
|
●
Revenue
●
Non-GAAP
op. income
●
Non-GAAP op. margin
|
●
Stock price
|
|
|
Total Performance/ Vest Period
|
Ongoing
|
1 Year
|
1 Year performance
2 Year vest (ratable)
|
1 Year performance
3 Year vest (cliff)
|
3-5 Years
|
3 Year
(ratable)
|
Ongoing
|
The program uses a mix of fixed and variable compensation elements
and is designed to drive corporate performance using measures that correlate to stockholder value and align with our financial
and strategic Company goals. The market-positioning provides a reference point for compensation decision-making;
however, decisions
regarding compensation opportunity for executive officers are made on a case-by-case basis, taking into account individual performance,
tenure, criticality of role, pre-existing equity and compensation arrangements and ability to impact business results.
Pay-for-Performance
Our NEOs’ pay mix emphasizes “at risk” pay
opportunities and is largely performance-based. In 2016, with respect to our CEO’s annual target compensation package, “performance-based”
compensation in the form of annual cash bonus incentive and performance-based equity comprised 63% of his target total direct compensation,
and “variable” compensation in the form of annual cash bonus incentive and equity (i.e., RSUs and performance shares)
comprised 88% of his target total direct compensation. In addition, performance-based compensation comprised 54% and variable compensation
comprised 79%, on average, of our other NEOs’ target total direct compensation.
2016 Target Pay Mix: CEO and Other
NEOs
(1)
|
Target Total Direct Compensation reflects salary and stock awards as disclosed in the “
Summary Compensation Table
,”
and target opportunity for non-equity incentive plan awards as disclosed in the “
Grants of Plan-Based Awards For Fiscal
2016
” table.
|
(2)
|
Target Total Direct Compensation reflects an average of the following components for our NEOs (other than the CEO): (i) salary
and stock awards as disclosed in the “
Summary Compensation Table
,” and (ii) target opportunity for non-equity
incentive plan awards as disclosed in the “
Grants of Plan-Based Awards For Fiscal 2016
” table. Ms. Denholm was
excluded from this calculation since she resigned from her position as EVP, Chief Financial and Operations Officer in February
2016 and resigned from the Company in July 2016.
|
38
Executive Compensation
|
|
Base Salary
In 2016, the Committee independently decided not to provide a
base salary increase to Mr. Rahim as it determined that his salary for 2016 was competitive when compared to market peers. Mr.
Rahim provided the Committee with his recommended base salary changes for the other NEOs, based upon analysis and guidance from
Semler Brossy, including competitive data from our Peer Group and Mr. Rahim’s assessment of individual-
specific factors.
The Committee determined in connection with Mr. Miller’s promotion in February 2016 to provide a salary increase commensurate
with his expanded responsibilities as EVP, Chief Financial Officer. As noted in the table below, two other NEOs received pay increases
that were intended to better align their salaries with other executive officers at Juniper Networks having similar levels of responsibility,
as well as with comparable positions in our Peer Group and at similarly sized companies in the technology industry.
Executive
|
|
2016 Base
Salary Before
Increase
|
|
|
2016 Base
Salary After
Increase
|
|
|
%
Salary
Increase
|
|
Rami Rahim
Chief Executive Officer
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
|
|
–
|
%
|
Kenneth Miller
(1)
EVP, Chief Financial Officer
|
|
$
|
346,800
|
|
|
$
|
525,000
|
|
|
|
51.4
|
%
|
Pradeep Sindhu
EVP, Chief Technology Officer and Chief Scientist
|
|
$
|
600,000
|
|
|
$
|
600,000
|
|
|
|
–
|
%
|
Vincent Molinaro
EVP, Chief Customer Officer
|
|
$
|
575,000
|
|
|
$
|
595,000
|
|
|
|
3.5
|
%
|
Jonathan Davidson
EVP, Juniper Development & Innovation
|
|
$
|
600,000
|
|
|
$
|
620,000
|
|
|
|
3.3
|
%
|
|
|
(1)
|
On February 22, 2016, Mr. Miller was promoted to his position as EVP, Chief Financial Officer. Mr. Miller’s salary increase
is in connection with his promotion.
|
Executive Annual Incentive Plan
Consistent with our objective of linking a significant portion
of our NEOs’ compensation to performance, the Committee established a target annual performance-based incentive opportunity
for each NEO, expressed as a percentage of base salary. In setting the amount of the target incentive, the Committee, with input
from Semler Brossy, takes into account competitive market data, desired positioning against market, the individual’s role
and contribution to performance, and internal equity. The actual payout may be higher or lower than this target
incentive amount,
based on Company and/or individual performance factors.
For 2016, the target incentive opportunities (expressed as a
percentage of base salary) for all NEOs remained consistent with 2015 levels. With respect to the 2016 AIP, a portion of each NEO’s
target opportunity under the AIP was awarded in performance shares (“Bonus PSUs”) at the beginning of the AIP performance
period, as discussed in further detail below. The target incentive opportunities for our NEOs for 2016 are presented below.
Executive
|
|
Annual
Salary as of
12/31/2016
|
|
|
Adjusted Base
Salary
(1)
|
|
|
Target AIP (as
% of Base
Salary)
(2)
|
|
Target AIP
$ Value
(3)
|
|
Rami Rahim
Chief Executive Officer
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
|
|
|
175%
|
|
$
|
1,750,000
|
|
Kenneth Miller
(4)
EVP, Chief Financial Officer
|
|
$
|
525,000
|
|
|
$
|
499,755
|
|
|
|
|
98%
|
|
$
|
487,473
|
|
Pradeep Sindhu
EVP, Chief Technology Officer and Chief Scientist
|
|
$
|
600,000
|
|
|
$
|
600,000
|
|
|
|
|
100%
|
|
$
|
600,000
|
|
Vincent Molinaro
EVP, Chief Customer Officer
|
|
$
|
595,000
|
|
|
$
|
585,000
|
|
|
|
|
100%
|
|
$
|
585,000
|
|
Jonathan Davidson
EVP, Juniper Development & Innovation
|
|
$
|
620,000
|
|
|
$
|
610,000
|
|
|
|
|
100%
|
|
$
|
610,000
|
|
|
|
(1)
|
Adjusted base salaries reflect actual salaries earned in 2016.
|
(2)
|
In 2016, the Committee awarded a portion of the target incentive opportunity value in Bonus PSUs. The percentages disclosed
in this column reflect the target incentive opportunity value as a percentage of base salary prior to adjusting for Bonus PSUs.
|
(3)
|
These values reflect the target AIP value prior to adjusting for Bonus PSUs. Actual cash payout is based on the Target AIP
(as % of Base Salary), less Target Bonus PSUs value prior to the 1.5x multiplier, as further described below.
|
(4)
|
On February 22, 2016, Mr. Miller was promoted to his role as EVP, Chief Financial Officer. His adjusted base salary is prorated
for the portion of fiscal year 2016 he served in his new role. His “Target AIP $ Value” is reflective of his prorated
base salary and “Target AIP (as % of Base Salary).” In addition, as a result of Ms. Denholm’s resignation, she
was not provided with a target incentive opportunity under the 2016 AIP.
|
Continues on next
page
►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
39
|
For purposes of the 2016 AIP, a portion of each NEO’s target
annual incentive opportunity was to be awarded in Bonus PSUs at the beginning of the AIP performance period, as discussed in more
detail below.
Performance Goals under the Executive Annual
Incentive Plan
Under the 2016 AIP, our NEOs could earn annual cash incentive
payments based on an achievement of pre-established financial and strategic performance components for the year. Payments for each
NEO under the 2016 AIP were to be initially funded based on the achievement of a minimum level of corporate revenue equal to $4,000
million, which the Company achieved for fiscal year 2016. Each NEO’s payout under the 2016 AIP funding amount was then determined
based on performance against three elements: non-GAAP operating income, financial metrics, and strategic metrics. The Committee
believes that linking executive compensation to these elements would incentivize executive focus on achievement of pre-determined
financial and strategic goals that would contribute to overall Company performance.
With respect to non-GAAP operating income, a threshold amount of non-GAAP operating income must be achieved to earn any amounts under the AIP (the “Non-GAAP
Operating Income Gate”).
If the Non-GAAP Operating Income Gate is achieved, the AIP will then pay out based on the performance against the financial and
strategic components, weighted 70% and 30%, respectively, as established by the Committee for the year.
For purposes of the 2016 AIP:
●
|
The financial component was comprised of corporate revenue and non-GAAP operating margin targets. The Committee believes that
both revenue growth and non-GAAP operating margin expansion are critical to stockholder value creation
|
●
|
The strategic component was focused on a number of key objectives that the Committee believes contributed to operational and
financial results, including customer satisfaction, market share gain, and employee engagement. The Committee evaluates the achievement
of each strategic metric on a quantitative scale.
|
The 2016 AIP design is illustrated below.
2016 AIP Design
*
|
Non-GAAP Operating Margin and non-GAAP Operating Income are based on GAAP operating income and adjusted to take into account certain
items, including, but not limited to, share-based compensation expense and related payroll taxes, amortization of purchased intangible
assets, acquisition/divestiture and other charges, payment of (or gains from) legal settlements or legal claims, restructuring
charges (benefits), certain one-time gains and losses, and income taxes related to these items.
|
Assuming achievement of the Non-GAAP Operating Income Gate, the
actual amounts payable to individual NEOs under the 2016 AIP depended on the actual level of achievement measured against the pre-established
objectives for the financial and strategic components. Maximum bonus pool funding is 200%, and our NEOs could earn anywhere between
0%-200% of their
respective target AIP opportunities based on our actual performance, less the portion of the 2016 AIP used to
calculate Bonus PSUs, as described below. For 2016, the Committee established target performance goals for revenue and non-GAAP
operating margin per the table below. The financial and strategic goals were the same for participants in the 2016 AIP.
40
Executive Compensation
|
|
2016 Financial Performance Targets
and Achievements
(1)
|
No payout if the Company’s non-GAAP operating income does not equal or exceed the Non-GAAP Operating Income Gate.
|
(2)
|
Non-GAAP Operating Income excludes certain items, primarily share-based compensation expense and related payroll taxes, amortization
of purchased intangible assets, acquisition/divestiture and other charges,
supplier component remediation
charges
, certain one-time gains and losses, restructuring charges (benefits), and income taxes related to these items.
|
(3)
|
No payout for the financial component if revenue is less than the “Threshold” revenue amount. The actual payout
percentage scales linearly between threshold and target and between target and maximum.
|
(4)
|
Reflects GAAP revenue for fiscal year 2016.
|
(5)
|
Revenue attainment greater than target reduces the decelerator on a sliding scale from 0.9x down to 0.75x at maximum revenue
attainment. The decelerator is 0.9x for revenue at target attainment or less.
|
For 2016, the Non-GAAP Operating Income Gate was attainment of
at least $1,166 million in non-GAAP operating income. Our 2016 non-GAAP corporate operating income of $1,167.1 million exceeded
the Non-GAAP Operating Income Gate, allowing the AIP to pay out based on attainment of financial and strategic components. Actual
2016 revenue was between Threshold and Target performance levels, while our 2016 non-GAAP operating margin produced a decelerator
of 0.90x on the revenue attainment. As a result, the payout for the financial component (weighted at 70% of the overall plan) was
38.6% of target.
For the strategic component of the AIP, the Committee evaluated
our actual performance for each strategic objective and determined an overall strategic component score of 121% of target. This
score reflects above-target performance for the customer satisfaction and employee engagement objectives, and mixed performance
for the market share objectives. As a result, payout for the strategic component (weighted at 30% of the overall plan) was 36.3%
of target. The combined payouts for the financial and strategic components was 75% of target.
Bonus PSUs Granted Pursuant to the Executive
Annual Incentive Plan
In order to enhance retention of our NEOs and further align the
interest of our NEOs with the long-term success of the Company, the Committee awarded approximately 50% of each NEO’s target
opportunity under the 2016 AIP in Bonus PSUs at the beginning of the AIP performance period. The Bonus PSUs vest over a two year
period (subject to achievement of performance conditions), which is approximately one year longer than the period required to earn
the cash portion of the AIP. In connection with the longer vesting period for the Bonus
PSUs, the Committee awarded Bonus PSUs
in the amount equal to 1.5 times the approximately 50% target annual incentive opportunity for each applicable NEO. The Bonus PSUs
vest only if both (i) the 2016 AIP Operating Income Gate and (ii) the threshold revenue figure under the 2016 AIP, as illustrated
in the chart below, are achieved. Upon achievement of the performance criteria, the Bonus PSUs vest in two equal tranches in February
2017 and 2018. The Bonus PSUs are not eligible for any additional performance multipliers.
Continues on next
page
►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
41
|
2016 Bonus PSUs Design
(1)
|
Non-GAAP Operating Income excludes certain items, primarily share-based compensation expense and related payroll taxes, amortization
of purchased intangible assets, acquisition/divestiture and other charges,
supplier component remediation
charges
, certain one-time gains and losses, restructuring charges (benefits), and income taxes related to these items.
|
(2)
|
The revenue attainment for the Company for the Bonus PSUs was $4,956 million, which is based on the Company’s GAAP revenue
for 2016, excluding revenue directly associated with products and services attributable to our acquisitions completed in 2016.
|
As described above, both performance conditions were achieved;
accordingly, the Bonus PSUs vest ratably in February 2017 and 2018, subject to continued employment with the Company. The Bonus
PSUs awarded to our NEOs are described in the table below.
Executive
|
|
Portion of
2016 AIP Used
to Calculate
Bonus PSUs
(1)
|
|
|
Value
Multiplier
for Two-Ye
ar
Vest
(2)
|
|
|
Number of
Bonus PSUs
Granted
|
|
Rami Rahim
Chief Executive Officer
|
|
$
|
875,000
|
|
|
|
1.5x
|
|
|
|
45,259
|
|
Kenneth Miller
(3)
EVP, Chief Financial Officer
|
|
$
|
130,050
|
|
|
|
1.5x
|
|
|
|
6,727
|
|
Pradeep Sindhu
EVP, Chief Technology Officer and Chief Scientist
|
|
$
|
300,000
|
|
|
|
1.5x
|
|
|
|
15,517
|
|
Vincent Molinaro
EVP, Chief Customer Officer
|
|
$
|
297,500
|
|
|
|
1.5x
|
|
|
|
15,388
|
|
Jonathan Davidson
EVP, Juniper Development & Innovation
|
|
$
|
310,000
|
|
|
|
1.5x
|
|
|
|
16,034
|
|
|
|
(1)
|
Reflects the target annual incentive opportunity value for the Bonus PSU prior to the 1.5x multiplier.
|
(2)
|
In connection with the longer vesting period for the Bonus PSUs, the Committee awarded Bonus PSUs in the amount equal to 1.5
times approximately 50% of AIP target opportunity for each applicable NEO.
|
(3)
|
Mr. Miller was awarded a Bonus PSU grant in connection with the 2016 AIP on January 15, 2016, prior to his promotion to EVP,
Chief Financial Officer. Therefore, the portion of the 2016 AIP delivered in Bonus PSUs reflects 1.5 times approximately 50% of
his AIP target opportunity prior to his promotion. In addition, as a result of Ms. Denholm’s resignation, she did not receive
a Bonus PSU award.
|
Executive Annual Incentive Plan Outcomes
Upon completion of the measurement period for 2016, the Committee
reviewed the performance of the Company to verify and approve the calculations of the amounts to be paid to NEOs. Excluding Ms.
Denholm, who resigned from the Company in July 2016 and did not receive a
payout under the 2016 AIP, actual cash payouts to NEOs
under the 2016 AIP ranged between 67.5% and 75.0% of the individuals’ target annual incentive for 2016 (less the portion
of the 2016 AIP used to calculate Bonus PSUs). In addition, the performance conditions of the Bonus PSUs were achieved.
42
Executive Compensation
|
|
The table below summarizes the payments for the NEOs. Payments
are expressed as a percentage of their 2016 target incentive and actual payout amount less the portion of the 2016 AIP used to
calculate Bonus PSUs.
Executive
|
|
Target AIP
$ Value
(1)
|
|
|
Payout
as %
of Total
Target
|
|
|
Total
Payout $
(2)
|
|
|
Portion of
2016 AIP
Used to
Calculate
Bonus
PSUs
(3)
|
|
|
AIP Cash
Payout $
(4)
|
|
Rami Rahim
Chief Executive Officer
|
|
$
|
1,750,000
|
|
|
|
75.0%
|
|
|
$
|
1,312,500
|
|
|
$
|
875,000
|
|
|
$
|
437,500
|
|
Kenneth Miller
(5)
EVP, Chief Financial Officer
|
|
$
|
487,473
|
|
|
|
75.0%
|
|
|
$
|
365,605
|
|
|
$
|
130,050
|
|
|
$
|
235,555
|
|
Pradeep Sindhu
EVP, Chief Technology Officer and Chief Scientist
|
|
$
|
600,000
|
|
|
|
75.0%
|
|
|
$
|
450,000
|
|
|
$
|
300,000
|
|
|
$
|
150,000
|
|
Vincent Molinaro
EVP, Chief Customer Officer
|
|
$
|
585,000
|
|
|
|
75.0%
|
|
|
$
|
438,750
|
|
|
$
|
297,500
|
|
|
$
|
141,250
|
|
Jonathan Davidson
EVP, Juniper Development & Innovation
|
|
$
|
610,000
|
|
|
|
67.5%
|
|
|
$
|
411,750
|
|
|
$
|
310,000
|
|
|
$
|
101,750
|
|
|
|
(1)
|
These values reflect the target AIP value prior to adjusting for Bonus PSUs.
|
(2)
|
Reflects “Target AIP $ Value” multiplied by “Payout as % of Total Target.”
|
(3)
|
Reflects the target annual incentive opportunity value for Bonus PSUs, excluding the 1.5x multiplier.
|
(4)
|
Reflects “Total Payout $” less “Portion of 2016 AIP Used to Calculate Bonus PSUs.”
|
(5)
|
Mr. Miller was awarded Bonus PSUs in connection with the 2016 AIP prior to his promotion to EVP, Chief Financial Officer. Therefore,
the portion of the 2016 AIP delivered in Bonus PSUs reflects 1.5 times approximately 50% of his AIP target opportunity prior to
his promotion.
|
Long-Term Equity Incentive Compensation
The Company and the Committee remain focused on aligning the
Company’s long-term equity compensation program with stockholder interests. For 2016, the Committee reviewed target equity
pay mix and determined to maintain the combination of performance-contingent awards and service-vested awards granted in 2015.
In determining the ranges for long-term equity incentives, the Committee sought to allocate the number of long-term equity awards
(which does not include the Bonus PSUs described above) granted to our NEOs as follows:
●
|
Approximately 33% based on achievement of target awarded in the form of PSAs;
|
●
|
Approximately 33% based on achievement of target awarded in the form of price-vested RSUs; and
|
●
|
Approximately 34% awarded in the form of service-vested RSUs.
|
The Committee believes this equity mix aligns the executive officers’
compensation opportunities directly with stockholder interests, i.e., stock price appreciation, and also incentivizes our executive
officers to continue to drive performance in key financial metrics that support our innovation agenda and that the Committee believes
will in the long-term positively impact stockholder value (i.e., revenue and operating income).
The Committee’s policy is to use the 90-day average stock
price close over the three-month period at the end of the prior year to convert target equity value to the
number of equity awards.
For the 2016 equity awards, this three-month average stock price close was $29.60. The Committee believes that using an average
stock price mitigates the impact of spot stock price volatility on any given day in converting long-term equity incentive value
to the number of shares subject to an award.
In determining the amount of long-term equity incentives to award
our NEOs, the Committee reviewed grant values in the Peer Group and the survey data and also took into account the executive’s
respective role, grade level, and individual performance.
The Company’s equity compensation programs are intended
to align the interests of our executive officers with those of our stockholders by creating an incentive to drive financial performance
over time and maximize stockholder value creation. The vehicles used for the equity compensation program, and the rationale for
their use, are as follows:
Performance Share Awards
Our ability to successfully offer our products and services in
a rapidly evolving market requires us to effectively scale and adjust our business to fluctuating market opportunities and conditions
on an annual basis while also remaining focused on long-term success. In this regard, the Committee believes that, by using three
concurrent 1-year tranches that cliff-vest over a 3-year period, the Committee can best align the financial objectives for our
NEOs with long-term stockholder value creation and the business plans and goals approved by our Board. In general, we calculate
the number of PSAs based on the achievement of annual performance
targets
Continues on next
page
►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
43
|
established. Based on the actual achievement against the performance targets, shares are earned, which we refer to as
being “banked,” however, these “banked” shares are not vested until the end of the entire three-year
performance period.
One-third of the total target PSAs are subject to annual performance
targets established by the Committee and the amount of PSAs “banked” for a particular year is based on the achievement
of annual performance targets established for that year. With respect to each year’s performance, participants can “bank”
between 0% and 200% of the target number of PSAs for that year (i.e., one-third of the total PSAs awarded to a participant) based
on the level of achievement against the performance targets for that year. Vesting for the
“banked” shares under a
PSA occurs only after the Committee certifies the level of achievement for the third tranche, and any “banked” but
unvested shares under a PSA are forfeited if the participant leaves the Company before the vest date.
Given the significant strategic importance to focus on top-line
growth in the current market, the Committee determined that a significant focus on revenue and non-GAAP operating margin was appropriate.
Accordingly, the Committee, in consultation with Semler Brossy, approved the use of financial performance goals for the 2016 performance
period under the PSAs similar to those used in the AIP. The performance targets for 2016 are illustrated below.
2016 Performance Share Awards Design
(1)
|
Non-GAAP Operating Income and Non-GAAP Operating Margin exclude certain items, primarily share-based compensation expense and
related payroll taxes, amortization of purchased intangible assets, acquisition/divestiture and other charges,
supplier
component remediation charges
, certain one-time gains and losses, restructuring charges (benefits), and income taxes related
to these items.
|
(2)
|
Revenue is based on the Company’s GAAP revenue, and adjusted to exclude revenue from acquisitions or normalize for the
loss of revenue from divestitures, in each case that may occur during the year.
|
For 2016, the Committee changed the performance targets for PSAs
compared to 2015 by adding a non-GAAP operating margin decelerator. This decelerator decreases the number of shares that can be
“banked” if non-GAAP operating margin falls below a specified threshold. This addition was intended to align the PSA
performance targets to those included in the AIP. The Committee believes this change, in combination with maintaining the non-GAAP
operating income gate and revenue as the primary financial metric, provides an increased focus on revenue growth in a sustained
and
reasonable manner. For 2016, the Committee set target performance goals under the PSA at levels which it believed at the time
to be difficult but achievable, and set maximum performance goals at a level which it believed to be very difficult to achieve.
The following tables provide the target levels for non-GAAP operating
income, non-GAAP revenue, and non-GAAP operating margin goals, our actual achievement, and the number of shares “banked”
for the 2016 performance measurement year.
44
Executive Compensation
|
|
2016 Non-GAAP Operating Income, Non-GAAP
Revenue, and Non-GAAP Operating Margin Achievement
(1)
|
No shares are earned (i.e., “banked”) if non-GAAP operating income does not exceed the gate.
|
(2)
|
Non-GAAP Operating Income and Non-GAAP Operating Margin exclude certain items, primarily share-based compensation expense and
related payroll taxes, amortization of purchased intangible assets, acquisition/divestiture and other charges,
supplier
component remediation charges
, certain one-time gains and losses, restructuring charges (benefits), and income taxes related
to these items.
|
(3)
|
No shares are earned (i.e., “banked”) if revenue is below the Threshold. The payout percentage scales linearly
between threshold and target and between target and maximum.
|
(4)
|
The revenue attainment for the Company for the PSAs was $4,956 million, which is based on the Company’s GAAP revenue
for 2016, excluding revenue directly associated with products and services attributable to our acquisitions completed in 2016.
|
(5)
|
Revenue attainment greater than target reduces the decelerator on a sliding scale from 0.9x down to 0.75x at maximum revenue
attainment. The decelerator is 0.9x for revenue at target attainment or less.
|
Details on individual grants can be found in the “Grants
of Plan-Based Awards For Fiscal 2016” table in this proxy statement.
Shares Earned for 2016 PSA Goal Achievement
Executive
(1)
|
|
Award Year of
PSAs
|
|
|
Total PSA
Target
(2)
|
|
|
2016 PSA
Target
(2)
|
|
|
2016
Performance
Achievement
(% of Target)
|
|
|
2016 Total
PSAs
“Banked”
|
|
|
PSAs to
Vest in
2017
(3)
|
|
Rami Rahim
Chief Executive Officer
|
|
|
2016
|
|
|
|
80,828
|
|
|
|
26,942
|
|
|
|
50.3
|
%
|
|
|
13,551
|
|
|
|
-
|
|
|
|
2015
|
|
|
|
104,873
|
|
|
|
34,958
|
|
|
|
50.3
|
%
|
|
|
17,583
|
|
|
|
-
|
|
|
|
2014
|
|
|
|
53,700
|
|
|
|
17,900
|
|
|
|
50.3
|
%
|
|
|
9,003
|
|
|
|
-
|
|
|
|
Total
|
|
|
|
-
|
|
|
|
79,800
|
|
|
|
50.3
|
%
|
|
|
40,137
|
|
|
|
38,573
|
|
Ken Miller
EVP, Chief Financial Officer
|
|
|
2016
|
|
|
|
21,183
|
|
|
|
7,061
|
|
|
|
50.3
|
%
|
|
|
3,551
|
|
|
|
-
|
|
|
|
2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50.3
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50.3
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
Total
|
|
|
|
-
|
|
|
|
7,061
|
|
|
|
50.3
|
%
|
|
|
3,551
|
|
|
|
N/A
|
|
Pradeep Sindhu
EVP, Chief Technology Officer and Chief Scientist
|
|
|
2016
|
|
|
|
23,937
|
|
|
|
7,799
|
|
|
|
50.3
|
%
|
|
|
3,922
|
|
|
|
-
|
|
|
|
2015
|
|
|
|
31,086
|
|
|
|
10,362
|
|
|
|
50.3
|
%
|
|
|
5,212
|
|
|
|
-
|
|
|
|
2014
|
|
|
|
26,201
|
|
|
|
8,734
|
|
|
|
50.3
|
%
|
|
|
4,393
|
|
|
|
-
|
|
|
|
Total
|
|
|
|
-
|
|
|
|
26,895
|
|
|
|
50.3
|
%
|
|
|
13,527
|
|
|
|
18,820
|
|
Vincent Molinaro
Chief Customer Officer
|
|
|
2016
|
|
|
|
23,397
|
|
|
|
7,799
|
|
|
|
50.3
|
%
|
|
|
3,922
|
|
|
|
-
|
|
|
|
2015
|
|
|
|
32,010
|
|
|
|
10,670
|
|
|
|
50.3
|
%
|
|
|
5,367
|
|
|
|
-
|
|
|
|
2014
|
|
|
|
28,989
|
|
|
|
9,663
|
|
|
|
50.3
|
%
|
|
|
4,860
|
|
|
|
-
|
|
|
|
Total
|
|
|
|
-
|
|
|
|
28,132
|
|
|
|
50.3
|
%
|
|
|
14,149
|
|
|
|
20,822
|
|
Jonathan Davidson
EVP and GM, Juniper Development & Innovation
|
|
|
2016
|
|
|
|
23,397
|
|
|
|
7,799
|
|
|
|
50.3
|
%
|
|
|
3,922
|
|
|
|
-
|
|
|
|
2015
|
|
|
|
49,995
|
|
|
|
16,665
|
|
|
|
50.3
|
%
|
|
|
8,382
|
|
|
|
-
|
|
|
|
2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50.3
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
Total
|
|
|
|
-
|
|
|
|
24,464
|
|
|
|
50.3
|
%
|
|
|
12,304
|
|
|
|
N/A
|
|
|
|
(1)
|
Mr. Miller was not awarded PSAs in 2014 and 2015. Mr. Davidson was not awarded PSAs in 2014.
|
(2)
|
The number of shares that can be earned (i.e., “banked”) under the PSAs range from 0-200% of target.
|
(3)
|
Shares to vest in 2017 include shares “banked” for the following performance years: 2016, 2015, and 2014. Shares
will vest only to the extent the recipient of the PSA remains employed with the Company through the applicable vesting date.
|
Price-Vested RSUs
To further increase the alignment between our NEOs’ compensation
and Company stock price performance, the Committee sought to allocate to the NEOs approximately 33% of target long-term equity
value in the form of
price-vested RSUs. These price-vested RSUs are designed to provide NEOs an opportunity to build significant
ownership when the Company sustains long-term stock price appreciation.
Continues on next
page
►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
45
|
The 2016 price-vested RSUs are subject to vesting on the condition
of sustained increase in the Company’s stock price over a period from 2017 through 2020 as follows:
●
|
33% of the price-vested RSUs will vest if the average closing market price (average stock price, “ASP”) over 60
trading days equals or exceeds $31.00 between January 1, 2017 and December 31, 2018;
|
●
|
67% of the price-vested RSUs (minus any portion of which have previously vested) will vest if ASP equals or exceeds $35.00
between January 1, 2018 and December 31, 2019; and
|
●
|
100% of the price-vested RSUs (minus any portion of which have previously vested) will vest if ASP equals or exceeds $39.00
between January 1, 2019 and December 31, 2020.
|
In determining the stock price targets, the Committee considered
a range of internal financial metrics and external market factors, including the long-term performance of the U.S. stock market
as represented by the S&P500 Index. The Committee believes these stock price targets represent significant stock price appreciation
in comparison to the $24.33 per share closing market price on February 1, 2016, the date the Committee first approved price vested
RSUs in 2016.
The following chart depicts the vesting conditions for the price-vested
RSUs for the NEOs.
2016 Price-Vested RSUs Design
On January 4, 2016 after market close, the ASP equaled $29.71,
resulting in Tranche 1 (33%) of the March 2015 price-vested RSU grants vesting immediately. The table below provides a summary
of outstanding price-vested RSU awards for our NEOs in 2016.
Batch
Grant Date,
Participants
|
|
Tranche
|
|
Performance
Period Start
|
|
|
Performance
Period End
|
|
|
ASP
(1)
|
|
|
Premium to
Grant Date
Price
(2)
|
|
|
Status
as of
12/31/2016
|
|
|
Shares
Vested in
2016
|
|
March
21, 2014
Mr. Rahim,
Dr. Sindhu, and
Mr. Molinaro
(3)
|
|
Tranche 1
|
|
|
1/1/2015
|
|
|
|
12/31/2016
|
|
|
$
|
29.00
|
|
|
|
11.7
|
%
|
|
|
Vested
|
|
|
|
33
|
%
|
|
Tranche 2
|
|
|
1/1/2016
|
|
|
|
12/31/2017
|
|
|
$
|
32.50
|
|
|
|
25.2
|
%
|
|
|
N/A
|
|
|
|
-
|
|
|
Tranche 3
|
|
|
1/1/2017
|
|
|
|
12/31/2018
|
|
|
$
|
40.00
|
|
|
|
54.1
|
%
|
|
|
N/A
|
|
|
|
-
|
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33
|
%
|
November
21, 2014
Mr. Rahim
(4)
|
|
Tranche 1
|
|
|
11/1/2015
|
|
|
|
10/31/2017
|
|
|
$
|
29.00
|
|
|
|
32.7
|
%
|
|
|
Vested
|
|
|
|
33
|
%
|
|
Tranche 2
|
|
|
11/1/2016
|
|
|
|
10/31/2018
|
|
|
$
|
32.50
|
|
|
|
48.7
|
%
|
|
|
N/A
|
|
|
|
-
|
|
|
Tranche 3
|
|
|
11/1/2017
|
|
|
|
10/31/2019
|
|
|
$
|
40.00
|
|
|
|
83.1
|
%
|
|
|
N/A
|
|
|
|
-
|
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33
|
%
|
March
20, 2015
Mr. Rahim, Dr. Sindhu,
Mr. Molinaro, and
Mr. Davidson
(5)
|
|
Tranche 1
|
|
|
1/1/2016
|
|
|
|
12/31/2017
|
|
|
$
|
26.00
|
|
|
|
9.8
|
%
|
|
|
Vested
|
|
|
|
33
|
%
|
|
Tranche 2
|
|
|
1/1/2017
|
|
|
|
12/31/2018
|
|
|
$
|
31.00
|
|
|
|
30.9
|
%
|
|
|
N/A
|
|
|
|
-
|
|
|
Tranche 3
|
|
|
1/1/2018
|
|
|
|
12/31/2019
|
|
|
$
|
36.00
|
|
|
|
52.0
|
%
|
|
|
N/A
|
|
|
|
-
|
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33
|
%
|
February
19, 2016
(6)
Mr. Rahim, Mr. Miller,
Dr. Sindhu,
Mr. Molinaro, and
Mr. Davidson
|
|
Tranche 1
|
|
|
1/1/2017
|
|
|
|
12/31/2018
|
|
|
$
|
31.00
|
|
|
|
26.2
|
%
|
|
|
N/A
|
|
|
|
-
|
|
|
Tranche 2
|
|
|
1/1/2018
|
|
|
|
12/31/2019
|
|
|
$
|
35.00
|
|
|
|
42.5
|
%
|
|
|
N/A
|
|
|
|
-
|
|
|
Tranche 3
|
|
|
1/1/2019
|
|
|
|
12/31/2020
|
|
|
$
|
39.00
|
|
|
|
58.7
|
%
|
|
|
N/A
|
|
|
|
-
|
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1)
|
Average closing market price of our common stock over a period of 60 consecutive trading days.
|
(2)
|
Premium to Grant Date Price represents the difference between the ASP and grant date price.
|
(3)
|
Mr. Miller and Mr. Davidson were not awarded price-vested RSUs in fiscal year 2014.
|
(4)
|
Mr. Rahim was awarded price-vested RSUs in November 2014 in connection with his promotion to Chief Executive Officer.
|
(5)
|
Mr. Miller was not awarded price-vested RSUs in fiscal year 2015.
|
(6)
|
Mr. Miller’s 2016 price-vested RSU grant was awarded on February 22, 2016 in connection with his promotion to EVP, Chief
Financial Officer.
|
46
Executive Compensation
|
|
Restricted Stock Units
The Compensation Committee grants RSU awards for retention purposes
as they provide payout opportunity to the NEOs only if they remain employed through the applicable vesting dates. The payout opportunity
is directly linked with stockholder value and executive efforts over a multi-year timeframe. In 2016, the Compensation Committee
granted RSU awards on a programmatic basis, representing approximately 34% of the long-term equity awarded. Generally, the RSUs
vest with respect to 34% on the first anniversary of the grant
date and with respect to an
additional 33% on each of the second and third anniversaries of the grant date, assuming continued service to the Company
through each vesting date.
In 2016, Mr. Miller was granted an additional equity award in the
form of RSUs in connection with being promoted to Executive Vice President, Chief Financial Officer. The RSUs will vest over a
period of three years, subject to Mr. Miller’s continued service to the Company through the applicable vesting dates.
Section 4 –
Other Compensation Policies and Information
Benefits and Perquisites
The NEOs are provided the same health and welfare benefits that are
available to employees broadly. The Compensation Committee believes that the benefits programs are reasonable and consistent with
its overall compensation program to better enable the Company to attract and retain talent.
In addition to receiving Company wide-benefits, NEOs are eligible
to participate in the Deferred Compensation Plan and Executive Wellness Program described below.
Deferred Compensation Plan
In June 2008, the Company adopted and implemented a deferred compensation
plan for U.S. employees. All NEOs are eligible to participate in the deferred compensation plan. The Company implemented this plan
in order to offer benefits that are competitive with companies with which we compete for talent. We believe that this is a standard
benefit plan also offered by a number of companies within our Peer Group. This plan allows participants to elect to defer a certain
amount of compensation and related taxation on such amounts into one or more investment choices.
The participants are not taxed on the compensation deferred into
these investments until distribution of invested funds to the participant at a future date, which may be upon termination of employment
with the Company or a designated “in-service” date elected by the participant. The deferred compensation plan is intended
to comply with Section 409A of the Code. In 2015, other than Mr. Davidson, none of the NEOs participated in this plan.
Executive Wellness Program
Under the Executive Wellness Program, eligible executives receive
additional benefits focused on health care screening and wellness. The total value of this benefit is limited to $10,000 per year
for each eligible executive.
The Compensation Committee believes that promoting the health and
wellness of its executives results in a number of benefits to the Company, including increased productivity, lower absentee rate
and increased organizational stability, among others.
Other Benefits
From time to time, the Company may agree to reimburse employees for
relocation costs if the employee’s job responsibilities require him or her to move a significant distance.
Severance Benefits
In addition to compensation designed to reward employees for service
and performance, the Compensation Committee has approved severance and change of control provisions for certain employees, including
NEOs, as described further below. Our severance and change of control arrangements are designed to be competitive with the pay
practices of our Peer Group. The Compensation Committee, with input from its independent compensation advisor, annually reviews
the terms and conditions of our severance and change of control arrangements for our executive officers and will make adjustments
when and to the extent it deems appropriate.
Continues on next page
►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
47
|
Basic Severance
In order to recruit executives to the Company and encourage retention
of employees, the Compensation Committee believes it is appropriate and necessary to provide assurance of certain severance payments
if the Company terminates the individual’s employment without cause, as described in their respective agreements. The Compensation
Committee approved severance benefits for several members of senior management, including the NEOs. Under severance agreements
with Messrs. Rahim, Miller, Sindhu, Molinaro and Davidson and Ms. Denholm, in the event the employee is terminated involuntarily
by Juniper Networks without cause, and provided the employee executes a full release of claims, in a form satisfactory to Juniper
Networks, promptly following termination, the employee will be entitled to receive the following severance benefits: (i) an amount
equal to 12 months of base salary (for Messrs. Miller, Sindhu, Molinaro and Davidson), 15 months of base salary (for Ms. Denholm),
or 16.5 months of base salary (for Mr. Rahim), in each case as in effect immediately prior to the termination, and (ii) $18,000
in lieu of continuation of benefits (whether or not the individual elects COBRA).
In addition, in connection with Ms. Denholm’s promotion on
July 19, 2013, the Compensation Committee amended Ms. Denholm’s severance agreement to also provide that (i) severance benefits
would become payable in
the event that Ms. Denholm terminates her employment for good reason,
provided that Ms. Denholm executes a full release of claims, and (ii) her severance benefits would also include the vesting in
full, on the last day of Ms. Denholm’s employment, of any portion of her RSU award that was granted to her on July 19, 2013
that has not vested prior to the date of termination. On February 20, 2015, following the expiration of Ms. Denholm’s severance
agreement pursuant to its terms, the Compensation Committee authorized the Company to enter into a modified form of its standard
form severance agreement with Ms. Denholm, which modifications are consistent with Ms. Denholm’s prior severance agreement
as described above. Although Ms. Denholm had entered into a severance agreement with the Company, such agreement terminated upon
her resignation in July 2016 and she received no benefits thereunder.
All current severance agreements with our NEOs will expire in January
2019.
The following table describes the potential payments that would have
been provided for each of the NEOs (other than Ms. Denholm, as she had resigned from the Company in July 2016 and did not receive
any such benefits) upon termination of employment without cause (assuming the change of control benefits discussed below do not
apply), as described above, assuming such termination had occurred on December 31, 2016.
Potential Severance Payments for Termination Without
Cause
|
|
|
|
|
|
Value of
|
|
|
|
|
|
|
Base Salary
|
Incentive
|
Accelerated
|
Value of
|
|
|
Executive
|
|
Component
|
Component
|
Equity Awards
|
Benefits
|
|
Total
|
Rami Rahim
|
|
$
|
1,375,000
|
N/A
|
|
N/A
|
$
|
18,000
|
$
|
1,393,000
|
Kenneth Miller
|
|
$
|
525,000
|
N/A
|
|
N/A
|
$
|
18,000
|
$
|
543,000
|
Pradeep Sindhu
|
|
$
|
600,000
|
N/A
|
|
N/A
|
$
|
18,000
|
$
|
618,000
|
Vincent Molinaro
|
|
$
|
595,000
|
N/A
|
|
N/A
|
$
|
18,000
|
$
|
613,000
|
Jonathan Davidson
|
|
$
|
620,000
|
N/A
|
|
N/A
|
$
|
18,000
|
$
|
638,000
|
Change of Control
Severance
The Compensation Committee considers maintaining a stable and effective
management team to be essential to protecting and enhancing the best interests of the Company and its stockholders. To that end,
the Compensation Committee recognizes that the possibility of a change of control may exist from time to time, and that this possibility,
and the uncertainty and questions it may raise among management, may result in the departure or distraction of management to the
detriment of the Company and its stockholders. Accordingly, the Compensation Committee decided to take appropriate steps to encourage
the continued attention, dedication and continuity of members of the Company’s management to their assigned duties without
the distraction that may
arise from the possibility of a change of control. As a result, following
consultation with Semler Brossy, the Compensation Committee approved certain severance benefits for each of our NEOs, as well as
for several members of senior management, in the event of certain employment terminations following a change of control. In approving
these benefits the Compensation Committee, with input from Semler Brossy, considered a number of factors, including the prevalence
of similar benefits adopted by other publicly traded companies.
All current change of control agreements with our NEOs will expire
in January 2018. The Compensation Committee takes into account an executive’s current role and the impact of a transaction
on the role before renewing the agreements. Although Ms. Denholm had entered into a
48
Executive Compensation
|
|
change of control severance agreement with the
Company, such agreement terminated upon her resignation in July 2016 and she received no benefits thereunder.
Provided the executive signs a release of claims and complies with
certain post termination non-solicitation and non-competition obligations, all NEOs will receive change of control severance benefits
if either (i) the executive is terminated without cause within 12 months following the change of control or (ii) between four and
12 months following a change of control the executive terminates his or her employment with the Company (or any parent or subsidiary
of the Company) for good reason (both cause and good reason are defined in the agreement).
These change of control severance benefits consist of (i) a cash
payment equal to 150% (or 200% in the case of Mr. Rahim) of the executive’s annual base salary and target bonus for the fiscal
year in which the change of control or the executive’s termination occurs, whichever is greater, (ii) acceleration of vesting
of all of the executive’s then unvested outstanding stock options, stock appreciation rights, performance shares, RSUs and
other Company equity compensation awards that vest based on time, and (iii) a lump sum cash payment of $36,000 in lieu of continuation
of benefits (whether or not the individual elects COBRA). With respect to equity compensation awards that vest wholly or in part
based on factors other
than time, such as performance (whether
individual or based on external measures such as Company performance, market share, stock price, or otherwise), the change of
control severance benefits include acceleration as follows: (i) any portion for which the measurement or performance period
or performance measures have been completed and the resulting quantities have been determined or calculated, shall
immediately vest and become exercisable (and any rights of repurchase by the Company or restriction on sale shall lapse), and
(ii) the remaining portions shall immediately vest and become exercisable (and any rights of repurchase by the Company or
restriction on sale shall lapse) in an amount equal to the number that would be calculated if the performance measures were
achieved at the target level (provided that if there is no “target” level, then such amount shall equal 100% of
the equity compensation awards that could vest with respect to that measurement period).
The following table describes the potential payments that would have
been provided for each of the NEOs (other than Ms. Denholm, as she had resigned from the Company in July 2016 and did not receive
any such benefits) upon termination of employment in connection with a change of control of Juniper Networks, as described above,
assuming such termination had occurred on December 31, 2016.
Potential Payments Upon Termination in Connection
with a Change of Control
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
Compensation
|
|
Benefits
|
|
Value of
|
|
|
|
|
|
|
|
Severance
|
|
Severance
|
|
Severance
|
|
Accelerated
|
|
280G
|
|
|
|
Name
(1)
|
|
Component
|
|
Component
|
|
Component
|
|
Equity Awards
(2)
|
|
Gross-Up
|
|
|
Total
|
Rami Rahim
|
|
$
|
2,000,000
|
|
$
|
3,500,000
|
|
$
|
36,000
|
|
$
|
23,419,401
|
|
N/A
|
|
$
|
28,955,401
|
Kenneth Miller
|
|
$
|
787,500
|
|
$
|
787,500
|
|
$
|
36,000
|
|
$
|
3,565,762
|
|
N/A
|
|
$
|
5,176,762
|
Pradeep Sindhu
|
|
$
|
900,000
|
|
$
|
900,000
|
|
$
|
36,000
|
|
$
|
6,246,393
|
|
N/A
|
|
$
|
8,082,393
|
Vincent Molinaro
|
|
$
|
892,500
|
|
$
|
892,500
|
|
$
|
36,000
|
|
$
|
6,441,725
|
|
N/A
|
|
$
|
8,262,725
|
Jonathan Davidson
|
|
$
|
930,000
|
|
$
|
930,000
|
|
$
|
36,000
|
|
$
|
7,723,797
|
|
N/A
|
|
$
|
9,619,797
|
(1)
|
All NEOs are subject to a better-after-tax provision whereby Juniper Networks would either pay the NEO (i) the full amount of the NEO’s severance benefits or, alternatively (ii) an amount of certain severance benefits otherwise payable to the NEO such that the severance benefits will not be subject to the tax imposed by Section 4999 of the Code, whichever produces the better after-tax result for the NEO.
|
(2)
|
The value of accelerated unvested options, RSUs, price vested RSUs, Bonus PSUs and PSAs are based on a per share price of $28.26, which was the closing price as reported on December 31, 2016. With respect to PSAs, the equity value is calculated based on the sum of (i) earned, but unvested shares, and (ii) target unearned and unvested shares.
|
Equity Award Granting Policy
The Board has approved a policy for granting RSUs and other equity
awards. Pursuant to the policy, new hire and ad hoc promotional and adjustment grants to non-Section 16 officers are to be granted
monthly, which generally occurs on the third Friday of each month, except as discussed below. All approvals of RSU grants and other
equity awards by the Board, the Stock Committee, or the Compensation Committee (or a subcommittee thereof) are made at a meeting,
which may be either in-person or telephonic, and not by unanimous
written consent,
except that this requirement shall not apply to Board actions as to which the granting of equity awards is incidental to the primary
Board action. Annual performance grants to non-Section 16 officers are scheduled to occur on the same date as a monthly grant and
are generally approved by the Stock Committee in the manner described above. Grants in connection with acquisitions shall, unless
a date is specified in the acquisition agreement, occur to the extent practical on a date on which equity awards to Company employees are made by the Stock Committee. Annual equity awards
Continues on next page
►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
49
|
to Section
16 officers are generally scheduled to be approved at a meeting of the Compensation Committee, or a subcommittee thereof, in the
first quarter after the fourth fiscal quarter earnings announcement. The annual grants to Section 16 officers are also generally
scheduled to be effective on the third Friday of the month if the meeting approving such grants occurs on or before such date.
Notwithstanding the foregoing, if the Company is advised by outside counsel that the granting of equity awards on a particular
date or to particular recipients, or prior to the disclosure of certain non-public information, could reasonably be deemed to be
a violation of applicable laws or regulations, such grants may be delayed until such time as the granting of those awards would
be not reasonably expected to constitute a violation. If making a particular monthly grant would cause the Company to exceed any
granting limitation imposed by the Board or Compensation Committee (such as an annual limit), the monthly grant shall be delayed
until the first subsequent month in which the limitation would not be exceeded. If the making of a grant would cause the Company
to violate the terms of any agreement approved by the Board or one of its committees, such grant shall be delayed until it would
not violate such agreement. The exercise price of stock options granted will be the closing market price on the date of grant.
The Company intends to grant RSUs and other equity awards in accordance with the foregoing policy without regard to the timing
of the release of material non-public information, such as a positive or negative earnings announcement.
Equity Ownership Guidelines
The Company has adopted stock ownership guidelines to further align
the interests of the Company’s NEOs, certain former NEOs and non-employee directors with the interests of its stockholders
and promote the Company’s commitment to sound corporate governance. Please see the “
Executive Officer and Director
Stock Ownership Guidelines
” section of this proxy statement for more information.
Insider Trading Policy
The Company’s Insider Trading Policy prohibits all employees
and directors from short-selling transactions, hedging transactions, borrowing against the Company’s securities in margin
accounts and pledging the Company’s securities as collateral for loans.
No 280G Excise Tax Gross Ups
The Company has no executive officer contracts providing for excise
tax gross ups.
Repayment of Certain Bonus and Incentive Payments
In November 2015, the Board adopted a recoupment policy requiring
the Company to seek repayment of certain incentive-based compensation, including both cash and equity compensation, from our executive
officers, including our NEOs, in the event the Company is required to prepare an accounting restatement on an annual financial
statement included in an Annual Report on Form 10-K due to the material noncompliance of the Company with any financial reporting
requirements. In such event, if the Compensation Committee determines that (i) the amount of any incentive-based compensation that
is earned, vested or received by an executive officer exceeds the amount of incentive-based compensation that would have been earned,
vested or received by such executive officer had such incentive-based compensation been determined based on the restated financial
results (we refer to the excess amount as the “erroneously awarded compensation”), and (ii) such executive officer
engaged in fraud, intentional misconduct or intentional illegal conduct which, or such executive officer’s gross negligence,
materially contributed to the need for such an accounting restatement, then the Compensation Committee will seek to recover for
the benefit of the Company the erroneously awarded compensation.
Notwithstanding the foregoing, the Compensation Committee will seek
recovery only for erroneously awarded compensation earned, vested or received by an executive officer during the fiscal year in
which the Company is required to prepare an accounting restatement and the three completed fiscal years (or any transition period
that results from a change in the fiscal year of the Company within or immediately following such three completed fiscal years)
preceding the date or dates that the Company is required to prepare an accounting restatement. The Compensation Committee may also,
in its good faith judgment, determine not to seek recovery of any erroneously awarded compensation to the extent the Compensation
Committee determines (i) that to do so would be unreasonable or (ii) that it would be better for the Company not to do so.
The Impact of Favorable Accounting and Tax Treatment
on Compensation Program Design
Favorable accounting and tax treatment of the various elements of
our compensation program is a relevant consideration in their design. However, the Company and the Compensation Committee (and
the Subcommittee) have placed a higher priority on structuring flexible compensation programs to promote the recruitment, retention
and performance of Section 16 officers than
50
Executive Compensation
|
|
on maximizing tax deductibility. Section 162(m) of the Code places
a limit of $1,000,000 on the amount of compensation that Juniper Networks may deduct in any one year with respect to certain executive
officers. The Compensation Committee and the Subcommittee have the ability through the use of the 2015 Plan and the Performance
Bonus Plan to grant awards that qualify as “performance-based compensation” exempt from that $1,000,000 limitation
but, in order to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals,
the Compensation Committee has not adopted a policy requiring all compensation to be deductible, and has in the past and will in
the future make grants of compensation that do not qualify to be exempt from the $1,000,000 limitation when it believes that it
is appropriate to meet its compensation objectives. Because of the fact-based nature of the performance-based compensation exception
under Section 162(m) of the Code and the limited availability
of binding guidance thereunder, the Company cannot
guarantee that the awards under the AIP (including the Bonus PSUs), the PSAs and/or price vested RSUs will qualify for
exemption under Section 162(m) of the Code.
The Company intends for all executive officer arrangements to be
structured in a manner that does not result in any additional taxation under Section 409A of the Code; however, the Company cannot
guarantee this result.
Compensation Risk Assessment
The Compensation Committee annually oversees the performance of a
risk assessment of our compensation programs. In 2016, the Compensation Committee, in consultation with Semler Brossy, reviewed
the Company’s compensation policies and practices and determined that they do not create risks that are reasonably likely
to have a material adverse effect on the Company.
|
|
Report
of the Audit Committee of the Board of Directors
|
The following Audit Committee Report shall not be deemed to
be “soliciting material” and should not be deemed “filed” and shall not be deemed to be incorporated by
reference in future filings with the SEC, except to the extent that the Company specifically incorporates it by reference into
a document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
The Audit Committee is composed entirely of non-management directors.
The members of the Audit Committee meet the independence and financial literacy requirements of the NYSE and additional, heightened
independence criteria applicable to members of the Audit Committee under SEC and NYSE rules. The Audit Committee operates under
a written charter, which contains a description of the scope of the Audit Committee’s responsibilities and how they will
be carried out, which may be found on the Company’s website at http://investor.juniper.net/investor-relations/corporate-governance/default.aspx.
The Audit Committee oversees the Company’s financial reporting
process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting
process including establishing and maintaining adequate internal control over the Company’s financial reporting. The independent
registered public accounting firm of Ernst & Young LLP, or E&Y, reports to the Audit Committee and E&Y is responsible
for performing an independent audit of the Company’s consolidated financial statements and internal control over financial
reporting in accordance with generally accepted auditing standards in the United States. The Audit Committee discussed with E&Y
the overall scope and plans for the audit. The Audit Committee meets regularly with E&Y, with and without management present,
to discuss the results of E&Y’s examinations, evaluations of the Company’s internal controls, and the overall quality
of the Company’s financial reporting. The Audit Committee held 20 meetings during fiscal year 2016.
In this context, the Audit Committee hereby reports as follows:
|
1.
|
The Audit Committee has reviewed and discussed the Company’s audited financial statements for the fiscal year ended December 31, 2016 with the Company’s management.
|
|
2.
|
The Audit Committee has discussed with the Company’s independent registered public accounting firm the matters required to be discussed by under the rules adopted by the Public Company Accounting Oversight Board.
|
|
|
|
|
3.
|
The Audit Committee has received the written disclosures and the letter from the Company’s independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the Company’s independent registered public accounting firm its independence.
|
|
|
|
|
4.
|
Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board, and the Board has approved, that the Company’s audited financial statements for the fiscal year ended December 31, 2016 be included in Juniper Networks’ Annual Report on Form 10-K for the fiscal year ended December 31, 2016, for filing with the SEC.
|
|
|
|
MEMBERS OF THE AUDIT COMMITTEE
Robert M. Calderoni (Chair)
Mercedes Johnson
Rahul Merchant
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
67
|
Questions and Answers about the Proxy Materials and the Annual
Meeting
Q:
|
Why am I receiving these materials?
|
A:
|
The Board of Juniper Networks, has made these materials available to you on the Internet or, upon your request, has delivered
printed versions of these materials to you by mail or email, in connection with the Board’s solicitation of proxies for use
at Juniper Networks’ annual meeting of stockholders, which will take place on May 25, 2017. As a Juniper Networks stockholder
as of March 31, 2017 (the “Record Date”), you are invited to attend the annual meeting and are entitled to and requested
to vote on the items of business described in this proxy statement.
|
Q:
|
What is included in these materials?
|
A:
|
These materials include:
|
|
●
|
Our proxy statement for the annual meeting; and
|
|
●
|
Our 2016 Annual Report, which includes our audited consolidated financial
statements.
|
If you requested printed versions of these materials
by mail, these materials also include the proxy card or voting instruction card for the annual meeting.
|
Q:
|
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full
set of proxy materials?
|
A:
|
Pursuant
to rules adopted by the SEC, we
have elected to provide access to
our proxy materials over the Internet.
Accordingly, on or about April 10,
2017, we are sending a Notice of
Internet Availability of Proxy Materials,
which we refer to as the Notice,
to our stockholders of record and
beneficial owners as of the Record
Date. All stockholders will have
the ability to access the proxy
materials on the website referred
to in the Notice (www.proxyvote.com).
You may also request to receive
a set of the proxy materials by
mail or electronically by email.
Instructions on how to access the
proxy materials over the Internet
or to request a printed copy may
be found in the Notice. In addition,
stockholders may request to receive
proxy materials in printed form
by mail or electronically by email
on an ongoing basis.
|
Q:
|
How can I get electronic access to the proxy materials?
|
A:
|
The Notice will provide you with instructions regarding how to:
|
|
●
|
View our proxy materials for the annual meeting on the Internet; and
|
|
●
|
Instruct us to send future proxy materials to you electronically by email or in paper copy by mail.
|
Choosing to access our proxy materials on the Internet
or to receive future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the
impact of our annual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an
email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive
proxy materials by email will remain in effect until you terminate it.
Q:
|
How may I obtain Juniper Networks’ 2016 Annual Report on Form 10-K?
|
A:
|
Stockholders may request a free copy of the 2016 Annual Report on Form 10-K from our principal executive offices at:
|
Juniper Networks, Inc.
Attn: Investor Relations
1133 Innovation Way
Sunnyvale, CA 94089
(408) 745-2000
A copy of our 2016 Annual Report on Form 10-K is also
available with our other proxy materials at www.proxyvote.com. In addition, you can access a copy on the website of the SEC. You
can reach this website by going to the Investor Relations Center on our website, and clicking on the link labeled “SEC Filings.”
The website of the Investor Relations Center is:
http://investor.juniper.net/investor-relations/default.aspx
We will also furnish any exhibit to the 2016 Annual
Report on Form 10-K if specifically requested in writing.
68
Questions and Answers about the Proxy Materials
and the Annual Meeting
|
|
Q:
|
How may I obtain a separate set of proxy materials?
|
A:
|
As a result of Juniper’s adoption of “householding,” if you share an address with another stockholder, you
may receive only one Notice (or other stockholder communications, including our proxy materials) unless you have provided contrary
instructions. Juniper will deliver promptly upon written or oral request a separate Notice (or other stockholder communications,
including our proxy materials), now or in the future, to any stockholder at a shared address to which a single copy of these documents
was delivered. To request a separate copy, you may write or call Juniper’s Investor Relations Department at:
|
Juniper Networks, Inc.
Attn: Investor Relations
1133 Innovation Way
Sunnyvale, CA 94089
(408) 745-2000
Similarly, if you share an address
with another stockholder and have received multiple copies of the Notice (or other stockholder communications, including our proxy
materials), you may write or call us at the above address and phone number to request delivery of a single copy of these documents.
Q:
|
What items of business will be voted on at the annual meeting?
|
A:
|
The items of business scheduled to be voted on at the annual meeting are:
|
|
●
|
To elect nine directors to hold office until the next annual meeting of stockholders or until their respective successors have been elected and qualified;
|
|
●
|
To ratify the appointment of Ernst & Young LLP, as Juniper Networks, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2017;
|
|
●
|
To approve the amendment and restatement of the Juniper Networks, Inc. 2015 Equity Incentive Plan to, among other things, increase the number of shares of common stock reserved for issuance thereunder by 23,000,000, and provide a maximum annual limit on non-employee director compensation;
|
|
●
|
To approve the amendment and restatement of the Juniper Networks, Inc. 2008 Employee Stock Purchase Plan to increase the number of shares available for issuance thereunder by 9,000,000 shares;
|
|
●
|
To approve a Certificate of Amendment to the Restated Certificate of Incorporation of Juniper Networks, Inc. to eliminate any supermajority voting requirements contained therein;
|
|
●
|
To hold a non-binding advisory vote regarding executive compensation;
|
|
●
|
To approve, on an advisory basis, the frequency of future stockholder advisory votes on the compensation of our named executive officers;
|
|
●
|
To vote upon a proposal submitted by one of our stockholders regarding annual disclosure of EEO-1 data, if properly presented at the annual meeting; and
|
|
●
|
To consider such other business as may properly come before the meeting.
|
Q:
|
How does the Board recommend that I vote?
|
A:
|
Our Board recommends that you vote your shares:
|
|
●
|
“FOR” each of the director nominees to the Board;
|
|
●
|
“FOR” the ratification of the appointment of Ernst & Young LLP as Juniper’s independent registered public accounting firm for the fiscal year ending December 31, 2017;
|
|
●
|
“FOR” the approval to amend and restate the Juniper Networks, Inc. 2015 Equity Incentive Plan;
|
|
●
|
“FOR” the approval to amend and restate the Juniper Networks, Inc. 2008 Employee Stock Purchase Plan;
|
|
●
|
“FOR” the approval of the Certificate of Amendment to the Restated Certificate of Incorporation;
|
|
●
|
“FOR” the approval of our executive compensation;
|
|
●
|
To hold future stockholder advisory votes on the compensation of our named executive officers every “1 YEAR;” and
|
|
●
|
“AGAINST” the stockholder proposal.
|
Q:
|
What shares can I vote?
|
A:
|
Each
share of Juniper Networks common
stock issued and outstanding as
of the close of business on March
31, 2017, the Record Date, is entitled
to vote on all items being voted
upon at the annual meeting. You
may vote all shares owned by you
as of the Record Date, including
(i) shares held directly in your
name as the
stockholder of record
and (ii) shares held for you
as the
beneficial owner
(i.e.,
in street name) through a broker,
trustee or other nominee such as
a bank. More information on how
to vote these shares is contained
in this proxy statement. On the
Record Date, we had approximately 382,466,817 shares
of common stock issued and outstanding.
|
Continues on next page
►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
69
|
Q:
|
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
|
A:
|
Most Juniper Networks stockholders hold their shares through a broker or other nominee rather than directly in their own name.
As summarized below, there are some distinctions between shares held of record and those owned beneficially, which may affect how
you can vote your shares.
|
Stockholder of Record
– If your shares
are registered directly in your name with Juniper Networks’ transfer agent, Wells Fargo Shareowner Services, you are considered,
with respect to those shares, the stockholder of record, and the Notice or proxy statement was sent directly to you by Juniper
Networks. As the stockholder of record, you have the right to grant your voting proxy directly to Juniper Networks as described
in the Notice and this proxy statement or to vote in person at the annual meeting.
Beneficial Owner
– If your shares are held
in a brokerage account, by a trustee or by another nominee, you are considered the beneficial owner of shares held in street name,
and the Notice or proxy statement was forwarded to you by your broker or nominee. As the beneficial owner, you have the right to
direct your broker, trustee or nominee on how to vote and are also invited to attend the annual meeting. Please see
“How
can I attend the annual meeting?”
for details on the information you must bring with you in order to attend the annual
meeting as a beneficial owner.
Since a beneficial owner is not the stockholder of record,
you may not vote these shares in person at the meeting unless you obtain a legal proxy from the broker, trustee or nominee that
holds your shares, giving you the right to vote the shares at the meeting. Your broker, trustee or nominee has enclosed or provided
a voting instruction card for you to use in directing the broker, trustee or nominee on how to vote your shares.
Q:
|
How can I attend the annual meeting?
|
A:
|
You are entitled to attend the annual meeting only if you were a Juniper Networks stockholder
as of the close of business on March 31, 2017, the Record Date. You should be prepared to present valid government-issued photo
identification for admittance. In addition, if you are a
stockholder of record
, your name will be
|
verified against the list of stockholders of record on
the record date prior to your being admitted to the annual meeting. If you are a
beneficial owner
and not a
stockholder
of record
because you hold shares through a broker, trustee or nominee (i.e., in street name), you should provide proof of
beneficial ownership on the record date, such as your most recent account statement as of March 31, 2017, the Record Date, a copy
of any voting instruction card provided by your broker, trustee or nominee, or other similar evidence of ownership. If you do not
provide valid government-issued photo identification or comply with the other procedures outlined above upon request, you will
not be admitted to the annual meeting.
The annual meeting will be held on May 25, 2017 at our
corporate headquarters located at 1133 Innovation Way, Building A, Aristotle Conference Room, Sunnyvale, CA 94089. The annual meeting
will begin promptly at 9:00 a.m., Pacific Time. Check-in will begin at 8:30 a.m., and you should allow ample time for the check-in
procedures.
Q:
|
How can I vote my shares in person at the annual meeting?
|
A:
|
Shares held in your name as the
stockholder of record
may be voted in person at the annual meeting. Shares held beneficially
in street name may be voted in person only if you obtain a legal proxy from the broker, trustee or nominee that holds your shares
giving you the right to vote the shares.
Even if you plan to attend the annual meeting, you should also submit your proxy or
voting instructions as described below so that your vote will be counted if you later decide not to attend the meeting.
|
Q:
|
How can I vote my shares without attending the annual meeting?
|
A:
|
Whether you hold shares directly as the
stockholder of record
or beneficially in street name, you may direct how your
shares are voted without attending the meeting. If you are a
stockholder of record
, you may vote by submitting a proxy by
any of the methods specified below. If you hold shares beneficially in street name, you may vote by submitting voting instructions
to your broker, trustee or nominee. For directions on how to vote, please refer to the instructions in the proxy card or, for shares
held beneficially in street name, the voting instruction card provided by your broker, trustee or nominee.
|
70
Questions and Answers about the Proxy Materials
and the Annual Meeting
|
|
By Internet
– Stockholders of record of
Juniper Networks with Internet access may submit proxies by following the “Vote by Internet” instructions on their
proxy cards or the Notice and by following the voting instructions on the website. If you hold your shares in street name, please
check the voting instruction card provided by your broker, trustee or nominee for Internet voting availability and instructions.
By Telephone
– Stockholders of record of
Juniper Networks who live in the United States or Canada may submit proxies by following the “Vote by Phone” instructions
on their proxy cards or the Notice or by following the voting instructions provided by email or over the Internet. If you hold
your shares in street name, please check the voting instruction card provided by your broker, trustee or nominee for telephone
voting availability and instructions.
By Mail
– Stockholders of record of Juniper
Networks who receive proxy materials by mail may submit proxies by completing, signing and dating their proxy cards and mailing
them in the accompanying pre-addressed envelopes. Juniper Networks stockholders who hold shares beneficially in street name and
who receive voting materials by mail from their brokers, trustees or nominees may vote by mail by completing, signing and dating
the voting instruction cards provided and mailing them in the accompanying pre-addressed envelopes.
Q:
|
Can I change my vote or otherwise revoke my proxy?
|
A:
|
You may change your vote at any time prior to the vote at the annual meeting. If you are the stockholder of record, you may
change your vote by granting a new proxy by telephone, over the Internet or by submitting a properly signed proxy card bearing
a later date (which automatically revokes the earlier proxy). You may also revoke your proxy by providing a written notice of revocation
to the Juniper Networks’ Corporate Secretary at Juniper Networks, Inc., ATTN: Corporate Secretary, 1133 Innovation Way, Sunnyvale,
California 94089 prior to your shares being voted, or by attending the annual meeting and voting in person. Attendance at the annual
meeting without any other action will not cause your previously granted proxy to be revoked. For shares you hold beneficially in
street name, you may change your vote by submitting new voting instructions to your broker, trustee or nominee, or, if you have
obtained a legal proxy from your broker or nominee giving you the right to vote your shares, by attending the annual meeting and
voting in person.
|
Q:
|
How many shares must be present or represented to conduct business at the annual meeting?
|
A:
|
The quorum requirement for holding the annual meeting and transacting business is that holders of a majority of shares of Juniper
Networks common stock entitled to vote must be present in person or represented by proxy at the annual meeting. Both abstentions
and broker non-votes will be counted for the purpose of determining the presence of a quorum.
|
Q:
|
Will my shares be voted if I do not vote as described in the Notice?
|
A:
|
If your shares are held in street name, your broker may, under certain circumstances, vote your shares. Certain brokerage firms,
trustees and nominees have authority to vote client’s unvoted shares on some “routine” matters. If you do not
give voting instructions to your broker, trustee or nominee, your broker, trustee or nominee may either (1) vote your shares on
“routine” matters or (2) leave your shares unvoted. The proposal related to the ratification of the appointment of
Ernst & Young as our auditors for the fiscal year ending December 31, 2017 is considered a “routine” matter. None
of the other proposals are considered “routine” matters and therefore, your broker will not be able to vote on these
proposals without your instructions. If you are a stockholder of record and do not submit a proxy or vote at the annual meeting,
your shares will not be voted.
|
If you provide specific instructions with regard to
certain items, your shares will be voted as you instruct on such items. If you sign your proxy card or voting instruction card
or vote by telephone or over the Internet without giving specific instructions, your shares will be voted in accordance with the
recommendations of the Board (“FOR” all of Juniper Networks’ director nominees to the Board, “FOR”
ratification of the independent registered public accounting firm, “FOR” approval of the amendment and restatement
of the 2015 Equity Incentive Plan, “FOR” approval of the amendment and restatement of the 2008 Employee Stock Purchase
Plan, “FOR” approval of the Certificate of Amendment of the Restated Certificate of Incorporation, “FOR”
approval of our executive compensation ,To hold future stockholder advisory votes on the compensation of our named executive officers
every “1 YEAR,” and “AGAINST” the stockholder proposal) and in the discretion of the proxy holders as to
any other matters that may properly come before the annual meeting.
Continues on next page
►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
|
71
|
Q:
|
What is the vote required to approve each of the proposals?
|
A:
|
●
|
Each of the nine director nominees will be elected if he or she receives the affirmative vote of a majority of the votes cast with respect to the director nominee at the annual meeting (meaning the number of shares voted “FOR” a director nominee must exceed the number of shares voted “AGAINST” that director nominee).
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Approval of the ratification of the independent registered public accounting firm, the amendment and restatement of the 2015 Equity Incentive Plan, the amendment and restatement of the 2008 Employee Stock Purchase Plan, the non-binding advisory proposal on our executive compensation, and the stockholder proposal each requires the affirmative “FOR” vote of a majority of the shares of Juniper Networks common stock present in person or represented by proxy and entitled to vote at the meeting. The vote on approval of our executive compensation is non-binding on the Company and the Board. However, the Compensation Committee of the Board, which is responsible for designing and administering the Company’s executive compensation programs, values the opinions expressed by our stockholders and will take the outcome of the vote under advisement in evaluating our executive compensation principles, design and practices. In addition, the vote on the stockholder proposal is non-binding on the Company and the Board, but our Board will take into account the outcome of the vote when considering whether to annually disclose our EEO-1 Report data.
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The option of 1 year, 2 years or 3 years that receives the highest number of votes cast by stockholders will be considered the stockholders’ preferred frequency for holding an advisory vote on executive compensation. The vote on the frequency to hold future stockholder advisory votes on the compensation of our named executive officers is non-binding on the Company and the Board; however, the Board values the opinions expressed by our stockholders and will take the outcome of the vote under advisement in evaluating the frequency in which we hold future stockholder advisory votes on executive compensation.
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Approval of the Certificate of Amendment to the Restated Certificate of Incorporation requires the affirmative “FOR” vote of the holders of at least 66-2/3% of our outstanding voting stock entitled to vote at the annual meeting.
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Broker Non-Votes:
For purposes of all proposals,
broker non-votes will not affect the outcome of proposals, assuming that a quorum is obtained.
Abstentions:
Abstentions will have the same effect
as a vote “AGAINST” the approval of the ratification of the independent registered public accounting firm, the amendment
and restatement of the 2015 Equity Incentive Plan, the amendment and restatement of the 2008 Employee Stock Purchase Plan, the
non-binding advisory proposal on executive compensation, and the stockholder proposal. Abstentions will not affect the vote on
the election of directors or on the vote on the frequency of holding future stockholder advisory votes on the compensation of our
NEOs.
Q:
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What are broker non-votes?
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A:
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If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute
“broker non-votes.” Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter
without instructions from the beneficial owner.
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Q:
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What happens if additional matters are presented at the annual meeting?
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A:
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Other than the eight items of business described in this proxy statement, we are not aware of any other business to be acted
upon at the annual meeting. If you grant a proxy, the persons named as proxy holders, Kenneth Miller and Brian Martin, will have
the discretion to vote your shares on any additional matters properly presented for a vote at the annual meeting. If for any unforeseen
reason any of our director nominees is not available as a candidate for director, the persons named as proxy holders will vote
your proxy for such other candidate or candidates as may be nominated by the Board.
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Q:
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Who will bear the cost of soliciting votes for the annual meeting?
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A:
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Juniper Networks is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing and distributing
these materials and soliciting votes. If you access the proxy materials and/or vote over the Internet, you are responsible for
Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur.
In addition to the mailing of these materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic
communication by our directors, officers and employees, who will not receive any additional
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72
Questions and Answers about the Proxy Materials
and the Annual Meeting
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compensation for such solicitation
activities. We also have hired Innisfree M&A Incorporated to assist us in the distribution of proxy materials and the
solicitation of votes described above. We will pay Innisfree M&A Incorporated a fee of $20,000 and reimburse them for
customary costs and expenses associated with these services. Upon request, we will also reimburse brokerage houses and other
custodians, nominees and fiduciaries for forwarding proxy and solicitation materials to stockholders.
Q:
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Where can I find the voting results of the annual meeting?
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A:
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We intend to announce voting results from the annual meeting in a current report on Form 8-K within four (4) business days of the annual meeting. If the voting
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results announced in the Form 8-K are preliminary, we will file an amended Form 8-K reporting final voting results within four (4) business days of such final voting results becoming available.
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Q:
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What is the deadline to propose actions for consideration or to nominate individuals to serve as directors at the 2017
annual meeting of stockholders?
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A:
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Although the deadline for submitting proposals or director nominations for consideration at the 2017 annual meeting of stockholders
has passed, you may submit proposals and director nominations for consideration at future stockholder meetings. For further information,
see the section entitled “
Stockholder Proposals
” below.
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Stockholder Proposals
Requirements for stockholder proposals to be considered
for inclusion in the Company’s proxy materials.
For a stockholder proposal to be considered for inclusion in Juniper
Networks’ proxy statement for the 2018 annual meeting of stockholders, the written proposal must be received by the Corporate
Secretary of Juniper Networks at our principal executive offices no later than December 11, 2017. If the date of the 2017 annual
meeting of stockholders is moved more than 30 days before or after the anniversary date of the 2017 annual meeting, the deadline
for inclusion of proposals in Juniper Networks’ proxy statement for the 2018 annual meeting of stockholders will be a reasonable
time before Juniper Networks begins to print and mail its proxy materials for the 2018 annual meeting of stockholders. All such
proposals also will need to comply with SEC regulations under Rule 14a-8 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), which lists the requirements regarding the inclusion of stockholder proposals in company-sponsored
proxy materials.
Proxy Access:
Any stockholder (or group of up to
20 stockholders) meeting the Company’s continuous ownership requirements of three percent (3%) or more of our common stock
for at least three years who wishes to nominate a candidate or candidates for election in connection with our 2018 annual meeting
and requires the Company to include such nominees in the proxy statement and form of proxy, must submit a notice to the secretary
of the Company at the principal executive offices of the Company no later than December 11, 2017 and no earlier than November 11,
2017 (i.e. no later
than the 120th day and no earlier than the 150th day before
the one-year anniversary of the date on which the Company first mailed its proxy materials for the Company’s 2017 annual
meeting of stockholders). If the date of the 2018 annual meeting is advanced by more than 30 days prior to or delayed by more
than 60 days after the one-year anniversary of 2017 annual meeting, then, for the notice to be timely delivered, it must be received
by the secretary not earlier than the close of business on the 120th day prior to the 2018 annual meeting and not later than the
close of business on the later of (i) the 90th day prior to the 2018 annual meeting or (ii) the tenth (10th) day following the
day on which public announcement of the 2018 annual meeting is first made by Juniper Networks.
Requirements for other stockholder proposals and director
nominations.
Notice of any proposal that a stockholder intends to present at the 2018 annual meeting of stockholders, but
does not intend to have included in the Company’s proxy statement and form of proxy relating to the 2018 annual meeting of
stockholders, as well as any director nominations, must be timely delivered to the Company’s Secretary in accordance with
the bylaws of the Company, which, in general, require that the proper notice be received by the Corporate Secretary of Juniper
Networks not more than 75 days and not less than 45 days prior to the one year anniversary of the date Juniper Networks first mailed
its proxy materials or a notice of availability of proxy materials (whichever is earlier) to stockholders in connection with the
previous year’s annual meeting of stockholders. In addition, to be
Continues on next
page ►
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
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73
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in proper form, a stockholder’s notice to the Corporate
Secretary must set forth the information required by the Company’s bylaws.
For the 2018 annual meeting of stockholders, the notice must
be received no earlier than January 25, 2018 and no later than February 24, 2018. However, if the date of the 2018 annual meeting
is advanced more than 30 days before or more than 60 days after the anniversary date of this year’s annual meeting, then
for notice to be timely, the notice must be received by the Corporate Secretary not earlier than the 120th day prior to the 2018
annual meeting and not later than the close of business on the later of the 90th day prior to the 2018 annual meeting or the 10th
day following the day on which public announcement of the date of the 2018 annual meeting is first made by Juniper Networks. In
no event will the public announcement of an adjournment or postponement of an annual meeting of stockholders or the announcement
thereof commence a new time period for the giving of a stockholder’s notice as provided above.
Recommendation and Nomination of Director Candidates:
The
Nominating and Corporate Governance Committee will consider both recommendations and nominations for candidates to the Board from
Qualifying Stockholders. A “Qualifying Stockholder” is a stockholder that has
owned for a period of one year prior
to the date of the submission of the recommendation through the time of submission of the recommendation at least 1% of the total
common stock of the Company outstanding as of the last day of the calendar month preceding the submission. A Qualifying Stockholder
that desires to recommend a candidate for election to the Board must direct the recommendation in writing to the Corporate Secretary
of Juniper Networks, and must include the candidate’s name, home and business contact information, detailed biographical
data and qualifications, information regarding any relationships between the candidate and the Company within the last three years,
written evidence that the candidate is willing to serve as a director of the Company if nominated and elected and evidence of the
nominating person’s ownership of Company common stock.
Corporate Secretary:
Stockholder proposals must
be delivered to the Company’s Secretary via mail to Juniper Networks, Inc., ATTN: Corporate Secretary, 1133 Innovation Way,
Sunnyvale, CA 94089.
Copy of Bylaws:
You may contact the Juniper Networks
Corporate Secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for
making stockholder proposals and nominating director candidates.
Forward-Looking Statements
This proxy statement contains forward-looking statements within
the meaning of section 27A of the Securities Act, as amended, and section 21E of the Exchange Act. Words such as “may,”
“will,” “should,” “likely,” “anticipates,” “expects,” “intends,”
“plans,” “projects,” “believes,” “estimates” and similar expressions are used to
identify these forward-looking statements. Statements that refer to or are based on projections, forecasts, uncertain events or
assumptions also identify forward-looking statements, including, among other things, statements regarding expected or future equity
usage or burn-rate.
These statements involve a number of risks, uncertainties and other factors that could cause actual results
to differ materially from those expressed or implied. For a more detailed discussion of these factors, see the information under
“Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
in our most recent Form 10-K filed with the SEC. Our forward-looking statements speak only as of the date of this proxy statement
or as of the date they are made, and we undertake no obligation to update them.
74
Directions to Juniper Networks, Inc. Corporate
Headquarters
1133 Innovation Way
Building A, Aristotle Conference Room
Sunnyvale, CA 94089
From San Francisco Airport:
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Travel south on Highway 101.
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Exit Highway 237 east in Sunnyvale.
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Exit Mathilda and turn left onto Mathilda Avenue.
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Continue on Mathilda Avenue and turn left onto Innovation Way.
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Juniper Networks’ Corporate Headquarters, Building A, will be on the right side.
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From San Jose Airport and points south:
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Travel north on Highway 101 to Mathilda Avenue in Sunnyvale.
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Exit Mathilda Avenue north.
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Continue on Mathilda Avenue and turn left onto Innovation Way.
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Juniper Networks’ Corporate Headquarters, Building A, will be on the right side.
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From Oakland Airport and the East Bay:
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Travel south on Interstate 880 until you get to Milpitas.
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Turn right on Highway 237 west.
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Continue approximately 10 miles.
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Exit Mathilda Avenue and turn right at the stoplight (Mathilda Avenue).
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Continue on Mathilda Avenue and turn left onto Innovation Way.
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Juniper Networks’ Corporate Headquarters, Building A, will be on the right side.
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Annex A
JUNIPER NETWORKS, INC.
2015 EQUITY INCENTIVE PLAN
As amended and restated as of , 2017
1.
Purposes of
the Plan
. The Plan is intended to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Service Providers and to promote the success of the Company’s business
The Plan permits
the grant of Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Shares, Performance
Units, Deferred Stock Units and Dividend Equivalents. The Plan also provides for the automatic, non-discretionary
grant of certain Awards to Outside Directors as further specified herein.
2.
Definitions
. As
used herein, the following definitions shall apply:
(a) “
Administrator
”
means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) “
Applicable
Laws
” means the requirements relating to the administration of equity incentive plans, the grant of Awards and
the related issuance of Shares under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock
exchange or quotation system on which the Common Stock is listed or quoted and under the laws, rules and regulations of any foreign
country or jurisdiction where Awards are, or will be, granted under the Plan or where Participants may reside and/or work, as such
requirements shall be in place from time to time.
(c) “
Award
”
means, individually or collectively, a grant under the Plan of Options, Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights, Performance Shares, Performance Units, Deferred Stock Units or Dividend Equivalents.
(d) “
Award
Agreement
” means the written or electronic agreement, in such form as the Administrator prescribes from time to
time, setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject
to the terms and conditions of the Plan.
(e) “
Board
”
means the Board of Directors of the Company.
(f) “
Change
in Control
” means the occurrence of any of the following events:
(i) A change in the
ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“
Person
”),
acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty
percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection,
the acquisition of additional stock by any Person, who is considered to own more than fifty percent (50%) of the total
voting power of the stock of the Company will not be considered a Change in Control; or
(ii) A change in
the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve
(12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior
to the date of the appointment or election; or
(iii) A change in
the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has
acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets
from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair
market value of all of the assets of the Company immediately
76
prior to such acquisition or acquisitions; provided, however, that
for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of
the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately
after the transfer (provided that such entity is controlled in substantially the same proportions by the Company’s
stockholders who held the Company’s securities immediately before such transfer), or (B) a transfer of assets
by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for the
Company’s stock (provided that the value of the Company’s stock exchanged for such assets shall be substantially
equal to or greater than the value of such assets, as determined by the Board), (2) an entity, fifty percent (50%) or
more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns,
directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the
Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly
or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market
value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to
any liabilities associated with such assets.
For purposes of this
definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock, or similar business transaction with the Company.
Notwithstanding the
foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within
the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury
Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.
Further and for the
avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state
of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s securities immediately before such transaction.
(g) “
Code
”
means the U.S. Internal Revenue Code of 1986, as amended.
(h) “
Common
Stock
” means the common stock of the Company.
(i) “
Committee
”
means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board or a duly authorized committee
of the Board, in accordance with Section 4(a) of the Plan.
(j) “
Company
”
means Juniper Networks, Inc., a Delaware corporation, or any successor thereto.
(k) “
Company
Group
” means the Company, any Parent or Subsidiary, and any entity that, from time to time and at the time of any determination,
directly or indirectly, is in control of, is controlled by or is under common control with the Company.
(l) “
Consultant
”
means any natural person engaged by the Company Group to render services and who is compensated for such services, but who is neither
an Employee nor a Director; provided, that a Consultant will include only those persons to whom the issuance of Common Stock may
be registered under Form S-8 under the U.S. Securities Act of 1933, as amended.
(m) “
Continuous
Status as a Director
” means that the Director relationship is not interrupted or terminated.
(n) “
Deferred
Stock Unit
” means a deferred stock unit Award granted to a Participant pursuant to Section 15.
(o) “
Director
”
means a member of the Board.
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
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77
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(p) “
Disability
”
means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards
other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability
exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.
(q) “
Dividend
Equivalent
” means a credit, payable in cash or Shares, made at the discretion of the Administrator, to the account of
a Participant in an amount equal to the cash dividends paid on one Share for each Share represented by an Award held by such Participant.
Any Dividend Equivalents credited with respect to a Share or unit subject to an Award shall be distributed in cash or Shares to
the Participant only if, when and to the extent such Share or unit vests. The value of dividends and other distributions payable
with respect to any Share or unit subject to an Award that does not vest shall be forfeited.
(r) “
Effective
Date
” means May 19, 2015, the date the stockholders of the Company initially approved the 2015 Equity Incentive
Plan.
(s) “
Employee
”
means any person, including Officers and Directors, employed by the Company or any member of the Company Group. However, with respect
to Incentive Stock Options, an Employee must be employed by the Company or any Parent or Subsidiary. Neither service as a Director
nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
(t) “
Exchange
Act
” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(u) “
Fair
Market Value
” means the closing sales price of Common Stock on the date of determination (or the mean of the closing
bid and asked prices for the Common Stock if no sales were reported) as reported by the New York Stock Exchange or such other source
as the Administrator deems to be reliable. Notwithstanding the foregoing, if the determination date for the Fair Market Value occurs
on a weekend, holiday or other non-Trading Day, the Fair Market Value will be the price as determined above on the immediately
preceding Trading Day, unless otherwise determined by the Administrator. In addition, for purposes of determining the fair market
value of Shares for any reason other than the determination of the exercise price of Options or Stock Appreciation Rights, fair
market value will be determined by the Administrator in a manner compliant with Applicable Laws and applied consistently for such
purpose. The determination of fair market value for purposes of tax withholding may be made in the Administrator’s sole discretion
subject to Applicable Laws and is not required to be consistent with the determination of Fair Market Value for other purposes.
(v) “
Fiscal
Year
” means a fiscal year of the Company.
(w) “
Full
Value Award
” means a grant of Restricted Stock, a Restricted Stock Unit, a Performance Share or a Deferred Stock Unit
hereunder.
(x) “
Incentive
Stock Option
” means an Option intended to qualify as an incentive stock option within the meaning of Section 422
of the Code.
(y) “
Nonstatutory
Stock Option
” means an Option not intended to qualify as an Incentive Stock Option.
(z) “
Officer
”
means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act.
(aa) “
Option
”
means a stock option granted pursuant to the Plan.
(bb) “
Optioned
Stock
” means the Common Stock subject to an Option.
(cc) “
Outside
Director
” means a Director who is not an Employee.
78
(dd) “
Parent
”
means a “parent corporation”, whether now or hereafter existing, as defined in Section 424(e) of the Code.
(ee) “
Participant
”
means the holder of an outstanding Award.
(ff) “
Performance
Goals
” means the goal(s) (or combined goal(s)) determined by the Administrator (in its discretion) to be applicable to
a Participant with respect to an Award. As determined by the Administrator, the performance measures for any performance period
will be any one or more of the following objective performance criteria, applied to either the Company as a whole or, except with
respect to stockholder return metrics, to a region, business unit, affiliate or business segment, and measured either on an absolute
basis or relative to a pre-established target, to a previous period’s results or to a designated comparison group, and, with
respect to financial metrics, which may be determined in accordance with United States Generally Accepted Accounting Principles
(“
GAAP
”), in accordance with accounting principles established by the International Accounting Standards Board
(“
IASB Principles
”) or which may be adjusted when established to exclude any items otherwise includable under
GAAP or under IASB Principles: (i) cash flow (including operating cash flow or free cash flow), (ii) cash position, (iii) revenue
(on an absolute basis or adjusted for currency effects), (iv) revenue growth, (v) contribution margin, (vi) gross
margin, (vii) operating margin (viii) operating expenses or operating expenses as a percentage of revenue, (ix) earnings
(which may include earnings before interest and taxes, earnings before taxes and net earnings), (x) earnings per share, (xi) operating
income, (xii) net income, (xiii) stock price, (xiv) return on equity, (xv) total stockholder return, (xvi) growth
in stockholder value relative to a specified publicly reported index (such as the S&P 500 Index), (xvii) return on capital,
(xviii) return on assets or net assets, (xix) return on investment, (xx) economic value added, (xxi) operating
profit or net operating profit, (xxii) operating margin, (xxiii) market share, (xxiv) contract awards or backlog,
(xxv) overhead or other expense reduction, (xxvi) credit rating, (xxvii) objective customer indicators, (xxviii) new
product invention or innovation, (xxix) attainment of research and development milestones, (xxx) improvements in productivity,
(xxxi) attainment of objective operating goals, and (xxxii) objective employee metrics. The Performance Goals may differ
from Participant to Participant and from Award to Award. In particular, the Administrator may appropriately adjust any evaluation
of performance under a Performance Goal to exclude (a) any extraordinary non-recurring items, (b) the effect of any merger,
acquisition, or other business combination or divestiture or (c) the effect of any changes in accounting principles affecting
the Company’s or a business units’, region’s, affiliate’s or business segment’s reported results.
(gg) “
Performance
Share
” means a performance share Award granted to a Participant pursuant to Section 13.
(hh) “
Performance
Unit
” means a performance unit Award granted to a Participant pursuant to Section 14.
(ii) “
Plan
”
means this 2015 Equity Incentive Plan, as amended and restated.
(jj) “
Plan
Minimum Vesting Requirements
” means the minimum vesting requirements for Awards under Plan Section 4(b)(vi) hereunder.
(kk) “
Restricted
Stock
” means a restricted stock Award granted to a Participant pursuant to Section 11.
(ll) “
Restricted
Stock Unit
” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant
to Section 12. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company, subject to the terms
and conditions of the applicable Restricted Stock Unit Award Agreement, and each holder of a Restricted Stock Unit shall have no
rights other than those of a general creditor of the Company.
(mm) “
Rule 16b-3
”
means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.
(nn) “
Section 16(b)
”
means Section 16(b) of the Exchange Act.
(oo) “
Section 409A
”
means Section 409A of the Code.
Juniper Networks, Inc. Notice of 2017 Annual Meeting and Proxy Statement
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(pp) “
Service
Provider
” means an Employee, Consultant or Director.
(qq) “
Share
”
means a share of the Common Stock, as adjusted in accordance with Section 20 of the Plan.
(rr) “
Stock
Appreciation Right
” or “
SAR
” means a stock appreciation right granted pursuant to Section 8 below.
(ss) “
Subsidiary
”
means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.
(tt) “
Tax
Obligations
” means tax and social insurance liability obligations and requirements in connection with the Awards, including,
without limitation, (A) all federal, state, and local taxes (including the Participant’s Federal Insurance Contributions
Act (FICA) obligation or other payroll taxes) that are required to be withheld by an entity in the Company Group, (B) any
fringe benefit tax liability the responsibility for which the Participant has, or has agreed to bear, with respect to such Award
or the Shares subject to the Award, and (C) any other taxes of an entity in the Company Group the responsibility for which
the Participant has, or has agreed to bear, with respect to such Award or the Shares subject to the Award).
(uu) “
Trading
Day
” means a day on which the applicable stock exchange or national market system is open for trading.
3.
Stock Subject
to the Plan
.
(a)
Stock Subject
to the Plan
. Subject to the provisions of Section 20 of the Plan, the maximum aggregate number of Shares that
may be issued under this Plan is equal to the sum of (i) 23,000,000 Shares, (ii) 38,000,000 Shares that, as of the Effective
Date, had been reserved but not issued under the Company’s 2006 Equity Incentive Plan, as amended (the “
2006
Plan
”), and (iii) Shares subject to stock options or other awards granted under the 2006 Plan or the Company’s
1996 Stock Incentive Plan that, after the Effective Date, expire or otherwise terminate without having been vested or
exercised in full, up to a maximum of 29,000,000 Shares. All of the Shares issuable under the Plan may be authorized, but unissued,
or reacquired Common Stock.
(b)
Share Conversion
Ratio
. Any Shares that are subject to Options, SARs shall be counted against the numerical limits of this Section 3
as one Share for every Share subject thereto. Any Shares subject to Full Value Awards with a per Share
or unit purchase price lower than 100% of Fair Market Value on the date of grant shall be counted against the numerical limits
of this Section 3 as two and one-tenth Shares for every one Share subject thereto. To the extent that a Share that was subject
to an Award that counted as two and one-tenth Shares against the Plan reserve pursuant to the preceding sentence is recycled
back into the Plan under the next paragraph of this Section 3, the Plan shall be credited with two and one-tenth Shares.
(c)
Lapsed Awards
.
If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to a Full Value Award,
is forfeited to or repurchased by the Company at its original purchase price due to such Award failing to vest, the unpurchased
Shares (or for Awards other than Options and SARs, the forfeited or repurchased Shares) which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has terminated). With respect to SARs, when an SAR is exercised,
the Shares subject to a SAR Award Agreement shall be counted against the numerical limits of Section 3 above,
as one Share for every Share subject thereto, regardless of the number of Shares used to settle the SAR upon exercise
(i.e., Shares withheld to satisfy the exercise price of an SAR shall not remain available for issuance under the Plan). Shares
that have actually been issued under the Plan under any Award shall not be returned to the Plan and shall not become available
for future distribution under the Plan; provided, however, that if Shares of Full Value Awards are repurchased by the
Company at their original purchase price or are forfeited to the Company due to such Awards failing to vest, such Shares shall
become available for future grant under the Plan. Shares that are subject to an Option Award Agreement that are used
to pay the exercise price of an Option shall not become available for future grant or sale under the Plan. Shares that are
subject to an Award Agreement that are used to satisfy Tax Obligations shall not become available for future grant or
sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than stock, such cash payment shall not reduce
the number of Shares available for issuance under the Plan. Any payout of Awards that are payable only in cash shall
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not reduce
the number of Shares available for issuance under the Plan. Conversely, any forfeiture of Awards that are payable only in cash
shall not increase the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject
to adjustment as provided in Section 20, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options
will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Section 422 of the Code and the
Treasury Regulations thereunder, any Shares that become available for issuance under the Plan pursuant to Section 3(c).
4.
Administration
of the Plan
.
(a)
Procedure
.
(i)
Multiple Administrative
Bodies
. If permitted by Applicable Laws, the Plan may be administered by different Committees with respect to different
groups of Service Providers.
(ii)
Section 162(m)
. To
the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee consisting
solely of two or more “outside directors” within the meaning of Section 162(m) of the Code.
(iii)
Rule
16b-3
. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the Plan will be administered
by a Committee constituted to comply with Rule 16b-3.
(iv)
Administration
With Respect to Other Persons
. Other than as provided above, the Plan shall be administered by (A) the Board,
(B) a committee designated by the Board, or (C) a sub-committee designated by the designated Committee, which Committee
or sub-committee shall be constituted to satisfy Applicable Laws. Once appointed, such Committee shall serve in its designated
capacity until otherwise directed by the Board. The Board may increase the size of the Committee and appoint additional members,
remove members and substitute new members, fill vacancies, and remove all members of the Committee and thereafter directly administer
the Plan, all to the extent permitted by Applicable Laws.
(v)
Administration
With Respect to Automatic Grants to Outside Directors
. Automatic grants to Outside Directors shall be pursuant to
Section 10 hereof and therefore shall not be subject to any discretionary administration.
(b)
Powers of the
Administrator
. Subject to the provisions of the Plan (including the non-discretionary automatic grant to Outside
Director provisions of Section 10), and in the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its discretion:
(i) to determine
the Fair Market Value in accordance with Section 2(u) of the Plan;
(ii) to select the
Service Providers to whom Awards may be granted hereunder;
(iii) to determine
whether and to what extent Awards are granted hereunder;
(iv) to determine
the number of shares of Common Stock to be covered by each Award granted hereunder;
(v) to approve forms
of agreement for use under the Plan, which, for the avoidance of doubt, need not be identical for each Participant or Award;
(vi) to determine
the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when Awards vest or may be exercised (which may be based
on performance criteria), any vesting acceleration or waiver of
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forfeiture restrictions (subject to compliance with applicable
laws, including Code Section 409A), and any restriction or limitation regarding any Award or the Shares relating thereto,
based in each case on such factors as the Administrator, in its sole discretion, shall determine; provided, however, that,
subject to Section 4(d), Awards may not vest earlier than the one (1) year anniversary of the grant date (except if accelerated
(A) pursuant to Section 20 hereof or pursuant to change of control severance agreements entered into by and between the
Company and any Service Provider, (B) due to a Participant’s death, or (C) due to a Participant’s Disability);
(vii) to construe
and interpret the terms of the Plan, Awards granted pursuant to the Plan and any other agreement defining the rights
and obligations of the Company and the Participants under the Plan;
(viii) to prescribe,
amend and rescind rules and regulations relating to the Plan;
(ix) to modify or
amend each Award (subject to Section 6(c) and Section 24(c) of the Plan);
(x) to authorize
any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the
Administrator;
(xi) to determine
the terms and restrictions applicable to Awards;
(xii) to determine
whether Awards will be adjusted for Dividend Equivalents;
(xiii) to adopt such
modifications, procedures, plans and sub-plans as may be necessary, desirable or appropriate to comply
with provisions of the laws of the United States or any other country, to allow for tax-preferred treatment of Awards or otherwise
provide for or facilitate the participation by Participants who reside outside of the United States, in order to assure the viability
of the benefits of Awards made to Participants located in the United States or such other jurisdictions and to further the objectives
of the Plan; and
(xiv) to make all
other determinations deemed necessary or advisable for administering the Plan.
(c)
Effect of Administrator’s
Decision
. All decisions, determinations and interpretations of the Administrator shall be final and binding on all
Participants and any other holders of any Awards granted under the Plan.
(d)
Exception to
Plan Minimum Vesting Requirements
.
(i) Awards that result
in issuing up to 5% of the maximum aggregate number of shares of Stock authorized for issuance under the Plan (the “
5%
Limit
”) may be granted to any one or more Service Providers without respect to the Plan Minimum Vesting Requirements.
(ii) All Awards that
have their vesting accelerated (A) pursuant to a Change in Control transaction described in Section 20(c)
hereof (including vesting acceleration in connection with employment termination following such event), (B) due to a Participant’s
death, or (C) due to a Participant’s Disability, shall not count against the 5% limit.
(iii) For the avoidance
of doubt, if the Administrator accelerates the vesting of an Award but such acceleration does not result in the Plan Minimum Vesting
Requirements not being satisfied for that Award, this acceleration will not count toward the 5% Limit.
5.
Eligibility
. Nonstatutory
Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Shares, Performance Units, Deferred
Stock Units and Dividend Equivalents may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.
Notwithstanding the foregoing, Outside Directors may only be granted Awards as specified in Section 10 hereof.
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6.
Limitations
.
(a)
Section 162(m)
Limitations
. Subject to adjustment as provided in Section 20, during any Fiscal Year, no Employee may be granted:
(i) Options and Stock
Appreciation Rights to purchase more than 2,000,000 Shares; provided, however, that such limit shall be 4,000,000 Shares
in the Employee’s first Fiscal Year of Company service.
(ii) Restricted Stock
and/or Performance Shares and/or Restricted Stock Units covering more than 1,000,000 Shares; provided, however, that such limit
shall be 2,000,000 Shares in the Employee’s first Fiscal Year of Company service.
(iii) Performance
Units, having an initial value greater than $2,000,000, provided, however, that such limit shall be $4,000,000 in the Employee’s
first Fiscal Year of Company service.
(b)
Outside Director
Award Limitations
. In any single Fiscal Year, no Outside Director may be granted one or more Awards (whether cash-settled or
otherwise) with a grant date fair value (determined under U.S. generally accepted accounting principles), taken together with any
cash fees paid to such Outside Director for service in such capacity during such Fiscal Year, of more than $1,000,000. For the
avoidance of doubt, neither Awards granted or compensation paid to an individual while he or she is an Employee, or while he or
she was a Consultant but not an Outside Director, nor any amounts paid to an individual as a reimbursement of an expense shall
count against the foregoing limitation.
(c)
No Repricing
. Without
the consent of the Company’s stockholders, (i) the exercise price for an Option or SAR may not be reduced and (ii) the
Company may not pay cash or issue new Awards in exchange for the surrender and cancellation of any, or all, Options or SARs
with an exercise price that is less than the current Fair Market Value. This shall include, without limitation, a repricing
of the Option or SAR as well as an Option or SAR exchange program whereby the Participant agrees to cancel an existing Option or
SAR in exchange for an Option, SAR or other Award. If an Option or SAR is cancelled in the same Fiscal Year in which it was
granted (other than in connection with a transaction described in Section 20), the cancelled Option or SAR as well as
any replacement Option or SAR will be counted against the limits set forth in section 6(a)(i) above. Moreover, if the
exercise price of an Option or SAR is reduced, the transaction will be treated as a cancellation of the Option or SAR and the grant
of a new Option or SAR.
7.
Stock Options
.
(a)
Type of Option
. Each
Option shall be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market Value of Shares subject to a Participant’s Incentive Stock Options
granted by the Company, any Parent or Subsidiary, that become exercisable for the first time during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 7(a), Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time of grant.
(b)
Term of Option
. The
term of each Option shall be stated in the Award Agreement; provided, however, that the term shall be seven (7) years from
the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option
granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option
shall be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.
(c)
Exercise Price
and Consideration
.
(i) The per Share
exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
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(1) In the case of
an Incentive Stock Option
a) granted to an
Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110%
of the Fair Market Value per Share on the date of grant.
b) granted to any
Employee other than an Employee described in paragraph (a) immediately above, the per Share exercise price shall be no less than
100% of the Fair Market Value per Share on the date of grant.
(2) In the case of
a Nonstatutory Stock Option, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the
date of grant.
(ii) The consideration
to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the
Administrator and may consist entirely of cash; check; delivery of a properly executed exercise notice together with such other
documentation as the Committee and the broker, if applicable, shall require to effect an exercise of the option and delivery to
the Company of the sale proceeds required; or any combination of such methods of payment, or such other consideration and method
of payment for the issuance of Shares to the extent permitted under Applicable Laws.
(iii)
Expiration
of Options
. An Option granted under the Plan will expire upon the date determined by the Administrator and set forth in the
Award Agreement.
8.
Stock Appreciation Rights
.
(a)
Grant of SARs
. Subject
to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined
by the Administrator, in its sole discretion. Subject to Section 6(a) hereof, the Administrator shall have complete discretion
to determine the number of SARs granted to any Participant.
(b)
Exercise Price
and other Terms
. The per share exercise price for the Shares to be issued pursuant to exercise of a SAR shall be
determined by the Administrator and shall be no less than 100% of the Fair Market Value per share on the date of grant. Otherwise,
the Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions
of SARs granted under the Plan; provided, however, that no SAR may have a term of more than seven (7) years from the date of grant.
(c)
Payment of SAR Amount
. Upon
exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:
(i) The difference
between the Fair Market Value of a Share on the date of exercise over the exercise price; times
(ii) The number of
Shares with respect to which the SAR is exercised.
(d)
Payment upon
Exercise of SAR
. At the discretion of the Administrator, but only as specified in the Award Agreement, payment for
a SAR may be in cash, Shares or a combination thereof. If the Award Agreement is silent as to the form of payment, payment of the
SAR may only be in Shares.
(e)
SAR Agreement
. Each
SAR grant shall be evidenced by an Award Agreement that shall specify the exercise price, the term of the SAR, the conditions of
exercise, whether it may be settled in cash, Shares or a combination thereof, and such other terms and conditions as the Administrator,
in its sole discretion, shall determine.
84
(f)
Expiration
of SARs
. A SAR granted under the Plan shall expire upon the date determined by the Administrator, in its sole discretion,
and set forth in the Award Agreement.
9.
Exercise of
Option or SAR
. Any Option or SAR granted hereunder shall be exercisable at such times and under such conditions as determined
by the Administrator, including performance criteria with respect to the Company and/or the Participant, and as shall be permissible
under the terms of the Plan. An Option or SAR shall be deemed to be exercised when written notice of such exercise has been given
to the Company in accordance with the terms of the Option or SAR by the person entitled to exercise the Option or SAR and, with
respect to Options only, full payment for the Shares with respect to which the Option is exercised has been received by the Company.
With respect to Options only, full payment may, as authorized by the Administrator, consist of any consideration and method of
payment allowable under Section 7(c) of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company or as evidenced by the issuance of a stock certificate)
of the Shares, no right to vote or receive dividends or any other rights as a stockholder of the Company shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other
right for which the record date is prior to the issuance of the Shares, except as provided in Section 20 of the
Plan.
10.
Automatic Grants to Outside Directors
.
(a)
Procedure for
Grants
. All grants of Awards to Outside Directors under this Plan shall be automatic and non-discretionary and shall
be made strictly in accordance with the provisions in this Section 10:
(i) No person shall
have any discretion to select which Outside Directors shall be granted Awards or to determine the number of Shares to be covered
by Awards granted to Outside Directors.
(ii) At each of the
Company’s annual stockholder meetings each Outside Director who is elected at (or whose term continues after) such meeting
shall be automatically granted Restricted Stock Units for a number of Shares equal to the Annual Value (rounded down to the nearest
whole share). Each award specified in this subsection (ii) is generically referred to as an “
Annual Award
”.
The “
Annual Value
” means the number equal to $225,000 divided by the average daily closing price over the six
month period ending on the last day of the fiscal year preceding the date of grant.
(iii) Each person
who first becomes an Outside Director (including a Director who has transitioned from an employee Director to an Outside Director)
on a date other than the date of the Company’s annual stockholder meeting shall automatically be granted on the date such
person becomes an Outside Director Restricted Stock Units (each such award specified in this subsection (iii) is referred to as
an “
Initial Award
”) for a number of Shares equal to a number determined by multiplying the Annual Value used
for calculating the Annual Awards granted at the annual stockholder meeting immediately preceding the date of such Initial Award
(the “
Last Annual Meeting Date
”) by a fraction, the numerator of which is 365 minus the number of days between
the Last Annual Meeting Date and the date the person first became or becomes an Outside Director and the denominator of which is
365, rounded down to the nearest whole Share.
(iv) Notwithstanding
the provisions of subsections (ii) or (iii) hereof, in the event that an automatic grant hereunder would cause the number
of Shares subject to outstanding Awards plus the number of Shares previously purchased upon exercise of Options or issued upon
vesting of Restricted Stock Units or other Full Value Awards to exceed the number of Shares available for issuance under the Plan,
then each such automatic grant shall be for that number of Shares determined by dividing the total number of Shares remaining available
for grant by the number of Outside Directors receiving Awards on the applicable automatic grant date. Any further grants shall
then be deferred until such time, if any, as additional Shares become available for grant under the Plan.
(v) Each Annual Award
and Initial Award shall become 100% vested on the earlier of (A) the one year anniversary of the grant date, and (B) the day prior
to the date of the Company’s next annual stockholder meeting, subject in either case to the Participant maintaining Continuous
Status as a Director through the vesting date.
(b)
Reservation
of Rights
. The Board reserves the right to amend this Section 10, including to increase the limit on Annual
Awards or Initial Awards or to provide for additional Awards to Outside Directors.
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11.
Restricted Stock
.
(a)
Grant of Restricted
Stock
. Subject to the terms and conditions of the Plan, the Administrator, at any time and from time to time, may
grant Shares of Restricted Stock to Employees and Consultants as shall be determined by the Administrator, in its sole discretion.
Subject to Section 6(a) hereof as well as the Plan Minimum Vesting Requirements, the Administrator shall have complete discretion
to determine (i) the number of Shares subject to a Restricted Stock award granted to any Participant, and (ii) the conditions
that must be satisfied, which typically will be based principally or solely on continued provision of services but may include
a performance-based component.
(b)
Restricted
Stock Award Agreement
. Each Restricted Stock grant shall be evidenced by an Award Agreement that shall specify the
purchase price (if any), any vesting conditions, the number of Shares granted and such other terms and conditions as the Administrator,
in its sole discretion, shall determine. Unless determined otherwise by the Administrator, the Company as escrow agent will hold
Shares of Restricted Stock until the restrictions on such Shares, if any, have lapsed.
(c)
Transferability
.
Except as provided in this Section 11, Section 18, or the Award Agreement, Shares of Restricted Stock may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable vesting period (if any).
(d)
Other Restrictions
.
The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable
or appropriate.
(e)
Removal of
Restrictions
. Except as otherwise provided in this Section 11, Shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan will be released from escrow as soon as practicable after the last day of the vesting period or at such
other time as the Administrator may determine. Subject to the Plan Minimum Vesting Requirements, the Administrator, in its discretion,
may reduce or waive any vesting criteria and may accelerate the time at which any restrictions will lapse or be removed. The Administrator,
in its discretion, may establish procedures regarding the release of Shares from escrow and/or removal of legends, as necessary
or appropriate to minimize administrative burdens on the Company.
(f)
Legend on Certificates
.
The Administrator, in its discretion, may require that one or more legends be place on the certificates representing Restricted
Stock to give appropriate notice of the applicable restrictions.
(g)
Voting Rights
.
During the vesting period, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with
respect to those Shares, unless the Administrator determines otherwise.
(h)
Dividends and
Other Distributions
. During the vesting period, Participants holding Shares of Restricted Stock will be credited with all dividends
and other distributions paid with respect to such Shares, but such dividends and other distributions shall be distributed to the
Participant only if, when and to the extent the Shares of Restricted Stock vest. The value of dividends and other distributions
payable with respect to any Shares of Restricted Stock that do not vest shall be forfeited.
(i)
Return of Restricted
Stock to Company
. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed
will revert to the Company.
12.
Restricted
Stock Units
.
(a)
Grant
. Restricted
Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines
that it will grant Restricted Stock Units under the Plan, it shall advise the Participant in writing or electronically of the terms,
conditions, and restrictions related to the grant, including the number of Restricted Stock Units and the form of payout, which,
subject to Section 6(a) hereof, may be left to the discretion of the Administrator. Until the Shares are issued,
no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Restricted Stock
Units to acquire Shares. Notwithstanding the foregoing, the Administrator,
86
in its discretion, may provide in an Award Agreement
evidencing any Restricted Stock Unit Award that a Participant shall be entitled to receive Dividend Equivalents (subject to the
provisions of Section 2(f) with respect to Restricted Stock Units).
(b)
Vesting Criteria
and Other Terms
. Subject to the Plan Minimum Vesting Requirements, the Administrator shall set vesting criteria
in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock
Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide,
business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the
Administrator in its discretion.
(c)
Earning Restricted
Stock Units
. Upon meeting the applicable vesting criteria, the Participant shall be entitled to receive a payout
as specified in the Restricted Stock Unit Award Agreement. Notwithstanding the foregoing, at any time after the grant of Restricted
Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a
payout.
(d)
Form and Timing
of Payment
. Payment of earned Restricted Stock Units shall be made as soon as practicable after the date(s) set
forth in the Restricted Stock Unit Award Agreement. The Administrator, in its sole discretion, but only as specified in the Award
Agreement, may pay earned Restricted Stock Units in cash, Shares, or a combination thereof. If the Award Agreement is silent as
to the form of payment, payment of the Restricted Stock Units may only be in Shares.
(e)
Cancellation
. On
the date set forth in the Restricted Stock Unit Award Agreement, all unearned Restricted Stock Units shall be forfeited to the
Company.
13.
Performance Shares
.
(a)
Grant of Performance
Shares
. Subject to the terms and conditions of the Plan, Performance Shares may be granted to Participants at any
time as shall be determined by the Administrator, in its sole discretion. Subject to Section 6(a) hereof as well as the Plan
Minimum Vesting Requirements, the Administrator shall have complete discretion to determine (i) the number of Shares subject
to a Performance Share award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will
be based principally or solely on achievement of performance milestones but may include a service-based component, upon which is
conditioned the grant or vesting of Performance Shares. Performance Shares shall be granted in the form of units to acquire Shares.
Each such unit shall be the equivalent of one Share for purposes of determining the number of Shares subject to an Award. Until
the Shares are issued, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the
units to acquire Shares.
(b)
Other Terms
. The
Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance
Shares granted under the Plan. Performance Share grants shall be subject to the terms, conditions, and restrictions determined
by the Administrator at the time the stock is awarded, which may include such performance-based milestones as are determined appropriate
by the Administrator. The Administrator may require the recipient to sign a Performance Shares Award Agreement as a condition
of the award. Any certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator.
(c)
Performance
Share Award Agreement
. Each Performance Share grant shall be evidenced by an Award Agreement that shall specify
such other terms and conditions as the Administrator, in its sole discretion, shall determine.
14.
Performance Units
.
(a)
Grant of Performance
Units
. Subject to the terms and conditions of the Plan, Performance Units may be granted to Participants at any
time and from time to time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete
discretion to determine the conditions that must be satisfied, which typically will be based principally or solely on achievement
of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance
Units. Performance Units shall be granted
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in the form of units to acquire Shares. Each Performance Unit shall equal the cash equivalent
of one Share of Common Stock and shall be settled in cash equal to the Fair Market Value of the underlying Shares, determined as
of the vesting date. No right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Performance
Units or the cash payable thereunder.
(b)
Number of Performance
Units
. Subject to Section 6(a) hereof, the Administrator will have complete discretion in determining the number
of Performance Units granted to any Participant.
(c)
Other Terms
. The
Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance
Units granted under the Plan. Performance Unit grants shall be subject to the terms, conditions, and restrictions determined by
the Administrator at the time the grant is awarded, which may include such performance-based milestones as are determined appropriate
by the Administrator. The Administrator may require the recipient to sign a Performance Unit agreement as a condition of the award.
Any certificates representing the units awarded shall bear such legends as shall be determined by the Administrator.
(d)
Performance Unit Award Agreement
. Each
Performance Unit grant shall be evidenced by an agreement that shall specify such terms and conditions as the Administrator, in
its sole discretion, shall determine.
15.
Deferred Stock Units
.
(a)
Description
. Deferred
Stock Units shall consist of a Restricted Stock, Restricted Stock Unit, Performance Share or Performance Unit Award that the Administrator,
in its sole discretion permits to be paid out in installments or on a deferred basis, in accordance with rules and procedures established
by the Administrator, subject to the Plan Minimum Vesting Requirements. Each Deferred Stock Unit represents an unfunded
and unsecured obligation of the Company, subject to the terms and conditions of the applicable Deferred Stock Unit Award Agreement,
and each holder of a Deferred Stock Unit shall have no rights other than those of a general creditor of the Company.
(b)
Section 162(m)
Limits
. Deferred Stock Units shall be subject to the annual 162(m) limits applicable to the underlying Restricted
Stock, Restricted Stock Unit, Performance Share or Performance Unit Award as set forth in Section 6 hereof.
16.
Leaves of Absence/Transfer
Between Locations/Change of Status
. Awards will be subject to the Company’s leave of absence policy adopted by the Administrator.
A Participant will not cease to be a Service Provider in the case of (i) transfers between locations of the Company or other
members of the Company Group, or (ii) a change in status from Employee to Consultant or vice versa.
17.
Part-Time Service
. Unless
otherwise required by Applicable Laws, if as a condition to being permitted to work on a less than full-time basis, the Participant
agrees that any service-based vesting of Awards granted hereunder shall be extended on a proportionate basis in connection with
such transition to a less than a full-time basis, vesting shall be adjusted in accordance with such agreement. Such vesting shall
be proportionately re-adjusted prospectively in the event that the Employee subsequently becomes regularly scheduled to work additional
hours of service.
18.
Non-Transferability
of Awards
. Except as determined otherwise by the Administrator in its sole discretion, Awards may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution
and may be exercised, during the lifetime of the Participant, only by the Participant (or the Participant’s guardian or legal
representative).
19.
Tax Provisions.
(a)
Withholding
Requirements
. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as
any Tax Obligations are due, the Company and/or any entity in the Company Group will have the power and the right to deduct or
withhold, or require a Participant to remit to the Company and/or the appropriate entity in the Company Group, an amount sufficient
to satisfy all Tax Obligations.
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(b)
Withholding
Arrangements
. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time,
may designate the method or methods by which a Participant may satisfy such Tax Obligations. As determined by the Administrator
in its discretion from time to time, these methods may include one or more of the following (A) paying cash, (B) having
the Company withhold otherwise deliverable cash or Shares having a fair market value equal to the Tax Obligations, (C) delivering
to the Company already-owned Shares having a fair market value equal to the Tax Obligations, (d) selling a sufficient number
of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion
(whether through a broker or otherwise) equal to the Tax Obligations, (e) retaining from salary or other amounts payable to
the Participant cash having a sufficient value to satisfy the Tax Obligations, or (f) any other means which the Administrator,
in its sole discretion, determines to both comply with Applicable Laws, and to be consistent with the purposes of the Plan. The
amount of Tax Obligations will be deemed to include any amount that the Administrator agrees may be withheld at the time the election
is made.
(c)
Compliance
with Section 409A
. Awards will be designed and operated in such a manner that they are either exempt from the application
of, or comply with, the requirements of Section 409A such that the grant, payment, settlement or deferral will not be subject
to the additional tax or interest applicable under Section 409A, except as otherwise determined in the sole discretion of
the Administrator. Each payment or benefit under this Plan and under each Award Agreement is intended to constitute a separate
payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations. The Plan, each Award and each Award Agreement under
the Plan is intended to be exempt from or otherwise meet the requirements of Section 409A and will be construed and interpreted,
including but not limited with respect to ambiguities and/or ambiguous terms, in accordance with such intent, except as otherwise
specifically determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement
or deferral thereof, is subject to Section 409A the Award will be granted, paid, settled or deferred in a manner that will
meet the requirements of Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional
tax or interest applicable under Section 409A.
20.
Adjustments; Dissolution or Liquidation;
Merger or Change in Control
.
(a)
Changes in
Capitalization
. Subject to any required action by the stockholders of the Company, the number of shares
of Common Stock covered by each outstanding Award, and the number of shares of Common Stock which have been authorized for issuance
under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration
of an Award, as well as the price per share of Common Stock covered by each such outstanding Award, the annual share limitations
under Sections 6(a) and (b) hereof, and the number of Shares subject to Annual Award grants to Outside Directors under
Section 10 hereof shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Award. Except as otherwise expressly provided herein or
pursuant to an Award Agreement, no adjustment of any Award shall be made for cash dividends or other rights for which
the record date occurs prior to the date issuance of any Shares subject to such Award.
(b)
Dissolution
or Liquidation
. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall
notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its
discretion (but not with respect to Options or SARS granted, if any, to Outside Directors) may provide for a Participant
to have the right to exercise his or her Option or SAR for a period prior to such transaction determined by the Administrator
in its sole discretion as to all of the Shares covered by such Awards, including Shares as to which the Award would
not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option or forfeiture
rights applicable to any Award shall lapse 100%, and that any Award vesting shall accelerate 100%, provided the proposed dissolution
or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised (with
respect to Options and SARs) or vested (with respect to other Awards), an Award will terminate immediately prior to the consummation
of such proposed action.
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(c)
Change in Control
.
(i)
Stock Options
and SARs
. In the event of a merger of the Company with or into another corporation or other entity or a Change
in Control, each outstanding Option and SAR shall be assumed or an equivalent Option or SAR substituted by the successor corporation
or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute
for the Option or SAR, the Participant shall fully vest in and have the right to exercise the Option or SAR as to all of the Shares
covered by such Award, including Shares as to which it would not otherwise be vested or exercisable. If an Option or
SAR becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the
Administrator shall notify the Participant in writing or electronically that the Option or SAR shall be fully vested and exercisable
for a period of time of time determined by the Administrator in its sole discretion, and the Option or SAR shall terminate
upon the expiration of such period.
(ii)
Full Value
Awards and Dividend Equivalents
. In the event of a merger of the Company with or into another corporation or entity
or a Change in Control, each outstanding Full Value Award and Dividend Equivalent shall be assumed or an equivalent Full Value
Award or Dividend Equivalent substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the Full Value Awards or Dividend Equivalents, the
Participant shall fully vest in such Full Value Awards or Dividend Equivalents which would not otherwise be vested. For purposes
of this paragraph, a Full Value Award and Dividend Equivalent shall be considered assumed if, following the merger or Change in
Control, the award confers the right to purchase or receive, for each Share (or with respect to Dividend Equivalents and Performance
Units, the cash equivalent thereof) subject to the Award immediately prior to the transaction, the consideration (whether stock,
cash, or other securities or property) received in the transaction by holders of the Company’s common stock for each Share
held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger
or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent
of the successor corporation, provide for the consideration to be received, for each Share and each unit/right to acquire a Share
subject to the Award (other than Dividend Equivalents and Performance Units) to be solely common stock of the successor corporation
or its Parent equal in fair market value to the per share consideration received by holders of the Company’s common stock
in the merger or Change in Control.
21.
No Effect on
Employment or Service
. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the
Participant’s relationship as a Service Provider, nor will they interfere in any way with the Participant’s right or
the employing entity’s right to terminate such relationship at any time, with or without cause. A Participant’s
rights, if any, in respect of or in connection with any Award are derived solely from the discretionary decision of the Company
to permit the Participate to participate in the Plan and to benefit from a discretionary Award. By accepting an Award hereunder,
a Participant expressly acknowledges and agrees that there is no obligation on the part of the Company to continue the
Plan and/or grant any additional Awards. Any Award granted hereunder is not intended to be compensation of a continuing or recurring
nature, or part of a Participant’s normal or expected compensation, and in no way represents any portion of a Participant’s
salary, compensation, or other remuneration for purposes of pension, benefits, severance, redundancy, resignation or
any other purpose.
22.
Time of Granting
Awards
. The date of grant of an Award shall, for all purposes, be the date on which the Administrator makes the
determination granting such Award. Notice of the determination shall be given to each Service Provider to whom an Award
is so granted within a reasonable time after the date of such grant.
23.
Term of Plan
. Unless
sooner terminated under Section 24, the Plan will continue in effect until March 26, 2025.
24.
Amendment and
Termination of the Plan
.
(a)
Amendment and
Termination
. The Board may at any time amend, alter, suspend or terminate the Plan.
(b)
Stockholder
Approval
. The Plan will be subject to approval by the stockholders of the Company at the 2017 annual meeting of stockholders.
In addition, any subsequent amendment to the Plan for which stockholder approval is required by Applicable Laws shall require stockholder
approval. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
90
(c)
Effect of
Amendment or Termination
. No amendment, alteration, suspension or termination of the Plan shall impair the rights
of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in
writing and signed by the Participant and the Company.
25.
Conditions
Upon Issuance of Shares
.
(a)
Legal Compliance
.
The granting of Awards and the issuance and delivery of Shares under the Plan shall be subject to all Applicable Laws, and to such
approvals by any governmental agencies or national securities exchanges as may be required. Shares will not be issued pursuant
to the exercise or vesting of an Award unless the exercise or vesting of such Award and the issuance and delivery of such Shares
will comply with Applicable Laws, and may be further subject to the approval of counsel for the Company with respect to such compliance.
(b)
Investment
Representations
. As a condition to the exercise or payout, as applicable, of an Award, the Company may require the person exercising
such Option or SAR, or in the case of another Award (other than a Dividend Equivalent paid in cash or Performance Unit), the person
receiving the Shares upon vesting, to render to the Company a written statement containing such representations and warranties
as, in the opinion of counsel for the Company, may be required to ensure compliance with any of the aforementioned relevant provisions
of law, including a representation that the Shares are being acquired only for investment and without any present intention to
sell or distribute such Shares, if, in the opinion of counsel for the Company, such a representation is required.
26.
Reservation
of Shares
. The Company, during the term of this Plan, will at all times reserve and keep available such number of
Shares as shall be sufficient to satisfy the requirements of the Plan. Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.
27.
Miscellaneous
.
(a)
Severability
.
If a court of competent jurisdiction holds any provision invalid and unenforceable, the remaining provisions of the Plan
shall continue in effect.
(b)
Construction
.
Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision
of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include
the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
(c)
Clawback
.
An Award granted under the Plan will be subject to any provisions of Applicable Laws providing for the recoupment or clawback of incentive
compensation; the terms of any Company recoupment, clawback or similar policy in effect at the time of grant of the Award; and
any recoupment, clawback or similar provisions that may be included in the applicable Award Agreement.
(d)
Fractional
Shares
. The Company shall not be required to issue fractional shares upon the exercise or settlement of any Award.
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Annex B
JUNIPER NETWORKS, INC.
2008 EMPLOYEE STOCK PURCHASE PLAN
As amended and restated as of , 2017
1.
Purpose
. The purpose of the
Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock through
accumulated payroll deductions. The Company’s intention is to have the Plan qualify as an “employee stock purchase
plan” under Section 423 of the Code (the “
423(b) Plan
”), although the Company makes no undertaking
nor representation to maintain such qualification. The provisions of the 423(b) Plan, accordingly, will be construed so as to extend
and limit Plan participation in a uniform and nondiscriminatory basis consistent with the requirements of Section 423 of the
Code. In addition, this Plan document authorizes the grant of rights to purchase stock that do not qualify under Section 423(b)
of the Code (“
Non-Section 423(b) Plan
”) pursuant to rules, procedures or sub-plans adopted by the Board
or Committee designed to achieve tax, securities law or other Company compliance objectives in particular locations outside the
United States. Such references to the Plan include the 423(b) and the Non-Section 423(b) Plan components.
If grants are intended to be made under
the Non-Section 423(b) Plan, they will be designated as such at the time of grant.
2.
Definitions
.
(a) “
Administrator
”
means the Board or any Committee designated by the Board to administer the Plan pursuant to Section 14.
(b) “
Applicable Laws
” means
the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable
laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.
(c) “
Board
” means the Board
of Directors of the Company.
(d) “
Change in Control
”
means the occurrence of any of the following events:
(i) Any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3
of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the
total voting power represented by the Company’s then outstanding voting securities; or
(ii) The consummation of the sale or
disposition by the Company of all or substantially all of the Company’s assets; or
(iii) The consummation of a merger or
consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation; or
(iv) A change in the composition
of the Board occurring within a two (2) year period, as a result of which less than a majority of the Directors are Incumbent
Directors. “
Incumbent Directors
” means Directors who either (A) are Directors as of the effective date
of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority
of the Directors at the time of such election or nomination (but will not include
92
an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the election of Directors to the Company).
(e) “
Code
” means the Internal
Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended
section of the Code.
(f) “
Committee
” means a
committee of the Board appointed in accordance with Section 14 hereof.
(g) “
Common Stock
” means
the common stock of the Company.
(h) “
Company
” means Juniper
Networks, Inc., a Delaware corporation.
(i) “
Compensation
” means
an Employee’s base straight time gross earnings and commissions, exclusive of payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses, sales commission, and other compensation.
(j) “
Designated Subsidiary
”
means any Parent or Subsidiary that has been designated by the Administrator from time to time in its sole discretion as eligible
to participate in the Plan.
(k) “
Director
” means a member
of the Board.
(l) “
Employee
” means any
individual who is a common law employee of an Employer and is customarily employed for at least twenty (20) hours per week
and more than five (5) months in any calendar year by the Employer, provided, however that under the Non-Section 423(b)
Plan, the Board or Committee appointed by the Board may determine that Employees are eligible to participate in the Plan even if
they are employed for less than twenty (20) hours per week or less than five (5) months in any calendar year by the Employer,
if such Employee has a right to participate in the Plan under applicable law. For purposes of the Plan, the employment relationship
will be treated as continuing intact while the individual is on sick leave or other leave of absence that the Employer approves.
Where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by
statute or by contract, the employment relationship will be deemed to have terminated on the first day following three (3) months
of such leave.
(m) “
Employer
” means any
one or all of the Company and its Designated Subsidiaries.
(n) “
Exchange Act
” means
the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.
(o) “
Exercise Date
” means
the last day of each Offering Period.
(p) “
Fair Market Value
”
means, as of any date and unless the Administrator determines otherwise, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on
any established stock exchange or a national market system, including without limitation the Nasdaq Global Select Market, the Nasdaq
Global Market or the Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as
reported in
The Wall Street Journal
or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly
quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value will be the mean of the closing
bid and asked prices for the Common Stock on the date of determination, as reported in
The Wall Street Journal
or such other
source as the Administrator deems reliable; or
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(iii) In the absence of an established
market for the Common Stock, the Fair Market Value thereof will be determined in good faith by the Administrator.
(q) “
Fiscal Year
” means
the fiscal year of the Company.
(r) “
New Exercise Date
”
means a new Exercise Date implemented by shortening any Offering Period then in progress.
(s) “
Non-Section 423(b) Plan
”
shall mean an employee stock purchase plan which does not meet the requirements set forth in Section 423(b) of the Code, as amended.
(t) “
Offering Date
” means
the first Trading Day of each Offering Period.
(u) “
Offering Period
” means
a period of approximately six (6) months during which an option granted pursuant to the Plan may be exercised, commencing
on the first Trading Day on or after February 1 and terminating on the last Trading Day in the period ending the following
July 31, or commencing on the first Trading Day on or after August 1 and terminating on the last Trading Day in the period
ending the following January 31. The duration and timing of Offering Periods may be changed pursuant to Sections 4, 20
and 21.
(v) “
Parent
” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(w) “
Plan
” means this Juniper
Networks, Inc. 2008 Employee Stock Purchase Plan, as amended from time to time, which includes a Section 423(b) Plan and a Non-Section 423(b)
Plan. Unless specified otherwise, references to the Plan herein shall refer to the Section 423(b) Plan.
(x) “
Purchase Price
” means
an amount equal to eighty-five percent (85%) of the Fair Market Value of a share of Common Stock on the Offering Date or on
the Exercise Date, whichever is lower; provided however, that the Purchase Price may be determined for future Offering Periods
pursuant to Section 20.
(y) “
Section 423(b) Plan
”
means an employee stock purchase plan which is designed to meet the requirements set forth in Section 423(b) of the Code, as amended.
The provisions of the 423(b) Plan shall be construed, administered and enforced in accordance with Section 423(b) of the Code.
(z) “
Subsidiary
” means a
“subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(aa) “
Trading Day
” means
a day on which the national stock exchanges and the Nasdaq System are open for trading.
3.
Eligibility.
(a) “
Offering Periods
. Any individual
who is an Employee on a given Offering Date will be eligible to participate in such Offering Period, subject to the requirements
of Section 5.
(b)
Limitations
. Any provisions
of the Plan to the contrary notwithstanding, no Employee will be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d)
of the Code) would own capital stock of the Company or any Parent or Subsidiary of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of
the capital stock of the Company or of any Parent or Subsidiary of the Company, or (ii) to the extent that his or her rights
to purchase stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company or any Parent
or Subsidiary
94
of the Company accrues at a rate which exceeds twenty-five thousand dollars ($25,000) worth of stock (determined
at the Fair Market Value of the stock at the time such option is granted) for each calendar year in which such option is outstanding
at any time.
4.
Offering Periods
. The Plan
will be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after
February 1 and August 1 each year, or on such other date as the Administrator will determine. The Administrator will have the power
to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without
stockholder approval if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
5.
Participation
. An Employee
may participate in the Plan pursuant to Section 3(a) by (i) submitting to the Company’s payroll office (or its designee),
on or before a date prescribed by the Administrator prior to an applicable Offering Date, a properly completed subscription agreement
authorizing payroll deductions in the form provided by the Administrator (which may be similar to the form attached hereto as
Exhibit A
)
for such purpose, or (ii) following an electronic or other enrollment procedure prescribed by the Administrator.
6.
Payroll Deductions
.
(a) At the time a participant enrolls
in the Plan pursuant to Section 5, he or she will elect to have payroll deductions made on each pay day during the Offering
Period in an amount not exceeding ten percent (10%) of the Compensation which he or she receives on each pay day during the Offering
Period. The Administrator, in its discretion, may decide that an Employee may submit contributions to the Non-Section 423(b)
Plan by means other than payroll deductions. A participant’s subscription agreement will remain in effect for successive
Offering Periods unless terminated as provided in Section 10 hereof.
(b) Payroll deductions for a participant
will commence on the first pay day following the Offering Date and will end on the last pay day prior to the Exercise Date of such
Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10
hereof.
(c) All payroll deductions made for a
participant will be credited to his or her account under the Plan and will be withheld in whole percentages only. A participant
may not make any additional payments into such account.
(d) A
participant may discontinue his or her participation in the Plan as provided in Section 10, or may decrease the rate of his
or her payroll deductions during the Offering Period by (i) properly completing and submitting to the Company’s
payroll office (or its designee), on or before a date prescribed by the Administrator prior to an applicable Exercise Date, a
new subscription agreement authorizing the change in payroll deduction rate in the form provided by the Administrator for
such purpose, or (ii) following an electronic or other procedure prescribed by the Administrator. If a participant has
not followed such procedures to change the rate of payroll deductions, the rate of his or her payroll deductions will
continue at the originally elected rate throughout the Offering Period and future Offering Periods (unless terminated as
provided in Section 6(d)). The Administrator may, in its sole discretion, limit the nature and/or number of payroll
deduction rate changes that may be made by participants during any Offering Period. Any change in payroll deduction rate made
pursuant to this
Section
6(d)
0 will be effective as of the first full payroll period following five (5)
business days after the date on which the change is made by the participant.
(e) Notwithstanding the foregoing, to
the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b), a participant’s payroll deductions
may be decreased to zero percent (0%) at any time during an Offering Period. Subject to Section 423(b)(8) of the Code
and Section 3(b) hereof, payroll deductions will recommence at the rate originally elected by the participant effective as of the
beginning of the first Offering Period which is scheduled to end in the following calendar year, unless terminated by the participant
as provided in Section 10.
(f) At the time the option is exercised,
in whole or in part, or at the time some or all of the Common Stock issued under the Plan is disposed of, the participant must
make adequate provision for the Company’s or Employer’s federal, state, or any other tax withholding liability payable
to any authority, national insurance, social security or
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other tax withholding obligations, if any, which arise upon the exercise
of the option or the disposition of the Common Stock. At any time, the Company or the Employer may, but will not be obligated to,
withhold from the participant’s compensation the amount necessary for the Company or the Employer to meet applicable withholding
obligations, including any withholding required to make available to the Company or the Employer any tax deductions or benefits
attributable to the sale or early disposition of Common Stock by the Employee.
7.
Grant of Option
. On the Offering
Date of each Offering Period, each Employee participating in such Offering Period will be granted an option to purchase on each
Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of Common Stock determined
by dividing such Employee’s payroll deductions accumulated prior to such Exercise Date and retained in the Employee’s
account as of the Exercise Date by the applicable Purchase Price; provided that in no event will an Employee be permitted to purchase
during any twelve (12) month period more than six thousand (6,000) shares of the Common Stock (subject to any adjustment pursuant
to Section 19), and provided further that such purchase will be subject to the limitations set forth in Sections 3(b) and
13. The Employee may accept the grant of such option with respect to any Offering Period under the Plan, by electing to participate
in the Plan in accordance with the requirements of Section 5. The Administrator may, for future Offering Periods, increase
or decrease, in its absolute discretion, the maximum number of shares of Common Stock that each Employee may purchase during each
Offering Period. Exercise of the option will occur as provided in Section 8, unless the participant has withdrawn pursuant
to Section 10. The option will expire on the last day of the Offering Period.
8.
Exercise of Option
.
(a) Unless a participant withdraws from
the Plan as provided in Section 10, his or her option for the purchase of shares of Common Stock will be exercised automatically
on the Exercise Date, and the maximum number of full shares subject to option will be purchased for such participant at the applicable
Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares of Common Stock will be purchased;
any payroll deductions accumulated in a participant’s account which are not sufficient to purchase a full share will be retained
in the participant’s account for the subsequent Offering Period, subject to earlier withdrawal by the participant as provided
in Section 10. Any other funds left over in a participant’s account after the Exercise Date will be returned to the
participant. During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only
by him or her.
(b) If the Administrator determines
that, on a given Exercise Date, the number of shares of Common Stock with respect to which options are to be exercised may exceed
(i) the number of shares of Common Stock that were available for sale under the Plan on the Offering Date of the applicable
Offering Period, or (ii) the number of shares of Common Stock available for sale under the Plan on such Exercise Date, the
Administrator may in its sole discretion provide that the Company will make a pro rata allocation of the shares of Common Stock
available for purchase on such Offering Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and
as it will determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock
on such Exercise Date, and continue all Offering Periods then in effect or terminate all Offering Periods then in effect pursuant
to Section 20. The Company may make a pro rata allocation of the shares available on the Offering Date of any applicable Offering
Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by
the Company’s stockholders subsequent to such Offering Date.
9.
Delivery
. As soon as reasonably
practicable after each Exercise Date on which a purchase of shares of Common Stock occurs, the Company will arrange the delivery
to each participant the shares purchased upon exercise of his or her option in a form determined by the Administrator (in its sole
discretion) and pursuant to rules established by the Administrator. No participant will have any voting, dividend, or other stockholder
rights with respect to shares of Common Stock subject to any option granted under the Plan until such shares have been purchased
and delivered to the participant as provided in this Section 9.
10.
Withdrawal
.
(a) A participant may withdraw all but
not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the
Plan at any time by (i) submitting to the Company’s payroll office (or its designee) a written notice of withdrawal
in the form prescribed by the Administrator for such purpose (which
96
may be similar to the form attached hereto as
Exhibit B
),
or (ii) following an electronic or other withdrawal procedure prescribed by the Administrator. All of the participant’s
payroll deductions credited to his or her account will be paid to such participant promptly after receipt of notice of withdrawal
and such participant’s option for the Offering Period will be automatically terminated, and no further payroll deductions
for the purchase of shares will be made for such Offering Period. If a participant withdraws from an Offering Period, payroll deductions
will not resume at the beginning of the succeeding Offering Period, unless the participant re-enrolls in the Plan in accordance
with the provisions of Section 5.
(b) A participant’s withdrawal
from an Offering Period will not have any effect upon his or her eligibility to participate in any similar plan which may hereafter
be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which
the participant withdraws.
11.
Termination of Employment
.
Upon a participant’s ceasing to be an Eligible Employee, for any reason, he or she will be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such participant’s account during the Offering Period but not yet used
to purchase shares of Common Stock under the Plan will be returned to such participant or, in the case of his or her death, to
the person or persons entitled thereto under Section 15, and such participant’s option will be automatically terminated.
12.
Interest
. No interest will
accrue on the payroll deductions of a participant in the Plan, unless required by Applicable Laws.
13.
Stock
.
(a) Subject to adjustment upon changes
in capitalization of the Company as provided in Section 19 hereof, the maximum number of shares of Common Stock which will be made
available for sale under the Plan will be thirty-five million (35,000,000) shares.
(b) Until the shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), a participant
will only have the rights of an unsecured creditor with respect to such shares, and no right to vote or receive dividends or any
other rights as a stockholder will exist with respect to such shares.
(c) Shares of Common Stock to be delivered
to a participant under the Plan will be registered in the name of the participant or, at the sole discretion of the Company, in
the name of the participant and his or her spouse.
14.
Administration
.
The Plan will be administered by the Board
or a Committee appointed by the Board, which Committee will be constituted to comply with Applicable Laws. The Administrator will
have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding, decision and determination made by the Administrator
will, to the full extent permitted by law, be final and binding upon all parties. Notwithstanding any provision to the contrary
in this Plan, and, with respect to the Section 423(b) Plan, to the extent permissible under Code Section 423 and proposed
or final Treasury Regulations promulgated thereunder (and other Internal Revenue Service guidance), the Administrator may adopt
rules or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local
laws and procedures for jurisdictions outside of the United States. Without limiting the generality of the foregoing, the Administrator
is specifically authorized to adopt rules and procedures regarding handling payroll deductions, making of contributions to the
Plan, defining eligible Compensation, establishment of bank or trust accounts to hold payroll deductions, conversion of local currency,
obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures and handling of stock
certificates which vary with local requirements.
The Administrator may also adopt rules,
procedures or sub-plans applicable to particular Subsidiaries or locations, which sub-plans may be designed to be outside the scope
of Code Section 423. The rules of such sub-plans may take precedence over other provisions of this Plan, but unless otherwise superseded
by the terms of such sub-plan, the
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provisions of this Plan shall govern the operation of such sub-plan. To the extent inconsistent
with the requirements of Section 423, such sub-plan shall be considered part of the Non-Section 423(b) Plan, and rights
granted thereunder shall not be considered to comply with Code Section 423.
15.
Designation of Beneficiary
.
(a) At the sole discretion of the Administrator,
a participant may file a designation of a beneficiary who is to receive any shares of Common Stock and cash, if any, from the participant’s
account under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the option is exercised
but prior to delivery to such participant of such shares and cash. In addition, a participant may file a designation of a beneficiary
who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior
to exercise of the option. If a participant is married and the designated beneficiary is not the spouse, spousal consent will be
required for such designation to be effective.
(b) Such designation of beneficiary
may be changed by the participant at any time by notice in a form determined by the Administrator. In the event of the death of
a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s
death, the Company will deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if
no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent
or relative is known to the Company, then to such other person as the Company may designate.
(c) All beneficiary designations will
be in such form and manner as the Administrator may designate from time to time.
16.
Transferability
. Neither payroll
deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares
of Common Stock under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the
laws of descent and distribution or as provided in Section 15 hereof) by the participant. Any such attempt at assignment,
transfer, pledge or other disposition will be without effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17.
Use of Funds
. The Company
may use all payroll deductions received or held by it under the Plan for any corporate purpose, and the Company will not be obligated
to segregate such payroll deductions. Until shares of Common Stock are issued, participants will only have the rights of an unsecured
creditor with respect to such shares.
18.
Reports
. Individual accounts
will be maintained for each participant in the Plan. Statements of account will be given to participating Employees at least annually,
which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of shares of Common Stock purchased
and the remaining cash balance, if any.
19.
Adjustments, Dissolution, Liquidation,
Merger or Change in Control
.
(a)
Adjustments
. In the event
that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Common Stock or other securities of the Company, or other change in the corporate structure of the Company affecting the Common
Stock occurs, the Administrator, in order to prevent dilution or enlargement of the benefits or potential benefits intended to
be made available under the Plan, will, in such manner as it may deem equitable, adjust the number and class of Common Stock which
may be delivered under the Plan, the Purchase Price per share and the number of shares of Common Stock covered by each option under
the Plan which has not yet been exercised, and the numerical limits of Sections 7 and 13.
(b)
Dissolution or Liquidation
.
In the event of the proposed dissolution or liquidation of the Company, any Offering Period then in progress will be shortened
by setting a New Exercise Date, and will terminate immediately prior
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to the consummation of such proposed dissolution or liquidation,
unless provided otherwise by the Administrator. The New Exercise Date will be before the date of the Company’s proposed dissolution
or liquidation. The Administrator will notify each participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise Date and that the
participant’s option will be exercised automatically on the New Exercise Date, unless prior to such date the participant
has withdrawn from the Offering Period as provided in Section 10 hereof.
(c)
Merger or Change in Control
.
In the event of a merger or Change in Control, each outstanding option will be assumed or an equivalent option substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses
to assume or substitute for the option, the Offering Period with respect to which such option relates will be shortened by setting
a New Exercise Date and will end on the New Exercise Date. The New Exercise Date will occur before the date of the Company’s
proposed merger or Change in Control. The Administrator will notify each participant in writing, at least ten (10) business days
prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise
Date and that the participant’s option will be exercised automatically on the New Exercise Date, unless prior to such date
the participant has withdrawn from the Offering Period as provided in Section 10 hereof.
20.
Amendment or Termination
.
(a) The Administrator, in its sole discretion,
may amend, suspend, or terminate the Plan, or any part thereof, at any time and for any reason; provided, however, that adding
additional shares available for sale under the Plan (other than pursuant to Section 19(a)) shall require stockholder approval.
If the Plan is terminated, the Administrator, in its discretion, may elect to terminate all outstanding Offering Periods either
immediately or upon completion of the purchase of shares of Common Stock on the next Exercise Date (which may be sooner than originally
scheduled, if determined by the Administrator in its discretion), or may elect to permit Offering Periods to expire in accordance
with their terms (and subject to any adjustment pursuant to Section 19). If the Offering Periods are terminated prior to expiration,
all amounts then credited to participants’ accounts which have not been used to purchase shares of Common Stock will be returned
to the participants (without interest thereon, except as otherwise required under local laws) as soon as administratively practicable.
(b) Without stockholder consent and
without limiting Section 20(a), to the extent permitted by applicable provisions of law, the Administrator will be entitled
to amend the Offering Periods, determine the terms of new Offering Periods (including, but not limited to (i) the length of such
Offering Periods, (ii) whether such Offering Periods will include one or more embedded Offering Periods and/or (iii) whether such
Offering Periods will have an automatic restate or reset provision), provide for overlapping Offering Periods, limit the frequency
and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld
in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order
to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from the participant’s Compensation, and establish
such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with
the Plan.
(c) In the event the Administrator determines
that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its
discretion and, to the extent necessary or desirable, modify, amend or terminate the Plan to reduce or eliminate such accounting
consequence including, but not limited to:
(i) amending the Plan to conform with
the safe harbor definition under Statement of Financial Accounting Standards 123(R), including with respect to an Offering Period
underway at the time;
(ii) altering the Purchase Price for
any Offering Period including an Offering Period underway at the time of the change in Purchase Price;
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(iii) shortening any Offering Period
by setting a New Exercise Date, including an Offering Period underway at the time of the Administrator action;
(iv) reducing the maximum percentage
of Compensation a participant may elect to set aside as payroll deductions; and
(v) reducing the maximum number of shares
a participant may purchase during any Offering Period.
Such modifications or amendments will not
require stockholder approval or the consent of any Plan participants.
21.
Notices
. All notices or other
communications by a participant to the Company under or in connection with the Plan will be deemed to have been duly given when
received in the form and manner specified by the Company at the location, or by the person, designated by the Company for the receipt
thereof.
22.
Conditions Upon Issuance of Shares
.
Shares of Common Stock will not be issued with respect to an option unless the exercise of such option and the issuance and delivery
of such shares pursuant thereto will comply with all applicable provisions of law, domestic or foreign, including, without limitation,
the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and will be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an option,
the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares
are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion
of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.
23.
Term of Plan
. The Plan will
continue in effect until February 25, 2028, unless sooner terminated under Section 20.
24.
Reimbursement of Taxes
. The
Administrator shall have the discretion to require reimbursement from any Plan participant in full for any liability that the Company
or the Employer incurs towards any tax paid or payable in respect to participant’s participation in the Plan, the grant of
any option pursuant to the Plan, or the exercise of participant’s option, provided that such reimbursement is provided for
in the subscription agreement. The Company may require security for such reimbursement of taxes as a precondition to participant
participating in the Plan, the grant of any option, or the exercise of this option on behalf of Participant. The Administrator
shall have the authority to approve additional documents or forms which may be requested by the Company for such security, collection
or otherwise for reimbursement of such taxes to the Company.
25.
Stockholder Approval
. The
Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted
by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.
100
Annex C
CERTIFICATE
OF AMENDMENT
TO the
RESTATED CERTIFICATE OF INCORPORATION
OF
JUNIPER NETWORKS,
INC.
Juniper Networks, Inc. a corporation organized
and existing under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is Juniper Networks, Inc.
2. The original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of the State of Delaware on September 10, 1997.
3. Pursuant to Section 242 of the General Corporation
Law of the State of Delaware, this Certificate of Amendment to the Restated Certificate of Incorporation further amends the provisions
of the Restated Certificate of Incorporation of the Corporation.
4. The terms and provisions of this Certificate of Amendment
to the Restated Certificate of Incorporation have been duly adopted in accordance with Section 242 of the General Corporation Law
of the State of Delaware by the Board of Directors and the stockholders of the Corporation.
5. Paragraph three of Article SEVENTH of the Restated
Certificate of Incorporation of the Corporation is hereby deleted in its entirety.
6. Paragraph six of Article SEVENTH of the Restated Certificate
of Incorporation of the Corporation is hereby amended to read in its entirety as follows:
The affirmative vote of the holders
of a majority of the voting power of the then-outstanding shares of Voting Stock, voting together as a single class, shall be required
for the adoption, amendment or repeal of the following sections of the Corporation’s Bylaws by the stockholders of the Corporation:
2.2 (Annual Meeting) and 2.3 (Special Meeting).
7. Paragraph eight of Article SEVENTH of the Restated
Certificate of Incorporation of the Corporation is hereby amended to read in its entirety as follows:
Any director, or the entire Board
of Directors, may be removed from office at any time, with or without cause, by the affirmative vote of the holders of a majority
of the voting power of the then-outstanding shares of Voting Stock, voting together as a single class.
8. Article NINTH of the Restated Certificate of Incorporation
of the Corporation is hereby deleted in its entirety and replaced with “NINTH: [Intentionally Omitted”].
9. Article TENTH of the Restated Certificate of Incorporation
of the Corporation is hereby amended to read in its entirety as follows:
The Corporation reserves the right
to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter
prescribed by statute and all rights conferred upon the stockholders herein are granted subject to this right.
***
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IN WITNESS WHEREOF, Juniper Networks, Inc.
has caused this Certificate of Amendment to the Restated Certificate of Incorporation to be executed by the undersigned duly authorized
officer this day of , 2017.
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JUNIPER NETWORKS, INC.
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By:
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[Signatory Name]
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[Signatory Title]
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102
JUNIPER NETWORKS, INC.
ATTN: INVESTOR RELATIONS
1133 INNOVATION WAY
SUNNYVALE, CA 94089
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